MACOM Technology Solutions Holdings Inc (MTSI) 2009 Q3 法說會逐字稿

Welcome. Thank you for joining Mindspeed Technologies third quarter fiscal year 2009 conference call. (Operator Instructions). This conference is being recorded. If you have any objections, you may disconnect at this time. I would like to introduce Andrea Williams, Mindspeed's Vice President of Corporate Communications, who will chair this afternoon's conference.

Thank you and good afternoon to all of you who have joined us for today's call to discuss Mindspeed's fiscal year 2009 third quarter financial results. Our press release, issued this afternoon detailing these results, may be accessed on our investor web site at www.mindspeed.com. Today, our CFO Bret Johnsen will begin the call with a review of the third quarter and our financial results. Our CEO, Raouf Halim will follow Bret with some perspectives on the quarter and will end by providing fourth quarter financial guidance.

Safe Harbor Statement. Before we begin I would like to remind you that our comments today will include statements relating to our anticipated future results including the financial outlook and expectations for our fiscal 2009 fourth quarter, and other market business and product trends that are forward-looking statements, within the meaning of section 27-A of the Securities Act of 1933 as amended, and section 21-E of the Securities Exchange Act of 1934. These may include statements about trends and expected performance of our business units, deployments and their timing and our ability to benefit from them, our inventory trends and levels, product features and their benefits, future monetization of intellectual property, market share, demand for our products, channel inventory levels, accounts receivable, customer relationships, equipment tender wins and production ramps, industry and economic trends, customer orders and forecasts, the impact of technological developments in our industry, growth prospects in and for various markets, various products and our business units, the impact and completion of cost reduction measures, business model leverage, design wins, design win traction and their impact on future performance, improvements in our operating structure, our balance sheet strength and liquidity position, availability of our line of credit, our expectations for fourth quarter revenue, gross margin, operating expenses and cash consumption, bookings and backlog and order trends and other expected operating results. Forward-looking statements made during this call are made only as of the date hereof and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Actual results may differ materially from those projected in any forward-looking statement as a result of certain risks and uncertainties including but not limited to those noted in our earnings release and on Form 10-Q for the fiscal quarter ended April -- July 3, 2009 and other filings with the SEC.

Non-GAAP Statement. During our call today, we will be making reference to non-GAAP financial measures which excludes stock based compensation expense, employer taxes on stock based compensation, asset impairments, amortization of intangible assets, employee separation and employee option exchange program cost, special charges and gain on debt extinguishment. For a reconciliation of non-GAAP to GAAP financial measures please refer to our earnings press release, and our Form 8-K furnished to the SEC today. Copies of both documents are available in the investors section of our website at www.mindspeed.com. We do not provide a reconciliation of forward looking non-GAAP measures to GAAP measures because of our inability to project special charges, asset impairment, employee separation costs, and stock based related expenses. With that I would now like to turn the call over to Bret Johnsen, our Chief Financial Officer.

Thank you, Andrea. We are pleased with the continued improvement in the business that we saw during the third quarter. The positive upward trend in bookings the we experienced in the back half of the second quarter continued and strengthened throughout the third quarter, as we continued to experience very positive business trends in China, where optical access and 3G wireless infrastructure ramps drove demand in all three of our business units. This strength in customer demand throughout Q3, resulted in a positive pre-announcement on June 8th, when we raised our revenue guidance for the quarter to a range of $32 million to $33 million from a previous range of $30 million to $32 million.

Now turning to the final financial results for our 2009 third fiscal quarter. Revenue for the third quarter was $32.5 million, up 14% sequentially. Revenue for the third quarter did not include any patent sales. Excluding patent sales in the prior period, product revenue for the third quarter of fiscal 2009, grew 23%, sequentially. Revenue from multiservice access voice over IP or VoIP processor solutions, contributed 42% of total third quarter product revenue and increased 27% quarter over quarter due to increased demand for our Comcerto voice processing solutions in the optical access space.

Revenue from high performance analog products represented 31% of the total product revenue, and increased 22% sequentially. HPA revenue increased in the third quarter, due to a strong pick-up in demand for crosspoint switch solutions, particularly within the China telecommunications market. Lastly, our wide area networking communication revenue, contributed the remaining 27% of third quarter product revenue and grew 17% sequentially, driven again, as we saw in the second quarter, primarily by improved end demand in China for 3G wireless backhaul applications and secondarily by overall WAN channel inventory depletion.

Product revenue for the third quarter was split by geographic region as follows. Asia-Pacific, 71%. Americas, 22% and Europe at 7%. China represented over 50% of total third quarter product revenue. We had two customers in the quarter which represented revenues of 10% or greater. They were ZTE and Huawei.

Turning now to gross margins. Non-GAAP gross margin was $19.9 million or 61% of revenue, consistent with our expectations. This compares to a non-GAAP gross margin of 59% in the prior quarter, excluding the benefit from patent sales in the second quarter. The sequential improvement in non-GAAP gross margin is primarily due to greater manufacturing overhead absorption as a result of increased manufacturing activities and efficiencies. Total non-GAAP operating expenses were $21.2 million, slightly better than our revised expectations and down 9% or $2 million sequentially, from the second quarter of fiscal 2009 level of $23.2 million. Q3, non-GAAP operating expenses were comprised of research and development expenses of $11.9 million; and selling, general and administrative expenses of $9.3 million.

As we previously announced, we took significant steps in the beginning of October, 2008, to reduce operating expenses with the majority of cost reduction efforts in the areas of SG&A and WAN. As a result of these efforts, we have reduced quarterly non-GAAP operating expenses by 12%, year-over-year, representing the lowest quarterly non-GAAP operating expense level in the Company's history. These expense reductions are complete at this point, and we have achieved this new operating expense level without impacting our market leading positions, our key product development initiatives or our long term strategic growth plan.

Finishing the income statement for the third quarter, other income and expenses, and a provision for income taxes in the aggregate totaled a net expensive approximately $900,000. Included in this amount was approximately $500,000 in interest expense, and an approximate $300,000 foreign exchange loss. This foreign exchange loss was driven primarily by the approximate 5% decline in the US dollar compared to the euro in the quarter. The result was a non-GAAP net loss of $2.1 million, resulting in basic non-GAAP net loss per share of $0.09 based on approximately 23.6 million weighted shares outstanding for the quarter.

Turning now to the balance sheet. We continue to execute well on the accounts receivable front. Our accounts receivable balance at the end of the quarter was $8.1 million, resulting in net day sales outstanding of 23 days, which is flat compared to the prior quarter. Inventory decreased by $2.7 million, to $11.5 million, resulting in inventory turns of 4.4, up from 3.1 in the prior quarter. We are pleased with our progress in materially reducing our inventory levels by more than 35% over the last two quarters.

On to cash and liquidity. We consumed $2.7 million in cash in the third quarter, and ended the quarter with cash and cash equivalents totaling $11.9 million. We anticipate that we will not consume cash in the current quarter.

Currently, our liquidity position includes our $15 million line of credit, currently undrawn, with Silicon Valley Bank. The approximate availability of funds for the line of credit fluctuates during the quarter, in association with our accounts receivable balance. For example, during Q3, the average availability was approximately $10 million.

Based on our expectations that we will not consume cash in the fourth quarter, and based on the average availability from our line of credit, we believe that we have sufficient liquidity to address the $10.5 million of convertible notes coming due in November of 2009. That being said, we continue to pursue the monetization of our IP portfolio as we're in continuing discussions with multiple interested parties. However as we mentioned last quarter, we're unable to predict the timing or amounts we could receive at this point.

I would now like to turn the call over to Raouf for some perspectives on the quarter and our fourth quarter outlook.

Thank you, Bret. As Bret mentioned we're quite pleased with the growth trajectory of our business and remain encouraged by the health of demand that we see from our key customers particularly in China, for 3g wireless infrastructure and fiber to the building optical access deployments. For the second quarter in a row, we're currently experiencing stronger bookings and backlog levels for the current quarter than we did at the same point in the prior quarter.

Also encouraging is the increasing design win opportunity pipe line for our voice over IP products globally and analog products within telecommunications, enterprise compute, storage, and broadcast video markets. Overall we believe that channel inventory is approaching normalized levels in most of our key markets. This further increases our visibility, into end demand and increases our confidence in the continued growth of our business.

Specifically, in the third quarter, we delivered 23% sequential revenue growth, excluding patent sales in the prior period through strong sequential growth in all three of our businesses. First, and most significantly, is the growth we continue to experience in our voice over IP solutions with our Comcerto process line.

According to industry analyst, [Deloro], the voice over access market is predicted to grow at over 50% compounded annual growth rate until 2013, given the buildout of fiber based networks in China and other developing markets such as India. We believe that Mindspeed enjoys a leading market share in fiber to the building or FTTB, optical access equipment in China with key equipment providers such as Huawei and GTE, who are themselves capturing share in European and emerging economies as well as serving local demand in China.

Secondly, a key growth driver in the quarter was our analog crosspoint switch solutions. As we noted in our press release on June 8th, we're enjoying strong traction in China as we were chosen by Huawei Technologies as a cross point switch provider for their core switching fabric within their optical transport or DWDM solutions. According to industry analysts, demand for crosspoint switches is expected to grow at an over 25% compounded annual growth rate through 2013, due to the increasing need for high bandwidth applications in the enterprise, metro, and core networks. Thirdly, we saw growth in our WAN business for the second quarter in a row, due to the pickup in 3G wireless backhaul solutions in emerging markets.

With that, let's talk briefly about each of our three product areas starting with multiservice access or MSA. Two of the most significant growth drivers for Mindspeed are in our MSA division, namely access voice over IP and service provider customer premises or CPE solutions.

Our MSA business unit grew 27% sequentially in Q3, driven primarily by the access buildout in China that we just discussed but also secondarily from orders by customers to service, a core network buildout in India by carrier BSNL. VoIP wireless gateways also performed well in the quarter driven by customers such as Alcatel-Lucent and GENBAND.

As you may be aware, we have been investing for several years in customer premise or CPE solutions, most notably for service provider provisions, broadband home routers and for WiMAX applications. Currently, we expect important rollouts for NTT's next generation optical network in Japan as well as Clearwire's WiMAX deployments here in the US to drive a ramp in our CPE portfolio this quarter and beyond.

We are gratified that key design wins in CPE for Comcerto 100 and Comcerto 1000 over the last two years are beginning to bear fruit. The Comcerto 1000 family is the next generation of low power, high performance multicore packet processors targeting a wide variety of voice and data communications equipment ranging from service provider, triple play, broadband home gateway, small or medium sized businesses or SMB, smart security appliances, wireless access points, all the way to low density voice over IP products. In terms of design wins for MSA for the second quarter in a row we had the highest number ever of Comcerto 300s voice over IP process access processor wins in Q3. The Comcerto 300 processor is part of the family of voice over IP processing devices together with carrier grade processing software delivers a complete integrated voice over IP media, signaling and control crossing solution for next generation networks or NGN.

Today we announce by press release the addition of two new devices to the Comcerto 300 series. We believe these two new devices will cost effectively bring the benefits of the Comcerto 300 family to lower density applications, while retaining software, API and footprint compatibility with the rest of the Comcerto 300 family, further improving what we believe was already the industry's most scalable voice over IP solution. These additional products and the increasing opportunity pipeline for Comcerto 300 gives us even more confidence in our leading share position, for Comcerto voice over IP solutions in the access market going forward.

Moving on to high performance analog or HPA. HPA grew 22% in Q3. The telecom segment was particularly strong in China with record orders for optical transport or DWDM solutions that utilize our crosspoint switches. As we announced by press release on June 8, we were very pleased to be champion by Huawei technologies within the transport line of products.

Additionally there has been some recovery in the broadcast video space after a couple of down quarters and we believe that we will see a steady recovery in broadcast video in the coming quarters. This is due to the positive reception of our new low-power, serial digital interface or SDI, video devices coupled with recent key design wins against our nearest competitor.

Lastly, we are currently experiencing an uptick in our optical PMD business due to PON rollouts in Korea and Japan as well as a Verizon deployment here in the US. We have silicon that addresses both GEPON and GEPON rollouts world wide, through key customers such as Mitsubishi, Motorola, CIG, CoreTech, Neophotonics, and others.

In terms of design wins for HPA in Q3 we have an additional very important signal conditioner win with a key Chinese customer also within the growing optical transport or DWDM solutions market. Signal conditioners are designed to enable the transmission of multigigabit serial data through the most challenging environments. Mindspeed has one of the industry's broadest lines of signal conditioning products, which we believe offer the industry's lowest power solutions.

Moving on to WAN. Our WAN division grew for the second quarter in a row sequentially by over 17%. As expected, our WAN division is benefiting specifically from 3G wireless backhaul deployments as well as secondarily by overall WAN channel inventory depletion. Key customers in China, and elsewhere, such as Nokia, Siemens Networks, ZTE, [Radices], Ericsson and others are driving demand in backhaul components such as ATM, SAR controllers and IMA or inverse multiplexing for ATM. Our WAN products are shipping in systems that include equipment such as radio network controllers, wireless base stations, media gateways and other platforms in China, and other emerging markets throughout Asia, that will be building these 3G networks.

As we look out to our fourth quarter, we consider key trends including the telecom environment in China, which I will now summarize for you. Mindspeed benefits greatly from its deep customer relationships and leading market share position in voice over IP with top Chinese equipment providers.

In Q3, over 50% of our revenue came from China, where leading equipment providers such as Huawei, ZTE and Fiber Home are building equipment for world wide markets in south Asia, in Europe, and emerging economies as well as servicing the significant local demand by Chinese carriers. The demand from Chinese carriers has translated specifically into increased demand in our MSA voice over IP segment due to the optical access or FTTB deployments that are currently rolling out in major metro areas in mainland China.

The first round of FTTB deployments from China Telecom began in 2008 and was estimated at around four million subscribers. The current tenders that are underway are the China Telecom second round and the China Unicom first round which we estimate when combined will consistent consist of over eight million subscribers to be deployed during the calendar year of 2009.

In terms of the optical access market that Mindspeed addresses vis a vis these large deployments, the fairly consistent message from our customers is that the total demand for the second half of calendar year 2009 will be similar to the first half of 2009. This is due to the fact that China Unicom's tender will be ramping as the second round tender from China Telecom slows down. As we have mentioned before, it has been estimated that 43 million optical access or FTTB subscribers will be deployed over the next three years, by all three Chinese carriers; China Telecom, Unicom and China Mobile.

In terms of WAN, as we mentioned, we benefited in Q3 from the 3G wireless backhaul solutions currently being deployed in China. As widely reported we're seeing some moderation of the 3G wireless deployment in the fourth quarter, but we expect this moderation will be temporary as the Chinese government has announced an ambitious agenda for 3G wireless, and plans to invest $60 billion over the next three years, as part of their stimulus program.

That being said, the 3G wireless market in China, while important, is far less meaningful to us than the optical access markets. Thus, overall we're very pleased with the outlook for our fourth quarter business in China, specifically.

With that as an overview, I will now turn to our guidance for our fourth fiscal quarter. Our guidance takes into account several factors including backlog, booking trends, expected turns, customer forecasts, product ramps, and other factors.

We are currently experiencing stronger bookings and back log levels for the fourth fiscal quarter than we did at the same point in Q3. Based on this, and other factors, we expect fourth fiscal quarter revenue to be up sequentially from the prior quarter, excluding potential patent sales, by two percent to 10%. Or a dollar range of $33.2 million to $35.8 million.

We expect non-GAAP gross margin to be approximately 61%, to 62%. This margin guidance does not include any benefits from potential patent sales within the quarter. We expect non-GAAP operating expenses to be approximately flat sequentially, at $21.2 million reflecting strong cost containment discipline by our teams that will aid in overall leverage and the business model, as we move out of this uncertain economic environment. Based on this, we expect to deliver a return to positive, non-GAAP, operating income in the current quarter. Lastly, we do not anticipate consuming any cash in the current quarter.

In summary, we are delighted with the growth trajectory of our business. We believe our business is at an inflection point, as we expect to return to non-GAAP operating profitability as well as to eliminate cash consumption in this, the fourth quarter.

Our strong third quarter revenue growth and the outlook for this fourth quarter are driven by the fundmental strength in our multiservice access voice over IP processors and high performance analog portfolios. This revenue growth coupled with our significantly improved operating structure, we believe, has us poised to take advantage of the leverage in our business model.

Operator, we are ready to open the lines for questions.

Thank you. (Operator Instructions). Quinn Bolton, you may ask your question.

Hi, guys, congratulations on the strong results. Raouf, was wondering if you could talk a little bit about the mix shift driving the revenue growth in the fiscal fourth quarter. If I heard you right in the prepared script it sounded like you were saying the MSA or the fiber to the building deployments in China in the second half of the calendar year would be approximately flat with the first half, so it sounds like that business is flattening out and you also mentioned a pause in the China wireless 3G. Wondering, is the strength coming from some of the PON deployments that you mentioned in the script, and/or some of the rollouts at Clearwire, or NTT that is driving the MSA business or could you just provide a little more color there?

Certainly, Quinn. Well, we -- we are absolutely expecting the voice over IP business will continue to drive very strong revenue growth in this, the fourth quarter, as you alluded to. In fact, we expect voice over IP to be the predominance of our revenue growth this quarter, given the backlog we're seeing and the strong demand trends.

In addition to the optical access market which as you correctly alluded to is roughly flattish in the second half compared to the first half in China specifically, we are seeing access business growth outside of China. We are seeing continued growth in our wireless, voice over IP business.

I mentioned BSNL as one example, but there are many examples beyond that and also of course we're very excited -- particularly excited about growth in our design wins and positions at NTT in the Japan GEPON optical network and also our ramp of our WiMAX position with our customer premise CPE products. Really the voice over IP at Mindspeed has broadened considerably beyond its early roots five or six years ago and is now a platform that addresses both wire line, wireless, access optical and really a whole slew of different markets globally.

So it's not just one tender or one market even but really a multiplicity of exposures that we have, in the carrier universe with our voice over IP products. Again, backlog is very strong for that business and we're very confident it will grow substantially this quarter once again sequentially.

Okay. Great. Just wondering if you could give us -- you mentioned some of the PMD design wins, just could you sort of go into how you would see that business, ramping over the next few quarters?

Yes, that business actually is doing very well for us as well. I think in our prepared comments I talked a little bit about our strengthening position in the GEPON level of optical infrastructure. The key customers there include people like Mitsubishi, like Motorolla, [Quartek], Huawei, [NeoPhontoics] and many others -- what we're seeing at this point in the game with our PMD portfolio is a significant share capture by Mindspeed in a variety of optical markets.

Both GEPON, where we have continued to be very strong in Japan but also in China, and then of course in GEPON in North America, in Western Europe and other parts of the world where optical access is starting to take off. Very strong backlog once again for our PMD business this quarter sequentially. We're very comfortable this business will grow substantially in our fiscal Q4 over Q3.

Okay. Great. Then just last one for me. Just on the outlook with the MSA business continuing to drive growth, I think that's one of the reasons why gross margins are currently below your 65% longer term target. If MSA continues to drive revenue growth do you think you can ultimately get back to that 65% target or do you think, longer term, margins in the low-to-mid 60s is sort of where they would shake out given the strength of the MSA business.

Quinn, I can jump in and talk to that. I think first off we're very encouraged by the fact that -- for the third quarter in a row, our gross margin is headed in the right direction. We were at 59% excluding patents in Q2. And then roughly 61% in Q3, and now, at the midpoint of our guidance, 61.5%.

So again I think we're happy to see the progress there. To your point, I think it is a blend, obviously and mix within our businesses is obviously a key element, to our gross margin. But, I think we have stated it may take a number of quarters to get back to our 65% but we haven't backed off that target at this point.

So that's still a good long term one, two year out target.

Yes.

Great. Thank you.

Dan Morris of Oppenheimer, you may ask your question.

Thanks for taking my questions. First off just talking about the upcoming convert redemptions just a few months away I guess. It seemed like you were saying, you know, obviously plan a is going to be to try and monetize the patent portfolio but in terms of plan b, what -- is it still that you're going to most likely draw down the line of credit, or -- I know you have some other options now with the shelf filing and perhaps some other options but could you just kind of address that?

Sure. Dan, I will take that. Well, so as we mentioned you know we consumed $2.7 million and got down to approximately $11.9 million for this quarter. But we don't anticipate consuming any cash this quarter. And so to your point, the line of credit -- the availability of the line of credit is really -- our first opportunity, related to addressing the 10.5 coming due. And the average availability was approximately $10 million last quarter. So they kind of line up hand-in-hand.

Okay. Great. And Raouf you mentioned the video business you're seeing a little bit of a recovery there. Is that more just an end market type of recovery or are you also -- do you think you're also seeing some maybe new programs ramp or some share gains there?

Yes, Dan. So I think it is much less of the market fundamentally recovering right now, and much more of the fact that we have gained a very significant amount of share from our closest competitor over the course of the last couple of years so, we are seeing very important design wins starting to grow production with some of the largest tier equipment providers in the broadcast video space. So our business is growing despite a headwind if you will. And we believe that once there is a better economic environment globally we should be growing by leaps and bound in our video business.

Okay. Great. One last one from me, Bret. Just looking at inventories, on an absolute basis you have obviously worked it down pretty good for the next quarter. Do you expect that to be flat, up, down? Directionally?

I think our big target was to get inventory turns back about four and we did that as we stated we would. I think at this point, probably, given the growth in the business, it is probably roughly flat is the best way to look at it.

Okay, great, thank you.

And Sandy Harrison at Signal Hill, you may ask your question.

Good afternoon everyone.

Hey, Sandy.

Couple of questions as far as the WAN business, it pops its head up here this last quarter. Was that a -- sort of simply a restocking phenomenon? Is it basically something that they -- that you are not sure whether it is going to continue, or can you point to some growth drivers that will keep that at least flattish or on a slight upward trajectory?

Yes certainly, Sandy. This is Raouf. I am happy to take that question. I think we are seeing some benefit from inventory -- channel inventory depletion helping our WAN business. But I think the larger component of the revenue growth is really the business trends and the adoption of 3G wireless services in China, specifically. And I rattled off some of the names of our customers in that space but we have very, very strong positions in 3G infrastructure specifically. That includes a number of customers, big name customers that you would recognize.

But I think as we go forward, we will continue to see some benefit from the remainder of the inventory depletion. We are, I believe, going to see some benefit from the ultimate sale of multiple of these business units by Nortel to a whole host of acquirers. No doubt you have been following that, be it the metro ethernet business or the wireless business, or of course their enterprise most recently going to wire.

We have very strong positions in all of the above with our WAN products as well as in some cases with our voice over IP product. So I think that leg up, if you will, is still ahead of us. Counter that with a little bit of near-term softness if you will, in the 3G wireless market in China which we think is likely -- sort of a summer phenomena. Worst case it might last through the end of the year. It is some push and some pull. On balance we're very happy with the trajectory of our WAN business.

Got you. If you look at the inventory perspective, it and some of the things going on there, if you see growth from that are you going to -- is that a net cash consumer in the next quarter or two or is that -- you think you can grow in and I guess the question before that is what are you guys seeing lead times being talked about out there? Are they increasing, decreasing or remaining relatively the same for you guys?

Let me start with the lead time question first. We did see lead times extend and have been seeing that for the past couple of months. But they seem to have stabilized back to more normal levels at this point. Again, they are not getting any worse. And then as far as cash consumption is concerned, I will let Bret take that in a second but we certainly modeled the quarter pretty effectively I believe, taking into account all the trends we see in the WAN business as well as the rest of our portfolio. Do you have anything to add on the cash front?

Was your question whether WAN would impact our cash burn?

No, just if you saw your growth rates, the range you gave of 2%, to the high end of 10%.

Uh-huh.

If you saw those revenue growth rates would you be needing to add inventories, which would take away from potentially your cash position one way or the other.

No, we contemplated that into our cash forecast of remaining neutral for this quarter already.

Okay then my last question is just a housekeeping one. What sort of turns business would you looking at for a 2% versus a 10% quarter.

What would -- what sort of drivers?

No, no, no, no, what percentage of turns would you be looking for to do one or the other?

So Sandy, we're very, very well booked at this point. Once again, our billings and backlog are stronger sequentially at this point in the quarter than they were in Q3. So we're feeling very good about this quarter, quite honestly.

We don't disclose turns specifically numerically as a percentage. We don't require particularly high turns. I would say we require very low turns from an historical prospective to meet our guidance.

Clearly if China grows stronger than we modeled right now that will help us be towards the high end but there are a number of other high factors. For instance, North America appears to be trending in the right direction, at this point. That's helping our video portfolio, it's helping our enterprise voice over IP portfolio, it's helping our enterprise analog products as well.

If that positive upward trend continues throughout this quarter, I think we could look better towards the end of the quarter. Any of a number of things could help us. I don't believe we're being very aggressive at this point with our guidance and we're very well booked. And I will leave it at that.

Thanks for that clarity. Thank you for taking my questions.

That conclusion today's question and answer portion of the call.

Thank you, again, for joining us for our conference call, and we look forward to speaking with you throughout the quarter. Thank you.