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Date

Thursday, April 23, 2026 at 4:30 p.m. ET

Call participants

  • President and Chief Executive Officer — Jeffrey Niew
  • Senior Vice President and Chief Financial Officer — John Anderson

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Takeaways

  • Total revenue -- $153 million, up 16% year over year, at the high end of guidance.
  • Earnings per share -- $0.27, up 50% year over year, above the midpoint of guidance.
  • Cash used in operations -- $1 million, within guided expectations, including $8 million in outflows related to a divested CMM business.
  • MedTech and specialty audio revenue -- $68 million, up 14% year over year, driven by product introductions and strong demand.
  • MedTech and specialty audio gross margin -- 53.5%, up 480 basis points year over year; projected to return to 51% for full year, in line with prior year.
  • Precision devices revenue -- $85 million, up 17% year over year, with growth across medtech, defense, industrial, and electrification markets.
  • Precision devices gross margin -- 39.2%, up 350 basis points year over year, benefiting from improved pricing and demand, partially offset by higher specialty film costs tied to an energy order.
  • Book to bill ratio (precision devices) -- 1.19, marking the sixth consecutive quarter above one, with broad-based order strength at both OEMs and distributors.
  • R&D expense -- $10 million for the quarter, up $1.4 million from the prior year due to higher project spending in both segments.
  • SG&A expense -- $28 million, up $3 million from the previous year, driven by higher commissions, expense timing, and increased headcount in precision devices.
  • Interest expense -- $2 million, down $1 million year over year because of lower average debt.
  • Share repurchase -- 276,000 shares repurchased at a total cost of $7.5 million during the quarter.
  • Ending cash & revolver borrowings -- $41 million cash and $131 million in borrowings under the revolving credit facility at quarter-end.
  • Net leverage ratio -- 0.6x trailing twelve months adjusted EBITDA; liquidity exceeded $310 million including unused revolver.
  • Fiscal Q2 2026 revenue guidance (period ending June 30, 2026) -- $152 million to $162 million, with 8% year-over-year growth at midpoint.
  • Fiscal Q2 2026 adjusted EBIT margin guidance -- 20% to 22% projected for the quarter.
  • Fiscal Q2 2026 EPS guidance -- $0.28 to $0.32, midpoint up 25% year over year.
  • Capital spending -- $11 million for the quarter; full year expected at 4%-5% of revenues, mainly for capacity expansion related to a large energy order.
  • Precision devices pricing strategy -- "Pricing strategy is becoming a big part of our opportunity every single year," with anticipated 2%-4% price increases per year in this segment according to Jeffrey Niew.
  • Precision devices margin expansion outlook -- Management expects at least a 100-basis-point full-year gross margin improvement in 2026 driven by the specialty film line ramp in the back half.
  • PD capacity utilization -- Running at about 80% on average, with room to increase output mainly through additional direct labor rather than equipment investment.
  • Large energy order -- Specialty film production for a $75 million-plus energy order is on target for a full ramp-up by end of fiscal Q2 and expected to deliver $25 million-plus in revenue at favorable gross margins during the rest of 2026.
  • Long-term agreement trends -- Management reports growing customer discussions in defense for three- to five-year orders, but current book to bill is driven by orders set to ship within twelve months.
  • Adjusted EBITDA growth target -- Leadership states confidence in "deliver an increase in 2026 adjusted EBITDA above our cumulative annual growth target of 10% to 14%."

Summary

Knowles Corporation (KN +2.42%) showcased substantial year-over-year growth in revenue, EPS, and gross margin for both its MedTech and Specialty Audio and Precision Devices segments, coupled with strong order momentum indicated by a book to bill of 1.19 in the latter. Forward guidance reflects management's confidence in sustained organic revenue growth exceeding prior target ranges, with anticipated margin expansion driven by both pricing and operational efficiencies, particularly in specialty film ramp tied to the energy order. Customers in the defense end market are showing increased interest in multi-year purchasing commitments, and management highlights further upside for adjusted EBITDA in 2026 above the previously communicated growth target.

  • Jeffrey Niew noted, "MSA’s first quarter revenue grew well above our annual organic growth target of 2% to 4%," but full-year growth is expected to normalize to this range.
  • John Anderson confirmed, "Q1 gross margins were 53.5%, up 480 basis points from the year-ago period, driven by both increased factory capacity utilization and favorable mix" for MedTech and Specialty Audio.
  • Precision Devices margin expansion for the rest of 2026 will be driven by increased capacity utilization, especially as the large energy order is fully ramped and operational headwinds fade.
  • Management expects Precision Devices full-year gross margin improvement of at least 100 basis points, with directional commentary suggesting possible 200 to 250 basis points of additional upside as the specialty film headwind subsides in the back half.

Industry glossary

  • Book to bill ratio: A measure of demand, calculated as the ratio of orders received to units shipped and billed in a given period; a ratio above 1 indicates rising backlog and demand exceeding supply.
  • Basis point: One one-hundredth (0.01%) of a percentage point, used to express changes in interest rates, margins, or yields.
  • Specialty film line: Knowles Corporation's production capability within Precision Devices dedicated to manufacturing film-based capacitors, notably used for large energy market orders.
  • MEMS microphones: Micro-Electro-Mechanical Systems-based microphones, offering enhanced sensitivity and miniaturization, used in advanced audio devices.
  • RF filters: Radio frequency filters that selectively permit signals at certain frequencies, crucial for satellite, defense, and communications applications.

Full Conference Call Transcript

Jeffrey Niew, our President and CEO, and John Anderson, our Senior Vice President and CFO. Our call today will include remarks about future expectations, plans, and prospects for Knowles Corporation, which constitute forward-looking statements for purposes of the safe harbor provisions under applicable federal securities laws. Forward-looking statements on this call will include comments about demand for company products, anticipated trends in company sales, expenses and profits, and involve a number of risks and uncertainties that could cause actual results to differ materially from current expectations.

The company urges investors to review the risks and uncertainties in the company’s SEC filings, including, but not limited to, the Annual Report on Form 10-K for the fiscal year ended December 31, 2025, periodic reports filed from time to time with the SEC, and the risks and uncertainties identified in today’s earnings release. All forward-looking statements are made as of the date of this call and Knowles Corporation disclaims any duty to update such statements except as required by law.

In addition, pursuant to Reg G, any non-GAAP financial measures referenced during today’s conference call can be found in our press release posted on our website at knowles.com and in our current report on Form 8-K filed today with the SEC. This will include a reconciliation to the most directly comparable GAAP measure. All financial references on this call will be on a non-GAAP continuing operations basis, with the exception of cash from operations, unless otherwise indicated. We have made select financial information available in webcast slides that can be found in the Investor Relations section of our website. With that, let me turn the call over to Jeff, who will provide details on our results. Jeff?

Jeffrey Niew: Thanks, Sarah, and thanks to all of you for joining us today. We started 2026 with solid financial results in Q1 and great momentum entering the rest of the year. Our strategy of leveraging our unique technologies to design custom engineered solutions and then delivering them at scale for blue chip customers in high growth markets that value our solutions is proving to be a powerful combination. We had strong organic growth in the first quarter. We delivered revenue of $153 million, up 16% year over year, at the high end of our guided range.

EPS of $0.27, up 50% year over year, exceeded the high end of our guided range, and cash utilized in operations of $1 million was within our guided range. Now on to our segment results. In Q1, MedTech and Specialty Audio revenue was $68 million, up 14% year over year. Our customers’ new product introductions, coupled with our position on these platforms, have led to stronger than expected growth in the first quarter. Knowles Corporation continues to demonstrate our ability to deliver unique solutions with superior technology and reliability our customers have come to depend on. MSA’s first quarter revenue grew well above our annual organic growth target of 2% to 4%.

However, the hearing health end market is expected to continue to grow at normal historical rates in 2026. Therefore, we are projecting MedTech and Specialty Audio will grow within the 2% to 4% range for the full year 2026. Beyond 2026, we are positioned well to win next-generation designs for MEMS microphones and balanced armature speakers. As I said during our year-end call, we also see the prospect to increase our content per device in next-generation hearing health products and expand our reach with our microsolutions group, which provides the opportunity in the future to increase growth rates above the historical rates.

In the Precision Devices segment, Q1 revenue was $85 million, up 17% year over year, with all our end markets we serve—medtech, defense, industrial, and electrification—growing on a year over year basis. Let me share a couple of highlights driving growth in our end markets this quarter. We saw strength in the defense market across our product families. Our capacitors were in demand supporting ongoing OEM and defense programs, new products starting production, and share gains. We also saw broad-based orders for our RF microwave products as we continue to be a sole supplier on a number of key defense programs.

Additionally, we do expect increasing demand in 2027 and beyond driven by the replenishment of stocks in connection with the Iran conflict. In the industrial market, demand continued to grow with strong order activity across a wide range of our capacitor products supporting a multitude of applications and industries at both our distribution partners and OEMs. As an example, our ceramic capacitors were in high demand in the semiconductor equipment market and also for use in downhole applications. Additionally, with inventory challenges we saw last year behind us, we believe our distributor partners’ orders are aligned with end market demand.

In addition to the strong shipments we saw in the first quarter, our book to bill in Precision Devices was very strong at 1.19. This ordering pattern was broad based, and this marked the sixth consecutive quarter where the book to bill was greater than one. We see ordering strength across all our end markets both at OEMs and with our distribution partners. A robust pipeline of new design wins coupled with favorable secular trends gives me confidence in our ability to continue to grow revenue above the high end of the organic growth target of 6% to 8% for Precision Devices in 2026.

I continue to be excited by the strength of our business and the momentum we exited the first quarter with. We are well positioned for continued strong organic revenue growth and margin expansion through 2026. We believe this momentum is sustainable for two key reasons: First, our portfolio of businesses are well positioned in markets with strong secular growth trends. Whether it be defense, medical, industrial, or electrification, the secular drivers of growth in these markets are forecasted to be positive for the foreseeable future. Second, we design high performance customized solutions for our customers that have demanding applications, and we have the manufacturing capabilities that allow us to ramp up these solutions quickly and efficiently.

This combination differentiates us, allowing us to garner premium margins for the products we produce. This is proving to be a winning combination. Before I turn the call over to John to cover our financial results and provide our guidance, I would like to reiterate what I have said on previous calls. I believe Knowles Corporation has entered a period of accelerated organic growth. With a very healthy backlog of existing orders, we now expect our revenue growth in 2026 to be above the high end of our target organic revenue range of 4% to 6% that we provided at our Investor Day in May.

Our strategy of leveraging our unique technologies to design custom engineered solutions, then deliver them at scale for blue chip customers in high growth markets that value our solutions, is proving to be a powerful combination for driving revenue growth, expanding margins, and strong cash flow to drive shareholder value. Now let me turn the call over to John for our financial results and our Q2 guidance.

John Anderson: Thanks, Jeff. We reported first quarter revenues of $153 million, up 16% from the year-ago period and at the high end of our guidance range. EPS was $0.27 in the quarter, up $0.09 or 50% from the year-ago period and above the midpoint of our guidance range. Cash utilized by operating activities was $1 million, within our guidance range. In the MedTech and Specialty Audio segment, Q1 revenue was $68 million, up 14% compared with the year-ago period, driven by increased hearing health shipments associated with our customers’ successful new product introductions. Q1 gross margins were 53.5%, up 480 basis points from the year-ago period, driven by both increased factory capacity utilization and favorable mix.

For full year 2026, we expect MSA gross margins to be in line with 2025 margins of 51%. The Precision Devices segment delivered first quarter revenues of $85 million, up 17% from the year-ago period, driven by broad-based strength across medtech, defense, and industrial end markets. Segment gross margins were 39.2%, up 350 basis points from 2025, as improved pricing and higher end market demand is driving increased factory capacity utilization. These improvements were partially offset by higher factory costs in our specialty film product line as we ramp up production capacity to support our $75 million-plus energy order.

While we delivered significant year-over-year margin improvement in the first quarter, I am confident in our ability to further improve Precision Devices gross margins in 2026 as we increase production volume in our specialty film line. On a total company basis, R&D expense in the quarter was $10 million, up $1.4 million compared to Q1 2025 on higher project spending in both MSA and PD segments. SG&A expenses were $28 million, up $3 million from prior year levels, driven primarily by higher sales commission, timing of expenses, and additional headcount within the Precision Devices segment to support future revenue growth, including new product initiatives.

Interest expense for the quarter was $2 million, $1 million lower than last year due to lower average debt balances. Now I will turn to our balance sheet and cash flow. In the first quarter, we utilized $1 million in cash from operating activities, and capital spending was $11 million. Cash from operations includes $8 million in outflows related to the CMM business, which was divested at the end of 2024. Payments related to the CMM business are now substantially complete. During the first quarter, we repurchased 276 thousand shares at a total cost of $7.5 million. We exited the quarter with cash of $41 million and $131 million of borrowings under our revolving credit facility.

Lastly, our net leverage ratio, based on trailing twelve months adjusted EBITDA, was 0.6 times, and we have liquidity of more than $310 million as measured by cash plus unused capacity under our revolving credit facilities. Moving to our Q2 guidance. For Q2 2026, revenues are expected to be between $152 million and $162 million, up 8% year over year at the midpoint. R&D expenses are expected to be between $9 million and $11 million. Selling and administrative expenses are expected to be within the range of $26 million to $28 million. We are projecting adjusted EBIT margin for the quarter to be within the range of 20% to 22%.

Interest expense in Q2 is estimated at $2 million, and we expect an effective tax rate of 15% to 19%. We are projecting EPS to be within a range of $0.28 to $0.32 per share, up $0.06 or 25% year over year at the midpoint. This assumes weighted average shares outstanding during the quarter of 87 million on a fully diluted basis. We are projecting cash from operating activities to be within the range of $20 million to $30 million. Capital spending is expected to be $8 million.

We expect full year capital spending to be approximately 4% to 5% of revenues as we continue to make investments in the first half of this year associated with capacity expansion related to the large energy order we received in 2025. We started 2026 with significant year-over-year revenue and earnings growth, and we have positive momentum entering the remainder of the year. Our first quarter performance, combined with a robust backlog and increased order activity throughout the first four months of the year, give me confidence in our ability to deliver an increase in 2026 adjusted EBITDA above our cumulative annual growth target of 10% to 14%.

I will now turn the call back over to the operator for the Q&A portion of our call. Operator?

Operator: Thank you. We will now open the call for questions. We will now begin the question and answer session. If you have dialed in and would like to ask a question, simply press star followed by the number one on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw your question, simply press the star one again. Your first question comes from the line of Christopher Rolland with Susquehanna. Please go ahead.

Christopher Rolland: Hey, guys. Thanks for the question, and congrats on the results. In your press release, I think you mentioned numerous design wins across multiple end markets. And, Jeff, you might have addressed this fully in your prepared remarks, so I am not sure. But if you did not, if you could highlight perhaps those products, the applications, how you view the lifetime value of these sockets—any color would be appreciated.

Jeffrey Niew: Yeah. I mean, Chris, I wish I could sit there and point to one specific one. The one obviously that we continue to ramp up or work on is the energy order, which will be fully ramped up by the end of Q2, so that is not a significant contributor in Q1. But it is very broad based. In medical, we have a lot of applications relative to wearable-type devices. In industrial, we have a lot of things going on in downhole applications—a lot of good stuff going on there. Defense, I would characterize just briefly—orders are up. There is no doubt orders are up.

But the level of activity relative to everything that is going on in the globe is really high. We think in defense there is strength in 2026 that is probably stronger than we expected, and 2027 looks to be shaping up to be even better for defense. Overall, I think we are executing on this concept that we built out an engineering team that can customize to solve really hard problems across these applications, and then we can scale the production very quickly on these customized solutions. It is just very broad based what we are seeing.

Christopher Rolland: Excellent. And then maybe, John, a question for you. You talked about gross margin expansion and favorable pricing. Maybe if you can talk about pricing increases—whether you put them on or whether you have an ability to increase price from here—and then just more broadly, the drivers of gross margin beyond pricing. I think you talked about ramping the specialty film line, which is great. Any other things to think about on gross margin and drivers there would be great.

Jeffrey Niew: Let me take the pricing question, and I will let John cover the other drivers of gross margin expansion. More and more, Chris, what we are starting to realize as we go through this journey is that we have a lot of very strong positions, and we are looking at this on a regular basis. I would say it is more specific to the PD business, where we have a lot of different applications and a lot of different customers. Pricing strategy is becoming a big part of our opportunity every single year.

The things that we have done should lead us in the 2% to 4% range in the PD business on price per year, somewhere in that range, and we should be able to garner that. It is a little different in the MSA business. We have a very limited customer base, and we have very strong margins in that business, so we are not really seeing pricing increases there—hence why we are saying that gross margins are not expected to expand. But pricing is one piece; there are other things as well.

John Anderson: Chris, I talked in my prepared remarks about the MSA gross margins. We expect that to be flat around the 51% level for the full year. They were above that in Q1; we were operating near maximum capacity, and we also had some favorable mix. But for MSA, think year-over-year flattish at a very attractive 51%. For PD, that is where we think there is margin expansion opportunity. We delivered 39.2% this quarter, and as we look, Q2 will be in that range.

But as we enter the back half of 2026, we see increasing capacity utilization in both the specialty film line as we ramp up production—we will be ramped up as we exit Q2, as Jeff mentioned—and we should see some really good improvement in capacity utilization in the back half. Also, in our ceramic capacitor line and our RF filters, as demand is increasing, there is opportunity. Our variable margins are very strong in all of our businesses. We will probably need to hire more direct labor as this continues to ramp, but there is not a tremendous amount of overhead needed to support increased volume.

Christopher Rolland: That is great. Thank you, guys.

Jeffrey Niew: Sure. Thanks, Chris.

Operator: And your next question comes from the line of Robert Labick with CJS Securities. Please go ahead.

Analyst: Hi. This is Will on for Bob. Looking at specialty film pilot programs—you have discussed downhole fracking and energy transmission pilots—can you give us an update on how they are progressing? When do you know if they may convert to larger programs? And did you win any new pilots in the quarter?

Jeffrey Niew: There is a list we review on a very regular basis of the pilots. I would say we are due to deliver pilots to 20 different customers over the next quarter or so—just figure every quarter we are delivering pilots. Again, my base is up in downhole. I would add a little bit more specific on the energy order: we are on track from a ramp standpoint, we are on track from a yield standpoint, and we feel very strongly about that $25 million-plus at pretty good gross margins for the rest of the year, especially in the back half as it is fully ramped.

Bottom line is, everything is heading in the right direction here for the specialty film line. We see the opportunity, as John laid out, that within Precision Devices—especially on a year-over-year and sequential basis—it is going to help drive improved gross margin. I will be surprised if for the full year we do not improve gross margins within the PD segment by 100 basis points, and it is really driven in the back half of 2026.

Analyst: That is super helpful. Thank you. And you talked about the tailwinds from the war in defense. Are there any headwinds from the war that you are evaluating?

John Anderson: Just a little bit on input cost. Transportation costs are fairly low. Think of the size of our components—they are very small—and we manufacture in a lot of the regions where we are selling, so the impacts are fairly minimal. Maybe some resin-based products have seen modest increases, but not significant.

Jeffrey Niew: And on costs that we are looking at, if transportation were to become more substantial, a lot of our customers take possession at our dock—we are not paying for the shipping anyway. For input costs like resins, it does not seem to be a big portion of our bill of materials.

Analyst: Thank you very much.

Operator: Thank you. And once again, if you would like to ask a question, simply press star 1 on your telephone keypad. Your next question comes from the line of Anthony Stoss with Craig-Hallum. Please go ahead.

Anthony Stoss: Thank you very much. Jeff, getting back to pricing power—maybe I was not following it correctly. It seems like there is a ton of activity, especially on the military defense side, and maybe there are puts and takes in each of the different divisions. Given the nature of activity, do you think it is fair to say that gross margins and pricing in 2027 on average are going to be higher than 2026?

Jeffrey Niew: No. I would say we have a pretty strong cadence of how we do pricing at this point. I would not say we are going to see outsized pricing. If I say it is in PD, 2% to 4% per year—maybe it gets toward the higher end of that range. I am not seeing more than that. You are right, the demand—more than defense, the demand across the board—is pretty high. We talked about the book to bill being 1.19; that is on top of 16% growth. So that book to bill represents a fair amount of orders. I just got off the phone with our sales team—the order rate in April is already strong again.

We are looking at another strong month of bookings in April. We are spending more time analyzing pricing and things like that. But we do not have huge amounts of cost in order to get these units out; they are very profitable already in the PD segment. We are going to continue to follow our playbook of increasing price on a somewhat regular basis—by market, by product, by customer—to cover any input costs that increase and add some more where we can.

John Anderson: I would add, Tony, from a gross margin standpoint, there is some opportunity in 2027 to be above 2026 just because of the trajectory through 2026. We are increasing gross margins, and 2027 margins should be similar to what we exit 2026 at, which will be higher than what we are delivering right now.

Anthony Stoss: Yep. Got it. That makes sense. And then two last questions on the energy ramp. Are there any technical hurdles or production setup hurdles that you still need to overcome before the end of Q2, or is it pretty much blocking and tackling at this point?

Jeffrey Niew: It is a lot of blocking and tackling. All the equipment is on site; it is a matter of bringing it up, fully qualifying it, and then running high volume through it. We are not waiting for a piece of equipment that may not arrive on time—everything is in place. In Q1, they were slightly ahead of what they had projected in terms of output and getting things qualified. I am not committing that we are going to be ahead for the first half, but everything seems to be on track. I was just down there a week and a half ago at the facility—everything looks great. We are in pretty good shape.

Anthony Stoss: Okay. Last question. Your RF group that you do not talk about that often—quite a few of the RF power amp folks are talking about huge orders in satellite. Do you have any products that are exposed to satellite, or can you tweak anything to gain exposure to those huge satellite orders?

Jeffrey Niew: We do have some satellite business. I would not say it is a huge driver. What we provide are super high-performance RF filters, which is why we can garner great gross margins and make good money in this space. There is more of a mix in the satellite business of using more commercially available RF filters versus specialized stuff. To the extent we can be differentiated, we will sell into that market. But when they come to us and say they want something really low cost at a very low price, we tend to say there are other guys willing to do that.

So we do have some exposure, but it is usually when they need something very unique and special, and we can garner very good gross margins.

John Anderson: And I would add, we talked about 17% year-over-year revenue growth in Q1 in the Precision Devices segment. RF was a big contributor to that. It is smaller as a percent of the total, but their growth rate was in the double digits.

Jeffrey Niew: My point is we are not going to deviate from that. We do not want to be in the commoditized portions of the market, and there are some commoditized portions. My take is satellite is a bit more mixed in terms of what they are looking for.

Anthony Stoss: Got it. Thanks for all the color, guys.

Operator: Thank you. And the next question comes from the line of Tristan Gerra with Baird. Please go ahead.

Tristan Gerra: Hi. Good afternoon. In Precision Devices, could you give us a sense of where your front-end utilization rates are? And as utilization rates go to full utilization—above 90%—what type of gross margin would that imply? And are you able to quantify the impact on gross margin currently from the energy order production ramp, and when does that headwind go away?

Jeffrey Niew: First, on capacity utilization—it is different from product to product. We have our filters, ceramic capacitors, and film capacitors (from the Cornell acquisition). It is a little different by product. Generally speaking, we have done a lot of capacity planning for the mid to longer term in the last quarter. With the growth rate we are having—at least within 2026 and likely into 2027—we are going to need more direct labor. We are not going to need a lot more equipment; there may be some selective places we need equipment.

We are probably running on average in the 80% range right now across the PD business, and we have some room to bring up output without adding a lot of expensive capacity. Our variable margins are very strong, so we expect to drop a lot of this revenue growth to the bottom line. As far as the energy order, it is definitely weighing on the PD segment. We have not quantified it precisely, but it is going to be a driver of margin expansion in the back half. Directionally, think of maybe 200 to 250 basis points better than we are doing today as it relates to the PD segment, and that is driven heavily by this energy order.

Tristan Gerra: Okay, great. That is very useful. And then, given lead times expanding and all types of shortages happening in the industry, are you seeing appetite from customers to try to secure capacity into 2027? Have you done LTSAs in the past? Is that the type of discussion that customers are coming to you with, or is it mostly short lead-time orders?

Jeffrey Niew: In our distribution business, for the most part it has been short lead-time orders. In our OEM business, there is a lot more discussion—specifically in defense—about larger orders. We are starting to see more people come to us saying they want to place an order for three or five years instead of a year, which would be more typical for defense. There is a lot of negotiation and discussion going on about that right now. In industrial and medical, we have very long-term customers; we get regular forecasts from them, and we are prepared to meet their requirements. Defense is the area where we are starting to see more discussions about bigger orders.

But I will add, that book to bill of 1.19 did not include any big orders scheduled out more than a year. There is nothing in that book to bill that would be an anomaly that drove it up to 1.19. I would say 97% of that book to bill will be shipped within twelve months.

Tristan Gerra: Great. That is very useful. Thank you.

Operator: Thank you. And there are no further questions at this time. Ladies and gentlemen, this now concludes today’s conference call. You may now disconnect.