Earnings Call: Q4 2020

Feb 9, 2021

Good morning, everybody. This is Moritz Kuehneiner. I'm very happy to welcome you to this morning's conference call on our full year 2020 Q4 results. As usual, Alex will give you an overview of the development of our business, and Ingo will lead you through the financials in more detail. Alex? Thank you, Moritz. Good morning, ladies and gentlemen. I'm very happy to welcome you to our Q4 and full year 2020 conference call this morning. Please note that we are reporting consolidated group financial results, including Osram, on the basis of our majority shareholding and that some of my remarks will relate to our AMS business only. Therefore, the term group will refer to the total group, including Osram, while the terms we and our business will refer to our AMS business. Now some key figures to start with. Full year 2020 group revenues were $4,200,000,000 up 86% our, including consolidation, while 4th quarter group revenues were $1,680,000,000 up 17% sequentially Form 3rd quarter. Our AMS business saw full year 2020 revenues of 2.2 $9,000,000,000 and a full year EBIT of $519,000,000 which was 23% of revenues. 4th quarter revenues for the AMS business were $681,000,000 and the adjusted EBIT margin for the AMS business was 27% of revenues. AIMS recorded robust overall group results in 2020 despite the impact of COVID-nineteen, And we concluded the year with a very positive Q4 for the group. I'm proud to add that The year 2020, the year of COVID-nineteen, turned out to be the best year in the history of the AMS business. With revenues of $2,290,000,000 the AMS business showed growth in this very challenging environment, together with an increase in full year adjusted EBIT. In the Q4, the AMS business saw the expected very good sequential growth. It achieved revenues that were strongly towards the top end of the guidance range, clearly driven by the very firm consumer demand, while the AMS Medical business ended up slightly weaker than expected. The adjusted operating margin for the AMS business was strong in the 4th quarter at the top end of the guidance range despite a currency headwind. We welcome the Osram Q4 2020 results that came out this morning. I'm happy to see the improved performance of the Osram business in the revenues and EBITDA profitability and its contribution to group results. Beyond that, I'm not able to comment on details of the Osram business at this time. We're also pleased to see the Osram Business improved financial outlook for its full fiscal year. The expected positive demand developments in the Osram Business that is underlying this outlook confirms Osram's leadership in the global light emitter market and the strength of its technology. We look forward to harnessing these advantages in the coming years through our planned full integration of AMS and Osram. I also appreciated That the expected balanced revenue profile for the group is already evident, particularly in light of very good consumer demand. In the second half of twenty twenty, non consumer markets accounted for 63% and the consumer market for the 37% of group revenues. This is less than half of what the split was in the year before when the consumer market was made up 87% of revenues. Even in the full year group results, which exclude the Osram business for the first half of twenty twenty, non consumer was 52% and consumer 48% of group revenues. This compares to 82% of Consumer Business in 2019. We continue to progress towards the business integration of AMS and Osram. We are preparing to implement the domination and profit and loss transfer agreement, or DPLTA, which OSRAM shareholders approved in the 4th quarter. In December, an action was brought against OSRAM shareholders' resolution approving the DPLTA, upholding its registration. This is not entirely unprecedented in Germany. Osram has, in the meantime, filed a court motion To remove the blocking as part of a specific legal procedure. We therefore expect to be able to implement the DPLTA in the foreseeable future. This will enable us to drive the integration of both companies in the most efficient way and realize the client synergies of €300,000,000 which we are happy to confirm. We have comprehensive long term funding in place to implement the DPLTA and subsequent steps to realize the full integration of Oswego. Our financial flexibility going forward It's further supported by the expected ongoing cash flow generation for the group. A majority owned independent listed subsidiary of AMS, OSRAM has announced the intention to appoint Ingo as CEO of OSRAM in the current quarter. Also, Thomas Stockmaier has recently been appointed as Chairman of the Supervisory Board of Osram. 4 seats of the Osram Supervisory Board have changed since the closing, And we expect a 5th deal to change in the current quarter. Now let's take a look at our AMS business in 2020 Q4. The AMS Consumer business performed strongly in 2020 and was an important driver for the group despite positive impact of COVID-nineteen. This positive development was due to ongoing robust demand for consumer devices, which continued in the 4th quarter. Our AMS business is a worldwide leader in optical sensing focused on innovation, and our AMS Consumer business is a major supplier Off Sensor Solutions to Consumer OEMs. The consumer business is a major player in 3 d sensing and combines extensive IP and know how for all architectures, structured lines, indirect and direct time of flight and active stereo vision. In 2020, our AMS business shipped substantial volumes in 3 d sensing products to leading consumer OEMs and continue to build its position in the Android market. We are successful in illumination for different 3 d architecture based on our optics and VCSEL technologies, and we are driving the evolution of 3 d technology for more differentiated usage. To this end, we have been expanding our 3 d portfolio to include Near infrared image sensing, SPAT sensing, algorithm and system and application software. On this basis, our AMS Consumer business implements a strategic focus to create system level 3 d solutions. In world facing 3 d, we ran high volume of VCSEL ITOF illumination for camera enhancements last year. Taking 3 d sensing forward for complex applications, we are focused on the development of 3 d direct time of flight technology. Business advanced time of flight architecture targeting augmented reality and other world facing users. 3 d direct time of flight and AR scanning functions will create an attractive new 3 d market in the next years based on customer feedback. Our broad three d portfolio and industry leading system capabilities offer an unmatched platform to drive innovation in 3 d DTOF systems and address attractive opportunities in this market. We are seeing good progress in developing our complete 3 d Detour solution high performance. As a result, we have recently started to engage with customers on first evaluation. The solution integrates SWIC illumination, optics, high resolution SPED sensing, software and algorithm, and we see ourselves as the only vendor having this capability. We are also engaging with a major eco system software player for 3 d direct time of flight. We want to combine both parties' know how to accelerate integrated 3 d Detolf solutions. We are keen to drive innovation in 3 d DTOF systems, and the feedback we receive validates the strength of our 3 d DTOF technology. In other direct time of flight, our AMS business is successful with the 1D DTOF solutions. They already power LDAF Autofocus in smartphone platforms at different OEMs, and we are seeing further market success and penetration for our 1D Detox technology. We are also focused on behind all LED3D technology for face authentication as a major innovation in front facing 3 d. This will allow to make 3 d sensing invisible behind the display and eliminate frontal place components. Our strong capabilities in boarded light emission and sensing And our deep three d system expertise drive our leading position in this emerging area. We are progressing in our development OLED 3 d active stereo vision along a technical path to realize a system solution for this highly challenging technology. The full system comprises VCSEL illumination, near infrared image sensing, algorithm and related software, and we are able to demonstrate technical concept. Additionally, we are starting to engage with leading OLED vendors to address key technology aspects in order to commercialize the technology for the next years. As the following step, we plan to explore OLED 3 d architectures dead support structured light. Our AMS business has a leading position in display management for consumer devices, shipping significant volumes last year. With our innovative light and proximity sensing behind the OLED display, We enable full screen designs. Our OLED portfolio continued its success last year with growing adoption of leading Android OEMs. Our AMS business is also a leader in ultra small scale proximity sensors and successful in the wireless earbud market. Camera enhancing features are attractive value propositions for smartphone users. Our innovation for automatic white balancing creates higher picture quality and compelling natural colors using spectral sensing. Wider range speaker detection, on the other hand, allows to eliminate picture artifacts and from artificial lights. Both solutions having nice market traction, and we see increasing adoption at smartphone audience. As a leading supplier of active noise cancellation in the growing earbuds Headphone market. We added a number of new audio OEMs last year. Let me now look at the AMS non consumer side. The full year segment results of the AMS non consumer business were significantly impacted by the pandemic. Over the course of the second half, however, this challenging situation began to improve. Our AMS Automotive business showed an overall performance in 2020, reflecting the strong impact of COVID-nineteen on global demand. Following a weak very weak first half. Our AMS Automotive business showed more attractive results in the 3rd Q4 as order trends and production volumes developed positively. The AMS business has built a strong position in 3 d LIDAR, a core automotive and 3 d sensing technology that enables the evolution to automated and autonomous driving. Our AMS business has VCSELIDA engagements at a range of system suppliers, including LiDAR vendors in North America. Our partnership with successful LiDAR integrator, Ibeo, added this program win for Great Wall Motors, It's emerged as a meaningful new market in automotive, where interior comfort and safety functions such as driver and seat monitoring are gaining real traction. Our AMS business is nearly its early leader here with project wins in different technologies, including 3 d. In the innovative micro lens projector systems for exterior lighting that create light carpets on the ground, We are seeing increasing adoption that offers opportunities for optical and VCSEL solutions. The AAMUS Industrial Business, which serves industrial, automation and harbor markets, performed in line with muted expectations for 2020. Industrial demand was strongly impacted by the effects of pandemic, which reduced industrial investment globally. Following a weak first half, our AML Industrial business improved in the 3rd Q4, and we see more positive demand trends indicating a regional recovery. We have a leading position in high performance global shutter imaging, And our imaging expertise drives our 3 d system capability in consumer, in industrial, including 3 d active stereo vision. At the recent CES, a facial recognition door lock, which is powered by an AMS 3 d system, was announced for the U. S. Market. The AMS Medical business recorded an overall positive performance in 2020 against the backdrop of COVID-nineteen. AMS confirmed its leading position in medical imaging for CT, digital x-ray, mammography and microendoscopy. Our AMS business continues to be successful in the growing Asian CT market and benefited from COVID-nineteen related demand for CT scanners. It is also the leader in latest CT sensing technology that creates outstanding diagnostic resolution at low radiation doses. The AMS Medical business expanded into medical lateral flow test or LFT last year and established in vitro diagnostics method for viruses, bacteria and other biomarkers. Driven by COVID-nineteen and as a real innovation, we brought a highly accurate LFT readout solution to the market at record speeds. Powered by our unmatched spectral sensing, the integrated test kit optically analyzes LFTs at the point of care and offers fast robust diagnostics without high cost lab equipment. In the quarter, early production of a COVID-nineteen antibody test kit started at our partner, Cinnober, and created 1st small scale revenues. Our North American partner, Precision Bio, is in late stage development and the approval process for a highly sensitive COVID-nineteen antigen test kit to identify current infections. In addition, we pursue opportunities with additional partners in North America and Europe. We expect digital LFT solutions for large in vitro testing market to offer a real growth opportunity for the coming years. In operations, for the AMS business, we were able to safeguard production and fulfill customer demand through the year despite COVID-nineteen. In spite of the pandemic, our AMS business achieved high production efficiency and yield across locations. Let me now turn to the outlook for our AMS business. Please note that our financial outlook for the Q1 only includes the AMS business given the financial guidance horizon of Osman. We expect the AMS business to grow year on year in the Q1 at the midpoint of expectations despite typical seasonality effects. Based on available information and the definition above, we expect Q1 AIMS revenues ARR 500,000,000 to US540,000,000 up 4% year on year at the midpoint of the range. We expect an adjusted operating margin for the Q1 of 20% to 22% for the AMS business, also improving year on year at the midpoint. The AMS Consumer business is expected to reflect seasonal volume effects, While the non consumer business is expected to align with respective end market dynamics. Please note These expectations assume no foreseen negative effects from the pandemic that would have a meaningful negative impact on our business. With this, I would Now I'd like to hand over to Ingo. Yes. Thank you, Alex, and a very good morning to all of you as well from my side. Before I start reviewing the financials of the Q4 and the full fiscal year 2020, let me start maybe with a few general remarks. We will refer to the AMS business and the Osram business when discussing the financial performance of these two business areas. I will refer to the Aemet Group when discussing the fully consolidated financials of the company. The Alstrom financials are consolidated as of July 2020. In other words, the AMS Group financials for 2020 include 6 months of the Alsram's financial performance in 2020. When we refer to adjusted financial metrics for the AMS business, We refer to adjustments from the as reported IFRS basis pertaining to acquisition related share based compensation, restructuring costs and results from investments and in associates. A reconciliation to the IFRS basis of The presentation is included in the financial information of Q4 and the full year 2020, which we have posted this morning on our website, where you can find the details. When we refer to forward looking information, this is related to the AMS business only, given the current OSRAM financial guidance horizon. First, maybe some of the highlights. I'm now on Page 24 of our Q4 2020 earnings release presentation. Q4 2020 for our AMS business came in towards the high end of the guidance range we provided, driven by robust demand in the AMS Consumer business. The Alseram business also showed improved performance in its December quarter when compared with the same period about a year ago. For the full fiscal year 2020, revenues and adjusted EBIT for the AMS business were at historical record levels. Continuing revenue growth was accompanied by an improved adjusted EBIT margin, and that all despite the backdrop of the COVID-nineteen pandemic. And As Alex pointed out, for Q1 2021 already, we expect to show year over year growth in our AMS business. When you take the midpoint of the guided revenue range, even when we take typical seasonality into consideration. Adjusted operating profitability is expected to be very solid in the range of between 20% to 22% of revenues. Let's take a closer look at some of the key financials of the AIMUS Group summarized on Page 25 of the presentation. In the Q4 of 2020, group revenues were USD 1,680,000,000 up with 138% year over year, R, reflecting the consolidation effects of OSRAM into the AMS Group. OSRAM contributed approximately US1 $1,000,000,000 revenue in the quarter. For the full year, group revenues were at US4.16 billion dollars up 86 Again, up largely due to the same consolidation effects. Osram revenue constitutes approximately 45% of the full year group revenues in 2020. Adjusted EBIT in Q4 2020 for the group came in at a solid 17% OAR compared to 28% for the same period a year ago. The year over year change is reflecting of the OARAM consolidation effects into the total group. The AMS Group net result for 2020 was on an adjusted basis was $282,000,000 On a reported IFRS basis, the group's net result was negative with $104,000,000 in the year 2020. The decline to 2019 is reflecting the Alstom consolidation impact since July of 2020 as well as operational and financial expenses related to the acquisition process in the course of 2020. Year over year changes in earnings per share for the Amos Group were driven by the impacts on net result that I just outlined as well as a higher share count compared to a year ago given the rights issue executed earlier in 2020. With the acquisition of Osram, the AMS Group revenue distribution has markedly changed When you look at the comparison on Page 27 of the presentation. For the full year of 2020, revenue from our Consumer business was almost evenly split with our revenue base in Automotive, Industrial and Medical. However, when looking at the second half of twenty twenty, which more importantly represents the periods in which we have been consolidating Osram, We noticed a more diversified revenue picture for the group, substantially reducing the historically more concentrated exposure of the AMS Group to the consumer part of its business. Regionally, the AMS Group had a higher share in EMEA and the Americas on balance for the year 2020. Turning now to Page 28, looking at gross profit and profitability on an adjusted basis. 4th quarter 2020 adjusted gross margin came in at 35%, lower compared to Q4 2019. For the full fiscal year 2020, the AMS business was able to increase It's absolute gross profit in U. S. Dollar terms, also on the back of the underlying revenue growth. Still, the adjusted gross margin for the AMS Group was at 33% lower than fiscal year 2019, given the Austrian consolidation effects. Adjusted EBIT for the group was 17% for Q4 2020. For the full year 2020, the group's adjusted EBIT stood at 13% lower when compared with 2019. Underlying that was on the one hand, a successful expansion in adjusted EBIT margin in our AMS business from 21% in 2019 to approximately 23% in 2020. On the other hand, we saw the consolidation effects of Osram into the 2020 group financials, markedly affecting the overall year over year comparison to 2019. Foreign exchange movements, especially especially the weakening of the U. S. Dollar against the euro provided some headwinds for the AMS business in the Q4 of 2020. Moving now to the OpEx development of the group for Page on Page 29. SG and A expenses for the group in Q4 of 2020 were USD230 1,000,000 USD 168,000,000 of which related to the Ostrom business or approximately 73% of the total spend in the quarter. For 2020, SG and A expenses were USD 6 US27 million dollars including 6 months of Osram SG and A spend amounting to US336 million dollars or approximately 54% of total SG and A for 2020 for the AMS Group. Close to US64 $1,000,000 of the group's SG and A spend were one off expenses related to the Alstrom acquisition recorded in the AMS Business Financials. R and D spend in the Q4 was USD 179,000,000 USD 103,000,000 of which related to the Osram business, close to 58% of the total quarterly group innovation spend. Overall, this spend for the group translated into 11% of group revenues. Efficient spending on overheads continues to be a key financial objective, also in the combination with Alstom once the domination agreement has been cleared and registered. Turning now to the net result and earnings per share information on Page 30. The adjusted net results for the AMS Group in 2020 was US282 $1,000,000 By and large, contributed by the AMS business worth $274,000,000 The overall decline when compared to 2019 It was driven by the expenses related to the acquisition, both on the operational expense side as well as on the financial expense side, taking transaction related fees and higher interest expenses into account. Adjusted basic and diluted earnings per share for the group in 2020 were CHF1.13 CHF0.98 or US1.26 dollars and US1.09 dollars on the dollar front. When we compare our EPS performance to 2019, we need not only to take into consideration the changes in net results outlook, but also the substantial increase in number of shares outstanding resulting from the rights issue in spring of 2020. Let me now complete the picture on the financials with a look into cash flow and the debt position of the AMOS Group on Pages 31 and thirty two, respectively. The group operating cash flow was very strong in the last quarter in 2020 with 3.84 $1,000,000 with the AMS business contributing US292 $1,000,000 and the Osram business US92 $1,000,000 For the full year 2020, the group's operating cash flow increased by US67 million dollars $835,000,000 very strong. 2020 CapEx spend in the group was nearly unchanged year over year at US211 $1,000,000 With 5% of group revenue. This spending reflected a cautious investment approach given the uncertainties presented to the group by the COVID-nineteen pandemic. The group's cash and cash equivalents stood at US1.9 billion dollars at the end of the year compared to US1.46 billion dollars at the end of the 3rd quarter. The increased results from a combination of the net proceeds related to the placement of the EUR 760,000,000 convertible bonds during Q4 2020 on the one hand and the strong free cash flow generation of the group in the quarter on the other hand. At the same time, We did also retire some outstanding short debt short term debt during the quarter, notably the EUR 450,000,000 outstanding balance sales of the previous acquisition related bank bridge. As a result of all of the above, The group net debt came down meaningfully and stood at roughly US2 $1,000,000,000 as per the end of 2020 compared to approximately US2.5 billion dollars as per the end of September 2020. Overall, this translated Inter A Financial Leverage for the group of approximately 1.7x@yearend, positively ahead of our expectation. We believe that we now have a well balanced funding structure in place with a mix of funding instruments and different maturities. It will allow us to support operational cash flow needs of the group, whilst at the same time also working towards the full integration of OSRAM. With that, I would like to thank you for your attention and open up the floor for questions. Ladies and gentlemen, at this time, we'll begin the question and answer session. AAR. And the first question is from the line of Stefan Aury of ODDO. Please go ahead. Yes. Good morning, everyone. Thank you for taking the question. Actually, I have two questions. Sorry, the first one was about Q1 as you're guiding for normal seasonality and AUR. Given the very strong context and momentum at Apple, I would have expected probably slightly better seasonality in Q1. So can you please comment a little bit what's happening there? Is there Any share loss, I would say, at other manufacturers like What is Huawei the problem? Or are you facing price pressure? So any information would be appreciated. And the second question is about the DPLTA delay. Can you tell us what time frame for the implementation of the DPLTA according to you? And how much does it delay the restructuring? Thank you very much. Yes. Let me Alexia, let me take the first question. Ingo will take the second one. For Q1, actually, we are very happy with the development of our business and expect good business momentum to continue in the 1st year. It's enormous seasonality as we see it From the market and from others, we expect to even grow year on year at the midpoint in the quarter, which reflects a typical seasonality on a scale that is very much like in previous years, plus we have continued effects from the pandemic. So in total, we are very happy with the Q1 guidance and don't see any additional impacts on the Q1. Okay. Yes. And on the DPLTA, I think it's important to note that, As Alex said in his prepared remarks that Osram has already filed for the counterclaim, so to say, and then which is on the basis of an established in German law, if you like, accelerated procedure. AAR. And I think Alex said foreseeable future, that should be a couple of months in our expectation. Okay. Thank you very much. The next question is from Achal Suthania of Credit Suisse. Please go ahead. Hi, good morning. Can you just help us Stan, there is obviously a lot of noise around design changes for potentially for 3 d sensing at one of your large customers. Obviously, you can't comment much on what the customer may be planning or thinking, but Can you just help us understand like how are you trying to position yourself from a technology standpoint to be ready for any design change either on the 3 d sensing side for front facing or for the ambient light stroke color sensor. Just to give us some sense of where you're trying to head towards in terms of technology. Thank you. Yes. Thanks for the question. And as you know, as before, there are certain areas in our business. We cannot comment on specific projects or customer engagements. But what we are doing is very clear that as in the past, We invest significantly into our optical competencies. We are driving the roadmaps further in bringing light sensing behind the OLEDs. We do the same in the 3 d area. We expand our portfolio from structured light to active stereo vision, direct time of light. So you see that we have positioned ourselves as a company with a broad for you leading edge technology to be able to support our customers in the best possible way. And that's what we'll continue in the future as well. Thanks, Alex. Just maybe a quick follow-up on that, what you said. So R. How should we think about some of these projects ramping, not just at your major customer, but across the board with the Android camp as well? Can we expect some new projects to ramp up on 3 d side of things as we go through 2021. We are in strong engagement with the broad customer base and the consumer space. As you can imagine, we have launched multiple new designs where we brought, embedded light sensing, proximity sensing behind the OLED. We mentioned this already. We see very good traction there. We engaged in 3 d technology, also in world facing 3 d and direct time of flight, But we cannot give any timing there. When we are allowed to talk about assignments, we can do this, but we cannot give specific timing on areas. But we feel very well positioned with our portfolio, which is very broad and address basically the majority of our customer needs. AAR. Thank you, Alex. Pleasure. Thank you. The next question is from Jonathan Mannon of Liberum. Please go ahead. Yes. Hi. Good morning. Thanks for taking the question. So my question is also a little bit along the previous lines. R. Normally, your let me try it another way. Normally, your seasonality is quite strong in the second half of the year. Is there any reason why we should expect that not to be true this year as well, that we should not see the kind of seasonality in the second half, 3rd quarter ramp, etcetera, that we've seen in the previous years. And my second question is on you talked about a sort of an ecosystem partnership on the direct time of flight. Could you just elaborate a little bit more on that, like what kind of a partnership it is? What it brings to your solution that you don't have on your own, etcetera, that will be useful. Thanks. Yes. On the guidance, we give now only the guidance for the Q1, and we don't give indication for for the remaining of the year. We may have indications in the next quarter. But today, we give the purely the guidance on the Q1, and we will stick to that. On the second question, the relationship with software in companies related to 3 d. This is more related to the application lever layer, not on the firmware, what we do in with our solutions. But in the algorithm with our solutions, this is more on the application level to utilized applications like AR for end customers and other use cases. And it shows that working with software companies very closely our. Together, you can optimize the technical setup of the system to create better performance place. So we see a very good combination there, and the way of working is very intense and very constructive. AAR. Understood. Later in this quarter, potentially, we can give more insights. But the first step engaging with those companies very, very successful. Understood. Thank you. The next question is from the line of Sebastian Dubovic of Kepler Cheuvreux. Please go ahead. Yes. Hello, everyone, and thanks for taking the question. R. Could you please help us understand a little bit the kind of OpEx budget that you have for 2020 Maybe on a clean basis and separately, what do you expect in terms of PPA for 2021 Basically, and on spectral sensing and medical lateral flow testing technologies, you mentioned a little bit of revenue in Q4. Can you understand a little bit what kind of revenue you had already? And how do you expect the volumes of the revenue coming from medical lateral Flow Testing business accelerating moving to Q1 2021. Thank you. Yes. Let me take the second question first, and Andrew will talk about the OpEx. The revenue in the 4th quarter was a couple of 1,000,000, so very so quite a small number, but this is a starting of the business, and we see it improving over the next 3 quarters. We're not giving a guidance on that, but what we see is a very good traction in this area and good interest. Multiple two customers we announced already. And I think it's very clearly seen that the market Requires such solutions. But the ramp, of course, is complex for getting all the medical approvals, Which is nicely on track. But we see besides the current COVID-nineteen application, also future application with other viruses and bacteria where this technology can be used. So that's why we see a meaningful growth opportunity in this area and a ramping business, but we have not skipping guidance quarter by quarter for it, AAR. But steadily improving. Yes. And then maybe your question on OpEx and PPA. So please understand we do not typically guide for selected P and L or balance sheet items. So appreciate if you understand that. The only thing I might say that if you look at, for instance, PPA, You've now seen 2 quarters where we consolidated OSRAM, so the Q3 and Q4 of 2020. And I think that should give you an indication as to what kind of run rates you would probably have to expect in the combination as well. And once the domination agreement is in place and We will give guidance for the group. Then forward, you will also see probably a bit more language on the OpEx level going forward. But at this point in time, I'm afraid I can't give you a clear answer to this one. R. Thank you for your understanding. The next question is from Sandeep Deshpande of JPMorgan. AAR. Please go ahead. Yes. Hi. Thanks for letting me on. Maybe I can ask 2 questions. I mean, R. Firstly, regarding your spending plans in the AMS standalone business through the year, R. Based on what wins you have, do you need to ramp up or change the spending plans through the year? AAR. And do you expect to cover the overall D and A that you have like you have to last R. As you know, in the past, you've had some problems because of the spending. But you had a very smooth 2019 despite the pandemic. And do you expect That same sort of trend in 2020. And my second question is regarding some of these new wins that you've talked about in direct time of flight on the back of the phone or whether it is a white light balancing. When R. Are these going to produce significant revenues, which is going to cause a significant shift in your revenues, whether it is in 2021 or 2022 or beyond that? Yes. Let me start with the second question. We see, as I mentioned before, very good traction there, especially in the Android's camp, where more and more customers are interested to get those features because this helps them to give better use case and experience to their end customers. Direct time of flight is certainly an area for the next couple of years Where we see clearly use cases for world facing. AI is a good example. And there, we are positioning ourselves to be a full system provider, including the image sensor end software. So this is very, very strong technology, and we will see progress through 2021 Intertechnology offering. So that's very clear. On the spending, I think we indicated that our CapEx will be 10% or lower based on revenue for the coming year. And as it was similar to 2019, So we don't see a very as a goal, and we don't see a major change there. Thank you. AAR. Yes. The next question is Sorry. Go ahead please, operator. The next question is from Robert Sanders of Deutsche Bank. Please go ahead. Yes. Hi. Alex, do you see any appetite to simplify structured light by using cheaper optical components on the transmit side, Such as polymer lenses, molded glass as opposed to wafer level optics. I mean, there's been a lot of debate in the market. Do you think this is actually doable in terms supporting facial authentication given accuracy and temperature, etcetera. And I have one follow-up. Thanks. Well, as you can imagine, our engineers are looking at all different areas, and we are very, very strong in structured light. But I cannot reveal any technical ideas here because we want to don't distribute it in the world. But we are looking at those technical details, but we are not speculating. And there's always different ways and looking at it, AAR. But we feel comfortable with the technology we have in house. And just on the behind OLED content opportunity. Do you still believe that, that is a higher content opportunity than having a notch, etcetera when it comes to 3 d sensing, particularly facial authentication. Is that still the case? Or do you think that there are ways around it by using a bezel But we'll actually not necessarily increase the content opportunity significantly. Well, certainly, As you can imagine, this is to bring 3 d or any other sensor behind the OLED screen is significantly more complex Having it visible. And for that technical competence, the value and the content is certainly higher. So We see high opportunities in content at the moment those technologies goes behind OLED. And we have demonstrated this when we brought proximity and AMOLIGHT sensing behind OLED, where the ASP is significantly higher than the same functionality being visible on the screen. Thanks a lot. The next question is from the line of Adithya Meteque of Bank of America. Please go ahead. Yes. Good morning, guys. So two questions, please. Just firstly, just a follow-up on one of the previous questions. When I look at the standalone 1Q guide, you're guiding for your revenue to be up 4% at the midpoint on a year on year basis. However, when I look at iPhone unit expectations, they're expected to be up almost 30% year on year. Similarly, in the December quarter, your stand alone revenues were up around 4 year on year, while iPhone units were up 11% year on year. How do we how do I square this difference, how to understand this underperformance. Is there something going on around pricing pressure, maybe content changes that we're not fully understanding? AAR. Any color you can provide around this would be very helpful. And secondly, just for the ramp up of synergies, you mentioned synergies will now come 3 years post the DPLTA. We were previously modeling these synergies to come 3 years post closure. So how should we think about the implications on restructuring expenses within our models? Should we assume should we delay these out as well? Any color around this would be helpful. Thank you. Yes. Thanks for the question. Let me take the first one. As I mentioned before, we see a standard seasonality for the Q1 here, And we don't see any different structural changes if I look at the Q1 this year to previous years. So we feel happy with the guidance. We look at specific customer demands and market demands, And that derives our guidance, which was in the past always quite accurate. And but we don't see any structural changes in the Q1 guidance our Yes. And then maybe on the synergies, I think we always said that On the synergies, we would expect them to be around sort of a 2 thirds In the 1st 2 years, which is, I think, also what we confirm today, AAR. We've not changed our view on the absolute amount of synergies that we see coming in based on what we've now seen also Alstern. But obviously, we can start realizing those only once we have the domination agreement in place. So that's maybe the only change in that because of legal reasons. There's nothing of our own assurance making, if you want, from that perspective. As far as the expenses are concerned related to such synergies. I would expect those to be always a bit front loaded relative to the savings For obvious reasons, as far as those are related to personnel kind of measurements. So the front loading of that relative to the profile of when then the synergies come in AAR. Should be the same as what we've indicated before. So no change there as well. R. Understood. Maybe if I could just a quick follow-up on the year on year changes in Apple units versus your guide. Is there anything additional you can add? AAR. Can you repeat the question? I understand your point on seasonality into 1Q, but just on into 1Q. But just on and I understand you have been accurately predicting in the past your revenues, but just wondered If you could help us square the circle around why your performance in the 4th quarter was significantly lower on a year on year basis versus Apple's units on a and it is again very low in the March quarter as well per your guidance. Is there anything we need to keep in mind when we're modeling this within our estimates going forward? Look, so first of all, we can't give specific information about 1 platform or customer. But what I can tell you is that we don't see structural changes, not in the Q4 of last year nor in the Q1 of this year. We see it very similar to the years before, and we don't see any changes there. So I unfortunately cannot add more there. Okay. Understood. Very similar to other what we see in the market. I mean so That's why we feel quite comfortable with this guidance, and we feel happy with the 4% increase year on year. Understood. Thank you. And the next question is from the line of David O'Connor of Exane BNP Paribas. Please go ahead, David. AAR. Great. Good morning and thanks for squeezing me in guys. Maybe 2 from my side, Alex. Firstly, helping us with the growth drivers for 2021. Can you please rank the product growth drivers for this year? We are not giving by product category the growth drivers. But As you well know, larger areas of growth is everything related to ambient light sensing and 3 d. We indicated a growth driver of in the Metrica business. We are seeing the start of towards the end of the year in the automotive business to move up, but we are not giving specific drivers by product category. That's very similar to the years before, I would say. Okay. Okay. Fair enough. Understood. And first, second question. How confident are you that you can maintain your 3 d sensing market share in 2021? Thank you. Well, we certainly have the ambition to position our portfolio, which is the broadest in this industry, as broad as possible And position ourselves, all possible customers with our portfolio. That's very clear. And we put all the efforts behind to continue to create leadership in the market in 3 d, in display management and other optical components, and we see this very positively. And specifically, when I go and the next years forward with new opportunities we get with the combination of Osram. We see this in a very strong positive way. Ladies and gentlemen, this concludes our question and answer session for this morning. We thank you very much for joining us this morning for our Q4 results conference call, and we look forward to speaking to you again with our next quarter's results. Thank you very much, and have a good day.