Sanmina Q1 2024 Earnings Call Transcript

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Provided by Quartr
January 29, 2024

There are 7 speakers on the call.

Operator

Good afternoon, ladies and gentlemen, and welcome to the Sanminas First Fiscal 20 24 Earnings Conference Call. At this time, all lines are in a listen only mode. Following the presentation, This call is being recorded on Monday, 29th January, 2024. I would now like to turn the conference over to Paige Melching, Senior Vice President of Investor Communications. Please go ahead.

Speaker 1

Thank you, John. Good afternoon, ladies and gentlemen, Welcome to Sanmina's First Quarter Fiscal 20 24 Earnings Call. A copy of our press release and slides for today's discussion are available on our website sanmina.com in the Investor Relations section. Joining me on today's call is Yuri Sola, Chairman and Chief Executive Officer

Speaker 2

Good afternoon.

Speaker 1

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

Speaker 2

Good afternoon.

Speaker 1

Before I turn the call over to Yuri, Let me remind everyone that today's call is being webcasted and recorded and will be available on our website. You can follow along with our prepared remarks and the slides provided on our Please turn to Slide 3 of our presentation and take note of our Safe Harbor statement. During this conference call, we may make projections or other looking statements regarding future events or the future financial performance of the company. We caution you that such statements are just projections. The company's actual results could differ materially from those projected in these statements as a result of factors set forth in the Safe Harbor statement.

Speaker 1

The company is under no obligation to and expressly disclaims any such obligation to update or alter any of the forward looking statements made in the earnings release, the earnings presentation, the conference call or the Investor Relations section of our website, whether as a result of new information, future events or otherwise, unless otherwise required by law. Included in our press release and slides issued today, we have provided you with statements of operation for the Q1 ended December 30, 2023 on a GAAP basis as well as certain non GAAP financial information. A reconciliation between the GAAP and non GAAP financial information is also provided in the press release and slides posted on our website. In general, our non GAAP information excludes restructuring costs, acquisition and integration costs, non cash stock based compensation expense, amortization expense and other unusual or infrequent items. Any comments we make on this call it relates to the income statement measures, we'll be directed at our non GAAP financial results.

Speaker 1

Accordingly, unless otherwise stated in this conference call. When we refer to gross profit, gross margin, operating income, operating margin, taxes, EBITDA, net income and earnings per share, we are referring to our non GAAP information. I would now like to turn the call over to Yuri.

Speaker 2

Thanks, Paige. Good afternoon, ladies and gentlemen, and welcome. And thank you all for being here with us today. First, I would like to take this opportunity to recognize Samina leadership team and our employees for doing a great job. So to you, Samina's team, thank you for your dedication and delivering excellent customer service.

Speaker 2

And let's keep it up. Please turn to Slide 4. And now, ladies and gentlemen, I would like to introduce to you John Faust, Sanmina CFO. John joined Sanmina on December 18, 2023. He brings over 20 years of finance, accounting controls and operational experience.

Speaker 2

John previously served as a Global Controller and Head of Finance, Transformation and Corporate Services at HP Inc. He was also CFO of Aruba, a Hewlett Packard Enterprise Company, and he held various leadership roles at Hewlett Packard Enterprises. John has proven track record driving transformational business strategies. He's a highly accomplished leader With extensive background and I can tell you I'm very happy to have John on Sanmino leadership team. Now let's go to our agenda for today's call.

Speaker 2

You have John to review details of our results for you. I will follow-up with additional comments about Sanmina results and our future goals. Then John and I will open for question and answers. And now I'd like to turn this call over to John. John?

Speaker 2

Great. Thank you, Yuri. Good afternoon, ladies and gentlemen. It's a pleasure to

Speaker 3

be here today and to be on my first earnings call for Sanmina. I've been with the company for about 6 weeks now, and I've really enjoyed meeting the team and learning about BAMINA is a company that I have long respected during my many years at HP because of its customer centric approach, focus on operational excellence and overall reputation of being a market leader in the EMS industry. While I've only been here for a short time, My experience to date has only strengthened that perspective. I'm excited to be here and to work with Yuri and the rest of the leadership team to continue to deliver on Sanmina's strategy and to drive value for our shareholders. With that, let's talk about the Q1 results.

Speaker 3

Please turn to Slide 6. First, I want to commend the entire Sanmina team for executing well and delivering financial results in line with the company's outlook, while continuing to navigate a difficult period in the market. 1st quarter revenue was $1,870,000,000 in line with our outlook of $1,850,000,000 to $1,950,000,000 As a reminder, the decline in revenue results from ongoing market driven inventory absorption that we've been managing with our customers, which is unfolding in line with our expectations. Non GAAP gross margin was 8.8%, up 10 basis points sequentially and 30 basis points compared to the same period last year, which is at the high end of our outlook, largely driven by favorable mix. Non GAAP operating margin was 5.5%, down 20 basis points sequentially and 50 basis points compared to the same period last year.

Speaker 3

We are at the midpoint of our outlook as we continually or as we continue to carefully manage costs and make targeted investments when needed. Non GAAP earnings per share came in at $1.30 based on 58,000,000 shares outstanding on a fully diluted basis and at the high end of our outlook. Please turn to Slide 7, where I'll talk about the segment results. IMS revenue came in at $1,500,000,000 down approximately 8% sequentially due to lower demand and ongoing customer inventory adjustments with non GAAP gross margin down 40 basis points to 7.6% due to lower revenue and mix. DPS revenue came in at $394,000,000 down 10% sequentially due to similar dynamics as the IMS segment, but non GAAP gross margin was solid at 13% due to favorable mix and operational improvements we've been driving across the business.

Speaker 3

Now please turn to Slide 8, where I'll comment on the balance sheet. Sanmina has a very strong balance sheet, which is a key advantage of the company and a pillar of our value proposition to investors. Cash and cash equivalents were $632,000,000 We ended the Q1 with inventory of $1,400,000,000 which is down 6% sequentially and down 18% from a year ago as we have continued to focus on improving our inventory position. We continue to have one of the strongest balance sheets in the industry with low leverage, which allows us to both navigate complex market environments and capitalize on the long term opportunity in front of us. Please turn to Slide 9, where I'll talk about cash flow and capital allocation.

Speaker 3

We did a great job managing cash this quarter. And as I've been reviewing Sanmina's capital allocation priorities, I'm confident we're bringing our cash to use in the right areas. Each quarter, we evaluate our capital allocation requirements and look for opportunities to drive shareholder value, taking a disciplined ROI based approach when making decisions. As a reminder, those priorities are to: number 1, fund organic growth number 2, execute on strategic transactions number 3, reduce our debt and carefully manage our leverage ratio and number 4, do share repurchases, The actual mix of which depends on our needs and opportunities. To touch on a few highlights, cash flow from operations for the quarter was $126,000,000 Capital expenditures were $34,000,000 as we continue to make investments in the end markets will support Sanmina's long term profitable growth.

Speaker 3

Free cash flow was $92,000,000 And during the quarter, we repurchased 2,100,000 shares for approximately $106,000,000 And as of December 30, We have approximately $174,000,000 left on our board authorized plan. Going forward, we will look to do share repurchases opportunistically. To conclude on the Q1 actual results, overall, It was a strong quarter as we delivered on what we said we would despite the headwinds we face as customers continue to adjust inventory levels. Please turn to Slide 10. I'll now cover our outlook for the Q2, which is based on everything we are seeing in the market and forecasts from our customers.

Speaker 3

Our outlook is as follows: revenue between $1,825,000,000 to $1,925,000,000 essentially flat with the prior quarter. Now while we're not providing guidance beyond the 2nd quarter, We are seeing signs that demand and revenue should start to improve in the second half of the year, which Yuri will elaborate on shortly. Non GAAP gross margin of 8.3 percent to 8.8 percent consistent with prior quarters and dependent on mix. Operating expenses of $60,000,000 to $62,000,000 in line with normal levels non GAAP operating margin of 5.2% to 5.6% Other income and expense, approximately $12,000,000 in line with normal levels. A tax rate of 17% to 18%.

Speaker 3

We also estimate an approximate $3,000,000 to $3,500,000 non cash reduction to our net income to reflect our JV Partners' equity interest. Non GAAP EPS in the range of $1.20 to 1 $0.30 based on approximately 57,000,000 fully diluted shares outstanding. Capital expenditures to be around $40,000,000 to support new programs and future opportunities as we continue to invest where needed to support our long term strategy And finally, depreciation of approximately $30,000,000 Overall, I'm very pleased with our performance this quarter and excited about the opportunity ahead. And now that I'm on board, I look forward to meeting with many of you and hearing your perspectives. With that, let me turn it back to Yuri.

Speaker 2

Thank you, John. Ladies and gentlemen, let me add few more comments about our financial highlights for the Q1, and I'll review our end markets and outlook for the Q2 and the rest of the fiscal year 'twenty four. Please turn to slide 12. For the Q1, as you already heard, overall we met outlook and we demonstrated our ability to manage costs and operational execution in this macroeconomic environment. For overall markets, we are seeing ongoing customer inventory adjustment coupled with softer demand across the industry.

Speaker 2

What is the main advantage in this environment? Our business is aligned to adapt to market dynamics like this. We have strong cost management and operational execution. We are well diversified in growth markets. In the key markets that we focus on, our customer requires Sanmina technical capabilities, global regional footprint industry leading IT systems managed by Sanmina Smart Connected MES.

Speaker 2

The bottom line is that Samina provides a competitive advantage to our customers by delivering predictable and consistent performance globally. Please turn to Slide 13. Let me talk to you now about the revenue by end markets. As we said, We are operating in a very dynamic environment. Our team did a great job delivering 1st quarter financial results in line with our outlook.

Speaker 2

As you can see in our graph, industrial, medical, defense and automotive was 67% of our revenue, came in at $1,257,000,000 for quarter. Quarter to quarter revenue was down 6.4%. What we saw in here is some inventory adjustments and softer demand softness in the medical sector. For communication, networks and cloud infrastructure, we delivered 33% of revenue or $618,000,000 Quarter to quarter was down 12.8%, mainly due to inventory adjustment at communications market and softer demand from end markets. We also saw some softness in cloud enterprise sector.

Speaker 2

For the Q1, top 10 customer represented 45% of our revenue. Bookings for the Q1 were slightly better than a Q4 of 2023. Demand for the 2nd quarter is sequentially flat, But we expect to see sequential improvements in second half of fiscal year twenty twenty four. Please turn to Slide 14. Now let's talk about the markets that's going to drive the future growth for us.

Speaker 2

Sanmina has been investing in faster growing and higher margin end markets. These are key markets for us: cloud, Defense and aerospace, medical, digital health, electrical vehicles, renewable energy, industrial and optical packaging. For cloud, basically built around AI and ML, we see a lot more new opportunities, driven by upgrade of cloud networks to meet AI traffic needs for the future. Defense and Aerospace will continue to see solid demand. For medical, digital health, we have strong base of customers with positive trends For electrical vehicles and electrical vehicle charges, We see fair amount of new projects and lots of great opportunities in front of us.

Speaker 2

Renewable Energy, New projects for us will drive the growth. For Industrial, we have a solid base of business and new projects in a pipeline. In optical packaging, for us, it's all about 800 gigs. We see a lot of trends in this side of the business. So I can tell you that the pipeline of the new opportunity is exciting for our future.

Speaker 2

Please turn to Slide 15. Now let me tell you about Samina's priorities to drive long term profitable growth. Number 1, Samina culture is basically to build everything around customer requirements. We are very customer centric company. Because of that, we're able to build a strong long term partnership with the market leaders.

Speaker 2

We have great diversified customer base in key markets, and strategies again is to build around the customer needs. And I can tell you that we are even in this market, we are adding new strategic customers to our existing base. Number 2 is to continue to provide leading technology in heavy regulated markets. Our technology is a competitive advantage. We provide total solutions from NPI to full systems.

Speaker 2

We are well respected by our customers and industry for quality of execution. We also deliver time to market flexibility for our customers, so they can get their new products to the market at a faster rate. Number 3, Sanmina is positioned for a long term growth. For fiscal year 2024, we're starting with a lower revenue base. We knew that beginning of the year with all the inventory correction that is going on, But we do have a strong pipeline of the new opportunities.

Speaker 2

We do expect sequential improvements in the second half of fiscal year 24, and we'll continue to invest in the growth opportunities. We also continue to optimize capital structure to drive the growth in next 2 to 3 years. So this way I can tell you that The revenue goal is to get back to $9,000,000,000 run rate and then drive that growth to $10,000,000,000 to $12,000,000,000 But we don't want to just grow. Number 4 for us is margin expansion and cash flow generation. We are focused on margin expansion, and our business model will allow us to do that.

Speaker 2

Short term, our operating margin goal is 5 to 6%. And if you look at the last 2 years, we're able to deliver those numbers more on the high end. Longer term, We believe that our long term operating margin goal internally is over 6% 6% plus have high confidence we'll get there. And we'll continue to generate cash to drive this growth. And number 5 for us is how do we maximize the shareholder value short term and a long term.

Speaker 2

As John told you earlier, We repurchased shares opportunistically. For the Q1, we bought over $100,000,000 And what Also positive in Sanmina business here is that we have significant leverage still in our business model. So now please turn to Slide 16. For the Q1, as you already heard from us, we had a solid execution and excellent performance by our team. Revenue of $1,800,000,000 $700,000,000 in line with our outlook.

Speaker 2

We delivered a non GAAP operating margin of 5.5%, and we delivered non GAAP diluted EPS of $1.30 And this is at the high end of our outlook. For 2nd quarter revenue outlook, we're going to be at $1,825,000,000 to 1,925,000,000,000,925 And non GAAP diluted EPS, we're guiding between $1.20 to $1.30 which is basically flat to our Q1. For the year, as we already said, we are seeing ongoing customer inventory absorption and softness in demand for our first half of this year. But we believe for the second half of the year, we expect to see sequential improvements. Ladies and gentlemen, now I would like to thank you for all of your time and support.

Speaker 2

Operator, We're now ready to open the lines for question and answers. Thank you all again.

Operator

Thank you. Your first question comes from the line of Christian Schwab from Craig Hallum Capital Group. Your line is now open.

Speaker 2

Hello, Christian.

Speaker 4

Hey, Yuri. Can you just specifically On the growth markets, can you tell us which 1 or 2 that you guys anticipate seeing Driving the sequential growth in the back half of the year?

Speaker 2

Well, as I mentioned earlier, if you look at our Industrial, medical, defense and aerospace markets, we believe those are markets that are pretty stable for us. There's some inventory adjustments going on now, but we expect to see nice improvements in 3rd, especially as we exit our fiscal year and then Q1 of calendar year next year. So those are the markets. Also when it comes to let's talk about communication networks for us, if you look at that market, we had a major Inventory correction with some of the projects there. We Based on those, we see some improvements in the second half and some improvements will probably take longer than couple of quarters to get there.

Speaker 2

But on a cloud infrastructure side, we a lot of our networking customers are into cloud AI And we are involved in a lot of the new projects that are coming up that basically will be upgrading The cloud infrastructure and we believe that Seminar will have a fair amount to participate in that segment in the second half of the year and beyond.

Speaker 4

So on the communications equipment part, you anticipate that exiting this quarter for the most part each customers inventory levels vary, but you think after this quarter, the worst is kind of behind you? Or is there just going to be puts and takes as some have, as you suggested, A few more multiple quarters of digestion and others are possibly returning to ordering again. Just I guess that wasn't clear.

Speaker 2

Yes, I would expect to see improvements in the 3rd quarter of our fiscal year, even across those markets, but to see more better improvements probably till the Q4 on some of that. But I would say worst is behind us. We'll see how we go through this quarter. But I would I don't know if I'm smart enough to know when is the bottom, but I would expect I do expect based on what I see and what I'm hearing from key customers that definitely Q3 we should be able to improve our shipments. So I can say that, yes, I think the worst is behind us.

Speaker 2

Because some of these communication correction has been going on for the last two and a half quarters.

Speaker 5

Right. Correct.

Speaker 2

Yes. So then my

Speaker 4

last question, Yuri, on the optical, you talked about seeing strength in particular at 800 gig, are you guys seeing any strength or well positioned as the industry possibly starts moving to 1.2 terabytes?

Speaker 2

Yes. Yes, we are working on some of those new programs, yes, especially the pluggable side of the business.

Speaker 4

Okay. And you would anticipate that that market would be solid in 24, is that fair?

Speaker 2

I would say for us, I think definitely there's some positive movements around, but I would say end of the 25%, we expect a fair amount of upside in that segment.

Speaker 4

Okay, great. Thanks, Yuri. No other questions.

Speaker 2

Thanks, Christian.

Operator

Your next question comes from the line of Anja Soderstrom from Sidoti. Your line is now open.

Speaker 6

Hi, thank you for taking my questions. Congratulations on the solid quarter here despite the challenging environment.

Speaker 2

Thanks, Ein. So I

Speaker 6

also want to dive a little bit further into the end markets as well and the medical there with we heard from other peers there that there been some inventory corrections there. What are you hearing in terms of that? And do you have new programs that are ramping that will Sort of offset that if that prolongs longer than anticipated?

Speaker 2

Yes, Anja, there is a correction now across almost every customer out there, but at a different level, okay. There are some that not a major impact and Like in communication side, we had a more impact. On the medical side, during this quarter that we just finished, we had Some softness in demand and some inventory correction and we expect that to continue in the second quarter. And we hope that improvements in the 3rd Q4 of this year. So our base of we're around 20% of our revenue comes from medical.

Speaker 2

So it's a very solid customer base for us. But with us, we also have a lot of programs that are Basically changing into the end of 2024 and 2025, in some cases even to 26. So in the next 2 years, we've got a lot of new programs. They have upside, but also going through some upgrades.

Speaker 1

Okay. Was there any

Speaker 6

end of this end market within those groups that you're talking about that were particularly strong? Definitely,

Speaker 2

defense and aerospace for us is still Solid demand, we're still chasing certain parts, especially in some of the unique technology. The renewable energy for us Demand is strong is now but a lot of these are new programs, so just ramping up the new programs. Industrial for us was solid. That was about 27% of our revenue. So that's continued to be solid for us.

Speaker 2

And like as I said earlier in the prepared statement, on cloud, we're starting to see fair amount demand from They are switching to support AI and ML.

Speaker 6

Okay. Thank you. And in terms of inventory, It seems like you are doing a great job in managing that as well. Do you think we should continue to see improvement from here? Or Where are you targeting there?

Speaker 2

Yes. We definitely expect to see improvements. Now with my new CFO, I should have a lot of improvement. So No, we do expect improvements and we have programs internally that we're working very hard on and with our customers. We learn a lot through the COVID days and how to manage it and so on.

Speaker 2

So there's a lot of focus both on our customer side and of course on our side to make sure that we are smarter And going forward, we manage inventory, especially if we have hiccups in our industry like we had with COVID.

Speaker 6

Okay. Thank you. We're talking eventually achieving $10,000,000,000 to $12,000,000,000 revenue in a couple of years here And 6 plus percent operating margin, what kind of revenue level do you think you need for that operating margin?

Speaker 2

I think for us, it's a mix Of the business, how much it comes from our technology group and how much does it come from our products. But as we as you can see, once we get Closer to the $9,000,000,000 plus, I think last year we exited a year almost, what, dollars 5.9, $5,800,000,000 But and so as we get to the run rate around $9,000,000,000 plus, we expect to be in that high 5s, the low 6s.

Speaker 6

Okay. But the key

Speaker 2

for us is the mix. We're investing a lot of these new Technology products are components. We are investing in some of the defense industries. We are investing into lithography. We get some European partners there that we have for fully Photography equipment, precision machining and so on.

Speaker 2

So we got a lot of on our plate. And I think as long as those things come together the way we already spent a lot of the money for growth. So we got to grow. I mean that's the whole focus right now internally, but we got to grow smart. We don't want to grow for a growth sake.

Speaker 2

We're going to make sure that we have a respectable margins.

Speaker 6

Okay. Thank you. That was all from me. I'll get back in queue.

Speaker 2

All right. Operator, we have time for one more question.

Operator

Thank Your next question comes from the line of Ruplu Bhattacharya from Bank of America. Your line is now open.

Speaker 2

It's good to have you back.

Speaker 5

Yes. Thanks for taking my questions. Appreciate it. I have a few questions. Let me start by welcoming John.

Speaker 5

Thanks. It's good to have you on board. Maybe can you just tell us what your maybe top 2, 3 focus areas are over the next 12 months?

Speaker 3

Yes. Thank you, Ruplu. It's nice to connect with you and looking forward to speaking more with you. Couple of things, right. So number 1, I would just say in the business, Right.

Speaker 3

That is the top priority for me. As I mentioned in my prepared remarks, I've been here for about 6 weeks and been spending a lot of time meeting with the leadership team. In my 1st week here, I was able to make a trip down to the Guadalajara and that was very important just to be able to see our capabilities firsthand at one of our major facilities and I've done some in the Bay Area too. And then really just getting into the details of the business. So just a couple of weeks back as we were preparing For this earnings call, kind of in the normal course of business, we went through all of our quarterly business reviews.

Speaker 3

So that was a great opportunity for me to dig in deep to all the respective divisions, learn about what's happening in the market, what's going on with our customers and helping to decide what our priorities need to be, right, to drive some of the things Juri was just talking about with Anya as an example, where do we see opportunity to drive operational improvements, whether it be in inventory or otherwise.

Speaker 5

Got it. Let me ask you another question and either you or Yuri can chime in. So this quarter the CPS segment saw about 2 20 basis points of sequential improvement on revenues that were sequentially down. I mean, part of this you said is mix, part of this is operational improvements. I'm trying to see if you can parse that out because If we look from 1Q to 2Q, as you've in years past, you've had margins decline.

Speaker 5

So how much of this is structurally sustainable at this 13% level? And how would you characterize this as Mix related versus operational more structural improvement?

Speaker 2

Yes. Ruplu, let me this is Yuri. Let me of give you an overview of what was going what's going on last quarter. As we've said, definitely there were some inventory Adjustments that affected the revenue for us, similar to the other businesses, we believe the components business, We're starting to see light end of the tunnel. We're seeing because when you as the demand comes back, it's going to come in our component businesses first, Okay.

Speaker 2

So we're starting to see some of that right now. So that we the key to that, our goal for our components products and services is to get that minimum 15%. So yes, it is sustainable. And I think it's now for us, It's all about getting the revenue. We might have short term plus and minus percentage of there or up and down.

Speaker 2

But I think the longer term, these programs that we are working on and what we have in front of us and investments that we already made, Ruplu, into our factories. And if you ever have a time, you come to the Bay Area, we'll take you around and show you some of the investments that we made in a component side of The business is really to help us not just drive the revenue, but to go after the business that is more profitable. So John, you want to add something to that? Yes, what you learned in the last QVR just in

Speaker 3

the 6 weeks that I've been here, but CPS is a big priority for us. I think I would add to what Yuri is saying. So and really just focusing on expanding and adding more value for our customers. And if you look along the different lines of businesses there from precision machining, plastics, printed circuit boards, All of them we saw some good operational improvements, but we think that there is more that we can do there to Yuri's point to continue to grow that business, add value for our customers and expand margins.

Speaker 5

Okay. Thanks for the details there. Since you mentioned revenue a couple of times, I think Yuri you've said that You expect sequential growth in the second half. If I look at consensus estimates, I mean consensus is modeling double digit growth sequentially for both 3Q, 4Q. What do you think about that?

Speaker 5

I mean, when you talk about sequential improvement, I mean, is that the kind of level of improvement you're Like double digit sequential growth, any color on that? Like what how strong a growth are you expecting?

Speaker 2

Yes. We're guiding Arupu strictly to make sure that we're clear here. We're only guiding 1 quarter at a time in this environment. But I can as we get into the 3rd quarter, especially in the 4th quarter, 4th quarter It's going to be upside. The question is how much, okay.

Speaker 2

And it can be a double digits, okay. For the Q3, I think it will be up, but it's really hard for me right now to speculate that how much. It all depends how inventory shake out, but our customer base and the new programs that are coming up can drive the growth. We're just going to see it. So I don't want to over commit, but I can commit that the longer term, This company is positioned to be a lot bigger than what we just did.

Speaker 5

Okay. Thanks for that. And maybe I'll just try and squeeze one more in. You also talked about strong free cash flow this quarter and inventory went down. I mean, how is there a target like how should we think about free cash flow?

Speaker 5

Typically, EMS companies, if the economy is weak, the countercyclical balance sheet, you should have strong free cash flow. Any thoughts on free cash flow sustainability and thoughts for free cash flow for the full year?

Speaker 2

Yes. I mean, Ruplu, this business It's just as good as I do. Yes, definitely we should be generating in a down market, we should be generating a Fair amount of free cash flow as we did last quarter. And we're utilizing our cash properly. Our stock is a high value.

Speaker 2

So we bought over $100,000,000 of debt. We continue to invest. Yes, we expect to be cash flow 3 for a year. I mean, if you look at historically, we've been generating free cash flow around $200,000,000 $250,000,000 and we should be at that level.

Speaker 5

For fiscal 'twenty four?

Speaker 2

I mean, I'd say in the general term, we'll just see how we how this inventory gets used up In short term. I think that's going to I think that short term is all first of all, the good thing about inventory, Ruplu, you know in our industry That we have a contract where we only buy what is our customers tells us to buy and they're 100% responsible for this inventory. We charge for carrying charges and etcetera. But just getting these things off our books and turn it into the might take a little bit more than just the 3 months.

Speaker 3

Okay. All

Speaker 5

right. Thank you for all the details. Appreciate it.

Speaker 2

Yes. And come and see us.

Speaker 5

All right, I will.

Speaker 2

All right. Well, first of all, I'd like to say thank you to all our participants. And if we didn't answer all your questions, as John said, we're available, especially for John right now as he wants to get to know you. So please give us

Speaker 3

Thanks a lot. Thank you everyone.

Operator

Ladies and gentlemen, this concludes today's conference call. You for your participation. You may now disconnect.

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