Q2 2024 Sanmina Corp Earnings Call

Participants

Paige Melching; Senior Vice President - Investor Communications; Sanmina Corp

Jure Sola; Chairman of the Board, Chief Executive Officer; Sanmina Corp

Jon Faust; EVP & CFO; Sanmina Corp

Ruplu Bhattacharya; Analyst; BofA Securities

Steven Fox; Analyst; Fox Advisors

Anja Soderstrom; Analyst; Sidoti & Company LLC

Christian Schwab; Analyst; Craig-Hallum Capital Group LLC

Presentation

Operator

Good afternoon, ladies and gentlemen, and welcome to Sanmina's second quarter fiscal 2024 earnings conference call. (Operator Instructions)
I would now like to turn the conference over to Paige Melching, please go ahead.

Paige Melching

Thank you, Denny. Good afternoon, ladies and gentlemen, and welcome to Sanmina's second quarter fiscal year 2024 earnings call. A copy of our press release and slides for today's discussion are available on our website at sanmina.com. In the Investor Relations section.
Joining me on today's call is Jure Sola, Chairman and Chief Executive Officer.

Jure Sola

Good afternoon.

Paige Melching

And Jon Faust, Executive Vice President and Chief Financial Officer.

Jon Faust

Good afternoon.

Paige Melching

Before I turn the call over to Jure. Let me remind everyone that today's call is being webcasted and recorded and will be available on our website. You can follow along with our prepared remarks and the slides provided on our website.
Please turn to slide 3 of our presentation and take note of our Safe Harbor statement. During this conference call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the Company. And we caution you that such statements are just projections.
The Company's actual results could differ materially from those projected in these statements as a result of factors set forth in the Safe Harbor statement. The Company is under no obligation and expressly disclaims any such obligation to update or alter any of the forward-looking statements made in this earnings release, the earnings presentation, the conference call or the Investor Relations section of our website, whether a result of new information, future events or otherwise, unless otherwise required by law.
Included in our press release and slides issued today, we have provided you with statements of operations for the second quarter ended March 30, 2024 on a GAAP basis as well as certain non-GAAP financial information. A reconciliation between GAAP and non-GAAP financial information is also provided in the press release and slides posted on our website.
In general, our non-GAAP financial information excludes restructuring costs, acquisition and integration costs, noncash stock-based compensation expense, amortization expense and other unusual or infrequent items. Any comments we make on this call as it relates to the income statement, measures will be directed at our non-GAAP financial results.
And accordingly, unless otherwise stated in this conference call, when we refer to gross profit, gross margin, operating income, operating margin, taxes, net income and earnings per share. We are referring to our non-GAAP information.
I would now like to turn the call over to Jure.

Jure Sola

Thanks, Paige. Good afternoon, ladies and gentlemen. Welcome and thank you all for being here with us today. First, I would like to take this opportunity to recognize Sanmina's leadership team, our employees for doing a great job. So to Usiminas team, thank you for your dedication and delivering excellent service to our customers, and let's keep it up.
Now let's go to our agenda for today's call. We have John to review details of our results for you. I will follow up with additional comments about Sanmina's results and future goals. Then John and I will open for question and answers.
And now I'd like to turn this call over to Jon. Jon?

Jon Faust

Great. Thank you, Gary, and good afternoon, ladies and gentlemen. Thank you for joining us here today.
Before we go through the financial results, I want to acknowledge the entire Sanmina team for executing and delivering financial results in line with the company's outlook and continuing to do an excellent job.
Now let's talk about the Q2 results. Please turn to slide 5. Second quarter revenue was $1.835 billion at the low end of our $1.825 billion to $1.925 billion guidance range, which is down approximately 2% sequentially. We believe the business has leveled out from a revenue perspective, and we expect to see improvements in the quarters ahead as customer inventory absorption headwinds dissipate, which Jerry will comment on more in his prepared remarks.
Non-GAAP gross margin was 8.9%, which exceeded the high end of our outlook and was up 10 basis points sequentially and 50 basis points compared to the same period last year. We're very pleased with this gross margin result, which is due to a combination of favorable mix, focused execution and strong operating discipline.
Non-GAAP operating expenses were $63.6 million, slightly above our outlook of $60 million to $62 million, primarily driven by incremental expense related to our deferred compensation plan, which was completely offset by an asset gain in the other income and expense line item. Non-GAAP operating margin was 5.4%, which was at the midpoint of our outlook and down slightly at 10 basis points sequentially.
And 40 basis points compared to the same period last year. This operating margin result was also impacted by the incremental deferred compensation expense that I noted earlier, but is still solidly in the short term range of 5% to 6% that we set earlier this year.
Non-GAAP other income and expense was $6.5 million, favorable to our guidance of approximately $12 million, driven by the asset gain that I mentioned previously, as well as higher interest income due to our strong cash generation results and less interest expense due to lower usage of our revolver. Non-GAAP earnings per share came in at $1.30 based on approximately 57 million shares outstanding on a fully diluted basis. And at the high end of our outlook.
Please turn to slide 6 to talk about the segment results. Ams revenue came in at $1.46 billion, down approximately 3% sequentially However, IMS. non-GAAP gross margin was up 10 basis points sequentially to 7.7% due to strong operational execution and our continued focus on driving manufacturing efficiencies. Cps revenue came in at $398 million, up slightly at about 1% sequentially.
And non-GAAP CPS gross margin was down 10 basis points sequentially to 12.9% due to unfavorable mix. While we're pleased with these results, we continue to see opportunity for margin improvement in both the IMS. and CPS segments going forward. Further supporting our longer term margin objectives.
Now please turn to slide 7 to talk about the balance sheet. Our balance sheet is a key advantage of the company and a pillar of our value proposition to investors and the team did a great job managing it again this quarter.
Cash and cash equivalents were $651 million at the end of the quarter, we had no borrowings on our revolver, leaving us with substantial liquidity over of over $1.5 billion. We ended the second quarter with inventory of $1.38 billion, down slightly sequentially and inventory turns were 4.8%, up slightly sequentially. We continue to focus on improving our inventory position and increasing turns.
Our non-GAAP pretax ROIC was 22% for the quarter, well above our weighted average cost of capital. We continue to have one of the strongest balance sheets in the industry with a low leverage ratio of 0.57 times, which allows us to both navigate complex market environments and capitalize on the long-term opportunity in front of us simultaneously.
Please turn to slide 8, where I'll talk about cash flow and capital allocation. We did a great job managing cash this quarter, and I'm confident we are putting our cash to use in the right areas to touch on a few highlights. Cash flow from operations was $72 million for the quarter and approximately $200 million for the first half. Capital expenditures were $30 million for the quarter as we continued to make investments in the end markets that will support Sanmina's long term profitable growth.
Free cash flow was $43 million for the quarter and $135 million for the first half. During the quarter, we repurchased 28,000 shares for approximately $1.4 million. And for the first half, we've repurchased 2.2 million shares for approximately $107 million. As of March 30, we have approximately $172 million left on our Board-authorized plan, and we intend to continue to repurchase shares on an opportunistic basis.
Our focus and execution on cash generation provides us with the flexibility to invest in the business when making those investment decisions, we look for opportunities to drive shareholder value while taking a disciplined ROI-based approach, which is a practice, we will continue to follow going forward.
To conclude on the Q2 actual results. Overall, it was a strong quarter as we delivered on what we said we would and we continue to set up the company for future success.
Now please turn to slide 9. I'll now cover our outlook for the third quarter, which is based on what we are seeing in the market and forecasts from our customers. Our outlook it is as follows. Revenue between $1.8 billion to $1.9 billion, up slightly sequentially. Now in this type of market environment, we believe it's prudent to continue with our practice of only guiding one quarter at a time, but we are seeing signs that demand and revenue are starting to improve, which Gary will elaborate on shortly.
Non-GAAP gross margin of 8.3% to 8.9%, up slightly sequentially and dependent on mix operating expenses of $60 million to $62 million, in line with normal levels. Non-GAAP operating margin of 5.3% to 5.7%, up slightly sequentially. We expect other income and expense to be approximately $12 million, in line with normal levels tax rate of 17% to 18%.
We estimate an approximate three to $3.5 million non-cash reduction to our net income to reflect our India JVs, partner's equity interest non-GAAP EPS in the range of $1.22 to $1.32 based on approximately 57 million fully diluted shares outstanding. Capital expenditures to be around $40 million to support new programs and future opportunities as we continue to invest where needed to support our long-term strategy.
And finally, depreciation of approximately $30 million overall, I'm very pleased with our performance this quarter as we delivered on what we said we would.
With that, let me turn the call over to Gary to talk more about the business.

Jure Sola

Thank you, John. Ladies and gentlemen, let me add a few more comments about our second quarter, and I'll review our end markets and outlook for the third quarter and the rest of the fiscal year 2024.
Please turn to slide 11. As you heard from John for the second quarter, we delivered good results. Overall, overall, we met our outlook. We are seeing stabilization in some of our end markets and incremental improvements in demand recovery, slightly slower than expected beginning of the year. But we are working very close with our customers as they are burning through their inventory.
I can tell you that macroeconomic uncertainty remains, but Sanmina theme continues to demonstrate resilience and deliver good financial results in this environment. So what is certainly an advantage, big market. I can tell you that we are well diversified in growth markets. Sanmina has strong customer base of market leaders to help us to get through this environment.
We are working very closely with our key customers with existing and new projects to drive growth as market improves. Our business is well aligned to adopt to present market dynamics. We have strong cost management in place. We have aligned our costs to present business demand. And as John mentioned mention, Sanmina industry's leading balance sheet gives us a lot of flexibility to market to maximize shareholder value.
So please turn to slide 12. Now let me talk to you about revenue by end markets. Revenue for second quarter was $1.835 billion or roughly slightly down approximately 2% quarter over quarter. Within our guidance, I can say the forecast were more predictable this quarter. Industrial and Medical defense, aerospace and automotive was 67%. Our revenue slightly down 2.5% quarter over quarter.
For defense, aerospace and automotive, we saw good demand during this quarter for communication networks, cloud infrastructure. That was 33% of our revenue, slightly down 1.5% quarter over quarter. Also, I can tell you that we had a higher demand for new projects in communication networks and cloud and cloud segment, but we could not ship it because of material shortages and some testing capabilities, equipment capacity issues.
These issues will be resolved in our third quarter for second quarter top 10 customers represented 48.5% of our revenue were well diversified company and we have no customers over 10% plus. I can also tell you that the bookings for second quarter improved nicely. Book-to-bill was 1.1 plus to 1. Newer products are driving demand.
Please turn to slide 13. Sanmina has continued to invest in a faster growing and higher margin end markets such as cloud infrastructure, defense and aerospace, medical, automotive, renewable energy, industrial and optical advanced packaging.
So let me make a few comments on each of them for cloud infrastructure, AI and ML is driving new opportunities for us. We've been driving will be is mainly being driven by upgrades in our cloud networks to meet a traffic needs. Sanmina is well positioned to benefit from growth in a I would benefit some right now and the rest of the '24. But we're expecting to see more benefits and bigger opportunities in calendar year 2025.
For defense and aerospace, we continue to see solid demand. New program wins are driving a long-term growth for medical all focuses on digital had health and medical devices such as disposable consumables, drug delivery, surgical diagnostic imaging and lab diagnostic systems. We have strong base of customers and we are well positioned here. We see positive trends long term for automotive.
We mainly focus on electrical vehicle and electrical charges. Short term demand is softer, but our new opportunities will drive the growth. We see a better forecast for September and December quarter, and we expect to see improvements in demand longer term as we enter calendar year '25 and beyond for renewable energy will continue to win new projects. We've been focusing around generation of generation and storage of power, power controls and management here. Same thing, new opportunities are driving growth for us.
For industrial. We have solid customer base. We see stable demand. We've been focusing on factory automation, test and measurement and inspection equipment for semiconductor. Part of the industrial, we target we focus only target a fee. That business for us be stable, but we should see more improvements in the second half of '24.
Overall, we have solid new projects in the pipeline that will drive the growth longer term for optical advanced packaging, we expand is optical business for applications, mainly around 800 gig modules, and we started to do the R&D and new product introduction and 1.6 terabytes. Again, good opportunities here. Growth in cloud and data center will drive the growth for this segment for longer term.
Please turn to slide 14. I just wanted to show you a few slides. I mean, few pictures in this slide to see where Sanmina participates in AI and ML today as you can see for AI and ML for infrastructure such as communication, cloud infrastructure across multiple product lines such as servers.
I see hardware, software development, semiconductor capital, optical components such as optical modules, BARBARA controls, power management, networking equipment and services, storage on consumption of AI and ML is going across all markets such as automotive, transportation, safety, security, healthcare, defense and aerospace. And then, of course, what we're doing internally utilizing IBM and ML by automating our factories and machine learnings and back office. So as you can see, we are heavily involved in AI, and I believe this will drive a better future for us.
Please turn to slide 15. In summary, for second quarter, we had solid execution revenue of $1.83 billion, in line with our outlook. Non-GAAP operating margin 5.4%, non GAAP diluted EPS of $1.30, high end of outlook. So overall, a respectable quarter for Q3. Our end markets outlook, as John mentioned, is what we're seeing from our customer today that Q3 will have a guidance of $1.8 million to $1.9 billion non-GAAP EPS will be at the $1.22 to $1.32.
On positive side, our visibility is getting better and we're starting to see more traction, say some normalization of supply chain for Q4. We remain optimistic that we will see sequential improvements as we move into second half of the year, and we are starting to see stronger forecast for our September quarter as we are getting our forecasts.
And I can tell you that I'm personally excited about long term growth for Sanmina. As I said before, physical year 2024 is a transition year for us. We are navigating these market dynamics 40 Well, short term, our operating margins are holding and they're stable in the range of 5% to 6%. At the same time. Longer term, we are positioning the Company by making changes and improvements to drive operating margin to 6% plus.
We expect that the fiscal year '25 will be a growth year for our end markets. And our focus is to drive the growth in our heavy regulated markets. We believe that's where we have competitive advantage and we're well positioned there. So in summary, for short-term and long-term, Sanmina is well positioned to manage through this dynamic markets.
Ladies and gentlemen, now I would like to thank you all for your time and your support.
Operator, we are now ready to open the lines for question and answers. I'd like to say thank you again.

Question and Answer Session

Operator

(Operator Instructions)
Ruplu Bhattacharya, Bank of America.

Ruplu Bhattacharya

I thank you for taking my questions on the communications and cloud segment was down 36% year on year. Can you help us parse that? How much was communications down and how much did cloud grow. And can you give us some more details within that segment? I mean, how are you seeing inventory correction in that segment? And how did optical versus networking versus wireless? How did the different end markets within communications? How did they pan out this quarter and how do you see it trending over the next couple of quarters?

Jure Sola

Well, Ruplu, thanks for the question. First of all, there's no surprise that the communication market has been down now in my opinion, for the last three quarters, mainly driven by it inventory adjustments and some softer demand in certain segment. But yet you asked the question, what is going to end? I believe we come into the bottom of it. As I said, we're starting to see some normalization when it comes to supply chain.
And we are starting to see some more predictable forecasts. And more importantly, as I said, I think as we go forward, I think our visibility is better and so on and so on. I think back to a Xeon up there, that cloud itself is going better for us that that's about if you today, if you look at it, 33% of the revenue, about half of that is cloud and half of it is communication, communication networks.
A lot of the business that we do is around the net forcing an optical networks, the ruble, but the whole whole communication demand has got affected, especially around 5G and so on and so on. So but it's on a positive side, we're starting to see the light end of the tunnel, and it's not a trend anymore.

Ruplu Bhattacharya

Got it. That's helpful. And maybe as a follow-up here, if I can ask you on slide 13, you talk about Sanmina's expertise in optical packaging, and you've talked about 800 gig and 1.6 terabytes. Can you give us a little bit more detail on what type of stuff, what are the projects that you're working on and when you think these technologies will become mainstream, like when are you shipping 800 gig now? Or is that in testing phase? So any time line for these technologies to become more and more adopted?

Jure Sola

Yes. We've been in our optical business for a long time, especially optical networks. That business for us is a pretty strong overall with a strong customer base. We started getting involved in optical modules, I would say last five, six years we've been investing a fair amount in the last couple of years into optical advanced packaging. We've been doing for 100 gig type of product. We're starting to do 800 gig and making some shipments cross our optical product line on 1.6 data, but that's in development with a couple of partners of ours and Mid-South designs in an NPI process of process.

Ruplu Bhattacharya

Okay. And maybe maybe a last one question, John. So inventory was down sequentially a little bit this quarter. Can you give us your thoughts on the overall cash conversion cycle and how you see free cash flow trending? And just remind us on your uses of cash, how should we think about how you prioritize uses of cash in this environment?

Jon Faust

Yes, sure, Ruplu, thanks for the question. So in terms of the cash conversion cycle, we're in the mid 70s right now. But if you look back at the history of Sanmina, we're closer into the 50s. And so that's certainly what we're going to be striving towards.
Right. And if you break that down between DOIDSODPO., I think we've got a little bit of room to improve across the board. Inventory itself is quite a bit elevated several days beyond what our historical levels have been in our DPOs, not quite as high. So so you know, we're definitely going to be focused on working capital initiatives to bring that back down into line, which should help us generate more cash.
And in terms of our priorities for capital allocation, those haven't changed, right. And we've got four of them, just to reiterate reiterate for you and everybody else on the call. So number one is in organic growth, indeed the business and two strategic transactions transactions or inorganic growth, three, paying down our debt, which is at pretty low levels already and then number four, share repurchases, which as I mentioned, we'll continue to do opportunistically.

Jure Sola

Just to add to that, the cash flow was pretty strong for six months, about $200 million, and we expect to continue to generate strong cash flow the rest of the year?

Jon Faust

Yes, absolutely, yes.

Ruplu Bhattacharya

And do you expect strong free cash flow to continue for the rest of calendar '24?

Jure Sola

Yes, as you know, yes, Ruplu, we guide one quarter at a time, but we are guiding cash flow to be positive and two, three and as Jerry mentioned, very pleased with the performance that we saw here in the first half in the first two quarters. And then we expect to generate cash going into Q3 as well, thank you for all the details.

Ruplu Bhattacharya

Appreciate.

Jon Faust

Thanks, Ruplu.

Paige Melching

Operator, our next question, please.

Operator

Steven Fox, Fox Advisors.

Steven Fox

Hi, good afternoon. A couple of questions for you, and good. Good to talk to you guys. A couple of questions, if I could. Average bank know Broadcom, um, in terms of them just you mentioned some test capacity issues and some supply chain constraints during the quarter. Can you expand on that and make sure I just want to make sure what sort of markets we're talking about and when and how you're solving that problem that I have.

Jure Sola

Yes, yes, Steve, that came from Communication Cloud, a customer base where we won a pretty good size of project that should go on for the next year on three, four five floors. And it's this mainly is driven around our customer design and also talk customer design of a test fixturing, and we just see some of that modification as we got involved in production.
We realized some modification needed to be made. We have some shortages of materials at the same time. We're changing on a positive side. These things will be resolved sometime this quarter. And then we should first start continue to make shipments hopefully sometime end of this quarter. And next quarter and should be a pretty good program for us going forward.

Steven Fox

Got it. Helpful. And then as you mentioned, your gross margins were a little bit better than expected. And do you still see room for further margin improvement from here? Can you just walk through some of what you see as the gross margin opportunity say over there? I don't know two to four quarters out and receive.

Jure Sola

I think we are working to improve the mix of our business, driven by the some of the technologies that we offer into our customers and creating a lot more value, especially in a new market with some of the leading technologies that are coming out. So it's amenable is not to sell just the price but to sell the value that we provide to our customers.
And I believe that what we're providing all the way from our high technology printer circuit boards, if you look at a market here and ML require some more advanced printed circuit boards requires a year on mechanical rocks, cooling and so on. That goes around that integration of servers, storage. So that's the area that we move into an area I mentioned earlier, talking about optical, expanding our optical business.
We always were very strong and an optical net force optical systems. But now we're starting to in. We've been investing into optical components and optical modules to basically there's a huge demand going to be going on in next few years. And I believe that we'll be able to participate in that and drive the drive the margin up.
We also focus on expanding our defense and aerospace business. Demand for that business continues to be strong and we want to expand that all away from high technology printed circuit boards through the board assembly to the system assembly and so on.
On renewable energy, that's another area that fits our model providing end-to-end from mechanical electronics, you know, heavy power and so on. Because especially around the AIA. upgrade, the cloud requires a lot of the technology and capabilities that we deliver industrial business for us has been solid. I think we are investing the right things there, too.
So overall, I would say the margin will be driven by the capabilities that we provide into our customer number one and providing more end-to-end solution for our customers in our markets there, we have competitive advantage that I said, more mission critical type of products and then Tony things internally.
I think as we went through this morning for as I call it, transition year, we invested a lot in '23 for our growth and we positioned the company for the road, unfortunately, at 44 when demand went down because inventory correction, what we win because of COVID and then slower than a combination of those two things is a transition year or what are you doing this type of environment?
You you basically look at your company and tried to tune things up so that allows us to do a better job as the market comes back. And also most importantly, still, if you don't take care of our customers better and deliver the better better results for our shareholders. So that's combining all of that.
Yes, John, I don't know if you have anything else to add.

Jon Faust

I think you said it very well. You're I think the only thing I would add on top, Steve, to add to what Gary said, which is all about driving value for our customers within the businesses and driving better segment. Our mixed results. But as we return to growth, we should get some natural operating leverage as well. Right?
So if you add that on top of everything that Gary was saying, that's why we still believe that there's margin upside in both segments and for the company overall.

Steven Fox

That's an awesome explanation. Appreciate the color. I'll take my other questions offline. Thanks.

Jure Sola

Thanks, Steve.

Paige Melching

Operator, our next question, please.

Operator

Anja Soderstrom, Sidoti.

Anja Soderstrom

And thanks for taking my questions. So I'm just curious, you came in on the lower end sort of the lower end of the guidance range for revenue this quarter and you expect sequential improvement next quarter. What's what gives you confidence in that. Is that due to those shipments that were pushed out in communications, are there two other things driving that growth as well?

Jure Sola

Well, first of all, on your tax question, yes, if we had a little bit extra, we could have shipped our revenue would have looked a little bit better than what we delivered yet. But confidence is really what we are seeing from our customers what they are telling us right now, based on today's information, as we said, we will take one quarter time in this environment.
We, you know, I believe that what we've seen through forecast visibility is getting better. I think in burned down with a lot of our key customers, a lot of us, a lot of our customers are telling that the second half of the calendar year will get better and the forecasts are looking better. So combined combination of all of those things and some of the new programs that we have coming up should allow us to move in the right direction. John, anything else?

Jon Faust

Yes, I would just add, yours are on its way to your point that the market still pretty dynamic was from customers and end markets to his point turning the corner on demand and inventory absorption. But if you look at our guide for Q3 and the midpoint, we are expecting to see some modest sequential improvement. And so we're staying close with our customers on that and looking on delivering as much as we can.

Anja Soderstrom

Okay. Thank you. And the joint venture in India, how is that trending? It seems like you had a normal payment for that this quarter.

Jure Sola

Yes, let me just give you from the business point of view. And John, you can make a comment on that. First of all, the India joint venture is going well on yellow. We we're running the same way as we run it ever before. We have a lot of interest from our customers, and we expect a lot of growth in India. So from that point of view, I'm very happy where we add and more happy about the future. John, any comments?

Jon Faust

Yes, I think it's execution executing well, to your point. And if you look at what we guided on, the right, we said about $3 million AMI on the distribution, and we did just shy of that. So pretty much, right, right on target, right, where we wanted to be. But a lot of upside potential. And especially if you look at the next 12, 18 months.

Anja Soderstrom

Okay, I think it was awesome.

Jure Sola

And operator, we have time for one more question.

Operator

Christian Schwab, Craig-Hallum Capital Group.

Christian Schwab

Hey, Gary, I just have one quick question that hasn't been asked on the AI and machine learning product that you laid out, you know, if you what percentage of total revenue is all?

Jure Sola

Well, the cleanup in a cloud that we did in Communication Cloud is about 33% last quarter. About half of that comes from cloud with the we don't break it down at that. But definitely it's it's more this quarter than the last quarter. Will be more next quarter than we did last quarter. So definitely it's going the right direction, and it's really driven with a lot of our customers, new products that are required for operates of of the data centers.

Christian Schwab

Okay. I guess we have other things in there that I thought you were including in your AI and machine learning, but that's okay. So I guess just a follow-up. You know, on that you kind of said that you kind of thought that the optical business will follow both the cloud and hyperscale on strong spending. I guess just a follow-up to an earlier question. When would you expect in our optical spending to show meaningful improvement from current levels for?

Jure Sola

I would say let me kind of make a comment and a whole communications sector. I personally believe that we come in end of that this bad cycle, if I can weigh, I would expect to see nice some nice improvement in our fourth quarter. We're going to see some this quarter, but really a lot more in our fourth quarter and of analog as at September and December quarter of this year. We definitely a forecast looking up from in that segment and then help from us from a cloud, we'll help move that in the right direction.

Christian Schwab

Okay, great. Thanks for the questions.

Jure Sola

Thank you, Christian. Ladies and gentlemen, I want to again thank you for your time and your support. If you have any more questions, please get back to us. Otherwise appreciate everything, and we'll see you or talk to you 90 days from up. Bye-bye. Thank you.

Operator

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining you may all disconnect.