Good day. Thank you for standing by and welcome to the Cerence Q3 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instruction] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the call over to your host, Rich Yerganian. Please go ahead

Thank you. Welcome to Cerence's third quarter fiscal 2021 conference call. Before we begin, I would like to remind you that this call may involve certain forward-looking statements. These statements are subject to risks and uncertainties, as described in the press release preceding today's call. Cerence makes no representations to update those statements after the date hereof. In addition, the company may refer to certain non-GAAP measures, key performance indicators and pro forma financial information during this call. Please refer to today's press release for further details of the definitions, limitations and uses of those measures and reconciliations of non-GAAP measures to the closest GAAP equivalent. Joining me on today's call are Sanjay Dhawan, President and CEO of Cerence; and Mark Gallenberger CFO of Cerence. As a reminder the only authorized spokespeople for the company are Sanjay, Mark and me. Before handing the call over to Sanjay, I would like to announce several upcoming investor events. They are all virtual events, so the exact timing of our participation is subject to change. The conferences include the Raymond James 2021 Diversified Industrial Conference on August 24, Cowen's Transportation & Mobility Conference on September 9, the RBC Global Industrials Conference on September 10 and the Jefferies Software Conference on September 14, and the Evercore Autotech Forum on September 21. Please visit the Events page in the Investors section of the Cerence website for most up-to-date information on our participation. Now on to the call. Sanjay?

Thank you, Rich. Welcome to everyone on the call and thank you for joining us to discuss our third quarter fiscal 2021 financial results. For our call, I'll first review our strong financial performance in Q3, followed by a review of some notable events that took place during the quarter. Next, I'll update our key performance indicators and then hand the call over to Mark to review the detailed financial results. Once again, we delivered a strong financial performance. This is especially the case when considering the headwinds to our license business due to semiconductor shortage. Our revenue came in at the high end of the range, was aided by strong year-over-year growth in our variable license product line being up 74% year-over-year. The business model continued to deliver better-than-expected performance with non-GAAP gross margin at 79.1% and adjusted EBITDA at $38.7 million or 40%. The result was non-GAAP EPS of $0.62 and cash flow from operations of $24.1 million. When combining our year-to-date results with our guidance for Q4, our full year forecast is expected to come in at the high end of the range. Mark will provide details in a few minutes. During Mark's comments, he will also be updating all of you on our midterm 2024 model. The model was first published in February of 2020 at our first Analyst Day. We had hoped to hold our second Analyst Day in early September as a live event in New York City, but unfortunately the rise in Delta variant of COVID-19 has led us to delay that event until later in the calendar year. We did feel, however, it was important to update you on the 2024 model given the positive updates to the original model. Much has happened since we first introduced our midterm model, especially in…

Thank you, Sanjay. I'll first review another strong performance for our fiscal Q3 and then I'll provide guidance for our fourth quarter. I'll follow those comments with an update to our 2024 midterm target model. We delivered another strong quarter on both the top and bottom lines. Revenue came in at $96.8 million, which is at the higher end of our guidance of $94 million to $97 million and is a 29% increase from the same period last year. Our key profitability metrics were also very strong and exceeded the high-end of our guidance range. The non-GAAP gross margin was 79.1%, mainly driven by favorable product mix. Our non-GAAP operating margin was 37.7%, adjusted EBITDA was $38.7 million or 40% margin and our non-GAAP earnings per share of $0.62 exceeded the high-end of our guidance by $0.05. During the quarter, we generated more than $24 million of CFFO and our balance sheet remains strong with total cash and marketable securities of approximately $157 million. Now let's review a detailed breakdown of our revenue. Our strong revenue growth compared to last year was driven by two factors: first, our total license revenue was up 54% year-over-year. Our variable license revenue was up 74% from the same quarter last year driven by continued recovery in auto production. You may recall that our Q3 from last year represented the trough revenue quarter due to the impact of COVID-19 on auto production shutdowns. We believe our variable license revenue during the quarter was impacted by the semiconductor shortage slowing down auto production. Although we cannot exactly quantify, how much the semi shortage impacted our business, our variable license revenue is where you would see the most direct impact from lower auto production. Second, our connected services revenue grew 19% from last year. But more…

[Operator Instructions] And your first question comes from the line of Joseph Spak with RBC Capital Markets.

Thanks so much everyone. I wanted to dive in first a little bit to the updated 2024 forecast. So if I look at the segment that is behold and I guess to volumes in the license segment and I look at what IHS was looking for in early 2020 when you first sort of put that it looks like it's maybe 4% lower global production volumes. So just order of magnitude since you're keeping that flat are you saying the take rates is sort of making up that call it $10 million to $15 million. Is that the right interpretation?

Yes, that is correct. We are seeing the lower IHS production forecast like you're seeing. But we are seeing updates from HIS, which is showing some increase in penetration rates or what you're calling the take rates. And so I think generally speaking we're comfortable with those two offsetting and keeping the numbers where they are.

Okay. And then just on the margin component of this. So Connected Services, I know you raised that from 65%. I think you've even hinted before that that could settle in around that mid-70s level. But you're kind of already there. So, I guess I'm curious as to sort of why there is a sort of further upside there? And then the new mobility markets I was just a little bit surprised that that was, I know it's a smaller dollar amount, but I'm surprised it's lower margin because I thought you were just sort of leveraging the tech you're using the other markets. So maybe you could just explain that a little bit?

Yes. So, I think in terms of the new mobility markets I'll cover that first. There is an element of hardware which generally is going to be a lower margin component. There will be obviously leveraging of existing technologies. But when you combine it with a hardware component for a total solution, we are factoring in that blended component. And so that's why we think coming out of the gate where we want to model 45% for those margins. And similar to what we did when we first launched our analyst model, 18 months ago we try to be somewhat conservative just because we are entering new areas and we don't want to put ourselves out there too aggressively. But if things change over time as this market starts to develop further then we can certainly have some room to potentially increase those margin assumptions. Relative to...

Sorry if I could just quickly follow up on that maybe I didn't properly understand on the new mobility markets. What hardware like is that -- I thought that's like the motorcycle segment. So you're providing the whole box with the voice, or I think the thing with Visteon? But I thought you were just providing the voice component?

Sure. Sure. Yes. I think what we -- and Sanjay can cover a little bit too, but I think more of it's on the elevator side where there would be a hardware on the elevators.

Yes. So Joe the -- in the 2-wheeler space there is really no hardware. We're working with the Tier 1s like Visteon Bosch others who provide hardware the so-called head units, right? And a lot of our software also runs on the phone of the rider. So there is really no hardware component there. The hardware component that Mark is mentioning is on the elevator side. Because elevators have a long life and a large installed base of elevators were shipped with no kind of capability of running Edge AI. There is a piece of hardware there we have built their retrofits in existing elevator with Edge AI capabilities. And that is what Mark is referring to. Our core business model though just to be very, very clear is software SaaS in the elevator business as well. Although, we were sort of forced to kind of put this piece of hardware out, at a slightly lower margin. But really the product that we are leveraging and shipping is the core, AI product that you referenced to which is common across auto and so on.

And sorry Mark, I cut you off on the connected margin.

Yes -- the connected margins. When we first introduced the Analyst Day model 18 months ago, we had 65% margin assumption. We kind of blew through that and we're running now low 70s to high 70s. So we're there. We feel like we can sustain that even into the future. We will have some – a little bit of pressure as the legacy connected revenue declines over time. So that puts a little bit of pressure on the blended margins. But like we've done in the past, we tend to be a little bit conservative with these assumptions. And it's always better to be able to improve them over time. But right now we're comfortable with 77%.

Thanks very much, guys.

Your next question comes from the line of Luke Junk with Beard.

Good morning. Thanks for taking my questions. First I wanted to ask on the two-wheeler markets. Obviously, you highlighted the relationship with Visteon in that market? And had couple of questions related to that. One if you could, speak to the nature of that relationship a little bit more effectively, does this give you a couple of bites in the Apple, in the market? And then overall do you feel like overall commercial momentum, the two-wheeler market is getting closer to a tipping point here? Obviously, you're now including in your 2024 mile which is encouraging.

Yes. So we're – look, very delighted to have this relationship with Visteon, who's definitely in the have a great penetration into the two-wheeler market as well besides auto. We're – our model is to be the AI platform of choice, not just for cars but also for two-wheelers and other modes of transportation. And what we are trying to do very systematically is to basically kind of reach out to those other adjacencies as well. And two-wheeler is a very important one because the safety. I'm a rider, I'm a two-wheeler rider and the safety is so important and you can't touch the phone and there are times when you want to kind of communicate with other riders and so on and so forth. So bringing these features out is extremely important and conversational AI plays a very important role. And so we're working both either directly with the OEMs or also indirectly through the Tier 1 channels across different markets. We're right now engaged in China, India. We are heavily engaged in Japan, who controls about 50% of the two-wheeler market. We are engaged with Tier 1s and OEMs in Europe and also in the United States. But we're definitely very happy to announce this relationship that we put a joint press release out earlier in the – a few weeks back and we're certainly looking forward to further traction.

That's great color. Thank you for that. Second question I wanted to ask about the 2024 revenue model specifically, the fact that you're now adding connected renewals to the model. And I know you're waiting on that and it was thought that this would be a possibility down the road. But I'm wondering is there any data that you can share behind that decision? And just in general what's informing your view there specifically, on the connected renewals?

Yes. So I think we have one or two data points since our last Analyst Day, where we've had renewals. So that's encouraging to see that our customers are looking to extend those cars beyond their original multiple year subscription period. I think also, what we're seeing is even with some of our new connected subscriptions those are trending to be longer in period. So, that gives us the indication that customers know that there's value in that, and that they're willing to commit for longer upfront periods of time. And so – and then also looking at some of our internal scheduled as to when some of the original contract periods are ending, we felt like there should be some upside. We haven't disclosed exactly what that upside is built into the model, but we are now factoring some of that into fiscal year 2024 based upon a couple of data points that we've already seen and the fact that some of our newer contracts are actually extending beyond what some of the previous contracts were.

Great. Thank you both for that color. I'll go ahead and leave it there.

Your next question comes from the line of Mark Delaney with Goldman Sachs.

Yes. Good morning, and thanks very much for taking the questions. I was hoping to start with a question about your expectations for the percentage of vehicles that has Cerence technology and how you expect that to evolve? The number of start of production vehicles that you talked about for this most recent quarter, I would think is a good positive indicator as those new programs ramp up in volume. And give you guys some good visibility into, how many vehicles may have Cerence technology on them going forward? I think, it's probably a pretty important input as well into the 2024 model. So maybe talk about, how you see that evolving? And if you could also touch on your expectations to the 2024 model about what that penetration rate may look like?

Yeah. So – yeah, penetration rates, I think they're going to continue to grow over time. We looked at some of the IHS data for penetration rates in particular that on the connected side those have grown from 18 months ago. I believe it was around 60% penetration rate for connected cars 18 months ago. Now, it's in the high 60% range. And so we've tried to factor that into our analysis. However, offsetting some of that is the fact that IHS is lowering the total volume forecast for 2024 post-COVID. So when we see the puts and the takes between those two, we've decided to hold that revenue stream flat for the core portion of the business. So that's kind of how we've sort of articulated and built out the model.

Okay. That's helpful. And maybe you could also talk a little bit more on your degree of visibility into the 2024 model. I mean, you've given some helpful commentary already on the margin side, but maybe on the $700 million of revenue on the one hand, right, you're signing contracts that are multiple years in length. And even for cars not in production, yet you're probably getting to the point where you're already having one or in pretty advanced discussions for 2024 in terms of launches three years out. So I can see some potential good visibility, but you've also – you have a content per vehicle consideration that's feeding into it, in some of these newer markets. So you talked about having some, maybe, conservatism on margins. Is that sort of logic holding as well for the revenue side of the equation, or is there more uncertainty on that piece of it? Thanks.

Yes. I mean, I think, you know how the -- it's a long sales cycle in auto, right? So we've got a cycle of two to three years. So it gives us pretty good outlook. And I think, for fiscal year 2020, we had a substantially strong bookings year. If you recall, it was over $800 million. I believe it was $835 million, to be exact, which was significantly higher than the prior fiscal year. We've given you an update already for the six months ending March for this year, which is also shaping up to be another very good year for us. So that, I think, all those bookings, which is the leading indicator, gives us more confidence and more visibility into 2024 and beyond. And so, it really comes down to a lot of that bookings momentum. I think the SOPs that we just had a record for this past quarter, is also an indication of those bookings over time translating into real revenue and getting ramped into production. So that -- those SOPs is I think more evidence that, it's bookings first and then ultimately, as you execute well, you get ramped into volume production. I think the SOPs, even though we had a record quarter, those will just -- those are just starting to ramp. So you'll start to see those benefits in out years, right, once those new products and those new cars hit their stride, if you will. So it's not like a step function change where SOP in one quarter and then you flip the lights, which it does take time for those to ramp into volume production. And by 2024, a lot of those will probably be right in the middle of their prime for production.

Thank you.

Your next question is from the line of Colin Langan with Wells Fargo.

Hello. Thanks for taking my question. Just following up on that, I mean, how should we think about how these sort of new markets are going to ramp? I mean, in terms of new mobility, is that going to -- is that -- has anything hit yet? And -- or is that we're going to start seeing something actually start to contribute next year? Same thing with -- I assume there's some SaaS already out there within Connected Services. How quickly is that ramping? And how much of your targets is already kind of in the backlog that you've won? And how much has to be won? And I guess make my question long, sorry. And any color on the two-wheeler market in terms of how large it could be and how many vehicles might actually need your services?

Yes. So, Sanjay, you want to start that one or you want me to?

No, I can certainly start that. So both for the two-wheeler market and also for Connected Services and apps, we will have revenue in the current fiscal year. We were initially saying that, we will have revenue by the current calendar year, which is Q1 of next fiscal year, but I'm confident to say now that we will have revenue in both new mobility markets and also in new connected apps and services in the current fiscal year. So that's good. Secondly, in terms of the -- how much of the back -- how much of the revenue is already in the backlog, I don't have that breakdown for -- your question was from a 2024 model. But when we come back in -- we refresh our backlog at the end of the year start of the next fiscal year. So in November – October/November when we come back in our next conference call we will obviously refresh our backlog to the street. And at that point, we'll try to give some more color about that during that. But needless to say, we're feeling confident about it. That's the reason we put these numbers in the current model update basically. Was there anything else that I missed Colin?

I think yes in terms of the ramp for some of these new products some of these will be on the same sort of design cycle as some of our core products. And so that's why I think as I mentioned in my prepared remarks, it's going to be nonlinear in terms of how we think the revenue will be ramping up into those fiscal 2024 target revenue assumptions. So that -- I think that was the other question that you had was -- how back-end loaded is it. And I think it tends to be a little bit more back-end loaded for some of these newer products because some of these products will be following a similar design cycle and ramp up with our core business.

Right Mark. And I think just one more thing to add that I missed was I think Colin you were asking about the TAM. What's the available market for these products right? And so we struggled a little bit -- we were thinking of including a TAM analysis in this deck for all of your reference. But the TAM numbers that we have are management TAM numbers. And what we are doing right now is, getting a third party to independently do the TAM analysis not -- who doesn't have the management information just to kind of validate and give you a more independent view of the TAM rather than a management-only view of TAM. So we decided Mark and I decided not to include that in this release of the target model, but certainly in the future we hope to kind of share with you the TAM analysis as well.

Got it. And just I guess one quick follow-up. I mean on your 2024 pretty big jump in professional services margins. What is the key drivers of that?

Yes. So it's really twofold: One we're focused on improving the utilization rates of those resources. It is people-driven. And -- so that's one component. The other component is to shift the mix of onshore and offshore resources. And so, as we change that mix that's improving some of our overall labor costs.

Okay. Thank you very much for taking my question.

Your next question comes from the line of Raji Gill with Needham & Company.

Yes, thank you for taking my questions and I appreciate the updated fiscal year 2024 target. A couple of questions on that target. So, I'm wondering how you plan to recognize revenue for the new applications and services as well as the new mobility markets? Any clarity there in terms of the revenue recognition?

Yes. A lot of those are going to be transaction based. So, clearly, we'll be recognizing revenue as we see those transactions occurring. And so it's going to follow that type of revenue model. Some may be subscription based. There are some that are going to have that subscription element. And those will -- those were more or less I guess track similar to what we do with our connected subscriptions which would be an amortization schedule based over the life of that period -- the subscription period.

Got it. And on the fiscal year 2024 target, so with the new connected number staying basically flat from the original guidance, and likewise, with the Edge business I get it in terms of overall units might be coming down 3%, 4%, 5% based on IHS. But I would think though that the ASPs would be increasing over the course of those years that would offset any kind of unit degradation as well as the attach rates for Cloud Connected increasing. So, I'm just a bit surprised that that number would be flat even if there's kind of a small unit correction. So, maybe if you could just kind of clarify that in terms of your thought process of keeping those numbers the same.

Yes. So, I think on the connected piece, we had ASP expansion already factored into the original 2024 target model that we originally put out 18 months ago. And so we're still factoring in those ASP expansion in this model. The other thing to keep in mind is unlike the variable licenses which are recognized in the quarter, there is an amortization schedule. And so because of COVID, there were fewer cars shipped right over the past year and so that's going to have a lingering effect on those amortization schedules. And so you got to keep that in mind as well. However, a lot of that's offset by the fact that the penetration rates or the take rates for connected cars is increasing. And so we kind of looked at all of those factors and took some judgment and said you know what, I think all in all it's going to be about flat because of all this all the different changes that are happening.

I see. And for the cash flow from operations, you increased that by $50 million. You talked about paying off some debt. Wondering how you're thinking about the capital structure in light of this new updated target?

Yes, I think the capital structure and our high-level plans are still the same which is the first priority is to keep funding the organic investments, which we believe are fully funded. The next priority is to see if there's other external ways that we can grow accelerate our strategy and our plans through inorganic investment. If you recall earlier this year, we – an investment, a small investment, an investment in CerebrumX data analytics company and we would expect to do more of those activities as those opportunities arise. And then the last piece is to pay down the debt. I think those priorities are still the same. We haven't changed those priorities. And so first, grow the business and invest organically, second inorganic. And then if there's any excess cash, accelerate the pay down of the debt. And so whether we had – we increased the EBITDA in the [indiscernible] million but the underlying priorities are unchanged.

Appreciate it. Thank you.

Your next question comes from the line of Michael Filatov with Berenberg.

Hi, there. Thanks for taking my question. I guess just digging into the Connected Services business, the fiscal year 2024 outlook again. Again, a little surprised it's flat, but I mean maybe you could provide a little more detail as possible around maybe your renewal rate assumption, or what percentage of sort of the revenue base today you expect to be rolling off of the initial contracts by fiscal year 2024? And then maybe just any details around what your ASP assumptions would be on those renewals that would maybe help provide some context?

Yes. I think it's still a little premature to give those level of specifics because we just have very limited data points unfortunately. And I don't like to extrapolate one or two data points into how we think all these are going to unfold. Each deal is going to be somewhat different and have their own uniqueness, if you will. So I think it's a bit premature to give those types of specifics. But at a high level, you're thinking about it the right way, right? I mean I think when it comes to renewals, there's going to be a percentage of cars. It's not going to be 100%. I think in terms of renewal durations, those will probably be still multiple years but probably not as long as the original contract period because those cars are just naturally older now. And so I think those are a couple of influencing factors. And then I think what I'm seeing is good news is the fact that more and more of these cars are getting connected and more users are actually using the technology. And so I think because of that there's going to be more opportunities for us to engage in these renewals because the end consumer is ultimately, the one that's going to be driving the demand for it, right? And so I think as the technology becomes more user-friendly it's giving us – and our customer an opportunity to extend those cars beyond the original contract period.

Got it. Understood. And then just one other question sort of stepping away from the fiscal year 2024 outlook. One of the notable advantages I think that you guys have talked about before with sort of your competitor, the Google GAS system, right? Is that its ability to offer sort of this ecosystem this plug-and-play system with its own – services and whatever. So Sanjay maybe you could provide a little more detail around what your strategy is, Cerence's strategy is to build out a sort of a similar ecosystem, whether that Cerence's building it internally or working other parties to sort of help compete against that ecosystem model that Google offers?

So we're trying to be sort of neutral to various different ecosystems, because we're very focused on supporting Google or Amazon or Apple in their ecosystems, the big tech ecosystems that we know of here, or any custom ecosystems that may be coming on board with companies, for example, HARMAN Ignite Ecosystem is one such example that I referenced to in my remarks. But again we're not just stopping to that. We're also working closely with the Chinese ecosystems as well, right? So the way we're trying to approach this is -- we're not trying to build a competing big tech ecosystem. Instead we're trying to be compatible with the big tech ecosystems, which are out there and also support any custom ones that the OEMs may want to support.

Understood. Thanks a lot.

Your next question comes from the line of David Kelley with Jefferies.

Hi, good morning guys. Just a shorter term and then a longer term question. Maybe starting with the Q4 guide, specifically the sequential sales target I think being flat to modestly higher here. We're all hearing about the ongoing variability in production schedules. And understanding clearly you're less exposed to the cycle and this would primarily be a variable license discussion. But just wondering if you could talk about what you're seeing heading into the fourth quarter and visibility to the top line?

Yeah. So a lot of it really comes down to short-term, the semi shortages right? That's the influencing portion of our model. And as you rightfully said that translates into our variable license revenue line. And so I think when we first started seeing about the semi shortages six-plus months ago, I think all of us thought it was going to be a first half event for the calendar year. That's not -- that has not turned out to be the case. It's now spilling into the second half and there's talks about being a calendar 2022 event as well. So it just -- it's just been -- it's been -- it's taken longer for the auto industry to correct the semi shortage that's fairly pervasive throughout the industry. And so we try to factor that into our guidance as best as we can for Q4. I've seen reports where auto production is expected to be actually, I think down a little bit quarter-over-quarter for calendar Q3, which would be our fiscal Q4. So we try to dial that in as best as we can. We use a lot of the IHS forecast, but we also try to get a sense for what our customers are telling us short-term as well. And so that's basically what we're trying to model. The pro services I think that's been flat the last two quarters. I think based upon some of our completion dates. You probably start to see the pro services ramping up sequentially. And so that's how we built up the model for Q4.

Okay, great. That's really helpful. And maybe sticking with Pro services, the 2024 revenue target fairly meaningful raise there for that business. We tend to view it as an indicator for future business for Cerence or development relationships with OEMs. So -- we're just hoping maybe if you could give us a bit of color on what's driving that raise? And how you think about professional services opportunity?

Yes. So I can start and Sanjay may want to jump in as well. But I think what we see today is, we've had a very good growth in our Pro services, since we originally set the target. I think originally when we set the target 18 months ago, $85 million that was on the conservative side quite frankly. And based upon our performance since then it's been good revenue growth for us. And so we're being, I would say basically less conservative on that front. And then we're also looking to go beyond what we just do traditionally with our Pro services right? We want to we want to still leverage these valuable resources, but add more value to our customers in the car and do some more work in the car, but beyond what we have traditionally done too. So we think that's going to help us to grow that top line as well.

Okay. Perfect. Thanks for taking my question.

Your next question comes from the line of Jeffrey Van Rhee with Craig-Hallum.

Great. Thanks for taking question. Just a couple for me. Maybe start with the bookings. I realize you give the update midyear and in the fiscal. There had been some aspirations that it was reasonable to think you could possibly hit the target or hit the bookings you delivered in '20 even though it was a huge year. You still feel the same. You still feel like that's a reasonable aspiration. And again, while you don't quantitatively comment on it or outline it for the quarter, can you give maybe a little bit of qualitative about the value of bookings in the quarter?

Yes. That aspiration is still there and we're feeling good about it to achieving that aspiration. And we'll come back with details end of Q4.

On the bookings or sort of new business front I mean, I'd be interested if you took maybe your last major win or last couple of major wins. Anything you'd observe there around sales cycles bake-offs who are the finalists sort of deciding factors as to why you got the win? Maybe just a little real-time color about the competitive environment?

So the competitive environment is similar. The niche players like SoundHound iFlytek, Symphony and others basically show up for the bake-offs. And then in the bigger architecture discussions kind of the coexistence with big tech shows up in the architecture discussions. So that element has not changed. I think we're seeing quite positive reactions from customers about the kind of broadened portfolio especially of our cloud. We are seeing some cloud wins -- cloud-only wins against previously losses that Cerence may have lost and so that's positive as well. And overall, kind of I think good positive reaction of the portfolio and so on. I think the other positive feedback that we are getting from the customers is that delivering the SOPs and running our PS programs where there is nothing in red is something that I'm extremely proud of because of our employees and of our PS team colleagues and R&D colleagues. Because the -- that results into obviously getting the product done and shift, but also creates an amazing amount of goodwill with our customers as well. So as I reported to the Board in our Board meeting last week, we have no red programs and we're really, really working hard to make sure that we deliver to the schedule and the quality that OEMs expect us to deliver these programs.

Yeah. That's helpful. Thanks guys really impressive execution tough market, so thanks again. Appreciate it.

There are no other questions at this time.

Well, thank you all for joining us on today's call. We look forward to engaging with you at upcoming investor conferences or in any other form. And hopefully, sooner rather than later, we'll be able to meet in person again. Thank you again for joining us this morning and have a great day.

This concludes today's conference call. You may now disconnect.