Alpha and Omega Semiconductor Ltd

NASDAQ:AOSL

Earnings Call Analysis

Alpha and Omega Semiconductor Shows Steady Growth with Optimistic Outlook

Alpha and Omega Semiconductor reported a Q1 revenue of $181.9 million, slightly up year-over-year and 12.8% sequentially, with a non-GAAP EPS of $0.21. Strong demands were noted across Computing, Consumer, and Communications segments, driven by trends in AI, gaming, and smartphones. The Computing segment saw an 8.6% year-over-year increase and anticipates minor sequential growth next quarter, despite expected seasonal declines. Looking ahead, revenue guidance for the December quarter is set at approximately $170 million, with gross margins expected at 24%. The company is transitioning into a total solutions provider, increasing product differentiation and BOM content.

A Strong Start to Fiscal Q1

Alpha and Omega Semiconductor (AOS) kicked off fiscal Q1 with solid financials, reporting revenue of $181.9 million, a year-over-year increase of 0.7% and a sequential jump of 12.8%. The company's non-GAAP gross margin was reported at 25.5%, indicating a slight decline from last year, but the non-GAAP earnings per share (EPS) rose to $0.21, showing healthy operational performance compared to $0.09 in the previous quarter. These results align closely with AOS’s guidance, highlighting effective management amidst market fluctuations.

Broad-Based Demand Drives Growth

In this quarter, AOS benefitted from broader demand across its major segments. The Computing segment exhibited robust performance, comprising 42% of total revenues, growing by 8.6% year-over-year and 6.6% sequentially, bolstered by the strength in PC desktops, notebooks, and servers. Furthermore, AOS's transition from a component supplier to a total solutions provider appears fruitful, leveraging its high-performance silicon technology to tap into growth areas like advanced computing and AI data centers. This includes anticipated increases in BOM content for new graphics cards and AI solutions.

Segment Analysis and Future Guidance

AOS's segment results were mixed, reflecting varying growth trajectories. The Consumer segment grew 2% year-over-year and saw a sequential rise of 12.4%, primarily driven by gaming and wearables. However, the guidance for the December quarter indicates a forecasted decline of nearly 30% in the Consumer segment, influenced by seasonal factors and product life cycle fluctuations. In contrast, AOS anticipates low single-digit growth in the Power Supply and Industrial segment, attributing this primarily to emerging trends in e-mobility and increased demand for quick chargers.

Communications and Outlook for 2025

The Communications segment performed well, achieving a year-over-year growth of 14.2% and a sequential increase of 29.4%, largely due to significant contributions from a Tier 1 U.S. smartphone customer. However, a cautious outlook hints at a low double-digit decline in the upcoming quarter due to seasonality. Management expressed optimism towards tackling new opportunities in AI and data center solutions as part of their broader growth strategy in 2025, despite limited visibility ahead.

Financial Health and Operating Expenses

The company demonstrated healthy cash flow with operating cash flow of $11 million, up from $7.1 million in the prior quarter, bolstered by the repayment of customer deposits. AOS finished the quarter with a cash balance of $176 million. Looking ahead, AOS guides for the December quarter to achieve revenues of approximately $170 million, with a GAAP gross margin expected at 24%. Non-GAAP operating expenses are anticipated between $38.8 million to $39.8 million. This management of costs alongside revenue generation reflects proactive financial health amid expanding operations.

Navigating Competitive Pressures

The executive team acknowledged increased competitive pressures, particularly in the lower-tier markets, as firms seek to utilize their capacities in response to demand slowdowns. AOS's strategy focuses on enhancing its product differentiation to combat these pressures. The company has also noted a shift towards higher BOM content associated with the growing trend of more advanced smartphones, which may enhance competitive positioning.

Earnings Call Transcript 2025-Q1

[Operator]

Good afternoon. Thank you for attending today's Alpha and Omega Semiconductor Fiscal First Quarter 2025 Earnings Call. My name is [ Sherlyn ], and I'll be your moderator for today. [Operator Instructions].

I'd now like to turn the conference over to our host, Steven Pelayo. Steven, you may proceed.

[Steven Pelayo]

Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor's conference call to discuss fiscal 2025 first quarter financial results. I'm Steven Pelayo, Investor Relations representative for AOS. With me today are Stephen Chang, our CEO; and Yifan Liang, our CFO.

This call is being recorded and broadcast live over the web. A replay will be available for 7 days following the call via a link in the Investor Relations section of our website.

Our call will proceed as follows today. Stephen will begin business updates, including strategic highlights and a detailed segment report. After that, Yifan will review the financial results and provide guidance for the December quarter. Finally, we will have the Q&A session.

The earnings release was distributed over the wire today, November 4, 2024, after the market close. The release is also posted on the company's website. Our earnings release and this presentation include non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release.

We remind you that during this conference call we will make certain forward-looking statements, including discussions of the business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligations to update the information provided in today's call.

Now I'll turn the call over to our CEO, Stephen Chang. Stephen?

[Stephen Chang, executive]

Thank you, Steven. Welcome to Alpha and Omega's fiscal Q1 earnings call. I will begin with a high-level overview of our results and then jump into segment details.

We delivered fiscal Q1 revenue and EPS results in line with our guidance. Revenue was $181.9 million. Non-GAAP gross margin was 25.5%. Non-GAAP EPS was $0.21.

We saw broad-based demand due to seasonality in the September quarter with sequential growth in each of our major segments. Relative strength came from PC desktops, notebooks and servers in our Computing segment; gaming and wearables within Consumer; strong growth from a Tier 1 U.S. smartphone customer within Communications; and AC-DC power supplies and quick chargers in the Power Supply and Industrial segment.

We have delivered on our commitment and continue to make unwavering strides to transform from a component supplier to a total solutions provider, leveraging strengths in high-performance silicon, packaging and intelligent ICs. We aim to capture market share and increase BOM content with a broader portfolio. For example, we are leveraging our strength in graphics cards and introducing new Vcore products for opportunities in advanced computing and AI data centers.

In smartphones, trends like foldable screens, AI integration and faster charging offer growth opportunities. In addition to Computing and Communication, we see long-term potential in solar, e-mobility, gaming and home appliances, all driven by the global push for efficient, sustainable energy solutions.

With that, let me now cover our segment results and provide some guidance by segment for the next quarter.

Starting with Computing. September quarter revenue was up 8.6% year-over-year and 6.6% sequentially and represented 42% of total revenue. These results were slightly better than our original expectation for mid-single-digit growth. As mentioned before, we saw relative strength from PC desktops, notebooks and servers, which was offset by softer graphics and AI accelerator cards due to a pause before the next platform transition.

We are increasingly confident in our position in advanced computing. Our backlog for both graphics cards and AI accelerator cards is now growing due to the new platform transition. At this stage, we are working closely with add-in card makers in Asia as they bring up their boards and prepare for mass [ production ]. With the new platform, we expect BOM content to increase as more power stage ICs, paired with our controller, are being used to power the GPU.

These design wins highlight the strength of our customer relationships and our total solutions approach as we supply both the controller and power stages. Additionally, we are collaborating with customers on larger data center opportunities slated for 2025. We anticipate having more to talk about with these developments during our next earnings report.

Looking forward into the December quarter, the PC market is expected to decline with seasonality, but we expect the Computing segment to slightly grow sequentially with share gains in desktops as well as strength in graphics cards and servers, offset by notebook and tablet market seasonality.

Turning to the Consumer segment. September quarter revenue was up 2% year-over-year and 12.4% sequentially and represented 17.4% of total revenue. The results were in line with our forecast for low double-digit sequential growth and were primarily driven by gaming, wearables and TVs, offset by a decline in home appliances. This was the second quarter of sequential growth in gaming, so we are confident the inventory correction is now behind us. However, we don't expect meaningful growth until the customer transitions to the next platform.

Wearables were a notable standout in the quarter, reaching record levels on market share gains and new versions of smart watches and headphones. For the December quarter, we forecast close to a 30% sequential decline in the Consumer segment, driven by seasonal decline in gaming and TVs, post new product launch impacts in wearables and continued softness in home appliances.

Next, let's discuss the Communications segment. Revenue in the September quarter was up 14.2% year-over-year and 29.4% sequentially and represented 19.5% of total revenue. These results were above our double-digit sequential growth expectations as our Tier 1 U.S. smartphone customer prepared for its product launch. In some of their high-end models, we are seeing an increase in BOM content as they are moving toward a higher charging current. We also saw strong sequential growth from China OEMs, offset by sequential declines from Korea. As mentioned last quarter, we are benefiting from a mix shift to more premium phones.

Looking ahead, we anticipate a low double-digit sequential decline in the December quarter due to seasonality and overall limited visibility on smartphone sell through heading into next year.

Now, let's talk about our last segment, Power Supply and Industrial, which accounted for 17.5% of total revenue and was down 23.7% year-over-year, but up 15.6% sequentially. The results were at the low end of our forecast for 15% to 20% sequential growth, but were still driven by seasonal strength in AC-DC power supplies and quick chargers.

Within Industrial, solar remains soft, while the recovery in quick chargers has now started. We see additional opportunities in 2025 for quick chargers due to increased BOM content driven by higher charging currents. We are also leveraging relationships in Taiwan to partner on DC fans for server racks.

For the December quarter, we expect the Power Supply and Industrial segment to grow low single-digits sequentially, primarily driven by e-mobility and continued growth from quick chargers. This growth will be partially offset by a seasonal decline in AC-DC power supplies.

In closing, the September quarter was in line with our expectations. The broad-based growth confirms the inventory corrections we experienced over the past year are complete. Seasonality has returned and new markets like AI and advanced computing are emerging. We expect a typical seasonal decline in the December quarter primarily driven by notebooks, tablets, gaming, wearables and TV, but partially offset by desktops, graphics cards, servers, e-mobility and quick chargers.

At this point, our visibility into 2025 is limited and the calendar first quarter of 2025 is typically seasonally soft as well. However, we are optimistic and poised for growth, bolstered by advanced technology, a diversified product portfolio addressing a broadening array of end markets and a premier customer base across all business lines. We are steadfast in executing our technology road map.

We are excited about our transition from a component supplier to a total solutions provider. These strategic efforts over the past few years are starting to bear fruit as evidenced by our success in designing in both controllers as well as power stages into PCs, graphics cards and now expanding into AI applications. This transition will only accelerate going forward as we tap into new opportunities and increase our share of BOM content.

In summary, power management underpins key trends such as AI, digitalization, connectivity and electrification, especially as we move towards a sustainable low-carbon society. We see many opportunities in advanced computing and data centers, increasing integration of AI and PCs and smartphones and higher smartphone charging currents with multiple batteries and screens. Beyond Computing and Communications segments, we remain optimistic on the underlying power trends in adjacent markets such as solar, motors and e-mobility, gaming, home appliances and power tools.

With that, I will now turn the call over to Yifan for a discussion of our fiscal first quarter financial results and our outlook for the next quarter. Yifan?

[Yifan Liang, executive]

Thank you, Stephen. Good afternoon, everyone, and thank you for joining us. Revenue for the quarter was $181.9 million, up 12.8% sequentially and 0.7% year-over-year. In terms of product mix, DMOS revenue was $122.5 million, up 20% sequentially and 0.8% over last year. Power IC revenue was $52.9 million, up 0.4% from the prior quarter and from a year ago. Assembly service and other revenue was $0.9 million as compared to $1.4 million last quarter and $0.7 million for the same quarter last year. License and engineering service revenue was $5.6 million for the quarter versus $5.1 million in the prior quarter and $5.6 million for the same quarter a year ago.

Non-GAAP gross margin was 25.5% compared to 26.4% last quarter and 28.8% a year ago. The quarter-over-quarter decrease was mainly impacted by ASP erosion and mix changes.

Non-GAAP operating expenses were $38.5 million compared to $39.3 million for the prior quarter and $40.8 million last year. The slight quarter-over-quarter decrease was primarily due to lower professional fees and fluctuation of engineering expenses.

Non-GAAP quarterly EPS was $0.21 compared to $0.09 per share last quarter and $0.33 per share a year ago.

Moving on to cash flow. Operating cash flow was $11 million, including $8.4 million of repayment of customer deposits. By comparison, operating cash flow was $7.1 million in the prior quarter and $13.8 million last year. We expect to refund $5.8 million customer deposits in the December quarter. [ EBITDAS ] for the quarter was $20.6 million compared to $16 million last quarter and $23.3 million for the same quarter a year ago.

Now let me turn to our balance sheet. We completed the September quarter with a cash balance of $176 million compared to $175.1 million at the end of last quarter.

Net trade receivables increased by $12 million sequentially. Days sales outstanding were 15 days for the quarter compared to 12 days for the prior quarter.

Net inventory decreased by $10.8 million quarter-over-quarter. Average days in inventory were 125 days compared to 148 days in the last quarter.

CapEx for the quarter was $6.7 million compared to $7.2 million for the prior quarter. We expect CapEx for the December quarter to range from $6 million to $8 million.

Now, I would like to discuss December quarter guidance. We expect revenue to be approximately $170 million, plus or minus $10 million. GAAP gross margin to be 24%, plus or minus 1%. We anticipate the non-GAAP gross margin to be 25%, plus or minus 1%. GAAP operating expenses to be in the range of $45 million, plus or minus $1 million. Non-GAAP operating expenses are expected to be in the range of $38.8 million, plus or minus $1 million. Interest expense to be approximately equal to interest income and income tax expense to be in the range of $1 million to $1.2 million.

With that, we will open the call for questions. Operator, please start the Q&A session.

[Operator]

[Operator Instructions] Our first question comes from David Williams with the company Benchmark.

[David Williams, analyst]

And excuse me, I jumped on a little bit late here. So forgive me if you covered some of this in the call. But just kind of curious how you're seeing -- I guess, from the competitive standpoint, are you seeing anything that's changed there? And in particular, maybe your graphics card business, is there any new force in there that you're seeing?

[Stephen Chang, executive]

Okay. Your question got a little chopped up. Can you repeat the last part of the question? I heard the question about competition in general, but can you just phrase again?

[David Williams, analyst]

Sure. No problem. Yes, just the competitive landscape and if you've noticed or seen anything more so, I guess, in the graphics card side? You talked before about that being a competitive spot. Just curious how you're seeing that today?

[Stephen Chang, executive]

Sure. So overall competition, it is -- right now, we are still overall in a market correction period. And most of the end segments -- in our markets, we saw the correction happening earlier last year in the computing and consumer space. And from -- and then this year, we're seeing, in general in the market, more in the automotive and industrial side. So what we see is overall, every -- each one of our competitors is affected by the market cycles and where we are in the market cycle. And therefore, we are seeing more increased competition as more firms are seeking to fill their [ fabs ] and in some cases, it's been going back to some of their previous markets.

But that said, I think on the graphics side, the key thing here is about their upcoming transition, at least for our leading customer here. They’re undergoing a major -- big transformation with a big chipset that's expected to launch at the beginning of the new year. We do expect to participate as part of that, at least on the graphics and the add-in card side, where we expect to see the business come earlier. We're seeing -- we expect to see a little bit less competition there.

Actually, in the previous platform, there were more competitors in those sockets. There's less now going into this next platform on the card side. On the data center side, we do expect to see the -- a few more of the major players there. There's going to be more competition there, but there's also a big opportunity there as well.

[David Williams, analyst]

I just wanted to ask too on the seasonality. It looks like you're guiding down just a bit more than seasonality. Is it fair to assume that maybe we're back to a place that we can expect kind of seasonal trends here? Or is there still enough volatility out there that you think is too early to call?

[Stephen Chang, executive]

I think for the standard markets that we've been in, in computing and the consumer, that seasonal pattern has returned. But at the same time, the full recovery, especially for PCs, hasn't come yet. We're still waiting for PC shipments to grow -- I guess, for the [ replacement ] cycles to come back again. Therefore, at least for the last few years, after the inventory correction of the previous year, right now we're just waiting for the PC shipments to be able to grow more.

That said, we are not standing still. And even in those -- in the PC markets, we're seeking to gain more BOM content as we sell more of a total solution going into that application. We do think that seasonally, yes, it's going to go through that cycle where the September quarter is typically the peak because of back-to-school and the holiday seasons, and then going into the March quarter is probably more of a trough when it comes to the PC shipments. But that should come back up again going into the following year.

We're hoping that -- to be able to layer that in, especially with our advances in the graphics card and AI accelerator card side. That can help to fill in the gap and layer in on top of what we see as our base business.

[Operator]

Our next question comes from Craig Ellis with company B. Riley.

[Craig Ellis, analyst]

I wanted to start off with a clarification. Stephen, in your remarks, I think you noted that the expectation in the December quarter for Communications would be down around 30%, which seems well above seasonal for that quarter. I wouldn't be surprised if we saw that on a multi-quarter basis, but single quarter seems high. So is that a particular OEM program that's weak? Or is that something that's spanning different Android programs as well as other customers that you have?

[Stephen Chang, executive]

To clarify, I think we didn't say a 30% decline in December quarter. We said a low single -- low double-digit sequential decline in the December quarter. So basically, in this segment, our #1 customer in the U.S. market did launch [ that ] phone. We are -- we have a pretty good share on that phone. The launch is fairly strong. We do expect normally that -- for it to drop down some and going into the December quarter. So that simply reflects that right now.

Right now, honestly, I think it's a little bit early to say how strong that reception will be going into the December quarter. Just as a note, were you asking about Communications or were you asking about Consumer?

[Craig Ellis, analyst]

Well, I was asking about Communications because I thought that's where you referenced the 30% number. But if I [ misassociated ] [ those ], I apologize.

[Stephen Chang, executive]

Right. The 30% decline was specifically for the Consumer segment. That's where we mentioned that. And that's more a reflection of the gaming market, the product life cycle as well as the TV market has something to do with that as well. Several things that were strong in the September quarter in the Consumer segment, such as the wearables, the headsets, those naturally will tend to drop off once you go into the December quarter once you're passing the holiday season.

[Craig Ellis, analyst]

Got it. Makes sense. Okay. Moving on to the questions. First on compute and AI. So I like the tone signaling higher AI confidence than prior. Can you provide some details on the specific socket opportunities that the company has won? And it sounds like there are some things that are out there that may be in progress, that could be quite material for 2025. Any color on that would be helpful. And to the extent that you can provide color on dollar content with us, Stephen, it would be quite useful.

[Stephen Chang, executive]

Sure. So for AI, our more near-term opportunity is actually coming from the next-generation graphics cards in combination with the AI accelerator cards. And with the next platform that's being launched there, that customer is using similar solutions for both. And the BOM content indeed is growing. Over there, we're talking about our driver MOS products being sold, actually multiple driver MOS is being sold and being -- and used to power the GPU. And the new thing about us going into this new platform is that not only are we selling the driver MOS, but we're also pairing that together with the controller as a total solution.

In general, I think you've heard us talking more about selling total solutions. And this is one evidence of that happening in the market now and that we can sell both the controller as well as the power stages. And in this case, in terms of BOM content, it's going to grow from what used to be maybe around $5 to $6. It can -- And then [ going to ] the next platform, it can range anywhere from $7 to $15 to maybe even over $20 of content depending upon the power or the level of the GPU being paired with.

[Craig Ellis, analyst]

Got it. And Stephen, for the AI application, that would be instances where in a server -- there would be a control CPU in front and then anywhere from 4 to 8 GPU cards in back and you'd have content in those GPU cards. Is that where you would have content, that type of configuration?

[Stephen Chang, executive]

So for us, we're specifically addressing initially on the cards themselves, the data cards. So these are both graphics cards, the traditional ones that would go into a PC, but the same ones that can go into also a server as an AI accelerator card. So that's where the initial content and ramp will be coming from at launch with this customer. We are indeed also working on data center opportunities where we're going for onboard solutions where the content can actually be bigger. And that's something that's -- it's still earlier in development, but it's something that we'll continue to update on going forward.

[Craig Ellis, analyst]

Okay. Got it. And then moving on to a few other items. You mentioned desktop share gain. Can you quantify the degree to which that benefited the business in the back half of this year or could benefit the business in the back half of this year? And then how does that play out next year for the company?

[Stephen Chang, executive]

Sure. We -- this is -- our -- we are happy to see our share come back in the motherboard portion of the business. Desktop still are an important part of our base. And going into the December quarter, it's something that's actually helping us -- helping the Computer segment -- the Computing segment to also grow when normally the PC segment is in more of a cycling kind of down -- seasonally down. So this is something that it is helpful. And I think it's nice to be able to, I guess, go against the curve in that market.

[Craig Ellis, analyst]

Great. And then lastly for me, I think we've all had our eye on competitive pricing this year. How did it play out in the third calendar quarter, your fiscal first quarter? And as you look ahead, what's your expectation for the way pricing can play out? What are maybe positives and what are risks as you look out over the next 4 quarters?

[Yifan Liang, executive]

Sure. During the quarter, we did see increased pricing pressure. I mean, I guess this is a reflection of softer overall market recovery. Competitors impacted by inventory correction and demand slowdown, especially in automotive and industrial. So they shift in more -- toward consumer-related markets to fill their [ fabs ]. So we see increased competition from all players, large or small. So right now, I mean, the ASP erosion for this year is more trending toward high single-digit annual erosion versus typical the mid- to high single-digit.

So in here what we want to do is to accelerate our new product rollout to counter the ASP erosion. So that's been -- what we have been doing all along the years.

[Operator]

Our next question comes from Jeremy Kwan with company Stifel.

[Jeremy Kwan, analyst]

Maybe a little bit follow-up on the pricing question. Can you talk about -- I think in the years past, you've talked about competition in the low to maybe low to midrange coming out of China. Have you seen that continue to intensify? Can you talk about maybe things you're doing there to try to counter that? And also the -- if you can give us a quick update on the JV and how -- where your position is in terms of capacity and what they've maybe communicated to you in terms of their capacity expansion plans and maybe their search for new customers? Just a bit of an update there would be helpful.

[Stephen Chang, executive]

Jeremy, let me address the first part on the pricing and also on the -- how to compete against competitors in today's market, and then Yifan can address the JV question. So what Yifan emphasized is really the key strategy to improving ASPs and margin is that all in all, we are trying to go after more attractive sockets, higher performance sockets with products that are more differentiated. So this is why you've heard us talk about not only the total solutions, but driving application-specific solutions that have more differentiation.

And in China, one of our core markets that we're going after is the smartphone market. And over there, the underlying trend that's powering that is towards -- as phone makers are moving towards higher charging current, especially in the premium phones. So over there, we are selling, again, newer products that have offered better performance, especially to power these higher charging currents. So when there's an application trend that pushes performance more, actually, it creates more separation between us and the competition.

So we'll continue to drive and go after these attractive sockets with our solutions, and that will help us to combat the competition.

[Yifan Liang, executive]

In terms of JV and -- I mean, yes, JV side, I mean, right now, JV is in the process of raising additional funds. So in terms of their business, yes, they are EBITDA positive and then they sign up more customers. So they are still one of our major suppliers and then we still work with them very well. So they are supporting our business at this point.

[Jeremy Kwan, analyst]

Maybe if you can give us the utilization rates at [ Oregon ] and your capacity, especially, I don't know, with price erosion coming, has that -- is that kind of putting -- or does it lower the capacity at all in terms of the revenue you can get out of the fab? Just -- and your continual upgrades to the fab, looking at that all in combination, can you just give us kind of where the utilization rate is now and where you see that going in the next couple of quarters?

[Yifan Liang, executive]

Okay. Sure. For the quarter, our fab's utilization was around 80% or so. So overall, I mean, we still have some capacity to go -- to support our further growth overall. I mean, yes, as we roll out more new products, and so we expect our fab can provide support there.

[Jeremy Kwan, analyst]

Got it. And going to the gross margin line, can you give us more color in terms of the puts and takes into the sequential decline that's expected in the December quarter? How much is volume? How much is pricing? And then kind of where do you expect the trend to go? Is 25% the bottom here? Or how are you looking at it on a kind of a longer-term basis?

[Yifan Liang, executive]

Okay. Sure. September quarter's margin was -- quarter-over-quarter drop was mainly because of ASP erosion. And I mean, that's pretty much the contributor. So from there, I mean, we expect -- I mean, that once we grow our business, I mean, our utilization can go up and then -- which can provide support to our gross margin line and then also our newer products, can improve our product mix. So that's where we want to grow our gross margin.

[Operator]

[Operator Instructions] There are no more questions registered in queue. At this time, I'd like to pass the conference back over to our host for closing remarks.

[Steven Pelayo]

Okay. Great. It's Steven Pelayo. This concludes our earnings call today. Thank you for your interest in AOS, and we look forward to talking to you again next quarter. Take care.

[Operator]

That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.