Sameer Desai Senior Director, Corporate Development and IR
Tom Edman CEO
Todd Schull CFO
Matt Sheerin Stifel Nicolaus
William Stein SunTrust Robinson Humphrey
James Ricchiuti Needham & Company
Mike Crawford B. Riley
Call transcript
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Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the TTM Technologies Third Quarter 2019 Financial Results Conference Call. Sameer Desai, TTM's Senior Director of Corporate Development and Investor Relations, will now review TTM's disclosure statement.

Sameer Desai

Thank you, Brad.

of I forward-looking to of outlook. statements Securities Reform started, today's everyone the get related Litigation contains statements call within Act we would future remind like that Private to Before TTM's including business XXXX, the meaning results our these statements Commission. most and report Form one materially recent due including the other from or XX-K the Exchange more annual risks uncertainties, differ Securities filings factors could to Actual forward-looking or explained and with in on

required are regarding not These expectations update Form assumptions obligation statements law. new the these management's the reports forward-looking based TTM, this by future SEC of may and result affect of publicly on to information, refer the as filings. on the of statements, on events, date presentation. S-X, X-K, to a may other XX-Q, whether or that any registration as of be in undertake disclosures the which Please revise statement Form and TTM circumstances, as does any found the other risks or except company's XX-K,

direct in and we We EBITDA. is www.ttm.com. on to will the to available was at and not with measures non-GAAP on you also considered non-GAAP measures with included be Such for a and as SEC substitute should presented such as the the Web company's in measures call which GAAP of financial reconciliation prepared certain filed measures discuss accordance press adjusted release, GAAP, TTM's site this

go ahead, Edman, the over Tom Please Chief like TTM's Executive turn now Officer. to call would I Tom. to

Tom Edman

third XXXX conference our of I'll our overview results. thank quarter, Todd our an and strategy, you highlights our will begin performance by from of third Good CFO, Schull, with afternoon guidance. quarter joining XXXX for Thank our financial QX with review discussion and us a our you, followed follow including of quarter the business QX a for call. XXXX Sameer.

the call open then will questions. to We your

expected offset In the of than exchange operating foreign expected revenues TTM EPS better XXXX, quarter third generated and weaker within the than guided range, results.

labor and markets were Our from manage by customers. to as operational our increased hampered in and efficiencies defense demand our we cellular challenges work aerospace

American due tight short labor summer performance fell vacation North to compounded our which our facilities' the by forecast market, North output. our of Specifically, season, American negatively impacted operating the

quarter In cellular, added and the we new employees in products. yield to trained as faced early challenges cellular ramp we

performance expectations. While margin did yields September, our stabilized in the quarterly meet not

in actions third million the $XX.X not Despite satisfied additional cut quarter, flow overall of adjust quarter. and demand results, costs facilities business in to from as we quarter challenges the well addressing our as to therefore and We our defense with aerospace to realities. taking the higher solid are our operations commercial bottlenecks concrete we in generated cash are in operational

we Looking in face and demand into softer sequential the QX, automotive markets. cellular end

focused goals the excellence and towards will we operational our efforts in our grow aerospace fastest. TTM, market. munitions, the significant for systems Overall automotive Few the and as and continue path financial We radar areas support to discipline, aerospace as end and on differentiation expected defense particular, trends In of remain market and markets. are diversification will and our to continue in defense end differentiation. and on well missiles, strategic

and greater radar. scanned defense to gallium to This With dish radar AESA range, radar the which rotating solid-state customers and nitride services, subsystems upgrade fixed RF accuracy, radar CAGR. capabilities. an is continued mechanical detection platforms, performance increases defense expected stands systems, AESA conversion electronically grow and design technology for at next-generation AESA silicon of AESA the the radar leader is the benefit active array, of the and as based defense the in our adoption XX% all traditional for by market and in and a germanium technology in and programs AESA for radars. stands of from represents technology the manufacturing to turn sensitivity, or allows next-generation components TTM of

next is lower And radar missile recent production an LTAMDS TTM the be few an critical Raytheon. systems to defense over using contributor of AESA system system. technology to and important in LTAMDS to will designed nitride is LTAMDS TTM defense Raytheon be by pilot air architecture important upgrade the stands tier is the in and and Patriot and built gallium award platform, the the this example sensor, missile years. for

commercial growth the for with aircrafts aerospace remains at growing the end In continuing market and in to addition, backlogs travel middleclass. rapidly overall record strong, air the environment significant forecast

While increasing over the a strength next overall than strong being nice provide program defense with programs spending more key budgets driven near-term years, by which defense XX. tailwind to alignment few our number and is procurement

record XXXX at end and ratio driving to book-to-bill for new market was of the our milestone business, of level $XXX and far the significant a million. $XXX in our exceeding $XXX QX A&D million of in backlog million Our That's XXXX. a third and A&D program aerospace QX defense quarter X.XX, the of

supporting a year-over-year programs. major across Our trends achieving record both positive a X% on revenues We of level. defense commercial in customer design-to-specification our dual defense broad build-to-print aerospace market team's new base requirements QX, focus through capitalized and and grew and on

Manager employees during worldwide. President as was beginning leading Cathie Cathie year. and the the at Northrop more will of and where executive than the the TTM be business A&D General role would of Vice quarter the Services A&D TTM and Gridley most Senior from the announced Advanced incoming joins We President formally X,XXX assumed joining September units, also division recently next on President Defense Grumman of leadership team their Vice that Xrd Corporation, she

significant will for and President Brian the Executive Officer Vice plans to transition Phil to Operating Titterton, next retire contributions TTMs I TTM me and currently to unit President to currently years. corporation. to like would over Vice Vice with the his President COO transition Executive Brian and an to President reporting for advisory executive A&D Chief will year. the business role, Barber, of thank

in develop programs and the and vehicles, connectivity business, positions increased Moving requirements. of continue to electric hybrid to we and safety new on driving, advanced vehicle autonomous infotainment, our to related automotive mega-trends

will this adapt customers. also industry. innovation the of be macro of there new world, our to goal automotive be trends, a they the to Our Because technology-focused as business to electronics of while customers, innovative support tremendous with building a in existing amount set new above continues

with in robust, In $XXX Our new million, XX automotive of remains of future lifetime program value are bodes quarter, the for begins product will In that designs XX customer well won ADAS-related. contribute which, Designs years. this ramps. engagement design the to activity a future market, well we before which were revenues winning revenues. we a automotive year

Now, I'd like our markets. review end to

in For and defense QX TTM, sales XX% of and of XX% XXXX represented XXXX. the market XX% end of aerospace to sales, compared third total sales, QX quarter

output end in XXXX. cellular yield XXXX, We challenges. about phone revenue QX in maximized market than of in from quarter, QX XX% end QX in better represent expect and facility XX% despite our sales experienced the total in accounted market as third of sales. X% this to ramp for compared We The QX expected we of the in XX% of our to

XXXX, of quarter, to in in of third XX% QX. ago cellular total quarter quarter as during of to second into during represent the was compared the demand revenues represented QX sales Automotive year the of pulled XX% XX% expect XX% XXXX. and We sales

were grew business. Solutions better expected and to sales due than QX, in Automotive in strength primarily year-over-year our E-M

a were flat basis. on PCB sequential Our sales

our decline total third in XX% segment. sales decline contribute We XX% expect offset XX% instrumentation second majority our in market in of the We medical XXXX. contributed E-M to the strength the was XX% of and global quarter, automotive Solution year more the quarter, that industrial of with declines a the ago weakness in the our in by quarter The by in industrial sales sequential customers than industrial in to QX, total compared demand. end caused of due instrumentation customers saw in to

we quarter, this fourth expect be revenues. of market the to For XX%

market compares Networking third provider customers XXXX. United XX% stopped during from and products in shipments our States XXXX, the second of in for to saw due capacity of weakness QX the to We war in segment XX% service we continues. in cellular notebooks as in storage to of components XXXX. weakness communications quarter XXXX. datacenter these declined Huawei. made quarter U.S. customers. XX% revenue XX% XXXX, of quarter well the China, of and and this in QX, the increased of of of the the peripherals expect This XX% between to of as total computing as represented revenue and revenue as to In sales quarter be second we year-over-year to trade end the quarter our the and third Sales Many of compared XX% third of allegation due accounted impacts networking softness high-end in to and telecom XX% spending, trends of in wireless

revenues expect in of approximately to sales. quarter fourth end represent this We XX% market

Next, I'll cover from some third details quarter. the

HDI, for quarter our quarter XX%. XX% and RF components technology and year in due the in to approximately includes end and the business, increases advanced In QX, approximately compares revenue. XX% which company's were rigid-flex, and substrate, the During ago, our cellular our accounted subsystems market. of This sequential year-over-year to growth

technology new will to leverage markets. activities business in pursue new that opportunities and customer are continuing increase We design advanced engagement our capabilities

to compared in in in Capacity year XX% XX% and ago Pacific in the QX QX. XX% Asia quarter, utilization was

North QX due in XX% commercial in The overall both ago softness Our America was capacity Asia XX% to Pacific America year-over-year in quarter, to were in the XX% in our market. compared and non-cellular QX. year utilization end North and declines in

the the top XXXX XX% XX% quarter of ago of of and in Our to customers quarter sales XX% year a in contributed XXXX. in quarter total compared five second third

QX end subject versus QX, year backlog, of quarter percent XX-day at accounted the third end quarter, and the $XXX.X end was the $XXX.X cancellations customer the $XXX.X million, largest the third at million to our quarter of for year XX% of to last and which in is XX% at XX% compared in QX. the million in sales ago Our of

I'd was challenging And been have terms markets. three TTM's commercial some in ratio revenue September X.XX book-to-bill by to challenges commitment quarter. end the ending XX. most discipline. execution we year growth PCB conclude our the experienced Our a operational has of to emphasizing in for in like recent This months year

year, committed and profitability and performance in satisfied execution. are not this to are operational our improving our We

We not a structure where differentiated invest to investment while will cost growth reduced offering, see we where and areas our continuing and in in product we areas continue to review have do differentiation.

Our and even for to stronger our as of an position from emerge improve. their demand this TTM to customers is cycles service softness, period goal

on focus as the of operational RF In TTM, trends, defense our our use increasing content, such diversification, our longer off expected will wireless and term, in from We differentiation, industry. benefit pay investors electronics for increasing and and strategic XG automotive secular technology, aerospace the and customers. discipline

Now to review Todd. our third performance financial the Todd will quarter.

Todd Schull

everyone. Thanks, Tom, and afternoon, good

were our to communication, $XXX.X For million medical, was to $XXX the in net offset $XXX.X core end-markets, end-markets. to in second the due million. in third industrial sales compared revenue declines million third XXXX, decrease year-over-year compared our sales and net net The in instrumentation and of quarter organic sales growth XXXX and of aerospace networking of cellular quarter and partially and by computing and defense quarter,

third year. diluted per operating to XXXX $X.XX the of in or year, On the of or compares quarter in diluted million quarter basis, second $XX.X last net quarter a and per $XX.X $XX GAAP the share diluted XXXX million net in of quarter the and share quarter $XX.X GAAP for the XXXX. third million per This million, million in quarter XXXX of $X.XX $XX.X the of or second third income income million of income was share. $X.XX to third in this was of compared $X.X

The our focus non-GAAP performance. comments financial of my will remainder on

expense restructuring and insight non-cash ongoing to enable better the costs, eyes the non-GAAP to performance. Our infrequent unusual or investors and company's a of other financial items, performance We related acquisition information company management provide to see items. financial non-GAAP excludes present costs, into the certain through

to commercial compared degree XXXX. of of non-cellular XX.X% The shifts primarily XX.X% margin second the quarter the product due inefficiencies. lower XXXX to gross margin third was mix quarter quarter our to decrease in production the and lesser a third in in Gross XX.X% unfavorable end-markets, in year-over-year and volumes was and in

or million $XX.X was third $XX net a or of net X.X% expense sales sales of quarter. and X.X% sales versus second the marketing the year-ago, or and net million, million, $XX.X of in Selling X.X% quarter, in

X% a sales, same of Third net million, quarter quarter was of million, or expense year-ago, million, of in the G&A or the $XX.X $XX.X net X.X% previous sales compared $XX.X net sales and or quarter. X.X% to in

to last same payments was margin of third interest compares quarter. in from to in and second due last lower $X.X operating quarter same expense million Interest quarter in Our the $XX.X million our the the decrease quarter, and against in This rates. was the X.X% year, quarter we XX.X% term made a third year X.X%. loan the

During earnings exchange or or brought the to gain foreign of per of gains. of quarter, compares of of we Government $X.XX approximately recorded million XXXX. a gain of quarter $X.X $X.X to EPS the $X.X second the in last QX million total $X.XX or and This million approximately $X.X in share. EPS million, $X.XX year, approximately incentives

in quarter. Our effective third XX% tax rate the was

XXXX income diluted per to net third quarter and million, $XX.X quarter per Adjusted the $X.XX net or $XX.X XXXX quarter third of $X.XX or net quarter million, income was second diluted or was Third $XX.X was share. a million $XXX.X compared with This versus of XX.X% $XXX.X solid share. XXXX of was diluted from EBITDA $X.XX of million adjusted the compares income $XX.X in EBITDA million or the in same share, sales, or for per net third $XX.X or million year. of operations sales. XX.X% XX.X% quarter the $XX net adjusted sales. second quarter, net third flow EBITDA Cash In quarter last million, of million, quarter,

of of XXXX, nine second year. in increased first to the the versus months cash equivalents $XXX.X which cash and as of from December Cash cash quarter million million third the will same $XXX.X accumulate XXXX. $XXX.X period in the repayment our operations the was we for from at of $XXX.X quarter, For in million flow million last convertible bond, the end mature

term $XX.X at quarter for capital sheet $XX.X As debt Net third a short reminder, our for on our was Depreciation balance the quarter spending convertible year-end. become bond million. would million. was the

I'd guidance quarter. for turn like to to Now, the fourth

fourth the for revenue quarter. total expect We

$XXX total the to of revenue to $XXX for quarter of expect million be in million. We fourth XXXX the range

count in be of $X.XX to $X.XX on to share is earnings non-GAAP approximately million forecast per XXX of The based expect We share. diluted the diluted range EPS shares. the

Our dilutive bonds. such RSUs, share guidance with shares as but includes our options count associated no securities, convertible and

We SG&A the expense will of fourth be in revenue X% that about quarter. expect

million. $XX.X expect We interest expense approximate to

Finally, we rate to between tax estimate our be XX%. and XX% effective

To developing financial assist information. we the model, you offer in a following additional

we about expense the expense during fourth of $X.X expect $X.X quarter of million, and be compensation about approximately million. million, estimate approximately We stock-based will amortization to interest record of depreciation intangibles $XX.X of $XX expense non-cash million,

to prepared line our Brad? concludes the That open remarks. And now we'd like for questions.


our Sheerin first Thank you. And Stifel. Matt [Operator question comes with Instructions] from

Matt Sheerin

Yes, thank you.

backlog questions Just good also you but up very your market, and in some regarding below down, good still one, bookings you've as a labor which looked that markets issues, there. it and came but implies, just and forecast, percentage growth your guidance a certainly like couple about some also other the defense of having into aerospace from me, and but ran strong talked growth, first with

reasons So to you whatever and faced, doing behind overcome could you headwinds that? get what into you're the

Tom Edman

Matt. addition mean about What at we're and talk backlog I clearly requires to of in ongoing but not also record very only equipment, from level. with, by being you, very we've the is regular climate encouraged the of TTM Yes, that Thank investment bookings people. it, a terms Sure. been capital which program

we providing TTM. we're we're now bring A&D capability, work as of also we additional employees in RF additional package not customers, for new new solution course, that the and that, capital particularly, assembly side, our the add As on to PCB and do bringing together solution, the bring we more equipment, only employees and doing

the ramp we it's is in there, in out hoping ramp, as summer a third market quarter and the were in particularly months, as and able in we quickly brought think I not but as as so, to people. those tight labor well-known, for we were

a growth strong that into we So, again next regular summer the will with. year the now people and obviously have positioned we backlog are given to as that be on brought given who of push QX that we're grow, through continuing backdrop, in cadence in vacation focused

at slow in steady but strength to continue So we're this that and to to we grow that progress, up we'll continue going had with and build ramp backlog.

Matt Sheerin

the losing were fulfill going just into you're market Okay. quarter, pushed that? share or basically and orders, words, And ramped to those you're any those in of because other with labor fourth orders the not anything

Tom Edman

while That's correct, some billing bringing yes. happens in The so program keeping is and need timing, the to delicate dance output expectations, terms programs, particular a other our continue critical in, programs really here to our deliver feel that and components we in we're on key ahead programs making and and -- here -- lockstep we hold programs, programs, think what's of and doing that's so there's with of head sure what we customers to our certainly up -- we're what deliver and their always here. I as moving short and we

So we're continuing complete -- and delivering our to for focus not customers losing them. we're we're solutions share, on not certainly yes,

Matt Sheerin

question regarding segment significantly, Thank in you my both Huawei telecom but out down the only weakness which for piece there. know that. just not network and been also supplier there's to And and a next be I communications has you're the networking, calling

So just was as XG XX% telecom and Huawei, year. of mid at in year-on-year, percentage the parse roll that and you're of you seeing can down due help the both us side what you could you looking next out and into side, to networking terms sort what near-term then

Tom Edman

absolutely you're right. and Sure,

in I seeing weakness. terms situation, not think alone we're the the of seeing

Huawei what came impact about we're to Anaren. revenue as we four and don't our percent wireless type us five don't on what you is here overall to customer, with an on business which customers, tell a can component seeing but we -- about being again at, I look comment think you specific If if usually us traditionally

know, were Anaren you margins operating operating traditional As approximately the twice what margins were. TTM

of that it's so we're bottom impact. terms in impact that line And feeling

the about think less revenue, than still it's X%. you If

at to you're So as of looking X%, a range that X% of revenue. to piece X% X% dropping in that to kind

year overbuilt the are going where more hearing general point that they're games, be our for what some XG. little I Japan of year, right as of but we interpreting next are now Korea, now wave China, certainly that some talk XG, Tokyo what always anticipation off and I expected inventory coming in to To we Olympics, and where this China, investment of on a first the head in thought in should in We've I think we're investment ramp occurring XG, certainly into that a of we're in be investment customers would early phase from year. of about think beyond to seen sort to these back and that -- we ramping telecom latter-half of coming is of to real happening with right build, think the bit is and going going they're next to as to have situation next bleed demand sort that be it we moving of

I think we'll see that.

I second-half think be than it the going it's first-half. the towards year we'll of -- like to looks the more

Matt Sheerin

very much, Tom. thanks Okay,

Tom Edman

thank Sure, Matt. you,


you. Thank

William with question comes next SunTrust. Our from Stein

William Stein

that's September that sort -- into that my I of it down wondering cost the to Great, be sense as pretty It but the an Do my question. continues comes then you'd for for EMS margin if expectations beat falling I like looks as of the for we right? I'm go-forward have business, consider business to company, low thanks company numbers there's, this expectation business know what makes if a for dig the you. structure consider right, participate expected. you I relative materially, in I taking to was really in. whether if this next if end that unusual quarter. result And to the back this the my automotive wanted have market you

Tom Edman

you, Will. Yes, thank

really the best there's it piece automotive and is solutions to the the the pullout look at portion. So, yes, looked the how as way we'd certain -- automotive at

to going strengthened I we and off think it's last quarter, next had then drop quarter. certainly this

look wanted specifically down automotive that's were the one to as that some And the market. so, get And end looked at they sequentially the where sales we've will PCB we the visibility slightly market. be on for the of at the reasons fourth as sales we really into quarter. forecast PCB And flat

I the a on piece would E-M that, - right rather So, moves of around definitely I I -- Solutions the to you're piece, quite focus think like PCB than which you, bit.

continue assembled business we in about wish And the automotive solution to customers very up who complete In have that our helpful us would Solutions also that see more like terms for of to to the to it those particularly we it's give E-M start is business, efforts for a customers. allows it. what solution

of in does us of is sales significant profitable and in into it business helpful is an automotive that and, are that the while the the So give particularly world contributor that not and a PCB helpful more business profitability and go itself, customers for course us. to avenue

Same thing networking, So, the that's for Solutions to customers services TTM. way. where in business the stand the business course also with of we communication for E-M same continue

So for that's on automotive. hopefully there, better but the feel stay we gives a that you where

William Stein


phone as of pattern, indications I we news right? progress a have suggesting demand into typically, a me typical American very constructed. Asia looked customer doesn't large I quarter, the out that Let QX the revenue cellular I pattern think North flow through think can. I historically well if guess the dig

QX I'm market. So a in this end by little the surprised guidance bit

I performance. flat expected would've customer. biggest your that's think I to

I me And decline, if think driving my you and the if correct. in of sequential tell math sort I'm it right of you're that's down. could what's I'm guiding expectations wondering if

Tom Edman


our were we would we third fourth the actually very in still quarter the as of yield forecasting saying forecast in said, exceed good output. So, challenges second in year declining quarter maximizing focused always the from output we're as to quarter, is early third third this had quarter, even We with it we've really our quarter on that And fourth terms our the able actually we of very is quarter. build This we consecutive the in some be where a question.

providing so, forecasting, And it's, customer, fourth and more feeding wise base it's to quarter, with in inventories carefully. we to into year think and as our at I customer in today, for last as our that products the the world manage think therefore be I obviously to we look live conservative

at So and through more call, I get be we're of what sales of what in we see looking looks forecast demand would what to real like December. requirements ultimately looks when revised we'll kind a the

normal, is that right? So

what we're So a seeing seeing a ultimately third we're it's conservative is from really quarter, But at that a third like or the a row second forecast in quarter. where looks quarter more then of the end it's the down determine input mid-December to that the cycle. through into and really And sales how of we through be December doing into feed in QX. in in end sell the we'll then will QX, are the, and that hopefully that looking

where really that's we So stand well.

or forecasting quarter. have but on So think or year not, second a data I a a just going to more say we a it's go year the hard points for this do careful that fourth we're, this in row to to that next you. is Thank slightly in point

William Stein

you. Thank


Our next Company. Needham question James from with & comes Ricchiuti

James Ricchiuti

Was were question wondering if I'm you Hi. good it Thank what saw? talk fairly on you broad-based geographically. that seeing about market, the as PCV softness the portion the automotive could related it afternoon. and to you you A

Tom Edman

Jim. you, Thank

more I in instructive. the in about more because So, yes, if if I'll think what and give it's think it, year-on-year you at automotive quarter you saw look sequential we and an overall

America. and We more improvement than America we have still saw in so in bit Europe more before, weakness North pretty weakness bottom had much down an Asia, in we then the Asia bouncing along seen North in quarter-on-quarter a of in and

we digital sort impact impact has the The our we're felt But that now been in and business on sort way we the I Europe. it's continues interpret bouncing the of that -- bottom. along did is of

Asia, good to gradual in but improvement indication. a seeing a think, Hard China. I some positive good, it's it's that in trend particularly as it's call yet start to

seeing U.S. fallen the the are just this we're as think experiencing I as softness customer some in customers US now. our auto of

would quarter, your the to sure I quarter, yes, fourth same we're expecting have that's And so, geographic Fourth picture. more of thing, say.

James Ricchiuti

Are any GM you you have recent to seeing you any or you disruption as strike? it did are the Tom, seeing, related or seen

Tom Edman

pull. us so right? the selling hub part inventory. to tell. into That could saw this last generally And then, so, we Well, shift into difficult we the we're hard of tier because always but we And what for parts, tell, in be one U.S. suppliers, it's to a quarter, experienced

James Ricchiuti

Okay. And in that but there's you that you, is beyond that early you're not market to environment in to in the down change of try would some pin for automotive QX, there suggest the seeing anything the part XXXX?

Tom Edman

a China more I doubled a average, towards markets on of the an say, in Europe, challenging transition, be with Long-term terrific than vehicle. XXXX, TTM, ongoing going and I content electric think a for it's to as really that's particularly still would thing year and year those really push EV adoption.

to but the now Jim macro what market tied certainly terrific, the level, and U.S. with least in But China and very is to to which market, say of regards terms in see unit in Europe I call steady it Europe stabilize. this a little in at the at of going is that's a of to can the be Asia, U.S. is is but improvement lower So European challenging. Asia sort bit a to see going little more to good market, think happens harder to be, I sales, it's transition and to continue what think economy I bit to unsatisfactory

be I I as this transition. continue -- that's market to challenging we good just year. sign. overall to it's go see going say a don't, for that So, next through that we're I think

James Ricchiuti

a thanks it, lot. Got

Tom Edman

Jim. Thanks,


Mike We'll Instructions] [Operator Thank you. Riley. take next our Crawford from with question B.

Mike Crawford


first times next is changes recently lead have about can or of any enough, demand running XG, got But good adopters. ahead run rate is of where relative QX starting more year? QX direction that And indicate in situation that in path? you that demand the its expanding build inventory any might from of You a maybe see we the and seen some particularly, to talked of

Tom Edman

Thank you, think I Yes, Mike. on.

anything going conservative. difficult customer again, than on They're leading forecast our we're, they're more I that it's So certainly on there. would based on -- else. be say based to being

couple think that public a seen you've of announcements with the I as well.

I think next latter real starting they're year. at looking of half the towards demand

see of forward at they build I that here, or working be mean still a bring that inventory, expecting but terms We quarters off for least what that couple inventory. that equipment think whether we're will and not, they'll of in

Mike Crawford

have I could the you U.S. footprint, thanks. your think just and utilization, probably versus be in with before at Okay, on -- a I to operate say peak it started XX% Asia, quarter, like in how sounds to maybe even in that you'd slip footprint in utilization Asia at fine. would think there? but far And you're lower consolidating Certainly, XX% you about then think closer XX% bottlenecks, rather you

Tom Edman

in prefer you're Asia, we in absolutely so Yes, Right. right, to XX% be really peak a territory. operating or quarter, above we

have where which we it's based we core And based concerning so, to a is so this on on that plating is equipment that that may number from the capacity, plating that at installed, -- standpoint, be have remember XX%, process.

will. we but capacity, in equipment may operating, sitting still would have that's And if so, a not we facility call you that that's

the that's basis So, calculation. for the

to seeing a bit but really about still talking and our to markets, we've XG, the term us longer second-half of looked what you're we're we're of me as of year that little for we markets, as term facility, only, Things a it here, actually a point expect we with at course, be let of make what would longer side, at just phone about is, our expect sense what close so, which we look felt and see industrial And on at not the talk to business. felt seeing coming, side in Internet towards medical next the the communications, network XG and the impact be in and but cellular of pick-up we our and

they're semiconductor on in which We business, on in the that side semiconductor that seeing expect adding bringing strength the and capacity equipment, to they're be a already requirements semiconductor and be and data will we're and of for now anticipation lend credence the the capabilities in our required that, computing XG that. returning felt to side, of capital

terms at we're to from careful So, that going those market in will but situation continue businesses, be labor we comes footprint, our look manage managing again, costs into as very how standpoint, will of careful how to we it requirements a come could our awfully of return and cut they tie we facilities because the charters be the when end about of quickly. that

Mike Crawford

you. And the that talked talked the to customers you what's data with your in that see sector to and about in think call, stored. that in thank last made but conversely, we datacenter be where being improving coming about XG-enabled you little Okay, you a point then visibility and general your about question I last the needs remarks, all data then the soft, relates

or not? anything there So, visibility regarding changed has

Tom Edman

Yes, excellent it's question.

as to as is certainly what this, we -- the we're the a ramp, but looking certainly a than ramp anticipated, ramp of So has bit little steep changed at complex long new here, a we QX steepness occurring QX, a into of less additional at still see. customers year. looked good here And our go of more server digestion we that's designed as platforms, and of or equipment requirements. period It's been next

So that ramp, steepness that and is that bit to higher say of a difference the demand the has little to the shift just I the caused would right.

Mike Crawford

you. thank Well, great. Okay,

Tom Edman

Thank you.


at I Edman to back conference Thank you. time. the closing will for no now have we this Mr. And turn remarks. further Tom questions

Tom Edman

attending. like Thank would you, and thank I you to for all

within range, guided solid covered. operational cash we the generated Just we we of that the flow to earlier, the summarize some some made earnings we despite of first, points delivered challenges

are demand our core support. and strategies of we thank investors, of finally, discipline. diversification, And like our you, while facing environment, our customers our execute some to end Thank markets to and our of well I your we in would a differentiation, you. commercial for continued continue on Second, course, tough employees,


your disconnect. you and concludes Ladies We call. attendance you and now you. gentlemen, and today's thank Thank participation, this for may