Ladies and gentlemen, thank you for standing by and welcome to the Celestica Third Quarter 2020 Earnings Call. At this time, all participants lines are on mute. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to turn the call over to your speaker today, Craig Oberg, Vice President of Investor Relations and Corporate Development. Please go ahead.

Good afternoon and thank you for joining us on Celestica's Third Quarter 2020 earnings conference call. On the call today are Rob Mionis, President and Chief Executive Officer, and Mandeep Chawla, Chief Financial Officer. As a reminder, during this call, we will make forward-looking statements within the meanings of the US Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. Such forward-looking statements are based on management's current expectations, forecasts and assumptions, which are subject to risks, uncertainties, and other factors that could cause actual outcomes and results to differ materially from conclusions, forecasts or projections expressed in such statements. For identification and discussion of such factors and assumptions as well as further information concerning forward-looking statements, please refer to today's press release including the cautionary note regarding forward-looking statements therein and our annual report on Form 20-F and other public filings, which can be accessed at sec.gov and sedar.com. We assume no obligation to update any forward-looking statements except as required by law. In addition, during this call, we will refer to various non-IFRS measures including operating earnings, operating margin, adjusted gross margin, adjusted return on invested capital or adjusted ROIC, free cash flow, gross debt to non-IFRS trailing 12-month adjusted EBITDA leverage ratio, adjusted net earnings, adjusted EPS, adjusted SG&A and adjusted effective tax rate. Listeners should be cautioned that references to any of the foregoing measures during this call denote non-IFRS measures, whether or not specifically designated as such. These non-IFRS measures do not have any standardized meanings prescribed by IFRS and may not be comparable to similar measures presented by other public companies that use IFRS or who report under US GAAP and use non-GAAP measures to describe similar operating metrics. We refer you to today's press release and our third quarter 2020 earnings presentation, which are available at celestica.com under the Investor Relations tab for more information about these and certain other non-IFRS measures including a reconciliation of historical non-IFRS measures to the most directly comparable IFRS measures from our financial statements. Unless otherwise specified, all references to dollars on this call are to US dollars and per share information is based on diluted shares outstanding. Let me now turn the call over to Rob.

Thank you, Craig. Good morning and thank you for joining today's conference call. Despite the challenging environment, Celestica performed well in the third quarter, delivering another quarter of year-over-year and sequential revenue and operating margin growth. We are continuing to see the benefits of our portfolio transformation actions and our solid third quarter results are another sign that our strategy is yielding results. Our global team is successfully navigating today's challenges and is working tirelessly to support our customers, while keeping our employees safe. Our operations remain largely stabilized and our supply chain continues to improve. However, we continue to experience a fair amount of demand volatility as our customers' end markets remain impacted by COVID-19. As circumstances continue to change, we are well prepared to adapt and address any new COVID challenges. We believe we have a robust set of processes and protocols in place to manage our operations and global supply chain as the COVID-19 situation continues to evolve around the world. While we are experiencing demand strength in the capital equipment and health tech markets and JDM business, we continue to see softness in other markets, most significantly in commercial aerospace. Our CCS segment delivered another quarter of solid performance. Revenue grew on a year-over-year basis and segment margin came in above our 2% to 3% target range. This quarter represents the sixth consecutive quarter of sequential margin expansion in CCS. In our ATS segment, demand weakness in some of our businesses is offsetting strong growth in health tech and capital equipment driven by recent wins. The cost productivity actions taken within ATS are leading to improved profitability. While we continue to take actions to return the segment to its target operating margin of % to 6%, we are encouraged by the sequential and year-over-year operating margin expansion that ATS achieved in the third quarter. As we continue to drive cost productivity actions and the broader demand environment improves, we believe margins will return to target levels. Overall, we believe the strength we are seeing in several of our end markets is a testament to our diversification strategy and our ability to innovate, execute and deliver for our customers. The actions we have taken to transform our business in recent years have strengthened our portfolio and we are pleased to be seeing the positive results. I will provide some additional color on our end markets, but first, I will turn the call over Mandeep to give you further details on the third quarter results. Over to you, Mandeep.

Thank you, Rob. And good morning, everyone. As a reminder, we did not provide financial guidance for the third quarter of 2020 due to the uncertainty created by COVID-19. During the quarter, we experienced COVID-19 related impacts including premiums paid to ensure continuity of supply and inefficiencies as a result of being unable to secure supply. However, these impacts were offset by various recoveries. Our third quarter revenue came in higher than anticipated at $1.55 billion, mainly due to strong demand in communications fueled by JDM. Our total revenue increased 2% year-over-year and 4% sequentially. Our non-IFRS operating margin was 3.9%, up 110 basis points year-over-year and up 50 basis points sequentially. The year-over-year and sequential improvement was driven by productivity initiatives across our business and improved the mix in CCS. IFRS earnings per share were $0.24 cents, up $0.29 year-over-year and up $0.14 sequentially. Non-IFRS adjusted earnings per share were $0.32, up $0.19 year-over-year and up $0.07 sequentially. Our ATS segment was 34% of consolidated revenue, down from 37% compared to the third quarter of last year. ATS revenue was down 6% compared to the prior-year period, but up 5% sequentially. The year-over-year decline was driven primarily by COVID-19 related demand impact, specifically in commercial aerospace and industrial. This was partly offset by growth driven by new program ramps in health tech and capital equipment, as well as continued strength in the semi market. Higher sequential revenue was due to demand strength across several of our end markets. Our CCS segment revenue was up 7% year-over-year and up 3% sequentially. Within our CCS segment, the communications end market represented 45% of our consolidated third quarter revenue, up from 42% in the third quarter of last year. Communications revenue in the quarter was up 9% year-over-year, largely driven by strength…

Thank you, Mandeep. We are pleased with our 2020 year-to-date performance despite the challenges resulting from COVID-19. We continue to benefit from the investments we have made and the portfolio shaping and productivity actions taken over the last few years. We believe that these actions have made us a stronger company and better position us for the future. Our third quarter results reflected strong mix and operational performance as we continue to execute on our portfolio-shaping activities, including our Cisco transition. We are pleased to have improved operating margin on a year-over-year basis for the third consecutive quarter despite COVID-19 headwinds. Now turning to ATS. Our capital equipment business posted another profitable quarter, with strong volume driven by increased demand in our base semi business and new wins in a number of adjacent equipment end markets. While demand is up materially from a year ago, we are seeing the overall demand environment leveling off as we end 2020 and enter 2021. In A&D, while demand in our defense business remain stable, we continue to experience demand softness in our commercial aerospace business. Demand in 2020 is materially down from a year ago, and we expect these depress market conditions to persist throughout 2021. We will continue to drive the appropriate cost productivity actions to improve the overall profitability of this business at lower levels of revenue. In industrial, the impacts of COVID-19 moderated in the third quarter, and we experienced a gradual recovery of demand across our customer base. We also saw an improvement in profitability on a year-over-year basis as new programs ramp and we executed on our cost productivity roadmap. Within health tech, our team is executing very well on projects supporting the fight against COVID-19. We continue to see strong demand for diagnostic equipment and anticipate improvements…

[Operator Instructions]. Your first question comes from the line of Todd Coupland with CIBC.

I wanted to have you talk about what you think the business looks like once we get past COVID-19. So, if we think about growth drivers like JDM and semi, what is a normalized growth rate for the current portfolio, or at least the portfolio excluding Cisco once that disengagement is complete? Any color on that would be super helpful to think about the business once we get through the pandemic. Thank you.

Mandy here. There's been a tremendous amount of volatility, I would say, going through 2020. Some markets are up significantly, other markets are down significantly. What we are seeing as we're entering into the fourth quarter is that there is some level of stability starting to appear. The softness that we've seen in the commercial aerospace side is starting to level off, the significant demand increases in the service provider business are starting to level off. And so, if you look over into 2021, our view at this point is that ATS should continue to target the 10% growth rate that we have always put out there and we think that we have roadmaps that give us confidence that that is a possibility for 2021. On the CCS side, there's going to be a big revenue overhang from Cisco, but we all knew that was coming. And then, when you look at the CCS business ex-Cisco, we're looking to maintain our performance going into 2021. But we continue to target a series of bookings to also drive a little bit of incremental growth. But as we exit 2020, we do see some of the markets stabilizing at the levels that they're at. And then there's opportunities when some of those depressed markets come back.

I would add some color. Within ATS, I think the growth drivers for us would be our capital equipment business. That's really being fueled by program wins and share gains over the last couple of years. Industrial, we think, is going to return to growth. And of course, our health tech business is doing quite well. And within CCS, we do – even though – I expect incremental JDM growth on a year-over-year basis, even though, as Mandy mentioned, the demand is moderating a little bit from the very strong growth we had this year.

Your next question comes from the line of Robert Young with Canaccord Genuity.

I'm not sure that I understand the drivers behind the moderation in CCS margins in Q4. I think you said mix normalization investments in JDM. Is that all enterprise impact? Or maybe if you can break that, is that lumpiness in hyperscalers? Maybe could you talk about what's the driver there?

It's Mandy here. So, CCS had, frankly, just outstanding performance in the third quarter, generating 4.0% EBIT. As you know, the target margin range for that business is 2% to 3%. And so, while we continue to expect strong performance going into the fourth quarter from CCS, will it repeat 4%, we don't expect it to at this point. And so, when we say moderation, it means get back to a little bit more of a normal level. And the reason for that is because a lot of things went right in the third quarter. We had strong mix with higher levels of JDM. Within JDM, we had some positive mix as well. So, the margin profile of the JDM business was stronger than it normally is. And then, we were also successful in generating a lot of service billings with our customers. When you start to normalize for those things, the margin profile should start leveling off a little bit.

And then, my second question would be around – I was surprised to see that restructuring a little lower than your target, given aerospace. Does that suggest that you're not restructuring the aerospace business in the near term to meet demand? Or is that more related to the expectation that Cisco disengagement is lower? Why is the restructuring more [indiscernible] I guess?

The restructuring dollars were not as high as the first two quarters of this year, but we still anticipate spending $30 million for the full year. So, there's some additional costs that will be incurred in the fourth quarter. When you look at where our restructuring is being targeted towards, most of the activity that we need to do in Cisco has been completed, but we still have some cost actions to take as we ship that final product in the fourth quarter. And then, to your point, on the ATS side, where we continue to target the restructuring activities are in the businesses that have the most significant demand downturn. And those are in the aerospace and defense and industrial segments. So, we do expect that we'll continue to take actions in the fourth quarter and stay within that $30 million envelope.

I'll add, Rob that, within Cisco, the restructuring was a lot less than originally anticipated due to the strength in the base business and some new wins that we're able to direct to Thailand. So, it was a lot lower than anticipate.

Your next question comes from the line of Ruplu Bhattacharya with Bank of America.

For the first one, can you drill down a little bit into the communication segment? Looks like it was up strong 9% year-on-year. What did you see an optical networking and wireless? Did the revenue from Cisco meet your expectations? And then, just one that, looks like the guide, you're saying up single digits or low single digit. So, is there some incremental weakness you're seeing in that segment in 4Q?

With 3Q, broadly speaking, we saw strength in service provider ramps, and that was somewhat offset with program exits and demand dynamics. The strength really came from our networking business. And again, it was partially offset with the Cisco transition, which is part of that communication segment. As we move into Q4, the dynamic really in terms of offsetting the growth is really the program transitions, i.e., Cisco exit. But we still see very strong growth in networking, some very strong growth in existing programs, both in networking and also optical.

I just wanted to ask, maybe for Mandeep, can you remind us on your capital allocation priorities now? You've reduced debt quite a bit. So, should we think that you'll focus more on M&A? Or how should we think about share buybacks going forward? So, any thoughts just on your capital allocation priorities for the next year?

Our long-term priorities remain unchanged. We will continue to focus on generating strong cash flow, returning 50% to our shareholders and investing 50% into the business. And I know, as you know, over the last eight or nine years, we have been very aggressive on the share buybacks, frankly more so than any of our peers in the space. So, we are pleased with the cash flow performance that we've been seeing so far this year, and we have been able to get almost to a neutral net debt position, which is wonderful. Our focus at this time continues to be on generating additional dry powder, whether we apply that to paying down more debt or we will continue to just build up dry powder in terms of cash on our balance sheet because we continue to be focused on looking at M&A targets. That being said, whenever we make an investment decision, we're looking at it compared to alternatives as well. So, we'll continue to monitor when the right time is to open up a share buyback program. We'll ensure that we are looking at M&A targets from an ROI and EPS accretion perspective relative to things such as share buybacks. And as we do that analysis based on the moment that we're in, we will have flexibility to go one way or the other. Right now, we are in a position where we can now reopen a share buyback program. But again, as we take an opportunistic view towards it, we'll open it up at that time. So, whether it's going to be sometime in the fourth quarter or sometime in 2021, we'll just continue to monitor how the market trades us and then also look at the alternatives in terms of M&A.

Congrats on the quarter and on the strong margin improvement.

Your next question comes from line of Thanos Moschopoulos with BMO Capital Markets.

Rob, can you expand on the semi business. You talked about seeing demand leveling off as you enter into next year. Maybe a bit more color in terms of what you hear from your customers in that front?

Semi cap has been – all capital equipment has been very strong. Semicap has been particularly strong. In the first half of this year, we saw strong foundry spending and logic spending. As we get into the back half of this year, the foundry and logic spending is continuing and we're seeing some increase in memory spending as well. As we look forward to next year, we see the memory spending continuing, even going from NAND to DRAM. A large portion of our growth is not just rising with the sea level. It's actually new share gains, approximately 30% to 40% of our growth is really being driven by new wins and new share gains across all of capital equipment. We've been doing a very nice job of not just growing our semicap business, but we also have other capital equipment business that we're expanding within. And, in fact, 20 new program ramps that we're commencing right now. So, a lot going on in capital equipment.

Maybe in a related note, what's happening in flat panel? Is that subdued? And do we need to see some of the new fabs being built for that to pick up or what are you seeing there?

Correct. The overall display market is still generally depressed. A lot of the projects that we thought would start ramping this year into the first half of next year are being pushed into the right. That being said, we did take a lot of actions last year to make the business more efficient at lower volume. Those actions are complete. And we have a long view of the industry and we think it's well placed with the recovery. The drivers, obviously, would be smartphones as 5G gets – that uptake happens. And that'll probably be the latter part of 2021 into 2022. And the new large form factor TVs should also help uplift the market when this COVID cloud hopefully gets past.

Your next question comes from the line of Paul Steep with Scotiabank.

I guess, Rob or Mandeep, can you maybe talk a little bit about what you're thinking in terms of the M&A environment out there. Obviously, it's a challenged period and you've spent it wisely working on the business. But as cash and capital builds, it sounds like priority is to try to grow the business. How is that environment even looking? Or is it still sort of pause and just heads down on working your way through the current environment?

I'll start off and Rob can add on if he'd like to. So, at the beginning of the year, when COVID was starting to just hit everyone, we saw a dramatic drop off in M&A activity. That being said, we are seeing a lot more targets that are coming online which is nice to see. We're evaluating a number of M&A transactions every week, frankly. It's very well understood that we're looking for certain types of targets to accelerate our strategies. We have not pulled the trigger on any of them, largely because we want to make sure that it's the right fit. When we look at an M&A target, price, of course, is important. We want to make sure that we're paying the right price for it. But we're also looking for capabilities that the business will bring to us, so that it can accelerate our strategies. We also want to ensure that it is able to be integrated relatively lightly. We don't want to go through a massive integration when looking at targets. And then, again, we're just making sure that the business can provide us the right level of scale when needed. And so, we continue to apply the same filter. There are some good targets out there, but nothing that is imminent at this point.

And then, just one quick follow-up. Can you give us a sense for CCS? It's hard for all of us from the outside – obviously, Cisco disengagements work to sort of plan and you've been replacing and sort of shifting some of that capacity back. How far through that project would you say we are, not in terms of Cisco disengaging, but in terms of sort of reorienting that capacity in the business to new business? Thank you.

This is Rob. We're pretty far along on that process for a couple of different aspects. First of all, our base business is up. That's really driven by our service provider portfolio, fueled by our JDM offering. We've had significant new wins at Thailand, driven by both high value EMS players and also those JDM programs. And when we started the Cisco transition, we put in place a bookings goal. Again, we weren't intending to replace Cisco dollar for dollar. We wanted a higher, rich – programs that played to our portfolio. We put together a bookings plan and we're very close to closing that plan by the end of this year. Now, it takes time for those bookings to actually turn to revenue, which we think will be latter part of 2021 into 2022, depending on market uptake. But overall, I think we're through the knothole, if you will, on the Cisco transformation and the portfolio renewal within CCS. We're very pleased with how CCS has been operating. And the mix is very strong and the offering is very strong, and we're continuing to invest in our JDM portfolio and taking it to the next level.

Only thing I'd maybe add to that as well, Paul, is – you're right – there's a lot of moving pieces. We've done disengagements and programs in CCS going back now a year-and-a-half. The final revenue impact is still in 2020's numbers. And then we have Cisco as well. If you look at overall CCS for 2020, based on the guide that we just provided, it is implying relatively flat revenue on a year-over-year basis, despite the disengagements that have been happening. When you look at how CCS has been growing outside of the disengagements, the business is actually up in the double-digit percentage range. So, it talks to a lot of the bookings that we've been generating to drive growth in other areas to offset the disengagements that are coming. So, some pretty good underlying growth beyond the programs we're disengaging from.

Your next question comes from the line Paul Treiber with RBC Capital Markets.

I was hoping that you could speak to the long-term visibility or maybe sales pipeline that you have with hyperscalers, particularly on the JDM side of the business. Typically, how involved or integrated are you with the hyperscalers in terms of product roadmap and planning programs out into the future?

We have good visibility. Most of our CCS business and JDM business, we could have good visibility a quarter out when it comes to specific numbers. But broadly speaking, with all our hyperscalers, we have technology roadmap meetings with them. So, we share our roadmap for technology. They share their requirements. And we align closely such that we're ready when they need us to be ready. Within JDM, we've worked really closely with our customers to customize the solutions for their specific application. So, in many respects, we're very tightly interlinked with them when it comes to their requirements.

Paul, I know you know this. One of the benefits that we have in our JDM business is that we are across a number of different sets of solutions. We provide solutions in networking and storage, even into compute as well. And as Rob mentioned, we work very closely with our customers to customize product, but we also have products that customers are buying off the shelf as well where the brand is not necessary. They're not necessarily turning around selling it, they're using it for their own consumption. And so, because we have off-the-shelf products that they can take or products that they can customize with us, it gives us some more diversity in terms of the sales channel.

And then, when we look out – so, year-to-date JDM is up 90% and it's 15% of total revenue. Do you have aspirations or any long-term targets you could share in terms of how you see that growth progressing over the next couple of years or maybe how large of a percent of total revenue that business could get to?

I'll start off. As you know, we're not providing 2021 guidance. But what we can tell you is that, as you mentioned, the business is up materially on a year-to-date basis and we continue to see a similar level of growth in JDM going into the fourth quarter. From a margin profile perspective, JDM has been performing accretive to overall CCS results, and that has helped bring up the rest of the CCS business as well as the company's margins as well. As we look into 2021, we are still targeting some level of growth, and Rob briefly mentioned that earlier. However, it's not going to be at the 90% levels again. What we're seeing this year is a combination of wins that we've had in place since 2018 and 2019 ramping, and then some accelerated demand because of COVID. As that acceleration starts to moderate and as we start reaching steady state in our JDM ramps, we'll expect regular growth going into 2021. But we are still expecting a strong 2021 in JDM.

And I would also add, when you look at our JDM business and you look at our ATS business, they're very similar in nature in terms of – it's an engineering led engagement, it's high value revenue. And when you look at our diversification efforts, part of our strategy is, when you take our JDM business and you take our ATS business and you add them together, we kind of consider that our product life cycle is revenue or high value revenue. And the broad goal of that is to have that be well north of 50% of the company's revenue moving forward. And to some extent, we're already there and we're looking to kind of grow that diversification and continue to invest in those businesses.

Your next question comes from the line of Kurt Swartz with Stifel.

I'm hoping to follow-up on Cisco and CCS and see if you can maybe just drill down a bit on the cadence and the magnitude of the Cisco wind down. Should we be expecting the full roughly 10% of Cisco related sales to come off right at the turn of the new year? Or can we see some lingering contribution into 2021? And then, I guess, if you're able to maybe quantify how much of this wind down you're expecting to offset with new communication program ramps at this point, that would also be helpful. Thank you.

I'll start off with that. In terms of Cisco, the wind down should be – the manufacturing activities were largely complete in the third quarter. When it comes to the fourth quarter, very little revenue contribution in terms of our business. So, I would say the majority of the revenue is completed or recognized at this stage of the game. The last remaining thing that we have in 2021 would be very insignificant in terms of very, very low volume production or end-of-life programs or things like that, but not material in any nature. As we move into next year, the bookings that I mentioned earlier, it's going to take some time for those bookings to convert into revenue. So, perhaps the latter half of 2021 as we renew our portfolio on the CCS side.

I guess maybe just looking back at the recently completed quarter, can you give any sense of sort of linearity of demand throughout the quarter and maybe any notable volatility by segment or end market?

In terms of linearity, most of our revenue is shipped out in the third month of the quarter. I believe, generally speaking, inside a quarter, about 25% of the revenue will go in month one, 30% of the revenue will go in month two and the balance will go in month three of the quarter. Pre COVID, post COVID, we've seen some modest changes in that, but it's hard to figure out whether that's just due to demand dynamics or COVID dynamics. But that's a general linearity inside a quarter.

So, no, I guess, material or notable swings within the end markets to really call out?

Nothing notable.

[Operator Instructions]. Your next question comes from line of Jim Suva with Citigroup.

I am very impressed with the JDM traction you've been getting. So, if you could give us a little bit more context or color around it. It sounds like it's very tied into the hyperscalers or the cloud companies. I don't know if that's an accurate statement or not. And is it a lot of servers or a lot of storage or a lot of switches? And I guess importantly, how do you ensure that your protective moat is – so that other suppliers, especially maybe those out of Asia who may be a little more price conscious don't do similar JDM efforts as we do here if they're doing it, but yet your numbers speak for themselves about the impressive growth that you're seeing, as well as the profitability. Thank you.

In terms of JDM, the majority of the revenue is going to the hyperscalers, but they're also going to some of our enterprise customers as well. And the products that we're making is actually on all technologies across the data center. So, we're working on storage solutions, compute solutions, networking solutions, which is probably the biggest portion of them. The difference, I think, between our offering and some of our competitors' offering is that it's truly customized to our customers' specifications. And as I mentioned earlier, we're very excited to have the product roadmaps and we're also working with silicon providers to make sure that we have access to early silicone and developing leading-edge capabilities to support our customers moving forward. And we're also continuing to invest in a fair amount of R&D. We've been doing that now for seven plus years and we're continuing to speed up product roadmaps and have a very strong engineering-centric, engineering capable organization. That recipe has been working for us. And lastly, I would say is, because of our heritage, I think we're offering our customers enterprise level quality at ODM level pricing.

Jim, maybe just to add on to some of the remarks that Rob made. We do believe that there are high barriers to entry into this business. As Rob has mentioned, we've been investing in this business for the better part of a decade, $25 million to $30 million every year. You see that on our R&D line. One of the reasons that the business has been doing well is we have very sticky relationships that go back a number of years. We don't compete with our customers, we don't have a brand, we don't have a direct sales channel. And so, that allows for a very high trust relationship. The other thing I would say that's been benefiting us is the footprint that we have. We started off a number of years ago doing a lot of JDM production in China. And while we continue to do that, with some of our customers, they've been looking for a Southeast Asia solution. And so, we do a lot of our JDM manufacturing in Thailand, which is one of our strongest sites in the network. And so, because of the footprint that we're able to use, as well as the types of products that we are producing, which is across a broad set, we believe that the barriers to entry are relatively high.

That was a great description and very much appreciated.

This concludes our question-and-answer session. I will now turn the call back over to Rob Mionis for closing remarks.

Thank you, Amy. I'm pleased we're able to deliver another solid quarter marked by sequential operating margin improvement and strong free cash flow. Our CCS portfolio continues to perform well and delivered a sixth consecutive quarter of margin expansion as we execute our portfolio shaping actions. And in ATS, I'm pleased with the improved sequential profitability improvement of our businesses, given the continued headwinds that we're seeing in commercial aerospace and industrial. And while we continue to face business uncertainty amidst this pandemic, I believe we have proven that the Celestica team has the ability to successfully navigate the challenges that might lie ahead. I'd like to thank our global team for remaining vigilant and keeping themselves and each other safe. Thank you all for joining today's call. And we look forward to updating you as we progress throughout the year.

Ladies and gentlemen, this concludes today's conference call. On behalf of Celestica, thank you for participating. You may now disconnect.