Good afternoon, thanks for joining today's Second Quarter 2023 Conference Call. As you read our earnings press release, as you listen to this conference call, recognize that both contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in our earnings press release, those described in our annual report on Form 10-K for Fiscal 2022, those described in subsequent filings with the SEC. You should consider all forward-looking statements in light of those and other risks and uncertainties. Additionally, we will be providing certain non-GAAP financial measures during this conference call.
Our earnings press release and the financial supplement posted to our website each provide a reconciliation of these non-GAAP financial measures to their most comparable GAAP financial measures. On the call with me today are Jeff Andreson, our CEO, Larry Sparks, our retiring CFO, and Greg Swyt, our incoming CFO. Jeff will begin with an update on our business, and then Larry and Greg will provide additional details about our results. After the prepared remarks, we will open the line for questions. I'll now turn over the call to Jeff Andreson. Jeff?
Thank you, Claire. Welcome to our Q2 earnings call. Our second quarter results came in at the upper end of our expectations. Revenues were $185 million and declined less than expected, primarily due to the acceleration of customer demand for a couple of end markets that are recovering more quickly in the currently soft WFE environment. Our gross margin, operating expenses, and operating profit performance also fell into the upper end of our guidance ranges, and with more favorable tax largely offsetting the higher interest expense. Earnings of $0.02 per share also exceeded our prior expectations of a break-even quarter. We continue to see the second quarter 2023 as Ichor's trough quarter during the current downturn, with modest sequential growth expected as we progress through the year.
Our current expectations for the third quarter indicate revenue growth of about ± 4% , with the only difference compared to our prior outlook of 5%-10% growth being the stronger second quarter. While our overall outlook for the full year is consistent with what we were seeing at this time last quarter, there is no question that there continues to be a significant amount of variability in customer demand and build schedules. For example, at the same time as Q2 witnessed a third degree of pull of demand from Q3, we also saw increased demand in a couple of pockets of strength, including increasing investments in the trailing- edge logic and high bandwidth memory. These areas of upside, however, are being pretty equally offset by softening demand in some areas of leading-edge logic and slower build schedules in other areas, such as EUV lithography.
While we are witnessing some improvement between the quarters, our overall outlook for 2023 is largely unchanged. However, the year is a bit more front-half weighted than we previously thought, given the stronger performance in Q2. Clearly, our expected revenue decline in 2023 is a bit steeper than the overall market decline of 20%-25% this year due to several factors. First is our relative customer exposure, which is more heavily weighted towards etch and deposition compared to lithography. We estimate that our customer shipments of etch and deposition systems would be down at least 30% this year. Furthermore, the component side of our business, which is largely comprised of weldment and precision machined parts, and which typically represents about 25% of our revenue, is seeing deeper cuts as our customers work to reduce their inventory levels.
The bright spots for us this year are definitely within growing market segments and new customer design wins. We continue to expect to add a 3rd 10% customer for Fiscal 2023. We are also less exposed to the memory market today than ever before. Based on our customers' revenues by end market, we estimate that memory WFE investments drove approximately 40% of our sales in 2022. Given the industry environment for memory year to date, we estimate our current exposure to be less than 25%. All of these factors, which certainly are resulting in a challenging year for Ichor in 2023, are just as strongly indicating the potential for a very strong snapback of demand as the industry recovery accelerates.
For example, our outlook for the remainder of 2023 assumes little to no recovery in the memory sector, which is broadly expected to begin to rebound sometime next year, given the recent stabilization in pricing and demand environment. Our business model and financial profile tend to generate significant operating leverage as revenues increase. For example, we estimate our gross margin flow-through to be approximately 25% as we move through the remainder of 2023, which at the midpoint of Q3 guidance, will generate a 30% improvement in operating profit on a 4% increase in revenues. A more significant revenue ramp in 2024 could once again lead to very significant earnings growth as we look ahead, which is why we continue to make critical investments in our business in support of future growth.
During this period, we are maintaining our focus on driving share gains for our proprietary product and making investments in new offerings that support our customers' long-term technology roadmaps. We are utilizing the slowdown to complete qualifications in new products that will both increase our share of our served markets, as well as the internally manufactured content of our existing products. We continue to make good progress on all of our focus areas this year, with new customer qualifications for our internally developed machining components, leveraging our global weldment footprint to gain additional share, qualifying our initial next-generation gas panels, as well as our proprietary chemical delivery systems, and the development of new components that address the wet processing market. I'd like to start with an update on our next-generation gas panel evaluations. We are now actively engaged with four customers.
We have now completed the qualification of two of the evaluation units we shipped for two different applications. Our best estimate of when production shipments will begin is mid to late 2024, as they will now move into their customer evaluation stage. Additionally, we also expect to complete a third evaluation this quarter that will also lead to first production units in a similar time frame as their tool is introduced into the market. These are important milestones for Ichor, and we are very pleased with the progress we are making with this new product. We have finalized the qualification of incremental machining components and will begin initial shipments later this quarter. These components will be integrated into our existing gas panels that we manufacture today and will be margin accretive.
The new gains in our chemical delivery business are progressing, but at a slower pace than our gas delivery product. As a result, we are reviewing our Japan strategy to accelerate our results in this region. We are also developing new components for this market that we expect to begin to release in 2024 as well. Lastly, we reported on our last earnings call that we have completed delivery and customer qualification of our first gas panels for the silicon carbide market and are now shipping production units. We continue to work closely with our initial customer and expect to deliver the first evaluation units to them for their next-generation tools sometime in early Q4. In summary, I'll remind everybody here today that our revenues tend to recover more sharply when industry spending rebounds, and our business model enables earnings growth well in excess of revenue growth.
In the meantime, we are managing through the lower demand environment by focusing on delivering solid financial results as the business recovers from Q2 levels, improving our operational capabilities, qualifying our internally developed products, and developing new products that align with our customers' needs for both technology and costs. Before turning the call over to Larry, I'd like to share my sincere appreciation for his leadership of the finance organization and across the enterprise over the past four years, and congratulate him on his long-awaited retirement. Both Larry and I trace our roots back to our many years at Applied Materials, which is where we also met Greg Swyt. In fact, Greg and I have worked together for the majority of our last 25 plus years in the business.
Some of you might remember him from Nanometrics, where he took over for me after I joined Ichor in 2017. Greg's extensive experience in semiconductor equipment and his deep knowledge of Ichor's finance and operations will make this transition very seamless. We will all miss Larry. We also know we're in great hands with Greg. With that, I'll turn the call over to Larry to recap our Q2 results before closing with Greg to provide further details around our Q3 financial outlook. Larry?
Thanks, Jeff. I've greatly enjoyed my last four years at Ichor and getting to know so many of you in the investment community. First, I would like to remind you that the P&L metrics discussed today are non-GAAP measures. These measures exclude the impact of share-based compensation expense, amortization of acquired intangible assets, non-recurring charges, and discrete tax items and adjustments. There is a very helpful schedule summarizing our GAAP and non-GAAP financial results, including the individual line items for non-GAAP operating expenses, such as R&D and SG&A, in the Investors section of our website for reference during this conference call. Second quarter revenues were $185 million, towards the upper end of our expectations, and declined 18% from Q1.
Gross margin of 14.5% was consistent with our expectations of flow-through just under 20% on the revenue decline, as compared to our model of 25% incremental margin on increasing revenues. Operating Expenses were $21.5 million, and given the upside in both revenue and gross margin, Q2 operating margin was also above the midpoint of guidance at 2.9%. As a result of higher interest rates, net interest expense increased to $5 million, while our non-GAAP net income tax benefit for the quarter was also a bit higher than forecast, at $500,000. As a result, net earnings for the quarter were $0.02 per share. Our GAAP net loss included a non-cash $11 million valuation allowance taken on our US deferred tax asset, recorded as a result of our US profits falling into a cumulative three-year loss as of the end of Q2.
A large portion of our fixed cost structure, including interest expense, M&A amortization, and stock-based compensation, is in the U.S., which does not change with customer volume. As the industry recovers and our U.S. revenue and profitability grows, we will reevaluate our valuation allowance requirement. I will turn to the balance sheet. Cash and equivalents at quarter end totaled $85 million, increase of $16 million from Q2, while total debt declined by $7 million. We generated $27 million of cash flow from operations, and after $4 million of CapEx, free cash flow for the quarter was $23 million. As expected, working capital balances declined across the board, given the current softness in the customer demand environment. Accounts receivable declined by $27 million, and inventory declined by over $5 million.
DSO declined a bit to 47, and inventory turns were 2.4 [audio distortion]. Given the free cash flow generation in Q2, we elected to pay down a portion of our revolver, especially given the continual increases in interest rates. We currently have $95 million available on our revolver, and our net debt coverage ratio is currently about 2 x. Now, I'm pleased to introduce Greg Swyt and turn the call over to him to share more details about our Q3. Greg?
Thanks, Larry. Thank you, Jeff, for the earlier introduction. It's nice to know that many familiar names from my Nanometrics days are listening to today's call. Our revenue guidance for the third quarter is in the range of $185 -$200 million, which indicates our expectations of modest sequential growth from Q2. As Larry indicated, our incremental gross margin flow-through expectations are approximately 25% on increasing revenues, which we expect will drive Q3 gross margin improvement to the high 14 level. We expect to closely manage operating expenses to the $21.7 million level, ±$200,000, as we continue to prioritize our R&D investments in support of our new product programs and maintain the critical infrastructure that will enable us to quickly respond to customer demand as the spending environment further recovers.
At the midpoint of Q3 revenue guidance, we would expect to generate approximately $7 million of operating profit, which is a sequential growth increase of about 30% from Q2 levels, demonstrating the strong earnings leverage we can achieve as revenue volumes recover. Interest expense is expected to increase once again to approximately $5.3 million due to higher interest rates. Finally, our guidance on taxes as we move through 2023 continued to reflect the expectation of a net tax benefit to be recorded for the full year. Although we are expecting pre-tax income globally for the year, given the pre-tax losses incurred in the past, we expect to recognize a net tax benefit in the range of $4 -$5 million for fiscal 2023.
This is a bit smaller of a benefit than we forecasted last quarter, and given that we've recognized $3.2 million of the benefit year to date, for modeling purposes, you should assume a benefit of $400,000 at the midpoint of our Q3 guidance and approximately $1 million forecasted for another quarter of sequential growth expected for Q4. As we look ahead to 2024, on an ongoing basis, we expect to incur a nominal non-GAAP tax expense each quarter, and for modeling purposes, you should assume a 5%-10% non-GAAP effective tax rate. Operator, we are ready to take questions. Please open the line.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from the line of Krish Sankar with TD Cowen. Please proceed with your question.
Yeah, hi, thanks for taking my question. Larry, congrats on an amazing career, and good luck on your retirement. You're going to be missed. Greg, welcome.
Thank you.
I have three questions, and maybe all three for Jeff, maybe. Jeff, you know, thanks for the color on what happened in the quarter and your guidance, and it's kind of consistent with what you said a quarter ago, which is like expect sequential growth. I'm kind of curious, like, given your limited visibility and the fact that your customers, like you mentioned, are trying to draw down inventory, what gives you the comfort that Q4 is going to be sequential growth? Is there any way you can quantify it, or is it too early to quantify how December quarter is going to look like? Then I have two other questions.
Yeah, I think that's a good question. I think our visibility, you've seen movement, and we talked about builds moving, things like that. In general, kind of the magnitude of what we're seeing is holding up, and that gives me some confidence that as our customers are working through this, that what we're seeing is what we're going to get, so to speak. What I would tell you is, I think the inventory correction at some of our customers is going to take us through this year to get it done. I think our visibility, you know, quite honestly, is kind of moved around a little bit quarter to quarter and moved within, you know, like, advanced nodes and lagging nodes.
But it's held up in, in kind of the same visibility for the year that we've seen. If you kind of just play the numbers out, you're probably looking at a 4% or 5% sequential increase off the midpoint of our Q3 guidance.
Got it. Very helpful, Jeff. The second question is, you kind of mentioned that you're going to add a third 10 person plus customer this year. I'm assuming it's probably ASML, given the exposure to EUV. Can you just help us talk a little bit about kind of like what are your EUV exposures and how to sort of quantify it, or like, kind of how you think about that going into later this year and into next year? I had one last question after that.
Yeah, I, I think that we haven't quantified how much content we get per EUV. We, we generally don't do that even on the other gas delivery products or other areas. They're very transparent, and so, you know, as you know, they've kind of slowed some of their builds down. We've seen some of that trickling through kind of the second or fourth quarter for us. In general, they're still going to crest 10%. I would say next year, it's very difficult. If I could tell you what WFE was, I could tell you if they stay above it or below it, because, you know, they're going to be kind of near that, that, that level by the end of the year.
I would say as to think about it, is any indication they're giving you about their growth year-over-year, we're going to see it, four or five months, you know, beforehand. We'll have a piece of 2025 and 2024, you know, so we would expect to see growth year-over-year still in that area.
Got it. Very helpful. My final question, Jeff, you know, like, there's been a lot of focus on silicon carbide. It seems like a very exciting market, and my understanding is that you guys have some exposure to it. Can you just help us, like, frame kind of what your exposure is in terms of gas panels or gas boxes, what it is, and how to think about that opportunity, into next year for your silicon carbide exposure? Thank you.
Yeah, I mean, it's an initial customer. I, I would say that it's a relatively complex gas box, you know, in comparison to a pretty easy one. I'm not going to tell you the ASP, but I would tell you it's kind of this year for us, it's high single digits in millions, and next year, I, I would expect that to continue to grow because I would expect it to probably double year-over-year, only because we've pretty much been delivering just in the second half of the year with kind of smaller quantities in Q2. It's a growing market, and that's at one customer.
There are other areas that are benefiting from this that we're also trying to engage with at this point, but it's too, too early for me to kind of give you any outlook on that.
Got it. Thank you, Jeff, and congrats, Larry.
Thank you, Krish.
Thanks, Krish.
Thank you. Our next question comes from the line of Brian Chin with Stifel. Please proceed with your question.
Hi there. Thanks for letting us ask a few questions, and also congratulations to Greg, and all the best to you, Larry. Maybe first question. Going back to the commentary around the design activity for the new gas panels with increased Ichor proprietary content. Two successful quals, another progressing nicely. Can you, Larry, or, or maybe actually, Jeff, can you discuss sort of, were these wins kind of on cost, on performance merits, or maybe a combination of both? Also kind of looking a little further out, if, if those go well, yeah, how could design and activity kind of go from there forward?
Yeah, good question. The simple answer is, there is a cost advantage and a technology advantage, which is how we've gotten the attention of our initial customers. On an apples for apples basis, I think some of the new components that we've done, particularly around the flow controller, actually can eliminate some components, which actually lowers the cost. They see a pretty good cost reduction as well as performance enhancement, handles a wider range of gases as well. Sizing it, I would like to see these first applications move through their customer eval process. The third one has to do that as well.
Maybe by the end of the fourth quarter or something, we'll have a good feel for how they're doing now that they've moved it from, say, their apps lab in their facility out to a customer, first tool.
Okay.
More to come. Sorry, Brian.
Yeah, no, that's helpful. Maybe for Greg, Larry, or Jeff, on the cost structure, are, are you where you want to be right now in terms of resizing headcount, a lot, a lot of that's variable, and just the general expense structure of revenue growth off the bottom remains somewhat measured here still over the near term?
Yeah, I think what, what we've done is, you know, we have, we, we have a pretty variable model in direct labor workforce, where we carry a lot of temporaries and stuff. So we have right-sized that to what we see is an adequate level to kind of address the, the next several quarters of demand. They're all fairly similar, as you, as you know, and so we can handle any kind of uptick or anything like that with just overtime and things like that. OpEx structure, we've taken a more of a, a guarded approach because we have to continue our investments in R&D.
The company is going to return to growth and scale, so we've scaled some places where we can, and we've used kind of what I would call temporary variable cost reductions, which is, you know, PTO and things like that. And then we're kind of not replacing attrition unless it's a critical role. If we see 2024 not start to uptick, we may take a different approach in OpEx.
Okay, great. Thanks. Maybe just thinking one last quick question. You, you noted some end markets were incrementally better, including trailing nodes. What, what are your customers saying about the durability and sustainability of trailing edge investment in, in calendar 2024?
I think they're still remaining pretty positive about that. Obviously, there's some geopolitical issues that could slow that up, which I, I don't have an opinion on. If they try and curtail or require licenses for some of the lagging nodes, that could slow things up. Right now, the demand is, is really pretty, pretty healthy. We participate in it, fairly well, but there's more things that we can do to kind of support that at our customers as well. Some of that they still do internally, and we're working on seeing if we can help them in anything, because it's a pretty healthy market right now.
Okay, great. Thanks for the color.
Yeah.
Thanks. Our next question comes from the line of Quinn Bolton with Needham & Company. Please proceed with your question.
Hey, guys. Larry, congratulations on your retirement, and Greg, welcome. I guess maybe first for Jeff, just wanted to follow up on Brian's question on the, the sort of three customers adopting the next-gen gas panel. I, I know you don't want to share too much color yet, but would you classify, or categorize these programs as kind of major etch step platforms? Or are you sort of starting on more niche platforms to kind of get your feet wet and to see how the gas panel performs, and then, you know, you would, you would sort of target larger, higher volume systems, say, in 2025, 2026?
Yeah, I think they're they lean more towards kind of the niche application, not blanket films or something like that. They are initially smaller applications that we can kind of take, cut our teeth, learn, get it out there, and then move it to larger applications as we have success in the marketplace. Having said that, they're not, they're not insignificant. They all stack up. You know, as we've talked about, you don't need a lot of wins, given the margin profile of that kind of shift from 90% procured to 70% or 75% internally manufactured, to kind of move the needle for us. We're pretty excited. It's kind of a little bit of a. We've gotten our qualifications going.
We expect a third one by the end of the quarter as well. Those have to move now to their customer qualification process. We still got a little bit of lead time before we move to production.
Got it. Second question, I think you mentioned the two areas of strength were, trailing nodes, but also high bandwidth memory. I was wondering if you could just share, you know, how Ichor plays in that HBM. Is that really more on the etch and depth systems for the Through Silicon Via, or are there other applications where you're seeing demand for, for the HBM application?
Yeah, I mean, Quinn, you know I don't see the sell-through on everything, but I do know there's certain, there's certain tool types that are kind of focused on, some of the, the packaging applications of high bandwidth, and that's where I've seen it, so I would infer that we see it across some other areas, too. I wouldn't say it's gigantic, but it's, it's definitely a positive in a challenging, memory market, so.
Got it. Just last quick one for me. You mentioned sort of a, a change or shift in strategy for the Japanese market to try to accelerate some penetration. Could you elaborate on what actions you're taking?
I mean, I don't want to get in too much details, but obviously, we've been trying to work through partners. The question is, is: do you go and get boots on the ground versus work with partners or some combination of the two? That's what we're trying to sort out to see if we can get this accelerated.
Understood. Thank you.
Thanks, Quinn.
Thank you. Our next question comes from the line of Craig Ellis with B. Riley. Please proceed with your question.
Yeah, thanks for taking the question. I'll echo the prior congrats to both Larry Sparks and Greg Swyt. Good luck and welcome aboard. Jeff , maybe I'll start off with you. It sounds like what you're saying, while there have been some moderate movements, some in, some out, that things are tracking well to what you've been expecting three months ago. The question is this, as we think about the potential for industry to move into a period of more significant acceleration, one, are you seeing any signs that that is happening? Two, if not, where would you expect those to emerge, and when would you expect those to start to surface?
I'll, I'll give you my, my view. I think memory, and I think we've talked about this at my several conferences you've been at, I view it as kind of middle of the year, next year. I think foundry logic, I think is maybe a little bit of the wild card. I think the trailing edge remain fairly stable. When you kind of add that, I think our, our first silicon carbide opportunity is actually a pretty good growth driver year-on-year as well. I do think foundry logic has held up relatively well, and I wouldn't suspect that that's gonna change. Deep dive, there's a lot of both political and economic challenges right now that could change that direction.
Yep.
A little bit too early to tell, so.
Got it. Okay, maybe switching over to Greg. Greg, we had some nice cash generation in the Q2, and some of that was used to pay down debt. What should we expect with cash generation for Q3, and how are you thinking about potential further debt reduction?
Craig, the cash flow that we're expecting, we will continue to evaluate where we're generating our free cash flow, and then as, as opportunistic, we'll pay down our debt. At this point, we expect that we should generate enough cash flow to service the business as well as address some debt in the quarter.
Yeah, I'll just add.
Okay.
Greg, that, you know, we're focused on inventory reduction.
Yep.
A little bit of reduction this quarter, and you saw a little bit incremental debt repayment.
Mm-hmm.
We expect to do a similar process this quarter, so, hopefully we can continue to bring that inventory down, and then obviously, with the interest rates where they are, debt repayment is pretty high priority.
Yep. Given Jeff's earlier comments that we might see the fourth quarter up somewhere around mid-single digits, would it be fair to think that we would be able to generate cash and have sufficient beyond, you know, growth initiatives to pay down debt a little bit more? Or is that just too far out, guys?
Yes. We would, we would expect to continue to, to move our inventory lower as the primary driver for improved cash flow into the quarter.
All right. Thanks for the help.
Thanks, Greg.
Thanks, Greg.
Thank you. Our next question comes from the line of David Duley with Steelhead Securities. Please proceed with your question.
Yeah, thanks for taking my question. I was wondering, as far as your OEM customers, where are we with the inventory levels there? Are we now matching their demand levels, or is there still a significant level of inventory there, and how long would you expect it to last?
Good question. Hey, Dave. I think that on the component side of the business, I think it's gonna last through the end of the year. I don't think they're where they're at, and it's, it's not an across-the-board comment, it's different and different of our OEM customers, so it's not one for all and all for one. I think the component side is gonna take the longer. I think most of the gas panels that kind of get hung up between, you know, we all, we all drive this industry on forecast, forecasts change, and so I think that is largely behind us, so it's really working through the components business.
Okay. I think I understand it. You kind of answered it in different ways on this conference call, as far as, you know, when the industry starts to, you know, turn into up, what areas do you think that you will outperform in or, you know, will allow you to grow faster than the industry? You know, silicon carbide is a good example, maybe you could just outline what you think the two or three biggest opportunities are to outgrow the industry.
Well, I think if we can take a horizon of a year or two, I think our, our new gas panels can have a material impact on us if, if we get qualified, you know, beyond the first three and add three and four. silicon carbide, obviously, is a focus area for us. We're supporting our first customer. We're, we're continuing to work on their next generation. This is an application I think is gonna continue to grow and have some legs for several years, for sure. There's other opportunities in that space. As I said on the call, a little too early to talk about who we're talking with, but there are some other opportunities that I think we can, we can do that.
There's opportunities, I think, for us to expand what we do for our EUV customer beyond just gas delivery. There are, there are other areas we're working on, and I think as the industry rebounds, you know, we're so levered to depth and etch, and when memory recovers, I think just that segment of the market and where we're at, we're gonna outperform the overall market then because of that as well.
Okay, final one from me is, you mentioned this 25% drop-through rate on incremental revenue. Is that what we can kind of pencil in throughout 2024, which I would assume will be a much higher, will be a nice growth year?
Yeah, I, I'll, I'll comment. I'll start. I think it's fair that maintaining 25% flow through for all of 2024, it'll, it'll be dependent a little bit on product mix and kind of the pace of the recovery, but, you know, we expect to continue to drive market share gains and revenue growth in the components part of the business, which is, you know, a critical piece of our gross margin. As Jeff mentioned, you know, recognizing some, some of the new gas panel product revenues in 2024 should allow us to, to continue to achieve 25% flow through during the year. We're, we're, we're shooting for that. I mean, I think we've got a good plan, and we just have to execute that plan.
As long as the market comes back kind of where we see it today, I think that's a reasonable expectation.
Now, I, I'm sorry, just, just to clarify, if, if, you see a, a, a broad adoption to your gas panel, wouldn't you think the drop-through rate would be higher than 25%, or is that kind of baked into the cake?
I think initially it might have a little upside, but let's, let's have some success before we re-up our outlook model at this stage. It depends on the magnitude of it, Dave, obviously. If you get $10 million, for example, it's different than getting $20 or $25 or $50. That may change the needle, so.
Okay. Thank you very much.
Thank you, Dave.
Thank you.
There are no further questions at this time. I'd like to turn the floor back over to Andreson for closing comments.
Thank you for joining us on our call this quarter. I'd like to thank our employees, suppliers, and customers for their ongoing dedication and support as we continue to navigate this highly dynamic business environment. Our upcoming investor activities include the Needham Semiconductor Conference, being held virtually on August 22nd, and Jefferies Conference in Chicago on August 29th. We also look forward to our next quarterly earnings call, scheduled for early November. Operator, that concludes our call.