Keysight Technologies, Inc. (NYSE:KEYS) Q4 2022 Earnings Call Transcript

Neil Dougherty: Well, I certainly think over the longer term that as the supply chain normalizes, there will be an opportunity for us to reduce some of the working capital that’s built up over the course of the last year. We see it in terms of inventory, at least inventory via the prices that we’re paying for parts. We see it money tied up in terms of commitments to buy future inventory where we paid in advance for future delivery — has been a use of working capital that, frankly, is new over the course of the last 12 months. And then frankly, the supply chain situation has significantly impacted the linearity of our revenue within the quarter. You can imagine when you move from more of a just-in-time environment where you’re just building and shipping and building and shipping.

We’re doing a lot more build to a certain stage, wait for parts, finish and ship. And so, our revenue is tended to be more back-end loaded, which results in us carrying more receivables at the end of the quarter than we would if we were shipping in a more linear fashion. So again, I think it’s a function of how does supply chain normalize and when does that eventually happen? That is — you need a little bit of a crystal ball to answer that question. But when it does happen, we would see — we would expect to see an ability to reduce working capital.

Operator: That concludes our question-and-answer session for today. I would like to turn the conference back to Jason Kary for any closing remarks.

Jason Kary: Thank you, Dante, and thank you, everyone, for joining us. As he mentioned, that concludes the call, and we wish you all a good evening and look forward to seeing you soon.

Operator: This concludes our conference call. You may now disconnect.