SMTX - Earnings call transcript Q1 2020

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Operator

Good day, ladies and gentlemen, and welcome to your SMTC Corporations First Quarter 2020 Financial Results Conference Call. All lines have been placed in a listen only mode and the floor will be open for questions following the presentation. [Operator Instructions]

At this time, it is my pleasure to turn the floor over to Blair McInnis. Sir, the floor is yours.

Blair McInnis

you. Thank

in the include to events company statements results are begin the everybody that future affected a events and I'd to what may substantially factors, will and number the that company's the will be subject presentation are from about foresees. forward-looking of results call, which beyond performance company we uncertainties. control, remind actual of cautions like that financial risks Before and and The by nature expected many and currently that future vary

various results on made on except reports the date this Report to filings form with the of the required Securities as on factors update contained and Exchange do of Annual are subsequent and Form this Discussion that call, of X-K as not and may future company's Reports XX-Q, is Commission. and affect Form law, statements by we All other Quarterly intend information. XX-K, the in forward-looking

call, we income and During results. to decision-making. operating that and net Financial non-GAAP press to financial and Please key provide financial GAAP refer between for respect adjusted with EBITDA. release when past GAAP these conjunction adjusted will the including believes in reconciliations metrics certain used the the its useful Measures, results, information adjusted SMTC issued profit, adjusted in yesterday operational gross also Management reference overall performance future the measures, we greater Non-GAAP prospects, with measures, for transparency about and enhance uses financial of understanding and allow

these results accordance any measures. and in that to items adjusted a to future investors is evaluate this analysts, with for, be prepared for used or The not presented financial as intended construed in inference parties as to, information should information substitute Measures SMTC’s non-GAAP companies be interested isolation considered GAAP, presentation an unaffected will These are industry. Non-GAAP Financial frequently other be of by the also in in not and financial financial superior by or SMTC’s and

conference be of this in www.smtc.com. will also the for Relations section available call replay audio Finally, SMTC's website at Investor

pass to over President Officer. will Eddie I Smith, and call Chief now SMTC’s Executive the

Eddie Smith

Thank gentlemen. Officer. with Chief Executive today Fitzgerald, Eddie our and is On this SMTC's Smith, ladies President and I'm you, morning good Blair, Officer. SMTC's and Waszak, Chief Officer, me Financial Chief and call Rich Steve Operating

discussing before. I’d our results which like our to their COVID-XX before and came better patience and applaud First, a like the seen that want to I acknowledge in support working I we’re of the time and emergence result unlike quarter of suppliers, our internal would and that hard times. is these support anything our during entire living and work than shareholders to trying in of a the we’ve the our budgets, and as team, partners. continued also our the thank our dedication of for SMTC customers, pandemic,

is pandemic. same resulting off from a report pleased am chain typically I X.X% and through sequential at what a revenue in of first the our the paying our to time, increase move quarter supply forward slow on company and operational while we is as continue excellence navigating health, report the during seasonally quarter, safety challenges focus the emergence COVID-XX to that

of the During over revenue in the five from first programs customers excess new quarter plus existing generating we $XX programs potential new additional of of were million from have four awarded customers, that time.

awarded million and that grow funnel during new excited new additional to April an date programs are to in with business our We May. continues $X

balance, during business times. remains On intact. resilience SMTC The these challenging team our has demonstrated

our customers sure top evolving times contact in of with and weekly, we stay some daily, the is Our leadership team, myself make situation. on to included, in

launch and the first will positions reducing steps to to half expenditure which incremental production other we to need our of new taking reach later simultaneously plans including on some this limit they we the expenses, for XXXX, and in investments year are QX the before discuss. into new Steve make capital products our While support putting of hiring volume pause year a

sales until While decided business we are would prospects, pandemic pleased visibility to levels. COVID-XX to the prudent that our be unpredictability with full time withdraw of our the environment, funnel year growing and current we pre-COVID-XX returns given it formally guidance such

internally we achieve the when the communication forward lines reflects guidance industry open our to annual in financial of leading look the and timely pandemic and are we provide both can COVID-XX comes our keeping and and to reliable providing an resume We that confidence metrics. end information, day to externally, to ability

to Let me our employees by for remains have safety will to delivery we meet our as saying remarks our wrap and actions requirements. meet our of Officer, Rich efforts the wellness up we ensure priority top the employees continue to Chief keep taken Fitzgerald, responsibly running discuss up production our detail our that the customers’ families, a in to and our health Operating and my SMTC, their customers’ introductory requirements. and of

the addresses as result we of first we the protect our in share light second commentary in quarter of have goals, will additional in our COVID-XX of open questions. are Steve detail, markets results Steve we on our you of the efforts the I a expenses taken, with steps our we more call we Rich support with pandemic. for have before employees quarter, will including also the some making and the to safety thoughts business, discuss our After before CFO, incurred Waszak, programs, health, new investments our and and to our serve return wellness the the

Fitzgerald. that, With Rich

Rich Fitzgerald

update would morning. COVID-XX provide on SMTC’s continuity like business I plan. Thank Good global you you with to Eddie, an

during helping to SMTC has would like presents. customers, employees, I COVID-XX First, pandemic in everyone as that thank the and channel partners our been address instrumental challenges this the time,

continuing has operation top with accordance the for regular their stakeholders to priority. and all our regular while world business and all safety our operating and be As rhythm to keep applicable been team. Currently, health, ability said, health provide The employees to all of of and in to remain our become wellness facilities and has SMTC the Eddie our safety the operations regulations. running, families around the communication in continues

signs January, in and working on working of business plans. we quickly pandemic a early continuity to Asia As begin chain in global late forward began emerging supply potential initiatives on were pull our our

our As we ocean our clients. of shutdown, began moved of freight feeling freight suppliers logistics ensure and costs our continuity nearing our to quickly challenges, air, some the business most to effects raw material for of with we key increasing

needs became and continues to demand. our be This conversations conducting versus non-critical also our daily and We began immediate with customers paradigm. to channel new partners align

to included Shortly with after health stay-at-home and state the the all our continuity nation, globe. our our safety to protect for orders government each specific around site. plans This to governments our we employees and globally, business requirements state sites California the developed other announced with responded customers, a of and for Fremont, of our first the plan working quickly implemented respective and plans the leadership California comply in team define

remain with located the ensure operations our business to worked additional operations. of to exemption We documentation closely quickly obtain to with clients essential our customers our the open. then globe are letters continue local each proper of necessary worked had We across we sites and where to for governments defined

XX all all all to CDC access our of routinely points Following their recommendations, measures We all following medical we we number age who temperature in and masks. for non-essential of instituted those personnel encouraged at our to travel ill We immediately globally. conditions, to access essential have We required pre-existing the We the protective implemented facilities, strict at hygiene our to shift required We stay ensure and And with closely and feeling at pay. personal including sites all each We anyone of to home. social work was stay and and equipment modified employees continue factories personnel employees metering to facilities: our our face stopped wearing around to health employees over Mexico and strictly remotely. limited to support all the We employees safety only. and home distancing on provided wellness. with site. patterns quickly at at rules of employees to proper limited instructed check have enforced the

implemented our employees, protect the Given approach the stay-at-home being addressing in orders to we reduced responsibly phased locations, various continue standards customers’ with in a outlook, while delivery current rigorous our our enforce to needs.

travel and work controlled We back bring will continue some to manner. safe continue align be and we will of our to further halted notice. employees plans All in non-essential our a until to

global with videos, continue through channel class frequent and communicate world employees will through We clients with our to and regular dialogue. our partners and

supplies social the that help done has challenges through of communities goods have pandemic donations work local we the local I and work employees responsibility the COVID-XX am team proud of hospitals the to that to extremely of and all to demonstrated the in. address our the in

With the said, I’ll stay to that Steve. safe. over call turn

Steve Waszak

partners your challenges commitment their and And Thank and all customers thank dedication and you, you for together leadership. I work our want the employees to period. of incredible to who SMTC’s Rich, thank our of for and this

X.X% quarter discuss million, a XXXX me year first the from X.X% for the up prior let the ago. results. $XX.X compared Now, the and Revenue was quarter, first financial quarter to

quarter one During XX%-plus had customer. XXXX, the first we of

serve year our sales that Avionics, This in the a quarter $X.X and a $X of and nearly breaks sector. our Defense earnings million to Aerospace the our million compared $XX.X markets down to we with is all shows million prior growth by quarter which were relatively strong stable, in and increased XX% Included in the release same respectively. table that by ago, table industry business,

medical XX.X% gross and meet or profit start-ups and inefficiencies the was was customer of million program in quarter risk revenue Our to customers’ year use or delivery of of for employees certifications million production to on $XX.X put in at chain labor profit them or primarily in X.X% XXXX due and million revenue, staff start-up expenses the quarter same the for the a schedules. COVID-XX, quarter to of ago. incurred higher that XX.X% which replace sequential with gross decline new prior from temporary our to and The logistic $X.X expenses compared first program leave resulted supply for conditions certain management, $X.X

XXXX connection $XX.X intangibles of our XXXX in was of profit was or in in with MC $XX.X loss same currency million XX.X% foreign adjusted amortization acquisition $X.X revenue. year of XXXX revenue, gross of million QX adjusted of unrealized of Assembly ago In recorded excluding comparison, million unsettled profit QX period contracts. XX.X% non-cash gross gross Our and XX.X% revenue or $XX.X the while profit for our or forward exchange was QX million adjusted a

same the administrative million quarter ago. compared in flat the of and essentially for quarter $X.X million, and year $X.X general was of a fourth to XXXX in expenses $X.X Selling, XXXX first quarter reported million

a As decreased percentage X.X% revenue, quarter of prior quarter. the X.X% XXXX to first in the expenses of from SG&A in

million XXXX, net reported of net first comparison, of year $X.X $X quarter income income same quarter in million year $X.X was in income reported in $X.X $XXX,XXX compared the of in in Adjusted in the and prior same the a quarter We and the first of ago. net $XXX,XXX period the million. we the quarter a ago. XXXX quarter adjusted In prior to

Adjusted million XXXX the in in of $X.X was quarter $X.X the quarter and compared ago. EBITDA quarter same $X.X the prior a million, year to in first million

few like the first metrics balance that quarter. reported I'd to other and sheet the Now we in financial a comment key on

with in over DPO first XX for X.X the XXXX, days XXXX. cash-to-cash were quarter first the compared Our XX days quarter XX quarter at and of turns Inventory at cycle days, with days of DSO averaged turns. XX

$X.X for Net and Our quarter the end de-leveraging in focus was at from first ago. the $XX.X an of quarter million the extension the California down quarter debt as compared the increase million, of includes a XX, $XX.X at a XXXX Fremont from year Net site. million debt $XX.X lease prior our March to facility of continues. same million

at financial At end the Net million the was million, ago. and end at the and same end quarter $XX.X $XX.X lease million of of obligations had asset-based lending first the $XX.X the end facility. Debt, the under a year $XX available of excluding operating we quarter to the of prior quarter compared credit our quarter, million at the

effectively, needs, internal represented our to capital cash quarter our board. manage from a instituted reduction pause core measures our XX% we ensure, for other containment new across among reduced second we the hiring positions, the which plans, expenditures in a To

leverage registered from and debt reduced our rights our MC We remain the our we on in focused improvements from EBITDA EBITDA acquisition reducing XXXX, ratio. from direct debt-to-adjusted X.XX, X.XX X.XX operating are excluding end of of ratio, offering with offering, lease targeting Since to proceeds QX less our well as the debt-to-adjusted excluding leases, current XXXX projections, performance. in in ratio June Based XXXX, as completed by than achieve our we to on a obligations

the to our million in XXXX chain expenses, EBITDA assuming our current of range as million quarter to by $XX excludes $X.X million and of between We and facilities levels $XX on to operate and expect adjusted current million and $X.X demand outlined COVID-XX which continue visibility, at based revenues second range Rich. related direct between $X.X supply to million,

Concluding, impact believe employees new our we potential or global encouraged business, or such COVID-XX manufacturing change – government of negative in been pandemic in impacts supply business, facilities on far or winning customer impacts mitigating impact for lastly while interruptions, are we and by product recognize our regulations, chain success demand, the thus in our successful as the on we have build-shipment the very changing new and impacts the economy. of also and very, -- our COVID-XX on the

time mentioned, prudent visibility we Eddie withdraw until the year XXXX the levels. pre-COVID-XX as for it guidance such to XXXX returns that full provided is to XX, September on XXXX reaffirmed Thus, and March XX, on

I’d for Eddie it With on our comments to to back like business. that said, return

Again for thank you participation today.

Eddie Smith

to we pandemic. was a even performance be Steve. you, the this were consistent COVID-XX year emergence with will XXXX a of year for the similar and made Thank progress. overcome on great suspect made. SMTC financial of challenges stronger year challenging believe be before I to progress more track and where I

in of customer our degree At our of demand balance this remains in the looks There a industry strong. uncertainty half first regarding fair the time, point year.

of many test industries are devices, customers deemed defense, and systems. and our Fortunately, in operating essential, including measurement medical

with successfully at the equipment result, and to facilities are staff our quarter As to conditions safety currently we of our medical boats accordance closed fourth from them customers, risk facilities and and North health regulations. arrival to We've a be upon those put necessary, all America We and of in using operations. responsibly we the our applicable to operate remain for open with each also our and to placing most Where the all on of of employees temporary China manufacturing migrated COVID-XX. pieces redeployed facilities. in back have final continue

place Italy, and interruptions, from to suppliers During increasingly COVID-XX in quarter, the related regulations. first the China, experienced India, and pandemic EMS industry times production due shelter in

the setting Drawing has working relationships years, a we shortages. anticipating that expediting around thinking, many component our key new chain and supplier developed out-of-the and over on supply have box materials, sources of done team up supplies, proactively great job potential obstacles,

the Boston through we Introduction launched facilities. Product Fremont pandemic, by new COVID-XX XX presented our New Amid and programs, challenges

working and place, solid work Our the are at customer engineer and production processes in these production smoothly. staffs making sure hard have programs, have that new program management have been obtained their certifications, start-up proper that

sales Our market been successful share. team continuing has gain to in

our grow deeper wider to customers. with continue We and

a $XX secured with over so generating of million this revenue of potential the in dozen already year, or programs excess We have time. new customer

seeing Defense increased success Aerospace business. with We Avionics, and are our

programs. and We initiatives expect Energy efficiencies, customers, customers, and further and Measurement have half to global growth. Datacenter second including, Sigma as support several And and along I with mentioned our finally, Lean our our production costs Test ongoing improve on our we last XG call, reduce to XXXX Power

our monitoring making as the reiterating what COVID-XX remarks met. top has our impacts healthy, our discussed, requirements remains and by my priority. in are conclude customer employees business. are This the sure me in on Let that the team safe, been I introductory we our are Richard carefully said proactive pandemic of that And

stronger premier sheet, shareholder of Tier leveraging performance our company making employees, our leader, Erica's delights service, leading revenue, balance including EMS remain committed industry stockholders segment achieving and customers value. taking rewarding EBITDA our our to we finally, even care and margin, gross metrics with percentage X growing an superior that further and our company margin our the margin, net business become deeper And to

call Rich, With questions take and I you those of that, Steve, today. on from will the

Operator

Riley. [Operator ahead. Crawford question go come Instructions] first will B. And with Mike Please from our

Mike Crawford

and for leverage the X.Xx the you marry end Thank Eddie to by year fact rest your you can just you. of only and QX the with if goal target less guided for not or possible, Steve, that -- year?

Eddie Smith

Yes.

going have as demand do? are what So, world morning, all, up of is first to business to don't going the they to we still underlying our the still that's We customers. How the customers. open are good again? to increase? unemployment our So, Mike. are When a What is know we Mike, from We What going have continues to running happen governments you? still strong. forecast from have orders

thought business to we And some know pretty that though look we the just was we happen future. running customers' don't a going the it do don't what's in was with prudent so, big our world. the We get macroeconomic and even into well significant of control things

decided we pull to the guidance. So,

What doing customers' are high what plants efficiency up our the their that today, forecasts supply what with today, are chain is know and XX%. manufacturing our we do is our in and

that comfortable environment. I the economic being we with comfortable feel with said, don't the macro with So, year, feel just

this about about And year, so think debt even QX exceed first of for pandemic, the our you the the ratio, metrics. in leverage in when and versus half you our meet of or think so QX, guidance to we many middle the will of

don't matter the government enough and that going QX The about what I do. and fact is is know just to QX

Mike Crawford

if Eddie. you, more, mind. Two you don't Okay. Thank

the programs work? million those comment of future just the of you on could one, potential of duration So, programs? the new XX What's $XX these and

releases new new prior award the type you had in already of might toys where update? of to how the also, And we time subsequent and defense this about disclosed a last aerospace many those of versus have been talked

Eddie Smith

question, a can't our factories using iPads, going in as it's can is GoPros so in virtually the approvals to our get from and said, Rich manufacturing the so process. great Yes, allow customers we become question of because people we terms

So, and spread all half of in that is a environment, second XXXX. tell over normalized I the $XX million year you that of this would

So, I XX-month would type you first. tell it's as an projection

Second is, release portion in the this one we out was of in significant put March. announced a press

-- split wins April April out we the heard March you new So, and I of million. $X -- think

million most the had previously, Mike. $XX of think been I announced

XX% the be this, to to going in that period The fun good government That's part is going as to and of regulation or that's to are subject than you And aero the systems the know, not be or it part more does. of loss economy over of business. how a consistent time. defense be going

Mike Crawford

last off saw Eddie. -- came been before rebound what in leading in XXXX-XXXX. subsequent a then fall well, that but some indicators question the and And situations is when of And at with your in? Thanks Great. through you a a not with you've maybe pandemic, were roaring back demand point, revenue

Eddie Smith

Yeah.

about up quarters went later later, billion went $X.X This back had this my the $X.X just in recession. $X -- And was a XXXX-XXXX a Then a industry I been born from in XXXX And somebody, revenue I've then to first So, billion the which and tell it five phenomenal. semiconductor was down in was asked I you went through my down bust the CEO crisis, had conversation. pretty division. the year I at I back then CEO I got when up. where year. the is XXXX.com XX%. wrong revenue quarters billion specifically, Maybe four by our role XXXX-XXXX,

all Thailand for over this happen had pretty always pandemic, is hey, So, a in reasons, to tell my shut is, this. to not people going had the because maybe tsunami through in different but answer the you floods down. we what were you're Japan, people is of I calm And say, continue

see you we exactly are just what said, certain And trigger that to there will us things decisions. that make

closing up started, So, with China happened the completion to plant negotiating in Richard be and over, COVID first myself other our of January, when and the landlords people. and finishing

hadn't there not became something were clear shortages, be were right. overnight, had that was telling clear factories there it that Lead-times out and were it some much, was so shortages. gone business being would us up And why people closed. jumped And

And to in in, from moved pulled boat so, being immediately our freight, we Rich pulled air things freight orders. as we said, and

things see around. I lead-times where think same of of are those jockey you're to going some to going types

is that they're there. If lot government, semiconductor right a in about business. about shelter-in-place on They're with there negotiation There's test went the you of capacity. think XX% with Malaysia, sense houses and packaging their a was Malaysia and of operating XX% operating now at whole

That's demand lead-times XX, when and probably XXX% okay need and up, go the it But you're back will opens marketplace. in up. only you operating

we updates signs out So we these every daily, it continue back, once moves. Mike, get continue start we will on the coming watching our operate month, numbers. we so watching we'll a seeing will are things We book-to-bill put website, that day. make to And lead-times when daily, appropriate

have we've you than And able I are do have cargo then which around And we able as planes experience, planes, the call what's our you because back, all in probably you on the that work got passenger what and the going to is sooner but that less happen in, live to China tell we be regularly will not that. to world crazy things most. to flying with been and

what those don't I guidance trillion have When out dollars things? know if and yearly correctly. about yeah, couple good pass on So, to you stopped don't what's to keep have with handle to doing hate a are going of dollars, trillions the just they out they throw if What know just laws; when that pretty economy on we'll do. talk that. them just happens a going. we these governments that I we'll to going

Mike Crawford

great. that's No,

So, thank much. very you

Eddie Smith

Yeah.

Operator

with Capital ahead. Please go Christian from Craig Group. comes Schwab And our next question Hallam

Christian Schwab

good question. for guys. Thanks my taking morning, Great. And

year remain course that and that margins? how environment think, in that about guidance, at? similar know already levels discussed, margins been we've the been about gross as giving the minuses official should gross of it we So, of you're and pluses not I thinking we Steve, has throughout but should the through be the

Steve Waszak

outlook remain growth are We Welcome thank our yet first Yes, see gross don't point both because you. should costs to the direct to expenses. have COVID we what in know, talk COVID. have in is got our that Christian. we margins capacity, really full There's the labor we've costs, some that about yet direct because quarter. we've to nature. done indirect have and Yeah, stable we stay-at-home, in need believe you people have to the this our some redundant What things and at we stay production

also and that – costs time There's and take around, a rooms inefficiency indirect you all that stuff got. so locker lot some know, the just in factories nature, and there's inefficiencies of realigning that there's we of

We have our buses more social distancing organize from folks. to for

we there's kind – which coming some some announced margins contracts of just these NDA margins, of to pressure gross there's include It that which that percentages. are of higher still put things that relative in those will that didn't we've on some higher have or

today look So as over the three we course margins to two next quarters. net-net, would the on hold at I

Christian Schwab

being products be the follow get I – if know, is to you Last Okay, wondering is trying guess out hit reasons new some of just of may or year people perfect. delayed going all And QX unable see ramp design then wins. that know, that are as the you of majority just question, Aerospace the design any know, know, kind or factories? that's, that ramping, my the pushed I'm what about still and new these want part of in case? that to the the ramping Is that to of for is, winds you levels I'm majority QX last talked to give a those the could that and you part that we reaching and production in to, we've for that about, at not reason case, of guidance been why the we or Defense. we to until up quarter not expected, if regarding in previously really entire talked for question is earlier

Eddie Smith

fact, about products. more even them really than to giving Defense, believe, us I providers, they we of and Matter in quicker, hesitation trying efficient because keep been, customers, to my the are so is and EMS guidance stay Aero of staying moving not move open push of fact, Yeah, forward. producing will they'll other some have yearly some

and why So the to Defense macro has I but might guidance of we think the with that, with Aerospace has really world. of more wide pull do to specifically the actually that nothing do concern guidance,

So QX, I QX, say thesis come your with customers would Defense on that and original Aero stick those board. will

stuff. Defense engineer Christian, you more don't the in Aero have a But consumer on were It's innovative, see travel. while see I and having car the you other board never you companies side people it. business. sitting my meetings, get zoom doing, be to know, my so type working or change can when that in life adapted pretty a and in can't expected I GoPros they're engineers on I'm worried about, know, so the

I your touch with start people, term was and in think go wanting touching long worry, and from systems to things that. Because I to think credit I and all they and that, other well. away seeing this actually will systems, If people really payment you'll card hand payment to will do

see they today, I the we have government back all this customers. is money, think That's and them. of unemployment why the more tomorrow to keep really just trillions last doesn't level. with is start you'll does don't guidance of normalize to these And the it approving, when do stop? a dollars going when pull

Christian Schwab

you. questions? Great. guys. Thanks, other Thank No

Eddie Smith

Christians. Thanks,

Operator

ahead. to Please Kohl with go Mangrove. next we'll And Instructions] move [Operator Steve

Steve Kohl

job the for and Good unprecedent morning, environment. few dealing excellent call most the with guys. difficult Thanks and I’ve questions. got a

me bit about your let customer a sure talk not little market you're kind As exposure. I'm surprised, of

bunch a you custom question of guess, than I be rephrase the essential know, and talk question. of I've rather of just an is you customers? revenue, May deemed about let mentioned, few essential, think are little got me up. I what percentage And them opening bit a revenue a numbers deemed follow

Eddie Smith

Yeah.

this essential. tricky we saying, agree people not, because is start a was essential, publicly what's this, don't disclosing So that's one, allows

our of going I So, at that. is tell percentage don't give point, we're a portion business but this I a out of significant would deemed to believe essential, you

Steve Kohl

Okay.

Aerospace little and talk on me Defense. Let about

predominantly Just $XX.X million all or all or else it Fremont the somewhere unclear, is Is on coming Melbourne, out of in that number. that of Melbourne or all so of a system? something it out of is

Eddie Smith

its of through Freemont goes our and predominance but sites. Boston Melbourne, of it Most some

So news the in we Mexico, the also not in just are we're good growing growing is U.S.

Steve Kohl

should the some it the you of Defense there, ramp if in you better year? the for see what that are balance looking of people the and the an expectation or bounce year, right, of constrain in And balance know, that I some a be still when we're doing is Aerospace you for for look see still what big some Okay. that pretty of is, business remember are Melbourne the because issue, at a and Melbourne the being obstacles you

Eddie Smith

continue That's business. going Aerospace the year. not of is Melbourne so Yeah, Military to the where a we balance grow Getting to our of do has Steve. issue, significant through portion the been people

So before we have invested curve. probably

terms really it. part not of So the of issue people’s it's an in

the the on aerospace you have qualify a qualify defense, the aerospace have of of is, the is when qualify of business, bits maybe conformal in, process, even it's bills, do still lot it. do I to think chain supply qualifications last the of aerospace defense the chain, a defense. they And come lot trickier the There qualification customers, military, bit and then maybe to you slot. supply though real done and is one coating,

particular, need space programs that type In into have, qualification. the we get the you you when

about, think iPads, maybe you that? that go to it how But not GoPros, ask of Right a do different way. can Christian we're I good do now trying work question things. all pretty around with

shelter-in-place requirements, allow and us the QX, become our people QX. lift they buildings back in may do the when critical in to So

Steve Kohl

a lot longer getting over I question, was QX is having this companies we travel businesses at last or to and obviously, term were adjust. months, haven’t a guess now of several the

that structure or lead before, not might long-term lower do take travel, thought see can changes we you to with we a where see out structural you You could that lower costs we would how done that going have lower, forward? have know, cost some

Eddie Smith

that traveling win able much. we've is to news good without the customers So been some

so other down. bad on are industry. what people in expenses all travel competitors is, news The my matter and the And it's

travel more meetings. whatever they'll think clearly the cost it do will call meetings will new of people it Zoom want across, to I think be So to phenomenon, this cost sales, lower you and I

I think forward. going

people who forward. companies will work-from-home have think going more I

be So a in infrastructure And I was there'll think there initial I travel. then investment. think a savings

Steve Kohl

other and narrows So the last within a And question, obviously, talking got some the the that you obviously, and vertical? just could flows I the ebbs a spend retails market the second down, fence know of little soft, I'm customer seen folks I curious other them? protect about you you've that in punch line, but to targeting? sales area, what's just come the up that of about maybe opportunities with opportunities what that are some things responded happening have or other

Eddie Smith

there. opportunity places of clearly is the these ventilators And do right about? we are all quoting some they’re question the to in now countries is so as in process many So in Yeah, world. there ventilators need multiple the talking be, going as

these We also, in killing involved of are UV that those new were on terms of operating testing and light, technologies viruses some of things. types some

-- experience I I we're will My them there's think products all soft. products, lumpiness on specific go products. there's going you out have you think focused and and so that win will after, opportunity think some of you I because we've in quarters that I on, new good I been tell that these them, had, that has earlier, walked prices through coming some a that of we're

much products take straight lumpy just to and of up more down. these Some or right, out things gets some coming products just marketplace won't will, the straight than off, that the

Steve Kohl

Thank I the the question. you've time guys much. appreciate very taken you

Eddie Smith

Thanks. Have good a day.

Operator

Smith with that, Eddie comments. the final over turn for call to I'll And back

Eddie Smith

of want thank for their focus. everybody Well, and first all time Okay. to, I

great closing, our the want And thank progress day. in to to So of employees, thank team, the to and support several quarters. reporting continued and various forward our distributors, stakeholders you. next our attending, stockholders leadership for I business our look Have a partners, for then for all you over our

Operator

does teleconference. We conclude participation. appreciate today's And your that

You may disconnect day. this time at have and a lines your great

SMTC (SMTX) 7 May 202020 Q1 Earnings call transcript