SMTC Corp
Q1 2018 Earnings Call Transcript

Published: 8 May 2018

[Operator:]

Good Day, ladies and gentlemen, and welcome to the SMTC First Quarter 2018 Earnings Call. [Operator Instructions]. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference Mr. Blair McInnis, Vice President of Finance. You may begin.

[Blair McInnis:]

Thank you. Before we begin the call, I'd like to remind everybody that the presentation includes statements about expected future events and financial results that are forward-looking in nature and subject to risks and uncertainties. The company cautions that actual performance will be affected by a number of factors, many of which are beyond the company's control, and that future events and results may vary substantially from what the company currently foresees. Discussion of the various factors that may affect future results is contained in the company's annual report, on Form 10-K, on Form 10-Q and subsequent reports on Form 8-K and other filings with the Securities and Exchange Commission. All forward-looking statements are made as of the date of this call, and except as required by law, we do not intend to update this information. This conference call will also be available for audio replay in the Investor Relations section of SMTC 's website at www.smtc.com. I will now pass the call over to Eddie Smith, the company's President and Chief Executive Officer.

[Edward Smith:]

Thank you, Blair. Welcome, and good morning, ladies and gentlemen. I am Eddie Smith, SMTC's President and Chief Executive Officer. On this call with me today is Steve Waszak, SMTC's CFO; and Rich Fitzgerald, our COO. After the close of the market yesterday, we reported results for our first quarter of 2018. We finished the quarter with $37.1 million in revenues, up approximately 12% from the comparable quarter last year. Adjusted gross margin improved from 6.9% to 9.6%, while adjusted EBITDA was $922 thousand, which was $1.1 million higher compared to first quarter of 2017. The Company reported both net income and positive cash flows from operations in our first quarter of 2018. Yes, I am pleased to report that we are on track with our business plan to stabilize and reposition the company’s business and can now focus on accelerating our growth. Customer demand from existing customers and customers we have added over the last few quarters remains strong, and our backlog should, barring any further tightening of supply by electronics component suppliers, support double digit revenue growth in 2018, and positive year-over-year trends in our adjusted gross margins and EBITDA metrics. We have been successfully working with key supply-chain partners and meeting our customers’ commitments. The strong collaboration has been exceptional. To further provide flexibility to fill upside in our forecast, I announced the appointment of Phil Wehrli, as Senior Vice President of SMTC’s Global Supply Chain organization. We remain focused on crisp execution of our business plan with detailed attention to operational excellence, industry leading quality metrics and superior customer on-time deliveries. Over the past 12 months we have made progress aligning our cost structure to our near-term opportunities, stabilized and expanded our customer base into new markets and product lines. We also strengthened the organization’s senior leadership team with Rich and Steve who are on today’s call and with whom I worked at SMTEK International, an EMS company, where we transformed SMTEK’s market-positioning and shareholder value, and also with Phil who I just mentioned. At STMC, we are intensively dedicated to achieving a Relentless Pursuit of Customer and Employee Excellence and Profitable Growth with Above Market Returns for our Investors. We are making important strives forward toward this Vision, including reporting a slight profit and generating a positive Cash Flow from Operations in the first quarter, improvements compared to same quarter a year ago, but we have much more to do to capitalize on the opportunities we see for SMTC. To achieve our Vision, we are targeting to expand into additional programs and divisions at existing customers, as well as continuing to secure new customers. We will also explore M&A opportunities that provide synergistic benefits and/or add high-value end markets to accelerate our growth and enhance shareholder value. I'll now hand the call over to Steve to review the financial details and then come back with some additional comments. Welcome Steve.

[Steve Waszak:]

Thank you, Eddie, and good morning, everyone. Revenue for the first quarter was $37.1 million, compared to $33.2 million in the same quarter in 2017. $1.7 million of the revenues reported in the first quarter of 2018 was due to the impact of a new revenue accounting recognition standard, ASC 606. The remainder of the 12% year-over-year growth in revenue was the result of increased orders from existing and new customers added over the last two quarters. With our expanding revenues, the Company had four 10% customers, accounting for 46% of our revenue, compared to one customer that accounted for 11% during the comparable quarter last year. We saw year-over-year increases to customers in Industrial, Power and Energy, Electronic Payment Processing and Medical industry sectors. Revenue to customers in the Networking and Communications sector experienced a slight decline over the same period a year ago. Gross profit for the first quarter was $3.9 million or 10.4% of revenues, compared to $3.6 million or 10.7% of revenues in the same quarter in 2017. That said, adjusted gross profit in the first quarter, which excludes the impact of unrealized foreign exchange gains or losses, was $3.5 million or 9.6% as a percentage of revenues, compared to $2.3 million or 6.9% in the same quarter in 2017. This increase in adjusted gross profit in the first quarter compared to the same period in the prior year was primarily due to the increase in revenues, and to a lesser extent, improved efficiencies. Operating expenses, which is comprised of selling, administrative and general expenses, were $3.5 million in the first quarter, compared with $3.8 million in the first quarter of 2017. The same quarter year-over-year decrease was due to cost savings related to the restructuring plan executed in May of 2017 in addition to reduced rent and operating costs due to the corporate office move which occurred during the second quarter of 2017. These costs were partially offset by the hiring of a COO and VP of Customer Acquisition which were new positions not existing in the first quarter of 2017 and a new CFO hired during the first quarter of 2018. In addition, during the transition, the prior CFO ongoing salary and severance costs are recorded in the first quarter of 2018. As Eddie said, net Income was $8 thousand for the first quarter, compared to net losses of $0.4 million in the first quarter of 2017. Further, Adjusted EBITDA was a positive $0.9 million in the first quarter, compared to a negative $0.3 million in the first quarter in 2017. The increase in the first quarter compared to the same period in the prior year is due to the improvement in adjusted gross profit from higher revenue, improved margins and cost reduction efforts. Before I turn the call back to Eddie, if I may allow me mention a few balance sheet items and provide guidance for the second quarter

[Edward Smith:]

Thanks, Steve. Let me wrap up by saying, we remain on track with our strategic plan and have produced a solid Q1 with year-over-year growth in revenue, adjusted gross margin and adjusted EBITDA. I look forward to reporting on future earnings calls our continued progress towards making SMTC a stronger company that delights its customers with superior service and rewards its stockholders with enhanced shareholder value. With that, let’s take questions from those on today’s call. Thank you.

[Operator:]

[Operator Instructions]. And our first question comes from Lucas Davenport, he is a private investor.

[Unidentified Analyst:]

Couple of questions. The first is, do you have any comments on the seeking alpha article that came out a few days ago.

[Edward Smith:]

First of all, welcome we respect you. Everybody, first of all, we have announced our earnings before the articles written, and people think look at stocks different ways. I'm not so sure that the person who wrote understood the EMS industry all that well, so it's - I don't make a lot of comment on some of that. The reality is we had a good quarter, I think the business or trajectory is often into the right. I have done this turnaround things for, you don't turn around in one quarter. And then I think taking comments back from 2012 and try to tie those to something that happened 2018 is pretty difficult stretch. But I'll also say, probably, the two highlights that I would point out that were - that are different than what I think was talked about is, we're now cash flow positive from operations, which is a first time in multiple years. SMTC has been there with that, and we have a double-digit growth. In the end, I'll go run the business to increase shareholder value and to be profitable and then articles will change. I think that might be a lingering article from previous history, so I'm not too worried about.

[Unidentified Analyst:]

Okay. Thank you for that. What percentage can you estimate, the percentage increase for us revenue in the next quarter Q2.

[Edward Smith:]

Yes. We don't forward guidance other than to say, I think we did speak about as an overall for the year. We should double-digit grow. And I feel very comfortable. I know that in the market place people talk about tight supply chain so far that hasn't affected us super negatively. We have to work a little harder, I brought somebody into so Phil. Phil had work for [indiscernible] and bought multiple billions of dollars per year worth of components. So he has the right connections, he has right processes. So I don't see the supply chain is the big issue as some of our competitors. So I believe, we'll continue to have double-digit growth plus. I'd say that way.

[Unidentified Analyst:]

Thank you. My last question is would, I guess, the president having an America's first policy. Are there any plans to possibly seek, for example, like this might be a bit optimistic but like apple is talked about coming back possibly to the North America and manufacturing. Is there any possibility of reaching out to those big companies to try to get some kind of business from them? And that's all I have.

[Edward Smith:]

Great question, Lucas. Clearly the tariff, the 301 tariff stuff that was announced and now going through the process has caught our attention and our customers attention. We've done analysis of what it would mean for our customers on components that we import from China, and we've talked to our customers about that. But we continue to be in conversations with our customers about what they manufacturer with our competitors over the China and should that come back to either Suzhou or Fremont plan. So I do think that there's a possibility is that the more on shore, that'll go on. And when I tell the customers in and kind of is, I can't change or influence what goes on in politics, but we have such a footprint that were in America, we're in Mexico, we're in China, that what we can do well is react to what the customer needs, based on what political agendas are implemented. So we have the solution for our customers. And I think what will happen is we'll be implemented based on what the ultimate final results of the 301 tariff is

[Operator:]

And we have a question from Steve Kohl with Mangrove.

[Steven Kohl:]

I guess that our one of the [indiscernible] question for a second. So as you guys of what the, obviously one of the ideas, I think, the spoken of in the past it was it was trying to level production the best you can between the various plans. I guess, two parts of this; number one, how much more capacity because trial has been doing very well. Do we have additional capacity in Mexico to handle more volumes do come over there? Number two, are you seeing opportunities just to fill, the china facility, with folks and business markets of supports are selling into Asia that are not shipping product back in the United States.

[Edward Smith:]

It's a great question. So because of the growth in Suzhou, we put about $4 million of CapEx due to the business. Most of it into Suzhou, we did put some into the other plants, but I would say the predominance more than 80% in Suzhou. That should give us so much significance possibilities. So we continue to look at, do we need more equipment? And I think we'll be adding some work CapEx to Suzhou based on its growth. That new line that we bought just got there this week. It'll take a couple weeks to install, test out, get it up and running and make it efficient. Rich's done a great job, getting it brought in. So I don't think we have a long term expansion issue in Suzhou. We do have some tightness short term, but that should be solved by the end of the month. As far as the second part of your question about level loading the factories and doing that, we have moved some customers around to different places to get some already official season the other plants. We also move them because of the type of business that they do, while Suzhou is a big time production facilities pretty much more with MPI facility, but I would tell you that, over in china we're doing more China-for-China manufacturing and less China to bring back to the U.S. manufacturers, Steve. So I would say our customers are much more keen, it's the same, okay, from loads of if it's a big product I'm going to bring back to North America, I'll build it in Suzhou. If it's a product that's going into china, I'll build it in China. And if I need NPI, I'll do the NPI up in Fremont. And that seems to be the way that, that's putting out with our customers, right now. So it has little load from factories, and we've moved multiple customers to different factories for different reasons.

[Steven Kohl:]

Okay, thanks. One other question, just on the - you mentioned that you've been filling up, obviously, we noticed some customers are growing and has some good success there. How are you feeling about that pipeline visibility office so you mentioned that you expect double-digit growth is kind of you're having visibility for this year? Should receive the margins come through? Obviously, decent quarter here, but is it continue in Q2? Should that come through on the margins are what should we expect to see kind of on the margins of volumes wrapped up from here?

[Edward Smith:]

Yes. One of the things - the great things about EMS is, as you fill your flash should become more efficient, right? Get off to pay for the lights twice, the building twice in some of those, so your margins actually increase. So I would expect, our margin through main study or grow based on the increase in business for the rest of the year. So it is a pretty exciting time when it comes to that part of our business, adding customers. Our pipeline, so the first question about pipeline and quotes, right now we have a significant pipeline and quotes that are out. Some that I feel very confident we win, others I think it'll be a little bit of a stretch for us to win. But I think we have a pretty good pipeline. I would say, as we win customers right now because of the tight supply chain, it takes a little longer to date to wrap up a customer than it did a year ago or maybe two years ago. But we have been able to actually wrap some new customers up pretty quickly and so I'm pretty excited about the rest of the year.

[Steven Kohl:]

Okay. And one thing that I've given you guys a lot of credit, since you have come on board is buying stocks, and some for the rest of the obviously notice as an absence of that last quarter . Can you give us a little bit of color I'm kind of how the executive team is stealing about the stock is up to us to decide to move to $2 because of just one up on this so we don't want to buy anymore.

[Edward Smith:]

I personally point out to stay in the same pattern before. There's always reasons you can buy and not by at different points in different times. I knew we're going to have a good quarter and go net income positive, and so I didn't think it was appropriate for me to use that information and go out and procure stock at this point. But I'm still very high in the stock, even at this price. I like the $2 question, it's going to be even funnier when you ask a question $3 and $4 hours and all. But I am still very high in stock.

[Operator:]

Our next question comes from [indiscernible]. He is private investor.

[Unidentified Analyst:]

Yes. I guess, I've a couple questions. The first one, I'd like to start with it's, I guess, it is related to those seeking alpha article, they'd touched on the debt issue and our cash on hand as far as being able to service our backlog in our orders, and they were seeing we obviously concerned about whether we have sufficient cash to do that, not to mention, our debt, how we're going to be able to service our debt? I'm just wondering, if you can touch on those two factors.

[Edward Smith:]

Yes, sure. Absolutely, I appreciate. as I have said about the article earlier, I'm not sure, it's accurate or she understands, how we borrow money and the availability that we have to do that. So the first, if you heard Steve, as Steve spoken, and I'll have Steve comment when I'm finished, is we have $3.6 million on a hand, and we have availability over $9 million on our bank line. But here's what I would say, that those two numbers, together, are the largest amount but I could find the last four years at any onetime. I believe, we have plenty of room to grow significantly over the next bunch of quarter without any cash flow, works hash issues. I don't think you understands ABL banking which is what we do we do as a base Monday. So as we increase our inventory, and we increase our receivables from our customers are bank credit line actually expands and allows us to grow quickly without having to raise money. So I'm not so sure if you understands the whole business, I've been more than happy to talk to her and explain to our business in our business model, but with all that being said, I put that aside I'll really on the core question. I don't foresee it in the near future that our day-to-day operations, right, help will be have impact on growth or anything, based on money we would need our bank. We like our bank that really phenomenal they do a very good in terms of what we needed. I just saw when I first came in, I asked him for amendment, we got that. But we have availability in it as we're cash flow positive it'll be even more positive story. I think She's off base with that type of stuff so I will spend a lot of time on trying to respond to somebody doesn't understand our business. I don't know Steve you want to add anything.

[Edward Smith:]

[Indiscernible] direction and the board, I have done some extensive modelling to project out where we think will be in the next two quarters in '18 plus all also potential groceries for '19. And as Eddie said, we have a very, very strong relations with our bank we've in compliance with all of our covenants, and the capacity that we have under our backline provides the financing working capital for both inventory and receivables, again, assuming we stay on track excuse we are in terms of cash-to-cash days outstand all that. So we have sufficient, more than sufficient capital to drive very, very strong growth over the next 4 to 6 quarters, as we do our modelling and do our stress testing internally. And so that anything we look for now is really going to be growth oriented. As Eddie talked about, we put $4 million of CapEx into the business in Q2, which you'll see over the quarter and next quarter, all that capital was done, and a customer by customer program basis with tie ROIs. So we put lines in the plan to expand the plants capacities as we bring our customers and expand customer programs or existing customers. So this is - you always would like to have perhaps last after the other day this business thrives on the [indiscernible] manage your cash or cash flow in your debt in conjunction with growing the business. So we feel very good, and based on the modelling I've done in the past few weeks since coming on board sense of modelling we feel very comfortable we're good shape for that regard for capital and cash.

[Unidentified Analyst:]

Okay. And, I guess, I'll get to the other question what I was wondering on these potential new customers, it's been talked about in our previous calls. I know you didn't really helpful information yet on the how that was going to impact us. I'm just wondering if you could give a little more insight on what's going on with these potential and new customers? And how that will affect our profitability? I'm assuming that could help us tremendously if these pan out for us?

[Edward Smith:]

Yes. So we're ramping up. So I would say, once I give a number for that we're going to repeat a lot of time. So we can give you the number of new customers, but I would tell you all those customers are in some stage to ramp up, some are already ramped up in our production volumes, some are starting to ramp up. We've won some new customers, which we're now putting the pipeline in place. For those customers, I would tell you that as, as I said earlier in the call, as a new customer ramps up there more profitable normally than our existing customer, and that is really because of scale. The factory gets more scale they've overhead spread over more dollars and the reality is that's going to get better and better over time. So I'm very pleased with the pipeline it has a bigger since I've been here a year in terms of quotes that are outstanding and opportunities. We've added some new logos, which means new customers, I just learned that whole [indiscernible] in last couple of days from my team. But the reality is that a couple new logs each quarter and so - it is a pretty exciting time on the customer acquisition side of the business. As Steve said, one of the things up a point that has in Steve's comments, we are four customers that are approximately 10% of our business. So I think what you're saying is, some new customers being added on, some of our more existing customer showing us some confidence and more faith. And I think that, that combination lead to very positive return, long term.

[Unidentified Analyst:]

I knew, you'd mentioned in a previous call there were two customers, you didn't know for going to land those contracts or not. And I'm wondering, if you've got any information you can throw in there on those two potential customers.

[Edward Smith:]

Yes. We've landed a few potential customers, and on the very specific ones that we talked about, I think the last conference call the called before that. I think we went to one of the two. And I think it's pretty exciting time. We've landed a couple that are preventing pretty setting as time goes on here so. The customer acquisition side, we had Bob Miller, as VP of customer acquisition. I was doing that for the first couple of quarters, and so I want to add some resource to that, and so I couldn't be more excited about where we're going with customer acquisition side.

[Operator:]

And our next question comes from David Cannon with Cannon Wealth Management.

[David Cannon:]

Many of my questions about have been answer already just two things I would like to know. In terms of the growth batch and you're seeing in coming quarters. Can you share with us some of the differentiators and you think reasons that you're winning that business with those customers? And also spoken a lot about the fixed cost, you don't have to pay twice. So as you get up to $45 million $50 million ordered revenue, what is the contribution margin on that next our revenue, once you get up to that level? So we can get an idea of the leverage on our earnings models.

[Edward Smith:]

Yes. So let me start with the first part of the question, which is why the customers come to us in SMTC or should they come to SMTC? One is, I think, our operation group bar none is the best thing in industry. I think Richard's is team, quality wise and metrics wise are doing a phenomenal job and they've come a long way in a short period of time. I think, so first, I would say operationally, we're getting better and better by the day that's pretty phenomenal. Second is supply chain, as you probably have noticed from many of our competitors announcements, supply chain is tight. We have not experienced some of the same issue, it's clearly tight, but with the relationships that Rich, myself, Phil and others have, we've been able to overcome that and not negatively affect our customers to point of a stoppage or loss of revenue, and so I'd say supply chain. And then last is, we've been able to ramp up some new types of customers, such as, medical customers and others. I think also your to see in 2019, a lot of the efficiencies profitable bottom line. But I'll overall my model David, for every growth dollar of NBA or material value added 50% of that should drop down for the contribution margin. One more, as you get more efficient right? Model will get better and better as time goes on, so we have to what which is a pretty senior plan around, it's been around hit a threshold and they should drop more. Our Fremont in the one class are not is full so they probably drop a little bit less. And so where we bring the customer on, matters a little bit about what drops in the NBA down the contribution margin, but I will say is, look at it overall for the company 50% looks like a pretty reasonable target in models for the company in terms of what drops.

[Operator:]

And our next question comes from, [indiscernible]. He is a private investor.

[Unidentified Analyst:]

So my question is about, could you highlight some of the quality improvement shoes made over the course of the past year, I know there has been in, increase trust in your customer base and would you say all the low hanging fruit as far as operational efficiencies has been pictures or more ago?

[Edward Smith:]

So with doing CapEx spend that we did before that Steve spoke about the $4 million. Obviously, as we get new equipment's, it gives us better technology, faster technology and we get more operationally efficient that's number one. So I think this is still a ways to go, and if you ever speak to really good operations guy, he's never done tinkering in and getting better and better but we've come a long way. Second is, Rich has supplemented a real time dashboard in the company, which means Rich, myself, Steve, the executive team wake up every morning, and we can see what happened the day before as its going on that particular day. We can see on time delivery, we can see our quality, we can see our ENL. We can even see real time, as our customers answer our NPS surveys, so that promoters for from our customers. So when our customers are unhappy, we can deal it. So Rich and myself, I can give you a particular story, we had a customer it was so bad MPO escort made some comments. I'll call Rich up, the next day we're on plane, we go see the customer, understand what the issues are? And then we go fix those issues so it's real time feedback. And as was adjust a real time feedback, Rich's team have been really good to be able to say. Here's the industry standard metrics, here where we are today, here we want to be in the future. I don't think, operational excellence ever ends, so I would say is that it's continued to get better. But I think with new equipment, new tools, new measurements and then every employee at SMTC has KPIs with respect from them on what we're doing. And as we given those measurements, I think, people just get better and better you're inspecting what you do and holding a accountable.

[Unidentified Analyst:]

Okay, great. And then on the growth side, can you get any color as far as, what sorts of customers you wonder in your pipeline? Are you finding that you're going after wins these days et cetera.

[Edward Smith:]

Yes. I would say this way, you have to know who we are? When you go to market, so you are going to be pretty unsuccessful. And I understand that we are Tier 3 EMS provider. So when you say size, I don't see a server trying to win something that's $100 million, not at the size we are on today. I think that would cause us and then the customer issues. Well goal is to try to keep customers below the 20% mark somewhere in that 10% to 20% mark would be a really good feeling for us and for the customer. Otherwise, I guess, the risk rest that's right the reliance risk at our part, because the rest of the customer's part and so my answer to you is, we know where we fit in the industry, we focus on that particular space, we would take a customer for over $1 a million to probably $15 million or $20 million it feel very comfortable with it. But if we got into the $50 or $100 million is probably not a space, we wouldn't want to compete because it would be less profitable, profitability and probably would overwhelm our plants and we don't want that.

[Unidentified Analyst:]

Okay. The last question to share with existing customers. Are you seeing improvements there? And for new customers, are you leaning one way or the other versus direct model compared to your sales reps in the field?

[Edward Smith:]

Yes. So as far as the existing customer share wallet, I think that will continue to expand. We continue to talk to our customers. I think it took a while for them to change their view of SMTC and I think some of those still have to change their view of SMTC. Some of our customers have given us more business, some of our customers have given us more business, some of our customers talked to us about new opportunities. But I think, we'll see the benefits from our existing customers and new share wallet in 2019, early 2019 to mid-2019. I think some of them have to get over the some of the history of SMTC and if I could re brand SMTC from day one that I was here to now, I would do that, but I have to live with some a legacy stuff and so I think so much to cause some while. I think the articles where people talk about, that grow or not I don't help our situation for sure, because we do have enough room to expand pretty significantly and not need additional cash, but sometimes people believe what's in writing and not with the reality is.

[Operator:]

And our next question is a follow-up from Steve Kohl with Mangrove.

[Steven Kohl:]

Just a quick one, well, maybe, I'll do that quick what we for one more [indiscernible]. Eddie, we noticed that obviously it doesn't lost on us but two of the customers bought on medical but that was one of the two focus areas that you guys are moving, kind of more technically challenging stuff, secure service all sounds good and that makes a lot of sense. Can you give us an update on where you are both on an organic? How much of this can be done organically? Or we can send somebody much in the past getting some of these industries need these certifications or things like? Where are we, where are we trying to working on some things internally or we still looking businesses along with maybe just give us a little sense of direction.

[Edward Smith:]

So Steve, we are in process of a credit getting AS menu 100 the accreditation which is what you need for the military medical market. So Rich and his team are vigorously working to get that, but as you know, it's not an overnight process because you have to change actually have a company's those things in process to go through. I expect in the Q3 quarter will have AS menu 100 in both Suzhou and our three month plan. so we can do military in medical plans. That's a pretty exciting change, because the world that I come out of, an Rich comes out off, we have pretty deep loyalty in that marketplace from some of the bigger tier 2 and tier 1 providers for the U.S. government. You also know right now, the U.S. government spending in a space has increased. So we're working as quickly as we can to get our AS9100 and AS9200, and get what we need to get to do our aerospace business, but we're not quite there. The only way to see that going any quicker, as if we were to find the right MNA candidate that had these accreditations already in some other plants, and we were to do some eMNA and by the accreditation by using their plans. And so clearly, it's something that takes a look at every day to make sure that we can expand what markets, the higher grow, higher profitability markets, the more technical. What I normally refer to it as the highly regulated markets. These markets are highly regulated, you need to correctly, you need to understand that if you do that is a significant profit that comes with that and we are, deep into the process of getting our accreditation. Rich's team has done a good job. We got our ISO 1345 that the medical customers that unbelievably quick and now this is the next step to get a regulated markets.

[Operator:]

And I'm showing no further questions at this time. I'd like to turn the call back to Mr. Eddie Smith for any closing remarks.

[Edward Smith:]

Well, first of all I'd like to thank all of you for attending. Thank you for that. SMTC will be present at the B. Riley FBR's 19th annual institutional investor conference on May 24th, taking place in Santa Monica at California. Contact at B. Riley our contact or self-restoring a one on one meeting with us. Information about this event will be posted on the Investor Relations section of our website. I'd like to once again thank our dedicated employees, suppliers, customers and investors for the continued support as we build a stronger company. I look forward to updating you on our progress on our service call everybody have a great day. Thank you.