Good day. And welcome to the Sensata Technologies Q2 2024 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Andrew Lynch, VP, Finance. Please go ahead..

Thank you, operator. And good afternoon, everyone. I'm Andrew Lynch, Vice President of Finance for Sensata, and I would like to welcome you to Sensata's second quarter 2024 earnings conference call. Joining me on today's call are Martha Sullivan, Sensata's Interim President and CEO, and Brian Roberts, Sensata's Chief Financial Officer.

In addition to the financial results press release we issued earlier today, we will be referencing a slide presentation during today's conference call. The PDF of this presentation can be downloaded from Sensata's Investor Relations website.

This conference call is being recorded, and we will post a replay on our Investor Relations website shortly after the conclusion of today's call. As we begin, I would like to reference Sensata's safe harbor statement on slide 2.

During this conference call, we will make forward-looking statements regarding future events or the financial performance of the company that involve certain risks and uncertainties. The company's actual results may differ materially from the projections described in such statements.

Factors that might cause such differences include, but are not limited to, those discussed in our Forms 10-Q and 10-K as well as other filings with the SEC. We encourage you to review our GAAP financial statements in addition to today's presentation.

Most of the information that we will discuss during today's call will relate to non-GAAP financial measures. Our GAAP and non-GAAP financials, including reconciliations, are included in our earnings release and in the appendices of our presentation materials. Martha will begin today with comments on our overall business.

Brian will cover our detailed financials for the second quarter of 2024 and our financial guidance for the third quarter of 2024. Martha will then return for some closing remarks. We will then take your questions. Now I'd like to turn the call over to Sensata's Interim President and CEO, Martha Sullivan..

Thank you, Andrew. Good afternoon, everyone. It is a privilege to have the opportunity to speak with you today. Since rejoining Sensata as interim president and CEO 90 days ago, I have been focused in three key areas. First, enhancing our overall performance to expand margins and improve our execution.

Second, identifying underperforming products and projects within our portfolio that no longer drive value. And third, finding the next CEO for Sensata. Let me take a couple of minutes to discuss each of these in greater detail. Our long term strategy has not changed.

We are a best-in-class provider of sensor rich and electrical protection solutions to our customers. Our sensing products are essential for customers to meet increasing mandates for safer, cleaner, and more efficient applications.

Our electrification solutions support the ongoing conversion across the end markets we serve, including automobiles, heavy trucks, and industrial infrastructure, such as the power grid needed to support a more electrified world.

While our sensing technologies are significant within our electrification portfolio, at the center of our strategy are high voltage contactors, which are critical electrical protection devices used to switch currents.

Earlier this year, we augmented our contactor product family with the buyout of the remaining shares of our joint venture in China, and we are well positioned to grow and gain share with a broad set of offerings, including next generation contactors that provide higher levels of efficiency, greater safety, and multipole configurability.

It is clear that the world will continue to be more electrified, and while I closely track our advancements as a board member, my return to the CEO seat has given me a broader and deeper appreciation for the significant progress we have made on several key fronts.

There are near and long term opportunities and key strategic growth vectors for Sensata, including many electrification and sensor opportunities that will drive success for years to come.

Market transformations are rarely linear in nature, and we are experiencing that today in electric vehicles, which we define to include both battery electric vehicles and plug in hybrids.

While EV production is forecasted by S&P Global in their June 2024 report to grow nearly 18% to 17.9 million units in 2024, this level of production has dropped by 10% as compared to forecasts from just five months earlier in January.

Despite this drop in projected EV volume, Sensata remains well positioned to react to short term shifts in consumer preference. Our core suite of vital sensing products remains of critical importance to our customers, allowing us to outgrow the market despite changes in volume mix between combustion engines and EVs.

For the second quarter of 2024, our automotive business outgrew the market by more than 700 basis points as we grew 6% year-over-year compared to an S&P Global defined market, which contracted by approximately 1%.

As we know, market outgrowth can vary from quarter to quarter due to mix and launch schedules, but we are pleased with the second consecutive quarter of strong outgrowth in our auto business.

While we are hedged against changes in powertrain mix, we are not immune to impacts from reductions in overall automotive production and we are taking the necessary steps to prepare for an automotive slowdown in the back half of 2024.

S&P July's report indicated a drop of over 800,000 units as compared to their report of just four weeks prior and a drop of 1.6 million units from their April estimate. In the third quarter, China is now expected to be down nearly 8% year-over-year, Europe lower by almost 6% and North America down by 2.5%.

We believe there is a possibility that net total production may show further reductions as OEMs adjust inventory levels. Let me take a moment to discuss the rest of our business portfolio which represents nearly half of our revenue.

Our heavy vehicle and off-road business reported relatively flat year-over-year top line results for the second quarter against a market drop which was down by approximately 7 percentage points.

This outgrowth was the result of strong China production levels of on-road truck and new tire pressure monitoring regulation in Europe, offset by continued production weakness, primarily in North America. Both agriculture and construction were weak in the quarter, consistent with expectations.

While destocking and slow housing construction markets continued to impact our industrial business, which has significant exposure to housing through HVAC and appliance, we are encouraged with the continued growth of our new A2L leak detection sensor.

This product has been well received in the market and we have quickly become the leader in this exciting growth segment. Finally, aerospace continues to deliver solid results and is on pace to deliver mid-single-digit revenue growth in 2024.

I am encouraged by our execution to date as we return to a more normalized operating environment and I remain confident in our ability to improve our margins in the second half of 2024 despite the macro headwinds that exist.

Increasing my confidence in our ability to improve margins is the work we have begun to identify and take action on underperforming products. Early in my tenure, we began a review of various component families across our business to effectively prune the tree of products, which may be mature in cycle, slow growing and at substandard margins.

This exercise identified approximately $200 million of annual revenue falling into this low growth, low margin category, with the majority of these products in our Performance Sensing segment. Actions to eliminate these products started in June with the goal of more than half eliminated in Q3 and the remainder by the end of the year.

Finally, regarding our CEO search, our board search committee and I are committed to finding the right next leader of Sensata. We are continuing to source and meet with highly qualified candidates who are attracted to our differentiated business, and I am encouraged by our progress to date.

Searches such as these do take time, but I expect that we will have identified the new CEO for Sensata in the coming quarters. With that, let me turn the call over to Brian..

Thank you, Martha. Good afternoon, everyone. Let me start on slide 7. We delivered another solid quarter with results in line with expectations across all our key metrics. We reported second quarter revenue of approximately $1.036 billion as compared to revenue of 1.062 billion in the second quarter of 2023.

We eliminated approximately $5 million in revenue in the second quarter related to underperforming products, as Martha discussed earlier. Adjusting for this eliminated revenue, we would have delivered a top line result slightly ahead of the midpoint of our guidance provided in April. Adjusted operating income was $196.7 million or a margin of 19%.

This represents a 30 basis point improvement from 18.7% for the first quarter of 2024 and is consistent with our goal of delivering 20 to 30 basis points of improvement each quarter this year. On a constant currency basis, adjusted operating margin was 19.2% compared to 19.4% in the second quarter of last year.

Adjusted earnings per share of $0.93 in the second quarter of 2024 represents an increase of $0.04 sequentially from the first quarter and a decrease of $0.04 as compared to the second quarter of 2023. Turning to slide 8 on segment performance.

As a reminder, we recast our segments starting in Q1 to better align to how we are managing and operating the business. We also created another segment that currently houses our results related to the INSIGHTS business.

As we previously announced, INSIGHTS is currently under strategic review and we expect to update you on the progress of that review in the coming months. Prior periods have also been adjusted for purposes of comparability.

Performance Sensing revenue in the second quarter of 2024 was approximately $724 million, an increase of approximately 4% year-over-year, with both automotive and heavy vehicle and off-road businesses outgrowing their markets.

Automotive outgrowth of approximately 700 basis points was driven in part by significant share gains on internal combustion engine vehicles in Europe. This outgrowth was amplified by outgrowth in Korea and Japan where we continue to gain traction. HVOR was approximately flat in the quarter compared to a market estimated to be down 7%.

As Martha noted, this outgrowth was the result of strong China production levels of on-road trucks and new tire pressure monitoring regulations in Europe, offset by continued production weakness, primarily in North America. Performance Sensing adjusted operating income was approximately $177 million or 24.5% of Performance Sensing revenue.

Sensing Solutions revenue in the second quarter of 2024 was approximately $268 million, a decrease of approximately 19% year-over-year.

The significant year-over-year decrease was a result of continued destocking and a slow housing construction market continuing to pressure our industrial business and due to $26 million of one-time pass-through revenue in the second quarter of 2023 related to our Dynapower business.

Adjusting for the one-time Dynapower revenue, Sensing Solutions revenue would have been down 12% in the second quarter of 2024 as compared to the prior year. Sensing Solutions adjusted operating income was approximately $80 million or 29.8% of Sensing Solutions revenue.

Moving on to slide 9, we remain focused on prudently reducing our leverage on the balance sheet with a goal of net leverage under 3x by the end of the calendar year. We successfully completed a bond offering in June, raising $500 million of proceeds.

The proceeds from the new notes, which mature in 2032 at an interest rate of 6.625%, were coupled earlier this month with approximately $200 million of corporate cash to retire $700 million in bonds that would have matured in October of 2025.

In addition, we announced last week our Q3 quarterly dividend of $0.12 per share payable to shareholders of record as of August 14. We remain focused on improving free cash flow conversion in 2024 to approximately 65% to 70% of adjusted net income, a level that we achieved in the second quarter of 2024.

Over the back half of 2024, we will continue to focus on reducing inventory levels and maintaining capital expenditure spending at approximately 4% of revenue. As shown on slide 10, let me take a minute to walk you through our expectations for the third and fourth quarters of 2024.

These guidance ranges reflect two significant adjustments to the revenue line. First, as Martha has described, we are actively exiting underperforming products totaling about $50 million per quarter of revenue or $200 million annually. As I noted earlier, we removed about $5 million of this revenue in Q2.

We expect to eliminate approximately $30 million in Q3 and most of the remainder in Q4. Second, given the lower production forecast from S&P Global, including an 800,000 unit decrease over the last four weeks, we've reduced our second half auto expectations within Performance Sensing by approximately 10 million per quarter.

With these adjustments, we expect third quarter revenue of $970 million to $1 billion. At the midpoint of the revenue range, we would expect an adjusted operating margin of 19.2%, consistent with our expectations of 20 to 30 basis points of leverage each quarter and earnings per share of $0.85.

We do not expect foreign currency to have a significant impact on our third quarter adjusted operating margins on a year-over-year basis.

Revenue for the fourth quarter is currently anticipated to be in the same range as the third quarter as the further downward adjustment caused by exiting underperforming products is offset by seasonal end-of-year growth. We would expect incremental adjusted operating margin improvements in Q4 of approximately 20 to 30 basis points.

Let me summarize this revenue guidance for the full year 2024. Before the impact of approximately $85 million of revenue in underperforming products that we have decided to exit, our updated guidance for the full year would be revenue of flat to up 2 percentage points.

Given the downward revisions by S&P Global for auto and KGP for HVOR, we now expect our end markets to be down by 2 to 3 percentage points this year. This would equate to Sensata outgrowth of approximately 300 to 400 basis points in 2024, unchanged with what we had stated back in April. Now I'd like to turn the call back to Martha..

Thank you, Brian. In summary, let me leave you with a few key messages as we reflect on second quarter and look forward to the remainder of 2024. We have a winning strategy focused on high value sensing and electrical protection. This winning strategy is demonstrated in our second consecutive quarter of strong outgrowth in key auto and HVOR markets.

While much work is to be done to advance our overall performance through expanding margins, reducing leverage and improving execution, we are taking active steps such as exiting $200 million of annual low margin revenue, a net reduction of $200 million in long term debt, and the ongoing insight strategic review to ensure that we enter 2025 with a solid foundation.

Finally, I want to thank my colleagues at Sensata for welcoming me back. We have an exceptional cohesive team that is committed to driving shareholder value, executing for our customers, and delivering on our purpose. And it is a pleasure to be working with them again. I will now turn the call back to Andrew..

Thank you, Martha. We will now move to Q&A. To allow all of those who wish to ask a question the opportunity to do so, we will limit each participant to one question. Operator, please introduce the first question..

[Operator Instructions]. The first question comes from Wamsi Mohan with Bank of America..

This is Joseph Leeman on for Wamsi.

My question is, can you expand on the new business wins in Japan and Korea?.

A couple of things worth mentioning there. We're really excited about the traction that we're getting, particularly with Toyota. We're starting to show up now in our content growth and that's in active safety systems. So that's been a nice growth area for us..

Next question comes from Amit Daryanani with Evercore..

I guess, Brian, Martha, when you talk about exiting this $200 million of low growth, low margin business in the back half of this year, can you just talk about what benefit is that having to your operating margin or cost structure? And then just broadly, as you sort of look at your entire portfolio with a fresh set of eyes, beyond this $200 million of low growth, low margin, as you kind of called out, are there other assets that are potentially non-core that you could look to divest as well that could probably help you delever a lot quicker? Or is this the extent of exits or divestitures you're going to do?.

The way I would describe it is this is really catching up on normal product life management hygiene that's been a practice within Sensata, but given all the other challenges in recent years, we have the opportunity to catch up on that. So, as described, it's really low or no growth products at very substandard margins for Sensata.

And it's one of many tools that we're focused on to ensure that we can demonstrate our commitment to 20 to 30 basis points of margin improvement each quarter. And that really is the focus here at Sensata. It's back on operational excellence. It's looking at our margins and recognizing those are the hallmark of a differentiated business.

And we have strong underpinnings to deliver that at Sensata, as you've seen in the past..

If I just ask you to clarify this, what are you expecting from an auto production basis for the back half of the year, and are you embedding any further cost reduction initiatives beyond what you've talked about to ensure that the margins are defended in this 20, 30 basis points expansion zone?.

Second half of the year, we're looking at auto being down 5 basis points, HVOR similarly 4 to 4.5 basis points. And for that reason, it becomes that much more important to be looking at cost reduction and accelerating those efforts. And we are doing that.

And as you heard in Brian's comments, continuing to commit to delivering the increase in our overall margin performance..

Next question comes from Mark Delaney with Goldman Sachs..

I had a question on how Sensata sees itself getting to the 21% to 23% EBIT margin targeted that it articulated at the last investor day, and certainly understand the $200 million of product exits is a good step toward achieving that, but are there other pricing actions or restructuring activities you think you may need and maybe just talk a little bit more on the broader price cost trends in the business?.

So specific to the margin piece and then I'll let Martha talk about the trends that she's seeing in the business being back here for a quarter, as I've said, I think pretty consistently since I started here, I really look at a lot of these 2026 targets at the moment as directional in nature.

What we're trying to do and make sure that we are instilling back here, as Martha noted, is this certain focus around operational performance and excellence and making sure that we can continue to take steps in the right direction.

I think part of the way that we achieve credibility back with all of you is by setting, in some cases, shorter term goals and then continuing to hit those shorter term goals, hopefully each and every quarter. We absolutely see a path for margins to get back into the 20s.

I think we've been consistent about that as well, but we'll continue to kind of provide future guidance as we go of exactly what that trend is and how quickly we will hopefully get there..

I think there's no question that this business has the chops and the potential to deliver margins with a two handle, and we've done that consistently in the past. If you look at some of the challenges that have faced the business over the past few years, we saw a pretty hefty run up, as many did during 2022 and into 2023.

I think we've done a good job of taking pricing actions across the business. We've been able to maintain margins more consistently on the industrial side of our business and we are now really aggressively attacking our input costs to ensure that we restore our margins across the business. And there's lots of opportunity to do that..

Next question comes from Matt Sheerin with Stifel..

Just a couple of clarification questions. Regarding the discontinued products, is that within Performing Sensing, is that coming out of both the auto and the HVOR segments? And then in terms of your guidance for Q4, you talked about a seasonal uptick offsetting some of the discontinued products.

Is that uptick expected both in the Performance Sensing and the solutions business as well..

Let me speak to how the discontinued products or prune products cut across the business. But by our nature, we tend to develop products where we leverage technologies into multiple end markets. And for that reason, the products that we're pruning in Performance Sensing do cut across both the auto and commercial truck side of our business.

In terms of the fourth quarter piece, we would expect that that offset is – the seasonal piece of that is primarily in what we call the Performance Sensing part of our business..

I think we'll see some uptick in growth in both business units, Matt, in Q4. So that's a little bit more kind of across the board, typical with what we've seen historically..

Next question comes from Christopher Glynn with Oppenheimer..

Just wanted to go into a little bit of some of the allocations of margin. It looks like the Performance Sensing margins were a little light, down sequentially in the adjusted corporate line, was a little on the lean side.

So just wondering, in particular, what's going on with that Performance Sensing margin going backward a little sequentially and how we should plug, however you answer, into our thoughts about the second half progression?.

Performance Sensing margin did come down a little bit in Q2, a little bit of pricing benefit in the first quarter. What was really impacting it in Q2, though, is this mix. So, as we mentioned, Europe is really kind of leading out-growth at the moment with the pushback towards some combustion engine vehicles versus EV.

That said, Europe margins still tend to be one of our lower regions within the auto business. So that has a good and a bad effect for us. Better margins than what we would see on the EV side. However, lower margins as compared to combustion engines maybe in other parts of the world.

And so, that attributed to why the – from a mix perspective, why the margin came down slightly. On the Sensing Solutions side, we saw the margin uptick. A lot of that is just good, strong performance management by the team and making sure that we're being as efficient as we possibly can and hoping to continue to see that trend going forward.

And on the corporate line, as we've talked about, we're continuing to manage the corporate SG&A side pretty hard, and making sure that before we add costs that we see the revenue and other reasons to be able to add it before we do so. So I would call that kind of in the prudent management category as well..

And just to clarify, I think you said you expect Performance Sensing to kind of directionally track the margin guidance for the company in the second half..

Yes, that's correct..

The next question comes from Luke Junk with Baird..

Maybe continuing on that train of thought, Brian, just wondering with what's obviously become a choppier auto backdrop looking into the back half, maybe if you could discuss some of the specific shockers overs, if you will, that you'll be leaning into to help drive that margin progress in Performance Sensing.

And maybe we could also square that just with the mechanical impact of these [indiscernible], kind of how much that's worth sequentially in the market as well..

I think Martha really started to hit on this, right? This is part of the whole idea of making sure that we're really looking at all of our different products or assets and figuring out where we want to make sure we're investing our dollars most appropriately.

And so, by finding some of these different assets or products that we say, maybe these aren't the right growth areas for us, they're not really growing their substandard margins and being very active and trying to prune those out, that's how we're freeing up investment dollars to be able to put into other portions of the business that we think have more growth expectations.

And so, some of that is balancing against the volume drop and ultimately turning it to the bottom line. Some of that is investing in what we think are higher opportunities going forward..

There's also an ROIC element of this, and that is just using our assets to deliver the highest value that we can for both our customers and our shareholders. So it's a pretty normal process. We're playing a bit of catch up at this moment..

Next question comes from Shreyas Patil with Wolfe Research..

Just first off, wondering if you could just help dimension the kind of margins that these assets that you're looking to divest, just to give us some context on the kind of improvement that we could be thinking about.

And then maybe secondly, on that theme, just curious how you're thinking about other possible areas of low hanging fruit in an effort to improve margin. For example, we have seen corporate costs increase by $45 million from 2019 to 2023. It looks like the corporate cost could be flat to down this down.

And you've previously talked about Megatrend R&D spending that has also increased by about $45 million over that same period.

So do you see opportunities to rationalize in those areas as well?.

Short answer, yes. So I think relative to the kind of margin improvement you can expect, we've talked about 20 to 30 basis points. All of what you mentioned is in the mix on that.

And in particular, we went through a strategic review and looked very deliberately and in a granular way, what's the return that we're getting on that R&D investment? And we have made some changes. And I want to be really clear about this. We are still very much tracking on our strategy within electrification.

There's lots of room for optimization across the customer base. If you look at customers that have become less reliable and delivering on new launches, it involves regions around the world. It involves the portfolio mix and the degree of customization that we're willing to do. So in many ways, it's just getting back to the basics of Sensata.

And as I said, there's a lot of opportunity to improve that margin..

The next question comes from Joe Giordano with Cowen..

Maybe I'll follow up on Martha, what you just mentioned there with the optimization of the customers. So, when you go through your electrification backlogs and your wins that you have in US EVs into the next couple of years, it's obviously a big number.

When you stress test that, how has that changed over the last, call it, six months with changing tastes and production mix? And how comfortable are you with that backlog right now?.

I would say we're comfortable with the backlog. There is not a month that goes by that we're not going out to customers that have contracted us on a launch and talking about when is it going to launch, if there's a push out we're being paid for that effort and getting recovery against that.

But we're recognizing that there have been delays in electrification and what we've been able to do is pivot that to wins on IC engines, and we are very uniquely positioned to do that. I give the team great credit for building the electrification portfolio.

At the same time, we have a highly relevant product offering when it comes to vehicles across the spectrum.

So it's making sure that we're agile, that we know what's coming, that we know what's being pushed out, that we slow our engineering investments where there have been push outs, and we make sure we have a relevant product portfolio across that entire production landscape..

Just to clarify that point on compensation.

I'm sure contracts vary significantly, but is there a way to think about the amount of coverage you have from these customers? If you're really going out and creating new products for specific applications that ultimately don't materialize for the customer or get pushed significantly, how should we think about their liability to you in a scenario like that?.

Yeah, that's a fair question. But keep in mind the way we develop our products and the way we go to market, with very few exceptions, the technologies that we're bringing to market cut across customers. We'll be allocating capital for a customer depending on how much volumes they're going to bring.

It's unusual that we wouldn't be able to find reuse over time. And so, we're not trying to punish people, but we do make sure that our capital that's been on reserve is going to be put to work. And we have those discussions very regularly if we find that somebody is underperforming to their volume commitments..

[Operator Instructions]. The next question comes from William Stein with Truist Securities..

I'm trying to make sure I understand two – what I thought were two different moving parts, but maybe it's part of the same thing. I think at least for the last quarter, you've talked about 20 to 30 basis points about margin improvement through the year. Today you're announcing that you are exiting certain products.

And it's unclear to me whether that's a requirement in order to achieve the 20 to 30 bps of improvement per quarter, or if that is a separate endeavor that adds to that savings.

Can you maybe clarify that for me?.

Yeah, I think it's a near term, long term question. It's, again, one of the levers that allow us to continue on a regular basis to deliver the 20 to 30 basis points of margin. And so, in the same way, we didn't talk about an auto market being down 5% in the second half of the year, we're now talking about product portfolio pruning.

That began, quite frankly, under my watch, and we weren't in a position to discuss it at our last earnings call. So we're finding ways, regardless of the market environment, to ensure that we deliver on that overall commitment. And I'll say it again, the product pruning is only one of many things that are in play..

I think one of you said earlier, low to no profitability. So if I were to assume about 10% operating profit, it looks like about half of the savings is coming from product pruning.

Is that about the right way to think about this?.

Well, keep in mind, this doesn't happen overnight. Right? So there's still incremental expense that ultimately, as you prune out $200 million of revenue, you still have to rationalize through some expenses. Right? So it doesn't just happen with kind of the flip of the switch.

And so, as Martha pointed out, this is kind of a – it's a combination short term, long term, where, yeah, we will get a little bit of benefit from that in 2024 to help us make sure we hit our targets. That'll help balance off if we do see a little bit of volume deterioration that's coming from auto or from other end markets.

But it also starts to set up a foundation for us in 2025 when we all know there's different pressures on margin that come from statutory costs increase and pricing and other things that happen to make sure that we're able to continue to hopefully drive margins northward in 2025.

So a lot of this doesn't happen overnight, but it sets the foundation for how we continue to improve our operational performance for not just the next two quarters, but for quarters to come beyond that..

Next question comes from Joe Spak with UBS..

Martha, I wanted to go back to your comment about being well positioned on the ICE side in the event of slower EV.

And I'm just curious, are you actually seeing new programs, new awards, or is this more of a case of maybe some programs that were expected to roll off and hence be a headwind to your sort of midterm targets that are now just being extended? And if it's the latter, and that contract was expected to be over by now, do you have an opportunity to go back in and reprice that contract?.

The answer to your first question is yes, we are winning new awards, and we're doing it with a lot of intentionality.

And so, we've really looked very closely and segmented the market and recognized, and I think we recognized this early on that it wasn't going to be an all or nothing situation, that there were customers well positioned on the ICE side who would be around for a long time.

We're also seeing with the move to more plug in hybrids that there is interest in making the engine on a plug in hybrid more efficient. So the answer is yes, we are winning new business. The answer to your second question is, yes, there are contracts that rolled off, and yes, we are repricing those.

So good instincts, you have good insight as to what's happening at Sensata..

The next question comes from Samik Chatterjee with J.P. Morgan. It appears we are having difficulty with Samik's line. This will conclude our question-and-answer session. I would like to turn the conference back over to Brian Roberts for any closing remarks..

The Evercore ISI Semiconductor IT Hardware and Networking Conference in Chicago on August 27 and Goldman Sachs Communicopia and Technology Conference in San Francisco on September 10. Sure, I'll have the opportunity to chat with many of you over the course of the coming weeks.

Appreciate everybody taking the time today for joining today's presentation, and we look forward to speaking with you again in a few months. Take care. Thank you. Operator, you may now end the call..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..