Good day ladies and gentlemen, welcome to Fabrinet's Financial Results Conference Call for the Fourth Quarter of Fiscal Year 2020. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions on how to participate will be provided at that time. As a reminder, today’s call is being recorded. I would now like to turn the call over to your host, Garo Toomajanian, Investor Relations.

Thank you, operator and good afternoon everyone. Thank you for joining us on today's conference call to discuss Fabrinet's financial and operating results for the fourth quarter of fiscal year 2020, which ended June 26, 2020. With me on the call today are Seamus Grady, Chief Executive Officer and Csaba Sverha, Chief Financial Officer. This call is being webcast and a replay will be available on the Investor’s section of our website located at investor.fabrinet.com. Please refer to our website for important information, including our earnings press release and Investor Presentation, which includes our GAAP to non-GAAP reconciliation. I would like to remind you that today's discussion will contain forward-looking statements about the future financial performance of the company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from management's current expectations. These statements reflect our opinion only as of the date of this presentation and we undertake no obligation to revise them in light of new information or future events except as required by law. For a description of the risk factors that may affect our results, please refer to our recent SEC filings, in particular the section captioned Risk Factors in our Form 10-Q filed on May 5, 2020. We will begin the call with remarks from Seamus and Csaba, followed by time for questions. I would now like to turn the call over to Fabrinet's CEO, Seamus Grady. Seamus.

Thank you, Garo, and good afternoon everyone. During the fourth quarter we demonstrated the flexibility of our business model as we generated financial results that exceeded our guidance ranges, while we continued to strictly observe enhanced measures to monitor and mitigate the potential impact of COVID-19 on our employees, customers, and operations. I am very proud of our team, and I'm grateful for their efforts in helping us achieve these excellent results. Revenue in the fourth quarter was $405 million, or $5 million above the high end of our guidance range, driven by less severe supply constraints than contemplated in our guidance, coupled with stronger than expected Telecom demand at the end of the quarter. From a profitability perspective, as we anticipated, our fourth quarter gross margin fell short of our targeted 12% to 12.5%, but improved from the third quarter at 11.8%. Continued efficiency gains more than offset the slight headwind that we continue to see from efforts to mitigate the potential for COVID-19 infection. That said, we remain fully committed to returning to our target gross margin range of 12% to 12.5% and expect to do so during fiscal 2021. From an operating perspective, we continue to run a very tight ship with SG&A expenses coming in just under 3% of revenue in the quarter. We continue to expect SG&A expenses to be a lever for operating margin improvement over the longer term. As a result, revenue upside in the fourth quarter largely fell to the bottom line, resulting in non-GAAP net income of $0.96 per share. In the fourth quarter, we produced a substantial $46 million in operating cash flow and $31 million in free cash flow. We anticipate that cash flows will remain very healthy as we look ahead. For the full fiscal year, we produced record revenues of over $1.64 billion and non-GAAP net income of $3.73 per share. Total operating cash flow for the year was a record $151 million, and free cash flow was $108 million. Looking at some of the details, the quarter played out much as anticipated, with sequential revenue growth in both Telecom and Datacom, while the industrial lasers and automotive markets showed sequential declines. As a result of these dynamics, optical communications grew to 78% of total revenue, with 22% coming from non-optical communications. Optical communications revenue of $315 million also represented slight growth from the third quarter. This includes the anticipated impact of an inventory correction at one of our customers, as we discussed on last quarter's call. Within optical communications, Telecom revenue was $229 million, up more than $5 million from Q3, and Datacom revenue was $86 million, up $1 million sequentially. We believe the inventory issues that impacted our Telecom business in Q4 will be largely over in the fiscal first quarter, which when combined with the increase in demand we saw at the end of the fourth quarter, should contribute to strong Telecom growth in the first quarter. By technology, silicon photonics-based optical communications revenue increased 4% from the third quarter to $90 million or 22% of total revenue. Revenue from QSFP28 and QSFP56 transceivers also continued to grow and was up 6% from the third quarter and 18% from a year ago at $54 million or 13% of total revenue. By data rate, revenue from 100-gig programs of $159 million was down slightly from $161 million in the third quarter. By products rated at speeds of 400-gig and above grew by 50% sequentially to $43 million. We expect revenue from 100-gig products to remain strong, while those at 400-gig and faster data rates should continue to trend upward. Looking at our non-optical communications business, revenue of $90 million moderated as expected from $103 million in the third quarter, due primarily to anticipated sequential declines in revenue from the industrial laser and automotive markets. Industrial laser revenue was $41 million compared to $46 million in the third quarter, and automotive revenue was $27 million compared to $31 million in the third quarter. Sensor revenue was $3 million in the fourth quarter consistent with the prior quarter, and other revenue was $19 million, representing a $3 million sequential decrease. As we look to non-optical communications drivers in the first quarter, we expect to see continued softness in industrial lasers and automotive, reflecting broader market conditions. However, we remain optimistic about opportunities in these markets over the longer term as the COVID-19 impact settles down. We also believe that current ramps of new automotive products such as LiDAR sensor from Velodyne will soon begin to offset some of the weakness in the traditional automotive markets. As we look ahead, our new product introduction or NPI capabilities will continue to be an important factor for winning new business. By partnering with customers during the design process, we can provide quick turnaround prototyping services, help them improve design for manufacturability and enable them to accelerate time to market before we begin volume manufacturing. We provide these NPI services in Thailand, as well as closer to our U.S. customers in Silicon Valley, and now also in Israel. Our Israel operation is up and running, as well as being fully ISO 9001 qualified, and we completed our first revenue shipments to customers in the fourth quarter. We are seeing good traction with new customers in Israel and are excited about this additional on-ramp to volume manufacturing in Thailand, which we expect to replicate the success we've seen at Fabrinet West in Silicon Valley. All in all, we remain optimistic about the markets we serve, and in particular, the demand trends that we see for the products we're producing for our customers despite the COVID-19 headwinds. Our optimism is also reflected in our increased customer penetration and diversity as measured by the number of customers contributing more than 10% to our total revenue, which we disclosed annually. We had three 10% customers in fiscal 2020 compared to just one in 2019, an increase in the diversity of our major revenue sources. Lumentum represented 19% of revenue, and revenue from Acacia and Infinera each increased in 2020 to represent just over 10% of revenue for the year. Our top 10 customers overall represented 79% of revenue. Our ability to quickly transfer and ramp complete network systems was illustrated by our successful transfer of Infinera's network systems products in 2020. We expect further evidence of the success of our proven transfer capabilities to be demonstrated with the transfer of Cisco products currently underway at our Chonburi campus. This program remains on track to ramp at the end of the calendar year. We continue to monitor the increase in demand from existing customers for additional capacity, and consequently have begun the next capacity expansion of our Pinehurst campus. We have begun the process of relocating some existing office space in order to expand our manufacturing footprint at Pinehurst, enabling existing customers to further expand capacity at that site. We expect this expansion to add approximately 100,000 square feet of manufacturing space at Pinehurst, an increase of 10% from our current manufacturing footprint at this campus. Even with these investments in growing our business, we anticipate generating significant free cash flow again in fiscal 2021. When combined with the record cash balance of nearly $500 million at the end of fiscal 2020, we are very favorably capitalized entering the new fiscal year. As such, our board has increased our share repurchase authorization up to $100 million. This expanded buy-back program reflects our commitment to returning value to shareholders by continuing to invest in our long term growth. In summary, we delivered a strong fourth quarter with revenue that was above our guidance, and we are confident that we can deliver an even stronger performance in the first quarter. We ended the fiscal year with three 10% customers and record cash balances, best in combination with our expectation that we will continue to generate significant cash flows, are enabling us to step up our share repurchase activity and return additional value to our shareholders. We entered fiscal 2021 with investments already underway to expand our manufacturing footprint in support of growing demand, and with our new facility in Israel now contributing to our growth. While we remain vigilant in keeping our employees safe, we're very proud of the excellent results we delivered in fiscal 2020. Our track record demonstrates that our strategy is working and we are more optimistic than ever about the future. Now I'd like to turn the call over to Csaba for additional financial details and our guidance for the first quarter of fiscal 2021.

Thank you, Seamus and good afternoon everyone. I will provide you with more details on our financial results for the fourth quarter and our guidance for the first quarter of fiscal year 2021. We were very pleased to deliver financial results that exceeded our guidance changes in the quarter. Upside in the quarter was due to a smaller than anticipated COVID impact that we assumed in our guidance and Telecom demand that grew faster than anticipated towards the end of the quarter. As a result, revenue was $5 million above the high end of our guidance range at $405.1 million. This result also includes the impact of an inventory correction at a particular customer, which was in line with our expectations at approximately $15 million. We believe these corrections are largely behind us at this point. Now turning to the details of our P&L. A reconciliation of GAAP to non-GAAP measures is included in our earnings press release and investor presentation, which you can find on our website. We continue to follow strict safety procedures in our facilities to keep our customers, employees, and their families safe during the pandemic. While the cost associated with this are a slight headwind to gross margin, in other efficiencies we were able to drive a sequential improvement from 11.2% to 11.8% in the fourth quarter. We remain committed to gross margins in the range of 12% to 12.5% and believe that with continued efficiency efforts we can return to that range during fiscal 2021. Non-GAAP operating expense during the quarter was $11.9 million or 2.9% of revenue, resulting in a non-GAAP operating income of $36.1 million or 8.9% of revenue. We expect that the improvements again generating gross margin going forward will largely be reflected in improving operating margins as well. Taxes in the fourth quarter were $0.6 million, and our normalized effective tax rate was 4.1%. Non-GAAP net income of $36 million or $0.96 per diluted share, a $0.04 increase from the third quarter despite lower revenue, due primarily to our improved gross margins. For the full year, revenue was $1.64 billion, non-GAAP gross margin was 11.7%, and operating expenses were 2.9% of revenue, resulting in non-GAAP net income of $3.73 per diluted share. On a GAAP basis, net income for the fourth quarter was $28 million or $0.75 per diluted share. In addition to share-based compensation expenses, amortization of debt issuance costs, our GAAP results for the fourth quarter included a non-recurring goodwill impairment expense and other expenses. Turning to the balance sheet and cash flow statement, at the end of the fourth quarter, cash, restricted cash, and investments were a record $495.5 million, an increase of approximately $30 million from last quarter. Operating cash flow was $46.2 million, and with CapEx of $14.8 million, free cash flow was $31.4 million in the fourth quarter. Our cash flow for the full year was also strong. Operating cash flow was a record $150.7 million, and free cash flow was $108.3 million. We did not repurchase shares during the fourth quarter. At the end of the year, we had $41.5 million remaining in our share repurchase program. For fiscal 2020, we repurchased a total of 355,000 shares at an average price of $58.37, with a total cash outlay of $20.7 million. From a capital allocation perspective, our first priority remains maintaining sufficient funds for working capital and maintenance CapEx, closely followed by risk mitigation, which includes FX hedging and maintaining balances that we believe will carry us through unanticipated risks like natural disasters or prolonged economic downturns. Our current cash balance sufficiently covers these operational safety and security priorities, as well as our locations for opportunistic M&A. We expect to continue to generate strong cash flows in the years ahead. We now believe we can leverage cash generated in a balanced way by reinvesting in growth, but also more aggressively returning value to shareholders. As such, our board has increased the size of our current stock repurchase authorization from the remaining $41.5 million to up to $100 million. In addition to our open market share repurchase program, we will evaluate implementing the 10b5-1 program to enable us to repurchase shares automatically, even during periods that our open market program has been restricted. We believe this overall capital allocation strategy, which is focused on maintaining operations and risk mitigation, while also reinvesting in growth and returning value to investors, ideally serves all of our stakeholders including employees, customers, and shareholders. I would now like to turn to our guidance for the first quarter of fiscal year 2021. We are encouraged by growing demand trends in optical communications that we believe will more than offset the current softness we are seeing in other markets. We expect the stronger Telecom demand that we saw at the end of the fourth quarter to continue in the first quarter. We expect Datacom and industrial laser revenue to slightly decrease, and we believe traditional automotive revenue softness will continue, partially offset by growth from advanced automotive technology programs. We expect total revenue in the first quarter to be in the range of $410 million to $430 million. We are optimistic that we can drive continued efficiencies in gross margin, even with seasonal cost increases that we typically face in the first quarter. From an earnings perspective, we anticipate non-GAAP net income per share in the first quarter to be in the range of $0.93 to $1 and GAAP net income per share of $0.77 to $0.84 based on approximately 37.7 million fully diluted shares outstanding. In conclusion, we are very pleased to have exceeded our guidance ranges for the fourth quarter and to deliver record results in a number of key metrics for the full year. We are optimistic that stronger demand trends in Telecom could more than offset headwinds in other parts of our business, and we are confident that we can continue to deliver strong value to shareholders as we look ahead.

Thank you. Our first question comes from Samik Chatterjee with JPMorgan. Your line is now open.

Hey guys, thanks for taking my questions. If I could just start off with the outlook here, particularly in relation to capacity additions and quite a strong outlook, and you're seeing strength across your businesses. What are your customers communicating to you in terms of capacity additions required over fiscal ’21 and did your CapEx pick up a bit here? So are you kind of – are you looking forward to a more material increase in CapEx in fiscal ’21 or have you already cycled past the CapEx additions that you needed to for your customers? I have a follow-up. Thank you.

Yeah, I think – hi Samik. I think that will be a fair assessment. You know the CapEx increase that you saw was additional capacity we've been adding throughout the year, and then as we’ve communicated in our prepared remarks, the roughly 100,000 square feet of manufacturing space that we're adding at the Pinehurst campus where we're relocating a number of office spaces into one location and then effectively building a new building and converting existing office space into manufacturing space, and that will be about 100,000 square feet of additional capacity. As we've said previously, our existing customers for the most part, you know who are in the Pinehurst campus, they really want to stay in Pinehurst. So if their business expands, we have to expand our footprint somehow in Pinehurst rather than try to force the customers to relocate to Chonburi. So really Chonburi is aimed at capacity additions for new customers. But, you know we were quite – I would say quite optimistic about the demand trends we're seeing in the marketplace, notwithstanding, let’s say the COVID impact from our perspective I think, the way we are thinking about COVID right now is it's a – we are in the new-normal situation now, so we factored that in, we've taken it into account, and the demand that we're seeing is really what's driving the increase in capacity that you're seeing us talk about here.

Got it. Just following up on gross margins here, you did mention that you expect to be back in the long-term range of 12% to 12.5% here in fiscal ’21. Just help me think about outside of the revenue, as it kind of – as we go through the year, probably we’ll have sequential growth in revenues as we go through the year. But outside of that ramp, what are the other drivers here, because I think you mentioned most of the COVID impact you should be seeing cycling past that in the first quarter itself. So what are the other drivers to think about timing when you get back to that range?

Hi Sam, this is Csaba. So in regard to our gross margin projections for the next fiscal year and fiscal quarter, obviously as we mentioned in our prepared remarks, we’d like to think that the COVID-19 impact is becoming part of our existing business so, other than that, we are making up the cost that we are spending on employee safety and all the social distancing related expenses which we anticipate to continue. We are anticipating to offset that with operational efficiencies. If you look at our performance in Q4, we were able to increase our gross margins by about 60 basis points from continuous efficiency improvement. So typically in the first quarter we see a bit of headwind from annual rate increases and obviously the ongoing expenses that we foresee from COVID-19, we are working hard and diligently to offset those by productivity and efficiency improvements, such as automation and all those productivity improvement actions that the operations is driving through. So other than the revenue and operating leverage, we are working hard to improve the efficiency. So again, we’d like to think the COVID related headwinds are going to be offset in a longer term and we can return to our target gross margin range during fiscal 2021.

Yeah, if I could just maybe add to that Samik, if you take our – the headwinds and the tailwinds that we're looking at right now, so the headwinds, as Csaba mentioned, the COVID headwinds are now just part of the normal way that we do business and that’s probably 20 to 25 basis points of a headwind that we’re carrying, with all of the protocols to do with COVID. Secondly, we have the merit increase that we implement yearly. So even though we are in a COVID situation, we want to make sure we take great care of our employees. So we have implemented merit increases for our employees that presents a headwind mostly in Q1 in this quarter. And then the tailwinds, obviously again as Csaba mentioned, the efficiency improvements that we've been able to generate, frankly very tight cost containment and cost control. We keep our costs under very tight control. You'll see our OpEx; for example, it's 2.9% of revenue. I don't think there are too many other EMS companies with that kind of OpEx. Therefore the leverage we get as we grow the company, you know a lot of the incremental gross margin drops to the bottom line. So we get the leverage there. So again, a combination of all of those factors, we feel we are in quite a good place in the sense that the headwinds, you know we know about them, we factor them in and we managed to draw back the vast bulk of it, so that we can improve the gross margin as we go forward.

Okay, thank you. Thanks for taking my question.

No problem. Thank you, Samik.

Thank you. Our next question comes from John Marchetti with Stifel. Your line is now open.

Thanks very much. Seamus, I was wondering if you could go back and talk a little bit about the strong Telecom demand that you saw that came in towards the end of the quarter. Curious if that was across multiple segments, if it was really geared towards geographies that maybe were starting to come out of COVID a little bit earlier than some others or any kind of color there that you can provide would be helpful.

Yes, so the Telecom revenue growth that we saw was really a combination of maybe the inventory correction that we have seen in the prior quarter, you know coming back as we had expected coming back last quarter. And then you know we did see some growing demand at the end of Q4 and into Q1, like I say, with the effects of that inventory correction, and also have some of the higher, I would say the higher speeds, the higher rated products. So the higher-end products that we saw coming back. And we, as we look into Q1, we do see Telecom being – continuing to be quite strong actually. I’m also Csaba, if you’d add anything to that.

No, as you mentioned Seamus, it’s been pretty much across the board. So Telecom was pretty strong and we see an uptick in demand in the higher data rate programs, John, so that’s what we had seen. Again, it's hard to tell whether it's a particular geography or particular customer that we feel good about this trend in the Telecom demand that we saw and we expect to continue that in the next quarter.

Yeah, understood. And then maybe on the supply chain side Seamus, you talked a little bit last quarter and through the quarter about some of the challenges on the supply chain side and making sure that that was being adequately planned for. Just curious where that stands now. It sounds like from your remarks, the bulk of that is behind you and you feel like the supply chain is also getting back to normal. Just want to make sure that I read that correctly.

Yeah, I would say the supply chain challenges John, you know we’re always I would say borderline paranoid about supply chain, because you know if you're missing that last resistor, you can't ship. So we're always completely paranoid and remain very, very vigilant on supply chain. I think, the way I would characterize it John is we have a good feel for what's going on. We feel we have our arms around this, but I wouldn't say it's behind us. We always start every quarter with a big nut to crack in terms of the challenges, the supply chain challenges we have, and then we have just, you know we believe, I would say the best supply chain team in the industry. We just go after it every quarter, every day, not every quarter, every day, and we did go after those challenges to make sure we get our fair share and in some cases our unfair share of the parts that are out, and the parts are on allocation in some cases. It’s a little bit different to maybe prior supply chain and challenges. If you go back a couple of years ago, you had the MLCC situation. At this time around, it's more widespread, which makes it a bit more of a challenge. You could look at that a couple of ways. You could say when it's spread across multiple commodities there far, note there’s no one commodity that’s going to become a bottleneck, but they really are still, I would say a number of challenges. We feel we have our arms around this, and the biggest impact we see right now is, maybe less to do with leaving revenue on the table and more to do with revenue and output being nonlinear. So we’d be a little bit more backend loaded than we'd like to be. We’d like to produce in a very linear fashion, so that we can produce the quarter. If you look at our production, our operations we like to be kind of flat loaders for the quarter. Not always possible, but we certainly target to be level loaders, and this quarter we feel we are a little bit more backend loaded, so a little bit of an impact on linearity, more so than on actual output if that makes sense.

Yes, and just a follow-up on that Seamus. I mean obviously that has a little bit of an impact on margins, but do you see customers, are you asking customers then to place orders with a little bit lean times, just so you can make sure that you have your arms around that supply chain or are customers still pretty much behaving the same way on the order side?

Yeah, so you’ve hit the nail on the head John. That’s exactly what we're doing. We're working with customers to make sure we go beyond the normal component lead time. In the end when components are tight, when component supplies are tight, whoever - whichever customer makes a commitment to the supplier to, you know, to order beyond the component lead time will typically get the parts. So we're working with our customers to make sure because you know once we order beyond lead time, we can't be financially responsible for that, we have to make sure that our customers, if you like – underwrite that. So that's really what we're working on right now, is to make sure we have that arrangements in place, a kind of a three-way understanding with our customers. You know if you like underwriting any orders we placed beyond the component lead time and then the suppliers honoring that. They see values in components of causality; see value in repurchasing commitments beyond the component lead times. So that's really the challenge we have right now, to work through all of that to make sure we secure our share and profits.

Thanks very much Seamus.

No problem, thank you John.

Thank you and our next question comes from Alex Henderson with Needham. Your line is now open.

Thank you very much. Just a couple of mundane questions to start off with if I could. Could you give us some sense of what's going on with your tax rate? Obviously, it’s moving around a lot because of the exchange rate moves, and the government I think could talk about giving some discount. Can you give us some guidance on what we should be using for FY’21?

Hi Alex, this is Csaba. So basically if you see, our tax rate was slightly down year-on-year. In fiscal 2020, our effective tax rate came in at about 4.14%, which was slightly below last year again as you mentioned certain movements around. So in the longer term, for modeling purposes, we still anticipate the tax rate to be around 5% range, in the low 5%.

Low 5%, great, thanks. And then the second one I wanted to ask, more pertinent is around the systems business. Clearly, it's a pretty big nut coming down the pipe. You have two potential customers impacting the numbers. The first one obviously had an inventory correction that should be falling out sequentially, but I don't think it's fully falls out until the December quarter, and then you have a second customer coming in the December quarter. Should we be thinking about that as a material contribution in this December quarter from that additional customer or is that really going to be metastasizing as a revenue driver starting in the March quarter and into the June quarter? How do we think about those tethering in?

So we've actually started some of that transfer. It's not meaningful in terms of revenue this quarter, but we actually do have some of that transfer activity going on, and it's more of the if a transfer and qualification type activity that's going on, and we'll be ramping that over Q2 and Q3 and out into Q4 actually. I think it will become meaningful...

If I could, what is it not relevant this quarter? Did you mean the June quarter or the September quarter, I'm not sure what you meant.

I mean the September quarter.

Thank you.

Yes, it’s not particularly meaningful. Meaningful in the sense that actually you know we have a number of programs and part numbers and you know in the qualification loop, in the qualification process, but not particularly meaningful in terms of shipped revenue in the quarter. I think, you know the December quarter, yeah it will become, it will start to become meaningful, I think in the December quarter, but it's probably really more out into March and June quarter that it becomes quite significant, quite meaningful. The other customer that you mentioned, you know from our perspective we think the inventory corrections are largely behind us. We understand they may have, they may have inventory corrections still going on, but you know they have more suppliers than just Fabrinet. So maybe affecting those other suppliers, we are not quite sure. And then of course there's other system companies, and it's really an important part of our strategy. We're not trying to target every company that we're, but there are a handful of companies, you know who we feel would be a really good fit where we can – we are currently supplying let’s say the optical components to those companies, that even if you know Huawei gets kicked out of networks around the world, those other companies will benefit from that and in the end they’ll come back to our optical components suppliers to get those optical components and so we should end up, you know if you like being neutral from that point of view. And then they the upside for us is as those companies then start to hopefully pick up Huawei business around the world and become customers of Fabrinet for system level business, you know we're quite hopeful that it should represent an opportunity for us to grow our business in the system space.

Just to fine tune it a little bit, so is it sufficient positive sequentially from the December quarter into the March quarter to offset normal seasonality? Is that the right way to think about the magnitude of it?

I think that will be a good way to think about it, yeah. That will be perfectly correct.

Thank you very much. I’ll recede the floor.

No problem. Thanks Alex.

Thank you and our next question comes from Tim Savageaux with Northland Capital. Your line is now open.

Thanks, and good afternoon.

Hi Tim!

Congratulations on the results. You'd mentioned a combination of factors. I mean it looks like – you know I currently expect the Telecom business to decline and it looks like it's up about you know $20 million relative to where my expectations might have been. You mentioned a couple of factors; one, kind of less supply headwind; two, accelerated Telecom demand. It looks to be on the 400-gig, 600-gig side toward the end of the quarter. If you look at what you might have expected entering the quarter and how it ended up, am I kind of in the range here, or you expected Telecom down. It was pretty nicely and how would you portion the upside via those two factors, less supply issues versus increased demand?

So I think you know we had anticipated that COVID would impact us to the tune of about $25 million to $30 million in the quarter. That’s what we had factored into our guidance and you know the actual impact was probably much smaller than that. It was in the $10 million to $15 million range thereabout. So I think it's a combination of a number of factors. I think that's a big factor. Also, the customer as you mentioned with whom we have the inventory correction. For the most part that has self-corrected this past quarter, and we are back to where we would like it to be. So a couple of factors and then as you said, you know the higher bandwidth, higher speed products, we did see an uptick in demand there towards the end of the quarter, so a few factors impacting the Telecom growth there.

Yeah, very helpful. So to kind of quantify that COVID impact, question on the Datacom side. I guess both results and guidance, given you know some pretty broad-based strength we're seeing in cloud, 100-gig Datacom modules in particular across the ecosystem from the module level down the IC level. You know flattish, flat to down is I think a little surprising in that context. I wonder if you could talk about dynamics on the Datacom side. We did see an uptick in QSFP here in the June quarter. It looks like you expect that to tick down a little bit. I wonder if you could talk about what’s impacting the Datacom outlook.

Yeah, so a couple of things. So first of all, I think some of the kind of historical pricing, maybe price erosion that we had seen, the outside price erosion that we had seen historically, that’s going to settle down now. We're back to, I would say normal levels of price erosion in the Datacom space for us. We do have a couple of, I would say customer specific program transition things going on where maybe an existing program is tapering off at a particular customer, where you know the new generation product is beginning to ramp, but hasn't fully ramped to the extent that its offsetting the declines in the program that's ending if you follow me. So that’s really what we see going on in Datacom. Overall we are quite optimistic about Datacom I’d say. We haven't – we don't believe we've lost any share or anything like that. It's more of a, like I say a customer, a program transition that's going on for one particular product is ramping down as another one ramps up.

Okay, thanks very much.

No problem. Thank you, Tim.

Thank you, and I'm showing no further questions in the queue at this time. I'd like to turn the call back to Seamus Grady for any closing remarks.

Thank you, operator. Thank you for joining our call today everyone. We are pleased to have exceeded our guidance in the fourth quarter. Our track record of success demonstrates that our strategy is working, and we have never been more optimistic about our future. We look forward to speaking with you again next time. Until then, goodbye and stay safe!

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your program and you may now disconnect.