Good morning, welcome everybody to the 25th Annual Needham Growth Conference. My name is Quinn Bolton. I am the semiconductor and semiconductor equipment analyst for Needham. It's my pleasure to host this fireside chat with Allegro MicroSystems. Allegro is a leading supplier of magnetic sensors and power ICs targeting the automotive and industrial markets. The company holds the number one share position in mag sensors worldwide, as well as the leading position in current sensors. We believe Allegro is well-positioned for a recovery in automotive production and for growing content per vehicle driven by the trends towards safety and ADAS as well as electrification. Joining me from the company are President and CEO, Vineet Nargolwala and CFO, Derek D'Antilio. We also have Jalene Hoover from Investor Relations in the audience. Vineet, Derek, Jalene, thank you for joining us. Good morning. Thanks for having us. I wanted to start just sort of to frame the automotive market with a question on automotive production. It looks like automobile production was up by a mid-single digit percentage roughly in 2022. Your revenue was up 20, 21% approximately. We've seen this outperformance true of many other automotive semiconductor suppliers. Can you give us some sense, how much of that revenue growth came from content gains versus potential inventory build at your customers? Yeah. Quinn, thanks for the question. You know, for us, we're really not seeing any inventory builds. Even though, automotive production grew single digit, what we're really focused on is the transition to electrified vehicles and the increased adoption of ADAS feature sets. That's really driving our content. When we look at our performance versus market, we feel really good about our exposure to the higher content applications. We think that that's a secular growth trend that's got, that's gonna play out over the next decade. The transition to e-mobility, which is the combination of electrification as well as adoption of, higher-end safety features and ADAS feature sets. Got it. Do the auto OEMs give you pretty good, insight into the amounts of Allegro components they're holding? I mean, do you have pretty good look into, what they're either, holding and/or, what the sell-through is through the automotive, channels? Yeah. You know, we've been in automotive for close to three decades, and really through the pandemic, we've built deeper supply relationships with the OEMs. We've always had great design relationships and engineering relationships, we've become much closer to them from a supply chain standpoint. We are very careful because we've been in a supply constraint environment not to ship into inventory. We have daily, weekly calls with our major OEM partners, where we're getting checks on their bare demand. We're still in a supply constraint environment. It's getting better, we are still supply constrained, we are very careful to make sure that there's no inventory being built up, and we don't see any evidence of that happening. In your conversations with automotive OEMs or your view of third-party market research, what's your outlook for automobile production in calendar 2023, 2024? I mean, I think we're sort of in a low 80 million range in 2022. Do you see that flat up or how does that trend over the next year? We haven't really given any guidance and we're still sort of calibrating our views on what is gonna be our fiscal 2024. I'll make some comments just sort of at a high level. You know, as you pointed out, we finished in, 81- 82 million units of production last year. That's a far cry from the 94 million units we were, the world was at not too long ago, right? We think there is still room to run in terms of just overall production levels. From our perspective, equilibrium is probably somewhere around 90 million units of global auto production. This is where supply and demand are more balanced. You have more inventory on dealer lots. Pricing is more reasonable. OEM lines are running at a high utilization. The industry is still out of whack from a balance standpoint. We think that production will continue to run upwards till we get to that sort of 90 million units, right? Do we get there in a couple of years or three years? Who knows. That's sort of the trend that we would expect. In the last couple of years when auto production was constrained, it feels like the auto OEM sort of mix shifted up to higher end vehicles just to maximize their dollars. As we get back to that more normalized production level of 90 million vehicles, do you see any sort of mix shift back to more low-end or mid-priced vehicles? Could that be a headwind to your content gains that you've seen over the last couple of years? It's difficult to predict where the OEMs are gonna drive their overall portfolio mix. I think one can expect it to be, to have more sort of broad availability of models across the spectrum. I'll tell you, for us, our ICs are not driving nice to have feature sets in a car, right? We are going into powertrain. We're going into safety feature sets, which is essential for the safe and efficient operation of the automobile. Regardless of what the portfolio that our OEMs put out, we feel really confident about our ability to grow above market because of the applications we serve. Whether it's in electrified powertrain, whether it's in adoption of feature sets around ADAS, or even in the what we call safety, comfort, and convenience, the content that we are part of is gonna continue to increase. Wanted to move to a few questions on backlog and orders. On your last earnings call, you stated that your backlog extends over a year and that automotive backlog actually grew quarter-on-quarter in September. A few questions. First, you've previously stated that you've opened your order book to customers to allow for cancellations, to try to scrub, the order books to see what real demand is. Can you say, how customers responded, to that opening of the order books? Sure. About 70% of our business is automotive, another 20% is industrial. As a result of that, over the last few years, we've entered into, like many people, preferred supplier programs, long-term agreements. We have built up over a year's worth of backlog, and we've had that for some time now. We are operating and have been operating in a supply chain-constrained environment, particular to wafers, so 200 millimeter wafers. We went through and looked at our backlog and said, "Where do we really wanna ship these wafers? Where do customers need them now?" It speaks to the question on inventory between OEMs and distribution. Distribution sort of bottomed in Q1. We went through in the summertime and opened up the non- largely non-cancellable, non-reschedule backlog and asked longstanding customers, particularly with orders that we were past due on, do they wanna reschedule those or cancel those? We had some uptake. When I look at that backlog declined 2% from Q1- Q2 as a result of that exercise. It was really skewed towards what we'll call the other portion of our business, which is the last 10% or 12%. That includes some interesting consumer and smart home applications, which we expected, and some of the long tail industrial. That allowed us to actually direct some of these scarce wafers at the wafer level downstream into applications where there's immediate demand. Yeah. I was gonna ask, were you providing incentives to cancel, orders that may not be needed by saying, "Hey, if you cancel the parts you don't need, we can pull forward perhaps the critical parts that you are most short on." Or, you know, are there working capital requirements where the customer is just saying, "Hey, cost of, you know, financing inventory has gone up, and so we will actually try to take orders off? It's actually a little bit of both, you know. The incentives really were for the customers to make sure that they're getting the right parts at the right time. There were active discussions within customers around which parts do you really need? Help us give us some bit more visibility so we can give you the right parts. As Vineet mentioned, that's given us a lot more supply chain connections with our customers. On the other side, there was orders, you know, that were just past due that we've asked to reschedule. I would say there was a higher proportion of those orders that were rescheduled and canceled, and it was really to help us balance our own supply and demand internally as well as our customers. With backlog at, you know, roughly a year or better, can you talk about your lead times? How are they trending? Are you know, have you been extended with lead times, and when do you think they might normalize? Yeah, I can take that one. We have been in extended lead times for better part of this fiscal year for us. We do see things improving, and we are working with in targeted applications to significantly reduce the lead time. We are confident that by, you know, call it, middle of this calendar year, we will be able to get back to normal lead times or close to normal lead times. Okay. With lead times compressing, we've heard from other customers that that tends to affect the order book. You know, if I don't need to place orders out 12 months, maybe I'll hold back. Have you seen any changes in order patterns, you know, more recently, whether it's because of shrinking lead times or just because of the, you know, global uncertainty, threat of recession? Yeah. I would say that it's, it depends on the market. In our automotive business, which is, as Derek pointed out, 70% of our business, we have not seen any change in order patterns, right? There we have a lot of visibility based on the design win cycle. You know, our leading indicator is really the funnel that we work, the design wins that we score, that then turn into backlog a few years down the road. We have a lot of visibility into where our OEMs are going and what to expect, you know, directionally from an order pattern standpoint. I would say that in some of our industrial businesses, we have seen some shifts, right? I think we talked about data center in our last earnings call, where we believe we are in a period of digestion of some of the inventory that was taken earlier. Our design cycle and momentum in data center and really overall in our industrial segments across clean energy and automation continues to be very robust. We feel really good about the long term. There might be a little bit of a digestion period here, as things settle out in data center. Just a question on sort of the e-mobility design wins. You mentioned last quarter they were up 68% year-on-year, sort of well ahead of target. Can you help us understand what the design win to revenue cycle looks like on the e-mobility side and, what are the e-mobility design win targets? I don't know if you sort of specified what those targets are. We have not specified what our targets are. I will tell you that e-mobility is now shaping up to be the majority of our sales activity in automotive and certainly represents an unfair share within our funnel as well as our recorded design wins. Typically, the design to design win to revenue cycle can be anywhere from one year - three years, depending on the application, depending on the customer. You know, in cases where we are winning with something that we already have on the shelf, so it's an existing part, just a few, you know, testing is required, the design to revenue cycle might be shorter. Where we are starting from scratch, we're designing a brand-new product, there, the design cycle is gonna be more typical of automotive, which is three-plus years. Wanted to move to, some supply chain questions now. To what extent did wafer, or foundry wafer supply constrain your revenue in 2023, and how are you feeling about wafer, you know, commitments from your foundry partners as you look into calendar 2023? Yeah. We've been in a wafer-constrained environment for the past almost two years at this point. We have three major suppliers for wafers, and the latest of which is TSMC, which we've engaged with for the past three years. TSMC has committed to giving us approximately 15% of our overall wafers coming from TSMC, and they're largely there right now, so they're about a quarter ahead. Still in a very constrained wafer environment for this year. When we started this year, we talked about we grew 30% growth revenue growth in fiscal 2022, and we talked about having a growth year just below mid-teens here in 2023 fiscal. As we moved throughout the year and got incremental supply from each of those suppliers, a little bit ahead on the TSMC ramp, a little bit more from our partner, Polar, and a little bit more from UMC, we were able to continue to increase that expectation of revenue growth in the year from below mid-teens to about 20%. In our last earnings call, about 24%. That expectation of revenue growth is really all calibrated to our comfort with the supply on the wafer side, given that we have over a year's worth of backlogs, so it's really all supply constrained still at this point. As you look to calendar 2023, have you completed the negotiations for wafer supply for this calendar year, or are those negotiations still ongoing? It's actively ongoing. Our fiscal year starts 1st April. It'll be our fiscal 24, so they're active, ongoing discussions with the wafer suppliers. What we've found typically is TSMC is really good at doing what they'll commit to do, and they're largely where they said they would be. You know, Polar's been a great internal partner for 18 years, and we have a great relationship with UMC. Those are actively ongoing, and we're balancing all the factors of, one, we want capacity. Two, the right technology. Three, of course, cost. And then the fourth one is geopolitical balancing, having a wafer supplier in North America and the other two in Taiwan. Probably up until about a year ago, I think you'd mentioned that the TSMC, UMC, the Taiwanese foundries, were able to get you lower wafer costs, and there might be gross margin advantage to shifting more of the wafer supply to those Taiwanese foundries. I think in the last year, because the Taiwanese have increased wafer pricing, and I think Polar's become a little bit more competitive, the gross margins may have balanced out. Is that still the case? Are you pretty agnostic at this point from a margin perspective, where you source the wafers? Or, do you know, is there still a preferred vendor from a margin perspective? It's not completely agnostic. Cost is certainly a factor, and they're different in prices. Over the last two years, TSMC has been very aggressive in the market in terms of pricing. 200 millimeter is not their sort of leading edge, so they've been very even more aggressive there. I think there's been some normalization of pricing between sort of the high end and the North American suppliers, particularly with Polar. Polar has really come up the ramp in terms of scale in their facility to what they can do right now, so they've made some cost improvements. I think it's become less material in terms of the mix. There's still some mix balance we can do there, but it will relate to technology, cost per wafer, and gross margin per wafer as well. Okay. You'd mentioned TSMC now up to 15% of wafer supply exiting fiscal 2023. You know, does that have a room to go higher? I know you haven't given a new target yet for 2024, but, you know, should we think over the next two, three years that the TSMC could become a bigger partner, or are you pretty comfortable at, you know, with the mix as it exits fiscal 2023? It will really depend on the factors I talked about. You know, there's a technology factor. There's a cost factor, of course. There's a regionalization factor. We haven't really, we're in that mix discussion right now, where we'd like to get our wafers from. I don't think we've committed to it being any higher. About a year ago, we said we'd get to 15%. We're there about a quarter earlier than we would be. You know, still working through some yield issues, quite frankly, and that happens as you take up a new supplier. It's a really long cycle time to bring on a new supplier in the wafer world to begin with, when you put on the automotive grade, it's even longer. Last question on the supply side. Wafer pricing has increased over the past couple of years given how constrained the environment is. As wafer foundry utilization start to loosen up, do you expect to see wafer pricing still moving higher for you through calendar 2023 or fiscal 2024, or do you think it starts to stabilize? Those are active discussions, as Derek said. Obviously, our hope is not. That continues to be an active dialogue for us. When you look at the headline numbers of utilization of a UMC or TSMC, you know, it's a bit more nuanced because we're in one particular fab with certain technologies on 200 millimeter, you know, 0.18 microns. That's automotive grade, so I think there's a bit of nuance even in their own pricing. Okay. I wanted to move to the magnetic sensor market. Maybe just to level set everybody, can you talk about who the primary competition is in current sensors and magnetic sensors, and sort of how do you distinguish or, you know, what sets Allegro apart from the competition in the market? Yeah. So magnetic sensing is obviously a very large market. You know, there's a lot of players. We are the leader, by any stretch of the imagination, you know, with over 20% share. We've been at it for the longest, I would say, and we've been really focused on that, and we've built leadership both through IP, but in very specifically in automotive, we are the leader by far. That comes with decades of year and of experience, customer intimacy, understanding of applications. It goes beyond just the product set. Obviously, and I've said this before, we've built up a really strong IP portfolio that serves as a barrier to entry. You know, I would say what sets us apart is not just the product, but how we understand the applications within those products or that the products get applied into. Everything we do is automotive grade, starting from the substrate on. We understand how customers engineer the products, how they source the products. Our engineering teams work very closely with our customers' engineering teams to solve problems as they're emerging. That deep customer intimacy and application expertise really lends itself to innovation that is very targeted on those applications. That takes years and years to overcome. You know, when I think then about current sensing specifically, we've translated that years of expertise in magnetic sensing into really leadership in current sensing. Today, we have probably the most accurate, most robust, most reliable current sensor on the market. We continue to innovate as we move the industry from Hall-based to XMR-based technology, which will bring more accuracy and more robustness to these applications. There are over 40 current sensing applications or sockets, if you will, on an electric car, and they're continuing to increase in terms of the demanding nature of those applications. Higher voltages, higher power ratios, more efficiency being required. We are up to the task with a big chunk of our R&D going towards innovating in those areas. Are those applications mostly in the traction inverter and the onboard chargers, or is it a pretty diverse set of applications in the EV? It's a very diverse set of applications, right? When you think about an EV, you've got a 400 or 800- volt power source, everything on the EV's operating at 12- volt, 24- volt or 48- volt. So, you've got a pretty big power conversion challenge. You've got to do it safely and you've got to do it efficiently. Every time you do power conversion, you need to measure the current before and after to make sure you've done that power conversion safely and efficiently. You've got the traction motor, which is operating at AC, you've got a DC-to-AC power conversion there as well. You definitely need current sensing all across the EV. There are applications like steering columns where you wouldn't think you need a current sensor, there are motor drivers, more importantly, our motor drivers that are operating most of the steering columns in the world. You need current sensors to make sure that the motor driver is operating efficiently. There are multiple applications across an EV which lend itself to our current sensors and the type of robustness we offer. We feel really good about our leadership position there. You say your strategic areas of EV and ADAS increased to 41% of the automotive Sales. Revenue sales in the September quarter. You know, how quickly do you think that could get to 50%? I know it's been a fairly, you know, 1%- 2% kind of per quarter, but, you know, should we expect that, you know, kind of that pace continuing? Do you see perhaps an inflection or an acceleration of the, you know, e-mobility as a percent of automotive revenue over the next couple of years? Yeah, that's a great question. We certainly expect that trend to continue as we see more EVs come out on the market. Today, we are still fairly limited in terms of the EV choices that consumers have. Within the next couple of years, we're gonna see a slew of new EV platforms from every major OEM. I think that starts to bring that inflection point where we will be above 50% of our automotive sales being in e-mobility. Can you spend a couple of minutes just discussing the XMR technology? I think that's one of the things that differentiates at least some of your newer products. What does that bring versus a Hall effect sensor? What's the competitive landscape? Perhaps on the financial side, has XMR really started to contribute to the revenue stream at this point, or is it still more sort of a future opportunity in terms of revenue contribution? Yeah. Hall effect has been around for decades, right? We were certainly the pioneers there, but, you know, it's a fairly well-served market. Even within Hall effect, there are nuances around performance, and we certainly are a premier offering there. Our customers realize it and we get the value for it. XMR will bring more robustness, more accuracy. Very specifically, we are focused on TMR, which is tunnel magnetoresistance technology, which we are pioneers in. We are actually in the market with an angle sensing application that uses TMR for highly accurate control of steering columns. We continue to extend that through the portfolio. We are seeing more and more applications demand higher robustness and accuracy, which you can only get with an XMR type application. We believe that we are well positioned as the market looks for these more demanding products to serve their needs. We expect the penetration of TMR into our overall magnetic sensing portfolio to continue over the next few years. Is it contributing to revenue today? Yes, it is. It is. Okay. Yes. Yeah. Um- We're shipping TMR products today. Okay. Yeah. No problem. Question just within the power IC market. You know, who's the primary competition in power ICs? What differentiates Allegro as you look at selling power ICs into the automotive or industrial markets? Quinn, I would say that the power IC market is even more well-served and fragmented. Where we focus is on building leadership in niche applications. Motor drivers for automotive is a great example, where we've parlayed our deep customer application expertise and intimacy into really understanding how to adapt motor driver technology into those applications and make them automotive grade. That's why we win. We've then taken that same automotive grade technology and applied it in very select industrial applications like data center. Data center for us is an energy efficiency play. As that market transitions to 48-volt and three-phase motor fans. One thing we know how to do is spin motors efficiently, fast, accurately, and that's what data center cooling tiers want. That's why they've picked our product, and that's why we built a leadership position there. There are numerous examples like that where we've taken, you know, PMICs or we've taken motor drivers and other power management solutions and really focused on our expertise in an application knowledge in automotive and turned that into leadership. Power IC businesses outpace the growth of the overall business over the past few quarters. Do you expect that to continue? We've been really pleased with the growth in our power management business. Some of it is related to the energy efficiency play in data center, like we talked about. In the past couple of quarters, I would say that because we're shipping from backlog, we've also made some choices around where we're gonna serve and where we're not, and some of it is around making sure there's continuity of operations for our customers. I would say that, you know, we should expect to see, you know, more balanced growth going forward. We are very pleased with the growth we're seeing in power management, and we should expect to see continued growth in that segment for us. Wanted to ask a question and I'll come to Heyday in a second. Feels like motor drives, lots of power applications are starting to transition from silicon FETs to GaN FETs. Mm-hmm. Does Allegro can Allegro drive both with your power ICs? Do you have a preference, or y ou know, to the extent that the world moves more in the direction of GaN. Yeah. Is that a opportunity for you? Is that a headwind? It is an opportunity now with the Heyday acquisition, right? Our current motor drivers don't have the ability to drive GaN or SiC-based devices, Heyday brings to us high voltage isolated gate driver technology that we can then use to drive GaN and SiC-based devices. That becomes really important as we think about the automotive ecosystem as electric vehicles now transition to higher voltages. Our drivers today can operate at about 110, 120- volts. With Heyday, we can go up to 1,200- volts. Our current sensors are already operating in that range, that opens up almost a $3 billion SAM for us as we look to expand into those applications in automotive. Great. Coming back to the data center opportunity you talked about. The data center market has cooled a little bit, but can you remind investors you won some significant designs over the last year plus in that data center market? Yes. How do you see those new designs layering in to the business over the next year or year plus? Yeah. We're really focused on the long term here in data centers, and we believe the energy efficiency play that our products afford, that application is a secular long trend that's gonna play out over the next decade. You know, quarter or two, we might see a little bit of digestion of the inventory, and sort of the build-out that has taken place. Over the long term, the design win momentum that we see gives us a lot of confidence that this is a market that's gonna continue to grow for us over the mid and the long term. I think another area of focus for you in at least on the R&D side for the power management business is on 48-volt. Mm-hmm. DC-to-DC or other power IC applications both for data centers and automotive. Can you give us an update on how you're thinking about the 48-volt market? Yeah. Where you're positioned? Yeah. I mean, you hit on it, right? We see great application within automotive as, you know, all cars are moving to 48-volt systems just with the higher efficiency they afford. You know, whether it's mild hybrids or full hybrids, 48-volt systems are becoming more pervasive in vehicles. In data center, there's a big move to 48-volt backplanes for the same exact reason. It's more efficient. Our power management ICs, which were built for automotive, are automotive grade, again, are getting great play in these demanding applications where robustness and reliability in harsh conditions matters a lot, right? For us, you know, think of us as we're really automotive first. We design and build products for automotive. Then we find these select industrial applications where we get a lot of resonance. That's really what we're seeing across the portfolio, including with our power management products. We've got about ten minutes left, but I've got a couple of financial questions, but I'll open up to the audience in case anyone has questions for management. When you think about wafer sourcing, in light of national security issues, export control rules, things like that, you know, you said you're sort of currently limiting TSMC as a supplier to 15%. Do you see or is there an intent or what kind of discussions are you having internally in terms of shifting maybe away from mainland China, away from the island of Taiwan, I mean, maybe more to North America, Europe, whatever it might be? Wanna do that one? We're not necessarily limiting TSMC to the 15%. That was TSMC's commitment to us, just to get to where they are. We're comfortable with that. Now we're sort of balancing where we want that wafers to come from, right? That is one factor, geopolitical. Polar is in Minnesota, supplies 40% of our wafers. We have the longest standing relationship of all of our suppliers with Polar. We've had for 18 years. They know our technology quite well. They, like many people, would have to expand their facility to give us significant upside. The other two fabs, both the TSMC and UMC, are both in Taiwan, so we don't have any wafer supplier in China today. Over time, I would envision us start to look more at a regionalization approach. There could be some, you know, there could be some opportunities in Europe, other opportunities in the U.S. or opportunities in mainland China for the China market, where 25% of our sales are. We're still on, you know, 200 millimeter wafers, 0.18 microns. There's some of it moving to 0.13-micron, so it's not leading edge technology, so that hasn't been a concern yet. We'll balance all those factors in terms of where we source our wafers from. Can you talk about lead times, how hard did they get? Very hard, I think, right now. You said they'll get back to normal by mid-this year. Mm-hmm. What is normal? As lead times get to normal, for this year, do you think your backlog, which you said is? Mm-hmm You know, 52 weeks or close, do you think that spring can get to in line with the lead times by mid-this year? It'll start mid-this year. I would say that traditionally, you know, we've had a couple of quarters with a backlog. That's normal for us. Keep in mind we have a design win backlog that gives us the forward visibility that turns into orders. At any given point of time, a couple of quarters worth of backlog is fairly normal for us. Lead times extended through the supply crisis, and we were in some cases as high as, you know, 48 weeks- 50 weeks. We're starting to see that moderate and really we don't like the lead times being that much, right? Because we wanna serve our customers in a better way. We think that by middle of the year we should start to come back more in the traditional, you know, 24, 30-week lead time period. We'll start that process now really, and hopefully by the end of our calendar year we'll get there. Okay. Maybe Derrick, a couple of financial questions. In the September quarter, your gross margin was 56.2%. Op margin 27.9%, you know, nicely ahead of some of the long-term targets that you've put out. You know, do you see sustainability to these numbers? What do you think has led the company to outperform your margin targets here in the near term? Sure. We're very pleased with where we ended up in Q2, and it's been very purposeful. As you know, there's been a structural transformation of the company over the last five years, moving from an IDM to essentially a fabless innovation company with only one backend facility. We've benefited from leverage. We've certainly benefited from mix, as Vineet's talked about with our strategic focus areas and our new products. Benefited a bit from price over the last year or two. But that's been a small portion of the three factors. The 56.2% in Q2, we had about 120 basis points of favorable foreign exchange coming from the Philippine pesos. You take that out, it's at about what our model was at the IPO, about 55%, probably a little bit ahead of where we thought we would be. You know, that was kind of a long-term model. I don't believe we'll stop there. We have multiple levers to continue to increase the gross margin that I'm ultra focused on with our operations team, and those include the biggest lever being mix. As we continue to introduce new products levered towards these markets, we've been talking about strategic focus areas, we can add a lot more value, we believe, and have a higher value proposition. BOM optimization in our own fab, in our own backend facilities with wafer optimization, as we've talked about. I think there's still significant opportunity for us to continue to improve gross margins. On the operating margin side, the last several quarters, we've dropped about 2x to the bottom line of sales growth as we leverage both the improvements in gross margin, but particularly, you know, the SG&A expenses. We'll continue to invest in research and development at about 15% of sales. We believe that's the growth engine of the company. You'll see the real drop to it have seen on the SG&A line. That nearing 28% operating margin, we'd expect that to continue to improve as we improve gross margins and we scale the top line. Can you give us any sense, you know, for the e-mobility products versus the traditional ICE solutions, is there a meaningful difference in margins? Yeah. Just, you know, the e-mobility, you know, sounds like that's a margin accretive part of the portfolio. What we've said publicly is, not all the time, it's a little bit more nuanced. When you look at our gross margins of being 56.2%, the sensor business is slightly above the power business. If you drill down further within that, there's some products in there that might be a higher gross margin product within sensors, even more so than the overall portfolio. From an e-mobility standpoint, it will depend. You know, there's some proprietary technology on the front end that's been invested in recently, so there's some depreciation. Over time, I'd expect that to be a higher gross margin. Where you really see the pronouncedness is in the product set or in the channel. The distribution channel is about 800 to 1,000 basis points higher gross margins than through OEM, simply because of the volumes. That's the long tail of 10,000 customers buying small volumes. If they wanna buy those products, they'll pay a higher price. Great. On the balance sheet, you've got roughly $300 million in cash, $25 million in debt. Pretty strong balance sheet. How are you thinking about capital allocation? What's your sort of ability to go out and, pursue M&A transactions? Is that a priority? Are you thinking about buybacks? You know, what are the biggest uses of cash this year? Yeah, I can start. priorities for the year? Vineet can certainly chime in. Our capital allocation view is, and we've said this a couple of times, is we really believe we have a significant opportunity to grow the business organically with the products Vineet's talked about, the end markets, our customers. First and foremost is to continue to invest in research and development, particularly in those strategic focus areas, to continue to be the number one leader in sensing, in certain IC power applications, particularly to be the leader, we've been the leader in Hall Effect technology, to be the leader in TMR technology. We'll continue to invest in research and development. We'll also continue to invest in capital expenditures, whether it's on our own backend, on wafer probing and assembly, even in the front end on certain proprietary technology. That's first and foremost. You know, secondly, we would look to do accretive M&A, M&A that makes sense for us, that fits squarely within our strategic focus areas, something that can be sold within our channels, something we have expertise in that accelerates our strategic roadmap. We have not talked about a dividend at this stage. We think we have better opportunities for that cash. From a buyback standpoint, our ownership structure is, well, 37% of the shares are traded publicly, so we've not really talked about a buyback at this point. Yeah. I would just add that, you know, on M&A, it's gonna really emanate from our strategic focus areas, and we wanna be very disciplined, right? We're not interested in diversifying. The focus is really important to us, and as Derek said, it's gotta be an asset that really helps us move our strategy forward and complement our portfolio. Here is a great example of that, right? Great technology asset that really fits with our channel, fits with our focus on e-mobility, and it's gonna be a great growth driver for us down the road. A large transformative deal that just gets to scale but takes it a different direction doesn't sound like that's high on the priority list. It's not. We've got a couple minutes left. If there are any last questions from the audience? No? All right, well, we'll wrap here. Vineet, Derek, thank you very much. Quinn, thank you very much.