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9c8b0226a2bd7618970bd1c79d3a91da | Congratulations on the strong quarter. Maybe -- and this is, I guess, maybe a little bit more high level, but what do you think is the driving force behind the success that you're having with new customer wins? Is it the excess capacity that you're bringing online? Is it your process and analytical development teams and the ability to kind of work hand in hand with those teams? What is the driving force there? | Matt, I think, it's a number of factors. I think, there's no question about it. I think, investing ahead of time, I've said this all along is that most of our clients, I believe, time line is a critical success factor for them. And so, you can have all the best offerings in the world. But if you haven't got a bioreactor available for them, it's not what's used in maintaining time line. So we've proactively gone and invested in that capacity to make sure that our existing clients don't have to -- I don't have to turn around to an existing client and let them know that we're going to delay their next clinical phase because we haven't got a bioreactor available. In fact, quite the opposite, we always have that. So that's one critical one. I think, another fundamental which for me is paramount in this industry is the quality track record and the GMP manufacturing experience. Avid has got 18 years of manufacturing commercial drug substance. And that's one of the longest out there and the quality team do a super job of ensuring that we do -- we manufacture that commercial product at the highest standards. So I think, that's another significant attribute. And then, this is a really sort of boring, but essential thing, which is delivering product on time, in-full, in-spec, day in, day out. Internally, we have a phrase we're only as good as the last batch. And we continue to focus on making every single batch the best we possibly can. I think, the teams have been doing a super job in execution. And ultimately, clients like their product delivering on time in-full, in-spec. And word gets around that that's what you get when you're going to Avid. So we could do that. So it's a combination of a whole host of factors, and I could probably go on with at least half a dozen other elements that make that -- but the guys are just doing a really good job of delivering on their promise. | direct | [
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cbe0e5fe44f0d4c6e540618236627388 | That's really helpful. And then, maybe a follow-up question for Matt. I think, you mentioned in your prepared remarks that you've doubled the size of the sales team. Could you remind us what the size of that team is today and whether or not you plan to add any more headcount to that group, like say, over the remainder of the year? | Yeah, I think, we're rightsized for now. Currently, we have three in the mammalian side and then another one focused on the cell and gene therapy. | intermediate | [
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3ce4c339d172af222d142a78200e8d27 | This question has kind of been asked around a bit. But the analytical and process development expansion that you're talking about, is that a necessary to win business? Or does that make the likelihood of winning business higher? | I mean, I think, it's an essential element. Most projects require analytical -- a large component of analytical in that space. And obviously, process development as well, a lot of people are building projects for -- or coming with projects for preclinical, clinical manufacturer. And developing the process and refining the process is a key element of that. So that's kind of the onboarding component of the business where things normally start. And then, obviously, as one hones down the process and have something that you can scale up to GMP, it moves into the GMP suite. So it's an essential component of the business that -- where clients come onboard there, Paul. | direct | [
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8db7f75099a505969895b85bfa2c6044 | And then, lastly, did the experience that customers went through during COVID create more demand for single-use technology? | It's a good question. I'm not -- I think, it's a difficult one to -- I mean, there's certainly an increased demand for single-use technology during COVID. I would put that as much based on the fact that finding the disposable components throughout the industry during the last two years has been extremely tight, considering -- and that's just about in every component of disposable at some point during that period. So it had to have an enormous impact. In terms of the search for our mammalian cell requirements in the disposable, I don't think it's as big as one might look at. For example, fill finish every vial no matter what the therapy was probably put -- every product no matter what the therapy was put into vial during COVID. But not every therapy required mammalian cell culture to manufacture it, in fact, very few. So relatively speaking, to the amount of vaccine that was actually delivered out there. So yes, a large increase in the demand for disposable, but not so much in the same demand for mammalian activities as it was on the equipment. | direct | [
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5352f8e2720c77cd2c4a490e7e5ac0e0 | The first question is, you guys mentioned improvement of kind of demand activity starting a few weeks back. You also talked about having traffic counters installed. I mean do you have any stats around kind of the momentum just to give us a sense for the recovery and how -- the cadence of the recovery and how it might look? | Sure. I'll give you some detail on that. So on the traffic counters, those have just recently been installed, and we're establishing baselines. And I think there's more to come on that in the future, particularly around, as we mentioned, the digital initiatives and marketing campaigns and the effectiveness of those and being able to measure them, also looking at capture rates and those kinds of things. On the PLO, it's interesting because we did see PLO continue to decline through mid-April, but we started to see it turn around beginning in mid-April. So -- and this is speaking of the U.S. In Mexico and at GPMX, we actually saw an increase from the beginning of March to the beginning of April, marginal increase in both of those parts of the business. In the U.S., we're down very slightly from March to April, but we're down less than we were in mid-April. So that turnaround started midway through the month and started going the other way, which is a really encouraging sign.
Another aspect of this that we spent a lot of time looking at, obviously, is just our new loans made in both dollars and transaction counts. If you look at where we are on dollars and transactions versus last year, across the board in the business at the end of April, we're significantly ahead of where we were. If you look at the very end of April this year versus the very end of April last year, the new loans made trends are much stronger. We also, though, just for discipline, compare ourselves to two years ago because that's a more normalized level of operations that we want to get back to and beyond. We're still below that, but if you look at where we were at the end -- at the very end of March on those origination trends versus where we sit or we sat at the end of April, the gaps were a little bit smaller versus two years ago. So all in, we're really seeing some encouraging signs for things starting to come back. And this is all, obviously, subject to how these additional stimulus actions have an impact. But what we're seeing in every case now is that when those things happen, they're temporary and demand comes back pretty quickly after they fade. | intermediate | [
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ad9f418a402255be6ce416bb42661080 | Okay. That's super helpful. And then you referred to some of this, but I'm wondering if you could give us maybe a little context of what's going on in LatAm versus U.S. I mean the U.S. clearly has some stimulus activity that logically can be crowding out loan demand for a period of time. But it looks like the PLO and so forth in the LatAm is off more than the U.S. And I'm wondering -- but you also cited that it might be recovering faster. So I'm wondering if you could just give some color there. Why do -- why are there differences? Why are the pressures or were the pressures in LatAm greater? And do you expect the recoveries to be similar? | Sure. So first of all, if you look at the performance of U.S. versus Latin America, the story is much more about the performance of the U.S. and really exceeding our expectations. Some of that you can attribute to timing of stimulus versus what we expected. But a lot of it also can be attributed to just really good, solid operations and moving inventory and sales velocity in that first 90 days and just operating the business, again, very effectively. We do have some differences between Latin America and the U.S. If you look at just activity levels, rates of vaccination, if you compare the percentage of people vaccinated in the U.S. versus across our Latin American footprint, it's significantly different, which is leading to lower levels of activity.
And then also some of the dollars that go to people in the U.S. end up showing up in remittances. But it's a similar story as kind of the mid-April comments I made, and it actually goes back a little farther. If you look at the last couple of months in Latin America, we've really seen things start to pick up, and we're pretty happy with what we're seeing. We still have a long way to go, as you pointed out. But these are -- if you look at the trends that we're seeing, the positive trends, combined with the demographic factors, the penetration of the pawn product in the different countries where we operate, we still believe that the future is extremely bright in Latin America, which is why you see us continue to invest there in de novo locations and those kinds of things. But there are differences, and we expect those to dissipate over time. But as it stands right now, the U.S. business is producing more than Latin America. | direct | [
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93e20daafcd12698b8060b9b4c9737e5 | Okay. That's helpful. Last question is, obviously, good trends on opex. Is this quarter a good run rate? And I think you kind of mentioned that you would think some of the variable expenses start to move up as transaction counts move up. But are there any other moving parts there? Or any other opportunities that you see to continue to drive opex lower. | We would think -- yes, we're still looking for more savings as we go. But we think we have found most of the low-hanging fruit and now we are just looking at trying to maintain those cost savings going forward and to keep those expense savings low. But as we said, those store expenses will slowly come back as that transaction volume increases? | direct | [
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4828fc0e7683fd8c43ebf842c5926685 | I just wanted to dig into the inventory turns, the jump from -- to 3.1 from 2.1. How much of that is just the reduction in aged inventory and leaner inventory levels overall? And what do you think a normalized level could be? I mean are we seeing the impacts of Lana, I guess, help your inventory turns and how should we be thinking about that? | Yes. We're really excited about what we're seeing on that aspect of our business in both the U.S. and Latin America. So across the entire pawn business, we're seeing higher turns and a greater focus on turning merchandise in the first 90 days when it's -- where it's most economical for us to do that. Clearly, this situation that we've gone through with sales demand starting about this time last year has helped us work through some of the aged inventory we had. But we also had what we call internally a new pawn operating model that lends itself to incentives being in place and operations being focused on continuing to manage inventory effectively to turn it faster, to have that velocity be high. And the result has been great to see. And we think that result is going to continue to drive positive results because at the store level, we're seeing -- at the store manager level, the store manager is able to see, if we manage it this way, there are a lot of other aspects of the business that benefit financially and otherwise. So we would expect that we -- that this is not temporary, that we've achieved a much greater level of efficiency in our operations and how we manage inventory. That ratio of PLO to inventory is more in line with what we would expect to see going forward.
Obviously, the challenge for us will be, as inventory increases along with pawn demand going up and that trending higher over time, we'll need to be as effective at higher volumes, but we really believe strongly that we've got a new operational focus in place that's going to lend itself to that. So we actually think these pickups in the inventory turns are here to stay. We did mention that the sales growth profit margins are likely to fall back a little because they're extremely high right now. And as you go into a more normal part of the cycle where there's a little more negotiation, those will slip a little. But the turns and the progress we've made on those we expect to keep and we'd like to continue to build on. | intermediate | [
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5aa02391986857e20f86b627e73e7b2f | Okay. That's helpful. And then can you just talk a little bit about the M-and-A in the U.S., given the market is very fragmented? Kind of was this a distressed opportunity just given what's going on in the pawn environment? Is that what you're looking for? And are there any meaningful changes that you see? Or is it still going to have to be kind of smaller-sized acquisitions in the U.S.? What are you seeing there? | Yes. In the U.S., the opportunities do tend to be smaller. It's still a really fragmented market. This is just a broad number kind of a general number, but there's something like 5,000 owners and 10,000 pawn shops in the U.S. So it's extremely fragmented, a lot of mom-and-pops. And obviously, it takes as much time to do a small acquisition as it does to do a larger one. But at the same time, we're focused on all of them. I mean we are having really good productive discussions with opportunities of all sizes.
But again, they do tend to trend smaller in the U.S. And I wouldn't say that this is a distressed situation at all. People will sell for many different reasons. Sometimes it's generational handover. Sometimes they're just ready to retire and go fishing or whatever it may be. And we're having ongoing discussions to make sure that they know that we're here, and we want to pay a market price and get deals done and move quickly, still do our diligence and be effective but also move quickly. And we've seen a good reception from that. We hope to continue in future quarters to be able to announce that we've had more success. This 11-store acquisition in Houston is, as I mentioned, a really good sign that our efforts are paying off. But as you know, the M-and-A business is choppy and things happen when they happen. But we're really excited about the one we just did. | direct | [
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cf45cf14fb04ce531f091e02616b4673 | Okay. Great. And then it's been a while since, and I don't know if it's coming, but since we've seen any inflation, and you've mentioned kind of a pickup in PLO demand, maybe more on a sequential basis. But is there any impact you think from, say, higher gas prices that might be impacting demand a little bit, helping it to the positive side? And is there any context you can put on the environments of a pawn operator under a growing inflationary environment? | So you bring up gas prices. Gas prices are up 63% today versus where they were this time last year. So that's a considerable increase in kind of an out-of-pocket expense that most of our consumers are incurring. You see it in other areas as well. I mean this has been a big topic of discussion this week in the markets. Inflation, is it transitory or not and those kinds of things. Building materials, consumer staples, consumer discretionary goods. Prices for things are going up. And it's interesting because the balance of that on the other side of it is unemployment is much better. It was almost 15% last April and now it's back down to 6%, not where we were at the beginning of 2020, but still really strong relative to where we were.
Consumer confidence is high. The average hourly earnings are now back to above pre-crisis levels. So the consumer sits in a pretty good position, which probably lends itself to less of a need for the government to intervene as much going forward in the future. But also offset by the fact that with some of these inflationary factors creeping in, what you would typically see in a market that's sort of operating on its own is, that kind of an environment would drive more needs for short-term cash. So the pawn business typically does well in all parts of an economic cycle, but it does better as prices are going up and things tend to be incrementally more distressed. So you would expect over time. If these inflationary trends are not transitory, you would expect that to drive more pawn demand and for that to benefit our business. | direct | [
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a74b40a16ba32b357d6ca4f34876155a | Great. Thanks for all the color on ERP. I'd like to switch over to your database. You've made meaningful improvements in both cloud and customer OCI 2, which where both one and two are required for ADB. So, are those improvements enough that we're now starting to see the upgrades to ADB? And are you able to monetize those upgrades to the point where we'll start to see database growth acceleration? | The answer is I think there's no question you're going to see a lot of database growth -- a lot of database acceleration starting next year, which we're a quarter away from. But we'll be fine in Q4. Again, autonomous database is growing pretty rapidly. But we expect it really to explode next year, and I really do mean very, very rapid growth next year. I'm not really ready to disclose our plans as to why I think it's going to suddenly spike, but we expect very, very rapid database growth next year. | intermediate | [
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311bbbe0ff5f5163f86ab4719e46ae15 | Yeah. Thank you, Larry. This SAP replacement wave, it feels like kind of a historic moment because that kind of activity, it's usually so rare, and these -- the logos are pretty large that you're mentioning. So, when we see -- | I apologize for interrupting. The really spectacular logos are not led. They're a threatening disease [Inaudible] some of them are pretty spectacular in there. But we have some that are much larger and much -- and absolutely shocking. And I've been alluding to this, but sometimes, we're in the middle of an 18-month implementation and the customer doesn't want to be mentioned. If I could mention them all, it would be -- it's front page news. I mean it's a very big deal. Yeah, I agree with you. It's an historic event. It is -- I think a long time ago I said there are two technologies that will drive Oracle's future. One is Autonomous Database, and the other is ERP. We expect -- we are -- again, reading the Gartner report, we are so dominant. Our product is so much better than anyone else's product in the cloud. We expect to get a significant number, more than half of SAP's customers, we'll get. But keeping our own, plus getting a lot from the smaller companies like Infor and Lawson. | direct | [
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17d16bdfa831daa466f9f7fcf345cb3b | So Larry, the ones that we see, which aren't too shabby, you mentioned DHL and Honda and Lloyds Bank. Is that a precursor to moving to Oracle core financials eventually? And I'm just wondering which of Oracle's strengths is really catalyzing that wave of replacements? | OK. So, there are two lists. One -- the first half of the list that I read, and they're about equal-sized lists, were people that already moved from SAP financials to Oracle financials. The second list were people that had partially moved to Oracle but still were running SAP financials in some places. In other words, we don't consider it a complete win until we replace out -- if we just sell procurement and supply chain and manufacturing and things like that but they still run SAP financials, we don't consider that a complete win. That's what we call our surround strategy. But once you start using our cloud products and compare that with SAP's on-premise products, we think the vast majority of these companies that have started the journey will finish the journey and don't want financials in the cloud, just like they have supply chain in the cloud and procurement in the cloud. So, yes, we expect companies -- we've already seen companies migrate off the second list. They buy procurement. They buy supply chain, and they say, OK. I like that. I'm now going to buy financials. So, yes, we expect all of this -- or excuse me, the vast majority of those customers to eventually standardize on Fusion Cloud ERP for everything. | intermediate | [
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4d69b80618069bd719a976e637e6599f | Appreciate the additional color that Safra gave on the call. I'd like to turn to OCI Gen 2. We've been hearing about security concerns from consumer Internet companies. To what extent has OCI security technology helped you win business with these companies? And is consumer Internet a big driver for OCI Gen 2? Also, to be clear, this is not about TikTok. It's about all the other consumer Internet company opportunities. | Yeah. Well, I think there are two things that are interesting about OCI. One -- on the security front. One is we believe security should always be turned on. In other words, there is no light switch: security on, security off. We have these things called Max Security Zones in OCI where you cannot turn security off. Max security is always turned on. It's a safe place to go inside of OCI. No one has anything like this where security is always turned on. You cannot turn it off. You cannot open up a link -- a network link that puts your infrastructure and your data in jeopardy. That's one thing. So, security is always on. The second thing is autonomy is very interesting because the Oracle Autonomous Database -- by the way, Oracle Autonomous Database is not the only autonomous product we have. We have Autonomous Linux that is the foundation operating system inside of the OCI network. Oracle Autonomous Linux, Oracle Autonomous Database, has no human labor associated with it. OK. So, as well, that's a huge cost savings. It is, but that's not the most important benefit. The most important benefit, if there's no human labor, there is no human error. If there's no human labor, there is no human misship. There's no opportunity for an insider to corrupt the system. There's no opportunity for a user to misconfigure a system that creates a security vulnerability that will lead to the loss of data. So we think one of the most attractive aspects of OCI other than its high performance, low cost, all of -- everyone likes to pay less, and they do with OCI. But we do a better job of securing your data than any other cloud vendor. We've seen that be the decisive feature in winning a lot of these deals with ISVs and end user customers. | intermediate | [
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0f74f2966ba8da55012db74cae7084d9 | Hi. Thanks for taking my question, and congrats on a strong quarter. I just wanted to focus in on the license line. It was up 4% as reported, flat constant currency off of what was actually the toughest comp for this fiscal year. I wonder if you can provide some context on sort of what is driving that, particularly sort of relative to the strength that you're also seeing in the cloud side? Is this Oracle database? Is this the add-ons to the Oracle database? Any sort of more color there and then also, in particular, sort of in conjunction with the cloud? That would be great. | Sure. Let me take that. So, the Oracle database remains very strong, and what's good about the Oracle database is you can also bring your own license to the cloud. So, it's both on-premise and in the cloud can be used there, and it remains very, very strong. The installed base of the Oracle database continues to grow, and that is, of course, our central piece. Now, in addition, Java on-premise continues to do very well as more and more companies continue to invest in Java and trust Java for their own applications. And in addition, our vertical applications, some of our industry applications, still require on-premise license for the customers' use. We also have cloud services in many of these verticals. But especially in telecommunications, as many of the communications companies move to 5G, we are a very central part of their transition to 5G and need our license in that -- in those areas. So, database, top, doing incredibly well. Java, doing very, very well, and our vertical applications. And then, pretty much everything else, of course, as you know, is offered just in the cloud. | direct | [
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26badc7f9713d694c1ff94f0ba0b3a06 | Great. Thank you so much for taking the question, and congrats as well on a great quarter. Larry, it's so great to hear every single one of those SAP wins, especially since investors think of SAP's customer relationships as being so deep. So, clearly, by displacing them in so many accounts, it speaks volumes to the quality of your product and trust that these companies place with Oracle. So, my question is this, why now and why from a product perspective? You mentioned Gartner's take. But since Oracle has always competed on having better product, what have you been doing product-wise that's enabled you to pull ahead of them like this? And what do you need to continue to do product-wise to remain ahead? | So well, we started 10 years ago to build Fusion Financials for the cloud, to rewrite all -- we have PeopleSoft ERP, JD Edwards ERP and of course, Oracle E-Business Suite. We had these three separate on-premise ERP systems because -- and we decided a decade ago to rewrite all of that for the cloud. And SAP, unbelievably, they just -- and by the way, we did a very good job. We started a decade ago. And we did, I think, a very good job redoing -- a big job, to say the least, redoing our ERP products for the cloud. That said, SAP chose not to rewrite their ERP products. Instead, they made a bunch of acquisitions. They bought Concur. They bought Ariba. They bought SuccessFactors. But they never -- and we made some acquisitions also, by the way. We bought Taleo and other -- right now and other things. But we rewrote everything for the cloud. SAP instead embedded their own database called HANA and focused on this new database and never really rewrote their ERP code for the cloud. I mean it's just an unbelievable error. They worked on a new database. And the thing we're competing with, so-called S/4HANA in the cloud, that's what SAP calls it, is not a cloud product at all. It is the 35-year-old ABAP -- this is written in a programming language called ABAP. Oracle Fusion is written entirely in Java, and it's entirely rewritten over the last decade. SAP stuff is literally 30 years old, the same stuff that they've always had that they now will host for you. So I would say we did a competent job rewriting for the cloud. SAP just entirely missed the boat. So, SAP really is more responsible for our leadership position than we are. Again, they never rewrote their application for the cloud. It's unbelievable what's happened, and their customers are noticing. We offer a new release of our ERP system every 90 days. We offer new features and functions. That's how the cloud works. You're on the cloud. You get new features and functions. You're on this 90-day cadence. We give you more features and more capabilities every 90 days. SAP has nothing like that. It's not a cloud system. It simply is, OK, you can get the old -- you can get the SAP S/4HANA and you can get it hosted by somebody, but they don't even have a cloud. They never built a cloud. That's what happened. It's amazing. | direct | [
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d7c37a206e1e48530dd8b268ea31bb72 | I was hoping maybe you could speak to how utilization is kind of historically relative to the particular month of the year? And what level of visibility you have kind of based on that into the guidance at this stage? | If you looked at quarterly utilization year over year, those patterns generally trend pretty close, if you look across the business in terms of seasonal quarters. In terms of the patterns that we see and how they inform guidance, we not only use what we're seeing early in the year, so for the first, let's call it, eight weeks of 2020, but we also use historical utilization as it relates to our existing client base to inform our guidance not only for the upcoming quarter, but for the full year. | intermediate | [
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bc87da6331b561e0c18e00580a81ddf0 | And then with the lockup expiring soon, have you had any conversations or update from your larger shareholders around their plan? | Anne, it's David. Yes. Lockup expires on April 21. So the first trading day will be on the 22. Our largest shareholders are Kleiner Perkins and TPG. And each firm has put in place a multiyear 10b5 plan that contemplates a thoughtful approach to reducing their large equity holdings. With respect to management, Pete and I are in discussions with our tax and financial advisors, and also anticipate putting a plan in place in the future. That's similar to our large holders, would also contemplate a thoughtful long-term approach through our concentrated equity holdings. But like a typical executive plan, any plan that we would put in place would only contemplate selling a relatively small portion of our holdings in any given year. The other thing I'd add, Anne, is that we do have a bunch of other long-term shareholders that are smaller. And with respect to those shareholders, if market conditions allowed, we would contemplate doing the follow-on to help them get out in a more orderly fashion. But I think we all see the market has been a bit volatile. So that was something that we'll monitor as time progresses. | direct | [
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a14bd4d1d044ad8a363c1c11db906be1 | You mentioned about the guidance and not having any impact on coronavirus. I think in the time that Progyny has been around, clearly, there's been no instance where anything of similarity. But is there anything that your provider that your doctors have seen in the past in terms of how you'll see any fluctuation volatility if there is some type of impact? I'm thinking on a much smaller scale but any local dynamics of snowstorms or anything like that? And how long they could see some disruption in the event that things get a little haywire? I know it may not be the best corollary, but at least if there's any type of timing-related volatility and utilization that we have seen in the past, if there's any corollary we can look at here? | Well, so the first thing I would tell you, Mike, is that we've spoken to a number of the doctors in our network. And as of now, we're not seeing any strange patterns with respect to cancellations or changes in scheduled appointment volumes, etc. So they're seeing normal activity. And by the way, we're also seeing among our members' normal activity. Obviously, if any particular geography has the local health authorities tell people to stay home, obviously, that could have a temporary impact with respect to people getting treatment in that geography. In the past, when there's been other issues like the SARS outbreak or something, when the acute issue has resolved itself, people continue to get treatment because, obviously, it was still the time for them to have a child and all their personal financial and professional issues were pointing to that being the right time to have a child. So again, we're not seeing anything now. The doctors aren't seeing anything now. And again, people have a child when it's the right time for them. The other thing I would add is that most fertility clinics are not located in hospitals, they are private clinics. So when our members are receiving treatment, they don't have to go to a hospital where they may have concerns about other sick people being there. Yes. Let me just add one more thing there, Mike. When we look back at when the SARS hit the U.S., I think it was 2012, 2013, middle of 2012 through early 2013, and you look at the CDC data in a number of cycles, oddly enough in those two years versus the two prior years, cycles actually grew in the U.S., didn't decline. So that's another indicator that something like that, I don't know that it's exactly similar to coronavirus, but something that widespread didn't have an impact relative to just overall cycles. That's the only other thing that we could point you to just sort of, if you will, in terms of what's happening or may not be happening. | intermediate | [
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6ce540960543b9d91e4377b3b0020b08 | As you wrap up at the end of the year, you move forward into 2021's selling season, one of the things I know that you've discussed in the past is the viability and the strength of your sales force. Can you maybe talk about how the sales message continues to evolve as you have more and more customers, and particularly customers coming from such a wider degree of various different subsectors, how that changes or augments or expands the sales strategy and especially with some of the history of having Progyny Rx now for a more run rate period of time? I guess, just thinking about how the sales force goes to market? And what's evolved over the last couple of years, as your business has shot up growth rate pretty quickly? | Well, look, I think that given that a lot of our value is based upon the outcomes we generate and as we've had more and more companies more and more covered lives and members and companies from varying industries and geographies, it certainly reinforces the message and provides additional evidence that our value proposition really applies across again, all different types of industries, all different types of employers, all different types of geographies. So again, what we're seeing, the growth of our business just reinforces all those messages. But it's largely the same value message that we've been talking about and that you're certainly familiar with. So again, it's more validation for why our program is better, why it provides employers a more cost-effective solution, why employees continue to have a better experience. And as we evolve as a company and have more experience, we've shown we can actually improve the employee experience. So again, just more reinforcing of many of the same messages. Now the other thing is, when you go out and sell large employers, they're always interested to know who else has the benefit and who else are you serving. And the more companies that you work with, the more "reference accounts" you have, so that they get more comfortable with the benefit. They also are looking to remain competitive with each other and in their industry with respect to the robustness of their benefits. So again, there is this kind of network effect that we've talked about before, within an industry where you sell a few employers in those industries. Other employers in the same industry are looking to have similar benefits. And the last thing I would say is that the adoption of Progyny Rx continues to be strong. And I think we've disclosed 75% of new customers take the benefit when they first sign up. We've had good success upselling those customers. And again, it's more validation of others doing what you may be considering doing as a potential buyer of our services. | direct | [
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85b143c9615223bc9616231ac2352741 | 2020 guide is better than we expected. And I'm hoping to understand a little more of the assumptions going into revenue guidance. So any change on utilization or client size there? And I know some of your customers we had talked about putting off the Rx decision, while they transition their core healthcare PBM contracts. So any details on follow through with those specific accounts, if you've had any traction in adding on the Rx benefit? | Yes. So I'll take the second question first. So as it relates to upsells in the RX benefit, yes, we did have a good upsell season, if you will, relative to RX. And we also had a favorable start day acceleration, if you will, with one of them. And so one of the things that's contributing to the higher guidance for the full year is that one of our upsell clients that took Rx was originally planning to do it mid-year and ended up in the beginning of the year. And so that's favorable to us. The second piece that's contributing to the guidance is we are seeing slightly better utilization than we had planned, both from our new clients as well as our existing clients, it's real slight, but the math adds up to it has an impact relative to the full year, but it was favorable relative to what we had planned. The way we do these things is we use historical experience by industry, adjusting for known demographics at each new client and do our best guess in terms of expectations from new clients and generally speaking, they fall out within a range as an overall cohort for new clients, but sometimes slightly favorable, sometimes not. So far, they're slightly favorable relative to what we planned when we rolled up all those new expected clients for the year. | direct | [
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d1128773500ebf12c4755055a07f20af | You talked about your 2020 book changing in mix with a lot of the sales coming from the nontraditional sectors, and I imagine it would continue even into '21. So how do you think about forecasting utilization under this mix shift dynamic? And would you anticipate utilization going up because of this mix shift? | So the important point about the comment around our expanding base of industries across our client base applies not only to this past sales year, but applies to the prior sales year for clients that went live in '19. I think that the point that we were trying to make is that the earliest years had the highest concentration of tech clients, and we continue to see expansion into other industries. It doesn't mean we're still not getting tech clients, we're getting them overall. Let me just make that point first. The second point relative to engagement rates overall and what to expect is because the tech companies generally have a younger employee demographic with a larger household income, utilization rates tend to be higher with them than with other industries when you calculate it as a percentage of total overall covered members. So as a result, what we're seeing slight, but on a blended basis, slight drop in utilization rate year over year sometimes, but mix could impact that. But the differential that we expect or a slight increase. The differential that we expect for the 2020 year could be a slight increase, but the reality is that, the difference is so small, as we get bigger and bigger, more and more clients, more and more covered lives, it should just be pretty close to what it's been, plus or minus a couple of basis points each year based on actual utilization that happens. So there won't be big fluctuations relative to our adding clients across industries. And as we grow bigger and bigger, it will just be more reflective of more similar to the overall base. | direct | [
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a663b5625223c83b3ee3086957aef696 | You mentioned and talked about your competitive advantages and particularly getting an early lead focused on fertility benefits. I guess, the question, how important is it at this point to expand service lines and sort of accelerate that? You've obviously done well on the pharmacy side. Just trying to get a sense of how important it is to sort of widen out, if you will, at this stage, it's still in early stage, but to sort of further out that lead that you have? | We think we can continue to grow at a very strong rate with our current solution. Nevertheless, we are, as we talked about previously, studying possible extensions to our service offering, particularly in adjacent areas and other areas of women's reproductive health. We think those opportunities will make both, I think, our benefits stickier and provide a better member experience, but also provide opportunities for additional revenues. So certainly, we're going to continue to look at those things and do what we think will be accretive to the business, but we can continue to grow, again, at high rates, given the solution we currently have in place. Yes. Remember, there are, as we talked about before, 8,000 potential employers were 2% to 3% penetrated. This solution saves them real dollars. It provides a better member experience. There's all kinds of other benefits to the employers with respect to better employee productivity, less absenteeism, helps their diversity and inclusion programs. So there's a lot of reasons why employers bring us on and all those reasons continue to be very valid. And there's a lot of employers still out there that can benefit from all those things. | intermediate | [
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392b95d932eb1a7473dd58da819b0ce9 | I wanted to ask about the gross profit margin in the quarter didn't show as much leverage on the short strong top line, and it was down and looked like it contracted a little bit year over year. I think you mentioned in your prepared remarks, headcount add. So I just wanted to hopefully get you guys to just flesh out in terms of the adds and sort of the leverage sort of on that line as we think about, not just '20, but beyond? | Yes, I would encourage you to look at the full year and any quarter, in particular, the fourth quarter is going to have the most variability relative to timing of new hires, preparedness for the following year in terms of how many people we add, etc. So the full-year gross margin is more indicative of our ability and the improvement there is more indicative of our ability to improve gross margins overall, the fourth quarter and sort of the fourth-quarter results, the delta between the margin versus whether you compare prior year or any recent period is small in absolute dollars relative to the reality of what we achieved overall for the full year. I would also encourage you to look at the overall guidance for next year and our ability to expand, our belief that we could expand margins again based on that guidance, and embedded in there is expanding gross margins, again, across the business, including in gross profit. And so it is really nuanced within the quarter itself, not a lot to read into there. So that's why we sort of put the comment in our prepared remarks around the impact of it because I know we look at the percentages and see a smaller percentage, but in absolute dollars, it's really small. It's the overall year that you should look at. | intermediate | [
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a54805087dad1cfb5232249cbaee0367 | Wanted to ask about the implications of the Luxco acquisition to the numbers. I know it's tough from where you're sitting right now to really give a firm projection for 2021, including Luxco, but could you kind of help us out, just given that it's going to have a really significant impact on the numbers, what would it have added in the last three quarters of 2020? Just any sort of kind of base case or historical framing off of what Luxco has done in terms of top-line and EBITDA contribution would be really helpful as we think about our models? | Yeah, Alex, this is Brandon. First of all, thanks for the question and happy to provide some clarity right hand. So the thing I point back toward is the investor presentation we released in January when we announced the Luxco transaction. Yeah, there are some financials shared at the time on a adjusted unaudited basis for 2019, but also on an LTM basis as of October 2020, that should be pretty directionally, I think for what you're trying to accomplish. I will share also that as -- we're now more than a month into integration of Luxco. We are still running the traps on the numbers, as we mentioned already. But there have been no surprises and things are progressing along very nicely on that front. | intermediate | [
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3d90d9a270c468c05d3f562d1663916b | And then just as we think about the sales of aged whiskey and this is really now three quarters in a row that you've had good success in selling the aged whiskey. And you mentioned that it's hard to really forecast what that demand is going to look like in the future. I mean, is there a sense that -- given that the demand is strong right now that we could continue to see strong sales of it this year as long as the demand is there. Just anything you can kind of tell us about your current and I know there's not so much visibility multi-year, but at least looking out over the next couple of months is that that kind of what you've been seeing? Any direction there would be helpful. | Hey, Alex, this is Dave. Yeah, we have experienced really strong demand for our aged whiskey as we mentioned the last three to four quarters, Q1 as well, obviously a very strong quarter. We -- the best indication that we have that we keep trying to guide to is the fact that we think over time, our growth rate should be pretty much in line with the overall American whiskey category growth rates. We recognize the quarter-to-quarter, our growth could be above or below that, as evidenced by what we've seen here in Q1. But as we look forward, that's kind of the guide post we reference is, overall we think that as the American whiskey category grows, that's where we would expect our growth rates to be in line with. Also if you look at our inventory position and we spoke to this in the prepared remarks, we feel like we've pulled down our inventory levels of our aged -- put away the last year. We feel the level that we're at now is a pretty good level, and I would say it's kind of at level of equilibrium meeting on a go-forward basis, we would look to put away the amount of whiskey based on what we think our forecasted demand is going to be within that given year. So, we feel good about that. We think our inventory positions are much more balanced today than they were a year ago. And we'll continue to put away whiskey again based on what we think our projected demand going forward will be. | intermediate | [
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8d4bd16d98d938b1131eccf6b7ac8d3e | And then my last question, the Ingredient Solution side of the business, I mean that's been a really top performing segment for a while now, and it sounds like from your prepared remarks that the demand from your customers for your offerings remain very strong. And there were some reasons why we didn't quite see that in the numbers this quarter. Can you talk a little bit more about that? And when we should start to see reported results start to match what you're seeing in terms of customer demand? | Sure. Yeah, I think in Q1 we kind of gave a forecast of this in our Q4 call. We had the -- in the month of February, we lost about two weeks of production in our Ingredients business due to the cold weather that came through the Midwest. Our natural gas supply was curtailed, which resulted in us needing to shut down operations through that period. As we restarted operations and got into March, we had a very strong March, both from a top-line and the gross margin performance more in line with what historically we've printed on that business last year. And as we go into Q2 and the balance of the year, we still are having very strong demand and we would expect the business to have similar gross margins to what we've been reporting in the prior year. So, we're still very confident in that business. We have cycle past the weather related events in Q1 and feel like we're back on track for the balance of the year. | direct | [
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8cc5d6cba26e59a17afe2812f678e22d | Hey, just -- I guess first kind of question on the guidance and especially on the Distillery business and your kind of commentary of it growing in line with the category. I guess, one, can you kind of quantify how much the -- and you might have already done this, the white goods issue -- I mean, the switchover how much that impacted on this year? And then two, I'm just trying to kind of, more importantly, couple the statements because you would think if you're selling aged inventory on a regular basis, which has a significantly higher price point and transaction value than new distillate, that your sales should grow faster than the category until you're kind of out of product or cycle through that. So, help me understand why you would only grow in line with that if you're still selling aged for the foreseeable future? | Yeah, Bill, good morning. This is Brandon. Thanks for the questions. First of all on the switchover, the total sales to ICP, which is a third-party contractor that we set the partnership with last year was around $24 million in total and that hits our industrial alcohol product line. This year, we expect to be finished selling by the second quarter of this year and we expect the total to be somewhere around $4 million in total sales for 2021. As it relates to your brown question, which is a really good one, as Dave mentioned, there is variability within brown even within the mix there is pricing as you correctly pointed out for aged is much greater than new distillate. And then as we sell one, two, three and four-year-old, there's different pricing for each of those as well. So, as we cycle over quarters we may sell a lot of aged one quarter that even more than we did the prior comparative quarter, but it is a different vintages, we're selling more one-year old versus four year old, it may not have, what would you think would be the desired result from selling that much more volume. So, it's not that straightforward. What we do know is that we've seen four or five straight quarters now of extreme demand for our brown goods specifically for aged and there are underlying trends that would indicate that that can continue. But as we know there can also be -- as we've experienced some variability to that business is due to the customer buying patterns that we've discussed. | direct | [
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1ab45871b3cd4dab0b7f87ab18822285 | So just to follow-up that. So is your guidance for the remainder of the year, just assuming there is no further aged sales and that would just be upside or that -- or are you thinking that the aged sales are front end loaded this year and you'll see kind of a lesser amount as we move through the year? | Yeah, it's probably more of the latter, Bill. So, our -- as we put together the guidance at this early on in the year, especially if we're coming off a strong quarter and a strong few quarters for aged if you -- actually, if we go back and look at the last three quarters, it is a little bit more front loaded. But for the full year, we do have our total brown sales growing closer in line with the category. | direct | [
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fbd033b7ce446c99138aaadce6c6c2f3 | Got it. And then, second question, can you give us any update on at least top-line trends for Luxco for the first quarter? I mean, they continue to grow, have there been any issues, anything we should be thinking about. | Yeah. Can't share a lot on the first quarter at this point. And believe me though, it's not because I don't want to, we've been working on this for a long time. We're really excited about the deal. We can't wait to share more with you in Q2. What I will share is, what I even shared a little bit to, Alex, is that, we have not seen any surprises since January, and that would make us feel differently about the numbers we shared at that point in time, which again, are still -- should be still on our website available. But we do have to finish running the traps, and put together the required accounting that's necessary to really provide more informed guidance. We hate to -- want to be a little bit ahead of ourselves now, only that slightly, or provide that at all a quarter from now. We just want to be prudent in our approach, and be as clear as possible with you and with the investors when the time is right. | fully_evasive | [
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5de21897a258cb2b13344507f008df73 | Got it. And then last two questions, sorry. One going back to just brown spirits, it seems that the kind of conversion over the past year of how you're viewing the aged has been from creating an asset that you can sell for top dollar to creating a library for your customers to shop whenever they want. And I didn't know if that's having a negative impact on kind of new distillate, because now your customers can say like, look, we can buy on consignment, and just buy it in three, four years, we don't need to buy it upfront. If that's having an adverse effect near-term, or expected to, on your kind of new distillate business? | Yeah. I think our -- we still sell a lot of new distillate, and a lot of those customers are on a contract basis, I think, through the last, I'd say three to four quarters in the -- as a result of COVID, I think, what we've seen is on brown goods, in particular, on aged in the last two to three quarters, we've seen the craft distillers kind of come back into the aged market in a pretty significant way. And now they're back in line with kind of their historical buying patterns, if you will, Bill. So, I think, long-term, we still view the -- kind of the balance between aged and new distillate to be in line with what we've seen over the last three to four years. That's something that we evaluate literally quarter-to-quarter. And obviously, it also influences how much MGP owned inventory we put away. But at this point, we still sell a lot of new distillate. We expect that to continue, and we also expect to see some pretty good growth patterns in the aged side of the business as well. | direct | [
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9480bfc652fbcbd5ab442702d4b93c59 | Got it. Last question for me, just the insurance settlement in the quarter. Didn't know whether that -- I think, that's included in the numbers and in your full-year guidance. I could be wrong, and just didn't know where that -- is that still in gross margin or is that still in SG&A, just any clarity there would be helpful. | Yeah, thanks for giving me opportunity to clarify that, Bill. Yeah. So, we did recognize a partial insurance settlement of around $3.5 million, $3.7 million in the quarter. That is treated as a reduction to cost of goods sold. So it will hit the gross margin. The actual receipt was closer to $8.5 million. The difference we have on our balance sheet, until we -- because a portion of that going to go toward different areas, whether it's more of business interruption or whether it's to the dryer replacing itself. So until we get more clarity and get closer to the end if not, or even complete the replacement dryer system, we are going to keep that on our balance sheet, just to be conservative, and then recognize it when we have more visibility and clarity. | direct | [
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8c83c522e3945f80ca712ad7836a6ff6 | But the $3.7 million is in the non-GAAP EPS for the quarter, and then, in your full-year guidance of $2 to $2.15 for the year, is that correct? | Yeah. It's actually -- yeah, it's in the GAAP reported for the quarter, because we were -- we did receive and recover it in the quarter. And yes, we are factoring that for the year. We are going to offset the majority, if not all, of our business interruption impacts with insurance. | direct | [
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5cb1ee9438b99b4a57c35c8f163391b7 | Hey, good morning, everyone. Thank you for that deeper look into sort of your opportunity set. As you said the underwriting deals, I feel like you're probably more in the -- more aligned with the investors on this call than other landlords and thinking about the future of office. So I was just hoping to get your views on where the office space goes, especially on topics like working from home and that impact on ultimate office usage, and how you think about that when you're underwriting office deals? | Yeah, thanks, Manny. Obviously, a lot of opinions and thought on this Salesforces announcement is an interesting one. We've done a lot of business with them on the leasing side over the years. I think clearly, work from home is going to be a part of the landscape looking forward and I think for the next few years, companies are going to experiment with how to manage their team and their people. I think Sam has been pretty outspoken and I tend to agree with him that longer-term when when it's safe to do so, people will still want to be at the office to implicate culture and to make sure people understand what the Company is about and what it's trying to achieve. So I would probably number us, and we have said this in the past, among the more relatively bullish about high-quality office in high quality markets. And having said that, it may be a few years before the fundamentals reflect an upward trend given the dislocation that's going on so far. | direct | [
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7713f5adb5d1ca086323054936fa4735 | And then I don't remember which David said this, but I think you reiterated that you're not looking at single deals, and you really want a platform or portfolio. Does that mean you're not looking at single deals within that underwriting those deals? Or is your desire just to act in a bigger way once you do act? | Actually, Manny, you're right on both points. Well, we are looking at single deals, but not with really a focus on execution or the actual acquisition of those one-offs, more just to understand pricing and what's going on in real-time in the market. But as David said in his prepared remarks, rather than create friction by buying a couple of one-off assets, we are looking for a larger transformative type investments to set the future. | direct | [
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b35c47561877884378f2c33af116a6fc | Yeah. Good afternoon. First, I wanted to check on the Hamlet acquisition. It sounds like the close has moved from the first quarter into the second quarter. And I was wondering if there is any big hiccups at this point. | Yeah. Hi, Tom. We really don't consider the close moving. We talked about it being end of the first quarter, early second quarter and we are still projecting in that time frame, again most likely early second quarter. We're still waiting for one clearance from one government, but we don't see that there'll be any issues with that. | direct | [
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de382a12b4802c4634ccd0cd2899da8d | Okay. That sounds good. And then when you look at the ramp in Malaysia, it sounds like it's on track for the third quarter. What do you do between then and now to ramp up capacity if you need it? Obviously things are getting stronger in the first quarter, [Indecipherable] grow again in the second quarter, will you have enough capacity on hand before the facility is done to handle? | Yes, absolutely. I mean, we always have a significant amount of first capacity and different things that we can do with overtime and extended shifts and things like that. So we definitely -- it's not a concern in the short term. Obviously, as we see '21 and '22 continuing to strengthen in the long term that additional capacity in Malaysia is going to really pay off for us. But, yeah, there'll be no constraints in the near term. | direct | [
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d79384010bd87eb169e5db46e7d44fd8 | Okay. And then final question. When you look at the kind of consensus view out there for 15% growth in the industry, everything you've seen correlate with that? | Yeah, yeah. We see -- obviously the 15% number that a lot of people are talking about definitely seems like a reasonable estimate. There have been a lot of announcements, especially in the foundry side of things to support that and as well as memory moving into more capacity adds in this year versus the node expansions that they were mostly focused on last year. So we still think everything planning up really well for strong growth in that range for 2021. | direct | [
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9bf021094967ab4ff85cc5ea32eb6705 | Hi. Thanks for [Phonetic] question. I had a couple of them, Jim. Just to follow up on Tom's last question, you said that you expect the outperformance to continue. So if you think WFE is going to be up 15% this year, is it fair to assume your revenues could be higher than that? | Yeah, obviously we're not guiding for all of 2021, but our target is to always outgrow WFE and we've outgrown that on an average of about 10 points over the last five or six years and obviously some years are higher and some are lower than others depending on many factors. But, yeah, our aim is to continue to outgrow WFE by roughly on average of 10 points. | direct | [
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4505f2c0deef61230e030f899944ec94 | Got it, got it. And then, Jim, I think in the last call you kind of spoke about some potential approved design wins at ASML. I'm kind of curious, when do you think the transition to tangible revenue? | Yeah. As I mentioned that's kind of a long-term goal over a few years and there are several reasons. A lot of the wins and a lot of the work that we're doing are on the next-generation tools in the litho space. And so those obviously have to go and get adopted and they have to ramp up on their own. And also the wins -- the wins come in -- they come in chunks along the way. They don't come in one big movement of operations from -- into ours. So you see -- on any given quarter, you'll see several wins in certain sub modules and modules or components and those continue to kind of stack up on each other over time as well as the new tools really start to roll out as they introduce them to the market. That's the -- that's where we see kind of a slow general growth over the next several years and our target to get that space up to a reportable segment. | intermediate | [
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fd2c8e5fa21ea9acb3bee09cefded59b | Got it. Jim, and then the final question for Sheri. It looks like the Malaysia facility is on track for a second-half ramp. I'm just curious how should I think about gross margin at least in the second half of this year as that facility ramps up? | Yeah. I think we'll take a look at how that will affect our model over the course of the year. Right now we see ourselves still at the high end of our model, especially now that we're starting to get into the $1.5 billion to $2 billion bucket that we put out in our model. So we'll see some increase in margin, but we will see how that flows through with the volume of revenue that flows in at the latter half of the year. | intermediate | [
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2e92ec60501bea80744a14396091483a | Hey, guys. Congratulations. Just wanted to follow up on the last question just about the gross margin effect from Malaysia, I assume that as that comes online, you are saying that you think that that's margin accretive and could be a tailwind in the second half. I just want to make sure I got your comment correctly. | Yes. So it just really depends on the amount of volume going through. So obviously, it is a lower-cost region for us, and that will obviously help us from a labor perspective. The volume is really the key thing there in terms of how much goes through, but yes, it could be helpful to get us continue to have us be at the higher end of our gross margin model and possible expansion. We will be looking at our model, as mentioned before, once the Hamlet acquisition comes into play and we will be taking a look holistically across all of our product lines to provide a updated model based upon that. | direct | [
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19af528ece31124918be7cd5d8607163 | Great. Second question for me. The services business actually growing in the fourth quarter, surprised to say, I thought you were looking for potentially a step back in that business in the December quarter as one of your large customers went through a fab transition. It doesn't look like that had an impact on the business. So just wondering if you could give us a little bit more color on the services business and do you expect that to grow in -- sequentially in the March quarter? | Yeah. We saw some -- yeah, you're right, we definitely saw a temporary slowdown in the -- from the Israel logic site as we had talked about before. We saw a little bit more strength in the memory side of things in Korea than what we had anticipated. And I think we do see that will continuing. And then with the fab conversion kind of coming back in logic in Israel there, we would expect to see service continue to grow sequentially over the next quarters. | direct | [
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32c493eca1bcd0d8037129cb7f1c8745 | Great. And then the last question for me. I understand you're not giving guidance for the full year. But sounds like 15% WFE growth you guys target growing faster than that. Could you make any comments about linearity sort of first half versus second half? Has there been -- there has been some debate in the industry as to whether it's a front-half weighted year or more of a balanced or even a second-half weighted year. Just any thoughts you have on kind of first half versus second half would be helpful. | Yeah, yeah. We've been following those comments as well. Obviously the first half benefits from improved visibility and it looks pretty strong. As we look at the end market fundamentals though, I think a lot of the second half and 2022 and increasing the strength kind of compounding from that it's kind of a little bit dependent on some more NAND capacity adds versus the technology moves and also memory, which is starting to add capacity continuing to accelerate. So it's difficult -- it's really difficult to call. I mean, obviously people call in the first half because that's where we could see pretty clearly. But I don't know if I would call -- I would make a call at this point that the first half is going to be stronger than the second half. It's really -- I think it's really too early. I had a look at it. The first half is pretty strong, very strong and then we see a lot of downstream indicators that there is no reason why the second half shouldn't continue. But there is always the caveat of any unusual events that occur. So it's really too early to say. I think the entire year being pretty strong -- definitely there is a consensus on that and if there is any waiting, I don't think it would be significant. That's kind of my view. | intermediate | [
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681b8feb627f920c149975099758e482 | Thank you very much for taking the question and congrats on a really nice end to the year. Jim, maybe first off staying on the services side for a second. On the parts cleaning business typically utilization rates are a key driver for that business and obviously saw that on the memory front. But did you talk about any potential incremental increases in that business due to the complexities of devices? Maybe more specifically on memory both for NAND and DRAM as they get more complex, do you see increasing I guess content or increasing services use because of the complexities of those devices on top of high utilization rates? | Yeah, I think that's a fair assumption that definitely you could see the cleaning cycles accelerate like they are toward the leading nodes and not logic which would obviously cause a higher cleaning intensity, if you would. And in addition to that, it also requires more of the leading edge kind of cleaning applications and more complex approaches to it, which obviously fits well into our bailiwick. And then third, then you still have logic pushing some pretty extreme dimensions with 7 and 5 and 3 nanometer, which is adding new requirements to cleaning, which is -- so the coating and the texturing of the parts for yield and particle controls starting to become a more significant added process that you don't tend to see at those older node. So I think there's kind of three factors that really come into play that should help the cleaning -- the cleaning and the analytics business to really maybe start to part ways with wafer starts and actually become grow a little faster. But I think it's kind of early days to see how that happens. But I think that's definitely something kind of cooking as those forces are building up. You're also seeing a lot of those devices start moving into more vacuum based. I think even some of the litho applications are starting to become more vacuum based. So you see another tailwind coming on there. So all those things added together bodes pretty well for that segment of the industry to really grow at an accelerated rate. | direct | [
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e878922823293431a2cb509a1d9cb0c9 | Great. That's helpful, Jim. Maybe as my follow-up question you guys performed really well last year in 2020 despite the pandemic issues. Can you describe the supply chain situation that you have right now? And whether you feel you can meet the increasing demand that we're seeing in the current environment? | Yeah. I think in Asia the factors on the COVID and supply chain the last few quarters has been minimal to almost nothing. Obviously in the US and in Europe, to some extent too around the holiday season it was definitely something in the fourth quarter that we had to deal with with the suppliers UCTs hasn't been directly impacted in any way -- any significant way by any COVID events. And we saw that at the beginning of the quarter that we're in, but I think we're seeing less and less of COVID related supplier issues. It's now -- it's the typical issues when you're ramping the supplier issues that come up. But it's not so at this point. At this point in time it, knock on wood, it hasn't been anything that has been really materially impacting our ability to get our output. | direct | [
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ad29415821b22d0560d5a5331161e8ab | Great. Hey, Jim, I just have one quick question, follow-up on memory. Have you seen any change in the last 90 days your outlook between DRAM and NAND? | Not much of a change. I mean, NAND is still kind of where we thought that people starting to continuing the transition to the 128 layers. I think in the last quarter or two, we started seeing the 176-layer pilot production start-up. That was anticipated though, but we're starting to see some of that kind of pick up, but no real -- no real major capacity adds yet in NAND and NAND is still a little bit kind of like the last cylinder [Phonetic] to kind of really, really go forward with capacity. DRAM is kind of moving along as we expected after the price has stabilized, after the utilization of the fabs, existing fabs went up. We started to see DRAM capacity, especially in Korea and in Xian, some areas we've started DRAM capacity adds start to roll in which we also anticipated. So -- I mean, those things are happening, but I think that was kind of how we saw the year rolling out. | direct | [
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85e35e4be381ffd7c6d718e61c3bffb0 | Okay. The only reason I ask is, some of our checks have suggested that NAND utilization rates have immediately improved since December. And so, it appears that that improvement has not yet led to any dialog that you're hearing regarding increased wafer starts you got. Is that fair? | That's correct. Yeah, the first indicator of those utilization rate is going up, yeah. The next step is typically then discussions around -- plans around the capacity adds and that's still -- we haven't seen that taking place yet. | direct | [
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494c825e55da1b7c7be0083f780290e0 | Hi guys. Thanks for taking my questions this morning. Look, obviously, we realize there's a lot moving around at the moment. When we look at sort of your top five or 10 investments, there were some pretty significant marks, First Boston Construction and AGY Holding, just curious -- and also St. George Warehousing. I'm curious if this is more marked to cash flow or this is really spread widening, and what you're seeing among your top investments in terms of actual fundamental performance. | Rick, this is Marsh Merriman. Thanks for your time and your question. Let me just speak generally through a couple of the names that you've mentioned. In thinking about valuations and performance with respect to First Boston, performance continues to be steady there. The valuation change was a change in -- was a reflection of a change in the valuation of the comp set for that business. And there's a consistent valuation approach here that has driven somewhat by trading multiples for the comp set. That's what accounts for that.
At AGY, that is a company that -- the topline performance of that company has continued to hold up, but profitability is under pressure as we have discussed before, due to a significant and atypical spike in one of the metals used in their production process. And so that has impacted profitability, which then impacted the valuation of the business in the market.
I think you had also asked about St. George. As you can imagine, St. George is a shipping and logistics company that deals with ocean freight. So it was one of the earliest companies to see impact from the COVID situation, which was reflected in its performance in the quarter and that was reflected in the valuation.
So, generally speaking, I would say that the valuations move around are a result of two things. One, the comp sets from these businesses are generally down for reasons we all understand, but they all have idiosyncratic reasons for their performance varying over the last quarter. | direct | [
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9a63ee86041359ab89a46e56fcb74fdf | Got it. Okay. Well, thank you for actually really differentiating those. That helps us understand the thought process on what's going on. So, I really value those insights. | You're welcome. | fully_evasive | [
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3f5649e16c3db30ea204e8faf18ebaae | So let's start on the non-res side. The commentary in the short term points to a little decline but stability overall. Maybe specifically how you're thinking about backlog. But more importantly, once you get past the next couple quarters, what's the current thinking internally for how resilient that business could be given your various exposure points in that channel? | Well, we do feel -- this is Scott Barbour. We do feel like we understand and see for the next couple of quarters a very stable non-residential environment. We look at all of those high frequency metrics and they're pretty good. And I think -- when I think just about non-residential, it's going to be a couple things. One, it's going to be segmenting that market and understanding very carefully those segments that will be growing, those that are not growing, and you know all those segments, Mike, and making sure that we've got the right people focused on warehouses and data centers and those kind of places where we know money is being spent. We're pursuing a lot of large warehouse jobs right now. So we see that and we know who the big developers are in that, so we're quite focused on that. We also believe horizontal construction, which you know we are much better in, in terms of participation, than vertical construction, we'll probably be more favored. So we're quite focused on that.
And then quite honestly, there is some, I would call it some power of incumbency where we have a large high-touch sales force. We're out there seeing all the jobs. So when things are being bid, we're going to see them. And I think that gives us a nice advantage, that and this kind of national footprint we have versus a lot of competitors. So we can move around to the right geographies within that non-residential. But there's definitely going to be change, we're -- and I think we're proving to ourselves that we're pretty good at flexing and moving resources to the point of attack, even when we can't really be out in the field like we've not been able to over the last couple of months from a selling perspective. | intermediate | [
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ca619c80ace487e1a71eee82df5c25bc | And, I guess, the flipside of that is the residential piece, which, given the Infiltrator acquisition's coming in at a really nice mix for you guys. I mean, that serves as a mitigation point when that change point comes and if weakness hits that market. How much of an offset do you think of that? How sustainable is the underlying trend from what you see? And is there any reason that you would participate more or less in that recovery curve on the residential side with your core businesses? | I think we'll participate more, for two reasons. One is, the Infiltrator market share model. It's a proven business model. It's a material conversion model. They have all the right distribution to reach the touch points out there. It's a very consistent grower, market share gainer. And again, they will be benefited from the move outside of the cities. Number two is, we have had several initiatives in ADS to pursue residential developers, residential homebuilders, infrastructure. And as you saw, those grew pretty nicely in this last quarter.
So the way we kind of look at it is, if we can kind of grow at better than the market rates with Infiltrator and those residential initiatives on ADS, we've got a really good chance of offsetting whatever market declines might occur in non-residential. So that's how I'm kind of thinking about it and making sure we're allocating resources, both sales resources and capital. You heard me mentioned in there, we're going to step up some capital. We've already stepped up some capital. We're going to step up some more capital to Infiltrator to make sure they've got all the capacity they need. We're moving some selling resources from non-residential to this residential homebuilder and development and infrastructure pursuit. So, we're definitely trying to be agile to understand the dynamic you asked the question about. | direct | [
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c25c8832f18af5a62cc32ab8e4388991 | Help me understand the sustainability on the margin side. Obviously, resin a tailwind for you. The Infiltrator inclusion helped a lot as well, but resin a tailwind. How sustainable do you think that is? And what are pricing dynamics looking like in the market right now? | Pricing dynamics are pretty favorable. I mean, I think -- I mean, favorable in the sense that we're able to hold price in the market today across the board, really, between Infiltrator and ADS. There's always a few skirmishes going on and we'll deal with those.
And, I guess, I think we've taken somewhat of a step change. Resin will go up and down. There's tools we'll use to mitigate that of pricing and operational initiatives. But overall, the improvements you saw in transportation and the manufacturing of those four-wall manufacturing here, I think some of the things we've done and learned how to do kind of, in this cost structure we have today, will benefit us long term. But it's not -- I don't think we're going to go all the way -- we're not going to go back to where we were, let's put it that way. But we will have seasonal and different factors that we'll have to deal with. That said, we have a lot of tools in the toolkit and a lot of different initiatives that we can continue to push ahead on that I think will show -- demonstrate that we've got more in the tank relative to margins. | direct | [
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be459f33c937194b235b9fa2a1d59015 | The first one, maybe we can dig in just a little bit deeper on the organic EBITDA margin expansion, 830 basis points. And you listed, I think four kind of drivers were on that, slower manufacturing, cost mitigation and leverage. Is there any way you could at least dimensionalize the impact from each of those? | Yeah. Hey, John. The way I would talk to it is, when you go to the EBITDA bridge and you look at kind of that boxed-in area, it highlights those areas. And again, I'll walk the left to right a little bit. But again, the volume hung in there and was stable. And our allied products continue to grow. So, you get really good leverage there on kind of that volume side of the house. Scott just hit on kind of that lower input cost environment. And much like we continue to talk to, we're able to hold on to most of our pricing on a year-over-year basis, even given that lower input cost environment. So, that's why you see that great leverage on that $17 million that was indicated there as well.
On the manufacturing and transportation, I think that's where we get the most excited. That's where you see kind of that operational improvement we've been talking about for the last 12 months to 24 months. We've got our operational excellence initiatives that are taking flight. And you saw those starting to come in. We talked about we weren't really very happy with our performance and our absorption of fixed costs back in January, Feb and March of last year. This year, we did a much better job around that, so you saw that come through as well. And then the synergies that we're getting related to the Infiltrator acquisition, we're getting those fully on schedule with the run rate synergies that we talked about.
As to the mitigation actions that we took, I'll tell you that in the quarter, probably around $5 million from mitigation actions that we took that, you can call temporary it if you want, but we'll continue with those as we go here into Q2 and as we work forward. But there was not a lot in the numbers and in the ADS legacy margin performance that was other than good operational performance.
Could I add one thing to that? John, you recall we talked quite a bit that the big lift with Infiltrator was around materials work, material science, materials, buying materials, things like that. And I think those are kind of woven into what Scott said. And those are things that aren't going to come back out. Those initiatives, those kinds of things. So, we're really happy with how those synergy programs and the leadership of those synergy programs and the digging in on those has gone so far. So, not all of it is synergy, but I think that's an important thing and one of those things in the toolkit we have going forward that we haven't had in the past, was that that synergy work with Infiltrator, particularly on the materials.
And I'll hit on it just one more time, because it's worth it. Those operational initiatives and excellence initiatives, again, multiple, some are in flight now, some are hitting our results, some will be hitting here as we move through the next three, six, nine months. So, that's where we're getting good traction and very pleased with our results. | intermediate | [
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e0f8708005b3c787b95ea27c70aff790 | And then in terms of the comment on demand being similar to what we saw in the first quarter. I mean, quarter-to-date, would you say that organic volume is running up sort of mid-single digits? Is that a fair way to think about it? | Yeah. It's probably doing that. Sequential is slightly ahead. July was slightly ahead of June on a daily basis. And after two day of -- two or three days of August, it's kind of the same. But I kind of go back to our experience of April, May, June. What we see happening right now looks a lot like June. When I say now, I meant really July and the first couple of days. And I -- given the backlog and the pace of orders, the book-to-bill, all that stuff is lining up in a very -- for a very similar type of sales performance, I think. | direct | [
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1aab07f41597913e6dc90f1e051ef7b5 | Nice cash position and liquidity position. Any updates on your thoughts around capital allocation and anything around the ESOP that might be able to take place? | Nothing on the ESOP. No ESOP questions today. No, nothing new on that. I'm just, I'm joking with you. Nothing new on that. We had our Board Meeting this week and we talked a lot with them about capital allocation and deployment and both capital investments we need to make at Infiltrator and ADS, things that we're -- we've been working on, we continue to kind of bring to fruition. And then we're going through a very disciplined process. I -- we've spoken in the past with you all about establishing a good process to look at acquisitions and be very thoughtful and deliberative. And we started that back the late last year after we got comfort with how things were going with Roy and the team at Infiltrator. And we saw this cash position building. We saw the liquidity coming forward. We didn't think it would be quite as good as it is, but we knew it was going to be good. So, we've started down that path. There's nothing really new to report on that besides that probably Scott, Mike, myself, a couple of others spending quite a bit of time thinking and working on that with our Board, and we had a good discussion with them yesterday about that. | direct | [
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f6afd8f45fd11984530ade1a6193b6d4 | On the last call, you indicated that you had visibility out through September. Just curious did visibility improve just given what you're seeing in the macro. Has it returned to more seasonable levels? And just how far out do you think you have it right now? | Good morning. This is Scott Barbour. And welcome. We -- yeah, we do have, I think very good visibility into September. Kind of driving my comments around this quarter will look a lot like the last quarter. I think I would -- my -- our bet right now is that, things are going to be fairly stable. There'll be some noise underneath it. Don't know exactly what's going to happen with all the reopenings and schools and the election and those kinds of things. But pace is pretty good, and I think that could extend through our construction season.
And we look at the macroeconomic data just like you guys do. We were hoping it would settle down with a, let's call it, a smooth reopening. It didn't. I mean, the smooth reopening really didn't occur, so that we still -- we thought there would be a little more clarity on the long-term. I don't think this really developed that way. But we know how to operate in this environment and we will continue to watch that very closely. But I feel pretty good out through the end of this quarter and through our construction season.
And I said it in the comments, but I would reiterate that the fall for our agriculture business is shaping up pretty nicely, which is good to see. And that's an important piece of our business as we move into September, October and November. Now, it can vary with poor weather conditions as we get later in the year, toward November and December. And we had a pretty good -- very good year last year. But things are shaping up nicely for us now. And our renewed focus on that, as well as the bet toward residential with Infiltrator and some of the ADS initiatives, I think has paid off well for the Company, and I'm glad that we took those initiatives on a year and a half ago. | intermediate | [
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6ca8301596bb5951ea642399f83983af | And then you talked about some of the capital infusion into Infiltrator as you're looking to add some capacity, it sounds like. Should we anticipate any step-up costs or start-up costs or any potential inefficiencies as you look to bring some extra capacity on? | So that's a good -- that's a really good question. And that capital is not on the ground yet. Those are -- that's equipment is still kind of in process of being built and not delivered. And there are always difficulties when you start on major capital equipment like that. That said, that's a pretty profitable, well-run, very solid operational and engineering group there. We'll have some issues. I mean, there always are. But I have a lot of confidence in that team that we'll find ways through that. And it might dent us for a month or two months, but it's not a crippler, if you know what I mean. I mean, it's just -- you're going to have to go through those things. There's a bit of birthing pains on those. And we -- in a company like that, I think the scope and profitability of it we're very well positioned to absorb that. | direct | [
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38b2c9d230e2bf3c80f068b05af495cb | Just looking at inventories, the sequential drop, was that, in your opinion, seasonal or a little bit more than seasonal? Or did you see any destocking and distribution? Just curious, if so, could you end up seeing a restocking here, if you aren't already? | It's more seasonal. There is -- we are not a -- our -- the business -- neither business, ADS nor Infiltrator really relies on a big stocking up of distribution and drawdown. So, you don't get some of those inertial forces in this Company that I know you're asking about and looking for. That destocking you saw on the inventory is really demand-driven, A; and then, B, somewhat input cost-driven, because when we procure at lower pricing, we get an inventory dropdown. | direct | [
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dfb63b10535bf5d76e248fab5bc407b9 | My first question is related to our revenue growth outlook in 2022, which of how are the major countries' performance doing and what's the outlook for 2022? And my second question is regarding our margins. Margin in the last few quarters have been on an uptrend. And from here onwards, any cost savings we can continue to do? And for the YY core segment, when can we see a break-even point? | As the world enters the post-pandemic area, the macroenvironment that we encounter has become of increased uncertainty and volatility. On the one hand, you see that with multiple countries gradually lifting lockdown bans, there has been negative impact on users' online social entertainment activity. And on the other hand, the resurgence of COVID-19 in certain areas both increased uncertainty on the potential economic growth, and together with the ongoing high inflation pressure across multiple regions, we do see weakened consumer confidence and capacity, which have negative impact on users' paying behavior.
Despite the above complex macroenvironment, we have achieved a 36.5% revenue growth for the year 2021, which indicates that our diversified globalization strategy, which focused on various numbers of different regions across the world; and our diversified growth engines, empowered by multiple social entertainment products, are effective, enabling our global businesses to have greater resilience. So, looking forward to '22, we will continue to execute the above-mentioned strategy. We expect to have a resilient and steady top-line growth, driven by multiple key regions, including Europe, North America, Middle East, East Pacific, and Southeast Asia; and also by monetization growth across multiple products, including Bigo Live, Likee, Hago, and other products. But we like to remind you that the current outlook for our first quarter 2022 do reflect some fluctuation related to seasonality of our business.
So, we expect our business growth to accelerate gradually in the second half of '22. So, in terms of the latest growth trends for the key regions, we do see promising trends in Europe, East Pacific, including countries like Japan, South Korea, Australia, New Zealand, and also the Southeast Asia region, to be good in Q4. And in 2022, we expect our business to continue to be diversified among the above-mentioned regions. Thank you.
As David just mentioned, we proved the profitability of our global business by achieving a 7.8% non-GAAP net profit margin for BIGO segment for the full year for the -- and also a 4.2% non-GAAP net profit margin for the whole group in 2021.
So, this means that we have officially entered into a sustainable growth stage. In 2022, we want to balance growth and profit. And this means that on the one hand, we will seize the opportunity, continue to invest and explore the global markets, and continue to increase the influence and market share of our products. And on the other hand, we expect to remain profitable and steadily improve the profitability level of our business.
So, specifically for BIGO segment, on top of the non-GAAP net margin that we achieved in the year of '21, we expect to continue to steadily improve BIGO's non-GAAP profitability for the full year in the year '22. And this is based on the assumption that Bigo Live continues to maintain a relatively stable level of operating profitability, while the losses of other product lines such as Likee are continuing to narrow. In terms of the cost and expense margins, with the increased monetization across multiple products, and the improvement of enhanced operational efficiencies, we believe that cost savings could happen across various expense items. And for the other segment, we have successfully narrowed its full year non-GAAP loss by 35% in the year '21.
In '22, as the monetization of Hago and also other products continue to pick up, we expect that the non-GAAP net losses of this segment to be further narrowed in the year of '22. Thank you. | intermediate | [
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74373c6592128959bc110fb2be19760b | My first question is about the competitive landscape in overseas market. How should we envision the changes in this year and how should we think about the seasonality? And my second question is about the YY Live transaction. Can management share about the progress, as well as any contingency plan or any strategies that can be shared? | Regarding your first question on the competitive landscape, I've shared my views multiple times in our previous earnings calls as well. So, I've just mentioned that our global business turned profitable in the year '21, and we have officially entered into a sustainable growth stage. So, this means that under the current complex -- increasingly complex macroenvironment, this makes our business more resilient and allow us to gain additional competitive advantages on top of our already existing extensive global business presence and also our proven global and localized operational capacity.
So, turning losses into profits means that we have more space and time to think and plan our business from a longer-term development perspective. As we have said before, there is still a lot of potential for the global social entertainment market. We believe that with the support of our abundant cash flow and also with our healthy growth model, we will be better positioned to seize market opportunity and further increase the market share and influence of our multiple products. And regarding our business seasonality, we have to admit that the outbreak and resurgence of the pandemic has actually disrupted the normal pattern from time to time.
And according to our limited observation of our business trends in the past, the first half of the year is usually a lower season, and business growth usually accelerate in the second half of the year. The current outlook for our first quarter 2022 reflects such seasonality fluctuation, and we expect our business growth to accelarate gradually in the second half of '22.
And regarding your second question about the sale of YY Live, the deal is still ongoing, and if there's any update, further information will be disclosed when as required by applicable law. Thank you. | intermediate | [
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0f72385d059fcc57b0becf8fee80fa94 | So, I have a couple of questions, both of them regarding Likee. So, what's our plan for the user [Inaudible] pace this year? And additionally, what's our expectation on the Likee monetization of those [Inaudible] and also user trend? Secondly, can you share more about non-livestreaming revenues [Inaudible] target for this year? | Regarding your first question about Likee, as I just mentioned in the prepared remarks, in the year '21, we took some proactive changes to Likee's -- to adjust Likee's marketing strategy and focus on the identification and cultivation of content creators. As a result, although Likee's MAU did suffer some fluctuation, after several quarters of executing the marketing adjustments, Likee has also achieved several key results. In the past year, we see that Likee's livestreaming revenue has increased by nearly 100%, and its operating loss for the full year was significantly narrowed by 67% compared to the year of 2020, meaning that the product's overall growth model has become much more healthier. So, for 2022, we believe that Likee will continue to invest more resources into identifying and nurturing the content creators.
We believe that a vibrant content community and the lively interaction between the creators and the fans are fundamental to sustaining Likee's monetization growth and also reversing Likee's user downward trend in the future. And in terms of monetization, Likee will continue to increase the penetration rate of livestreaming and improve its monetization efficiency in the year '22, so expect Likee to maintain steady monetization growth in the year '22. In terms of its marketing strategy, we'll continue to observe the performance of Likee in multiple core markets, including the Middle East and Southeast Asia, and its user engagement level retention, and also content progress in these markets. At the right time, we might consider increasing investment on its user acquisition, but we do expect Likee's operating loss for the full year to be further narrowed and will have the opportunity to be one step closer toward self-sustainability.
And regarding your second question about our non-livestreaming revenue, our non-livestreaming revenue in year '21 increased by 39% throughout the year, accounting for 5.4% of our total revenue, mainly from our advertising and also membership subscription revenues. So, monetization contribution from the recently launched features such as Likee's SuperLike and SuperFollow are still very, very small, as their primary focus at this stage is still to provide additional support to our KOL pool. So, as mentioned before, in the previous quarters, the growth of our advertising revenue is closely related to our content pool and also the scale of our user base. So, at this stage, we will prioritize the cultivation of our content pool and our product experience, and also steadily advancing our diversified monetization plan.
I believe that the newly introduced -- the latest product features have demonstrated our efforts toward this direction. Thank you. | intermediate | [
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dd02616bd392e23691fc4d2808aa5fa8 | I was hoping to go into a little bit more detail on some of the comments you made on the mobile market share and therefore the revenue you expect within the Mobile Access business. So, Pekka, you said that you expect to drop from about 27% to 28% 4G, 5G market share, ex-China, last year to 25% to 27% this year. And I suppose, if I sort of then think about what is expected for the mobile access market, yes, going to grow this year quite clearly given 5G, led by China, but I think, even without that, with North America and Europe it should be growing by low single digits. And so if I consider your slight market growth offset by your market share pressure in the middle of the range, I get to something around a low single-digit decline. Maybe it's mid-single digit when we consider the FX headwinds you guys faced. It sounds, however, when you talk about significant decline, that it's more than that. Just can you give us a bit more detail there? Do you think you're facing more price pressure than others given some of the technology issues you've faced in the past? Just a bit more detail in terms of what specifically you're expecting in Mobile Networks revenue would be helpful. | OK. OK. Thank you. I mean that's, of course, one of the most essential questions that -- and issues that we are facing this year. If I comment market shares, first, expectation is clearly that in China and in North America this year we will have lower market shares. And of course, that 25% to 27% that you referred to, that's excluding China, but then overall when you -- when we take top line, of course, China is in that game as well. We do not believe that we will be facing a situation where we would have to sell our product cheaper than competitors'. There is price erosion in the market. We certainly do not want to be the one who will be driving prices down, but it is reality that the prices are eroding. And the price erosion is stronger in the North American market than it is in other parts of the world. So from that point of view, the top line -- and then it comes to the definition of this significant -- there are three components. There is the volume, which is driven by market share. And then there is price erosion, which together with volume drives top line. And then on top of that, there is the currency headwind, which is actually going to be quite significant this year. So these three components together add up to significant. Then of course, what you should note, and hopefully, this is then the positive side of the story, is that when you take our guidance for top line, group top line, this year, and we are not guiding any midpoints or anything like that, but just for the sake of argument: If you mathematically take the midpoint and then eliminate the effect of currency headwind, that would lead to roughly flat top line for the group this year, which would mean that then, excluding currency effects, the other businesses would actually compensate for the drop in mobile networks top line. | direct | [
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62a3dd1aa87aaeb49953f6b1d54a3439 | I want to understand a bit better what happened in Q4 with regards to your product mix at Mobile Access. In the third quarter, you were prepared for lower share of ReefShark-based sales in Q4, but this was not the case, as you benefited from earlier-than-anticipated product releases. Are you running ahead of your targets thinking of system-on-chip transition? And was the EUR 150 million tailwinds from early revenue recognition driven by this matter? | Thank you, Sami. The EUR 150 million thing is unrelated to this one. That was a customer-specific issue. I would not draw the conclusion that the 43% share will be an indication of the overall program being ahead of targets. We maintain the 70% target by the end of this year and 100% target by the end of next year. These percentages jump up and down, always dependent on the mixture of customer deliveries in that specific quarter. Actually, the way it's measured is deliveries from the factory to customer, but then there is a further delay, often 6 months, between that event and then until the revenue is recognized. After it's typically installed then take commission, then taken into use, that's when the revenue is recognized. So I know that there is a temptation to draw that conclusion, but that would be pushing it a little bit. | direct | [
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99741fdf032ad048c256aa7ae3122099 | You obviously had solid cash generation in the quarter relative to your prior guidance even with that EUR 500 million early payment of cash. I just wondered if you could explain a bit more as to why you got that early payment. And then also it would be interesting to know in terms of the underlying improvement which was better than expected. What were the main operational drivers? And how sustainable is that as we look forward to the coming year? | Yes. Thank you. Very good point. And I will say that reason for this early payment from the customer side, which was due in Q1 2021, only the customer can actually answer that question. We didn't expect that. It came. And it could be just banking days error here as well, yes. For the other points, I will say that, if you look how we have been able to reduce the net working capital, which is the main driver on how we can improve our efficiency in collecting cash at two-thirds of the improvements that we've seen now in the latter part of the year is actually totally coming from higher efficiency, yes, on net working capital. And only one-third is coming from volume-based. So I will say that we have been able to increase the efficiency in net working capital. And we measure this in rotation days and we've seen that they have been improving. | intermediate | [
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3bf97d5da4897bfd6f746b53ebb0710f | I just had a question really on -- back to market shares, on the timing of the market share shifts that you see. So if you help me understand: I was thinking maybe China share loss was a 2020 affair and then we don't have further impacts from China in '21. Or am I mistaken? And then the same for North America. Is it only a '21 impact? Or are we going to be having this share loss hampering growth in North America for more years than just the current year? And then obviously, for Europe, you have some gains here. Have those already transpired in what we saw in the final quarter, or is there more to come in '21 and beyond? | Yes. The overall market share excluding China. Remember this 25% to 27% this year and 27% to 28% last year was excluding China. So that effect is eliminated. Clearly, the negative driver this year is North America. And then Europe is actually supporting this, mitigating some of that negative effect. We have guided only this year's market share, and it's actually very difficult to say anything yet about '22 or '23. We may be able to shed some light on this question at the Capital Market Day, but there is still so many deals to be negotiated and, hopefully, one during this year that will then affect next year's and 2023's market share that it's simply too early to comment that. | intermediate | [
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9bd258daea6ef7cffc9bfcbe193490f6 | I know it's probably a bit early to try and touch on this, but with what you're seeing in terms of your customer engagements now, knowing that the Verizon and North America issues are largely behind us, do you feel confident that you're holding your share in the rest of your North America base? And if that's the case, we're not past the issues in China and you're gaining share in Europe, do you think that we will at the very least be troughing in terms of market share now in 2021 given the engagement you see with your customers with the product today? Or is it too early to have that confidence and you need to see a bit more of customer interaction and success on winning this year? | Yes. Yes. We do need to see more customer interaction before we are able to say anything about '22 or '23 market share. Of course, some of the recent deal activity that we have had, especially the ones that we have published, is promising, but it's still too early to call. And then of course, when it comes to individual customers, customer names, including in North America, we never comment individual customers speculations in terms of what they might or what they might not decide in the future. So into that, we cannot unfortunately go. So it's still too early to call '22 or '23 market share. | direct | [
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58e21521b909af8e6e604d403b3dcab3 | I just -- I had a question about Europe. If you look at the historical RAN share in Europe of 50% for the Chinese vendors in 4G, how much of that share would you say is already up for grabs in 5G? And related to this, after you complete the swaps you're doing, do you think actually Europe could end up becoming a more attractive market from a pricing point of view over time? | I do believe that Europe will be an attractive market, but it's not possible, I'm sorry, to answer your question through any numbers or anything like that. We are not able to simply estimate that we are looking at our market share in Europe, which is trending up at the moment, but it is not up to us to speculate on where that will be coming from. And then especially when it comes to the comments about geopolitics, as I have said earlier, we are a business. We are not politicians, so we are not participating in any political speculations. We are focusing on our business and what we are seeing in our customers, and as I said, we have seen a positive market share trend in Europe. | fully_evasive | [
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8b3b044563ea3b40fb7d026a7d6f97f0 | I wanted to see if maybe you could offer some thoughts on how the C-band auction that's under way in the United States might affect Nokia. For example, there are some that are arguing that the money spent on the auction will reduce what operators will spend on the networks, while other arguments are saying, no, it demonstrates large intentions to spend and it's a good thing. And on top of that, I'd like to get a better understanding of your product competitive positioning with mid-band. | Yes. I mean, those are exactly the two ways to look at that thing, but I mean, hey, look. If somebody spends a lot of money on something, makes a big investment, shouldn't that lead to very high interest to do everything possible to maximize the return on that investment? And how do you maximize that return? You need to maximize the spectrum efficiency. You need to maximize the investment into your service, which would indicate that it would more be the latter one of the two alternatives that you are highlighting. Then when it comes to our product competitiveness in C-band: Now when we are making quick progress on ReefShark and system on chip, we are seeing a pretty strong competitiveness when we complete the road map during this year. So we are ready. | intermediate | [
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83baaf880587efcd5568f38240609a42 | You've made some comments that you have improved your competitiveness on the product side. Could you elaborate a little bit on where more -- where specifically you feel sort of that you have improved your 5G competitiveness? And also, has these encouraging comments and trends you're seeing made you believe that you can perhaps catch up a bit sooner than you had anticipated and spoke to us about three months ago? | Well, it's there is no big difference to what we said three months ago. We were pretty confident on our ability to catch up back then and I would like to repeat that confidence today. We are now already in the second month of 2021. And as I have said earlier, 2021 is the year during which we believe that for all relevant and significant parts we will complete the catch-up, so we are optimistic. And this is, of course, I mean, this is a matter of both silicon customer and in some cases merchant silicon, but then it's very much the software features and software functionality. There are clearly areas where we don't need any catch-up anymore. We are one of the leaders. And one of the examples is clearly end-to-end network slicing, which cuts across the whole network and also across 4G and 5G and makes it possible for operators to offer specific enterprise -- enterprise-specific slices when they are doing their industrial applications. And there is more to come. So we are approaching a situation where there is no need to talk about catch-up anymore, but there is a lot of work still to do this year. But once we get through this year, I believe we will get there. | direct | [
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711acc9cd0b759106eb914c7abe141ed | Can you talk about the mid-single-digit growth. We've seen the PMIs, particularly in Europe, be a little bit weaker, and it was nice to see some growth there. Is this kind of market outgrowth? Or is -- are these safety products more resilient than just a typical PMI sort of movement? Just curious to hear your thoughts around that? | What we're seeing, Stanley, is that we believe we're outstripping the market in some areas. Clearly, with fall protection, we're doing quite well with growth in the mid-20s. We believe we're taking market share and hitting stride with some of the new products we've developed over the last couple of years, some good strong marketing and sales and marketing programs, buying, some distribution. Along with that, we've invested about $3 million in capex in Mexico and England to expand the capacity on the front end of that. And it's really nice to see that business come through. So we believe we're gaining some nice share there. And of course, fixed gas and flame detection, that 13% growth in the second quarter, 8% year to date. And that's probably outpacing the market. We've got some great new products that we brought to market in that space. The market is healthy, and we continue to perform well. Portable gas detection, we got off to a slow start to the year, but we had 5% growth in the second quarter, and the bookings look really good as we go forward. So we think we're outperforming the market a bit and executing well. And the end markets remain pretty healthy for us overall. | direct | [
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6990ea6a21c1c1ddc654ea8281226546 | Perfect. And then thinking about the back part of the year, you guys have done a nice job of getting price and value pricing for the products that you have. Are there any things on the -- to be concerned about in terms of incremental input costs or anything on the cost headwind side? And then kind of the last part of the question would be, with the mix of the business, you all have talked about leveraging earnings growth, one and a half to three times. My guess is we're at toward the higher end of that range. I would just love to hear comments around all of that, if you could, please? | No, we continue to monitor that very closely, Stanley. We watch the supply chain and the pricing on the supply chain. And then on the flip side, we're really staying after our pricing side. We've done a nice job with managing our pricing and executing on the price increase, specifically in the Americas, a really nice job with the midyear price increase in '18 and then a price increase again here, January '19, more work to be done in international and Europe specifically, which we're taking action there to make sure that those increases take hold. So we have some more work to do in that area. But we're pretty confident that we're going to be able to maintain our margin levels going forward with the business. | intermediate | [
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cb4a4ea26c391a8861cf94edc83a4be3 | Hey, guys. Good morning. So Ken, I might have missed it, but did you give the content from Sierra Monitor in the quarter that you have any contribution? | Yeah. The revenue contribution was less than 1% growth. So we did under $3 million of revenue associated with the acquisition. And from an earnings perspective, we saw a dilution on the GAAP line of about $0.04 and $0.01 of dilution on the adjusted earnings line. Our expectations there remain $0.03 to $0.07 for the first full year. We've only owned it, as we've talked about on the call, since late May. So I think it's very much still on track, and we remain very much committed to delivering on what we had said we would earlier in the quarter. | direct | [
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bde9b2d9a88441df9f112cd2906f0937 | So that 3 million is about 30, 35 days' worth of revenue? | Yeah. That's about right. And it was late May when we closed that acquisition. | direct | [
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72abae5dcc27b45567653f94f184aa4f | I wanted to talk maybe longer-term, I mean, you've done a great job on the margin, and you've got a lot of initiatives that you pointed out over the last -- to carry us through 2020. But as we look a little bit further, I'm curious where the most opportunity is for MSA? Be it gross margin enhancements or SG&A takeouts. My sense is SG&A is probably done at this point, but I'd be curious to hear what what your input is about kind of the growth on the margin and how we continue these great incremental margins that you're having? | I know there's still lots of opportunity, Ed. I wouldn't say that the cost takeout is over. We're very focused on our SG&A. We had nice improvement, in fact, in SG&A in Europe, which SG&A declined by about 4%. So we're really managing those expenses. There is a lot of focus in that area. We leverage our systems and processes to look at the SG&A throughout the business. So I wouldn't say that that's over or behind us. Obviously, again $50 million out isn't in the cards, but there's some nice opportunity that we're going to continue to look at going forward. We also believe that there is some margin expansion opportunity with some of the businesses that we're in. Fixed gas and flame detection really looks like an attractive area for us. The investment in Sierra Monitor will really help us with some growth in that area and bring some technology into the organization. So we think that there's some nice opportunity on the growth side of the business. We're still a small player with fall protection. We're a distant No. 3 player in the fall protection area, and we think that there is some nice opportunity to grow that business, both organically and hopefully, inorganically, we can find some opportunity to help us grow that business. So there's some nice opportunity going forward on both the top line and margin and SG&A across the business.
The only thing I would add, Nish, is on the cost of sales side. We've been very consistent in talking about our opportunities on our cost of sales, where 70% of our cost of sales are raw materials and so our sourcing initiatives, and we're making some significant investments in our sourcing organization to really go after and realize some of those improvements. So we've got, as Nish indicated, I think the new products and the things we're doing to drive some pricing improvements on that side of things. The gross margin with the cost takeout and the pursuing sourcing opportunities. And then general improvements in our SG&A, like we're seeing in Europe. I think all those things come together to continue to give us confidence in our ability to deliver additional margin expansion. | direct | [
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ca9071ed1285e8f4098b84a6d14003d6 | So with that context, I'm curious, you called it out in the press release about 40%-plus incrementals. If I look out five years, do you think that rate continues at that 40% plus rate based on some of the initiatives and what you see existing in the core business? | No, it's always hard to say what the business will look like in four or five years. But what I can say is over the last three or four years, we've been consistently delivering those incremental margins at or above 25 or 30%. And so we think this business has the opportunity to continue to grow and improve the overall underlying margin position. And so yes, we think we're positioned well, and we think we've got enough opportunities ahead of us to continue to grow earnings and improve our margin profile. | intermediate | [
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9b10b3720dba3e346d846b4d31cbab43 | Hi, guys. Can you just discuss maybe what you're seeing there and why that may or may not be an area of concern? | Yeah. Larry, we're not overly concerned with what we're seeing with hard hats. When you go back and that leading indicator, I'd go all the way back to the post 911 economic downturn in 2002, 2008 and then again the industrial downturn in '15. What we saw in those downturns with head protection was a quick and sudden double-digit decline in business. And that's not what we're seeing today. What we're seeing today is really more distributors, really tightening up inventory. We're seeing some destocking, which we experienced that began sometime in May, all indicators were that it was in May. And then what's interesting is as we get into July here, our incoming business is up double digits in head protection. So it's been really uneven and choppy. If we don't get significant growth in head protection this year, I wouldn't be overly concerned because we're coming off with back-to-back years of double-digit growth. And we know that some of the employers out there are having difficult time with employment, finding people to do the work, and weather really hasn't played in our favor this year either. So while we're disappointed that you always want to see growth, 5, 7% growth with head protection, not having that this year or at this point this year, really doesn't point to a downturn in our view because the rest of the business is really strong. | direct | [
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f365a3ebf01cfaab66a16138e94eb8ae | OK. Also in the first quarter I think the book-to-bill overall was 1.07% or a little bit lower if you adjust it for their business didn't shift. So what would the book to bill be in the second quarter? | Typical as seasonality is with us, the book to bill was around 95%, which is pretty typical for the second quarter for us. But if you look at it over the course of the year, it's right around one or slightly above one. The backlog remains really good, really healthy for us, and that's why we have confidence in that mid-single-digit growth going forward. | direct | [
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11639c0cfd2c8fb273ffb101182c182d | Got you. Now I think 10 to $15 million in business didn't shift in the first quarter, shift in the second quarter. Can you remind us what product that was? And so obviously, if it did shift and if that could -- if it did shift, the top line growth would have been a little bit lower, if you ex that out, but still obviously positive by a few percent. So would the top line numbers in domestically or the Americas have hit your internal second-quarter targets? | Yeah. We don't normally talk about our internal plans, but what I can tell you, Larry, is that, overall, our internal -- our performance is tracking fairly well versus our plans and our internal plans. And there's a big reason why we are committed to that mid-single-digit guidance this year in terms of revenue growth. That business certainly shift through the second quarter. It was predominantly in some of our gas detection products, that's what comes out of our facility here in Pittsburgh, and that's where we saw some of those delays in the first quarter. So we did purge that out. But we do, as Nish has indicated, continue to carry a backlog that is at a really healthy level for us. So we still feel pretty confident about where we sit. | intermediate | [
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29522b2fdae99f2840728e9c2bf42a17 | Very good. And last question for me, you talked about -- maybe I missed this, I apologize if you discussed it, but Middle East obviously had been weak. But you have some good backlog for the second half. Are we still confident in that hitting? | Yeah. Larry. Right. The Middle East in the second quarter, they had a real tough comparison with self-contained breathing apparatus. But what's really encouraging about the Middle East is the fixed gas and flame detection business was up about 20% for the quarter. So if they had a good pipeline of business, there's still a decent backlog there. And it's nice to see that business bounce back, which, quite honestly, we anticipated with normal cycle of business there, real strong '17 part of '18 and then things tailed off the natural cycle of that business, and we're starting to see that come back. So it's nice to see some improvement there. And the margins are improving in that area too, which is also refreshing.
Larry, I was just going to add on to that comment was that, if we look at some of our higher-growth markets and some of the markets where we see some of the bigger opportunities, Asia and the Middle East, and parts of Latin America, just looking at our business in many of those areas, we've seen some really nice margin performance here in the quarter. The Middle East continued to bounce back for us after a pretty weak spot. So we saw that come through, that was good. China's business seems to be very much in chorus, growing at almost 13% in the first half, and with a good pipeline for the second half. And then Latin America, the team down there is doing a nice job as well. So we think we're well positioned in many of those growth markets, not only from a growth perspective, but from a margin perspective. So it's -- we feel pretty good about that. | intermediate | [
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89a86468c1375746c491864874ac1a2e | OK. So that pipeline and backlog that was expected to hit in the second half, you're already -- in other words, you're already starting to see some of it hit and the conditions are getting better. The projects are happening. So if not just the timing per se of the backlog hitting, but the overall end-market in the Middle East is getting better? | Yeah, I think that's a good way to define it. We're starting to see some of the projects come through, once again, the process, the cycle of projects are coming through for us. | direct | [
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a592e03b612ee7a34106fbfb496264e5 | Thirty three million of shipments to be recognized in the second half of '19. Does that provide you very good visibility into the remaining '19 guidance or whether there would be a meaningful portion that would be out into the 2020 time frame? | Yes. OK. Suji, actually, look at our -- as I said, in the second half, we have a very good order receiving. Also, we have a very high kind of a delivery schedule, too. So obviously, we look at the second and third quarter and the fourth quarter. We think the third quarter will be heavier than the fourth quarter, right? And also, we see some order or forecasts where we either deliver end of Q4 or probably come to the early Q1 next year. So we're very kind of excited about this customer forecast and also our production capability. Oh, Suji, just to add -- yes, sorry about that. But just to add is I think you were asking, too, if we thought some of the first tools we delivered here in the first half would be driving revenue for the second half. And usually, it takes two to four quarters for a first tool for recognition. So our second half, as David said, is -- a lot of it is shipment based. And yes, the first tools we shipped in the first half of the year, we would think, would be more of next year-type recognition events. | direct | [
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e0a8fdb87bdf7d84031b54220b908c38 | OK. Great. And then also on the shipments, are they spread evenly across foundry and memory customers? Or is there a concentration on one side versus the other? | Actually, looking at our customer, I mean, we do have our -- I call the the memory house and also have our foundry. And actually, our second half, you got mixing, right? Mixing of the -- there's a nano company and also the foundry. Pretty good mixing actually in the second half. As I said, our first customer, SK Hynix, also a delivery in Q1 and Q2 time line, and we're not expect additional deliver for SK Hynix in Q3, Q4. | direct | [
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7d37ff7a3fe1949d42b83449de3fc498 | OK. And then a question on the Tahoe products. Are additional -- I know you have one customer trialing it now. Are additional customers purposely -- or are you purposely waiting for that first customer's acceptance? In other words 2020? And are multiple customers kind of waiting on that event order? Is that how this is going to work out? Or the first customer acceptance is really the trigger for additional customers? | Yes. That's the typical pattern. Right? And looking at our history, it also showed that pattern. Normally, first customer take in a tool, and other customers they'll be waiting for the result. Right? So also, they're first waiting for results; secondly, they're waiting for repeat order. So I think there's more. As I mentioned, we've got a very promising data from first customer, and we're continually improving further excellency and also improving more of our yield data in the coming quarters. So with that data, we are confident and -- we'll have a repeat order from first customer. But then there may be -- it depends on other customer. If they're -- like our data, maybe they're now waiting for second order -- second repeat order to come out. They can make a decision, too. So we do have, as you say, a few customer lined up, and we're going to present our -- improve the results and -- to see what's their reaction. | direct | [
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cf04913a964c3f51a7ef880662755527 | OK. Great. And then just one thing I didn't clarify before. I just want to make sure. Is Ultra-C Tahoe complementary to SAPS and TEBO? Or is it a replacement for it? Is it -- | OK. So the -- so Suji, basically, Tahoe, partly -- I mean, Tahoe is a part that's basically used as -- for sulfuric acid, process. Right? Most of their process as supposed to action and also their -- post their, I should say, their CMP. And there's some -- also some -- a little bit metal removing process. But anyway, most metals process. At this moment, our Tahoe -- our SAPS -- TEBO didn't apply for those steps. And I should say, previously, they divide the market. However, there might be listed in structures and process that need or require adding TEBO and SAPS the further you consider, I call, the performance. So anyway, that's adding additional performances for that. But at this moment, our -- I should say most are -- we're sulfuric acid. And with this Tahoe product, we'll meet the customer requirements. | intermediate | [
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6297d2ef1c8e4700d35f3382d49bc227 | OK. OK. And then last question. It's exciting to see your fifth customer here, DRAM customer. Can you talk about the number of steps relatively -- not to go numbers but just whether 3D NAND or DRAM has more steps that are required at cleaning, which one's more intensive in terms of use of your tools or whether they're both pretty similar. | Well, in general, I see that is -- obviously, DRAM process are more complex than the 3D NAND process. So therefore, their need a cleaning step is more in a DRAM process. Right? So -- however, there are different challenging. Right? For instance, if we look in the 3D NAND, the -- they're multilayer, right, 128-layer, whatever in the future, 250-layer that deep hole or that sales structure, that deep-hole cleaning becomes challenging, too, right? And so I should say that generally speaking, obviously DRAM has more of a cleaner step than 3D. However, for the specific or deep hole, that's a cleaning challenge, which is, I -- we believe, our SAPS technology exactly designed for those deep-hole layer and their particle removal. Right? That's our strong point. | direct | [
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5eb109c8701fcf148dfd73ea4ba07d56 | Congratulations on another good report. I just was wondering if you can give a little more color on the eval tools, how many you have out there and how do they break out in terms of Tahoe and SAPS, etc. | OK. Well, so OK, the -- probably I can give you -- I cannot give all the number right at this moment. I can tell we have a Tahoe system on an eval tool right now. And also, we have the copper 3D MAP, right, for the foundry application. That's an eval tool. Right? And the -- that's a major new product. And also, we do have some other eval tools, which is the existing product, and then -- which is a new customer. And they're -- because they take a first tool, they have to make the eval. For instance, this new fifth customer DRAM company we're going to deliver their first tool, it's actually a mature tool. But it's also considered eval because of the first customer. So I can say there are at least three in hand right now. Actually, we have more than other number in here, but I cannot give you each one or who each customer it is. Right? Mark? | intermediate | [
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81fdb483068ca41d3a5ef4c45a31de71 | R&D costs, are they going to be trending up for the rest of the year? | Yes. I can hit that, Mark. So yes, we expect our overall opex to trend up a little bit from the first half of the year, and it'll be weighted to -- some of the growth will be weighted more toward R&D. Yes. | direct | [
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099ecfb1141843024847188a9f58eaba | Hey, guys. Congratulations on another fabulous quarter. Thank you for all those specific customer commentary that you gave. It's nicely refreshing. As you look at SK Hynix, do you have an opinion yet on whether their purchasing or spending with you will be up on a year-over-year basis in 2020 versus '19? | OK. Well, it's really hard to say at the moment, right, looking at the DRAM pricing. And obviously, the DRAM market today has kind of people concerns. So especially, there's a trade conflict between Japan and Taiwan. Right? I mean japan and also Korea, too. That all impact spending and also their future fab spending for Hynix. I should say at this moment this year, well, pretty -- say that is our first half year, very busy with supplying tool to the Hynix and the second half pretty empty. For next year at this moment, it's way too early to see that. By our -- I mean, I worked with Hynix for many, many years. It's hard for them to say next year, we'll have no spending. But we still think they are going to continue spending there. They'll spend over -- higher than this year or versus -- lower than this year. It really depends on their plan. By the same report -- if you look in the same report, we have some indication. They're going to spend probably higher than this year, probably equal to the last year. Right? But anyway, these are all the reporting projection. I can see that probably we'll give you more update at the year end. Or beginning next year, we'll give you more of our forecasts for our customer. | intermediate | [
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"fully_evasive"
] | B |
527db90fd7383d0ac48d310f7da161f8 | Great. As it relates to the Tahoe and the initial evaluation results that you and the customer are very pleased with, in the last quarter you guys made commentary that you would expect material revenue with that customer for Tahoe in 2020. I would assume, since the evaluation results, everyone's happy with -- that that would still be the case. | Yes. I think you that said a very good point, right? And as I mentioned, we have a very promising result, and I can see that they are Tahoe's human data, very close to their single-wafer hard SDM's single-wafer data. So that's what the real -- in the process what demonstrate Tahoe have a similar capability, but we'll use only one-tenth of chemistry. Right? So that's why the customer really like it. As to our first tool, and we're packing typically, I should say, eight to 12 months. So assuming probably either end of this year or beginning next year, we'll finish the qualification of first customer. And then obviously, we're expecting repeat order from the same customer and additional order from other customer. Right? And for the other customer, we're going to record a revenue of probably -- it depends on the order, right? Normally, new customer take six months. So some of those are new order from Tahoe will help definitely to add on our revenue next year. And at this moment, probably too early to say. It depends on when orders start, when we deliver. Right? So that's our projection. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
d49f0697804eb0807433e391041540f8 | OK. Great. And then on the TEBO, you guys talked about orders next year for your next-generation cleaning tool. Can you remind us, any ASP differences in the next-generation tool or gross margin differences versus the previous cleaning tools or ASPs and gross margins, the same just increased performance? | Yes. OK. Actually, as I mentioned, in early report in TEBO, we're -- just like any technology -- I'll give as example, go back to SAPS. For the SAPs getting to the customer using for production, it will take more than two years. Right? So TEBO will follow that trend. Right? So I think the -- as I said, Q2 last quarter, we're achieving together with a customer very good data, and -- which is through our hard working, closely collaboration with the customer and also modify hardware, modify parameter, modify processes, data -- I mean, process condition. So that will show our TEBO is very effective in removing small particles and also removing the contamination without damaging the structure. Right? With this good data, we'll continue working with the customer, and we'll continue to apply more and more steps. And then eventually, they're going to buy more of our tool because of the more steps and more of expansion in their capacity. They need a tool. Right? That's for our current customer. And with -- again, same thing I said with the Tahoe, same kind of path. As soon as one customer had a repeat order coming and overall data come out, and the other new customer like say, what's going on there. Right? So we expect that that's moment, a checking point. We've got additional new customer coming. So anyway, I think that bottom line, at this moment, I should say all the pattern wafer, there's no -- any technology kind of apply or physical agitation to that tiny structure. Right? We're going to control their bubble temperature, control their -- our TEBO technology, we're very promising or we're very confident this technology will play a big role, especially cleaning small particles, tiny particle into the trench, between the trench, above the trench or into the deeper layer. So it's really a critical technology when the people are moving to five-nano or three-nano, even down the road, right, no matter it's a FinFET or nano wear. And so we're very promise. We're very optimistic about technology. Eventually, it become mainstream technology to remodel this kind of a critical application. | fully_evasive | [
"direct",
"intermediate",
"fully_evasive"
] | C |
a7376dff4d15ccc680ec586bc35796b0 | Fabulous. And then lastly, speaking about of optimism, I think you guys currently have, I think, roughly $350 million in annual revenue production capacity already. Is that number still correct? | That's correct. As we announced before, we have two factories right now. First factory, about $100 million. Our second factory, around $250 million. So added together, it would be a $350 million revenue capability for a year. Yes. That's correct. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
bfe59a5c83637dbd3a7b6ca9d4b3d7eb | OK. And then to the optimism part. Given the fact that you're only a hundred million a year company today with another $250 million in capacity yet available, we're looking at adding future production and future space potentially in the near future. So with that in mind, what is your guide as multiyear outlook and objective for market share goals in the $3 billion cleaning market, as well as the $500 million advanced packaging market? | Great point. Right? And so if you look at our TAM here, our cleaning market totaled $3 billion with our current product, which is, I call it, a critical process. Our SAPS, TEBO and also the Tahoe, we think, about are -- total TAM is about 50% of that. And also with additional where cleaning -- 3D market is getting, especially front- and then back-end together, that's a roughly $0.5 billion TAM market. So we have a real huge market. Obviously, continue with innovation, new technology, we'll take more market -- increase the TAM market, too. So it's a real good future for us. And where is that? That's why expecting -- we're trying to building manufacture capacity. And further, we're going to also increase our sales capability both inside China, outside China. We put -- do believe our technology will be needed by everybody, every fab in the world. So that's why we're going to make our early preparation and for those time comes. And as to the, I should say, the sales revenue increase, it's hard to give you a future, but I can give you a past. Right? In the last five, six years, our annual compound increased about 60% of annual base. Again, that trend, I should say, obviously, it depends on the future how we execute the business. And we want to maintain -- we want to get kind of a good increase to our revenue until we reach a certain, I call, saturation point. Next three, four, five years, that'd be the growth, right, the growth period for us. So we're very excited. We're going to prepare for that of course. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
22ada445ca74a6e5477cfe150605d98c | Maybe just to start out in manufacturing products, but first, I should say thank you for all the detailed guidance. So there's a lot of granularity that you offered. To starting in manufactured product, I'd love to just get a little more detail on how you see awards in 2021, including umbilicals. Listen, I'm trying to get a sense for how much inbound do you need in 2021 to hit that margin target? Or do you have enough line of sight to get into that range, even if orders don't pick up, maybe for oil at latter half of 2021? | I'd put it this way, Sean, and thanks for the question. We've got the two biggest projects. We're working on, we will run throughout the year. So that's the lion's share of what we've got in the plan. And then we do expect that we'll be able to pick up some orders. We're not overly aggressive with what's built in the plan but that there will be â have to have or will need to have some incoming in the first half of the year. But that's across the board. That's not just an umbilicals that's in the even the some of the other connected hardware in the mobility solutions as well. And so we see some of that coming in all around the board. And as you know, I mean, some of those big projects in umbilicals are longer line of sight, so that's not entirely what we got in the plan. I think we've edged out effectively. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
6a6c0d1e17125c2cd2d80b0cc7a4a273 | Got it. Thank you for that. That makes sense. And then I think everyone's trying to unpack these new energy markets and understand the value chains over the better. So things like offshore wind, could you maybe just talk about how you perceive differences in those markets compared to your traditional energy markets. Look, in terms of competitive dynamics, contracting terms, pricing, just how would you compare the two in terms of traditional end markets versus these new emerging ones that you're pursuing? | You know, if you would've asked me that question, probably, three, four years ago, I would have told you that it's a tough market. The pricing is a little bit harder to get. They contract a little harder than some of our oil field customers. I think number one, things have gotten better there. I think we're starting to â we're able to establish the value of uptime and new technology and a lot of things. So we're able to place more technology into that market than we have in the past and then establish longer-term relationships. So I think they were alert, and to be fair, they were a little hesitant about -- we will remain interested if there's another pickup in oil and gas. So we built those relationships. We've turned them into something better. And in the meantime, oil and gas has gotten a little more challenging. So I think it's really rebalanced quite a bit. And we would say that those are good projects to have now. Yes. And I think, Rod, one of the things I would add is just partnering with them in the development of the SSR vehicles and things of that nature to help them be more efficient in their operations. It's been something we've been very proud of in the last 12 to 18 months and the uptake of that. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
043f962b541970f53b1ad2c6c2fa808c | First question is just with respect to the 2021 guidance obviously a big range at the EBITDA line $160 million to $210 million. And I know we still got a ways to go before we close out 2021, but could you just help us think about kind of the probability of outcomes getting to that higher end of the guidance versus the lower end. And just really trying to get a sense of how confident you feel and get into the midpoint of that guidance about $185 million of EBITDA next year or this year? | Sure. I think we feel pretty good because more of the news that's happened most recently is really putting some confidence out there about a more stabilized commodity price and being in that range and I think more confidence about that range. So I think we feel good about say the midpoint and the upper end of the range that it certainly today, it is looking good. But really, that range is going to be most strongly driven by the stability and the level of the commodity price. As I think about -- I would walk you through sort of the timing of these. If we've got a good near-term commodity price, that's first a lot of the IMR activity that we get those are quick-turn projects. Those barrels are already behind pikes.So if we can help them produce more through their existing wells, they don't need permits for that. Generally speaking, not like a drilling permit. So there's more that we can do there, especially with a riserless intervention campaign. So that can happen fast drive that range up. Then maybe later in the year, we start to see more recontracts get picked up, better utilization of the contracted rigs. So that helps on the upper end of the range. And then finally, you'll get some FIDs in the door, getting enough confidence over the longer term that we've been stable for a while at a better level. And that's going to drive more in the manufactured products business too. So it's all about that confidence that is by far the biggest number for us in this range. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
567610ab0af60a65f7a5457869c0465f | Understood. And that's helpful. And piggybacking on one of Sean's questions, in manufactured products, obviously, that's the segment that's going to have the most acute headwinds in 2021. But based on the kind of order outlook you have in your plan today, do you have any confidence that 2021 might represent the bottom for manufactured products, at least from an operating income perspective? Or is that a little bit too soon to call at this point? | No, I think what â I'd just kind of refer back to what we were talking about. It certainly looks like when we look at the raise to data and others around project FIDs that 2020 was a low point. And so if we see those projects FIDs like so many are saying, start to increase, I think that we should see, I mean, we're going to attract with FIDs, and if they go up, then that's going to be a good pro sharing as well. So that's what's out there in the market right now, as far as all the customer budgeting and the expectation. So I would kind of go with that. I think it looks like we should start to see that. And unfortunately, that business rate lags a little bit. So low FIDs in 2020 tend to have its effect in 2021, and improvement in 2021 will start to build in 2022 and beyond. So I think you've got it right. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
0202c95eb245b07c5af5ea444cf4b108 | Good morning. I was wondering if you could just circle back to the 1Q guide. I know there's a lot of moving pieces here. The guide calls kind of higher revenue, flattish EBITDA quarter over quarter. Can you just kind of walk us through some of the moving pieces here? Are you seeing some costs come back into the system? Or is there anything else impacting 1Q or maybe some benefits that helped out 4Q? | You know, I would just say, first of all, you look at some of the things that we talked about already. And Alan will help me out here. But one of the things is the riserless campaign is a good part of the Q1 story. I'll hit on your question about costs. We don't see any real significant costs creep back in. I would point your attention to a little bit of â and I think it's temporary, but a little bit of struggle getting people through the UK right now. Just with the impact of the new strains of COVID-19 that slowed down some of that. And it means people are in quarantine a little bit longer, but that's not significant. I think most of the things we're seeing, if they're coming into the system, they're temporary pieces. Overall, like we've got good control. And then, kind of in the background, we've still got â we're still realizing more and more of the good work we did in the cost reductions in 2019 and 2020. So some of that still coming in. So I don't think costs are really a big concern for us in Q1. Alan, any other comments that you'd add? No. I think you hit the high points and main. OPG, certainly, as we've mobilized and are outworking on the riserless light well intervention campaign in Angola. One of the other stories I think we've talked about in the past is the drill pipe riser contracts that we had working for Petrobras in Brazil. All three systems are on contract beginning this quarter where we had two of them beginning of the middle of last year. So that's an incremental as well. So the cost continued to be a focus and looking at improvement plans, but we're not seeing predict in that area at this point. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
0f313bc7871d2684068c268590e27c2e | Understood. And then maybe just more of a kind of a high-level question, we're hearing a lot about the Gulf of Mexico so much uncertainty from regulatory perspective. It seems like, so far, the impact has been pretty minimal. Some of these even kind of called toward a pull-forward of activity just to get ahead of the regulatory changes and more commodity prices are today. Well, how are you guys thinking about the Gulf of Mexico kind of longer term? How it plays out over time and even if, kind of new development slows, what do you think it all means for some of the more maintenance-oriented services? | Well, I think, actually, you know -- and that's â I liked the way you said that because I think one of the trade-offs we see is, if we start to see maybe a little bit of a hang-up in permitting, it could allow us to do more of the maintenance work. More of the IMR, because, if you've got some money to spend, you've got a decent commodity price and you can drill a new well, but can you get the most out of the wells you've got. That could turn some either change the work. But we actually have good participation in that kind of work. So that could be good for some in the near term. Obviously, any long-term issues in the Gulf of Mexico would be more serious for all of us. But I think that's one of the things that we're watching very carefully, obviously. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
ad35ce95a74694ee1efdeee31fb3d66f | Yes. Thanks for all of the detail. When I look at Oceaneering in the breadth of your services and technology, and through the lens of energy transition, to me, it seems much broader than just offshore wind. Obviously, getting less attention than some other areas, but ocean-bottom mining for rare earth, offshore projects for carbon capture and storage, these are all areas that to me seem synergistic with what you already have under your tent. So how are you thinking about these different in markets for energy transition in terms of what you already have and not just replacing your business, but growing your business into new areas? | No. It's absolutely a key focus for us. And I think we're trying to help people understand that some of that â when we talk about our investments, it's got to be focused on those types of activities. Not just greener industrialization, broadly written definitely not more of the same. We need to make â we need to turn this corner with â and a lot of our customers are doing it, so that's really helpful. So we place a high emphasis on the places that our current customers are going because we know we've got the sales channel there. But also just the things that play into our strengths. Like you said, Subsea mining, it's still wind with floating offshore, wind is an even bigger deal for us because it's a deepwater play. Some of this repurposing â potentially repurposing platforms to be hydrogen-producing that would definitely help our IMDS group because that integrity management of extending the life of these assets as they're being repurposed. There's a lot of great opportunities out there. And it's actually pretty exciting to say, OK, we need to look at all of them, but then we also need to make some really good bets on which one have scale, which will happen in the soonest and which best suited our capabilities. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
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