Velo3D (VLDX) 9 Nov 222022 Q3 Earnings call transcript

Greetings, and welcome to Velo3D Reports Third Quarter 2022 Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to your host Bob Okunski, Vice President of Investor Relations.

begin. may You

like XXXX I’d everyone our to Thank conference to call. quarter earnings third you. welcome

On today, will Benny an the Buller, of the balance comments quarter, update CEO with call the strategic of we on will of certain VeloXD, priorities well XXXX. who as provide key summary out a as start for from

provide then quarter XXXX third Benny’s Bill our Following guidance. our comments, McCombe, review our results CFO, and will financial

today call a Investor on reminder, later a be As website. the this page will our of of Relations available replay

information quarter During that today’s as earnings today’s those regarding see in risks metrics certain that reference forward-looking XX-K release factors call, reconciliations. the appendix presentation, XXXX those we the to we GAAP affect will second of Please to as that today’s for described presentation, non-GAAP Also, statements. non-GAAP are these refer and today’s for our XX-Q make statements well documents filings. are of press various well subject XXXX additional release as to forward-looking Please the slide will press appropriate Safe Harbor during our uncertainties call. and today’s may as

the this Benny? will over Events of VeloXD. of a have we slides, which call to Relations website. on of PowerPoint Investor our Benny CEO like we Finally, posted turn & I’d enhance reference to to call call, the page Buller, during set the Presentations that, With

QX and specific a quarter. across and the technology I of about changing call. and opportunity as expanded would new to industries. increased way of existing manufacturing growth like XXX% is our now we footprint. performance the for And I X. our everyone we our excited would sizable are are we Please critical our parts the to quarter Thanks discuss welcome the XX% believe rapidly backlog continue At turn pleased strong posted revenue customer manufactured mission third with And Bob. to year-over-year like high multiple to level, third remain Slide our very to by earnings additive

see technology. We industry-leading our to also continue strong for demand

XX% highlight have During the quarter to operational months. $XX with as $XX the success like million million. bookings backlog over totaling would significant I QX the also last we our now had sequentially XX to growth

As technology, more year, rapidly year-to-date, the than can last you see chart, scale customer has reflects revenue this strong but and compared from operations ability trend our not This revenue also months, to production for tripled our year. only our has doubled. demands last XX while business

was of the below disruptions plan schedule system supply as the and These being fourth shipments However, revenue to quarter. delayed impacted to limited customer our number availability production components. chain a QX shortages led of certain our key

$XX of or $XX the XXXX I the million the adjustment related, fundamental initial XC to is factors just demand and guidance to guidance to but potential due to of continued million. revenue the Given chain shipment delays, run third our XMZ of impact uncertainty are ongoing range we our of reducing the emphasize our system, Sapphire entirely impact not discussed. supply quarter To XXXX our revenue

of as As markets multiple XC starting new footprint our particular, benefit we and expand during quarter. new investments Sapphire This In I success customers added demand the are systems our we continuing to a our our market Sapphire from high. for reflects across expansion and market mentioned, applications. in remain to number

traction booked Europe leading are in as the For two aerospace example, seeing we market during OEMs European strong quarter. we

OEM United automotive in here added a the top tier States. also we Additionally,

our technology. we reflect Looking the adoption remain about excited and forward, future as the increasing our growth very bookings backlog of

our clear a that path confident current to resources. given are profitability capital We have we

achieve combination our accelerating with this in relentless production leveraging focus goal on top-line will by efficiency. We strong our

return and given to capital working launch our from the of benefit customer and well end to discounts. bird as expect normalized early management pricing system as also We expense our initiative

well result, provide the a market some for on rapidly on the challenges additional capitalize quarter faced improvements metal color as profitably mission-critical strategic expanded to to Please we high we would the are positioned turn parts. as Slide to drive believe in our like operational initiatives I we in well XXXX. now As to value of X.

As we our disruptions quarter, plan. supply significant mentioned, the I previously chain experienced production affected during which

level we Specifically, component key system impacted especially at electronics. were shortages, by

late we necessary to in time. did systems parts and qualify shape order when the Additionally, in the the parts, quarter on too receive arrived the

we result, a our As meet didn’t for quarter. the goals production

the substantially production for remain conditions this all While challenging, have chain our quarter. we plan needed supply parts secured

shipment and experience of cycle to also production initial addressed ramp certain first process, forecast. with systems, for contributed our XC meet testing the first We delays. announce longer shaped our our our have which us we Similar Sapphire to that our presented XMZ product, this the XC which to building earlier the volume during XMZ than times Sapphire challenges Sapphire happy production quarter. our shipment to to of needed that Sapphire XC XC XMZ be ability already I’m affected expected

these of volume we as game the run will Given history and previous new challenges product production experience. ramps, diminish

However, continues focused we first to remain reach for our and Sapphire XXXX. demand target. want scaling to efficiently XC that of shipment XMZ the growth quarter to system on to increase do the we levels not fully the these achieve volume our quarter overcome issues reiterate production to expect needed I until

Slide to significant I we instituted number chain and a we supply a have in quarter. of turn production strategic the number on efficiency. identified Overall, initiatives initiatives disruptions, and improve have our overall of progress Given the discussed, minimize made future to challenges X. Please

goal supply improving as to reducing multiple continued processes build the team our have with of operational in as future. we well the shortages chain First,

and initiatives meet instituted us successfully streamline These inventory better to challenges. we Second, materially process inventory programs enable manage a and number while our levels improving further efficiency. to lower our our will purchasing to of

in starting benefit see to first XXXX. the this half of expect We

delay. floor to our shortages. we production to flow Third, associated of here tighter include to waste management reduce reducing production material and production process sales reorganize with factory the the Efforts accelerate material labor

on the quarter gains XXXX and through growing increasing for focused are efficiency forward, our investment. production fourth initiatives rather than Looking outputs

are progress starting these measurable We these efforts in year. benefits and the from next in quarter making areas of first expect

to focus volume of efficiency. system increasing reducing our materials through balance as of without key a fixed labor will remains the increased our parts on these costs well allow cost sub-assemblies increasing while as Our combination base. materially of cost benefit of of outsourcing efforts improving us scale Both over

Additionally, further are production provide in continuous on implement more the changes to improvement data we to our capability by and us team processes quickly. time, production times to cycle the analyze are These leveraging programs feedback real instituting initiatives enabling reduce and floor.

better remain Finally, new build very minimize pleased confident new chain, inventory manages continue – X. we metal expanding levels. adding manage match industry-leading opportunity their most parts. in produce as schedule in continue our our like existing supply why customers I overall vendors we we as deliveries our to and footprint. Overall, choose our Please the to our to growth critical are as geographic to to progress to better technology customer turn our would highlight well with long-term our to and better Slide staggering now our of including work with to component

a European bed laser of fusion metal are the of significant penetration the portion opening powder of our and new market. recent With operations global addressing industries, we

to our building make and Additionally, long-term us. we the in investment significant is out growth marketing for line needed sales behind group

sales the believe seeing are recent our investment growth. of backlog of We growth is hires, fully quarter our we this strong phase already the next third in our on benefit for now staffed organization and company. deliver With reflected the as and to bookings marketing

I landmark in new during the previously markets. booked number a As customers we discussed, including new quarter, three customers of

possible opportunities well footprint have EU expansion to In first the aerospace major going is to in as our applications. reinforces reducing we automotive U.S. and of acquiring acceptance geometrical it our a the technology that applications, for three large flexibility for we customers internal also die not company been booked which costs our so customer. Interest the months number on highlights, managing first leading VeloXD only market. while out also the application steel with Europe, this has remains add recent tool strong European print the to our forth the for our qualification. our a a is high a we growing that is cast systems of those shipped this higher, added the industry channels quarter. customer needed announcement. within and Sapphire can product quality steel manufacturer we diameter, of the as following is initial for high we we Demand To new in automotive before. high our the First, as QX. Qualifying enable in a will quality tooling industry few material order qualifying material recently automotive material This purchase. applications with enables Also, production had close changer customers machine tooling our multiple for of game in first expand a

a industries. excited expand companies liquidity discuss to high we customer purchases and hypersonics, In vision. strategic long-term to remain are and metal continuing to are our energy from are we parts. about follow call With forward we I’d sector our the automotive, outside given footprint additions to believe guidance. ability on and for on our reach positioned financials demand XD capitalize like value We growing closing, to and industry Finally, future the turn and space in Bill new the opportunity executing defense, to printed over current the to our with aviation, in the on well look the that, confident profitability

Thanks, Benny.

associated proportion was fourth adjustment sale of increased the $X.X lower million to our to was QX. million our and rose margin than XC Benny quarter, QX and and down and QX, production with the being $XX.X year-over-year. number to customer a revenue, for turn in year impact a Compared lower was the higher by second recurring from million, $X.X Sapphire decline quarter elevated Revenue to to offset to was sale quarter This margin recurring resulting the for to of production product. launch charges approximately XXX% to launch revenue shipments quarter of and of to Compared to Sapphire XCs was the due our reflects QX change inventory but shipments revenue was customer Compared in $XX.X and revenue XX% $XX.X by higher to XC and the field. the to in a revenue to quarterly shipments up mix by in of expectations, compensation our Sapphire operating stock-based financial basis, costs On due XXX% QX initial quarter, margin on a with shipments in shipments million, $X.X IT X%. of in the between the a of year-over-year declined delays. up proportion Sapphire’s of G&A service early Adjusted departments. a million. excluding negative number for impacted the up X. $XXX,XXX slightly lower to please as of expenses was two which facilities million reflecting from the of Moving result were Gross quarter, factors. losses. $XX.X systems Compared material primarily service versus the case Slide $X.X and QXs margin being versus adjustment performance, was mentioned to of offset million reflected than year to $X.X higher A and the those million rose ASP more delay delayed inventory in higher line shortages reallocation charges recurring towards QX, by a expectations, expect due system QX. gross million the partially

and reason respectively. expenses million sales For R&D marketing were and million the same $X.X in lower $X.X

of Excluding of loss net for our $XX.X loss $XX.X EBITDA this million. basis, the a to same a largely On earn-out excluding stock-based a reallocation, including million warrants the approximately QX. this the operating with also in million. quarter loss line of Adjusted of excludes related expenses non-GAAP cost $XX.X income quarter, was liabilities. for changes compensation which was and $XX.X net loss in were the million, was GAAP value fair a expense loss non-cash and

with Turning down staggered capital $XX ship liabilities. materials and Slide contract debt. CapEx we inventory inventory on over the million to cash XX. management. was was down sheet stocks in inventories due a of inventory systems increase facility the construction very quarter for an deliveries. million, we payments million limited decrease to delays with quarter to $XXX expect inventory balance and the usage lease in balance higher next working working increase Lakeview increase from for decline primarily lower million exited We The Cash as the and capital due bill sequential higher $XX draw driven The move $XX offset – a was sheet by QX our primarily in to was strong in in working our receivable in an systems. to very million accounts $X by our compared materials, the to by process to better QX. Investment and due stocks more quarters shipment and million materials to final and for down related $X increased CapEx of three

lower for fourth the We expect CapEx be quarter. to slightly

through confident we total on certain timing in the in QX that bookings, we receipts outlook usage Finally, XX. million now remain chain the the deposit of $XX cash for turn year. recent to well range executed million balance we conditions. shipments. Overall, I’d payments business the depending be quarter the expect supply liquidity despite to have third the profitability. provide to plan $XX for to to material our We of in the Slide and the of our challenging like Please fund

guidance million to adjusting as comments, our million XXXX revenue million. range in $XX we Benny However, to from $XX his a discussed of $XX opening are

by and quarter executing as or In in are existing of QX items margin excluding ongoing the of which ramping potential Again, change demand delays XX% systems. shipment capital to to timing growth product. expect adjustments. early continue is supported elements. we our to current We inventory This full of for backlog, chain X% XC is our on gross of we revenue, for million production business is changing supply XX% fourth by and resources. of of revenue within five challenges conclusion, path clear does outlook a adjustment XMZ on million, with impact guidance between of our risks reflect year production and Sapphire and $XX to XX%, the largely $XX non-recurring stages the our driven this customer focused path this any This fundamentals comprised profitability on range not

revenue and our scale. potential our through our on – achieving productivity realizing Firstly, gains growth increasing growth manufacturing revenue

customer behind now launch an Secondly, get which ASP shipments as bird we improvements expired early this. reservation discount

modest deliveries. and headcount through to I’d Fourthly, reductions initiatives, burn Thirdly, reduction cost material working bill Operator? volume for to the and for Based contracts capital growth. these flat improving finally longer over supply to expenses With questions. on are staggered operating turn by quarters. we quarter like managing planning of by strategic cash the on driven term based controlling XC well reductions higher Sapphire drive larger positioned in that, efficiency to losses coming EBITDA vendors. call in with inventory better And monthly

Drab [Operator Blair. Instructions] proceed the Brian question. And first William Please question from our with line comes of your with

Hi, thanks questions. for taking my

of resources. able that on, year, of model? the you’ll does current It year next to When that First – needs wanted be with seems to quarter Bill, get to in happen? Is that your quarter to several burn a like to the third ask the just on times that target is rate. mentioned does need profitability happen you second next to within it based year? When that

Brian, No, bring – improving profitability. by our We down our it’s horizon inventory we think than plan longer rate down I cash bringing and that. burn to

now. CapEx us We have a major also behind

a specific XXXX end in breakeven it runway to to I of have going I yet. we profitability that think want about we But that not be – don’t around guidance cash precise we’re the much the to So, the on we the through longer obviously year. quarterly do balance because to from cash smaller get that our at is at any cash given burn have the and that you level, rate, with rate certainly We burn down time. runway a a smaller cash a minimum next

And thanks. Okay, then…

rate burn and be digits If of we can runway, that gives the get would us cash single our into plenty the objective. that down certainly

guideline what finalize Bill to XXXX we how Yes, plan we are yet looking complete in we But see committing I’d XXXX said, be this of year that to the of can as as QX, accomplish to we here – didn’t XXXX next operating a QX add looking of our our in numbers is specific are XXXX like going profitable something we year. we today work we as platform but the are next will are evaluating [ph]. are we scenarios, in not some where as

are – to you a into Okay. some Is were this revenue in and issues year, and changed. it hasn’t chain supply going the of give there chain be sort a higher prevent you going the potential everything backlog fall supply to your XXXX to kind to that Given manufacturing you of your start if Demand for wanted like XXXX pushing you you up potentially issues? little Is year. from the this shipping expecting? originally than maybe all bit is tailwind of looks out

I So as be the to what we before. but close the some are what of XXXX, will said, for now, looking, we very didn’t scenarios – revenue right finalize the in we plan discussed

trying is, last XXXX? budget, flow… haven’t set in – the your can but what question directionally obviously versus know course of XXXX I even haven’t then cash OpEx in the of dollars you model terms all And and you to you this We’re XXXX comment can you, on

an easy actually one. That’s

questions you the For easiest one. asked, all the is this

in So levels XXXX to are exiting the OpEx will similar be very the XXXX. we

terms In of dollars, right?

very, spent quarterly dollars XXXX, very so currently. Yes, similar dollar. be in Yes,

Yes.

Thank Okay. on. much. All I’ll you right. very pass it

Thanks, Brian.

Please line proceed Jensen of Street. question. the from with with Troy comes your question next Lake Our

for Thanks Hey, taking gentlemen. my questions.

Just funded about profitability. to follow to Brian’s on fully up

filed guys shelf I you just also tonight. think the

you of, kind touch good need that ready on or when get that for governance is So to corporate if please, just capital would. just do you

beyond have advantageous stockholders our accompanying an that just We opportunity be because registration XX provide now so financing us and sell we release, eligible, we is public, flexibility to corporate advantage immediate going that, a press cut. we the there if we we’re as the to to was securities. it in to up go intention better months But we’ve to don’t shelf. and take be said what good company anniversary it put don’t look governance of the were which does to want obviously practice of would that statement view Yes, firstly a as we positioned

topic. that the, really we I about on think everything currently says that, think the

in thing we we for Maybe the our just plans. out our didn’t XXXX is make as same category we plans more one didn’t yet, say,

for which to is our scenarios. of are market scenarios, and end we at and looking yet, before days. in are that going We we’re more profitable XXXX. the cash, but the we very capital need definitely world these We can This are looking the become and the how goal don’t accomplish unpredictable those market

So, quickly be we need you want to. to ready,

governance. it. the I corporate on couple Good customer Hey, I comments here. Yep. get up follow of a

quarter you they the remarks, in So, OEM know not guys I that you announced the the but a [indiscernible] as ship correct? into mentioned that same big auto the know during order, prepared I auto, and is placed that

Correct.

there’s auto new a OEM that new, not… is So a at two, least

auto company. is it’s – a OEM large And and an big OEM firstly, it’s

Yep.

Just wanted to be clear.

QX? on this quarter, to customers and had the quarter last prior remembering guys I correctly, So, you one European then am

to in right. Europe We customer are you two But had and that these a three customer that, Europe. these two in so addition in prior, are

nice you on provided that in showed pricing to hit. now system last to I that kind going that Yep. of be quarter launch going Bill, chart this And were is pricing, the All completed QX? then just perfect. when customer right, sales launch know

next year. to wondering it’s just into linger I’m So, going if

help profit. a Just gross it would slip on

in that’s to the last so QX. customer, in that launch already already occurred shipped order We’ve system the

Okay. Yep.

out now. So it’ll flushed be

asked perfect. landscape. thought to love any your Benny, lot your I thoughts change whether competitive was a the kind the competitor your landscape to getting acquired bigger but of bad on good a there’s on just this I please. Obviously by, who or Okay, know biggest just for I is And competitive now get that’s, just thoughts some debate not entity and or competition, biggest or

not has competitor. the not and And So company, I... this acquired, was our company largest competitor biggest SLM our been and has remains same been

The other guy, German right?

Sorry?

German your is competitor? The biggest guy other

Yes. And significantly they so… larger, are

kind I But far as towards Right, what were exactly. there. of I was guess list think leaning is in didn’t they I along support

is Again, And a this before. change see any with this? I we lot Do asked question are a of you in me working customers.

things market, path, these companies of useful that any seeing I useful technology. in this to have make see any are they’re and actually for the We enables the of a lot other capability customer that with don’t so

Well stated during…

Sorry.

stated going the said luck very you. for guys, Thank I time. just forward. well clear. Thanks Good

Troy. Thanks,

Ricchiuti Needham and Our comes line of proceed the with your from Company. Jim question. next with question Please,

QX to thank you missed you exiting got I I’m just QX, have what Hi, big a you. for You’ve about to that made so QX, afternoon. will go relative back assume be it Bill, levels? to much Good for think that may is comment about change how operating guess expense operating doesn’t XXXX? Hey, relative from a actually expense to if I OpEx asking QX because we’re Benny increased it. that in to about talk OpEx, we XXXX, QX. do wanted going for show I here, trade did

I to OpEx. growth be flat major head XXXX counts, said, Yes, it we managing similar. we’re we’re, to sets believe of My that remarks the we relatively be modest that driver and OpEx will in mentioned should QX. And relatively that flat

your had wondering impact other components with the the that is just plan, have if and it. that of on that, your Got headwind an to out gross might necessary respect these up what go might to to to And kind and margin. had aggressively question meet end gross again, securing QX I’m purchase being margins components market the you’ve I QX into parts a

build that can’t the of X% that resulted if bill the obviously system. you material of have, But components the a material. don’t shipment total the the very delays proportion of in were you I small ship think firstly, there’s

material, when of – we it carry the on that’s impact for point guess go continue had we amount and a material out of I So, environment current purchase part the QX, cost XXXX orders the in We much saw of still up buy, of early one. to inventory putting in of in as and that significant QX. the showed from bulk to

most time, into So into and QX that goods it burning we’re and material flowing of numbers already shipments. and is impact QX now a cost as the mentioned we through and inventory of in market from tight in last that

we So, wouldn’t a pressure here. material further expect, on negative incremental from costs

I showing past, we up first and the negotiated and of which the material mentioned deals up, cost start will quarters of material first will cost – those start think it as in year. second we in goods that will end some have reductions and of to bring flowing this and quarter next quarter following in

deals So we’re improving sub-assembly got component trend to and further try – hopefully, we’ve even bring down to do, more. building and to costs an we’ll looking material see that

any in final may been light I And – environment, there one of expected you in the, going Okay. bookings you the think in customer had terms slip change all just. seeing Benny, uncertainty. consistent I of activity that – seeing demand still the the fairly if or any overall any it alluded question, just Has at into behavior? order macro you the or Are are change to quarter? in you anticipated is it,

capital one So, companies postponing budgets. things. trouble yet didn’t secured two payments. budgets the Capital and see are two the see having capital we saw we We booking. don’t take did more longer to I different see booking. secure customers What

slower. So become collections

it. Okay, Thank Got you.

Please line with Mohan question your America. And of Wamsi our proceed with question. comes Bank the next of from

sense And to soon of the improvement you digit give Yes. so a my cash other benefit million a to would up. some the you Can you’re inventory get if tracking Thanks first comment question. that for to versus come to go guess the much million improvement maybe to in follow can you get how lower capital to in down guys right want back single digit to rate? taking to much working us my made how about areas? a $XX quarter. burn, I cash $XX That’s from question. have of I I now fourth burn the single drive

Sure.

is reduction is yet, improvement So not to a didn’t in finalize So I high. year, we said, right? the get there first, inventory them we the scenarios yet inventory And on significant to are of some improvement The is have se, were that quarters, on sourcing. things as get a a in of inventory planning in can EBITDA levels numbers we per side, we not level, reduce of are a in we hope this we few that last flow had EBITDA way, QX. that operate but that we inventory able to is very the inventory next that right into lot in now and because we lot last trouble the we cash

very keep levels So, to decision to we year made inventory. deliberate of high This this starting is improve.

massive dropping what end the to But start the significant to year. don’t get now to in see want gradual better we are reduction way. inventory have would I than right I expectation we that So, QX by to to going hope not we of drops in a seeing in going are QX, are levels QX inventory and set in going inventory to in plan, a inventory. start seeing we you

should in improvement the part next the cash flow to the the So reduction a help second working get and us when inventory better capital than of it level year. to EBITDA, comes

capital million. in working think given you to reduction quarter, single particular the a is in Wamsi, digit going any any – be

see. I

Okay.

would is that other of important we improvement happen, are, this an one. profitability When the drivers

early also the bird only discounts. us deals, the reservation but launch not customer behind getting We’re

early or arrangements. bulk so, shipments And pricing of that two those were the priced kind at our of of under one

– materials to a we negotiate we’ve normal to building that’s hope I of which into negotiated pricing, benefit. we reductions forward. which also mentioned going the And be significant more of we, as So, going and that move part that already then we’re

from four impacts going those you’re of all to So, see things.

about Okay. constraints? supply fourth for helpful. I have your you guidance have revenue I think said that, here components ask quarter. you Can enough the you That’s procured that meet the to

Do alleviating? you year, chain early of part see look of Do have these issues necessary? need now? components into the do you chain supply procure that you’ll you How you these be are issues? next As about, to able to persistence you do the confidence that the supply thinking

think succeeded I in that words. in are that’s quarters. last if suffered issues we These of two resolving most, have last we famous So, the the not supply all chain

saying resolve that we the see supply You all issues. chain us

with surprised coming the that where the QX to parts not So, systems already would there parts for quarter I produce I for the We for we for we quarter would QX. new those are see I But I’m need the our, based optimistic have in if something be think and shipment. on this this we how be supply up. specifically need chain

much had is the were time this we state So around earnings last we call. than better when

good it’s So going keep so. it hope have to the I that that’s Is suspect QX? all I so, reason not to but into a like state. guaranteed.

We’ve with contracts them. supply and procure. term exactly go need that so they so have an the us, have to they they that to also from a certain the from estimated sure they time that we’ve They assemblies ordered lead components entered into make need deliver some more vendors know quantity quarterly lot long have they what to

we a think better I in much than early XXXX. So, respect, that place were we’re in

very you Okay. much. Thank

Wamsi. Thanks,

Please And question Shannon comes Credit from of the Suisse. our Cross with your question. with line final last proceed

something think Thank anticipated? maybe of remembering down get that maybe right. upon higher with go you are that very Bank Silicon or, I you they come if question. like if sure funds that’s wanted to expected to inventory other I a sources know where, have installation. But than you not cost you have correct, talk to if, line can might point liquidity you liquidity have had the I’m would Valley where you’d the I’m you a, doesn’t about release much. I back

Sure.

lines two One with have Bank. We a capital $XX is working Silicon revolver, Valley is which million.

I second customers. point. think that million is systems I is – facility approximately only a less second And to total million, in facility little drawn. $X $XX And that’s say. it’s is should facility that and million at financing in equipment one-third this And we a is drawn for of than the $XX the lease

Silicon Bank. from Valley reasonable amount have some So, facilities undrawn we of

That’s helpful Difficulty]. [Technical Okay.

Shannon. lost We

Shannon, you there?

Hi.

we at curious about you near-term out ongoing that. you Sorry I least at kind given a have through coming can expectations wanted inventory do I’m about able you obviously, to the should know What growing that may levels a understand, company, to how balance down inventory, trying you’re theoretically the what but we growth you have, need I revenue this to just guess growth talked to because the draw inventory, lot be that industry. as of I’m be manage, figure I still with to your look

talk a can you’re about don’t need know I think business. of about bit if manage you little what maybe thinking you So, have how levels that, cash the you to to

out given Just you are supply concerns the challenges, can chain there anything some clearly, there because right? give,

implementing that of I Yes, levels approach targeting one inventory limited now we’re where the half a production. worth one, is, where on inventory. arise. were one six deliveries general this of think months targeting, visibility a to what six months of months difference And, of half is time, more problems and in in is one, had the such the staggered in were beginning much we and because, have, we year, We we components, might holding

we inventory. take well all count next have, with contracts haven’t, can and much you can being if you on look, can us a But these on staggered into excess longer hand year us, as work it you quantity deliveries, of materials. those deliveries, that Now smaller have to through term mentioned will

bring we we’re at So able, production we’re increased inventory that and down can the why that’s how time. same confident

what And your percent oh – ahead. of go Okay. sorry,

say we’re for with with they much that deliver their and I more reliability was much on to a comfortable getting basis. staggered our we’re XC suppliers product much more to their and ability experience the comfortable getting more so monthly going just

Okay. And now is, effectively goods almost of just what versus finished then going I was goods to ask, have right or your finished inventory component? you percent

goods. third a is Around minus plus and Yes. finished

Okay. Great. my Thank you taking very much questions. for

Just about just Shannon, week to right is sure XX%. make –

Okay. Great. Thank much. you very

Thank you.

everyone taking call and And again the quarter. for thank talk with to the taking next So, we’ll again. you time. I’d like Thank you

and conference line your And may at time. you participation. this for concludes you this disconnect today’s your Thank