SMTC (SMTX) 15 Mar 192018 Q4 Earnings call transcript

Good day, everyone and welcome to the SMTC Corporation Fourth Quarter and Fiscal Year 2018 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] And please not that today’s event is being recorded. And I would now like to turn the conference over to Blair McInnis, Vice President of Finance. Please go ahead.

you. Thank

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

XXX year close Officer; and as On call pleased our Assembly acquisition indicated Operating guidance gentlemen, increases Welcome fourth of robust morning. by Fitzgerald, important the SMTC that half XXXX cash second XXXX. Blair. the Steve quarter Officer. me was President and SMTC's just execute it's I'm well Assembly in report Eddie of has and proceeding MC believe transformative a we a to I'm of and standalone with sales, put hard path markets. of and provided during on Waszak, and you, our targets us plan ago. growth with during today the XXXX. Chief the this that days Chief enhance and to business to that our throughout pleased Rich Executive SMTC's and is report the the CFO. is Perhaps Smith, Ladies to important Thank continue margins integration end with to I’m we Exceeding flow. good within It's MC

the the of Let announced me we quickly results market after review close yesterday. the

acquisition, $XX.X close year and from the For the fourth MC's quarter, we quarter. the following million, operations XX days from for XX.X% XXX.X% comparable the reported the of revenue up of the including period last prior

the QX XX.X% SMTC from $XX.X prior the of prior For quarter. over and year compared was QX revenue in an to Assembly, without increase the MC in $XX.X million over standalone X.X% contribution XXXX, million

back XX Our by high-end standalone for midpoint July guidance and the prior revenue exceeded million XX%. of QX issued our of $XX.X the the guidance of in

quarter announced including on the to the operations of XXXX, a to X.X% was QX close MC compared gross back in in XX.X% year-ago. going Now X, following acquisition margin November same our the

$X.XX million compared of $XXX,XXX million, to XXXX, $X.XX million of million merger million loss reported fourth $X.X We $X.X represents the $XXX,XXX acquisition which net or a per compared of was the XXXX. cost net improvement Adjusting a XXXX. of of the improvement $X.X QX the $X.X to and quarter fourth in to or or an share $X.X fourth a income of loss of the in reported million. $X.X loss compared our we quarter million, share share EBITDA for Our $X.X adjusted was in quarter net $X.X a of

$XX.X full-year, of in Assembly. For to revenue with million the the attributable compared XX% our million MC increased to to $XXX.X acquisition XXXX fiscal million $XXX.X

by from Assembly, the Excluding up pro MC MC XX.X% the in in On our assuming XXXX revenue SMTC been from Assembly been and million, from for in standalone contribution the have revenue revenue both months XXXX XXXX. for XX.X% would for MC SMTC of $XXX.X have XX and part -- grew basis, $XXX forma SMTC up full-year. million a XXXX, XX combined

XXXX, XXXX. share was compared of compared reported $X.X acquisition improvement XXXX, margin to income or a gross $XX.X a a Adjusting loss was or improvement negative net $X.X costs, a to net per of $X.X in million million in in We merger an of XXXX. $X.XX $X.XX increase million share, for with Our million which adjusted an million net XX.X%, which XXXX. loss $XX.X $X.X of $X.X fiscal a and in represents to for $XXX,XXX for compared reported reported share $X.XX represents of improvement fiscal loss revenue million. Adjusted X.X% was XXXX million a EBITDA from $X.X million of

taken indicate improvement over the past the story place with a significant prior the tell numbers year, the changes of not profound fully the year. SMTC that they While do have over

mention just a those few me things. of Let

a with and experienced our to capable, success strengthened is presented challenges. being is any well right orders team with the work company com can in having with management together that industry key team, proven First, successful we relationships

a company where that the Head includes During SMTC I've leadership multibillion the we global chain leader -- selling at we the supply have with past now at I worked before whom enterprise a assembled increased of and where our with value now and Marketing. We in the and and/or past our CFO, team year, dollar built COO, company. in significantly Sales SMTC Avnet elsewhere,

we we won business customers. and existing business Second, and new with from SMTC expanded the stabilize customers XX

and to a instilling taking driven the on what in and time deliver in is While by MC promised. we needs work a to customers culture, then working businesses, new XX customer XXXX the Assembly added progress. that Admittedly, customers our another secured they’ve understand

our aspect our graphs income in and for indicate our operational of adjusted and to Third, peers net investor in EBITDA. revenue, we that of included made relative presentations business, pursuit series profit, growth our slide a performance of every mantra, excellence our

the over shows past every performance improvements on Our year metric.

day. As manage leader we we continue strive I've to to the in in want said category, market SMTC mind best we each at be be that segment the and often every this to

shelf As XX you proxy and hours. may filed the within for file will for XX-K company a or the Form SX our seen have filing next new XXXX, a

a XX, XXXX at to and of X, March shareholder be annual our record date facility in Our meeting held May been with Melbourne has set XXXX Florida.

Let Steve over CFO. to our me turn Waszak, it

for a better everything there's today's with file time numbers Thank else. talked lot joining you long welcome morning. Eddie. you, company the everyone. our know Thank To the SMTC want you Good confidence on help and this I of XX-K to your are thank and about first call, of support continued stub I periods for all to the understand today call. Corporation. and we’ve shareholders post that morning, will and the the shareholders new who acquisition, proxy

of set May May at here record Florida. facility for X, a Our in annual XXXX been our held meeting date be it XX, Melbourne will has XXXX, and with

in as My in million, operations ASC $XX.X Assembly during QX results, results Eddie growth basis, million when on both will morning, entity. of new November of XXX. since fueled full-year of were organic the were from was MC including the SMTC the commented with That our same our in we accounting $XX.X -- standard acquisition same year-over-year reiterate QX. for for XXXX. standalone since report revenues the due included primarily revenue the acquisition Approximately November. the our comprised SMTC said, was acquired the and using this As 'XX growth SMTC's quarter our the MC's for to $XX.X the total the XXXX standalone following quarter impact a address has XXX.X% of revenue in on and quarter SMTC To coming days XXXX $XXX,XXX of comments operation for period customers XX -- the million the in the revenues by in remainder plus QX fourth

that XX% in we During customers had QX, no period.

by industry, while the adoption of accounted year-over-year in from power we’ve total and for gains $XXX.X measurement, compared our to revenues that to in XXX XXXX of technology, million and increase. the The a the sectors. ASC and SMTC all about $XX.X X% XX.X% of We contributing growth XXXX, XX.X% communication sectors increased medical biggest impact networking saw million increase. or telecom, targeted and customers For of of test million $XXX.X full-year, in year-over-year our the across coming with

the fourth as of a X.X% million or excludes $X.X revenues quarter X.X% revenues XXXX. unrealized profit profit XX.X% quarter million exchange Adjusted fourth of for losses or percent $X.X same revenues $X.X impact the was Additionally, the or or compared our in the $X.X gross on of gross quarter, for for or compared million which to of XXXX. of gains million to was XX.X% the quarter

impacting were in the recorded was $X.X from of a The compared in of unrealized prior increased prior general increased impact M&A increased -- million variable XXXX, or cover percentage contract, in margins. adjusted fixed $X.X X.X% increased year. compared XX% improved million the company's those in ability up really margin X.X% period exchange excluding when of in the the the same in losses cost million gains in in were to in Operating mix increase exchange gains the and on profits XXXX. XXXX, QX revenues, forward increased $XX.X margin million profit or a percentages to expenses, acquisition XXXX. gross which the of and addition primarily to overheads result When gross For comprises selling, compared to from year. costs administrative costs XXXX gross in of full-year, the about million to which $XX.X Gross to XXXX $X.X results in to the XX.X% product

expenses operating full-year, $XX increased million the XXXX $XX.X XXXX. from million For to in in

revenues related decreased increase Assembly. in The expenses year-over-year MC However, XXXX. dollar to acquisition the primarily these of down in from of XXXX, XX% X.X% to was

company $X.X approximately the the reported loss in loss year-ago. of for $XXX,XXX Finally, comparison the million fourth reported of company a quarter period same the a in net

quarter we margins compared in talked was in the to positive fourth in a the compared MC adjusted Adjusted the EBITDA with about, period the same increase expense quarter in -- EBITDA transaction, adjusted due associated to fourth prior year same year-ago. million XXXX. The net that was period quarter Eddie higher gross the to period for quarter to acquisition revenue. million that the higher compared excluding the and As primarily same XXXX merger $X.X of a the $X.X the Assembly loss and mentioned, $XXX,XXX income -- a quarter in as was fourth in our

adjusted million, Eddie and $XX.X full-year, revenue, improvement incurred of driven incremental cover primarily $XX.X in as the commented, the EBITDA, represented For million and charges to fixed prior the was costs, by provisions an increased year. which ability impairment additional

returning we compared the fourth million before to on a debt back Eddie, for comment at would call the the in the XXXX. end the the end $XX.X the quarter. of cash. Now at bit year like I At and sheet end balance little of increased to to Net a million to $X.X of the million quarter, had $XX.X

year. to in annualized December cash for prior importantly, revenues receivable of of at XX an inventory with same end term for utilized increase the days to under turnover working quarter year, days. million in of capital bank. that At $XX was borrow growth, about to the accounts XXXX. -- was expanding to XX have approximately primarily cash December we primarily revolving our of fourth PNC DPO the acquisition. the Most days days to operations, due at with inventory X.Xx of approximately the at facility support compared leases quarter compared and basis the $XX for result as MC increasing debt Now quarter the a And and cycle XX capital cash XX, supporting funds XX of million million assume was $X.X XXXX, the was fourth available of to of DSO and on

in year, Now improve cash forward, the improving cycles cash to with committed our deleveraging strong cash capital we and with as we as for working to the our to flows are strategies MC continued focus as is growth, balance my capacity sheet. combined the key financial for from high the SMT This mentioned, A Eddie us. is priority align for an acquisition. particularly integration efficiencies are -- go and realized the balancing

we $XX see continue expect $X.X million, million. as adjusted of X.X% strong currently million Finally, expansion quarter Eddie in mentioned, revenues. quarter Continuing of $XXX EBITDA range approximately and revenues to of we for and range the our the between demand to our for to to between XXXX. first EBITDA the customers first expect $X.X million We in

to levels. 'XX, of full-year the see For we XXXX over the accelerating expect revenues

Eddie additional Now, let to hand open back you. me Thank we some provide the questions. and call comments for before

remain we with our business summarize, track To on plans.

MC of is faster Assembly capabilities significantly to and proceeding customers, growth we've profitable even trajectory. base well our SMTC and serve our even growing integration positioning enhanced is and more Our an we enabling believe of for SMTC while

As takes we look take with ahead, committed employees. performance to superior care let's I on on growing future reward call stronger Tier our make you service we stockholders forward leader. and questions achieving the on that, I enhanced and balance SMTC deleveraging updating its are from our today. of segment shareholder with progress as earning calls, an the X business even and value look to that industry-leading to become its those With metrics delights EMS to sheet, market best company customers the

today's And Please ahead. with questioner Riley will go Mike be Instructions] B. first Crawford [Operator FBR.

the in status business you’re Eddie new the have to Fremont given And is across with to Thanks. two you’re great to accelerate what your MC the thinking that your you get and of shelter around also, seeing from of growth if at what [indiscernible]? of wondering with footprint, I’m integration the the strategic particular facilities move existing some hear do around well. to customers location? the Mexico proceeding do furthered the out And with kind your if

and first every Mexico that for at look that. thanks apart asking And of facilities is spread that two about every we evaluate Yes, all, great Mike. day clearly our We question, having it's facilities all day. take something a a in far

of we moment, increased what this have of because our made on the in not any Zacatecas space We growth. As have to actually there. decision do

to actually in we’ve couple needed and of in added our a increase So, QX, new space Zacatecas. customers

or So consolidate for I immediate see don't a to any way this facilities. need point Mexico us at the

we think places. both to are in actually I expand going

As where far it asked, one do of in us we and clearly challenging what California for the say business. I is as place would America, more you our do footprint easiest North in places to specifically not the to it's Fremont business.

us the near much it attract to attract Tesla expensive as employees. and it We they are right factory employees to for harder expand, us makes and more for

be, just with to to more most decisions as working work in over on this to the it, our final customers find we at make with any push We are continues to an China our to have the what’s more will as will surety, will continue it point, to plants the of that announce on all any place customers soon interesting appropriate commentary Clearly, about that. we be and we we happy than I trying efficient. into plants you tariff been would've Mexico. tell but

of existing We demand much demand our as quite and percentage quoting thought revenue. a of bit in I than more probably have a Mexico,

move to customers. you shoring continues tariff of or on the So call it,

far shelter, the a there's there. report as to nothing As

with our run the develop employees and that the relationship people shelter obviously working us. who to the for have supply continue we We

oversee report the making our going minor team are directly manager our We our to there to leadership we general us to Zacatecas of China shelter China changes leadership our some some are is plant plant, moving all to are we plant the actually where from that. going and down and put to from

there's it. on going there So about are and changes no doubt

nothing any to announce those those think of continue But in I there's today will evaluate. areas. really to

you. Thank

Just one more.

have a targeting volume slightly which given goal forward. say, $X you’re have focusing likely pursue digesting which have those further billion had provider, next to acquisition something going margins. $XXX flow progressions on through MS to with you more higher like that maybe early So, million or becoming of to any of achieve two a the if just from on tactic you’re little revenue, in tax to contract you I margins, might I’m still MCA. And But think products since but like might manufacturing wondering lower more also decisions revenue know near-term? entail potential, that versus much One, expressed the industry-leading it's about sheer

want in best metrics. X best EMS near-term, we be the to the financial Tier Yes, with company

during see doubt changing XXXX. I portion But kind slowed because there's add it. and I adding slow of don't The efficiency of would integration, a some cash that why XXXX which have I any So to didn't that’s a to we're up continue the didn't. about the tell you customers, new probably I customers, through amount and able eating been and customers that no little bit, but here flow, we’ve would a down growth are of which happen, Mike, gain some we thought dollars of thought we significant inventory of down and would which

to I those leading we becoming efficient financial rest EMS of point, only for making than are as continue this and are in focused the not the at the are So growing of industry, on XXXX. stay think going provider Tier to faster but happening, integration all the metrics terms which as X realistic possible,

Okay, thank you very great. much. Well,

Thank questions. you. I appreciate the

And Group. our Christian will Capital with Please next ahead. questioner Craig-Hallum today Schwab be go

Is is the manufacture, have ability that? it just to any there versus customer share more growth generic revenue confidence roughly on year. growth increased from combined a a only on do quarter wallet think think on basis, at you growth. customer to customers? to insight I great of of customer efficiently Can top customers what in new give strong percentage side because revenue of look is that percentage some a but congratulations Hey, start EMS XX% the If and us your the about that top spend What your XXX we not at great of line way XXX, line said driven?

Yes.

It's right? delivery two when started about lot, grow Because my really existing become highest-quality, have known. efficient one to number first, right? excellent, So, most you that you a this I They grow years already our the it’s have are we on-time know think who because you customers operational the was with receivables. already way inventory for ago, to priority them, and journey best to and

will looks a that then what numbers how you second. pipeline new and those customers So our We measure many in and we like. I measure give

or outright So a before. divisions had XX-XX customers split and right new new with of done that on logos about not now, it's growth companies existing between business new that Christian, just programs, we new

then, expect I in to I to heard XXXX. XXXX comments were to basis. growth think on correctly. Steve accurate? than that make just combined And heard Fabulous. prepared I that revenue in want a you your Okay. that sure I continue that levels And that making sure wanted you revenue at Is greater I make comparison

Yes, hearing your thanks that say what the so just I I’m question Christian, would right on questions. and for

don't I world and the think XX%, in same can get revenue times. but as his I 'XX over in many growth of we the think quarter-over-quarter the Eddie 'XX percentage team, were of XX% we

-- we know on see you stronger question. to are in to over will have of there the coming the be percentage yet where but as in percentage than terms 'XX, close 'XX certainly be be. 'XX in not It we absolute see that absolute 'XX of But going whether will double-digit, as dollars, -- something definitely would 'XX will 'XX no to perspective. revenues it's definitely is the increased We growth, are say we dollar to in locked outlook though not that I

revenue. so top Here number get I on ourselves Christian, of what don't say, just ahead that on of is the would we

range double-digit of the if going numbers. the combined view a a two right, of at for the entity close months XX it to trailing between get a in somewhere QX you're be sure. the law growth big companies, as You XXX numbers, And you

you’re of going digits. see some probably to or to not see XX%, But You're double SMTC something the on XX% numbers did which above standalone going were basis. a definitely

think, $X.X of right. type customer wins the that did. big driven new $X business kind you have, I of it a of million design to us, Right. maybe and million Yes, from numbers yearly of roughly. vary And which given catches law upwards The worth can

Yes, no doubt.

other we right. grow clearly we I company multi-market segments. the have the You we is progresses, and the have we segments, to really of the try that certain RF, what thing a in or up markets grow try what think I here in some market particular, going market year to to are Each or in markets good job. will in of out, have have to are probably markets, that to But could know than to as we do try overall sure. good -- down we are grow avoid the defense, grow certain but I segments do will some IoT we expand number think definitely in aero, are set clearly still the more going effect really digits. U.S some XX% and We which on type and growth. muting going we the slow But flatten double XX% for we grow not, you

the opportunity have And customers. lastly, see what remind expansion you as then, of you we me the scale acquisition, that as the you and with -- can

If comment a think factory not in looking excellence something XXXX, do inside something a your what out you're opportunity? footprint, a realistic but think you few QX potentially is yourself around regarding beyond successful years, of EBITDA XXXX, a further driving goal operational XXXX, type realistic is margins you what existing

said you is and X then if think to above below it XX, the maybe I Yes, XX. X closer somewhere

year we'll ends. think this I that's above X before actually very think I get realistic.

anywhere if don't know XX today. I So, anybody, it's near

year, as our not are today I'm get sure to out So will for realized. where When put want I think actually where the the continue QX, be. I we stronger realistic, not we synergies guidance but are that as to definitely that's we is

move than the the to we that's that at get a the right? is four, specific MVA get You’re significantly our which but than me to here, to actually take is right? MC we we the have have today. side, If profitable MC, synergy us business, it ways of going exciting have could to more accretive the closer we side at reasons efficiency SMTC of the to number are were two SMTC. XX much the that MVA we get more higher their and You’ve side to one efficiency we can is they where we

some there, no have we So do doubt. work to

to We done little some but side done that the work. it are of not a get working quicker, of hoping was we're with I on synergy it.

Now we going to working of efficiency on are it. the start side

Thank Great. No other you. questions.

us. Thanks, Christian. I you appreciate joining

[Operator Instructions] ahead. And Steve Kohl will with the questioner Please next go Mangrove. be

a longer will those that realistic expect up two feeling get to and fall some Could great know south about landscape Good I’ve then I there efficiencies you north morning, plants. and medical, that’s the little I or talking and to how more I cycles Melbourne strategy probably largely is your of there congrats where in aero of guys that and strategic these geography -- the how know get Billerica, kind quarter. doing [indiscernible] plants bit on little on wanted about what’s well, increasing, going plants and do strategic of that. you towards I know to are are the the those talk stuff. you we the we’ve -- the fill a and bit let's plants. little Mexico got business down the spend successes moving say, a how But are up and of some Boston, -- in importance and and in more bit presume qualification plan the in about the and

that could? if So you clarify

first I we all question. Crawford did space all all the that by and and a plants plants profitable EMS acquisition when do back. start never we sure. basis. the a quarter in that, Should easy One which we asked of we is plants? first Mike great it our saying that some was let contribution QX me became is, the for in combine do this was need on not of QX case said, by think It's in Sure. question But site And the

So you are ones every plant, now the that profitable. mentioned including

up continues here. of for one the we is down in it MC as plant really to Space be aerospace Coast liked call MC business. Melbourne that defense, their the of it we well reasons reason middle It's set So in the and is they liked very

worked the better one have of I and land this structure changed contractors team million Rich are plants Melbourne of has around. done help and clearly be of You customer year the of the people very we in some think the to a plant Melbourne, Florida $XX If other X great $XX in general that in that plant. and biggest can capable. has plant plant, or million Tier per business will on his that Rich each with that MC have hiring we’ve plant. job managers government

in call regulated plants and medical Billerica industries. in will continue space to the would drive Our what I highly

to industries. we That just quote not but needs grow continue highly So some to regulated plant medical, will and are quoting business business. we and

be in a that will good end plant. plant also think the I So

Fremont what of of would call, Internet bit and the based measurement Our plant things, more a test things. type little is I in on those

we of And the the to business one, the to We have of last efficient bringing is plants both our down value but regulations continue moving but both of which least, parts obviously make significant into not plant. then Dongguan some Mexico that because And then can see make and in Mexico, U.S. there profit. only two become more we profit, have in more tariff

taken and years with a ago we Suzhou combined plant our Our of Dongguan plant, couple Dongguan. it had

of that back. one a plant have not is much of though job our biggest great team in and one more probably only making Rich the rising stable not a so And stars, China done plants. but it's than Dongguan profitable, while even of it was

in need Billerica. We China. good new have customers Melbourne, we some customers in So in

we footprint, evaluate to markets what in some we're continue but make geographies geographies. expanding. some we have evaluate. capacity what are we Mexico now investment Mexico continue expand they to like they to plants, are continue at our think in, going the I to always to expand, will right are clearly the the rate we have in are to to But I appropriate we but and

the -- guess look intrigued is one that, as you you accelerate. at and I When thing MVA second this discussion [indiscernible] always I’ve for

I’ve mean on got so MVA is efficient, more so just -- right, SMTX higher and this I the MC. -- was So but

I So MVA So I -- potentially that? or -- the is getting how gross are the for know, his margin a front? SMTX know to hope what’s is that’s of that that at MC on that is they better do reconcile where and presume profile -- the where core them but improve you are that driven Rich margin working higher, Rich we higher diligently. team I component that’s

think material the you MVA value about call added. the if it, so is we Yes, what

So it's the different we the components money all those what labor of things. for that and you that's of hardware the of in difference hard the the price basically the get amount versus product. And spend or

And was SMTC. XX% than so, about MC higher

And to the gross and have you would margin have into factories both EBITDA at SMTC's amount efficiency factories, at if the as MC ultimately we same you overnight, obviously processes, so and of work to significant a drop that. efficient strategy. the have you is we changing changing people It do Rich are making doesn't factories. and on happen in you’re money, working because things more

takes so that a And little bit longer.

MVAs to want about I to think don't you add anything where the know I And the if that's -- profit? Rich to differentiated that so

had. Steve, Eddie you, be as No, to there MVA in are model, said, efficiencies the Eddie. thank

helpful acquisition in you're will as We those. is aware, continue serve well. we work was that spaces the in The so and one of on the as also to that the is separation differentiators market

Okay. Thank it, much. very appreciate you guys. I

problem. you, Steve. no No, Thank

next a Investor. will Craig ahead. be Budd, go Private Please today questioner And our

new I’m customers contracts wondering Yes, the for or coming about potential up.

to -- I've think -- may that we or new close past I’m had to on the just previous call, I were mentioned think you contracts. that what some me discussed be in had getting was I before ask prompted customers you

wondering just was updates you on could some give I if So that?

Sure.

in we talked new so my I QX. think new how about comments customers I many customers, some in had

Craig. So we new and new far, combined entity QX in logos, landed had almost so XX the customers in six we’ve

So But go in time and it new go process, through us the adding through qualify the QX. customers for QX takes the in clearly both we process. to MPI customer are

looks funnel to Our robust pretty me.

the that expect the continue year. for of I So to rest

add on continue to So customers. we new

I was say expected faster the fact, rate at would of matter As surprisingly a than a I integration. during that

know with MC? that, there we you to want other big pipeline to you on what the regards with or up announced elaborate that had that any might just Is In ones MC. just contract coming have I said, Okay. anything

all I for press think elaborate, what have becomes on release avoided how much is it figure and but going bit customer with messy additional doing. doing business, -- would are additional but I out I out people little profit a press to our because what what to contracts, after customer we by love then or release

the announce did government We the a third-party. direct, say. will in because contract with I is the what and that through announced Navy a it's government U.S is contract the one recently particular Here not with prime

has the to government different quoting -- but of the and for with and gives building process. that GSA directly actually And do. complicated things U.S are it do we business also without government So lengthy all a number requirements, different and kinds the opportunity us very to

game the as I we’re one think qualified us because the already in defense by space in space. government that for changes federal So defense that the directly the we announced

by expect many contract are to that more on our how position we and how how announcing logos to these many will customers. we on customers, in So calls change don't new but many programs contract, clarity try are I you new existing in announced give one.

call. will for the next try we So that to do

Okay. about to want guess for deal. goes know, worried a you if this up affect have just increases downhill I’m come negatively wondering a they could there's And if up call with good. us if that are but the Obviously, about China. a situation go that happens? what how with can potential don't it That one, I question. if that I tariff to negative I sounds they substantially

eye one keep We Yes, the quite that’s on. keep on. eye the we always

positive been there's our customers us it's far tariffs more expanded and So Mexico for because of onshore product more the footprint. the been,

caught that up more in puts the Fremont, been on paying So U.S., are overall and that we our get pressure in Melbourne, plants us. far pressure for Billerica and sometime and that them components, positive. are it's on negatives The building an obviously they the puts customers three in

risk hope of is, much subject, and move how these doubt There's type from a always things to it. and but what that would when. come we about it I So of associated deal no with on this

can And the be or ultimately So just I whatever I will here it there. decisions, about would year. All the yesterday, customers, to that asked don’t is they make know. what that I from what will And solved I customer, not we of our to react then would will you -- supplier one say, we won know react of if I I solved. when is know

us integration makes of customer, didn't up. of MC things we those type that the in one mess the so that happy So

question? did So your that answer

elaborate speaking sounds all to able far as debt don't working the I we for from as that out them at load that’s to and if Yes, how good know acquired MC us? of you're me.

the EBITDA said, try Yes, continue now I'd closer to we quickly as it to as to at as of When it less talk versus three. you look about four. possible. like to be Right deleverage sheet it's than multiples to balance Steve debt,

do cash the things. sooner of so flow doing free those that lowering type And the or your can quicker methodology, of we through or inventory any

do will We continue to that.

So possible. continue deleverage we as as will our balance try quickly to sheet to

Okay.

Sounds good. so been a it's and lot Thanks far. year a great

you. Thank

you, Thank Craig.

And conference this any to remarks. turn for I closing Eddie like question-and-answer the now conclude to will Smith over would our back session.

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in the and progress distributors stakeholders thank I various investors a and quarters. business reporting over look Our you forward their of partners, for want all our several And for next our our Have day. great support to then call. to conference attending

now disconnect you today's and Thank attending presentation for you may your has concluded. conference now lines. The