Good afternoon. My name is Mariana and I will be your conference operator today. At this time, I would like to welcome everyone to the Viavi Solutions Second Quarter Fiscal 2017 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Bill Ong, Head of Investor Relations. You may begin your conference.

Thank you, Mariama. Welcome to Viavi Solutions second quarter fiscal 2017 earnings call. My name is Bill Ong, Head of Investor Relations. Joining me on today’s call is Oleg Khaykin, President and CEO, and Amar Maletira, CFO. Please note this call will include forward-looking statements about the company’s financial performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review our most recent SEC filings, particularly the risk factors described in those filings. The forward-looking statements including guidance we provide during this call are valid only as of today. Viavi undertakes no obligation to update these statements. Please also note that unless we state otherwise, all results except revenue are non-GAAP. We reconcile these non-GAAP results to our preliminary GAAP financials, and discuss the usefulness and limitations in today’s earnings release. The release plus our supplementary slides, which include historical financial tables are available on our website. Finally, we are recording today’s call and we’ll make the recording available by 4:30 P.M. Pacific Time this evening on our website. I would now like to turn the call over to Amar.

Thank you, Bill. Fiscal Q2 Viavi revenue of $206.5 million was at the high end of our guidance range as NSE exceeded the revenue guidance range, while OSP was near its guidance midpoint. Revenue declined 11% year-over-year. This was the result of the expected pullback of OSP revenue and a decline in NE revenue partially offset by revenue growth in our SE business. Viavi’s operating income at $26.9 million declined 11.8% year-over-year. Operating margin of 13% reached at the high end of the guidance range and was down 10 basis points year-over-year on lower revenue. Overall, Viavi operating expenses decline 12.3% year-over-year or $14.4 million driven by SG&A expense reduction and R&D spend optimization. EPS at $0.10 exceeded the guidance range of $0.05 to $0.08. About two weeks ago, we announced the restructuring of our NSE business segment. This plan is part of Viavi's strategy that we first announced at our September 15, 2016 Analyst Day to improve NSE's profitability by narrowing the scope of our SE business and reducing expenses by streamlining NSE business operations. We expect up to 10% of Viavi’s global workforce to be impacted as a result of this restructuring. The total cost of this plan will be up to $30 million including up to $24 million in severance charges. We expect this plan to be completed by the end of the second quarter of fiscal 2018, with most of the actions in the second half of fiscal 2017. The majority of the total charges are expected to be recorded within our third quarter of fiscal 2017. We expect this plan to deliver up to $40 million in annualized cost reduction in NSE. This includes a minimum of $35 million in annualized OpEx savings in NSE compared to an annualized fiscal second quarter 2017 NSE OpEx.…

Thank you, Amar. I'm pleased with our second quarter results as NSE exceeded the high-end of the guidance range in both revenue and operating margin. And OSP met our midpoint revenue guidance expectations and delivered better than expected operating margins. Network enablement or NE's core instrument business was impacted by weaker demand in North America. In addition, we did not see any meaningful calendar year end budget flash from North American Tier 1 service providers. This weakness was partially offset by stronger performance in other regions. In Service Enablement or SE we saw both year-on-year and sequential revenue improvement in data center formally called enterprise. The improvement was largely a result of organizational restructuring earlier in the year. We also saw strength in growth assurance products revenue as we drove solution acceptance. After a thorough strategic review, we announced the restructuring plan for our NSE business. Our restructuring plan is a result of our big NE focused SE strategy that we announced at our Analyst Day in September. The go forward SE strategy is built around our technology and market strength in mobile assurance and data center as our focus - as we focus on sustainable profitable growth. Moving on to OSP; anti-counterfeiting revenue declined, as expected, both sequentially and year-on-year due to customer inventory rebalancing to align with the end market demand. As we have indicated earlier, the demand for anti-counterfeiting business is expected to rebound in the second fiscal - second half of fiscal 2017. That trend is already factored into our guidance. This week marks my first year at Viavi. Much has been accomplished and I'm pleased with Viavi's progress during the past 12 months. However, we are just starting to make transformational changes in our company, as well as our industry. In conclusion, I would like to express my thanks to our customers and employees for their continued support of Viavi. I'll now turn over to Bill.

Thank you, Oleg. This quarter we’ll be participating at Morgan Stanley’s Investor Conference in San Francisco on February 27th. Mariama, let’s begin the question-and-answer session. We ask everyone to limit discussion to one question and one follow-up.

[Operator Instructions] Your first question comes from Dmitry Netis with William Blair. Your line is open.

All right. Thanks very much for taking my question. I want to zoom in on SE, Oleg and Amar and just get a little sense of the comps that you gave there on the restructuring and how it affects the business operations going forward? Can you give us a little more color in terms of any product lines that are getting consolidated or shutdown or as part of this restructuring plan? Any update on that front and what it really means the data center would that just fit kind of the network instruments business or is there other product lines that fit in there? Same thing for mobile insurance. And as you speak to that, can also give us an update where the legacy assurance businesses in terms of kind of the mix that we had seen in the last couple of quarters?

Thank you, Dmitry. I will start off, give you a bit of color on what's in and what’s out and then I'll turn it over to Amar to give you some bigger visibility on the mix between the legacy and the new. Now one of the fundamental tenets of our strategy was to really focus on the areas where we have either very strong technology position or a very strong market position or combination of both. And really refocus the SE and grow from that area. To that extent, we are anchoring our SE strategy around three elements. The first one is to continue build on our strength in the location intelligence, which is the acquisition we made recently. So that’s our what we call kind of the mobile edge focusing from that area and supplementing it with the various elements of other product lines that often support over that product be it data capture, probing and things like that. The second element is the Ethernet assurance. We have a legacy business that today serves many customers and it's probably going to run for a number of years. But, we are also recognizing that many of our customers are moving in the direction with a greater presence of virtualized instruments and software defined networking. So we are in process of developing a unified platform which will take us into that future, but that is also tightly linked and integrated with our physical instrument. So it’s a truly a platform that connects to the physical instrument structure of the network, connect you to the virtual instrument infrastructure and provides the Ethernet assurance for the customer being able to take it from existing network to the network of the future. And the third element is the data center, that’s the - you probably - you call it network instrument that’s really that division that has been restructured. We had an organizational restructuring there early in the fiscal year. We’ve made a number of product and platform changes and that business is already starting to show very promising results, and we’re going to plan to build on that. So those are the three things that will keep going forward. A lot of the other products are either being put more in the maintenance mode or being phased out. But as you know in this kind of business, there is a lot of the code is reusable in various products. So to the extent we can reuse the code, we reuse it. To the extent we don't, we basically discontinue investing in that area. That's what allows us to effectively take up to 300 people out of the R&D operations and product management operations. Amar?

So let me give you some additional color for modeling perspective. So if you guys recall during the Analyst Day event we said, as we go ahead and become a more focused SE business, our SE revenue will be sort of low double-digit from a mix perspective, SE as a mix of NSE. So when you look at fiscal year ‘16, we were about 23% to 24% was the SE mix within NSE, that should go to between 15% to 20% as we get into fiscal year ‘19. So the mix of SE within NSE should be between 15% to 20% as we head to fiscal year 2019. So that’s the plan based on the restructuring that we just announced. Now the mix of legacy versus growth within SE, in the current quarter the mix was 65% growth and 35% was legacy. Fiscal year ‘19 we should exit roughly at 70% growth and 30% legacy and in fiscal year ‘18 it should be more of 85% growth and 15% should be legacy. So that's what our estimates are based on the restructuring that we just announced.

Very helpful commentary. If I could just follow-up on the cost saving plan. The $40 million that you announced today or a couple weeks ago, but I think the number actually was the first one we heard about that $40 million cost savings. What's the baseline? How are you treating it? I think you said - just if you could repeat that comment, I'm not sure I captured everything but is the baseline really the December ‘16 quarter to kind of peg that $40 million cost savings to? And you will be done with that by kind of the December of ‘17, December quarter of ‘17, fiscal ‘18?

I think you captured it well but let me just make sure that we give more clarity here.

And Amar, if you could kind of tell us where the majority of that savings is coming from? I think Oleg mentioned R&D but is it R&D across the board or is it specific to SE or other parts of the company? Thank you.

I will give you more color on that too. So let's first start with the baseline, because it is important question and that’s the reason we put that in my script. The baseline would be the annualized OpEx or annualized cost as of the December ‘16 quarter, so if you take Q2 for NSE business. So when we talk about the overall $40 million, that’s a total cost savings as a result of this plan and on an annualized basis $35 million out of the $40 million is mainly OpEx and that's minimum. And the reason we say minimum is because we will drive some additional savings in fiscal ‘18. So that $35 million of savings is pegged to the Q2 ‘16 OpEx of $95.7 million. So if you annualize that it's roughly about $383 million on an annualized basis and from there you have $35 million of OpEx reduction. Now all these things, Dmitry as was already factored into our EPS guidance that we provided for the three years during the Analyst Day. This is an execution against the plan and outlook that we provided you guys. Now when you think about where the savings are coming from, on the OpEx side it is across R&D, it is across product line management and marketing as well as sales as we become more focused in our SE business and there's also some reductions happening in COGS as it relates to our service operations related to SE. In addition to SE, we are also looking at couple of unprofitable product lines within NE where we are also looking at how we can get into maintenance mode in that unprofitable product line. So - but it's mainly SE focused with a little bit of NE.

Okay, very good. I will cede the floor. Thank you very much for that.

You're welcome.

Your next question comes from Alex Henderson with Needham. Your line is open.

Hey guys. I'm a little puzzled with the numbers here by the mix. I would've thought that stronger revenues in Service Enablement would have caused lower margins given they generally have - you're losing money over there as oppose to making money in NE. And what I got was lower than expected NE and stronger SE, but better margins in SE than I would've expected. Can you help me out little bit with understanding how that mix in the quarter helped the SE profitability?

Yes. So Alex, that's a good question. So SE revenue growth was driven by two vectors, one was our data center business, which is our Network Instrument Business Group, which goes - basically is higher gross margin business so that really helps and now we have starting seeing momentum in that business and hopefully we'll see the momentum go forward. On the assurance side, we actually draw acceptances of the solutions that we actually sold previously. And when you drive those acceptance of those solutions and it has software and services component it comes in at a very high gross margins, and that’s the reason you saw favorable mix of gross margins coming in the SE business.

Okay. So if I could drag down on that a little bit. So the assurance acceptance is fairly lumpy. Will that recur as we go into the upcoming quarter or is that a - you've got the acceptance, now you get the revenues stream from that going out or is that catch-up, how do I think about that? And is that also cause a little bit of a spike in your revenues on that line?

No, it did causes a little bit of spike, that’s exactly right and that's the reason when we have guided for NSE in Q3 you will see that we are in line with the seasonal guidance from Q2 to Q3, but we also factored in that SE as we go through this restructuring it will impact our bookings as well as our acceptances. So, we expect that SE revenue to come down, that's exactly right. Now from a margin perspective you saw NE gross margins actually declined sequentially because of couple of things. One, is there was an unfavorable product mix that was happening as well as there was a one-time inventory adjustment that we took as we restructured one of the product lines as we announced this whole restructuring within NE. Now, that’s a one-time. So, we expect the NE gross margins to bounce back between 64% to 65% in our fiscal Q3 and our SE gross margins to be remaining at the 65% mark. So overall the gross margin should remain the same, but the mix will change as we go into fiscal Q3.

They wobbled up and wobbled down and canceled out the wobbles it comes out about the same?

You're right. Exactly right.

Okay, thanks. Got to the - till the crux of it, thanks.

Yeah. As I was reporting on earlier quarters, we had just the opposite, we had headwinds on SE and Amar was always very clear that when we do the deployment we sell-through a lot of hardware that we pass-through with a small mark-up. So that brings down the gross margin. Once the hardware is installed and it's really the acceptances and then extensions and the add-ons to the solution that we sold, that comes in at a much higher gross margin.

One other question if I could, just on the tax side. If Trump cuts tax rates to 15% to 20%, do you guys have to write down your goodwill? I mean, assuming the goodwill…

NOLs.

…deferred losses, NOL?

Write down the deferred losses?

Yes. I would assume that that would reduce the amount that you would be able to recognize?

So I need to follow-up on that question, Alex. Not to my knowledge, but I think it’s better we get into a little bit of detail there and help you so I can understand your question and then…

All right. Thanks.

You know our tax rate, let me just be clear. Our tax rate - cash tax rate is between 15% to 20%, the reason being we do have profits landing in tax jurisdictions where we do not have NOLs and we are working, as I mentioned during the Analyst Day on this super distributor model where we’ll be able to repatriate both profit and cash backed into the U.S. and protect it from using our NOLs. So we continue to do that, and depending on a quarter when the profitability of where it lands and which tax jurisdiction is hard to predict. But 15% to 20% is what the tax rate we are actually targeting.

Okay, thanks.

Thank you, Alex.

Your next question comes from Rod Hall with JPMorgan. Your line is open.

Yes. Hi, guys. Thanks for taking the question. I guess I wanted to come back to this question on NSE margins. And I guess what I want to ask is, as you restructure SE and you realize the cost savings you guys are talking about is that now drive a breakeven situation with SE, so it’s no longer losing money? I guess that’s my first question. And by when would you expect that division to breakeven? And then I also - and I don't know if you're going to want to comment on this or not, probably not but I would love to have any color on Oleg, what you are now thinking with regards to M&A? Obviously, this deal and talked about a lot in conjunction with you guys and it looks like key sides going to go there, was that ever a good fit for you or now in retrospect that the deal has been announced, can you give us some more color on kind of what you're thinking about what would be a good fit and what wouldn’t be? Thanks.

All right. Let me take the SE question first, Rod, and Oleg will follow-up with the next question that you have. So, SE will be a breakeven in fiscal year ‘18 based on this plan. So, as I mentioned during the Analyst Day, going back to my earlier commentary, SE on a fully loaded basis was losing about $40 million in fiscal year 2016. That losses - basically we cut some of those losses in fiscal year 2017 and it should breakeven in fiscal year ‘18. So as we had indicated, NSE is an operating margin expansion story for the next two years. So this is in line with what we guided where operating margins will be between 7% to 9% in fiscal ‘19 and this is - that's the basically we are tracking to that particular guidance. Oleg, can I…?

Sure. If I - then if you have that I’m just going to take the M&A question that you had.

Yes. Sure, anything else on the SE stuff, Rod, before we…?

Yes. Amar, could you just give us a timing on that? Do you - so would you expect these savings to be coming through…

Yes.

…in one quarter, two quarters? When can we expect these margins to kind of be what you guys have indicated?

Yes. So the 7% to 9% is fiscal year ‘19. Okay. So let’s keep that that's our guidance for the three-year. We are currently operating between about roughly 2%. In fiscal ‘16 we did 1.9%, we’ll be better in fiscal ‘17 and much better in fiscal ‘18. So, the savings as we had indicated, most of the actions will happen in the second half of fiscal ‘17. So as early as fiscal - first quarter of fiscal ‘18, you should start seeing some of the impacts of the savings. In fact some of the impact of the savings will start showing up even in fiscal, Q4 of 2017, which is fourth quarter of 2017. But the run rate impact should happen in fiscal - December quarter for fiscal ‘18 which is Q2, but as early as fiscal Q1 of ‘18 where you should see the full run rate impact.

Yes. I think we will see most of the potential as we exist the fiscal year in June quarter. So going into September quarter, we will start capturing most of the savings and then the remaining remainder will fall in, in the September and December quarter. And as we complete the calendar year will be a full implement. Okay?

Okay.

Now, regarding your M&A question, during our Analyst Day we identified that M&A is clearly a part of our corporate development strategy. Subject to two very important conditions. It's got to have a good strategic fit, either in the cost or technology and revenue synergies and we continue to be very financially disciplined. And as you know there is a saying, every deal has a price and it also, contrary to that, as a caller already said [ph], beyond a particular price, no deal is a good deal. So from our perspective we'll continue to look at multiple opportunities provided that they make financial sense for us and our shareholders.

And Oleg, are you still thinking timing wise you'd like to kind of get the SE restructuring done before you head down the path of consolidation or timing wise you are pretty open?

We can do both. I mean, reality is most of the planning and preparation to do SE restructuring it really took place in the past two quarters. We have now a very well understood strategy and organization going forward and we are implementing changes - most of the changes this quarter with the remainder in the June quarter and then whatever remains later in the fiscal year. So I think most of the heavy lifting in terms of structuring and analyzing and preparing for restructuring is done, it's really now just to get it executed and move forward.

Okay, thank you.

So, Rod just - so then clear, savings will start in Q4. You will start seeing some savings in Q3, some in Q4 and then Q1 should be a balance and then Q2 is when you have a full run rate savings. So that’s the whole plan. So next quarter should be better from an OpEx perspective compared to Q3.

Is that linear, Amar? I mean, how do we think about the - a third, third, third or is it - how does that come out?

Well, I won't get into that level of detail. You can send me your model, I'll fill it up. I'm just kidding. But, I think you can see, Rod, as I said most of the actions from a labor perspective will happen in the second half. So what will happen is some of it will happen towards the end of second half, right? So that full run rate savings you will see only in the following quarter which is fiscal Q1 of 2018. So I think you should - don't model it linearly, but there are some step functions, but you should see a full run rate savings starting fiscal Q2.

Okay, thank you.

Thank you very much.

Your next question comes from Patrick Newton with Stifel. Your line is open.

Good afternoon. Oleg and Amar, thank you for taking my questions. I guess, first is just a clarification. Amar you walked through the SE revenues and talked about SE being about 23% to 24% and heading down to 15% to 20% of sales in FY ‘19. Is there any lumpiness associated with that or under current plan is that a relatively linear decrease?

Yes, I think it's relatively linear, because as you know we will see the mature assurance business also ramp down linearly, that's what we are assuming. So it's relatively linear.

Great. And then, I guess Oleg, looking at the NE business, you have some new products you have some cyclical aspects and some new technologies that are coming to market. Do you have any timeframe that you think you can return the NE business to growth?

So NE, obviously is a pretty broad product business, right, product line business. In fact, today if you look at the fiber portfolio, it’s growing very nicely. So there's different elements of it. So the fiber business is growing pretty much across all regions and there's very strong healthy demand. The area of weakness we have was really more on the access side. As lot of the service providers prepared for deployment of DOCSIS 3.1 and G.fast. In the second quarter, we actually started seeing the initial deployments in Europe for these new technologies, and we expect that trend picking up throughout the next several quarters. So, obviously, as access part of the business returns - starts to recover and returns to grow it will drive the recovery for the rest of the business, and to the extent North American operators are spending money again on their network and field services that will further push the demand for that business. We have a very strong exposure to North America, so any kind of tightness in budgets more than offsets any product line specific strengths that we see around the world. And that was really the case I would say for the last two quarters in North America. But I think from that perspective the access technology is starting to be deployed such as DOCSIS 3.1 and G.fast is going to make the access part bring back to life so to say, and we expect the fiber to continue to be strong in coming year, and to the extent the CapEx spends are going to start to rebound in North America we’ll get a nice confluence of factors that should take our NE business and start growing it again.

Great. And just last one on OSP with the prepayment that you received last quarter, could you walk us through a little bit more detail around the type of customer whether the payment - what it means in regard to capacity commitments, minimum shares any other detail there? And should we think that you could see some higher volume consumer electronic applications coming out of OSP in the second half of calendar ‘17?

So I think we are limited on what we can disclose given the strict NDA terms of our agreement, but it is a capacity based prepayment. Obviously as I mentioned earlier to going to high volume production for the 3D type filters it takes capital investment in reactors and some of the back end of the line processing. And we're not going to go and spend money like drunken sailors and build a factory hoping they will come. We have a very strong intellectual property differentiation in industry. We do have, we believe the best technology in the market and our customers recognize it. And we do it more as a partnership with our customers, saying hey, we will go ahead and implement capacity and we will deploy it for you, but you need to put skin in the game and part of that is the prepayment of revenue and the way it gets back it gets refunded on a per unit basis as the customer realizes the volume forecast that they commit. So that's a general mechanism. It's fairly common in OSAT industry, the Outsourced Semiconductor Assembly and Test. I'm sure how common it is in our space.

And then timing?

Pardon me?

And the question on timing and timing…

As I said I have been in this business in particular with the ramps in the mobile devices for quite a bit in my previous jobs and there's always slippage of schedules. So to be prudent we did not really hybrid or communicate that up to this point but I think we are getting closer to the point where the production ramp will start materialize and I would just say that second half of this calendar year is what we're looking at. And it will depend on the customer readiness of other vendors whether it comes sooner or later in the second half.

And I think we are planning to give color on that Patrick, as mentioned early in fiscal Q4 earnings.

And Patrick as I said, as we get closer to the beginning of fiscal ‘18 or June quarter, we will be communicating more color on these opportunities as they get closer into out gun sights.

Great, thank you, Oleg and Amar for the detailed responses. Good luck.

Sure.

Your next question comes from James Kisner with Jefferies. Your line is open.

Hey guys. This is David Vise [ph] now in for James. Thank you for taking the call. To follow-up on the prior question, when we start seeing some of the 3D sensing potential applications flowing through OSP, do you guys have a sense for what margins will look like relative to the current OSP margins?

Well, not only do we have sense, we know exactly what they will be otherwise you won't do that business.

Exactly.

I mean, remember it's a capital-intensive business and we looked at it from point of view of return on our investment. Clearly, it’s not the kind of margins like you would get in anti-counterfeiting. They are lower, but the operating profit contribution and ROI is within our target model.

So just to build on that is, as Oleg mentioned it will be dilutive from a gross margin perspective. The OpEx structure doesn't materially change. So it's operating profit accretive from a dollar perspective and might be slightly dilutive on operating margins. But, again, we will not give that color till we get to a point where we can come and discuss what the volumes et cetera.

Okay, fair enough. And just mechanically could you refresh us on how these prepayments would flow through the financial statements? Is this where you see it show up on the P&L or mainly be a balance sheet adjustment?

No, no it's very simple model. I mean, think of it this way and I'm not going to tell you exact mechanism, but let’s say - I will tell you what is. Let's say you have a - you are going to buy pieces from me let's say to $2 apiece and you could promised to buy 10 units. Okay? I will ask you to prepay me $10 and I will refund you $1 for every unit. I will credit you $1 for every unit you buy. So when you buy a unit, okay, I will credit - I will debit your prepayment account by $1 and I will bill you for the second $1, you see? So my revenue P&L is going to be exactly I will recognize $2 of revenue, but all I'm doing is I'm moving a $1 from prepayment into my revenue and I'm billing you for a second $1, you see?

Okay, perfect.

It is sitting in our balance sheet, no P&L impact.

There's no P&L impact. It's really - just think of it as the customer advance payment. They just pay you revenue ahead and you credit it against the future invoices.

Okay, great. That's very helpful. Thanks, guys.

Sure.

Your final question comes from Meta Marshall with Morgan Stanley. Your line is open.

Hi, thanks for taking my question. I wanted to dig in on a couple of things. First on the SE business, you mentioned post the reorganization that some of the other businesses were in maintenance mode or being phased out. I just wanted to know is there any potential for monetizing any of those assets, or is that something that you're looking at, or should we not be expecting that going forward? And then the second question is just does any of the India reprints, kind of have any material impact on the OSP business? Thanks.

So I'll take the first question and then I'll give you follow-up with the OSP. So, if we look at - we've looked at all the options for our SE business including the divestiture, looking - selling parts of product line, selling all of the product line, and we had a number of offers and we had number of people we talk to. In the end, we came to conclusion that us doing the restructuring ourselves creates the greatest value for our shareholders. And unfortunately with a lot of these things there's two things you have to worry about. One, the visibility or severability of various software and technologies one from another to make a clean-cut, which is very difficult when you have a lot of intertwined product lines. And the second one is the customer obligations, because no matter what I put in the agreement and who the party is, in the end our customers still hold us responsible. And we could not truly guarantee the serviceability of the customers to our pre-agreed levels with some of the parties we looked at. And in the end when we looked at the value that they were offering and what we can do on our own there was a wide gap, and as I said we view ourselves as very good stewards of our shareholder money and there is no suckers in this room who are willing to give away a business for nothing. So we decided the best bet for us was to do our own restructuring, bite the bullet, do it right, and later if somebody wants to pay a fair price for we can always discuss it. But at this point we feel our current plan gives us the biggest bang for the buck and it gives the best value to our shareholders. Now with respect to the India reprints, I mean, clearly we are supplier to of pigments to leading manufacturers of ink, so India demonetization clearly drove quite a bit of demand in the prior year. Potentially, we don’t know it for sure, exact mix and the amounts and - but some of the big demand we had in the prior year was driven, we believe, in part by India and to the extent there is more business to be had, that's not something we see just as yet because we are - there's inventories sitting in the channel that are designed to provide for that. But generally, we avoid getting into details and asking our customers exactly where the pigments are going, because there is a great level of confidentiality in the industry.

Got it. Thank you so much, guys.

There are no further questions at this time. I will now turn the call back over to Bill Ong for closing remarks.

Thank you, Mariama. This concludes our earnings call today. Thank you, everyone.