STMicroelectronics N.V. (STM) Q1 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, welcome to the First Quarter 2019 Earnings Release Conference Call and Live Webcast. I am Myra, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Celine Berthier, Group Vice President, and Investor Relations. Please go ahead.

Thanks, Myra. Good morning and thank you everyone for joining our first quarter and 2019 financial results conference call. Hosting the call today is Jean-Marc Chery, ST's President and Chief Executive Officer. Joining Jean-Marc on the call today are Lorenzo Grandi, President of Finance, Infrastructure and Services, and Chief Financial Officer; Marco Cassis, President of Sales, Marketing, Communications and Strategy Development. This live webcast and presentation materials can be accessed on ST's Investor Relations website. A replay will be available shortly after the conclusion of this call. As usual this call will include forward-looking statements that involve risk factors that could cause ST's results to differ materially from management's expectations and plans. We encourage you to review the safe harbor statements contained in the press release that was issued with the results this morning and also in ST's most recent regulatory filing with the full description of these risk factors. Also, to ensure all participants have an opportunity to ask questions during the Q&A session, please limit yourself to, if possible to one question and a brief follow-up. I'd now like to turn the call over to Jean-Marc, ST President and CEO.

Thank you, Celine. Good morning, everybody and thank you for joining ST on our first quarter 2019 earnings call. Let me start with some opening remarks about Q1 results, Q2 guidance and full year 2019 expectation. First, on Q1. Our revenues, at $2.08 billion, and our gross margin, at 39.4% were substantially in line with our expectations amid softened market dynamics. We were lower than midpoint on revenues; I will say more on that later and better on gross margin. We maintained a solid level of profitability with an operating margin above 10% and a net income of $178 million. Second, on Q2. So we are still operating under soft market conditions, but today we are confirming our plan to return to sequential growth in the second quarter. At the midpoint of our guidance, we see second quarter revenues up about 2.4% on a sequential basis. And we see gross margin at about 38.5% at the midpoint. Regarding the full year 2019: Our plan is for revenues to be in the range of about $9.45 to $9.85 billion. This means that we plan for strong sequential growth in the second half of the year across our Industrial, Automotive and Personal Electronics end markets. This expected level of growth is taking into account already engaged customer programs and new product introductions. It is also assuming improving market conditions in the second half of the year. Indeed, our visibility of the market improved as we progressed through the first quarter. In Industrial and Mass Market, exiting the Chinese New Year, we saw no signs of improvement in Q2 demand. However, March and April Point of Sales revenues at distributors are showing signs of recovery. This coupled with the financial stimulus programs in China is increasing our confidence level for improved market conditions for the second half of 2019. Automotive is still growing, although tracking at a softer pace than planned. While confirming our revenue dynamics for a sequential growth in Q2 and a stronger second half compared to the first half, our 2019 plan is lower than what we expected entering the year. Therefore, we have started to take actions. First, on inventory. Our goal is to decrease it to a level in line with our current revenue expectations. This is an action already embedded in our Q2 gross margin guidance, which includes significant unsaturation charges. Second, to adjust our capital spending. We have moderated our 2019 CapEx plan to a range of $1.1 billion to $1.2 billion. The decrease is essentially impacting short-term capacity additions. At the same time, we are protecting our strategic programs that support our future growth. In 2019, we will maintain a solid capital structure. Importantly, as part of the proposed Annual General Meeting Resolutions, our Supervisory Board is proposing to shareholders to declare a cash dividend of $0.24 per common share, payable to shareholders in equal quarterly installments. Now, let's move to a detailed review of the first quarter. Net revenues decreased 6.7% year-over-year, as sales of Microcontrollers and Memories, Analog and Imaging were lower. On the other hand, we had strong growth in Power Discrete and Automotive, as well as growth in Digital and MEMS. On a sequential basis, net revenues decreased 21.6%. Compared to our midpoint target, we were lower by 90 basis points mainly due to ADG revenues below expectations in discrete and in traditional automotive products. As expected, all product groups decreased on a sequential basis. Our gross margin was 39.4%, 40 basis points higher than the midpoint of our guidance, mainly due to the lower sales price pressure and a better than expected product mix. On a seasonally low quarter, our net operating expenses were $607 million, within the range already shared with you in January. As anticipated, they included some catch-up of 2018 R&D grants. As a result, we maintained a solid level of profitability as our operating margin was 10.2%; net income was $178 million and diluted earnings per share were $0.20. Turning to cash generation. Our net cash from operating activities was $341 million in the first quarter. Our CapEx in Q1, 2019 amounted to $322 million. After the cash outflow of $76 million for the acquisition of 55% of Norstel's share capital, free cash flow was negative $67 million in the first quarter. We paid cash dividends totaling $54 million and executed a $61 million share buy-back as part of our ongoing program. Now, let's move to our second quarter outlook. In Q2, we plan to return to sequential revenue growth. We expect revenues to increase about 2.4% at the midpoint. Sequential revenue drivers will include growth in Imaging and Power Discrete. On a year-over-year basis, Imaging, Automotive and Power Discrete mainly driven by high voltage Mosfet and silicon carbide Mosfet. We expected to grow, while General Purpose Microcontrollers and Analog products are expected to be the main detractors, leading to a year-over-year decrease of 6.3% at the midpoint for our total revenues. Our gross margin guidance is 38.5% at the midpoint. This represents a decrease of 90 basis points quarter-over-quarter and 170 basis points year-over-year, respectively. The main reason for the sequential gross margin decline about 80 basis points is related to unsaturation charges, resulting from our actions to align inventory with our 2019 revenue expectations. We expect net operating expenses to be in the range of $625 million to $635 million in Q2 in a seasonally high quarter for this metric. Let me now share with you some important business, market and product dynamics we saw during the first quarter, starting with Automotive. In Q1, this part of our business grew high single-digit year-over-year. Late in March, we started to see some backlog adjustment in the traditional part of this business. This was due to the decline in the number of car registrations, especially in China. We believe this trend is likely to be reversed, based also on recent market forecasts. The demand for components supporting car electrification and digitalization [NF and MCUs] continued and continues to be strong. In car electrification, we had a number of significant design-wins during Q1 for various electric car and charging designs. These included smart-charging controllers, smart power products for electrical vehicle applications, and a 32-bit safety MCU for an electrical vehicle Battery Management System for a major European player. For Silicon Carbide, we announced the agreement to acquire the wafer manufacturer Norstel, on top of the multi-year supply agreement with Cree we already announced. In Q1, we also started to provide global carmakers with samples of our ACEPACK Drive module with SiC embedded. In car digitalization, we continued to benefit from our close cooperation with Intel-Mobileye, who won a program for the EyeQ5 from a European carmaker. We also won a major project in Japan with our 32-bit microcontroller family. Moving now to Industrial, we see two different trends. First, the ongoing inventory correction in the channel acknowledging shorter lead times. This is impacting our Analog portfolio and General Purpose Microcontrollers. However, as I mentioned earlier our business plan assumes better market conditions in the second half, with March and April Point of Sales revenues at distributors showing signs of recovery. Again, this coupled with the financial stimulus programs in China, is increasing our confidence level for improved market conditions in the second half of 2019. Second, power device demand is still strong, with a capacity shortage worldwide, and here we have good backlog visibility. As you know Industrial is a key area of focus for ST where we want to accelerate our growth. Progress was visible during Q1, as we continued our strong push, with new product introductions and key design wins across many applications. For example, we announced the next step in our strategy to build a stronger leadership position in embedded processing solutions for industrial with the launch of our first STM32 Microprocessor. We also extended our already broad STM32 ecosystem for microcontrollers with further advanced Artificial Intelligence features and with USB-C support. We launched new sensors for the industrial market, including a device with an embedded Machine Learning core for machine vibration detection. We also received awards from global players for industrial-grade motion sensors in asset tracking applications. Finally, Q1 also brought many design wins in power discrete for industrial applications. Let me conclude this product and market review sharing with you some points on Personal Electronics, where we target primarily smartphones, wearables and accessories with a selected approach. The 2019 global smartphone market is forecast to decrease slightly and foresees the introduction of first 5G devices. Our strategy is to bring more semiconductor content per device and we will benefit from existing and new programs, for smartphones as well as for wearables and accessories. During Q1, our Imaging Sensors business was clearly impacted by the anticipated strong seasonality, but we are progressing well on all our engaged programs with major customers. Imaging products are a key component of our selective approach to Personal Electronics, together with other sensors, secure solutions, power management and analog products. In the first quarter, we brought in wins for motion and pressure sensors and Time-of-Flight products in many flagship smartphones and wearables. We also won a motor driver in a smartphone from a major Chinese customer and other designs for smart-power and analog products. To conclude my remarks. During the first quarter, we executed substantially in line with our expectations and we maintained a solid level of profitability. For the second quarter, we are confirming today our plan to return to sequential revenue growth. For the full year 2019, we plan for strong sequential growth in the second half of the year compared with the first half and across our Industrial, Automotive and Personal Electronics end markets. Our revenue expectation is based on clearer visibility since Q1; it is taking into account engaged customer programs, new product introductions and assuming improving market conditions. We are aligning our production with the expected demand and moderating our CapEx. Based upon our plans, we expect to maintain a solid capital structure. Our objective in 2019 is to outperform our served market and deliver sustainable profitability. Thank you for your attention and we look forward to seeing you at our Capital Markets Day in London on May 14th. We are now ready to take your questions

[Operator Instructions] The first question is from Aleksander Peterc from Société Générale. Please go ahead.

Yes, good morning and thanks for taking my question. Just regarding your reduced CapEx outlook and that compared to your revenue guidance for the full year. So it would appear versus what you thought at the beginning of the year were in the same ballpark higher revenue broadly flat. And so I'd like to know in which market area, which end market you've seen this reduction that leads you to moderate some of your CapEx expectations for the year?

Good morning, everybody. It's Lorenzo speaking, guys. I take your question. Yes, you rightly say that irrespective to the original expectation we have some reduction. This reduction in term of revenues for the year has brought some moderate decline, review of our capital in which area we see actually lower than expected the rebound, especially in the area of the microcontrollers. In the area of analog in which, let say we were expecting, if you remember at the beginning we were saying that we would see the Q1 as the worst quarter and then let's say restarting in Q2 some improvement in these products. While in Q2 still we see some difficulties in the area of a microcontroller and analog. So these bring us to believe that actually the overall area for these two lines will be less brilliant that we were expecting at the beginning. On top of that, we have also seen in Q1 some weakening in the market of the traditional automotive. This is one of the reasons as we are shorter in revenues irrespective to our guidance.

Thanks. And just to confirm on automotive can you give us your growth rate for all of your automotive end markets in the first quarter year-on-year?

The growth automotive of in the first quarter year-over-year is above 10% using the range of the 12% -13% is that so still a significant growth. I would like to remind all of you that when I talk about automotive it is not only the group automotive but all the sales that the company does in automotive that is encompassing of course also power with our silicon carbide, also microcontrollers, memories all our products.

The next question is from Johannes Schaller from Deutsche Bank. Please go ahead.

Yes, hi, good morning. Thanks for taking my questions. In terms of the new design wins and then ST company specific drivers for the second half, could you maybe give us a bit of an indication how much of the growth they will contribute in H2 and maybe and if a bit perhaps distinction between that and what you assume for the market? I think that would be quite helpful. And then also could you maybe give us an idea just on the underutilization charges in Q1. And what you plan for Q2 and also what your fab utilization would be for the two quarters that would be helpful. Thank you.

So I will take this first question and Lorenzo will take the second question. So, clearly at the midpoint of our expectation for the full year of 2019, we will grow our revenue in the range of let say US $1.25 billion, H2 versus H1. I have to say that 65% of these growths will be related to already engaged programs and new product introduction with customer. And around 35% will be related to better market condition both for some OEM and distribution channel.

About the utilization the impact of unsaturation. In Q1, our gross margin came as substantially with no unsaturation on the front end. If you wanted we have around 20 basis point of inefficiency in back end related to the fact that we have some specific line like for instance imaging in which the low level of loading brings some impact in our gross margin. But this was fully embedded in our original; let's say guidance the level of 39% for Q1. The overall saturation for the front-end for the fab in Q1 was in the range of 88%. So they were fully loaded and this was anticipated when we enter into Q1 saying that we would not, let's say reduce the level of production in Q1 in respect to the fully loaded fab. Then in Q, of course, we started to have some correction in term of loading due to the fact that we want to keep under control our inventory that has increased as you have seen during the course of Q1. So the level of saturation allows our fab, they will be more in the range of 83% and as we said this is impacting around 80 basis points with an unloading charges. The gross margin of Q2.

Perfect, that's very helpful. And then for the second half of the year we should assume these unloading charges to go away I would assume.

Well for the second part of the year, we do expect still to have unloading charges. And they will not go away immediately because the level of revenue that we do expect is a significantly increasing, but notwithstanding this we think that at least in Q3, we will still have unloading charges. Then in Q4 for sure they will be much lesser than it would be in Q3 and in the second quarter. But we do expect that whether some unloading charges are also in the second part of the year.

The next question is from David Mulholland from UBS. Please go ahead.

Hi. Just wanted to ask on the inventory level that you've got to the end of Q1. If I calculated right is about 128 days. I just want to ask how you feel about that. Can you give us some color on the exact areas that you've built inventory up through the quarter? And given the comment you just made on what the utilization rate will be in Q2? Should we still be expecting inventory levels to be increasing through Q2 or can you start to see that trending downwards in absolute terms?

Thank you for your question. About inventory, you're right. Inventory in Q1 increased significantly. These were embedded in our numbers. Of course, increase a little bit more than expected, due to the fact our revenue came a little bit shorter in respect to our midpoint. In the - what will happen in the second quarter? In the second quarter, we do expect that the number of days of inventory will remain substantially flat. This means there will be no significant reduction of inventory during the second quarter. We will start to see reduction both in number of days, a significant reduction in number of days and in absolute value during the second half of the --we do expect to end the year substantially with the number of days similar to the one in which we entering in 2019. What it was in Q4, 2018. Showing the range of at the end of 90 days or something like that.

The next question is from Achal Sultania from Credit Suisse. Please go ahead.

Hi, good morning, everyone. Just coming back to the point that you're making on visibility going into the second half. If I compare --if I look at how you are guiding versus one of your peer groups in Germany, obviously, your peer group is talking about low single digit quarter-on-quarter growth in June and September quarters. You are talking about 2.4 in June and then probably somewhere between 15% to 20% in Q3. Can you just help us understand like what are these new products wins that is giving you this visibility going into the second half? Can you give us some more color which product areas, which customers, any color on that would be helpful? Thank you.

Both the second half for engaged programs and new products, clearly, the main contributors are product related to automotive and personal electronic end market. And as you know on automotive, it is clearly related to electrification of the car and the digitalization of the car. On personal electronics, it is a blend of our selected approach on sensors, of course, imaging sensor, secure solution, but another product as well. On the other side for a market position, obviously, it is more related to industrial and mass market, and the product involve are more general purpose, analog and microcontroller.

And how should we think about the margin profile of these new design wins? Is it going to be similar to the group average or bit different?

This, okay, we do not comment the gross margin of our new programs and product.

The next question is from Stéphane Houri from ODDO. Please go ahead. Stéphane Houri: Yes, good morning. Question on the second half, again, if we look at what your guiding basically it's probably above 25% of sequential growth H2 versus H1. And when you look at it storage really never happened before unless in very good market years. And you've just commented that 2/3rd of the growth was coming from engagements from your customers and new program. So where do you think your growth should be at the end of the year, if the recovery does not really happen? And what will be the impact on the gross margin going forward?

So thank you for your question. I would simply say that the ranges of revenue we share today with you from $9.45 billion to $9.85 billion are already embedding risk and opportunities. More than that today, I will not comment. So we can comment gross margin within this range and maybe Lorenzo you can give some color but I cannot comment, okay, out of this range because we do believe today with, again, better or clearer visibility than entering in the year in January or in December with the clearer visibility. We do believe that this range of revenue already embedding risk and opportunities.

About the gross margin and let's say we have this range today, our plan is moving between these two 9.45 - 9.85. Of course, gross margin it depends on the level of the growth that we will be able to post in the second half. Also because there will be, as I said, there some level of saturation. Of course, I will be glad that during a three week from now, during the Capital Market Day to let's say drive you a little bit more in detail on the dynamics that we say. What I can say is that if we are a substantially at midpoint of this range, we see something in terms of gross margin slightly about 38%. We would fall in the low end of the revenue range most likely we see something that is closer to --slightly above 37%. On the high side, let's say for sure there will be something that is better than this 38% plus and we will get back closer to 39%. Then as I said that we will have the chance three weeks from now to go a little bit more in detail of the dynamics about this important parameter. Stéphane Houri: Okay and so just follow-up about the OpEx because it seems that the range is higher than you previously guided. Is it the new guidance the $625 million to $635 million?

No, no. Maybe what I want to say, what the guidance that I gave 620 and 630 is this value there. It means that the full year, let's say if you take a day, our expenses full year and you divide it by 4, you will find that something that will be in this range, between 620 and 630. So it is in the range. Of course, Q1 came in at much lower 607 net expenses. Q2, we do expect that to be for seasonality a little bit higher. Q3 will be a little bit lower and Q4 will be, so at the end 4Q, it's true, it's a little bit higher than the average. But on the average of the year by quarter it will be between 620 -630. I don't know, if it's clear what I try to say.

The next question is from Anthony Stoss from Craig Hallum. Please go ahead.

Good morning, gentlemen. Maybe just to put a finer point on your second half growth. Can you share if you expect your content with your largest smartphone customer to be up substantially kind of generation-over- generation this fall's phone? And then also if you wouldn't mind commenting about the number of expected silicon and carbide customers by the end of 2019, and maybe how you see that ramping over the next few years? Thank you.

So as I told you in my previous speech, yes, we increase our semiconductor and value content with our major customer addressing the smartphone market. So I confirm it to you. Then about silicon carbide, so our revenue target for 2019 is to be about US $200 million so to double the revenue addressing MOSFET, but also in certain extent diodes. Mainly, this revenue will come from our engagement in our main customer. But important to say, again, and to share with you that we are already engaged with 30 important programs with various customers across the various region in the world to address both electrification of the car and industrial end market. But early in 2019, the main part of our revenue will be linked to our already engage main customer.

Thank you. As a follow up, Jean-Marc, can you - you ready talked about seeing a signs of recovery. Is there a particular region that you haven't seen recovery yet?

Well, it's clear that from a region point of view, Europe is - in term of trend, is a weaker region.

The next question is from Jérôme Ramel from Exane BNP Paribas. Please go ahead. Jérôme Ramel: Yes. Good morning. Two questions. The first one, what is the outsourcing level and how should we model it going forward? Just to understand how to reconcile the comment you made on the gross margin going forward and the utilization. If we look at for -

Yes, sorry. The question is over or --I can answer let say, I will answer about the outsourcing and then if you have a follow-up question we can listen. About the outsourcing in Q, the outsourcing was in terms of front-end outsourcing that what is the most important for us. In value of production was in the range of 17%. 17% of our value of production was coming up from foundry in Q1. What will happen going forward? There will be two, let's say two fold. One side that we have some repatriation that will be finalizing not very significant but still we have some flexibility. On the other side, some of the programs that we pull, the growth in the second part of the year will be, let's say from foundry. So that means that at the end at the level of the percentage of what we are outsourcing in front end in term of value production, we remain substantially flat in the course of the year at this level. Jérôme Ramel: Okay. Thank you and just a quick follow-up for Jean-Marc. If I look at your guidance for the full year, you really click the full year with a substantial higher level of revenues compared to --even compared to Q4 last year. So the question for the investors will be how sustainable are all these new designs you've signed and you are going to ramp up in the second half of this year going forward?

How stainable is the level of the design in the Q4 will be - the sustainability of our design. These designs are sustainable and sticky. Okay, as far as it concern our engaged - current engaged programs and new product. But, of course, okay that all this product a lifetime as any semiconductor design. But today, okay, this product and this program are sustainable. Of course, okay, again for next year okay you will have seasonality in the year as we are facing this year and as we face, okay during the past year. But the sustainability of our programs today is not questionable. Jérôme Ramel: So just to be clear are we talking about multiyear program? Or how should we understand the sustainability of this new product and new program?

Jerome, okay, I guess for the first time okay we gave a full year expectation in [Indiscernible] 0:41:15.3 okay maybe next year I'll give a three year, let's say visibility. Okay, we have a road map. We have a product road map. We have a technology road map. And I do believe that okay this product and technology road map is well matching with the specifications and road map of customers. But as you know, okay, semiconductor is a competitive market. And for us there is no other way to be the best in the market we address. That's the reason why on the smartphone, wearable and accessories we are very selective because we want to offer the best product and the best technology which is the best driver to be sticky and sustainable.

The next question is from Matt Ramsay from Cowen. Please go ahead, sir.

Thank you very much, good morning. I guess it sounded like analog and MCUs were a little bit more challenged longer through the first half of the year than you guys had potentially thought about that part of the year. Maybe you could talk a little bit about the reasons why you think that might be, not surprising given maybe a little bit more cautious tone out of TI last night as well. But and then the second part of the question is do you feel like you now started shipping to end sell- through levels and there should be some inventory build in the back half of the year at the distributors or are we still waiting to see signs of that? Thank you.

'Do you want to take? I'll take the first question. But again, for the first question what we have seen in Q1 and that's the reason why we said the visibility is more clear in that. We have seen no sign of let's say short-term demand increases for Q2 for mass market and industrial market. And, of course impacting the capability to grow of our analog product and microcontroller. And I have to say this view is well shared among our peers. Okay. That - okay, short term demand is basically a flat. However, as I already explained in some previous calls, in order to understand the market dynamic especially when you are facing a soft market condition as of today. We short backlog visibility but basically the short backlog visibility is not alarming our self-more than that is simply the translation of short lead time. So when the industry is offering short lead time, customer offers short backlog visibility. What is important for us is to monitor all the point of sales revenues of our distribution channel. And as I told in Q3 and Q4 last year, when we have seen the first sign of POS decreasing and the first sign of inventory correction, and as an impact revenue decreased for ST, now in March and in April, we are seeing the first positive sign in POS. It is not yet translating in short term better demand for ST, why? Because there is still some inventory correction and simply people are cautious on inventory level in the distribution channel. But what is very positive is that March and April have shown positive trend in POS. This is making us comfortable coupled with the fact that the incentive provided by Chinese authorities about taxes have not been taking into consideration in Q1. People wait to see what is materiality of this incentive. So with this incentive taxes by Chinese authorities, we do believe that the economics of the market on top of what we have already shown in Q1, make us in the good position to expect better market condition in the second half. Then as I told, okay, to and following your question from one colleague, now in our revenue range, we have taken accounts opportunities and risk linked to what we call better market conditions. But we do believe that we have a really good confidence level in this range of revenues, two third links to program, one third link to better market condition, both for distribution channel and some for the OEM than those which we are engaged on specific programs.

This is macro speaking for the second part of your question. Of course, we are expecting that by the end of the year the level of inventory at the distributor will be lower than what we have now. But more important than that, thanks to the lower level inventory, we expect these to be translated in more demand to support to increase the POS by end of the year.

Today's last question is from Guenther Hollfelder from RobecoSAM. Please go ahead.

Yes. Many things, just on your automotive business you mentioned that silicon carbide growth this year is mainly driven by your largest customer. I assume that your - the exclusive supplier for the silicon carbide MOSFET and we also I think there were some indications recently that this technology is also now being used in other models or previous models of your largest customer. If your growth, let's say in the second half also including that you are penetrating these other models at your largest customers with your technology.

So the $200 million goal which is part of the full year 2019 revenue range I share with you today is encompassing as a full customer demand.

Okay. May be a second one if you allow. I mean right now there's a lot of discussions in Europe also regarding B2X using CB2X technology or the Wi-Fi based V2X. And I remember in the past you had some agreements, foundry agreements with Autotalks. Could you update us on the situation here? And what's your road map and also let's say outlook for related sales?

Yes. Marco speaking. As you correctly said we have an ongoing collaboration with Autotalks. And we are very happy about how the collaboration is ongoing. And of course having deployment around the world of V2X standards, let's say, we are well positioned to leverage on what will happen in the market. But again and it is clearly widening and increasing. But if your question is a before it was about the W-Fi, yes only, but now covering both Wi-Fi and 4G, 5G connectivity.

Yes. And you mainly engaged with Autotalks on the Wi-Fi side or -

On both.

On both sides. Okay, good. Many thanks. End of Q&A

Okay. With this, Myra, if there is no - is there any further question or -

There are no more questions.

So I think with this, this will conclude our chorus for today. Jean-Marc, do you want to -

No. Again, we will be very pleased okay to receive you in London on next May 14th. Clearly, we will really please to discuss with you our plan. All we want to improve our leadership in the market we address. All we want to accelerate in industrial. All we want to improve our leadership in embedded processing solution for industrial. All we want to take advantage of our selective approach in the smartphone, wearable and accessories. I think it would be a great opportunity for all of us to share the ambition of ST again to outperform the market and being a sustainable profitable company growing better than the market we serve. So looking forward to see you in London. I wish you a good day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call. And thank you for participating in the conference. You may now disconnect your line. Good bye.