TTM Technologies Inc (TTMI) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, thank you for standing by. Welcome to the TTM Technology's first quarter 2012 earnings conference call. During today's presentation, all parties are in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, May 1, 2012. I would now like to turn the conference over to Ms. Diane Weiglin. Please go ahead.

During the course of this call, the Company will make forward-looking statements that relate to future events or performance. These statements reflect the Company's current expectations and the Company does not undertake to update or revise these forward-looking statements even if experience of future changes make it clear that any projected results expressed or implied in this or other company statements will not be realized. Furthermore, we wish to caution you that the statements involve risks and uncertainties, many of which are beyond the Company's control which could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, but are not limited to, the Company's dependence upon the electronics industry, contemplated significant capital expenditures and related financing requirements, the Company's dependence upon a small number of customers, the unpredictability of and potential fluctuation in future revenues and operating results and other risk factors set forth in the Company's most recent SEC filings.

The Company also will present non-GAAP financial information in this call. For a reconciliation of TTMs non-GAAP financial information to the equivalent measures under GAAP, please refer to the Company's press release which was filed with the SEC and which is posted on TTM's website.

Participating on today's call are TTM's President and Chief Executive Officer, Kent Alder; TTM's CFO, Steve Richards and Canice Chung, President of Asia Pacific. I would now like to turn the call over to Mr. Alder. Please go ahead, Kent.

Okay. Thanks, Diane. Good afternoon and thanks for joining us for our first quarter 2012 conference call. I will begin with a review of our business and Steve will follow-up with a discussion of our financial performance and then we will open up the call to your questions. Let's start with a review of highlights from the first quarter.

Net sales were $300.5 million, GAAP net income attributable to stockholders was $12.6 million or $0.15 per diluted share, non-GAAP net income was $18.8 million or $0.23 per diluted share, gross margin was 18.8%. We achieved gross margin and net income in line with our guidance despite lower than expected revenue. Ordinarily, the associated lower operating leverage would have dampened margins. However, a more favorable product mix and consistent execution resulted in solid margins for the first quarter. While demand for conventional printed circuit boards in Asia Pacific remains soft, advanced HDI products continue to represent an expanding part of our overall mix, comprising approximately 26% of our Asia Pacific's revenue in the first quarter, an increase from 23% in the fourth quarter.

I would now like to quickly comment on the results of our operating segments for the first quarter and Steve will add more details later on in the call. The Asia-Pacific segment had sales of $171.8 million in the first quarter, down from $218.4 million in the fourth quarter. Gross margin for the Asia Pacific segment was 17.4% in the first quarter compared to 18.5% in the fourth quarter. A decline in gross margin was primarily due to the lower absorption on lower production in our facilities that manufacture conventional printed circuit boards. While we had lower utilization rates in our conventional printed circuit board facilities, we ran at near full capacity in our advanced HDI facilities during the first quarter.

The North American segment recorded first-quarter sales of $130 million, down from $144.1 million in the fourth quarter. Gross margin for this segment was 20.4% compared to 21.6% in the fourth quarter. This margin decline primarily reflects lower facility utilization. Our capacity utilization percentage in North America was approximately 80% in the first quarter compared to about 83% in the fourth quarter. On a year-over-year basis, first-quarter sales in Asia Pacific declined 15.2% from $202.5 million in 2011. In North America, sales decreased 8.6% from $142.3 million in 2011.

Now, moving on to our end markets. Networking communications is our largest end market. Sales in this end market were 32% of first-quarter sales compared to 33% in the fourth quarter. We continue to experience solid demand for advanced technology routers with some softness in the enterprise networking equipment and then sales to our telecom infrastructure customers remained weak. However, we expect some modest improvement in this end market in the second quarter. On a longer-term basis we anticipate that we will benefit from our diverse participation across the enterprise, service provider, Internet and telecom infrastructure markets. Computing, storage and peripherals is our second largest end market. Sales in this end market represented 24% of first-quarter sales, an increase from 20% in the fourth quarter due to strong sales from a key customer. We expect sales to this end market to be down slightly in the second quarter.

The aerospace and defense end market represented 17% of first quarter sales compared with 15% in the fourth quarter. We experienced continued solid sales through commercial aerospace customers during the quarter while sales to defense customers were mixed and declined slightly overall. Going forward, we expect sales to this end market to remain steady in the second quarter. In the cell phone end market, sales declined to 10% of total sales from 14% in the fourth quarter. Sales seasonally declined in this end market following strong sales in the fourth quarter in advance of Chinese New Year. We expect sales to this end market to increase in the second quarter. The medical industrial instrumentation end market represents 10% of sales in the first quarter up from 8% in the fourth quarter. We expect this end market to be relatively stable as a percent of sales in the second quarter. Sales in the other end market decreased to 7% of sales in the first quarter from 10% in the fourth quarter. The decrease in sales was due to minimal e-reader production following strong holiday demand from a key customer during the fourth quarter. We expect this end market to increase in the second quarter.

Now, our top five customers accounted for 34% of sales in the first quarter. In alphabetical order, our top five OEM customers were Apple, Cisco, Huawei, Juniper, and ZTE. We had one customer who accounted for more than 10% of sales during the quarter. Lead times for both our segments were unchanged at four to six weeks which reflects normal lead times in Asia Pacific and North America. Our mix shift toward more advanced technology products resulted in ASPs increasing approximately 7% in Asia Pacific and 3% in North America during the first quarter.

Now, before I wrap up my discussion, I would like to talk about some of the changes and how we will be managing our labor force in China. In addition to the annual government mandated pay increase, we are increasing wages to improve retention of our production staff as we reduce employees' opportunities to work overtime hours in order to satisfy overtime reduction mandates from some global customers. In conjunction with these changes, we anticipate hiring approximately 800 additional employees. For the second quarter we expect these changes to reduce gross margins in our Asia Pacific segment by approximately 150 to 200 basis points, which we expect to partially offset through greater absorption on higher revenue levels.

To improve our operations and margins longer term, we will focus on improving our productivity and driving efficiencies with best practices throughout the Company as well as continuing to increase our high margin advanced HDI, flex and rigid-flex production. We will also continue to move towards increasing automation in our facilities. We have been successful in the past in improving our efficiency and fully expect to be successful in the future.

I would like to provide an update on the maintenance work we are performing on our SYE plant located in Dongguan, China. The refurbishment of this facility is underway and progressing well. We expect to spend approximately $5 million on this project, most of which should be capitalized. We expect production at the SYE facility to resume during the third quarter of 2012.

In summary, we expect demand for advanced HDI work to continue to increase over the long term and, although the softness in demand for conventional printed circuit boards in Asia Pacific is continuing into the second quarter, as expected, we are seeing some modest signs of improvement. As this year progresses, we expect increased revenue contributions from our advanced HDI, flex and rigid-flex business for touch pad tablets, smartphones and e-readers. Additionally, in the second half of the year we should begin to see demand improving from the telecom infrastructure customers as they work through their inventory and as the need for greater bandwidth continues to increase. Monthly bookings increased in the month of March in North America in large part driven by improving commercial aerospace business on selected large US defense programs. This also increases our confidence in our outlook for 2012. Based on our qualification work that we are doing for customers in Asia Pacific, we continue to believe our prospects for the second half of 2012 are strong.

As previously noted, our CapEx program focuses on technology enhancements, bottleneck areas and maintenance. We plan to invest $120 million to $135 million in 2012 as we expand our manufacturing capabilities primarily in advanced HDI, both the fastest growing and highest margin portion of our business. Now, Steve will review our financial performance for the first quarter.

Thanks, Kent. Good afternoon, everyone. First quarter net sales of $300.5 million decreased $61 million or 16.9% from fourth quarter net sales of $361.5 million. Gross margin was 18.8% in the first quarter compared to 19.7% in the fourth quarter. Selling and marketing expense was $8.6 million in the first quarter compared to $9.9 million in the fourth quarter. As a percentage of net sales, selling and marketing expense in the first quarter was 2.9%, up from 2.7% in the prior quarter.

First quarter G&A expense decreased to $22.1 million or 7.4% of net sales compared to G&A expense of $24.2 million or 6.7% net sales in the fourth quarter. Amortization of intangibles was $3.9 million in the first quarter compared to $4.5 million in the fourth quarter. Operating income, which includes amortization of intangibles, for the first quarter was $21.8 million compared to operating income in the fourth quarter of $17.6 million. Included in operating results for the fourth quarter of 2011 is a non-cash goodwill impairment charge of $15.2 million at the Company's backplane assembly plant in Shanghai, China. Excluding this goodwill impairment charge in the fourth quarter, operating income would have been $32.8 million.

The Asia Pacific segment's first quarter operating income before amortization of intangibles was $12.8 million compared to operating income of $20.1 million in the fourth quarter. North America segment's operating income in the first quarter before amortization of intangibles was $12.9 million compared to $2.1 million in the fourth quarter. Excluding the goodwill impairment charge in the fourth quarter, segment operating income would have been $17.2 million. Interest expense was $6.4 million in the first quarter compared to $6.8 million in the fourth quarter.

Our effective tax rate in the first quarter was 27%, an increase from the fourth quarter effective tax rate of 10%. The fourth quarter rate was lower due primarily to one-time items. Without these items, the effective tax rate in the fourth quarter would have been approximately 23%.

Net income attributable to stockholders for the first quarter was $12.6 million or $0.15 per diluted share compared to net income in the fourth quarter of $11.2 million or $0.14 per diluted share. Goodwill impairment charge recorded in the fourth quarter negatively impacted net income attributable to stockholders by $12.6 million or $0.15 per diluted share. Excluding the goodwill impairment charge, GAAP EPS in the fourth quarter would have been $0.29.

First quarter non-GAAP net income attributable to stockholders was $18.8 million or $0.23 per diluted share. This compares to fourth quarter non-GAAP net income attributable to stockholders of $31.2 million or $0.38 per diluted share. Non-GAAP net income attributable to stockholders adds back amortization of intangibles, stock-based compensation expense, non-cash interest expense, asset impairments, restructuring and other charges as well is the income tax effect related to these expenses. Adjusted EBITDA for the first quarter was $46.4 million or 15.4% of net sales compared to fourth quarter adjusted EBITDA of $60.2 million or 16.6% of net sales.

Cash and cash equivalents at the end of the first quarter totaled $223.8 million, an increase of $27.7 million from $196.1 million at the end of the fourth quarter. Net debt was $306.9 million at the end of the first quarter, down from $317.2 million in the fourth quarter. Cash flow from operations in the first quarter was approximately $34 million. Capital expenditures in the first quarter were approximately $26.6 million. This reflects approximately $23.3 million for Asia Pacific and $3.3 million for North America. Depreciation for the first quarter was $19.1 million.

In the second quarter we expect revenue to be in the range of $320 million to $340 million. We expect GAAP earnings attributable to stockholders in a range from $0.10 to $0.19 per diluted share and non-GAAP earnings attributable to stockholders in the range from $0.18 to $0.27 per diluted share. This is based on a diluted share count for the second quarter of approximately 83 million shares. We expect that SG&A expense will be about 10% of revenue in the second quarter. We will record amortization of intangible expense of about $4.1 million. We expect our blended tax rate to be approximately 27% in the second quarter and approximately 24% in the second half of 2012.

Before we go to questions, I would like to mention that we will be presenting at the JPMorgan 40th annual Technology, Media and Telecom conference on May 15 in Boston. We will provide further details in an upcoming press release. With that, let's open the call to your questions.

We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from the line of Shawn Harrison with Longbow Research. Please go ahead.

Hi. I guess two questions. First off, I just wanted to touch on the qualification process that was highlighted. I know last quarter and even this quarter it was alluded to the fact that you are making potentially greater inroads into smart phones. Maybe if you could just talk about the inroads.

The second question has to just do with the labor inflation in China. I think we all knew it was coming. This was maybe a little more than anticipated. Does this mitigate some future inflation maybe in 2013?

Yes, Shawn. Good questions. The first part of that question, on the qualifications, we don't talk about any specific customers, but certainly our qualifications are with programs related to smart phones, tablets, e-readers and so forth. We are in very good shape for those qualifications of programs. The challenge we might have is Windows programs kick in. We anticipate it could be kicking in the end of the second quarter but more likely into the third and fourth quarter and this is why we talked about kind of the strong second half of the year.

With regards to the second question regarding wage increases in China, there is kind of two parts to that. The first part is just the annual government demand increase in wages. And then the second part is how we have had to adjust our labor force to reduce the overtime which is demanded by some of our larger customers. So, you've got two parts coming in as we reduce the overtime and hire new employees. That certainly has some impact on our cost structure and that is why we are looking at 150 basis points to 200 basis points.

And longer term that could have a positive impact if turnover goes down and so forth. Or it could have some maybe additional negative if internal. We are not quite sure where that goes at this point in time, but it is something we are doing to comply with demands from several of our larger customers. We will know how that plays out as we go through the second quarter here. So, maybe, Canice, you are a little closer to that. Do you want to add any comments to what I just said?

I think Kent has covered a majority of the situation. Regarding the new programs we have on hand, we are running almost the final stage of the sample build. Like Kent has been mentioning, we are not sure about exact timing yet. Regarding the wages, the general minimum wage requirement by the government indeed we're lowering the net of (inaudible). If we can go up on this overtime requirement again successfully through the campaign we are running, then we don't expect we have these types of significant increase once again to happen in future years.

Okay. Just I guess as a follow-up to Asia, I think last call maybe you mentioned the potential for growth in Asia for the year, maybe for the second half versus the first half. Do you have any updates on the growth potential out of Asia this year?

I feel, Shawn, I think we are right in line with what we felt throughout the year and are still forecasting. Asia Pacific, when you look at the growth through the year, we are I think 5% to 10% -- 5% to 8% is probably more realistic, but there is a very outside chance we could get 10% growth rate in Asia Pacific.

That would be year-over-year.

Yes, that is year-over-year compared to 2011 to 2012 with most of that growth obviously coming in the second half of the year as these projects and qualification orders that we are working on come to fruition in the third and fourth quarter.

Okay. That is very helpful. Thanks so much guys.

Thank you. Our next question is from Matt Sheerin with Stifel Nicholas. Please go ahead.

Yes, thanks. I missed the first part of the first question regarding the increased labor rates and then also the additional employee hiring. I understand it's because of the requirements from customers and you said that was about a 170-basis-point negative impact on gross margins? Is that correct, for Asia?

Yes, Matt, there are two parts to that. There is the annual government raise that takes place and we are adjusting overtime with our employees, which actually reduces the opportunity for overtime. So, therefore, we have to hire we are anticipating about what 800 additional employees and that should have 150 basis point to 200 basis point impact in our gross margins.

Why are customers asking you to do this?

Well, I think if you see in the news some of the publicity that has been out there, that is the driving force behind what customers don't want to be involved with. So, they are very interested in having any situation not impact them. So, they are pushing some overtime requirements down on us and we are complying with our customers' demands.

I might add, I think our employees are happy with the overtime that they were getting and certainly we were fine with the government. The impetus for this is certainly coming from a larger customer and we are complying.

Okay. And I am just trying to figure out why then if you are basically paying the same wage rate across your employee base, you just have more employees working fewer hours, are there one-time all-in costs that are associated with an employee that bring up those cost for you?

I think there are some adjustments in the overtime and how that overtime is computed and so forth to help maintain our employees. One of the things that we are looking at is how do we make sure employees, even though they work fewer hours, still receive pay that they feel happy with so we can keep our turnover down. So, Matt, it is a complicated formula but it is in line with paying the overtime, computing the overtime and so forth. That will drive the cost up.

Have you gone to the customers and asked for some price concessions or reverse concessions where they would pay you more to compensate for that?

We have talked about that, but with not too much success.

And when you say business, several customers, not just one big customer?

Right.

Okay. So, with a lower gross margin does that mean Asia margins, it looks like Asia gross margins now are trending below North America which had not been the case. Is that a permanent issue where as you ramp production with the new capacity on the HDI, advanced HDI and you implement some of these productivity and efficiency programs that you will get that back and how long?

I know you've talked about at your analysts day about 22% gross margin target, near-term or maybe long-term. What should we think about the gross margin targets at various revenue levels at this point?

I think, Matt -- this is Kent again, I think we are still holding to our targets on gross margins of about 22% to 23% in there. Several things we are doing to get there that I think are important and of course the first one is as we move towards a higher mix towards this advanced HDI product, that carries a higher gross margin. So, as the mix continues to move towards higher percentage of HDI that certainly helps.

I mentioned earlier this becoming more efficient and productive. I think it's probably time we really strap our boots on and looked at that closely again. Just the top line growth, there is a lot of leverage in the top line. So, you've got top line, you've got mix, you got efficiency, and then the other thing that has been a little bit of a drag on our margins is the underutilization in our conventional printed circuit board facilities.

That corresponds to some slowness in China along with the telecom infrastructure build-out being pretty weak right now. As that comes back we think we will have some improvement in the third and fourth quarters. All of those things will help those gross margins up.

We are still looking to the second half of the year as being the strong point of 2012 and we are seeing some minor signs of improvement here in the second quarter. So, we are pretty confident that will happen. When we talk about investing in HDI and going through qualification programs, pricing exercises, allocation allotment exercises, again, this is not something we are pie in the sky on. These are all real and imminent opportunities here that will take place in the third and fourth quarter.

Okay. And just lastly, as you look at that capacity that is in the works, could you just remind us what kind of revenue capacity incrementally is coming on in the second half? And as you look at opportunities with customers on the smartphone side are you able to ensure that there is X amount of capacity so that you can satisfy those orders if they do come through?

You will see in our CapEx at 120 to 135 and for 2012 about three-quarters of that all is going to this expansion in HDI, advanced HDI products. We went through the numbers again last week on how much revenue we get for that. We are still $1.50 for every $1 invested in that expansion CapEx. So, we are looking at the opportunities, sitting down and working closely with customers to plan out the CapEx and the expansion and capacity.

When you look at Asia Pacific right now we are running at about 70% utilization in our conventional facilities and then you get to the advanced HDI and we are near full capacity. So, we are running at near 100%, so those opportunities are there. I might ask Canice, do you want to add any details to what I said here, it might be helpful?

I think Kent exactly explained the situation in the Asia Pacific. In terms of margin, I think it is two trains of driving, one is cost utilization. Another thing is that we are working also in the same direction to increase at the higher margin. With our CapEx to spend, our capacity will be increased by at least about 10% to 15%. (inaudible) advanced HDI.

If you look in to our ASP in the first quarter we have been able to drive it up by almost 7%. This will be the direction. It is not a one-off that we are seeing this margin. Up and down sometimes even before the acquisition, these are all brought up by utilization.

Some of the cost impact increases up, the longer directions and also discharge focus on high-value added as well as best practices to be sharing betweeh AP and North America, I think we still will be marketing to be achieving up 20%, above 20% sooner after the utilization and (inaudible) are coming in.

Thank you. And our next question comes from the line of Jiwon Lee with Sidoti and Company. Please go ahead.

Thank you. Good afternoon. Kent, you highlighted your outlook on the telecom infrastructure side? And I wonder if you could comment a little bit on the networking side, specifically as far as you are willing to venture out to?

Yes, on the networking side when you look at the high technology routers, the core routers, and the edge routers, that business has been pretty good for us. That's strong and we continue to see strength with those edge routers. When you get down to the service provider and some of the switches and so forth, that is a little bit soft. So, when you look at it in that end market you have got core and edge router strong, the switches a little bit soft, and then you got the telecom part weak.

Okay. That is very helpful. And the cell phone side. The reason why you are anticipating sequential revenue uptick is because of some of the qualification programs are beginning to kick in? Or so that is the majority of why you expect the revenue to be up?

Yes, that is almost all of the reason.

Okay. Terrific. Did you talk about or could you talk about how many qualifications or how many customers you are working on?

We probably won't talk about specifics with customers, but it is clearly with tablets and smartphones and some e-readers. I think that covers the majority of our qualifications.

Okay. And obviously a lot of the capital spending this year is going to the HDI work, but outside of the smartphones, tablets and e-readers are there any other revenue streams that you expect, at least in 2012, or are those three products the main reasons for that?

I think most of our revenue will be driven by the areas that you mentioned with smartphone, tablets and e-readers. I think what we are starting to see is our advanced HDI technology and some of the interfaces there and the components starting to spread out to other end markets. So, when you look at our business longer-term there will be quite a few opportunities besides just those products for our use of our advanced HDI capabilities.

And then the other side is we have been so soft with this telecom in our conventional facilities and you look at the Internet demands and bandwidth expansion that has been taking place and will continue to take place that we are fairly positive, optimistic that the second half of the year will have some of that come back to us also. And like I mentioned in our prepared comments, that will really help our conventional printed circuit board facilities that are underutilized right now.

I might mention too while I am on the topic that when we are talking about our CapEx about three-quarters of that goes into advanced HDI, there is another big chunk that is going into facilities and environmental with water recycling and so forth. And we are not doing anything with our conventional printed circuit boards. Anything might be a stretch but we're not expanding our conventional capacity in printed circuit boards.

That is very helpful. Thank you very much.

Thank you. (Operator Instructions) Our next question comes from the line of Paul Coster with JPMorgan. Please go ahead.

Yes, good evening. It's Mark Strouse on for Paul. The follow-up to Shawn's earlier question. You provided an update on the unofficial guidance, if you will, for fiscal '12. In North America do you still expect that to be I believe you said flat to slightly down last quarter?

Yes, thanks for the question. In North America we are looking to a situation where it is interesting. Actually, last quarter the Aerospace and Defense business was our strongest portion of our business. Conventional business was down. So, as we look out to the rest of the year in 2012, we are anticipating North America to be relatively flat with 2011 numbers. Chance we could be a little bit better, but right now we are looking at pretty much a flat situation.

Okay. That's helpful. Thanks. I think I might have missed this but the SYE plant coming back on board you said Q3. Can you give more granularity there? Is it earlier in the quarter or has it slipped a bit later?

Well, we are looking at the third quarter and we believe that it will be ready at the end of September/October timeframe. We are in a position here where the timing of that coming back online maybe has some margins there, so we're watching that pretty closely. We're moving ahead to get that repaired. We're looking at it -- when we bring that back online depends on market conditions exactly. Canice, do you want to add to SYE facility?

I think the renovation there was on track. We should be able to almost finish it by the August timeframe -- sorry, September timeframe. We ordered line to be test run. We are expecting it. We will be resuming operation by the second half of the Q3.

Okay. Great. That's it for us. Thank you very much.

Thank you. And our next question comes from the line of Steven Fox with Cross Research. Please go ahead.

Hi. Good afternoon. First question, can you just talk a little bit about the inventory build during the quarter on the absorption rates and the gross margin? And then how does the inventory -- projected inventory trend in the next quarter affect those dynamics -- those metrics, rather?

Yes, I can handle that question, Steve. Our overall inventory increased just a little bit, about $4 million, from the end of the year to the end of the first quarter. Most of that came from Asia and that is mostly in keeping with our expected about 12% revenue increase in the second quarter over the first quarter. Overall, raw materials are down a little bit but (inaudible) was up which is a sign of work in process moving through the plant. I think that's a good sign for our revenue strength in Q2.

I think how the quarter will play out is a bit uncertain terms of inventory because it is possible, depending on the timing of the orders we are talking about, that gives us some confidence in the back half of the year. Those orders come in in the next month or so we might actually ship some of that stuff during the second quarter and see probably not a very strong inventory coming out of the quarter. But if those orders come in later in the quarter, it might be more of a build for Q3 and we might see inventories rise the end of the quarter. It's still too soon to say.

Great. That's helpful. And then secondly, is it safe to assume the advanced HDI percentage is going to increase pretty much every quarter the rest of this calendar year? And any kind of color around what kind of increases we could be looking at? Thanks.

Yes, it is safe to say that it will increase, particularly in the second half of the year. I don't have a particular percentage in mind. I haven't run through those numbers exactly. I know historically if you go back to the first quarter of 2011 our HDI was about 19% of sales and now we are up to 26% of sales. The opportunities that we have in the second half of the year will certainly drive that percentage much higher. Most of our growth in the second half of the year is going to come from the advanced HDI technology products.

I'm sorry, one last question. Can you give the percentage of sales from your largest customer?

Yes, 13% of sales.

Great. Thank you very much.

There are no further questions. I would like to turn it back over to management.

Okay. Thank you. I just wanted to thank everyone for joining us today. We are on track for our program for the second half of the year and historically the second half of the year has been much stronger than the first half of the year. And I think even in 2012 it's even more exaggerated with our program qualification timing and wins and so forth. We are looking forward to a very strong second half of the year and the second quarter will be up over the first quarter. Thanks for your time. We will look forward to seeing you next quarter. Thank you very much.

Ladies and gentlemen, that does conclude the TTM Technology's first-quarter 2012 earnings conference call. If you would like to listen today's replay, the phone number is 1-800-406-7325, access ID 4532620. Thank you for your participation. You may now disconnect.