MKS Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 8, 2024

Key Takeaways

  • For full-year 2023, MKS reported $3.6 billion in revenue, $863 million of adjusted EBITDA, and $4.43 EPS, demonstrating solid profitability despite market headwinds.
  • In Q4, the company delivered $893 million in revenue, $218 million of adjusted EBITDA, and $1.17 EPS, all above the high end of guidance.
  • MKS achieved nearly $50 million of annualized run‐rate cost synergies from the Adatech acquisition and remains on track to hit the $55 million target by Q2 2024.
  • Demand in the semiconductor market remains muted, with Q1 semiconductor revenue expected to decline sequentially as inventory drawdown tied to memory spending continues.
  • The balance sheet was strengthened with over $1.3 billion in liquidity, successful debt refinancing that extends maturities, and ongoing free cash flow generation to accelerate deleveraging.
AI Generated. May Contain Errors.
Earnings Conference Call
MKS Q4 2023
00:00 / 00:00

There are 8 speakers on the call.

Operator

Good morning, everyone. I am David Ryzhik, Vice President of Investor Relations, and I am joined morning by John Lee, President and Chief Executive Officer and Seth Bagshaw, Executive Vice President and Chief Financial Officer. Yesterday, after market close, we released our financial results for the Q4 and full year 2023, which are posted to our investor website at investor. Mks.com. As a reminder, Barry's remarks about future expectations, Plans and prospects for MKS comprise forward looking statements.

Operator

Actual results may differ materially as a result of various important factors, including those discussed in yesterday's press release and in our annual report on Form 10 ks for the year ended December 31, 2022. These statements represent the company's expectations only as of today and should not be relied upon as representing the company's estimates or views as of any date subsequent to today and the company disclaims any obligation to update these statements. During the call, we will be discussing various financial measures. Unless otherwise noted, all references to combined company financial measures reflect the 2022 combined results of MKS and Adatech Limited, which MKS acquired on August 17, 2022. Also, unless otherwise noted, all income statement related financial measures will be non GAAP other than revenue.

Operator

Please refer to our press release and the presentation materials posted to the Investor Relations section of our website For information regarding our combined company results, non GAAP financial results and a reconciliation of our GAAP and non GAAP financial measures, For a detailed breakout of reported and combined company revenues by end market and division, please visit our investor website. Now, I'll turn the call over to John.

Speaker 1

Thanks, David. Good morning, everyone, and thank you for joining us today. MKS delivered solid results in 2023 against a challenging market backdrop.

Speaker 2

For the full year, we delivered revenue of

Speaker 1

$3,600,000,000 adjusted EBITDA of $863,000,000 and net earnings per diluted share of $4.43 Our performance highlighted the resilience of our business. We faced headwinds from a softer demand environment in semiconductor and electronics and packaging markets, but we generated solid profitability due to a combination of prudent cost controls and the underlying strength of our broad portfolio of proprietary solutions. We appreciate the continued support of our customers who rely on MKS to solve their toughest challenges and on our employees who work relentlessly to deliver on the MKS promise. Our results also reflect our 1st full year operating with ATOTEC as a combined, more capable global company. The addition of ATOTEC's industry leading chemistry and plating equipment solutions have expanded our broad range of capabilities and provided us with a higher mix of consumables and services revenue.

Speaker 1

We are on track to achieve our targeted cost synergies from the Adatech acquisition. I am also encouraged with the progress we made in 2023 and positioning for future revenue opportunities as our electronics and packaging teams are actively engaged key customers on their next generation designs for advanced package substrates, a critical enabler for new applications such as artificial intelligence. Most industry observers expect a recovery in our end markets to slowly unfold in the second half of this year. We have established ourselves as a critical enabler of advanced electronics with our foundational solutions for the semiconductor and electronics and packaging markets. By staying focused on our innovation roadmaps, controlling costs, managing our balance sheet and driving design wins with key customers, We are positioning MKS to generate attractive growth and value creation in the years ahead.

Speaker 1

Now let me discuss our 4th quarter results in more detail. We delivered revenue of $893,000,000 adjusted EBITDA of $218,000,000 and net earnings per diluted share of $1.17 all above the high end of our guidance range. Revenue from our semiconductor market exceeded our expectations as we saw better than expected demand in certain product categories such as plasma and reactive gas and analytical controls solutions. That offset a continued muted demand environment for our vacuum solutions for deposition and etch applications due to the industry downturn in NAND equipment spending, which remains at historically low levels. Demand for our photonic solutions for lithography, metrology and inspection applications remain robust.

Speaker 1

In 2023, this business grew on a year over year basis and exited the year at more than 20% of our overall semiconductor revenue. Photonic solutions remain an important area of investment for MKS. We expect it to be one of the key growth drivers for our semiconductor market in the years to come. As we look to the Q1 of 2024, we expect revenue in our semi field market to be down sequentially from our better than expected Q4 as overall demand remains muted. While customer inventory levels of some of our product categories have eased, we expect continued drawdown in categories tied to memory spending.

Speaker 1

Turning to our Electronics and Packaging market. Revenue was slightly better than expected due to the lumpiness of certain laser drilling equipment sales. Overall demand remains stable but muted, consistent with PC, smartphone and server production volumes. That said, the long term growth drivers for our electronics and packaging market remain as strong as ever. We frequently discuss how the trends of miniaturization and complexity are moving from semiconductors to other critical components of advanced electronic devices, including packaged substrates, which are a key building block of advanced packaging architectures.

Speaker 1

There are many packaging architectures enabling today's cutting edge applications, of which TSMC's chip on wafer on substrate architecture or COOSC Here's 1. Let me walk you through how MKS is a foundational enabler to that architecture. For the COW, which represents the chip on wafer, We have a leading portfolio of critical subsystems across deposition, etch, lithography, metrology and inspection applications that are integral to the manufacturing of individual semiconductors as well as bonding these individual semiconductor chips to each other. We also have a small but growing chemistry business for this application. These stacks of chips are then packaged on top a silicon interposer, which is the W or wafer, which is then integrated on a package substrate.

Speaker 1

This last step represents the O and the S in COOS. MKS has leading expertise in laser drilling, chemistry and plating equipment that addresses more than 70% of the critical process steps to manufacture these packaged substrates. Similar to transistor scaling for semiconductors, the lines, the spaces and the interconnecting vias of a package substrate are getting smaller. The size of the substrate is getting larger. The number of layers in each package continue to increase.

Speaker 1

All of this creates more complexity and miniaturization and MKS is uniquely positioned with the broadest portfolio to help Our packaged substrate manufacturing customers meet these challenges. As we look to the Q1 of 2024, We expect revenue from our electronics and packaging market to be down slightly on a sequential basis, primarily due to typical seasonality associated with the Chinese New Year. Turning to our Specialty Industrial market, revenue was slightly weaker than expected primarily due to modest softness in demand for research and defense applications. As we look to the Q1, we expect demand trends in our specialty industrial market to remain stable with revenue to be relatively in line with 4th quarter levels. As a reminder, we leverage our R and D investments in our semiconductor and electromechronics and packaging markets to drive incremental revenue opportunities in our Specialty Industrial market, which is a more stable business with good margins and cash flow.

Speaker 1

Wrapping up, I want to thank the entire MKS team for their passion, dedication and resilience this past year. In addition to weathering a softer end market backdrop, the MKS team worked tirelessly to resume normal production and deliver for our customers as we recovered from the ransomware event in the Q1 of 2023. The strength of our team and our culture is reflected in the industry accolades we received during the year, including being named to U. S. News and World Report's inaugural Best Companies to Work for in the Industrials and Business Services Industry List, as well as being named by Newsweek and Statista is one of America's most responsible companies for 2024.

Speaker 1

Finally, before I hand the call over to Seth, I want to thank him for his dedication and service to MKS and to congratulate him on his upcoming retirement. Throughout Seth's long and distinguished career at MKS, he has been instrumental to our growth and transformation. Seth's foresight, financial stewardship and ability to navigate complex financial landscapes have earned him the admiration and respect of all who have had the privilege of working alongside him. Our search for his replacement

Speaker 3

is well underway. We look

Speaker 1

forward to updating you when we have named our next Chief Financial Officer. And now, I'd like

Speaker 2

to turn the call over to Seth. Thank you, John. Before we discuss our results and outlook, I just want to say a heartfelt thank you to the entire MKS team As well as our shareholders, we are supporting this partnership in the past 18 years. It's been a privilege to serve as Chief Financial Officer of MKS. I am proud to be have been a part of the company's substantial growth and transformation over that period.

Speaker 2

MKS has a strong operating model, unique position to capitalize across a number of attractive secular growth opportunities leaves me very excited about the company's future. I look forward to following the Comcast's continued success. Let me now cover our Q4 and full year results and provide some thoughts on our Q1 of 2024. Starting with the Q4, we delivered revenue of $893,000,000 above the high end of our guidance range, primarily due to better than expected revenue from the semiconductor and electronics and packaging markets. Revenue was down 4% sequentially and down 18% year over year.

Speaker 2

Turning to our end market results, 4th quarter semiconductor revenue was $362,000,000 declining 1% sequentially and 28% year over year. 4th quarter electronics and packaging revenue was $226,000,000 a decrease of 7% and 15% year over year. Excluding the impact of foreign exchange and palladium pass through, 4th quarter revenue declined 9% on a year over year basis. Moving to our Specialty Industrial market, revenue in the 4th quarter was $305,000,000 down 0 point 5 dollars sequentially and down 3% year over year. Excluding the impact of foreign exchange and palladium pass through, 4th quarter revenue declined 3% year over year.

Speaker 2

In the Q4, consumable services revenue across our 3 end market categories comprised 41% of our total revenue. Turning to our margins, we reported 4th quarter gross margin of 46% exceeding the midpoint of our guidance range. The more favorable gross margins were a function of unexpected volumes as well as favorable product mix. Our healthy gross margins reflect the value logical capabilities in the complex problems we solve for our customers. 4th quarter operating expenses were $229,000,000 below the low end of our guidance range due to strong cost control even though we had better than expected revenue.

Speaker 2

4th quarter operating margin was 20.3%, well above the high end of our guidance range due to higher revenue, Favorable mix and prudent cost control, resulting in robust operating leverage. We continue to work toward our cost synergy targets with Adatech. We exited the 4th quarter delivering almost $50,000,000 of annualized run rate cost synergies, on track to achieve our cost synergy target of $55,000,000 exiting the Q2 of 2024. 4th quarter adjusted EBITDA was $218,000,000 Also above our guidance range, adjusted EBITDA margin was 24%. Net interest expense For the Q4 was $76,000,000 lower than anticipated due

Speaker 1

to more favorable interest rates relative to our expectations.

Speaker 2

Our tax rate for the Q4 was 16%. Net earnings for the Q4 was $78,000,000 or $1.17 diluted share. Turning to our balance sheet and cash flow, we exited the 4th quarter with more than $1,300,000,000 in liquidity, including cash and short term investments of $875,000,000 and an undrawn revolving credit facility of $500,000,000 We exited the quarter with gross debt of $5,000,000,000 And last month, we successfully completed the refinancing of our 7 $144,000,000 secured tranche A term loans by raising incremental secured U. S. Dollar and euro tranche B term loans.

Speaker 2

As a result of the refinancing, we extend maturity of the refinance debt to 20.29, Consistent with our existing tranche B term loans, we eliminated the financial maintenance covenant that applied while our tranche A term loan was outstanding. Based on current interest rates, we also expect the refinancing result in modest interest savings. In addition, we made a voluntary debt prepayment of $50,000,000 earlier this month following the $100,000,000 voluntary debt prepayment we made in the 4th quarter. We continue to prioritize deleveraging our balance sheet while managing the cash and investment needs of the business. In this context, it's worth noting that the Q1 typically has lower free cash flow due to timing of variable compensation payments.

Speaker 2

Our net leverage ratio exiting the 4th quarter was 4.7 times based on trailing 12 month adjusted EBITDA of $863,000,000 For the Q4, free cash flow was $146,000,000 and unlevered free cash flow was $194,000,000 Consistent with prior quarters, we made a dividend payment of $15,000,000 or $0.22 per share. Moving to full year 2023 results, revenue was $3,600,000,000 down 19% year over year on a combined company basis. Semiconductor revenue totaled $1,480,000,000 declined 28% year over year due to the decline in global semiconductor capital equipment spending. The largest driver of that decrease was significant decline in NAND spending where we are key enabler with certain subsystems such as RF powered generators for high aspect ratio etching. Electronic and Packaging revenue was $916,000,000 in 20.23, down 19% year over year compared to combined company results in 2022.

Speaker 2

Excluding the impact of foreign exchange and palladium pass through, electronics and packaging revenue declined 13% on a year over year basis. Within electronics and packaging market, total chemistry sales declined 10% year over year on a combined company basis, We exclude the impact of foreign exchange and palladium pass through. Specialty Industrial revenue was $1,230,000,000 in 2023, down 4% year over year on a combined company basis. Excluding the impact of foreign exchange and palladium pass through, sales declined 2%

Speaker 4

year over year. In

Speaker 2

2023, the revenue split between our semiconductor, electronics and packaging, especially industrial markets was 41%, 25% and 34%, respectively.

Speaker 1

For the

Speaker 2

full year, gross margin was approximately 40 percent and operating margin was approximately 20%. Again, that performance is reflection of the value of our proprietary and differentiated technology as well as disciplined cost management. We are pleased with execution on margins given the lower level of revenue due to broader industry softness. Turning to cash flow, we generated operating cash flow of $319,000,000 and free cash flow of $232,000,000 Furthermore, we generate unlevered free cash flow of $473,000,000 or 13% of total revenue. We are pleased with the strength of the underlying cash generation in our business despite a challenging demand environment in our end markets, as well as a ransomware event in the Q1 of 2023.

Speaker 2

As our end markets recover, we expect cash generation to improve, which will enable us to accelerate our debt pay down. Now let me turn to our Q1 outlook. We expect Q1 revenue of $840,000,000 plus or minus $40,000,000 By end market, our outlook is as follows: revenue from our semiconductor market of $330,000,000 plus or minus $15,000,000 revenue from electronics and packaging market of $210,000,000 plus or minus $10,000,000 and revenue from our specialty industrial market of $300,000,000 plus or minus $15,000,000 Based on anticipated product mix and revenue levels, we estimated 1st quarter gross margin of 45.5 percent, plus or minus 1 percentage point. For the Q1, we expect operating expenses of $240,000,000 plus or minus $5,000,000 Sequential increase is due to typical increase in fringe expenses and we'll continue investment into the business. While operating expenses can fluctuate due to underlying business levels, we believe a $240,000,000 to $250,000,000 quarterly run rate is a reasonable estimate to think about OpEx

Speaker 1

for the balance of 2024.

Speaker 2

We'll also continue to manage our cost structure carefully. For the Q1, we estimate adjusted EBITDA of $182,000,000 plus or minus $22,000,000 For the Q1, net interest expense is expected to be $78,000,000 reflecting current interest rates, our recent refinancing in the $50,000,000 voluntary prepayment we made earlier this month. For the Q1, we expect our tax rate to be approximately 24%. However, for the full year, we expect our tax rate to be approximately 20%. We are very pleased optimizing our tax rate following the close of the Aptek acquisition in August of 2022.

Speaker 2

In fact, absent any change in tax legislation, We now expect our long term tax rate to be approximately 19% to 21%, compared to tax rate of 25% to 27% and presented in our long term financial model at our 2022 Analyst Day. Given these assumptions, we expect 1st quarter net earnings of $0.72 per diluted share plus or minus $0.25 In closing, we performed well navigating through sickle softness in our end markets by focusing on what we can control. We maintained strong gross and operating margins. We prudently managed our cost structure while remaining aggressive with product innovation. We significantly lowered our tax rate through a series of tax planning initiatives.

Speaker 2

We optimized our balance sheet by extending certain debt maturities We simplified our debt structure by eliminating the financial maintenance covenant applied to our existing debt. We reduced our cost of debt for repricing our USD Term Loan B, we maintained strong liquidity as we managed through a cyclical slowdown. And finally, we deployed more than 80% of free cash flow to debt pay down. All of these actions have made MKS a stronger company and we're well positioned to capture long term secular growth opportunities we see across our portfolio and translate that into attractive value creation for our shareholders. With that operator, you can now open up for Q and A.

Speaker 4

Our first question comes from Joe Claude Rochi with Wells Fargo. Your line is now open.

Speaker 5

Yes. Thanks for taking the questions. Maybe first just to start as we kind of think about total revenue and your guidance for the Q1 and thinking about the seasonality for some of the businesses or end markets, how should we think about, I guess, the rest of the year? Do you view the March quarter as kind of the low point of revenue for the year?

Speaker 1

Hi, Joe. It's John. I'll take that. As you know, we only guide 1 quarter out. Visibility is limited As usual, but we certainly read the same things you do and we're certainly in constant contact with our customers.

Speaker 1

And I think our view is With the industry, meaning the first half is kind of consistent with current levels, kind of with our guidance. And then certainly the industry feels that the second half can be a little better. And our focus is really to continue to do the R and D for the future projects with our customers. And so as you know, MKS has always been very lean and able to react very quickly to any changes in those assumptions. So we are looking at a first half that's kind of consistent with what we just talked about and guided for Q1.

Speaker 2

Got it. That's helpful. And then just as

Speaker 5

a follow-up, I think in the past you guys have talked about the number of MKS plus Atotech opportunities in your pipeline and I think a lot of them have still been kind of driven by Addotech. But just kind of curious just as we turn over the new calendar year, if there's any update there on the number of opportunities there and then maybe then any color on just the number that are being driven by MKS?

Speaker 1

Yes, sure, Joe. So, we've kind of alluded to double digit numbers of customer opportunities with different customers, double digit, and that remains the same. As you know, the development and work with the customers takes time because we're working on the next generation package substrates with these customers. As you know, Adatech has leading industry market share in that space and the top 30 customers are their customers. So the majority of it is the synergy of ATOTEC and those relationships bringing over the laser groups.

Speaker 1

But our laser group also has had market share leadership in flex drilling and there are examples there as well and customers there where the laser group bringing the Additech opportunity into that customer.

Speaker 4

Perfect. Thank you.

Speaker 1

Thanks, Joe.

Speaker 4

Thank you. And one moment for our next question. Our next question comes from Krish Sankar with TD Cohen. Your line is now open.

Speaker 3

Hi, thanks for taking my question. And Seth, thanks for all your help through the years. You'll definitely be missed. John, my first question is, last year, your semi business underperformed WFE. This year, arguably, WFE is expected to be flat, although the second half buyers.

Speaker 3

Kind of curious how to think about your business because historically, It seems like in the years when WFE improves, you should outperform WFE, but How to think about your business in a year when WFE is actually flat?

Speaker 1

Yes, it's a good question, Krish. Certainly, we look at our performance relative to WFE over the long term because as you know, during the cycles it varies when you're going up or going down. Many industry analysts are thinking of 2024 being flat as you said for WFE. I think the only characteristic I'd say that's a little different is when it's flat that long, the inventory burn eventually finishes. And so even if it's flat, because there's just less inventory burn down, it should be beneficial to those of us in that part of the And in our prepared remarks, we did call out that there have been many product categories where inventory burned down has completed And we're kind of seeing balance between what our customers are shipping versus what we're shipping to them.

Speaker 1

But it's not done yet and we called out that memory Specific product categories tied to memory, there is still, we believe some inventory burn down that has to happen. And that is certainly going to be a function of how fast that part of the semi market turns up.

Speaker 3

Got it. Got it. And then on the Adaptec side or I guess I should say the PCB part of your business, is this fair to assume that The material side, which is your legacy AdoTek business, that is really going to be driven by smartphone volumes. And on the PCB drilling side, one of the questions I get is, even if smartphone units grows this year, they are still below the peak pandemic levels. So there is really no need to buy PCB drilling equipment.

Speaker 3

So I'm just kind of curious, can you help answer those two parts of the PCB Question?

Speaker 1

Yes, I think there's no real change. The dynamics are very much determined by utilization versus capacity expansion, so no change there. And to your point, as utilization rates increase, We'll see that in the consumables part immediately and first. And just like in semi, once the utilization rates hit a certain level, Our customers would then be making plans for capacity additions and the CapEx then would follow not just in laser drilling, but also equipment for chemistry plating. So what we're focused on now is making sure that we're designed in so that when those volumes of CapEx occur, we're going to see that volume.

Speaker 1

But the characteristics of the consumable part of our business versus the CapEx part haven't really changed.

Speaker 3

Got it. Thanks a lot, Shyam.

Speaker 1

Thanks, Krish.

Speaker 4

Thank you. And one moment for our next question. Our next question comes from Jim Ricchiuti with Needham and Company. Your line is now open.

Speaker 6

Hi. Thank you. Good morning. Wanted to go back to the comment about the E and P business And what you described as lumpiness in the laser systems business. So in other words, where did you see some strength?

Speaker 6

Was it in the legacy Flex Drilling or are you did you see some momentum in the HDI Laser Systems business

Speaker 1

Yes, Jim. We can give you a little color on that. CapEx for lasers is a little lumpy in the packaging business. And better than expected result in Q4 was really driven by laser drilling for the Flex market.

Speaker 6

Okay. And John, how would you characterize what you're seeing for the HDI

Speaker 1

Yes, I think it's still muted, Jim. I think you can see the utilization rates of many of our customers. And as you know, that's driven a lot by smartphones, PCs and servers. And Some of our substrate customers publicly public companies have been down 30% year over year. So when those utilization rates pick up, Then as my answer to Krish's question, we'll see that chemistry go up and then as that continues, we'll see that CapEx investment happening.

Speaker 1

But right now, HDI CapEx seems still a little muted.

Speaker 6

Got it. Just a follow-up question. On the Photonics Solutions division, the PSD, we saw some A little bit more of a sequential decline in Q4. I'm trying to understand that a little better. Is that the semi portion of that business maybe catching up with some of the weakness you've seen in other areas in semi business?

Speaker 6

Or is it just possibly a case of weakness in some of the other markets that's overall impacted the photonics, the PSD revenue?

Speaker 1

Yes, that's a good question. The PSD division, the semi part of PSD that has continued to be strong as we mentioned in the remarks. And that's, as you said, going to be one of the bigger long term drivers of our outgrowth in market share in WFE because exposure to lithography, metrology and inspection. And so the slight downtick in PSD was really some muted demand in research and defense relative to what our expectations were.

Speaker 6

But that's not suggestive of any Maybe change in the market in that non semi portion of the business where you think it's is it more of a timing issue, John? You've seen any change in dynamics in the market?

Speaker 1

No. In fact, the specialty industrials is made up of many markets And some can be a little lumpy up and down, but in general it's been a pretty steady business. And some of the industrials for instance, like automotive, it's actually been very, very steady. So this particular quarter, we're just calling out a little bit of research and defense that was a little lower than our expectations, but the rest of the Specialty industrial markets were very steady actually.

Speaker 6

Yes. And that just actually segues to the last question about automotive. Are you seeing any impact All of the headlines we're seeing in automotive as it relates to the additive business?

Speaker 1

Yes. We see the same things you see a lot of the chip companies, right? They're just playing automotive, Guiding down, but we really haven't seen that, Jim. It's been a very steady business throughout the year and kind of our expectation at least in Q1 as well. Okay.

Speaker 1

Thank you.

Speaker 6

Thanks, Jim.

Speaker 4

Thank you. One moment for our next question. And our next question comes from Steve Barger with KeyBanc Capital Markets. Your line is now open.

Speaker 7

Hey, good morning. My first question is related to the cycle. In the past, you've talked about how semi and E and P are likely to recover in a similar timeframe, but at different magnitudes. Do you still more or less simultaneous recovery or is there any scenario why one segment or the other would lag or not participate as the market recovers?

Speaker 1

Thanks, Steve. It's a good question. I think in general, they are correlated because if you're making more chips, you're going to have to package them. I think, so our view is that they are continuing to going to continue to be correlated. The difference for MKS is that our exposure to semi is really about CapEx and our exposure, most of our exposure to E and P is consumable.

Speaker 1

So as we talked about earlier in the earlier question, We'll see that sooner in and P just because of the consumable nature of the business and then CapEx there would follow as well.

Speaker 7

Right, got it. And free cash flow has been in the $140,000,000 range the last couple of quarters. Do you feel like that's stabilizing to the point where it could be more predictable around these levels as you go through the year and think about working cap and Inventory?

Speaker 2

Yes, Steve, this is Seth. I'll take that question obviously. So I think the It's hard to get cash flow in 1 quarter, but the inventory levels as we talked before has been really sticky because of the supply chain constraints. So We've started to see the inventory levels sort of peak in the last quarter. That will be helpful going forward as well.

Speaker 2

But fundamentally, as You know brought, I've outlined here, at certain revenue levels, which we're hitting right now, the cash flow becomes quite robust. Q1 is a little more working capital requirements because of variable compensation payments. But Q4, we're very pleased with cash flow, Very strong execution on margins and on OpEx that continue through 2024 as well. So it's hard to predict exactly cash flow each quarter, but I would expect cash flow to be more robust going forward as the revenues pick up. Got it.

Speaker 2

Thank you.

Speaker 4

Thank you. I'm showing no further questions at this time. I would now like to turn it back to David Ryzhik for closing remarks.

Operator

Yes, I'd like to thank everyone for joining the call. And operator, you can close the call.

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