Photronics, Inc.

Good morning, ladies and gentlemen, and welcome to the Futronix first quarter fiscal year 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your touchtone telephone. As a reminder, this conference is being recorded Wednesday, February 24, 2021. I would now like to turn the conference over to Troy Duar, Vice President of Investor Relations. Please go ahead.

Thank you, Jerome. Good morning, everyone. Welcome to our review of Photronics' 2021 first quarter financial results. Joining me this morning are Peter Kerlin, our Chief Executive Officer, John Jordan, our Chief Financial Officer, and Chris Prodler, our Chief Technology Officer. The press release we issued earlier this morning along with the presentation material which accompanies our remarks are available on the investor relations section of our webpage. I would like to note the press release had inadvertently omitted the bottom half of the balance sheet. The version on the 8K is correct and we will be correcting the press release. Comments made by any participants on today's call may include forward-looking statements that include such words as anticipate, believe, estimate, expect, forecast in our view. These forward-looking statements are based upon a number of risk, uncertainties, and other factors that are difficult to predict. Actual results may differ materially from those expressed or implied, and we assume no obligation to update any forward-looking information. At this time, I will turn the call over to Peter.

Thank you, Troy, and good morning, everyone. We achieved sequential growth in the first quarter, defying seasonal trends that demand improve across many sectors. Most notable improvement was observed in the high-end FPD where strong AMOLED demand for new mobile displays led the increase. High-end IC was modestly lower, with slight improvements in mainstream IC and FPD. Typical seasonality indicates that Q1 revenue would decline sequentially, so an increase of 2% demonstrates self-performance by our global team. John will offer more insights into the details shortly, but I'd like to make some general observations on what we are seeing in our markets. Over the last 18 to 24 months, there have been tremendous supply chain disruptions, driven by a combination of trade policies and economic lockdowns resulting from COVID-19. In our view, these government mandates move the market in ways that were not easily anticipated. In some cases, the impact has been positive for industry, such as the trend to do more of what we do every day remotely, spurring demand for work-from-home electronics, Conversely, many automotive manufacturers suspended or severely curtailed vehicle production last spring. When automobile manufacturing recently returned to normal levels, solar capacity had shifted to work-from-home applications, with another effect being chip shortages. The semiconductor industry is quickly reacting to these demand dynamics, creating what we believe to be an inventory-driven semiconductor upcycle. pending the installation of additional capacity, particularly at the high-end logic nodes. Semiconductor manufacturers are focusing their resources on increasing output of needed chips and not on releasing new products. Therefore, new design activity has been constrained in what to us resembles a semiconductor industry cycle of old, where the uptrend in our business flags the capital equipment suppliers by one to two quarters. Once the new tools are installed with the resulting capacity online, as inventory levels are replenished, the dam breaks and a wave of new design flows. Shifting gears to FPD, the trade policies implemented by the U.S. over the last few years have clearly impacted the electronics industry in China. Up until late last year, these policies had little impact on our business. to where that changed when Huawei was placed on the denied entity list last fall. As a leading manufacturer of smartphones in China, Huawei had its own ecosystem of suppliers. When their ability to purchase leading-edge semiconductors was severely constrained, it effectively froze their new product roadmap. The impact on us was a dramatic drop in demand for PhotoMask to build their new display panels. Fortunately, the end market demand for those phones did not disappear. As we move through Q1, we start to see a resurgence in new designs from alternative phone manufacturers, and recently, the very first tape out for Honor. Furthermore, significant amounts of new AMOLED display manufacturer capacity is being brought online by our customers in China this year. And moving forward, We expect a significant rise in AMOLED photo mass demand that should continue throughout 2021. Returning to our first quarter results, gross and operating margins were lower for this period. There are several reasons for this, and John will provide details during his commentary. But the bottom line is we must do better. We positioned our operations at the high end of the market in delivering mass that are critical for the production of leading-edge devices. Based on these factors, our margins need to improve. We know well what is required to accomplish this and we are committed to deliver the results of investors as well as we expect. Moving to the bottom line, earnings per share were 13 cents. Our cash balance was steady and our strong balance sheet continues to provide superb flexibility in managing our value creation strategy moving forward. We held our investor analyst day in December. If you attended the live event or listened to the archived webcast, thank you for your interest, and I truly hope you found the presentation helpful. If you've not yet listened, I encourage you to do so. During that event, we reviewed the commitments made during our 2018 Investor Day and how we performed against them. We also looked ahead as our investment focus evolved to maintain alignment with market trends. The two areas we highlighted were advanced display technologies and China market growth. We have three new FPD mass running tools that will be installed during 2021. These will bring us additional capacity to serve our customers who manufacture advanced panels. These investments should provide us with sequential growth in capacity and therefore revenue during the second half of 2021. As stated before, we have entered into three multi-year purchase agreements that collectively represent a business commitment in excess of $40 million annually to support these investments. We often comment that the display market is very dynamic. This includes development and adoption of new technologies. The increased penetration of AMOLED displays within smartphones is one example. As manufacturers compact combat, rather, plateauing sales by offering premium options such as upgraded displays. Similarly, the introduction of 5G requires a premium display consistent with 5G capability and feature set. The resulting transition from LCPS to AMOLED requires masks with more layers. The most basic rigid AMOLED mask set has only 12 layers, while the most advanced can have up to 25. Not only does the number of layers increase, but there are more critical layers within each set, further enhancing the value we provide. Similarly, high-end technologies are expanding into the large-screen TV market. We are seeing the ramp of G10.5 plus form factor, which has come to dominate the production of standard LCD panels for large-screen TVs. With this transition largely behind us, we are currently seeing the commercialization of various OLED displays intended to capture the premium sector of the TV market. An alternative approach combines a conventional LCD with a mini-LED backlight to create a similar visual experience. These technologies are good for mass demand, as they require more mass layers and more critical layers per set. creating more complexity and higher value. As a display for the mass marketing technology leader, we are well-positioned to benefit from these trends. Shifting to the Chinese IC market, we're in the process of qualifying the final Vitho tool from our initial phase of investment in Xiamen. The installation of this tool was delayed six months because the supplier self-imposed travel restrictions in response to COVID-19. The tool is targeted at production of high-end photo masks. Our expectation is that we'll begin to generate revenue by the end of the second quarter and ramp through the back half of the year. China remains a key region of expected growth for the semiconductor industry, and our presence there should position us well to grow with the market. Over the last three years, our IC revenue of product shipped to China has grown at a compounded annual growth rate of 60% and is currently running slightly above $100 million annually. We anticipate that our business there will continue to grow and we will remain the merchant photo mass market leader in China. We are off to a strong start. I would like to thank all of our employees for your good work during the first quarter. Looking forward, I continue to believe that 2021 will be one of the best years ever for Photronics as we invest to support growing end markets, expand our business in advanced display technologies, enable our global customers to meet their product roadmaps, and improve profitability and cash flow to facilitate continued investment in projects that improve our return on capital. At this time, I will turn the call over to John.

Thank you, Peter. Good morning, everyone. Revenue improved 2% compared with the fourth quarter as growth in FPD was partially offset by a decline in IC. FPD growth was driven primarily by AMOLED displays for advanced smartphones. We've communicated over the last few quarters that the U.S. ban on Huawei had an impact on the display supply chain as design activity stopped while they reacted to the new restrictions. This affected our fourth quarter FPD results as panel suppliers did not require new masks for Huawei phones. During the first quarter, we saw this disruption ease and AMOLED demand return as new phones produced by other manufacturers made their way to the consumer. Elsewhere in FPD, demand for LCD masks, including G10.5+, remained depressed as panel producers took advantage of favorable market dynamics by maximizing output of current product and not releasing new panels. IC revenue is down slightly compared with the previous quarter as an increase in mainstream and memory growth was offset by reduced high-end logic demand, partially due to the industry dynamics Peter mentioned earlier. In addition, one of our high-end writing tools in Taiwan was down for an extended period as travel restrictions delayed the repair and return to production. On a year-over-year basis, many of the trends we saw were similar to the sequential trends with a larger decline in high-end logic and a smaller increase in smartphone displays. Looking forward, there's a plethora of positive data points for our industries that suggest photo mass demand should increase. in 2021. That, combined with the additional capacity we plan to bring online during the second half of the year, gives us confidence in our outlook for 2021 of high single-digit percentage revenue growth and operating profit growth similar to the 23 percent growth we achieved in 2020. Gross profit for Q1 was 20 percent lower than the previous quarter and previous year, driven primarily by unfavorable product mix, which we expect to improve as high-end logic demand returns. Operating expenses are higher sequentially, which is not unusual for the first quarter, and within our expectations as a percentage of revenue. Below the operating income line, net effects of other income tax provision and non-controlling interest were more favorable than comparable periods, resulting in earnings for diluted share of 13 cents for the period. Our cash balance at the end of the first quarter was $279 million, essentially unchanged from the beginning of the quarter. Operating cash flow is 26 million, and we spent $18 million on CapEx. For full fiscal year 2021, we're still forecasting approximately $100 million in CapEx, as we execute on the next phase of FPD capital investment. We repurchased 1.2 million shares of our common stock for $13 million during the quarter, leaving approximately $69 million remaining under our current share repurchase authorization. On the balance sheet, total debt increased by a net of $33 million, which includes a new equipment lease. Before I provide second quarter guidance, I'll remind you that our visibility is always limited as our backlog is typically only one to three weeks. And demand for some of our products is inherently uneven and difficult to predict. Additionally, the ASPs for high-end mask sets are high. And as this segment of the business grows, a relatively low number of high-end orders can have a significant impact on our quarterly revenue and earnings. Geopolitical risk related to government actions to address health concerns or trade policy may have an impact on our operations, the operations of our customers or suppliers, or end market demand, resulting in an adverse impact on our industry and therefore our results. Given those caveats, we expect second quarter revenue to be in the range of $153 to $162 We are encouraged by demand trends in our markets and overall positive commentary by others in the industry. High-end logic recovery is anticipated, but timing is uncertain. Other markets should continue to grow and we're on track to deliver on 2021 targets. Based on our revenue expectation and our current operating model, we estimate earnings for the second quarter to be in the range of 14 to 20 cents per diluted share. We have begun 2021 on an encouraging note, growing revenue in a seasonally soft period and meeting supply chain challenges. We are pleased with our performance, but there is room for improvement. Margins should improve as we grow revenue, further benefiting from fixed cost absorption and continued focus on removing costs from our supply chain and operations. During our investor day in December, we presented our three-year target model that establishes operating margins in the high teens, earnings in excess of a dollar a share, and free cash flow of approximately $100 million. We're confident that these targets are achievable and look forward to updating you as we move forward. I will now turn the call over to the operator for your questions.

Ladies and gentlemen, If you have a question at this time, please press star, then the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first question comes from the line of Tom Lefele with D.A. Davidson. Can we now ask our question?

Yeah, good morning. I guess I first wanted just to look into the mainstream market for you. Obviously, it's still a big part of your revenue. What are you seeing as far as industry capacity, and what are the pricing trends and growth trends you see there?

Yeah, the mainstream market right now, particularly in Asia, for us is very strong. So our capacity in Korea, Taiwan, and China, it was sold out in the current quarter. US and Europe, not. But throughout Asia, we're in an oversold situation. And if you look relative to historical behavior, probably the first time in my 35 years, anyways, where I see, or we see, significant investment being made in legacy nodes. Never seen that before. So the market is, you know, oversold for photo masks, and there's more capacity coming online. So this also, you know, sets the stage do things that we have effectively never been able to do in the mainstream, which is to start to nibble at raising prices. So we're in a dynamic now where we expect to see pricing move up instead of down in the mainstream market segment, and that should start to happen in the current quarter, and as we step through the year, we'll see how far we can take that. It won't have a big impact on revenue necessarily, but it will have a disproportionate effect on profitability. So obviously we like that trend, right? We like that trend. Yeah, we like that trend, yeah.

Okay, great. Thanks, Peter. And maybe as a follow-up, you talked about $40 million of annual contracts right now with a few large flat panel customers. When you look at phase two, do you typically get into those contracts ahead of time? And so they're kind of in place for when you spend the money to put in another line? Or what are the dynamics there for a new line going in?

Yeah, it's a mix. It's a mix of the two. As far as our FPD business is concerned, just to remind you that for a couple of years running, we were sold out in our FPD business. On the Q3 call, we said we expected Q4 not to be sold out, which was for us a dislocation. Indeed, it happened as we expected it would. Well, we got on the Q4 call, and then our panelists a day or two later, what we said was November, you know, was, you know, a month of, you know, still a month of grim, you know, market. And that December, by the time we had those calls, we were able to sell our capacity. And that obviously continued through the quarter. So our FPD revenues this quarter, you know, reflect one month of kind of crappy market and two months not of what I would describe as a strong market, but strong for us because of our position, particularly in AMOLED. So if we project forward, as I said, we expect a lot of AMOLED capacity to come online, particularly in China, right? We estimate, for our customers, a doubling, more or less, from the beginning of the year to the end. We're bringing this capacity online right into the midst of that capacity ramp, which has served us, I think, very well. If you look at our AMOLED, there's three litho tools. Two are slated to be delivered in the current quarter. Because of the short qualification cycles, we expect to ramp both of those tools in the third quarter. By the fourth quarter, they should be fully sold out. Basically, we think as soon as we can get them online, they're going to be sold out. The third tool is being installed in the third quarter, so it should be ramping into the fourth quarter. So anyways, the AMOLED capacity we're installing this year, as soon as it comes online, we believe we should be able to fill it. And the entire factory for the rest of the year, we believe should be fully sold. So we're feeling good about AMOLED in What should constrain our revenues is our ability to install and ramp those new tools, right? Okay, great. Yeah, and unlike, you know, John made some remarks. If you look at our global cost structure, right, the capacity additions we're making this year were more or less point tools, not lines. So, point tool installations have, you know, more financial leverage. than when we have to do what we just did in China, right, which is build factories and install lines where the lion's share of the capex there is not fully utilized. So the second wave in Hefei should help us effectively grow into and fully leverage our cost structure there. Yep.

Okay, great. Maybe if I could just squeeze one more in for John. When you look at the single-digit revenue growth, but the 23% or so operating leverage, is that just kind of normal operating leverage for you, or is it some special things going on this year that creates a little bit higher leverage than you would normally see?

No, Tom, we should see... OPEX improved as a percentage of revenue through the year. First quarter is generally kind of tough on with OPEX with employer taxes, et cetera, reinstating. And then with our regular, our normal operating leverage through the rest of the year, we should be pretty comfortably within the range that we discussed, low to mid 20%.

So the increase of these new tools doesn't ramp up your COGS uniquely?

We only start depreciation as we qualify and start generating revenue from those tools. So we have a fairly close match of depreciation with revenue, and it's a smaller portion of the depreciation coming on. So our operating leverage will still be 50%. or better.

Great. Okay. Well, thanks for your time today. Thank you.

Thank you. Your next question comes from the line of Patrick Cole with Stifel. Can we now ask our question?

Thank you very much. Peter, maybe first off, in terms of the high-end IC business that you talk about recovering, Are you seeing it – where are you seeing it in specific markets of this potential recovery? And could it be a steep ramp when it does finally recover?

Yeah. So, you know, Patrick, great. As you know, we have a really strong global team that has reacted and does – historically and continues to react very quickly to shifts in markets. And likewise, it's a very seasoned team. So if we look at our memory business, for example, you know, John commented on it, it snapped back just like you would expect in a normal upturn. So boom, you know, memory business, you know, full on. So traditional. Logic business, you know, different story, right? We've talked about the mainstream where over the last two to three years and over the next certainly one to two years, we see new capacity coming online. So the mainstream market is oversold like I've never seen in 35 years, oversold, and likely stay that way. On the other hand, if you look at the high-end logic, I think as You know well, right? There is a problem there, not for our customers, but for their customers, because there's a shortage of high-end logic capacity, I think, that now is, you know, well understood. So the capital equipment guys, right, are selling a fistful of tools, right? I think we had, you know, we had bookings of $3 billion, right, in a month in January. I don't think that's ever happened before. And those tools are largely, many of them being installed in the Asian foundries, which right now are running the current designs in general quite hard, trying to keep their customers happy. So yeah, if you look at how the high-end logic market is behaving, it looks like, to me, the kind of cycles I saw 15 years ago. where the business would turn up, the customers would react to the upturn in the business by building current products, and then as they added capacity, we would see a significant uplift in our business because now inventory is starting to build a little, people are more comfortable, the new designs that they kept on the shelf for a quarter or so break out. That's what the whole business, when it was more diversified with many more manufacturers, looked like 15 years ago. That was a classic cycle for the entirety of our business. We see that classic cycle now. We haven't seen it for at least 10 years, but we see it now in the high-end logic sector. The designs, they're sitting there. They're going to get released, and they're going to get released when, you know, our customers are doing a better job at keeping their customers, you know, happy. So, yeah, that will be likely a steeper step up and it will be reminiscent of, you know, the days of old. So what we see this year is every quarter successively being, you know, a better quarter. That's what we see both in our SPD and our IC businesses. That's what we, you know, that's what we said during You know, our analysts say that's what we said on the last call. And the only thing that's happened really to change our view between then and now is, you know, the information flow is incrementally more positive. So, yeah, it's an interesting time, right, with markets doing and behaving in different ways. But if you look back over many years, each market you look at, you can see the reasons for why what is happening is So it's an interesting fluid time, but there's lots of opportunity there, I think, for us quarter by quarter. And the capacity we have coming online, when we made the purchase decisions, it wasn't completely clear what was going to happen. But generally, I think we have the right pieces on the board. in the right places to, you know, maximize the financial outcome of the current trends in the various markets we participate in. So we're feeling, you know, pretty good about the business and about the markets this year for sure. Yeah.

Great. That's helpful, Peter. Maybe as a follow-up question, You talked about the strength in the mainstream IC business, which, again, it's not a major surprise given the market environment we're in today. Maybe related to some of the comments you made about high-end ICs and how, you know, historically it's been driven by new design wins, Aside from the strong demand and the need for new masks to keep up with, again, the demand trends out there, are you seeing any new designs on the mainstream? I see, and what I'm trying to get at that is we're seeing more silicon content in markets like automotive. There are also, you know, other types of, again, silicon content increases in different marketplaces. Are you seeing any design wins on the mainstream IC side?

Yeah, that's, you know, the answer is yes, right? So I think most, nearly all the automotive applications are not high-end, or at least the way we define high-end is 28 nanometer below. The automotive applications, the high-end of automotive, you know, might touch, the 28 nanometer node, but in general, it's an older, what we would call older nodes. So this is a market where historically, when you saw an upturn, the business would get better, but there wouldn't be new capacity coming online. I think it's very clear that now, and for the last year or two, There's been – there are investments being made in new mainstream sets. And those investments are being, you know, driven by increased demand at those nodes, not just for the existing products, but for new ones. And I think the point you made – but a new car, I think, today has $800 of silicon content in it on average. And if you go to a high-end car, it's much more. And as we go shift from the internal combustion engine to the hybrid and electrification model, there's going to be a boatload. Power electronics, that's all mainstream. All. I mean, some of the chips are a couple inches in diameter for the switching electronics. So this... What's going on in the automobile industry is going to create dislocations in our industry that I don't think any of us have ever seen. You can see the CapEx being adjusted in advance of it. It's interesting times.

All right, your next question. All right, again, ladies and gentlemen, if you have a question at this time, please press tar, then the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your next question comes from the line of God Richard with Northland. You may now ask your question.

Yes, thanks for taking the question. Just in terms of the gross margin in the first quarter was down to 130 bits sequentially and you had some tools down and it was a weaker mix. Could you parse those out and just give us a little bit of guidance as to which was the bigger impact or the mix between those impacts?

Yeah, I don't know that we would say one is bigger than the other. the decline in the high-end IC, and we had a slide kind of lower geometry product up to high-level machines. And then in MPD, we had some unabsorbed overhead. So I don't know that I'd weigh one effect off a margin more than the other.

Okay. And then in terms of – it sounded like some of your competitors are adding – capacity for mature markets, given most of the equipment in the market is fully depreciated, can those new assets be competitive at current prices and be profitable?

No. I mean, I think what – so, you know, to just go back and, you know, clarify one of John's comments. So, we saw a high in logic demand week. So what we did is we had mainstream demand very strong. So what we did was we basically split our capacity where we kind of moved everything a tool up to do our best to try to maximize our market share. As the high-end demand resumes, we'll push that all back down. you can see the effect on our margins, right? And anyone who tries to do the same thing is going to have the same outcome, right? To the extent you use some more expensive tools to build lower ASP product, your margins are going to get compressed. And today it's not feasible to buy a new mainstream line and have it make money at current pricing. It's not feasible. But what the industry will do is what, you know, we are doing and what we planned for last year, and that is, if you look at our maintenance capex, it's largely targeted at the mainstream market. And it's there to de-bottleneck the existing lines that we have. So we can get a little financially viable capacity uplift in the mainstream by putting the right tools in the right location. you know, what can we squeeze out? I don't know, another 10%, maybe 15, about, and then we're done, you know? And I think our competitors are in a very similar situation. They can do what we're doing, add a point tool to a line, gain incrementally more capacity, but then they're going to be done. So, and the consequence of that, I think... which I think you've highlighted, is prices have to go up, and they'll go up until you can add new capacity and make money, right? How much that is, I don't think we've run models, but it's not small.

Got it, got it. So what you're painting a picture of is as the high end fills up in the back half and designs are released, you're going to you're going to see a significant uplift in utilization in both mature and high-end, and prices should go up, and this should be a very favorable trend for margins walking through the year.

Yeah. Basically, we'll slide, you know, the mainstream business down off the high-end tools and reframe fill those tools with the high-end logic in Asia. That's one trend. Another trend is it's undeniable that prices are starting. In fact, we started after Chinese New Year with select customers to start to raise mainstream pricing. I've been doing this for 35 years. I've never been able to do that before. And we can do it. We can do that because everybody is sold out. Everybody, not just photronic, everybody.

Got it. And then last question, climate change. You know, there was this cold snap in Texas, a lot of water damage, power out, et cetera, et cetera. I think you have a plant in Round Rock. And I was just wondering, was that plant, impacted? You know, is it back up and running? Just any color there.

Yeah. So, yeah, both we and our largest competitor have, you know, factories in Texas. And we were both impacted. Their factory was down for a week. Our factory was down. We were offline based on loss of power for about a day. And the impact of that loss of power more or less depressed output for the best part of a week. So we lost about half of our output as a result of the dislocation in the power grid. So on one hand, we're happy we outperformed our competitor who was down hard the entire period. On the other, it did have an impact on our revenues, and that's already been baked into the guidance. So there's nothing that we know of beyond that that you don't already see the financial consequences of. So, yeah, it wasn't good for us. It was worse for our competitor. Of course, we have several significant customers in Texas, in particular, NXP, which was the Freescale, which was the old Motorola, and Samsung, and also Infineon, all three offline basically for a solid week and now trying to recover production.

Got it.

We did better. We did better than all, but we were still affected. Yeah.

And then just the last one for me, you know, you've had some issues getting – you know, things installed, repaired because of quarantine and COVID. Are those issues behind you at this point, or are you still, you know, struggling to get, you know, vendors in to do stuff?

Yeah, so the problems with installations, we, you know, hope are behind us. You know, different... But... Yeah, we think the installation issues are behind us because there's kind of one category of vendor that has struggled more than others regarding COVID. We're still going to have, I think, some issues related to the inability, the travel constraints imposed by COVID because not every vendor for the photo mask industry has fully capable people in all the regions where we operate. So this is going to be a kind of a nagging headache for another quarter or two. But as we're already seeing with infection rates dropping as the vaccination cross-section of the countries we do business in increases, the problems we've been fighting for us, right? It started in Hersey more than a year ago. We've been fighting with these struggles for a year. I think we've done a very good job at mitigating the impact, but we kind of see a tail that will last another quarter or two. And the good news is that that high-end, It's a 9K in Jaman. That's a very high-end e-beam. That was delayed. The installation, the final acceptance of that tool was the end of October, the last day of October. So we've been working to qualify that tool. And as the qualification period is completed, it should ramp right into what we think is the ramp in the high-end logic market. Now, that might be lucky. I don't know. But the tool was always intended for Xiamen. And the rest of the costs that are needed to support that tool is already dragging our income statement. And once that tool is installed, the leverage of it financially should be high. So anyways, The fact that it was delayed isn't the worst thing in the world, given, you know, the softness in the high-end logic market we're presently seeing. So, you know, maybe we got lucky on that one.

Yeah. Got it. Got it. Okay. Thanks so much. Thank you, guys.

Ladies and gentlemen, there are no further questions at this time. I will now turn the call over to Peter Curlin for closing comments.

Thank you for taking the time to join us this morning. We truly appreciate your interest. Electronics is well positioned to grow revenue, earnings, and cash flow this year, extending our market and technology leadership positions and moving us towards our long-term financial target. Look forward to updating you on our success as the year progresses.

All right, ladies and gentlemen, that concludes the conference call for today. We thank you for your participation.