Integrated Silicon Solution Inc. F3Q09 (Qtr End 07/28/09) Earnings Call Transcript

| About: Integrated Silicon (ISSI)

Integrated Silicon Solution Inc. (NASDAQ:ISSI)

F3Q09 Earnings Call Transcript

July 28, 2009 at 4:30 pm ET


Scott Howarth - President & Chief Executive Officer

John Cobb - Vice President of Finance, Administration & Chief Financial Officer


Edwin Mok - Needham & Company

Mike Crawford - B. Riley & Co.


Good day everyone and welcome to the ISSI fiscal third quarter 2009 quarterly earnings conference call. As a reminder, today's conference is being recorded. At this time I would like to turn the proceedings over to Mr. Scott Howarth, Chief Executive Officer. Please go ahead.

Scott Howarth

Good afternoon and welcome to ISSI’s conference call for the quarter ended June 30th, 2009. I am Scott Howarth, President and Chief Executive Officer, and with me is John Cobb our Vice President of Finance and Chief Financial Officer. Before we proceed, I have asked John to comment on the nature of this call and any forward-looking comments that may be made.

John Cobb

Thanks Scott and good afternoon. During the course of this conference call, we will provide financial guidance, make projections, comments and other forward-looking statements regarding future market development and the future financial performance of the Company, new products or other matters. We wish to caution you that such statements are just predictions or opinions and that actual events or results may differ materially due to fluctuations in the marketplace, delays in developing new products, changes in demand or supply, or adverse developments in the global economy.

We refer you to the documents of ISSI files from time to time with the SEC, specifically our most recent Form 10-K filed in December 2008 and our Form 10-Q filed in May 2009. These documents contain and identify important factors that could cause our actual future results to differ materially from those contained in our financial guidance, projections, comments or other forward-looking statements.

Scott Howarth

Thank you, John. We are very pleased with our results in light of the poor economic environment. We saw a recovery in demand during the June quarter from the previous quarter and stronger demand occurring into the September quarter.

The demand recovery occurred in all of our markets with the strongest demand coming from China for consumer, telecommunications, and computing applications resulting from the fiscal stimulus in 3G build out.

However, overall end market demand remains below year ago levels due to the worldwide economic slowdown. The overall pricing environment moderated during the quarter.

We are cautiously optimistic about future growth as we believe our customers’ inventory corrections are mostly complete and that the current orders are more reflective of our end market demand.

We entered the September quarter with the strongest backlog that we have had since the beginning of a downturn nearly a year ago. So far, our bookings this quarter also have been stronger and in many markets we have seen pricing improved.

When you look at the elements that we control, we see many positives. During the June quarter, we were able to generate over $10 million in cash, further reduced inventory, improved our gross margin and reduced our loss. Our employees worked hard to do everything they could to improve the Company and the results showed their hard work.

In addition, we had a strong quarter of design wins and continue to see a high level of customer design activity as our customers seek stable DRAM and SRAM supply. Also during the June quarter, we completed our acquisition of Enable Semiconductor Corporation, a privately held Taiwanese and Korean company which we announced on April 27th.

Enable provides us with a full range of low power, SDR and DDR SDRAMs with densities from 16Mb to 128Mb, all available in Known Good Die or KGD format for multichip package applications.

These ultra low power SDRAMs provide longer battery life by using significantly less standby power. In addition, Enable provides us with ultra low power Pseudo SRAMS. All of Enable's products fill a strategic need for ISSI in the ultra low power markets targeting consumer portables, such as cell phones, digital cameras, PDAs, and GPS devices.

Our revenue for the June quarter was $38.9 million. This compares to $31.3 million in the March quarter. The 24.5% sequential increase in revenue resulted from a partial recovery in demand from a significant decline in the March quarter caused by the economic slowdown and an industry correction in the industry.

Revenue from Enable’s products contributed $1.7 million to our June quarter revenue, slightly higher than our target for this quarter.

Our gross margin in the June quarter was 25.1%, which is the highest level we have achieved in several years. The higher margin reflects the improved pricing environment, improved product mix and a success of our cost reduction efforts. In addition, we sold $1.3 million of previously reserved inventory. While we normally sell previously reserved inventory, this quarter was higher than most quarters and gave us a benefit of 2.7 percentage points of gross margin.

We are pleased that we could achieve a strong gross margin in this weak economic environment. This demonstrates the advantages of our fabless model where nearly all of our costs are variable. We believe this also shows that we can maintain our value proposition to our customers in our strategic markets.

As we previously announced, we have taken actions to reduce our spending and preserve cash. These actions included the reduction of our production plans, elimination of positions, salary reductions for all of our employees, a reduction in the fees for our Board of Directors, and numerous other cost reduction actions.

Since the start of the economic downturn at the end of September, we reduced our inventory by $22.6 million or almost 60%. We have generated $9.5 million in cash from operations. We completed our acquisition of Enable Semiconductor and we reduced our operating expenses by $2.9 million from the September quarter.

Throughout this downturn we have continued to focus on developing new products and supporting our customers. In short, we have strengthened the Company during a period of global economic weakness.

We cannot control the economic environment or the end market demand, but we are aggressively managing our business to preserve cash and to strengthen the Company for a long term success. We believe our results this quarter clearly demonstrate the positive impact of our actions.

Looking ahead, while end market demand remains below the levels before the downturn, we expect to see sequential revenue growth in the September quarter. We believe that our strategy is sound, we have the right products for our key markets and we remain focused on long term revenue and profit growth.

We are optimistic about our long term growth prospects and we will work hard to develop new technologies, gain market share, and build a stronger company.

ISSI is the leader in high quality memory products and our goal is to continue to extend our products into new applications and markets that require high quality memories and long term support.

In the past three years, we have been transitioning our business to be a supplier of high value memory and in doing so have improved our gross margin and delivered improved financial results despite very difficult memory market conditions.

We have also been seeking opportunities to grow strategically as evidenced by our acquisition of Enable. We will continue to pursue both strategic and organic growth opportunities. We believe we have established an extra foundation to continue to drive our strategy and penetration into those markets.

Our strategic direction is to focus on key applications and markets that provide sustainable revenue and profit growth. Our strategy leverages our strength and targets those markets; we believe we can add value through engineering, quality, service, and long term support.

Our broad product portfolio, customer service, long term support and high quality products provide a competitive solution that we believe will help further our growth in our focus market segments. The key markets that we are focused on include networking, telecommunications, automotive, industrial, and specific consumer and peripheral markets.

While many of these markets are experiencing weak end market demand, we still see opportunity short and long term as many customers are turning to ISSI for stable long term supply while the memory industry is in such economic turmoil. Our goal is to use our strengths to further penetrate these markets and to also expand our addressable markets with new products.

During the recession, we are taking a critical look at our core products and markets to ensure we focus and invest in the markets where we can achieve the highest return from our investment. The automotive and networking telecommunications remained very important to us even though the demand for automobile has dropped worldwide.

However, networking and telecommunications have remained much stronger particularly in China with their efforts to build out 3G networks. The growth of the electronic content on automobiles continues to grow with some customers targeting over 500 integrated circuits per vehicle in future models. This market continues to play the strengths of ISSI as a quality and technical requirements are higher than other markets. With the internal heat inside most vehicles, the automotive market requires memories with much broader temperature ranges to as high as 125°C and the highest quality memory with a goal of zero defects.

During the 10 years, we have been focused on this market. We have developed extensive product and process design expertise and knowledge to meet those transient requirements. While the cost of supporting the automotive market is higher than others, the margins and barriers to entry are also higher making a very attractive market for ISSI.

We believe our past growth in revenue in this segment has clearly been an evidence of our success and our position in this segment will continue to improve. We are actively supporting design wins for the 2010 and 2011 models and are confident this market will be very successful for ISSI in the long term.

Our telecom and networking customers also require both high quality memory and long term support and as such benefit from our investment into high quality automotive memories. With over three quarters of our employees in Asia, we have benefited from the strong presence by having access the critical technical resources, closer support and service to many of our customers and excellent low cost leverage to our business.

As we experience this economic slowdown, our long term operating model is a significant benefit to us as we have been able to reduce costs and generate cash. We intend to increase our market share through superior execution, targeted product solutions and higher quality product support.

Several of our customers are in need of cash to maintain their business, but we are fortunate to have a strong balance sheet and a low cost operating model to support our many customers now and into the future. Overall, we feel that our combination of focus on strategic markets, breadth of product offering, long term support and low cost model will drive our continued success.

Now, I will turn to our key markets and products. The DRAM market improved demand in the June quarter. As a result, our total DRAM revenue increased 36% on a sequential basis. Our acquisition of Enable Semiconductor contributed $1.7 million in DRAM revenue during the June quarter. DRAM revenue increased 24% excluding the benefit of Enable.

Sequential ASPs declined for more than in prior quarters. DRAM represented 52% of our total revenue in the June quarter. Our focused DRAM business represented 43% to the total revenue while the commodity business represented 9%.

DRAM order rates and pricing improved throughout the quarter as we saw demand in telecommunications, networking and for consumer electronics pickup. Looking forward, while visibility remains limited and the industry is adjusting to lower demand, we believe our customers have completed their inventory reductions and in some cases are now running into product shortages.

We begin the September quarter with stronger backlog than in the June quarter and turns orders to date have also improved over the prior quarter. We expect that our overall DRAM revenue will increase on a sequential basis in the September quarter.

With a very strong quarter in DRAM design wins is our customer starting to face limited product supply, reduced support from some memory suppliers and are seeking a stable supply. Overall, we had numerous very large DRAM design wins in the telecom market and automotive market. We also have large design wins for industrial and consumer applications in both Bi16 and Bi32 memory configurations.

Overall, we continue to see many opportunities for us to expand our market share and resume our growth as the economic environment improves and our competitive position strengthens.

For commodity DRAMs, pricing for 16Mb to 64Mb SDRAMs improved slightly during the quarter. Our commodity DRAM revenue was relatively flat compared with the March quarter and we saw improvement in our gross margins. As previously stated, the commodity DRAM revenue was approximately 9% of our total revenue or $3.5 million compared to 12% in the March quarter. While we continue to support key customers, we expect commodity DRAM shipments to decline in the future as a percentage of DRAM revenue as we place greater emphasis on our focused DRAM.

Let me now discuss our SRAM business. SRAM ASPs were down approximately 5% to 10% sequentially. Demand in most of our end markets in geographies remained weak during the quarter but we did see some strength in the China telecommunications. Our SRAM revenue increased by 9% compared to the March quarter and was approximately 34% of our total revenue.

During the June quarter, we won several major design wins at our key markets for various densities of our products. As an example, we had large design wins for 65 nanometer high performance 72Mb double in quad data rate sync SRAM, and several large design wins with our 4Mb asynchronous SRAM, mainly for networking automotive and industrial applications.

In addition, we had growth with our 18Mb sync and 36Mb quad data rate sync SRAM in the June quarter and had new design wins with our 36Mb sync SRAM in the telecom markets. With our competitive and broad SRAM solutions plus long term support, we are confident that we will see growth over the long term in the SRAM market. We expect the SRAM revenue in the September quarter to increase over the June quarter.

Our overall ASSP revenue increased 31% from the March quarter and represented 14% of total revenue in the June quarter. Market demand for EEPROM was much stronger in the June quarter while Smartcard demand was weaker compared to the March quarter due to lower demand from the Chinese governments.

ASPs for serial EEPROM and Smartcard products declined 10% to 15% sequentially, but through aggressive cost reductions we were able to maintain margins. We secured several large EEPROM design wins for networking in consumer products and had several large design wins for our contact with Smartcard. We currently expect ASSP revenue in the September quarter to be higher than the June quarter.

Let me now turn to our manufacturing operations during the quarter. Wafer Supply became more constrained this quarter and lead times started to increase. There were some limited assembly and test capacity constraints during the quarter but there are no impacts to our business.

Looking forward to the September quarter, we have seen increasing utilization in lead times at most foundries, but do not expect wafer or backend capacity to constrain our business. We are very successful in reducing our inventory during the quarter and now are slightly below where we would like to be. Even with this lower inventory, we do not expect to have any revenue constraint this quarter.

We limited our wafer starts and backend processing in order to bring our inventory level in alignment with our current requirements but the demand recovery is stronger than we had expected. In addition, we continue to reduce product cost and improve our operational efficiency which was reflected in our higher gross margin. While many of our competitors struggle with high levels of inventory, low gross margins and large cash outflows we have increased our gross margin and generated cash.

I will make some closing remarks in a moment, but let me first ask John to discuss the numbers.

John Cobb

Thank you, Scott. As Scott mentioned, our revenue for the June quarter was $38.9 million, which was 24.5% higher than the previous quarter and a decrease of 33.5% from the same period a year ago. Our SRAM, focused DRAM, and ASSP businesses all experienced stronger end market demand compared to the March quarter.

Gross margin was 25.1% in the June quarter, which was above our guidance range. This compares to 20.7% in the March quarter and 22.8% in the year ago quarter. The 25.1% gross margin was the highest we have achieved in several years. We experienced more modern ASP pressure during the quarter as the results of the improved market conditions. In addition, we saw $1.3 million previously reserved inventory. This provided a 2.7 percentage point benefit to our gross margin in the June quarter. As a fabless company, nearly all of our product costs are variable.

As such, unlike our competitors who have the high fixed costs associated with their own fabs, we have greater ability to control our costs, which minimizes the margin impact of falling ASPs. Additionally, our strategy targets specific markets, which have a more stable pricing environment.

During the June quarter, we incurred a $1.5 million in-process R&D charge related to our acquisition of Enable Semiconductor. Excluding this charge, operating expenses on a non-GAAP basis were $10.9 million in the June quarter. This compares to operating expenses of $10.6 million in the March quarter and $13.6 million in the June 2008 quarter. The increase in expenses from the March quarter was due to higher mass costs for new products and the addition of Enable Semiconductor.

As we previously announced, we reduced salaries for all employees, eliminated positions, and have taken other actions to reduce spending and preserve cash. While our expenses increased from the March quarter they still remain $2.9 million below the level of the September 2008 quarter.

Excluding the in-process R&D charge, we incurred a non-GAAP operating loss of $1.2 million in the June quarter compared to an operating loss of $4.1 million in the March quarter and $300,000 operating loss in the June quarter a year ago.

Interest and other expense in the June quarter was less than $100,000. We had no sales of investments during the quarter. Excluding the in-process R&D charge, the non-GAAP net loss for the June quarter was $1.2 million or $0.05 per share, which was significantly better than our guidance due to the higher revenue in gross margins. Net loss in the March quarter was $3.8 million or $0.15 per share. Net income was $2 million or $0.07 per share in the 2008 June quarter, which included $1.6 million in gain on the sale of investments.

A reconciliation of the Company’s GAAP to non-GAAP results is included in our press release.

Due to our aggressive inventory management and our spending reductions, we were able to generate $10.3 million in cash flow from operations in the June quarter. Despite this severe economic downturn, we have generated a total of $9.5 million in cash flow from operations in the first three quarters of our fiscal year. As a result, even after spending $2.7 million on our acquisition of Enable and spending $3.7 million on stock repurchases, our cash balance is now higher than it was at the beginning of the downturn in September 2008.

We ended the June quarter with $71.6 million in cash in short term investments compared to $44 million at the end of March. In the June quarter, we reclassified $20 million in auction rate securities from long term investments to short term investments. Under an agreement with Union Bank of Switzerland, we intend to require them to repurchase these securities at par on June 30, 2010.

During the June quarter, we repurchased a total of 232,000 shares of our common stock for an aggregate purchase price of $557,000. We intend to continue repurchasing our shares during the September quarter.

Our inventory at June 30 declined by $11 million to $16.6 million from March 31 a reduction of 40%. As a result, our inventory turns increased to 7 turns in the June quarter from 3.6 turns in the March quarter. Our accounts receivable increased during the quarter by $5.6 million to $24.6 million, and the day sales outstanding increased to 58 days from 55 days at the end of March.

Our accounts payable increased by $3.3 million from the March quarter. Overall, our balance sheet is very strong. At the end of June, we had $2.83 in cash per share and $4.61 in net book value per share. We are very pleased with our financial results given the economic environment. We grew our revenue, generated cash, improved our gross margin and reduced our loss while continuing to support customers and new product development.

Let me turn now to our guidance for the September quarter. All of our comments in this conference call regarding future numbers are forward-looking comments and subject to a number of risks and uncertainties. We are uncertain as to the duration of the economic downturn. As such, our forward visibility is still fairly limited and it is difficult to provide revenue guidance.

That said we currently expect our September quarter revenue will increase from our June quarter. In total, we expect revenue for the June quarter to be in a range from $40 million to $45 million. Our gross margin will likely be in the 22% to 25% range. Operating expenses should be in the range of $11.7 million to $12.3 million, which includes higher spending for new product mass. We expect about $200,000 from interest and other income. So taking this all into account, we expect to incur a net loss in the range from $1 million to $2.5 million for the September quarter or a net loss of $0.04 to $0.10 per share.

Now, back to Scott for final comments.

Scott Howarth

Thanks John. Overall, all business conditions have improved, the worldwide economic downturn continues to impact all of our markets and geographies. We are uncertain as to when business will fully recover in all of our geographies and markets and what level will be the new normal. As such, we are continuing to work hard to develop products for the future, support our customers, and maintain our strong balance sheet. Despite the difficult economy, we continue to have confidence in our ability to grow our SRAM, focused DRAM, and ASSP revenue over the long-term.

In the months ahead, we will continue to focus on our five key objectives, which are number one, to grow our customer base in a number of design wins; number two, increase our product portfolio while maintaining long-term support in our target markets,; number three, to identify and extend our reach into underserved and growing markets; number four, to serve our customers as strategic partners and gain market share; and number five, focus on preserving cash and efficient use of our resources.

We are cautious about the economic environment, but believe, if we continue to successfully execute on our objectives, we will build a stronger business. We remain committed to achieving that goal.

We will now take your questions.

Question-and-Answer Session


(Operator Instructions) Your first question comes from Edwin Mok - Needham & Company.

Edwin Mok - Needham & Company

Thanks for taking my question. The first one is regarding end markets. You mentioned that China is strong but there are some chatters that they might be slowing down in terms ordering and sales. I was wondering if you can comment on that and also since you are guiding full growth, in the coming quarter what are the end markets describing the growth?

Scott Howarth

Good question. I think if we look backward, they were two specific areas that we definitely saw our growth driven by China, the 3G build out, I think, has been quite strong for most of the major telecommunication carriers and also with their stimulus plan we have seen a lot of growth in consumer electronics areas.

Now, the consumer electronics growth, we see that continuing and some of the particular strength there as we see LCD TVs, net book area and some of the cell phone markets still are doing quite well and we are participating in some of those markets.

The information we have got from customers is the 3G build out has slowed down this quarter and had expected to resume somewhere in next quarter but I do not have any specific timeframe yet but we have seen that slowing down a little bit.

In the growth, I mean across the markets, we are starting to see pickup even automotive which I think probably hit the lowest point of all of our end markets. We are starting to see some pickup there. As you know, in the US, many of the major manufacturers, GM as well as Chrysler had extended shutdowns. Now that their shutdowns are over, we are starting to see new ordering through some of the different suppliers that we ship to.

The automotive market in China continues to do well so we are supporting through some of our customers a variety of different applications in automotive. Networking is another that seems to be still doing quite well as well as telecommunications. So that is where we are seeing the growth. I would say industrial probably is the weaker of the end markets right now.

Edwin Mok - Needham & Company

Great. Thanks. That was very helpful overview. And then a question on just a housekeeping question, right. So, your interest and other income actually came in slightly negative or given your cash you have on your balance sheet, I would expect you have some interest income? Can you explain why?

John Cobb

Yes. We have interest income but unfortunately we have foreign exchange losses that more or less offset the interest income and we also have rental income on our building in Taiwan but the functional currency of our Taiwanese subsidiary is the new Taiwan dollar but they do a lot of transactions in the US dollar and as a result they had foreign exchange losses which offset some of those other income items.

Edwin Mok - Needham & Company

So basically in the coming quarter, your guidance implied you expect a little more of those losses, what kind of losses are that?

John Cobb

We expect it to neutralize somewhat because we expect to have some other income where in this last quarter we had none. But we expect to still have some impact from that, yes.

Scott Howarth

In the other piece there also, Edwin, as you know interest rates are extremely low but we are not getting, I think we are less than 1% on our cash right now.

Edwin Mok - Needham & Company

I see, great. And then what was your cash from operation last quarter?

John Cobb

Last quarter, it was negative about $900,000.

Edwin Mok - Needham & Company

But I thought you guys had worked down some inventory and must be generating from cash from that, right?

John Cobb

We did work down the inventory but when you work down the inventory then it has to go through receivables and you collect it and also we worked down the inventory but we worked down the accounts payable. So, they tend to offset.

This quarter was the first quarter we really saw the cash benefit of taking our inventory down.

Edwin Mok - Needham & Company

I see, great.

Scott Howarth

Yes. That is all through collectibles and receivables there is usually about one quarter delay.

Edwin Mok - Needham & Company

Great. That was helpful. And then just talk about long term, two questions, one is could you update us as to when do you expect to see breakeven in terms of maybe revenue level and then also maybe in terms of inventory since you have worked down quite a bit, do you have kind of long term target on inventory levels?

Scott Howarth

Let me take those in reverse order.

Edwin Mok - Needham & Company


Scott Howarth

On the inventory, the goal that I have set this year is to get to a level of six turns, right now we are at seven. So, I do believe we are too low on inventory. I think for our business level, we probably should be in the $20 million to $25 million range on the inventory. So, we will see probably in the next couple of quarters we will increase our inventory a little bit. I do want to keep it. It is fairly level into the high turns.

Now, the question on when we think we can achieve breakeven that is a little bit harder to answer right now without having a better sense of the overall market growth. I definitely know we will breakeven probably early in our next fiscal year hopefully within the first half is my goal in target and I think if we do see continued positive trends in the economy that I do think that that is a real possibility.

Edwin Mok - Needham & Company

Scott maybe definitely the offset is, at what revenue level do you expect to hit breakeven given your current cost structure and given that you have to take some temporary salary cuts and some temporary measures, right? Some of those are essentially going to come back, right? So, that will help us in terms of gauging how the gross margins and also OpEx.

Scott Howarth

Yes. Edwin, as you know, there is a little bit variability at least on mass. So that is the only hedge I have at the moment. But I think with our current run rate, if we could pull the margins where we are at probably close to $50 million will get us to breakeven or near breakeven and as you look at our revenue guidance hopefully within the next one to two quarters it will be over $50 million.

Edwin Mok - Needham & Company

Great. That was very helpful. Thank you.

John Cobb

And one of the things I just point out also and I do not think it is specifically stated here. We did have positive EBITDA if you exclude the one time charge that we had for the in-process R&D and that certainly was one of our goals to get back to positive EBITDA.


(Operators Instructions) Your next question comes from the line of Mike Crawford - B. Riley & Company.

Mike Crawford - B. Riley & Co.

Could you talk about the current gross margin maybe just focus on DRAM and your SRAM, if you can carve up SRAM in any pieces that is helpful, just maybe now versus historically?

Scott Howarth

I would articulate our SRAM. Our margin is fairly consistent with historical standards. We have not seen much change up or down with it. The focused DRAM, we have seen improvement. Pricing has stabilized and moderated this quarter. We are not seeing the same drops that we had in the past. So we have seen improvements there from a margin standpoint. Also we have been working on cost reductions improving mix. So, we have seen definite growth in our focused DRAM and even commodity DRAM now, we have seen improvements in margin and commodity DRAM as pricing has actually started to stabilize and increase in some of the commodity areas.

Mike Crawford - B. Riley & Co.

Okay. And then regarding increasing levels of business, are you seeing any backend pressures in terms of test file mix or wafer supply availability yet?

Scott Howarth

So, I did mention in the call. We are seeing longer lead time in foundry across many of the foundries that we worked with. We are seeing some pressure on price increases as well. On the backed, we have seen a few situations where we have seen constraints, but the biggest impact we have seen is the shortages of leadframes. So, there has been some delay in getting additional production support in leadframes. But one of the advantages that we have, we shipped, we have low commodity devices as well as the focus on the DRAM side and we always put priority on focus.

So, in some cases, if we have shortfalls, we take it from our commodity or at least use the Die then we can test it to our industrial or other standards and cross ship. So, we have been able to actually balance supply to our customers without having any impact and we think we can continue that going forward.

Mike Crawford - B. Riley & Co.

Okay, great. And then last question as it relates to high end networking. When do you think will start to see many meaningful volumes of RL or LL DRAM entering markets where traditionally we have seen at high density SRAMs?

Scott Howarth

You mean when will the market start adopting those? Well, they are today. Actually, the RLDRAM as it is described or also LLDRAM is actually shifting today in some of the high end networking. So, these are already being adopted.

So, the market is starting to convert in some cases from QDR high end SRAM over to DRAM technology.

Mike Crawford - B. Riley & Co.

Okay. When do you expect to have revenues that are meaningful in this area?

Scott Howarth

Well, for us, we are still working on a device in that arena. So, we have not sampled for our customers yet. I would say revenue for this will be later or next year. So, we still have some ways to go yet with this device.


(Operators Instructions) Gentlemen, we have no further questions or comments. I would like to turn it back to you for closing remarks.

Scott Howarth

Okay. Thank you all for participating in this conference call and have a good evening.


And that does conclude today's conference. We do thank you for your participation and ask that you enjoy the remainder of the day.

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