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Operator
Greetings. Welcome to the Lateef Semiconductor Fourth Quarter 2022 earnings call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to your host, Rick Mouchet, Lateef's Director of Investor Relations. You may begin.
Rick Mouchet
Thank you, operator, and good afternoon, everyone. With me today are Jim Anderson, Lattice's president and CEO, and Sherry Luther, Lattice's CFO. We'll provide a financial and business review of the fourth quarter of 2022 and the business outlook for the first quarter of 2023. If you have not obtained a copy of our earnings press release, it can be found at our company website in the investor relations section at latticesemi.com. I would like to remind everyone that during our conference call today, We may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions based on information that is currently available and that actual results may differ materially. We refer you to the documents of the company files with the SEC, including our 10-Ks, 10-Qs, and 8-Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially. from those containing our projections or forward-looking statements. This call includes and constitutes the company's official guidance for the first quarter of 2023. If at any time after this call we communicate any material changes to this guidance, we intend that such updates will be done using a public forum, such as a press release or publicly announced conference call. We will refer primarily to non-GAAP financial measures during this call. By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends. For historical periods, we provide reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the investor relations section of our website at latticeemi.com. Let me now turn the call over to Jim Anderson, our CEO.
Jim Anderson
Thank you, Rick, and thank you, everyone, for joining us on our call today. 2022 was a remarkable year for Lattice as we significantly expanded our product portfolio and delivered record financial results. Annual revenue grew by 28% driven by growth in our core strategic markets of industrial and automotive and communications and computing. Full year non-GAAP gross margin expanded by 590 basis points to a record 69.1%. And we delivered annual non-GAAP net income growth of 64% year over year. We also continue to expand our product portfolio with multiple hardware and software product launches, including a successful launch of our new Lattice Avant mid-range FPGA platform, which doubles the addressable market of the company. Let me now provide an overview of our business by end market. In the communications and computing market, full year revenue increased 26%, which is the fourth consecutive year of double digit growth for this market segment. We continue to have multiple long-term growth drivers in this segment, including content expansion and data center servers, new Greenfield client computing design rooms, 5G wireless infrastructure, and data center networking. Turning now to the industrial and automotive market, full-year revenue increased 41%, which is the third consecutive year of double-digit growth for this segment. We continue to see this market as a strong long-term growth opportunity for Lattice as our business continues to grow across multiple applications, such as industrial automation and robotics, as well as automotive ADAS and infotainment systems. Turning now to consumer, full year revenue is down 3%, reflecting the macroeconomic softness in the consumer electronics end market. Consumer accounted for only 7% of our overall revenue in 2022. I'll now provide some product roadmap highlights. Since the introduction of Lattice Nexus, we've launched five device families based on the platform. We have four device families in production and ramping with customers. The fifth device family, Mach XL5NX, which launched in the first half of 2022, remains on track to go into production in the first half of this year. We also expect to launch two additional Nexus device families this year. We continue to be pleased with the revenue ramp of our Nexus-based products as each new device family adds a new layer of revenue. We expect the overall Nexus portfolio revenue to continue to ramp over the next several years. In addition to the continued portfolio expansion of Nexus, we further expanded our product portfolio with the launch of our Lattice Avant platform. Avant doubles our addressable market and creates an additional greenfield revenue growth stream as Avant revenue ramps over the coming years. Our customers are excited about Avant, which offers up to two and a half times lower power, two times faster performance, and up to six times smaller physical device size than our competitors' FPGA devices. Each of these competitive advantages provide significant differentiation of value for our customers' applications and systems. Similarly to Nexus, the Avant platform will consist of a series of device families that will be launched over time. The first family, Avant-E, was launched in December, and we expect to launch two additional device families later this year. As we've discussed over the past few years, software is a key element of our strategy. The investments we've been making in our software portfolio are making it easier for our customers to adopt Lattice products and get to market quickly. We've launched five software solution stacks to date and have more on the roadmap. As we mentioned previously, over half of our new silicon design wins are now enabled by at least one of our five software solution stacks. This increases the value that we're delivering to our customers and the long-term stickiness of our products. Avant also leverages the same software that our customers are already using today on our Nexus products, which enables easy customer adoption of Avant. In summary, 2022 was another strong growth year for Lattice. We're well positioned in long-term secular growth markets with a rapidly expanding product portfolio, accelerating customer momentum, and consistent financial execution. I want to thank the Lattice team for all their hard work and dedication. As we begin 2023, while we're certainly not immune to any macroeconomic challenges impacting the industry, we're well positioned to execute on our long-term strategy and continue to focus on unlocking the full potential of the company. I'll now turn the call over to our CFO, Sherry Luther.
Rick
Thank you, Jim. We are very pleased with our full year 2022 results. We drove strong double-digit revenue growth, significant gross margin expansion, and record profitability. We grew profit at more than two times the rate of our revenue growth in 2022. We generated a record level of cash from operations and increased the cash return to shareholders through share buybacks and debt paydowns. Let me now provide a summary of our results. Fourth quarter revenue was $176 million, up 2% sequentially from the third quarter and up 24% year over year. Q4 was the 11th consecutive quarter of sequential revenue growth. Full year 2022 revenue was $660.4 million, up 28% from 2021. The strong revenue growth for the full year 2022 was driven by double-digit revenue growth in our two strategic end markets of communications and computing and industrial and automotive. Our non-GAAP gross margin increased 50 basis points to a record 70% in Q4 compared to the prior quarter and was up 490 basis points compared to the year-ago quarter. Both the sequential and year-over-year increases in gross margin continue to be driven by our gross margin expansion strategy, which we started in 2019. Our non-GAAP gross margin for the full year 2022 was 69.1%, up 590 basis points from 2021. Q4 non-GAAP operating expenses were $52.5 million compared to $51.3 million in the prior quarter and $45.8 million in the year-ago quarter. Non-GAAP operating expenses for the full year 2022 increased to $201 million from $170 million, primarily driven by increased investment in our hardware and software portfolio. Our non-GAAP operating margin increased 50 basis points to a record 40.2% in Q4 compared to the prior quarter and was up 730 basis points compared to the year-ago quarter. We continue to balance operating margin growth with investing in our long-term revenue growth and business expansion. Our non-GAAP operating margin for the full year 2022 was 38.7%, up 850 basis points from 2021. Q4 non-GAAP earnings per diluted share was 49 cents compared to 32 cents in the year-ago quarter, which represents 53% year-over-year growth. Non-GAAP diluted EPS for the full year 2022 was $1.75, compared to $1.06 for the full year 2021. This represents 65% year-over-year growth. Strong cash flow continues to be an area of focus for Lattice. For the full year 2022, we generated a record $239 million in cash from operations. This represents an increase of 42% compared to the cash generated from operations in 2021. In Q4, we repurchased approximately 290,000 shares, or $20 million of stock, making Q4 our ninth consecutive quarter of executing share buybacks. Over that period, we have repurchased approximately 3.6 million shares. Lastly, we paid down $20 million on our credit revolver, exiting the year with $146 million in cash. Let me now review our outlook for the first quarter. Revenue for the first quarter of 2023 is expected to be between $175 million and $185 million. Gross margin is expected to be 70% plus or minus 1% on a non-GAAP basis. Total operating expenses for the first quarter are expected to be between $53 million and $55 million on a non-GAAP basis. Stepping back, I'm very pleased with the tremendous financial progress we've made in 2022 across many key metrics. despite some level of turbulence in the broader macroeconomy. As we begin 2023, we remain vigilant about potential macroeconomic softness, but are laser-focused on continuing to drive strong financial execution. Operator, that concludes my formal comments. We can now open the call for questions.
Operator
Thank you. And at this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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. And one moment please while we pull for questions. Our first question comes from the line of Alessandra Vecchi with William Blair. Please proceed with your question.
William Blair
Thanks for taking my question and congratulations on the tremendous execution in this tough environment. On that topic, I think Lattice might be one of the only semi-companies that hasn't had to lower in this macro inventory correction, which again is tremendous, but has us fielding a few questions around whether you'll just see it later in the cycle, kind of the rolling recession, so to speak. Can you walk us through some of the puts and takes around what's helped you buck the trend and whether you see any weakening in these trends as we move forward?
Jim Anderson
Thanks, Alex, for the question. I think certainly Lattice is not immune to any macroeconomic recessionary or inflationary pressures, but I do think there's Lattice-specific growth drivers involved. that we've seen certainly over the last two to three years that have helped the company grow in a really consistent and sustainable way. First of all, we're really pleased with the growth that we saw last year of 28%. And that follows a strong year of growth in 2021 of 26%. And as Sherry shared in her prepared remarks, actually Q4 was the 11th consecutive quarter of sequential growth. And In particular, we're very pleased to see growth in our two largest market segments, which are constant computing and industrial and auto. Both of those segments have now grown double digits for multiple years in a row, and combined, those segments represent about 90% of our revenue. And if you look within those market segments, just to highlight a few of of the specific places where we've been growing is in industrial and automotive. We just have a number of new design wins that are across many different industrial and automotive customers where we've either displaced competitors that are either FPGA competitors or, for instance, other microcontroller competitors. And those design wins are now in production and ramping. We also have places within the market where we've added additional content through our, not just FPGAs, but our software that hasn't existed in those systems before. And so that's really helped us have very solid growth in that industrial and automotive segment, which we grew 41% year over year last year. And then in communications and computing, you know, that segment has grown now double digits for us four years consecutively in a row. We saw 26% growth there last year. Again, where we're seeing growth is lattice specific content gains in, for instance, servers that go into data centers. So we continue to see our dollars of content per server expand. And as we look forward, we continue to see more opportunity to expand the amount of content that lattice provides in servers that go into data centers. We've seen good growth in 5G wireless infrastructure. Data center networking was another nice area for us last year. We see additional opportunity there over the coming years. So a number of different specific places that we're driving growth within those markets. And then lastly, I'd highlight from a product perspective, we have multiple new product cycles that we're going through. If you look at the Nexus platform, our most recent platform in production, We've launched five device families. Four device families are in production. A fifth one goes into production in the first half of this year. We have two more that we're going to launch this year. And then, of course, Avant is still out in front of us, ahead of us. And we're really excited about the customer momentum around Avant. So, again, certainly not immune to the macroeconomic pressures across the industry, but definitely some lattice-specific growth vectors that we're pretty excited about.
William Blair
Great. And then just as one follow-up, it seems like EMEA as a geography has really outpaced year-over-year growth. Is that a function in a period where obviously the continent has some things going on? Is that really a function of content gains and share gain within industrial? Does it spread beyond industrial? Can you help us think about the traction you're getting in Europe specifically?
Jim Anderson
Yeah, definitely. So in Europe, that market is more weighted towards industrial and automotive. So as we've seen our industrial automotive revenue grow sort of globally, we've certainly seen strong growth in Europe. And because Europe is kind of overweighted towards industrial auto, that's why we've seen particularly strong growth in that geography.
spk03
With that, I'll go back to Q. Thank you.
Jim Anderson
Thanks, Alex.
Operator
Our next question comes from the line of David Williams with Benchmark Company. Please proceed with your question.
David Williams
Hey, thanks, and I appreciate the time to ask a question. Let me also add my congratulations on this very solid quarter in execution here. And I guess really my first question for you, Sherry, is just on the gross margin. And I know we've talked about this in the past, but Just kind of wondering if you can tell us about how durable you think the gross margins will be around this level. I know we've had this discussion, but it seems like there's a lot of tailwinds at the company level, but maybe some headwinds developing from a market perspective, just kind of given the macro. Can you help us maybe understand the durability there?
Sherry
Yeah, thanks, David, and thanks for the question. So we're really pleased with our record gross margin in Q4 of 70%, 50 basis points improvement sequentially, and 490 basis points year over year. As a reminder, we've been executing on our gross margin expansion strategy now since 2019. This would actually be our fourth complete year that we've executed on that strategy. And the results that we've been able to drive with that strategy have been 1,330 basis points since the end of 2018 executing on that strategy. And the elements of that strategy are really multiple factors that have been driving it, pricing optimization being one. Of course, again, we've been executing on this for four full years now, so that's been a key part of our strategy to really get the value for our products. New products like Nexus, for example, are designed to be gross margin accretive, and so they've added value to our gross margin, as has Mix, as has product cost efficiencies. And so with so many of those factors or drivers, if you will, that we've been executing on for so many years now, for four full years, we feel that our gross margin is durable. We're really pleased with the progress that we've been able to make there. And it's really part of our DNA, the way that we manage our business and really work to get the value for our products. And so gross margin continues to be a focus area for us.
David Williams
Thanks so much for the color. Very helpful. And then maybe, Jim, one for you. Just kind of thinking about your customers from the Avant platform, the interest that you're seeing. Do you get the sense that customers are looking maybe to improve their existing product lines, or is this an area that you can gain additional sockets? And then also, are you seeing, I guess, new customers coming to you that you didn't previously service or couldn't service with the Nexus line that maybe you can with Avant? and maybe pull in some Nexus revenue there as well. Just kind of curious about that customer base you're seeing for Avant.
Jim Anderson
Yeah, thanks, David. We're really excited about Avant, and we were so happy to launch that in December. And if you're at the Avant launch event in December, you actually saw that we had quite a bit of customer participation in that event, actually many different kind of customer participants. testimonials and comments. So you can clearly see there's a lot of excitement in our customer base around that. And I think that really goes to the level of differentiation that the platform is bringing. You know, two and a half times better power efficiency, up to six times better physical device size. I mean, these are really meaningful benefits for our customers. That helps them design much more efficient systems. And when you combine that with software content, that we're adding on top of Avant that's really beneficial to our customers. And when we look at the target customer base for Avant, the great thing is that there's 90% overlap between the target customers for Avant versus existing Lattice customers. That means that 90% of that target customer base is already a customer of Lattice today. And that also means that they're using Lattice software. And so all that software content that we've developed for Nexus and pre-Nexus devices is leverageable by our customers to Avant as well. So, you know, customer momentum engagement, very strong. Actually, if you compare Avant customer design wind progress or design wind funnel to versus Nexus, the platform that we launched a number of years ago. And if you kind of compare at the same point in time, Avant is far exceeding what Nexus was driving in terms of design win progress at the same relative point in time. So, again, really excited about it. I can certainly tell you our sales team is very excited about it. But, yeah, I'm looking forward to –
David
many years of Avant growth ahead of us in the future. And our next question comes from the line of Matt Ramsey with Cowan.
Operator
Please proceed with your question.
Matt
Thank you very much. Good afternoon. I mean, 70% gross margin, Sherry. That's really, really impressive. So congrats to the whole team. I guess my first question, Jim, is related to the guidance to guide, I think, well ahead of consensus for the March quarter. Definitely sticks out among the semiconductor market right now. In particular, I guess no secret that the notebook market in the very short term, the server market in terms of units are feeling a bit of correction. And also we've seen some weakness from the wireless infrastructure space as well in some of the box makers and in CapEx from some of the carrier folks. So I just wondered if you could walk through some of those end market trends and maybe juxtapose that against the guidance. I assume most of it's driven by industrial and automotive on the upside and maybe comms and computing a little bit weaker. But if you could clarify that, that'd be great. Thank you.
Jim Anderson
Thanks, Matt, for the question. Yeah. So if you take the midpoint of our guidance for Q1, you know, clearly at a total company level, we've guided up sequentially. But if you look underneath the covers at the different segments, yes, we expect industrial and automotive to be up sequentially from Q4 to Q1, continuing to see design ramp within that market segment. Communications and computing, we do expect that to be down sequentially from Q4 to Q1 with primarily what's driving that is what you mentioned, some of the softness that the industry is seeing in overall server consumption and deployment. So we do expect that segment to be sequentially down. And then consumer, we also expect to be down sequentially from Q4 to Q1, more tracking normal seasonality within consumer. So that's kind of a little bit of color by the overall end markets.
Matt
Thanks, Jim. Appreciate it. Just as my follow-up, Sherry, we And digging into the balance sheet a little bit, days of inventory up quite a bit over the last couple of quarters, and maybe you could just walk us through that and what it might mean from a sell-in perspective, and maybe there's some pieces that haven't sold in as much as you thought, or conversely, is it sort of a forecast of what future sales might be looking like as you're building inventory in preparation for that growth? Just, I don't know, puts and takes there on the inventory would be helpful. Thank you.
Sherry
Sure. Thanks, Matt. So if you recall, we've actually been pretty consistent over the past two years or so in saying that we may choose to increase inventory to support the growth of our business. And that's exactly what we did. We increased inventory to support growth in terms of design wins with customers, in terms of new product ramps. Jim mentioned in his prepared remarks that we have four Nexus devices that are in production and ramping, and we have one that is going to be in production or ramping, rather, in the first half of this year. So new products certainly are driving growth and demand for inventory. And we may continue to increase inventory going forward. It's the right thing to do to support the business, to support our customers and that future growth. The other thing I'll mention is that If you look at our cash from operations, I think I said in my prepared remarks that our cash from operations was a record for Q4 in 2022. It was also a record cash from operations and our free cash flow at 41%. So we're really, really pleased with not only the revenue growth and profitability, but also our cash generated from operations. So the other thing I'll just leave comments that I'll leave you with on that is that Our products have very long life cycles, and our risk of obsolescence is very, very low as a result of that. So, you know, we feel very comfortable with the level of inventory that we have and want to make sure that we've got, you know, the right amount of inventory to support, again, our customers and that future growth.
Matt
Thanks, Sherry. Appreciate it.
David
Our next question comes from the line of Christopher Rowland with SIG. Please proceed with your question. I'm sorry, standby for once. Thank you.
Christopher Rowland
Christopher Roland?
Chris
Can you hear me?
Christopher Rowland
Yes, you can hear me.
Chris
Can you hear me? Okay, great. Great. My question is around automotive. Can you give us an idea now of the size of automotive as part of that multi-group there? And then talk about, you know, like in your presentation, for example, it just looks like you guys have tons of applications that FPGAs can address. Can you talk about maybe the ones that are getting the kind of, you know, the most design wins, the most traction, the most uptake? That'd be great. Thank you.
Jim Anderson
Yeah, thanks, Chris. So we don't break out automotive separately within that segment, but I can give you a little bit more color of just kind of what we saw last year. You know, overall industrial and automotive last year grew 41%. Within that, actually automotive grew significantly faster than that. So automotive still is the smaller portion of that segment, but it's definitely the faster growing portion of that segment. And the places that we're getting designed into are typically across a DAS and infotainment applications, you know infotainment I would say is probably more of the more often the place that we're getting. designed into, you know, there's frankly, there's many different applications. Just to give one example, you know, there's a lot of, for instance, sensor aggregation that needs to be done in the automobile. So there's so many different sensors across the automobile. Those sensor, all of those sensor inputs from the different devices need to be aggregated, pre-processed before they're sent back to the main processor. You'd find lattice devices doing that function. You'd also find lattice devices doing some of the video functions in, for instance, electronic mirrors, like rear view mirrors, as well as side mirrors. So a number of different places. But yeah, overall, we're quite pleased with Not just the revenue growth that we saw over the past year in automotive, but also the, you know, the design wind funnel that we see in front of us is quite strong. And we're also excited about Avant, our newest product line, and its applicability into automotive as well.
Chris
That's a great segue, Jim, for my second question around Avant, but also around the low-end lineup as well, Nexus in particular. I was wondering if you can talk about the competitive environment, both in terms of share, but also pricing from competitors as well. Can you describe kind of what you're seeing at the low end of the market overall and how things might have changed through this cycle to the current period where we are now, and then what we should expect for Avant and the mid-range market for you guys as well?
Jim Anderson
Yeah, thanks, Chris. And just to correct your terminology, I think we don't call it low end. We call it small FPGA, just to be clear. I mean, we've Nothing low end, about 70% gross margin. But in small FPGAs, what I would say is, yeah, frankly, we're quite pleased with the progress we're making there. Look, when you look at the product portfolio that we have in small FPGAs with not just Nexus, but the pre-Nexus devices, and you combine that with the significant software portfolio that we built out over the last four years plus, hands down, we have the strongest competitive or the strongest product portfolio in the industry. We feel very, very good about that. And frankly, I think it's the strongest product portfolio that the company's ever had in its history with respect to the small FPGA market. And so we feel really good about the momentum we built, the growth that we're driving in that segment, and that growth on, of course, Nexus, which is our newest product line, but also even on the prenexus devices. The software that we've added on top of the prenexus devices has helped kind of breathe new life into many of the prenexus devices, find new applications for those devices. And then when you had a question about pricing, I would call our pricing very durable. As Sherry mentioned earlier, the pricing optimization strategy, which we kicked off at the very beginning of 2019, We're now beginning our fifth year of that strategy. And over that four years of execution and now into our fifth year, I would say our pricing optimization or the pricing durability that we've seen has been quite strong. And so we certainly, back to your question around competition, we certainly take all competitors seriously. We stared very paranoid relative to competition, but I feel really good about the competitive strength of our product line and pricing durability. And then Avant, you mentioned Avant as well, and just to touch on that briefly, and we shared some of this at the Avant launch back in December, but the Avant platform delivers up to two and a half times better power efficiency, twice the performance in many cases. And I think this is really amazing. The device sizes are up to six times better. smaller than our competition. Now, we've always assumed there'll be robust competition in mid-range FPGAs, and so we built our roadmap assuming that we'll face robust competition. But I think the combination of the competitiveness of Avant, the software that's leveraged from Nexus to Avant, the fact that the target customers of Avant are 90% already customers of Lattice today, just put us in a good position to grow the Lattice product or the Vaughn product line over the coming years.
Chris
Thank you, Jim. Thanks, Tim.
Jim Anderson
Thanks, Chris.
Operator
And as a reminder, if you have any questions, you can call R1 on your telephone to join the question and answer queue. Our next question comes from the line of Hans Mosesman with Rosenblatt Securities. Please proceed with your question.
Hans Mosesman
Thanks. Congratulations, guys. Most of my questions have been answered, but I may have missed this. Can you comment on channel inventories, your lead times, and any supply related issues that may have come up in the last quarter that weren't there last quarter?
Jim Anderson
Yeah, thanks, Hans. Actually, I'm glad you asked about that. So when Sherry was talking earlier, she was talking about lattice-owned inventory. Now, if you look at channel inventory, which is inventory that's sitting at our distributors, and the vast majority of our revenue flows through distribution, the channel inventory is quite lean. It continues to be quite lean. And in fact, from Q3 to Q4, we saw our channel inventory roughly flat, slightly down sequentially from Q3 to Q4. But if you look at where we ended the year 2022 in distributor inventory, you compare that to the historical norms that we've seen over many years, the inventory in the channel remains lean relative to historic norms. And at some point over the coming quarters, we do need to replenish that inventory and get it back to what we would consider, what we and our distributors would consider more normal levels of inventory. In terms of your second part was around lead times, I would say, you know, in general, our lead times have come down and continue to improve. I think as the overall semiconductor supply chain has certainly improved over the last 12 months, just in terms of availability of capacity at both you know, wafers as well as assembly and test houses. That certainly improved our supply chain capacity and availability. And so certainly seeing lead times come down, we expect lead times to continue to improve. And then the last part of your question was around supplier issues. Nothing that sticks out of note in terms of any disruptions in terms of suppliers over the past quarter. Our supply chain is running quite well. And we've been able to actually build inventory, as Sherry touched on, Lattice inventory, which we view as very positive to support growth. So I would say the supply chain overall running quite well at the moment.
Hans
Great. Thank you. Congrats again. Thanks, Hans.
Operator
And we have reached the end of the question and answer session. And I'll now turn the call back over to Lattice's CEO, Jim Anderson, for closing remarks.
Jim Anderson
Thank you, operator, and thanks, everyone, for joining us on today's call. So when we look back, 2022 really was another great year for Lattice. Once again, I want to thank the Lattice team, as well as our partners and our customers, for all their dedication and support, not just in 2022, but over all the past years. And as we kick off 2023, we're certainly looking forward to another strong year for Lattice as we continue to rapidly expand the product lines of Lattice, but also drive new levels of innovation for our customers. Operator, that concludes today's call.
Operator
And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. Goodbye.
spk14
Thank you. you you Thank you. Thank you. you
Operator
Greetings. Welcome to the Lateef Semiconductor Fourth Quarter 2022 earnings call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to your host, Rick Mouchet, Lateef's Director of Investor Relations. You may begin.
Rick Mouchet
Thank you, operator, and good afternoon, everyone. With me today are Jim Anderson, Lattice's president and CEO, and Sherry Luther, Lattice's CFO. We'll provide a financial and business review of the fourth quarter of 2022 and the business outlook for the first quarter of 2023. If you have not obtained a copy of our earnings press release, it can be found at our company website in the investor relations section at latticesemi.com. I would like to remind everyone that during our conference call today, We may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions based on information that is currently available, and that actual results may differ materially. We refer you to the documents that the company files with the SEC, including our 10-Ks, 10-Qs, and 8-Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially. from those containing our projections or forward-looking statements. This call includes and constitutes the company's official guidance for the first quarter of 2023. If at any time after this call we communicate any material changes to this guidance, we intend that such updates will be done using a public forum, such as a press release or publicly announced conference call. We will refer primarily to non-GAAP financial measures during this call. By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends. For historical periods, we provide reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the investor relations section of our website at latticeemi.com. Let me now turn the call over to Jim Anderson, our CEO.
Jim Anderson
Thank you, Rick, and thank you, everyone, for joining us on our call today. 2022 was a remarkable year for Lattice as we significantly expanded our product portfolio and delivered record financial results. Annual revenue grew by 28% driven by growth in our core strategic markets of industrial and automotive and communications and computing. Full year non-GAAP gross margin expanded by 590 basis points to a record 69.1%. And we delivered annual non-GAAP net income growth of 64% year over year. We also continue to expand our product portfolio with multiple hardware and software product launches, including the successful launch of our new Lattice Avant mid-range FPGA platform, which doubles the addressable market of the company. Let me now provide an overview of our business by end market. In the communications and computing market, full year revenue increased 26%, which is the fourth consecutive year of double digit growth for this market segment. We continue to have multiple long-term growth drivers in this segment, including content expansion and data center servers, new greenfield client computing design rooms, 5G wireless infrastructure, and data center networking. Turning now to the industrial and automotive market, full-year revenue increased 41%, which is the third consecutive year of double-digit growth for this segment. We continue to see this market as a strong long-term growth opportunity for Lattice as our business continues to grow across multiple applications, such as industrial automation and robotics, as well as automotive ADAS and infotainment systems. Turning now to consumer, full-year revenue is down 3%, reflecting the macroeconomic softness in the consumer electronics end market. Consumer accounted for only 7% of our overall revenue in 2022. I'll now provide some product roadmap highlights. Since the introduction of Lattice Nexus, we've launched five device families based on the platform. We have four device families in production and ramping with customers. The fifth device family, Mach XL5NX, which launched in the first half of 2022, remains on track to go into production in the first half of this year. We also expect to launch two additional Nexus device families this year. We continue to be pleased with the revenue ramp of our Nexus-based products as each new device family adds a new layer of revenue. We expect the overall Nexus portfolio revenue to continue to ramp over the next several years. In addition to the continued portfolio expansion of Nexus, we further expanded our product portfolio with the launch of our Lattice Avant platform. Avant doubles our addressable market and creates an additional greenfield revenue growth stream as Avant revenue ramps over the coming years. Our customers are excited about Avant, which offers up to two and a half times lower power, two times faster performance, and up to six times smaller physical device size than our competitors' FPGA devices. Each of these competitive advantages provide significant differentiation of value for our customers' applications and systems. Similarly to Nexus, the Avant platform will consist of a series of device families that will be launched over time. The first family, Avant-E, was launched in December, and we expect to launch two additional device families later this year. As we've discussed over the past few years, software is a key element of our strategy. The investments we've been making in our software portfolio are making it easier for our customers to adopt Lattice products and get to market quickly. We've launched five software solution stacks to date and have more on the roadmap. As we mentioned previously, over half of our new silicon design wins are now enabled by at least one of our five software solution stacks. This increases the value that we're delivering to our customers and the long-term stickiness of our products. Avant also leverages the same software that our customers are already using today on our Nexus products, which enables easy customer adoption of Avant. In summary, 2022 was another strong growth year for Lattice. We're well positioned in long-term secular growth markets with a rapidly expanding product portfolio, accelerating customer momentum, and consistent financial execution. I want to thank the Lattice team for all their hard work and dedication. As we begin 2023, while we're certainly not immune to any macroeconomic challenges impacting the industry, we're well positioned to execute on our long-term strategy and continue to focus on unlocking the full potential of the company. I'll now turn the call over to our CFO, Sherry Luther.
Rick
Thank you, Jim. We are very pleased with our full year 2022 results. We drove strong double-digit revenue growth, significant gross margin expansion, and record profitability. We grew profit at more than two times the rate of our revenue growth in 2022. We generated a record level of cash from operations and increased the cash return to shareholders through share buybacks and debt paydowns. Let me now provide a summary of our results. Fourth quarter revenue was $176 million, up 2% sequentially from the third quarter and up 24% year over year. Q4 was the 11th consecutive quarter of sequential revenue growth. Full year 2022 revenue was $660.4 million, up 28% from 2021. The strong revenue growth for the full year 2022 was driven by double-digit revenue growth in our two strategic end markets of communications and computing and industrial and automotive. Our non-GAAP gross margin increased 50 basis points to a record 70% in Q4 compared to the prior quarter and was up 490 basis points compared to the year-ago quarter. Both the sequential and year-over-year increases in gross margin continue to be driven by our gross margin expansion strategy, which we started in 2019. Our non-GAAP gross margin for the full year 2022 was 69.1%, up 590 basis points from 2021. Q4 non-GAAP operating expenses were $52.5 million compared to $51.3 million in the prior quarter and $45.8 million in the year-ago quarter. Non-GAAP operating expenses for the full year 2022 increased to $201 million from $170 million, primarily driven by increased investment in our hardware and software portfolio. Our non-GAAP operating margin increased 50 basis points to a record 40.2% in Q4 compared to the prior quarter and was up 730 basis points compared to the year-ago quarter. We continue to balance operating margin growth with investing in our long-term revenue growth and business expansion. Our non-GAAP operating margin for the full year 2022 was 38.7%, up 850 basis points from 2021. Q4 non-GAAP earnings per diluted share was 49 cents compared to 32 cents in the year-ago quarter, which represents 53% year-over-year growth. Non-GAAP diluted EPS for the full year 2022 was $1.75, compared to $1.06 for the full year 2021. This represents 65% year-over-year growth. Strong cash flow continues to be an area of focus for Lattice. For the full year 2022, we generated a record $239 million in cash from operations. This represents an increase of 42% compared to the cash generated from operations in 2021. In Q4, we repurchased approximately 290,000 shares, or $20 million of stock, making Q4 our ninth consecutive quarter of executing share buybacks. Over that period, we have repurchased approximately 3.6 million shares. Lastly, we paid down $20 million on our credit revolver, exiting the year with $146 million in cash. Let me now review our outlook for the first quarter. Revenue for the first quarter of 2023 is expected to be between $175 million and $185 million. Gross margin is expected to be 70% plus or minus 1% on a non-GAAP basis. Total operating expenses for the first quarter are expected to be between $53 million and $55 million on a non-GAAP basis. Stepping back, I'm very pleased with the tremendous financial progress we've made in 2022 across many key metrics, despite some level of turbulence in the broader macro economy. As we begin 2023, we remain vigilant about potential macroeconomic softness, but are laser-focused on continuing to drive strong financial execution. Operator, that concludes my formal comments. We can now open the call for questions.
Operator
Thank you. And at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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. And one moment please while we pull for questions.
David
Our first question comes from the line of Alessandra Vecchi with William Blair.
Operator
Please proceed with your question.
William Blair
Thanks for taking my question and congratulations on the tremendous execution in this tough environment. On that topic, I think Lattice might be one of the only semi-companies that hasn't had to lower in this macro inventory correction, which again is tremendous, but has us fielding a few questions around whether you'll just see it later in the cycle, kind of the rolling recession, so to speak. Can you walk us through some of the puts and takes around what's helped you buck the trend and whether you see any weakening in these trends as we move forward?
Jim Anderson
Thanks, Alex, for the question. I think certainly Lattice is not immune to any macroeconomic recessionary or inflationary pressures, but I do think there's Lattice specific growth drivers that we've seen, certainly over the last two to three years, that have helped the company grow in a really consistent and sustainable way. First of all, we're really pleased with the growth that we saw last year of 28%, and that follows a strong year of growth in 2021 of 26%. And as Sherry shared in her prepared remarks, actually Q4 was the 11th consecutive quarter of sequential growth, and In particular, we're very pleased to see growth in our two largest market segments, which are constant computing and industrial and auto. Both of those segments have now grown double digits for multiple years in a row, and combined, those segments represent about 90% of our revenue. And if you look within those market segments, just to highlight a few of of the specific places where we've been growing is in industrial and automotive. We just have a number of new design wins that are across many different industrial and automotive customers where we've either displaced competitors that are either FPGA competitors or, for instance, other microcontroller competitors. And those design wins are now in production and ramping. We also have places within the market where we've added additional content through our, not just FPGAs, but our software that hasn't existed in those systems before. And so that's really helped us have very solid growth in that industrial and automotive segment, which we grew 41% year over year last year. And then in communications and computing, you know, that segment has grown now double digits for us four years consecutively in a row. We saw 26% growth there last year. Again, where we're seeing growth is lattice specific content gains in, for instance, servers that go into data centers. So we continue to see our dollars of content per server expand. And as we look forward, we continue to see more opportunity to expand the amount of content that lattice provides in servers that go into data centers. We've seen good growth in 5G wireless infrastructure. Data center networking was another nice area for us last year. We see additional opportunity there over the coming years. So a number of different specific places that we're driving growth within those markets. And then lastly, I'd highlight from a product perspective, we have multiple new product cycles that we're going through. If you look at the Nexus platform, our most recent platform in production, We've launched five device families. Four device families are in production. A fifth one goes into production in the first half of this year. We have two more that we're going to launch this year. And then, of course, Avant is still out in front of us, ahead of us. And we're really excited about the customer momentum around Avant. So, again, certainly not immune to the macroeconomic pressures across the industry, but definitely some lattice-specific growth vectors that we're pretty excited about.
William Blair
Great. And then just as one follow-up, it seems like EMEA as a geography has really outpaced year-over-year growth. Is that a function in a period where obviously the continent has some things going on? Is that really a function of content gains and share gain within industrial? Does it spread beyond industrial? Can you help us think about the traction you're getting in Europe specifically?
Jim Anderson
Yeah, definitely. So in Europe, that market is more weighted towards industrial and automotive. So as we've seen our industrial automotive revenue grow sort of globally, we've certainly seen strong growth in Europe. And because Europe is kind of overweighted towards industrial auto, that's why we've seen particularly strong growth in that geography.
spk03
With that, I'll go back to you. Thank you.
David
Thanks, Alex.
Operator
Our next question comes from the line of David Williams with Benchmark Company. Please proceed with your question.
David Williams
Hey, thanks, and I appreciate the time to ask a question. Let me also add my congratulations on this very solid quarter in execution here. And I guess really my first question for you, Sherry, is just on the gross margin. And I know we've talked about this in the past, but Just kind of wondering if you can tell us about how durable you think the gross margins will be around this level. I know we've had this discussion, but it seems like there's a lot of tailwinds at the company level, but maybe some headwinds developing from a market perspective, just kind of given the macro. Can you help us maybe understand the durability there?
Sherry
Yeah, thanks, David, and thanks for the question. So we're really pleased with our record gross margin in Q4 of 70%, 50 basis points improvement sequentially, and 490 basis points year over year. As a reminder, we've been executing on our gross margin expansion strategy now since 2019. This would actually be our fourth complete year that we've executed on that strategy. And the results that we've been able to drive with that strategy have been 1,330 basis points since the end of 2018 executing on that strategy. And the elements of that strategy are really multiple factors that have been driving it, pricing optimization being one. Of course, again, we've been executing on this for four full years now, so that's been a key part of our strategy to really get the value for our products. New products like Nexus, for example, are designed to be gross margin accretive, and so they've added value to our gross margin, as has Mix, as has product cost efficiencies. And so with so many of those factors or drivers, if you will, that we've been executing on for so many years now, for four full years, we feel that our gross margin is durable. We're really pleased with the progress that we've been able to make there, and it's really part of our DNA, the way that we manage our business and really work to get the value for our products. And so gross margin continues to be a focus area for us.
David Williams
Thanks so much for the color. Very helpful. And then maybe, Jim, one for you. Just kind of thinking about your customers from the Avant platform, the interest that you're seeing. Do you get the sense that customers are looking maybe to improve their existing product lines, or is this an area that you can gain additional sockets? And then also, are you seeing, I guess, new customers coming to you that you didn't previously service or couldn't service with the Nexus line that maybe you can with Avant? and maybe pull in some Nexus revenue there as well. Just kind of curious about that customer base you're seeing for Avant.
Jim Anderson
Yeah, thanks, David. We're really excited about Avant, and we were so happy to launch that in December. And if you're at the Avant launch event in December, you actually saw that we had quite a bit of customer participation in that event, actually many different kind of customer events. testimonials and comments. So you can clearly see there's a lot of excitement in our customer base around that. And I think that really goes to the level of differentiation that the platform is bringing. You know, two and a half times better power efficiency, up to six times better physical device size. I mean, these are really meaningful benefits for our customers. That helps them design much more efficient systems. And when you combine that with software content, that we're adding on top of Avant that's really beneficial to our customers. And when we look at the target customer base for Avant, the great thing is that there's 90% overlap between the target customers for Avant versus existing Lattice customers. That means that 90% of that target customer base is already a customer of Lattice today. And that also means that they're using a lot of software. And so all that software content that we've developed for Nexus and pre-Nexus devices is leverageable by our customers to Avant as well. So, you know, customer momentum engagement, very strong. Actually, if you compare Avant customer engagement design wind progress or design wind funnel versus Nexus, the platform that we launched a number of years ago. And if you kind of compare at the same point in time, Avant is far exceeding what Nexus was driving in terms of design wind progress at the same relative point in time. So again, really excited about it. I can certainly tell you our sales team is very excited about it, but yeah, Yeah, I'm looking forward to many years of Avant growth ahead of us in the future.
David
And our next question comes from the line of Matt Ramsey with Cowan.
Operator
Please proceed with your question.
Matt
Thank you very much. Good afternoon. I mean, 70% gross margin, Sherry. That's really, really impressive. So congrats to the whole team. I guess my first question, Jim, is related to the guidance to guide. I think well ahead of consensus for the March quarter definitely sticks out among the semiconductor market right now. In particular, I guess no secret that The notebook market in the very short term, the server market in terms of units are feeling a bit of correction. And also we've seen some weakness from the wireless infrastructure space as well in some of the box makers and in CapEx from some of the carrier folks. So I just wondered if you could walk through some of those end market trends and maybe juxtapose that against the guidance. I assume most of it's driven by industrial and automotive on the upside and maybe comms and computing a little bit weaker. But if you could clarify that, that'd be great. Thank you.
Jim Anderson
Thanks, Matt, for the question. Yeah. So if you take the midpoint of our guidance for Q1, you know, clearly at a total company level, we've guided up sequentially. But if you look underneath the covers at the different segments, yes, we expect industrial and automotive to be up sequentially from Q4 to Q1, continuing to see designs ramp within that market segment. Communications and computing, we do expect that to be down sequentially from Q4 to Q1, with primarily what's driving that is what you mentioned earlier, some of the softness that the industry is seeing in overall server consumption and deployment. So we do expect that segment to be sequentially down. And then consumer, we also expect to be down sequentially from Q4 to Q1, more tracking normal seasonality within consumer. So that's kind of a little bit of color by the overall end markets.
Matt
Thanks, Jim. Appreciate it. Just as my follow-up, Sherry, we Digging into the balance sheet a little bit, days of inventory up quite a bit over the last couple of quarters, and maybe you could just walk us through that and what it might mean from a sell-in perspective, and maybe there's some pieces that haven't sold in as much as you thought, or conversely, is it sort of a forecast of what future sales might be looking like as you're building inventory in preparation for that growth? I don't know. Puts and takes there on the inventory would be helpful. Thank you.
Sherry
Sure. Thanks, Matt. So if you recall, we've actually been pretty consistent over the past two years or so in saying that we may choose to increase inventory to support the growth of our business. And that's exactly what we did. We increased inventory to support growth in terms of design wins with customers, in terms of new product ramps. Jim mentioned in his prepared remarks that we have four Nexus products devices that are in production and ramping, and we have one that is going to be in production or ramping, rather, in the first half of this year. So new products certainly are driving growth and demand for inventory. And we may continue to increase inventory going forward. It's the right thing to do to support the business, to support our customers and that future growth. The other thing I'll mention is that If you look at our cash from operations, I think I said in my prepared remarks that our cash from operations was a record for Q4 in 2022. It was also a record cash from operations and our free cash flow at 41%. So we're really, really pleased with not only the revenue growth and profitability, but also our cash generated from operations. So the other thing I'll just leave comments that I'll leave you with on that is that Our products have very long life cycles, and our risk of obsolescence is very, very low as a result of that. So, you know, we feel very comfortable with the level of inventory that we have and want to make sure that we've got, you know, the right amount of inventory to support, again, our customers and that future growth.
Matt
Thanks, Sherry. Appreciate it.
David
Our next question comes from the line of Christopher Rowland with SIG. Please proceed with your question. I'm sorry, standby for once.
Christopher Rowland
Thank you. Christopher Roland?
Chris
Can you hear me?
Christopher Rowland
Yes, you can hear me.
Chris
Can you hear me? Okay, great. Great. My question is around automotive. Can you give us an idea now of the size of automotive as part of that multi-group there? And then talk about, you know, like in your presentation, for example, it just looks like you guys have tons of applications that FPGAs can address. Can you talk about maybe the ones that are getting the kind of, you know, the most design wins, the most traction, the most uptake? That'd be great. Thank you.
Jim Anderson
Yeah, thanks, Chris. So we don't break out automotive separately within that segment, but I can give you a little bit more color of just kind of what we saw last year. You know, overall industrial and automotive last year grew 41%. Within that, actually automotive grew significantly faster than that. So automotive still is the smaller portion of that segment, but it's definitely the faster growing portion of that segment. And the places that we're getting designed into are typically across ADAS and infotainment applications. Infotainment, I would say, is probably more often the place that we're getting designed into, you know, there's, frankly, there's many different applications. Just to give one example, you know, there's a lot of, for instance, sensor aggregation that needs to be done in the automobile. So there's so many different sensors across the automobile. Those sensors, all of those sensor inputs from the different devices need to be aggregated, pre-processed before they're sent back to the main processor. You'd find lattice devices doing that function. You'd also find lattice devices doing some of the video functions in, for instance, electronic mirrors, like rear view mirrors, as well as side mirrors. So a number of different places. But yeah, overall, we're quite pleased with Not just the revenue growth that we saw over the past year in automotive, but also the, you know, the design wind funnel that we see in front of us is quite strong. And we're also excited about Avant, our newest product line, and its applicability into automotive as well.
Chris
That's a great segue, Jim, for my second question around Avant, but also around the low-end lineup as well, Nexus in particular. I was wondering if you can talk about the competitive environment, both in terms of share, but also pricing from competitors as well. Can you describe kind of what you're seeing at the low end of the market overall and how things might have changed through this cycle to the current period where we are now, and then what we should expect for Avant and the mid-range market for you guys as well?
Jim Anderson
Yeah, thanks, Chris. And just to correct your terminology, I think we don't call it low end. We call it small FPGA, just to be clear. That's something we've Nothing low end, about 70% gross margin. But in small FPGAs, what I would say is, yeah, frankly, we're quite pleased with the progress we're making there. Look, when you look at the product portfolio that we have in small FPGAs with not just Nexus, but the pre-Nexus devices, and you combine that with the significant software portfolio that we built out over the last four years plus, Hands down, we have the strongest competitive or the strongest product portfolio in the industry. We feel very, very good about that. And frankly, I think it's the strongest product portfolio that the company's ever had in its history with respect to the small FPGA market. And so we feel really good about the momentum we built, the growth that we're driving in that segment, and that growth on, of course, Nexus, which is our newest product line. but also even on the prenexus devices. The software that we've added on top of the prenexus devices has helped kind of breathe new life into many of the prenexus devices, find new applications for those devices. And then when you had a question about pricing, I would call our pricing very durable. As Sherry mentioned earlier, the pricing optimization strategy, which we kicked off at the very beginning of 2019, we're now beginning our fifth year of that strategy. And over that four years of execution and now into our fifth year, I would say our pricing optimization or the pricing durability that we've seen has been quite strong. And so we certainly, back to your question around competition, we certainly take all competitors seriously. We stared very paranoid relative to competition, but I feel really good about the competitive strength of our product line and pricing durability. And then Avant, you mentioned Avant as well, and just to touch on that briefly, and we shared some of this at the Avant launch back in December, but the Avant platform delivers up to two and a half times better power efficiency, twice the performance in many cases. And I think this is really amazing. The device sizes are up to six times better. smaller than our competition. Now, we've always assumed there'll be robust competition in mid-range FPGAs. And so we built our roadmap assuming that we'll face robust competition. But I think the combination of the competitiveness of Avant, the software that's leveraged from Nexus to Avant, the fact that the target customers of Avant are 90% already customers of Lattice today, just put us in a good position to grow the lattice product or the Vaughn product line over the coming years.
Chris
Thank you, Jim. Thanks, team.
Jim Anderson
Thanks, Chris.
Operator
And as a reminder, if you have any questions, you can call star one on your telephone to join the question and answer queue. Our next question comes from the line of Hans Mosesman with Rosenblatt Securities. Please proceed with your question.
Hans Mosesman
Thanks. Congratulations guys. Most of my questions have been answered, but I may have missed this. Can you comment on channel inventories, your lead times, and any supply related issues that may have come up in the last quarter that weren't there last quarter?
Jim Anderson
Yeah, thanks, Hans. Actually, I'm glad you asked about that. So when Sherry was talking earlier, she was talking about lattice-owned inventory. Now, if you look at channel inventory, which is inventory that's sitting at our distributors and the vast majority of our revenue flows through distribution, the channel inventory is quite lean. It continues to be quite lean. And in fact, from Q3 to Q4, we saw our channel inventory roughly flat, slightly down sequentially from Q3 to Q4. But if you look at where we ended the year 2022 in distributor inventory, you compare that to the historical norms that we've seen over many years, the inventory in the channel remains lean relative to historic norms. And at some point over the coming quarters, we do need to replenish that inventory and get it back to what we would consider, what we and our distributors would consider more normal levels of inventory. In terms of your second part was around lead times, I would say, you know, in general, our lead times have come down and continue to improve. I think as the overall semiconductor supply chain has certainly improved over the last 12 months just in terms of availability of capacity at both you know, wafers as well as assembly and test houses. That certainly improved our supply chain capacity and availability. And so certainly seeing lead times come down, we expect lead times to continue to improve. And then the last part of your question was around supplier issues. Nothing that sticks out of note in terms of any disruptions in terms of suppliers over the past quarter. Our supply chain is running quite well. And we've been able to actually build inventory, as Sherry touched on, Lattice inventory, which we view as very positive to support growth. So I would say the supply chain overall running quite well at the moment.
Hans
Great. Thank you. Congrats again. Thanks, Hans.
Operator
And we have reached the end of the question and answer session. And I'll now turn the call back over to Lattice's CEO, Jim Anderson, for closing remarks.
Jim Anderson
Thank you, operator, and thanks everyone for joining us on today's call. So when we look back, 2022 really was another great year for Lattice. I want to, once again, I want to thank the Lattice team, as well as our partners and our customers for all their dedication and support, not just in 2022, but over all the past years. And as we kick off 2023, we're certainly looking forward to another strong year for Lattice as we continue to rapidly expand the product lines of Lattice, but also drive new levels of innovation for our customers. Operator, that concludes today's call.
Operator
And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
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