Cirrus Logic - Q2 2024

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic second quarter fiscal year 2024 financial results Q&A session. At this time, all participants are in listen-only mode. After a brief statement, we will open up the call for questions from analysts. Instruction for queuing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the conference call over to Ms. Chelsea Heffernan, Vice President of Investor Relations. Ms. Heffernan, you may begin.

Chelsea Heffernan (VP Investor Relations)

Thank you, and good afternoon. Joining me on today's call is John Forsyth, Cirrus Logic's President and Chief Executive Officer, and Venk Nathamuni, Chief Financial Officer. Today, at approximately 4:00 P.M. Eastern Time, we announced our financial results for the second quarter of fiscal year 2024. The shareholder letter discussing our financial results, the company's earnings press release, the webcast of this Q&A session are all available at the company's investor relations website. This call will feature questions from the analysts covering our company. Additionally, the results and guidance we will discuss on this call will include non-GAAP financial measures that exclude certain items. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in our earnings release and are all available on the company's investor relations website.

Please note that during this session, we may make projections and other forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information, the company expressly disclaims any obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise. Please refer to the press release and the shareholder letter issued today, which are available on the Cirrus Logic website and the latest Form 10-K, as well as other corporate filings registered with the Securities and Exchange Commission, for additional discussion of risk factors that could cause actual results to differ materially from current expectations. Now, I'd like to turn the call over to John.

John Forsyth (President and CEO)

Thank you, Chelsea, and thank you everyone for joining our call today. As you've seen in the press release that Chelsea referred to, in the second quarter of fiscal 2024, Cirrus Logic delivered revenue of $481.1 million, near the top end of our guidance for the quarter. In a moment, I'll hand the call over to Venk to discuss those results in greater detail. Before we get onto that, I'd like to provide some color on the progress that we made during the last quarter regarding the strategy that I have outlined on prior calls. Our first strategic priority is leadership in smartphone audio, and this quarter, we received the first silicon of our next generation custom boosted amplifier and sampled it to our customer.

Like our customer, we're excited about the performance, the efficiency, and the system cost improvements that it will deliver. Alongside that product, we remain on track with our first 22-nanometer smart codec, which represents a significant step forward for audio, sensing, and other key signal processing applications. Both of these products, the amplifier and the codec, are on schedule to be introduced next year. In the general market side of our smartphone audio business, this quarter, we had multiple customers introduce new flagship devices featuring our audio components, and we anticipate more devices using our products to be introduced in the first half of the coming calendar year. Turning now to the second pillar of our strategy, our goal is to continue to broaden our high-performance mixed-signal content in smartphones.

Progress in Q2 on this front included ramping shipments of our latest camera controller ahead of a customer's product launch. Once again, in that product launch, we saw the camera stand out as a key differentiating feature, and we are proud that our products help enable our customer to deliver outstanding innovations in this area. We continue to maintain an exceptionally close engineering relationship with our customer in the camera space and anticipate partnering on further exciting products in the future. Beyond the camera, we have also been investing in new intellectual property that aims to enhance overall battery monitoring, health, and performance, expanding the portfolio of technologies that began with the power conversion and control device that we introduced in fiscal 2022. We continue to be excited about the long-term potential these areas represent for further growth and diversification of our revenue.

The third element of our strategy is our focus on expanding into new applications and markets beyond smartphones. I've talked principally about the laptop space here, given that it is the market where we see our efforts coming to fruition soonest. While we're still in the early innings of our strategic plan for this market, today, we are shipping content in each of the top five laptop OEMs, and we are actively engaged with those same OEMs on design win opportunities for next generation laptop models. There are several favorable trends driving the adoption of our products in this space. First, the post-pandemic desire for high-quality audio, which had historically not been a focus area for most laptop OEMs. Second, the desire for thinner and lighter devices.

That desire creates a need for better audio amplification, for haptic rather than mechanical trackpads, and for fanless designs, where the thermal constraints bring demand for ever greater efficiency and power conversion. Finally, there is the architectural evolution towards SoundWire that we've spoken about previously, which creates an opportunity for OEMs to rethink their audio architectures and their partners.Today, we have excellent product sampling to customers, we have participation in the SoundWire-compatible reference design from Intel, and we are seeing great customer interest. While it will take some time for that momentum to flow through to meaningful revenue, we continue to be excited about these opportunities.

As an example of what can be possible at the higher end of this market, during the quarter, we began initial shipments for a high-end laptop model that features seven pieces of Cirrus Logic silicon, including several amplifiers, multiple haptic drivers, and a codec, resulting in multiple dollars of content. We continue to believe this is a market where Cirrus Logic has an opportunity to increase both content per device and market share over time. Beyond the laptop market, we're also investing in new products for our general market business, which services a large number of customers across the professional audio, automotive, industrial, and imaging end markets. These components offer sustained differentiation with improved performance, lower power consumption, and new feature enhancements, and we believe they can be important contributors to our profitability in the years to come.

In summary, we believe the company is well positioned for the future, with new products in the pipeline for the coming year, momentum building in our market diversification efforts, and significant opportunities to expand our high-performance mixed-signal content. With that, let me now turn the call over to Venk to provide an overview of our financial results for our fiscal Q2 2024, as well as guidance for the third quarter.

Venk Nathamuni (CFO)

Thank you, John. Good afternoon, everyone. I'll start with our fiscal second quarter results. Fiscal second quarter revenue was $481.1 million, which was near the top end of our guidance range, due to higher than expected demand for products shipping into smartphones. Revenue was up 52% quarter-over-quarter, driven primarily by higher volumes associated with new smartphone launches. On a year-over-year basis, revenue decreased 11%, which reflects a reduction in components shipping into smartphones, as well as continued weakness in sales of general market products. Turning to gross margin, non-GAAP gross profit in the quarter was $247 million, and non-GAAP gross margin was 51.3%, which was above the high end of the guidance range we had provided.

On a sequential basis, gross margin increased 90 basis points, reflecting lower supply chain costs, largely due to a reduction in freight costs. On a year-over-year basis, gross margin increased by 110 basis points due to lower supply chain costs and inventory reserves, partially offset by a less favorable product mix. During the quarter, we completed the disposition of wafers associated with a new high-performance mixed-signal product that was previously expected to ship this year. We worked in close collaboration with our key customer and supply chain partner in resolving this issue, and, as anticipated, the disposition did not have a material financial impact. Turning to operating expenses, non-GAAP OpEx in the quarter was $114.4 million, roughly flat sequentially and close to the low end of the guidance range, mostly due to product development timing, as well as lower discretionary spending.

We will continue to control discretionary expenses, especially given the current environment. Non-GAAP operating income was $132.5 million in the second quarter, or 27.5% of revenue. Lastly, on the P&L, non-GAAP net income in the second quarter was $101.6 million, or $1.80 per share, as the higher than expected revenue and gross margin, as well as the lower than expected operating expense, flowed through to the bottom line. Let me now turn to the balance sheet. Our balance sheet continues to remain strong, and we ended the second quarter of fiscal 2024 with approximately $352.5 million in cash and cash equivalents.

Our ending cash balance was down $73.6 million from the prior quarter as we built inventory to support seasonal product launches and used cash to repurchase stock during the quarter. We continue to have no debt outstanding, and additionally, as noted in prior quarters, we have $300 million undrawn on our revolver credit facility. I'd like to reiterate that our balance sheet remains strong, with a solid cash position and no debt. Turning now to inventory, as we indicated in prior quarters, we've been building inventory to support seasonal product launches, as well as fulfill our wafer purchase commitments per our long-term capacity agreement with GlobalFoundries. As a result, inventory was $328.9 million, up from $301 million in Q1 2024.

However, days of inventory declined 47 days sequentially, and we ended the quarter with approximately 128 days of inventory, down from 175 days in the prior quarter. Looking ahead, in Q3 fiscal 2024, we expect both inventory dollars and days of inventory to decline from the September quarter as we draw down the inventory to support the ongoing seasonal product ramps. While we expect inventory levels to remain elevated through this fiscal year, as we balance anticipated product demand and wafer purchase commitments, we expect Q2 fiscal 2024 to have been the high point of inventory for the current fiscal year. We'll continue to actively manage our inventory position to meet customer demand while fulfilling our purchase obligations. Turning now to cash flow.

Cash used in operations was $22.7 million in the September quarter, and CapEx was roughly $8.5 million, resulting in free cash flow for the quarter of -6%. For the twelve-month period ending in the September quarter, free cash flow margin was roughly 7%. On the share buyback front, in Q2, we utilized $40.6 million to repurchase approximately 510,000 shares of our common stock at an average price of $79.45. As of the end of Q2 fiscal 2024, we had $422 million remaining in our share repurchase authorization.

Subsequent to Q2 fiscal 2024, we utilized $24.4 million to repurchase roughly 350,000 shares at an average price of $69.40 under a Rule 10b5-1 share repurchase plan. We expect to continue to return capital in the form of stock repurchases, which we believe will provide a long-term benefit to shareholders going forward. Now, on to the guidance. For Q3 of fiscal 2024, we expect revenue in the range of $510 million-$570 million, and we expect gross margin to range from 49%-51%. Non-GAAP operating expense is expected to be up sequentially in the range of $120 million-$126 million, primarily due to an additional week of salaries as well as higher variable compensation.

As a reminder, fiscal year 2024 is a 53-week fiscal year, and our fiscal third quarter will span 14 weeks instead of the typical 13 weeks. Overall, from an operating expense perspective, we'll continue to control discretionary spending, but invest strategically in product development to drive our long-term growth. On the tax front, as we previously discussed, our fiscal 2024 non-GAAP effective tax rate will continue to be unfavorably impacted by capitalized R&D expense, and as expected, our foreign tax credits will be lower this year. Our fiscal 2024 non-GAAP tax rate is expected to be approximately 24%-26%, consistent with our prior quarter's guidance. We continue to anticipate that the impact of capitalized R&D will become less unfavorable over time as additional years of R&D expenses are amortized for tax purposes.

In closing, we had a strong Q2 fiscal 2024 as we executed well to deliver these results. Going forward, we will continue to focus on the best opportunities to enable the company to grow both revenue and profitability over the long term. And finally, while we understand there is intense interest related to our largest customer, in accordance with Cirrus Logic company policy, we'll not discuss specifics about our business relationship. With that, let me now turn the call to Chelsea to start the Q&A session.

Chelsea Heffernan (VP Investor Relations)

Thanks, Venk. We will now start the Q&A portion of the earnings call. Please limit yourself to a single question and one follow-up question. Operator, we are now ready to take questions.

Operator (participant)

This time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. It's star, then the number one on your telephone keypad. Your first question comes from the line of Matt Ramsay. Matt, your line is now open.

Matt Ramsay (MD and Senior Semiconductor Analyst)

Hey, guys. Thank you for taking my question. John, there's for the first time in a long, long time, from a architecture and share perspective, there's a lot going on in the notebook market with the emergence of what Apple's done with the M2 and now M3, and obviously what Microsoft is gonna do with Copilot and sort of shaking up the ecosystem a bit. And you guys have been sort of hinting at opportunities in that space. So what I'm interested in is to sorta compare and contrast that to what you've seen, the Windows market and laptops versus the Android market and smartphones for your company.

You obviously have your largest customer and a really, really strong relationship there, but do you have, like, legit opportunities in audio and other areas in sort of the Windows part of the notebook market? Is it dependent on ARM folks gaining share, or do you feel like your opportunities with Intel platforms are equally strong? Thanks.

Venk Nathamuni (CFO)

Thank you, Matt. I agree with your observations. I think there are a number of dynamics that make this market, the laptop market, really interesting again, and specifically interesting for us in a way that it hasn't been in quite a long time. And there are multiple drivers for us that I think will help us gain customer adoption. To answer your question specifically, we have great relationships with customers across the Windows side of the laptop market, and our relationship with Intel and our presence in the Intel reference design that I referred to earlier is really helping to drive customer engagement around the new products that we have. So we feel we're in a very good position with regards to our engagement with the key market leaders in Windows laptops.

Today, we're shipping to, as I mentioned, the top five OEMs overall in the laptop market, and we're engaged with each one of those OEMs around future designs. So we're very excited about that, and those conversations tend to be, right now, more focused on audio, but also including haptics.

John Forsyth (President and CEO)

... and to some extent, power products, which are coming a little, a little behind the audio and haptic products for us. But lots of great opportunity there, and it's in no way limited to Arm. In fact, I think Arm is potentially a tailwind for us, given the experience we have integrating into Arm-based systems in the smartphone space and the degree to which notebooks start architecturally looking more and more like smartphones, especially with the advent of Arm-based SoCs. But that's not a necessity. I would just say it creates additional opportunity over time.

Matt Ramsay (MD and Senior Semiconductor Analyst)

Yeah. Thank you for that perspective, John. As my follow-up question, I wanted to ask. I think it was good to hear your comments on sort of the resolution of the content and the product that didn't ship this year as you guys thought. I wanted to ask a bit about the technology and the IP that you developed for some of these haptic opportunities and its applicability into the Android market. I mean, when you guys made the big push and did the Wolfson acquisition and tried to push into audio in Android, it was fits and starts, and you had to kind of, quote, unquote, "break the bundle" with Qualcomm and MediaTek in those markets, and sometimes it was successful, sometimes not.

But if you look at the haptics arena, you have technology, you have IP, and I wonder if the environment for the Android smartphone market around haptics, if there's an opportunity there, and are the SoC providers, do they have strong solutions, or is this a new TAM that you could go into in Android? Thanks.

John Forsyth (President and CEO)

Thank you, Matt. In haptics, we are shipping haptics today into flagship Android phones. The story of haptic adoption in Android has been somewhat different from the iOS world, in that not every OEM values it to the same extent, and to begin with, the platform support was somewhat limited. We've seen in key flagship designs an appreciation for high-quality haptics, and that's tended to win us sockets. But I think there's probably a bit of a long-term headwind to the SAM for us there, given that it comes at a higher cost, and OEMs are perhaps comfortable putting high-quality haptics into flagship devices, but less so as they go down the tiers. I would say that the opportunity for us to continue serving flagship phones there with haptics continues, and, you know, we'll certainly aim to do that.

Operator (participant)

Question comes from the line of Christopher Rolland. Christopher, your line is now open.

Christopher Rolland (Senior Equity Analyst and Semiconductors)

Guys, thanks for the question. I guess, first of all, can you talk about your inventory balance once levels are done with this customer ramp? Is that where you're going to want them to be, and does the wafer supply commitments come into play, or is that behind us at this point as well?

Venk Nathamuni (CFO)

Yeah, Chris, thanks for the question. Yes, as I'd indicated in my prepared remarks, the inventory that we have been building the last couple of quarters was just to come to balance with the both, both the the supply that we had to fulfill in terms of our commitments to our partner, but in addition, also the ramp of the new products that we alluded to. Now, as you may recall, prior to this this last two, three quarters, we were in a pretty constrained position from the standpoint of inventory and living a pretty much hand-to-mouth existence. So we wanted to build inventory in anticipation of these product ramps.

As I mentioned on the, on the call earlier, we are expecting that the current, fiscal quarter, which is Q3, will see a meaningful reduction in inventory from what it was last, last quarter, and we expect Q2 to have been the high point. Now, obviously, looking ahead, you know, we still have some supply, requirements that we have to meet in terms of the purchase commitments for, to our partner, but we also see, you know, reasonable, demand with, with the next, set of products and such. So it will be, something that we will carefully monitor. As you've seen, we have come down, the inventory, path pretty substantially in, in the last, you know, few quarters, and, and we expect that to be, substantially better going forward.

But we'll just guide for it, you know, one quarter at a time. As it relates to this current quarter, we do expect inventory to be down from the prior quarter. And just to give you some perspective, you know, last fiscal year, we were at about 4.0 turns in inventory, and that's our ultimate goal in terms of where we wanna be from an inventory turns perspective.

Christopher Rolland (Senior Equity Analyst and Semiconductors)

Excellent. Thank you, Venk. Maybe following up, just talking about the Android opportunity over the next year, where you think you could capture some kind of needle-moving revenue. It sounded like in the laptop audio, you have some... I would assume that there are amps coming in the first half, but maybe you can talk to that. Do you think anyone would ever copy your lead customer's telephoto camera architecture for opportunities there? How are haptics ramping? I think you said you had some battery products, you know, efficiency products that you're trying to ramp as well. Where are all the opportunities, particularly needle-moving opportunities, for Android?

John Forsyth (President and CEO)

So specifically around Android, I'd say the market for us really splits into two buckets. There's the China-based OEMs, and then there's the Korean and North American-based OEMs. If you look at the China-based OEMs, we still have a good business there. We very much value our business with Xiaomi, Vivo, and Meizu. But we think that that environment, long term, has some headwinds for us. It's become a more difficult environment to do business. So it's not a major area of investment. If we then look at the other bucket, the other side of the house in Android, we've got great relationships with those OEMs. We continue to invest in those and to support future designs. I think our business with Samsung was bigger this year or has been bigger so far than last year.

We feel very good about that, and we're excited about supporting them further in the future. But the Android opportunity as a whole is something that I think for us is not as large when we look further out as the potential of the laptop opportunity. So we can see, as we look a few years out, we can see a scenario where the laptop opportunity in our laptop business exceeds that of our Android business. And that's one where we have, I think, much more greenfield space for expanding content and gaining market share right now. So that's the greater area of our focus when it comes to customer engagement and new product development.

Operator (participant)

Your next question comes from the line of Tore Svanberg. Tore, your line is now open.

Tore Svanberg (MD and Senior Analyst)

Yes, thank you and congrats on the results, especially getting through this wafer purchase commitment in light of the smart product. That was a great execution on your side. I had a question about the 22-nanometer products, John. You mentioned the word introducing them next year. So, does that mean that they will be sampling in calendar 2024, and then we'll see potential revenues the year after?

John Forsyth (President and CEO)

They're sampling today. Thank you for opening the door to that clarification. Sorry. They're sampling today. The 22-nanometer smart codec, in particular, is the product that we're talking about. That's in our customer's hands. It's performing beautifully. It's a marvelous product, and we're very happy with it, which means that we are working towards a market introduction in the back half of next calendar year.

Tore Svanberg (MD and Senior Analyst)

Very good. As far as the timing and opportunity in laptop, I understand you're in the top 5 today, but as far as this sort of bigger content ramp, is that something that could happen already next year, or is that more a calendar 2025 or 2026 story?

John Forsyth (President and CEO)

Yeah, that's a great question. Obviously, I've referred to the fact that we have a significant number of designs in development now, and we need that, but it's also important to be in the right products, have the right designs in development, and enough of them to start moving the needle on revenue, given where our overall revenue is today. So I guess I'll try to frame that for you in broad terms so you can get a sense of what we anticipate could happen here. This year, as I mentioned, we've got a number of designs coming to market within the remainder of fiscal 2024, including the poster child device that I referred to in my prepared remarks, which we're very proud about.

But by definition, anything shipping in the second half of the fiscal year, and that really means in practice, in the laptop space, most likely in the early part of next calendar year, isn't going to contribute much during the current fiscal year. So think of the contribution of laptops in our fiscal 2024 as being pretty minimal. However, those designs—there are designs coming to market now, which will start to contribute to revenue as we move into fiscal 2025. So we anticipate seeing a moderate step up in fiscal 2025 as more of those current design wins start going into production, putting us likely in the range of the low tens of millions $ revenue in fiscal 2025.

But a lot of what's happening today around the reference platforms that I mentioned in the prepared remarks will lead to customer product that's launching early calendar 2025. So we would anticipate that that would likely lead to steeper growth and more meaningful revenue than in fiscal 2026 and beyond. And as I mentioned previously, I know that we don't break it out as such, but to give you a sense of how we think about the opportunity, if Android stayed flat, then somewhere beyond that, we see the potential for our laptop revenues to overtake the Android business.

Operator (participant)

Again, if you would like to ask a question, press star, then the number one on your telephone keypad. Again, it's star, followed by the number one on your telephone keypad. Your next question comes from the line of Blayne Curtis. Blaine, your line is now open.

Blayne Curtis (MD)

Hey, thanks for taking my questions. I wanted to ask you, you've been mentioning several quarters in a row, diversification efforts in HPMS. I don't want to read too much into language, but I guess the language is a little different. You said there's some customer interest in power and battery. Can you just talk about those diversification efforts and, and maybe any kind of rough timing as to when we should think about maybe that impact in the model?

John Forsyth (President and CEO)

Yeah, we certainly have customer interests, Blaine, and principally, that's around the power space. So really, stuff that sits around the battery is an area that we believe we have significantly differentiated technology. We have that IP in silicon for the most part at this point, so we've been able to demonstrate IP to customers there, and we're excited about that. Translating that into specific program design awards and design wins, and so on, I'm gonna limit what I say on this call. But that would be a little further out. That's obviously beyond the audio products that we've got coming next year.

It's likely still some time before we see that come to fruition, but we believe they are meaningful opportunities, so you know, we're certainly investing in securing those.

Blayne Curtis (MD)

Thanks. And then maybe a question for Venk. I wanted to ask on seasonality for March. Obviously, the 14 weeks impacts OpEx. I don't know, with such high customer concentration, whether that matters for revenue, but any thoughts on March seasonality?

Venk Nathamuni (CFO)

Yeah. I mean, it's too early to talk about March, but you're right. I mean, in terms of just the current December quarter, you know, we do have that extra week of both revenue and expenses, and that's kind of factored into the guidance. Now, what happens in March, obviously, is a big function of what happens to our the top customers' main products. So I think we'll just reserve judgment on it. But a typical sequence between the December quarter and March quarter is that, you know, there's a seasonal decline, and we'll quantify it at the right time, but I don't see anything that's different this time around in terms of the seasonality. Just the magnitude of it is what we'll have to determine going forward.

Chelsea Heffernan (VP Investor Relations)

This will be our last question.

Operator (participant)

Our last question comes from the line of Ananda Baruah. Ananda, the line is now open.

Ananda Baruah (Senior Equity Analyst)

Hey, yeah, thanks, guys. Yeah, appreciate the question, questions. I guess going back to the PCs, John, would you, if there, you know, sort of it's thought that there perhaps could be a little bit of a PC adoption dynamic in 2024. If that were to happen broadly, would you anticipate seeing an impact to your PC business that we may notice as well? And then I have a quick follow-up also.

John Forsyth (President and CEO)

Sorry, are you referring to headwinds in the PC market?

Ananda Baruah (Senior Equity Analyst)

Tailwinds in the PC market.

John Forsyth (President and CEO)

Tailwinds.

Ananda Baruah (Senior Equity Analyst)

If there were to be a bit of a PC cycle. Yeah.

John Forsyth (President and CEO)

Yeah. I guess yes, although we're still building design momentum, so we'll, we would certainly expect to benefit from that. And, you know, we think that when you do an AB comparison between laptops that have Cirrus Logic audio and haptics in them versus competitive products that do not, the difference is really striking. It's really a night and day difference. We're very, very proud of what we're doing there, and we think it's really meaningful for the PC experience. So I would certainly hope to benefit from that next year, even if, you know, we're still building our design momentum, and our pipeline today.

Ananda Baruah (Senior Equity Analyst)

And then on the PC opportunities that you spoke about a few moments ago, if, like, you—like HP, HP is talking about in the next handful of years, 40% eventually of their PCs and laptops shipping with what they're calling AI-enabled processing. Dell is probably in the similar ballpark, so folks like that. Do you—would that—is that captured through that kinda AI adoption—AI capability in PCs and laptops? Is that already captured in your thought process, or would that provide, you know, kinda incremental content opportunity with that kind of AI enablement?

John Forsyth (President and CEO)

I'm not sure how that intersects quite with our current laptop-focused product portfolio. It may be that it does. We know, of course, that typical AI use cases burn a lot of power, so anything we can do to increase power efficiency across the system is obviously gonna be a benefit. But what I would say more broadly is, I think anything that makes laptops more interesting and more of a vector for innovation, and more of a focal point for improving the user experience, is likely to benefit us in general.

Chelsea Heffernan (VP Investor Relations)

With that, we will end the Q&A session. I'll now turn the call back over to John for his final remarks.

John Forsyth (President and CEO)

Thank you, Chelsea. So in summary, Cirrus Logic delivered revenue toward the top end of our guidance for the second quarter and made solid progress across each of the three key areas of our strategy. We're excited about the opportunities in front of us, and we thank you for your continued interest in Cirrus Logic. In addition, I'd also like to thank the entire Cirrus Logic team, whose commitment to disciplined execution and to bringing innovation to bear on the challenges that our customers-