Exhibit 99.2
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FINAL TRANSCRIPT
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CONFERENCE CALL TRANSCRIPT
TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
EVENT DATE/TIME: NOV. 11. 2004 / 5:00PM ET
EVENT DURATION: N/A
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FINAL TRANSCRIPT
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TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
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CORPORATE PARTICIPANTS
FRANK NAGLE
Tegal Corporation - IR
MIKE PARODI
Tegal Corporation - Chairman, President, CEO
TOM MIKA
Tegal Corporation - EVP, CFO
CONFERENCE CALL PARTICIPANTS
TOM ARAPETUS
Friedman Shanner - Analyst
EUNJIN UM
Kingsbridge - Analyst
JOE CALDWELL
Investment and Philanthropy Corporation - Analyst
FRED RAMBERG
MS Howe - Analyst
LARRY FOX
Analyst
LEE COHEN
Analyst
ADAM GURNEY
Kingsbridge Capital - Analyst
MATT TUCKLE
Analyst
DWIGHT LABLU
Analyst
PRESENTATION
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OPERATOR
Good day, ladies and gentlemen, and welcome to the Tegal second quarter fiscal
2005 earnings conference call. (OPERATOR INSTRUCTIONS). As a reminder, at this
conference is being recorded for replay purposes. I would now like to hand the
conference over to your host for today, Mr. Frank Nagle, Tegal Investor
Relations.
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FRANK NAGLE - TEGAL CORPORATION - IR
Good afternoon and welcome to Tegal's investor conference call for the second
quarter of fiscal 2005 which ended September 30, 2004. This is Frank Nagle on
behalf of Tegal Corporation Investor Relations.
A digital recording of this conference call will be available one hour after its
completion. And it will be accessible through midnight on Thursday, November 18,
2004. To access, investors should dial area code 888-286-8010, or area code
617-801-6888 and enter the past code 52308643. This conference call also is
available online via the Investor Section of the Company's Website at tegal.com,
along with a copy of the Company's earnings release.
Before we begin, it is my duty to review with you the important Safe Harbor
statements that should be taken into consideration when listening to comments
that will be made on this call. Except for historical information, matters
discussed on this call are forward-looking statements. Such forward-looking
statements are subject to certain risks and uncertainties, including but not
limited to industry conditions, economic conditions, acceptance of new
technology, the growth of target markets, as well as other risks.
Actual operations and financial results might differ materially from Tegal's
expectations as a result of these factors or unanticipated events. Specifically,
we refer you to the risks and uncertainties as set forth in the Company's
periodic filings with the Securities and Exchange Commission.
Now I would like to introduce Mike Parodi, Chairman, President, and Chief
Executive Officer of Tegal.
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
Good afternoon everyone, and welcome to Tegal Corporation's investor conference
call for the second quarter of fiscal 2005. With me today is Tom Mika, our
Executive Vice President and Chief Financial Officer. During this afternoon's
conference call we will follow our usual format. I will begin by providing an
overview of the business highlights for the quarter. Tom will then review the
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TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
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details on our financial performance. And after that we will open it up to any
questions you might have.
For those of you who are familiar with Tegal you know that we are engaged in a
process to move our Company from niche applications into high-volume markets.
While this sounds like a straightforward proposition, it is actually a complex
challenge involving several key elements. One, remaining committed to critical
advanced technologies that we have developed over several years as the markets
for devices and for our equipment begin to emerge. Two, adding promising new
technologies through company and product acquisitions and then successfully
integrating them into our strategy and operations. Three, introducing our
capabilities to an expanded set of customers and to new management teams at
existing customers. And four, ensuring that we have the right organization,
people and resources to anticipate and satisfy our customers' needs today and
well into the future.
It is one thing to sell a single system to a customer for their internal R&D
program, and wholly another to satisfy the needs of a high-volume manufacturer.
The risks to such customers of making the wrong choice are very substantial.
Their decision process is long, detailed and demanding and often includes the
evaluation of several different suppliers of several different equipment types
over the course of many months. Furthermore, suppliers who don't offer
significant benefits to those customers are simply not offered the chance to
compete for the business.
I'm pleased to say that Tegal is actively engaged with customers for such
opportunities, that we have made substantial progress toward the goal of being a
supplier to high-volume manufacturers in our industry, and that we're confident
we'll be able to demonstrate significant and measurable success in the current
fiscal year.
Our focus is and must remain on becoming a supplier to high-volume manufacturers
in our industry. It is what will propel our revenue growth to the next level,
and what is required to ramp our business in the future. We're single-minded
about achieving this goal. We're already achieving milestones as we advance
toward this goal. Let's review some of the progress that we have made during
this past quarter.
First, during the quarter we shipped and installed an Endeavor PVD cluster tool
at a prominent global consumer electronics manufacturer. The Endeavor Deposition
System is being used for critical process steps in the manufacturer of FBAR
devices. These film bulk acoustic resonators make up a highly specialized MEMS
device that is being incorporated into a variety of wireless products using high
frequency transmission speeds, including WiFi hubs and cell phones.
Because of the strong demand for these devices, some of the other manufacturers
are stepping into this market, and all are evaluating the Endeavor System for
their critical process needs. We believe that our patented technology in this
area is unique and enabling, so we expect to take a commanding lead in
deposition systems in this market.
Next, we are building a PVD 300 OnCore system in our factory in Petaluma that we
expect will soon be approved for evaluation by a Tier 1 device manufacturer for
wafer level packaging applications. We completed the design and development
based on the alpha system and technology acquired from First Derivative Systems
in April 2004. Wafer level packaging is a relatively small market today, but is
expected to grow substantially as device manufacturers begin certain enabling
tail-end applications in-house. A commitment to an evaluation involves
significant expense on the part of a device manufacturer, and is typically not
done without an expectation of production orders.
Third, we know of at least two device manufacturers who have made the commitment
to enter high-volume manufacturing of nonvolatile memories. Both of these device
manufacturers are current customers of Tegal, and we are in contention for
additional high-volume business at both. We believe this represents a
substantial sales opportunity for Tegal.
It is important to note that Tegal invested in etch technology in anticipation
of the need for etch systems for high-volume manufacturing in nonvolatile
memories. And we believe we're well ahead of the other potential suppliers as a
result.
Four, during the quarter we entered into negotiations with one of our European
customers for multiple etch systems for a major fab expansion. This customer is
experiencing high demand for its specialized devices. Our systems are very low
cost of ownership tools, and we are the supplier of record for this account. We
anticipate the first of several orders within the current quarter.
Finally, we're on target for completing development of our NLD product, which we
acquired from Simplus Systems in December of last year. We are processing
customer wafers, and expect to announce evaluation orders from Tier 1 customers
within the next two quarters.
I would now like to turn the call over to Tom Mika, who will review our
financial results for the quarter.
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
Revenues for the second quarter of fiscal 2005 were $5 million, an increase of
55 percent from 3.2 million reported in the second quarter of fiscal 2004, and
an increase of 45 percent from the first quarter of fiscal 2005. Tegal reported
a net loss for the second quarter of 2.5 million, or 5 cents per share, compared
to net loss of 1.7 million, or 10 cents per share, for the same quarter one year
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TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
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ago. Sequentially the Company's net loss decreased from the prior quarter loss
of 6.3 million, or 15 cents per share.
Gross profits for the second quarter of fiscal 2005 were 38 percent compared to
31 percent in the same quarter one year ago, and 23 percent in the first quarter
of fiscal 2005. The increase in margins in the quarter resulted from a more
efficient absorption of overhead costs on higher revenues.
Operating expenses for the second quarter of fiscal 2005 were 4.4 million, an
increase of 2.1 million from the same quarter one year ago. The major increases
during the quarter compared to one year ago were in G&A, $1 million; R&D,
$700,000; and sales and marketing, $300,000. Of the $1 million increase in G&A
expenses approximately $800,000 is paid to consultants and attorneys for
projects which are near completion.
Our operating expenses for the past two quarters reflect the full integration of
personnel from two acquisitions, Simplus Systems Corporation and First
Derivative Systems, Inc., and the addition of temporary headcount and other
expense to bring our NLD, OnCore, PVD300, and Compact products to market. We
have funded these programs using the Kingsbridge equity facility, which is
precisely the purpose for which we intended it.
We sold approximately 2.4 million shares of common stock to Kingsbridge during
the quarter at an average price of $1.12 for a total proceeds of 2.6 million.
Cash and equivalents at the end of the second quarter of fiscal 2005 was 4.3
million compared to 4.7 million at the end of the last quarter. Currently there
are 46.6 million shares outstanding.
I will now turn the call back to Mike for some final comments.
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
We have made substantial progress during the quarter in our transition to
becoming a supplier to high-volume device manufacturers. We're in the process of
introducing three major new products to existing and new customers. And our
substantial investments in the etching of nonvolatile memories have put us in
the forefront as manufacturers commit to ramping production in these devices.
We're a definitely on course, and we expect to be able to continue to
demonstrate even more traction in our areas of focus during the months remaining
in our fiscal year.
At this point I will now turn the call over to the operator for questions, which
we encourage.
QUESTION AND ANSWER
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OPERATOR
(OPERATOR INSTRUCTIONS). Tom Arapetus (ph) of Friedman Shanner (ph).
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TOM ARAPETUS - FRIEDMAN SHANNER - ANALYST
I have a question. You said the three products -- I was in the last conference
call too and you said you had three products that were going to be coming out
soon, and you just mentioned it again. Do we have a timetable for that?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
Yes, we do. The product start will be out during the first half of next year. We
expect to have the first product out in Q1, and the follow-on products coming
out in the quarter after that.
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
This is Tom Mika. I think it is important to note that in each of these products
we're now doing customer samples to verify process results.
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TOM ARAPETUS - FRIEDMAN SHANNER - ANALYST
Now another question that I have is (indiscernible) integration of Simplus and
all the acquired companies going, is that fully integrated yet?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
We're in the process of that integration. The transfers of the people have been
made. In the case of First Derivative Systems, we're building, as we mentioned
in the earlier portion of the call, we're actually building the systems here.
The people are in the middle of transitioning to this location. The Simplus
Systems acquisition has been fully integrated and they are currently here
working on the projects right now.
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TOM ARAPETUS - FRIEDMAN SHANNER - ANALYST
How many employees do you have?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
Worldwide approximately 120.
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TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
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TOM ARAPETUS - FRIEDMAN SHANNER - ANALYST
Okay. Because there's been some questions about that. One last question, guys.
You been great, and I will let you guys go on. Last conference call you happened
to state a number of 40 million in terms of revenues. Now were we talking about
fiscal year 2005, fiscal year 2006? And are we still on that course?
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
This is Tom Mika. What we had said in the last conference call is that we were
confident that coming out of this current fiscal year which ends March 31, that
we could see a run rate that would put us in that revenue level. And we still
believe that to be the case. What we are involved in doing is putting out
systems for an evaluation in Tier 1 customers. So we really believe that that is
achievable and continue to stand by that for fiscal 2006.
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OPERATOR
Eunjin Um of Kingsbridge.
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EUNJIN UM - KINGSBRIDGE - ANALYST
I have a couple of questions actually. You have several evaluation and sampling
orders in the pipeline, and some already in the evaluation stage with some top
tier companies. Can you discuss where you are in those evaluation stages? Is it
close to being coming to a decision? And how soon we can hear any type of
announcement in regards to turning those evaluations into some hard multiple
orders?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
Right, as you said we're in the middle of that process. The nonvolatile memory
market, as you know, continues to be one that we have focused on for our etch
products. And customers that we're working with right now are indicating that
they will be beginning to their ramping of production next year. And we have had
early indications of that. And so we expect over the next two quarters that we
will see further confirmation of that. The markets, of course, will dictate how
that plays out, but we're very confident that they're going to go forward with
their programs. And we have every reason to believe that we will be the company
that will be chosen to do that.
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
Let me just add to that. In the NLD and PVD300 areas all we're really expecting
in the coming year is to actually place evaluation tools into Tier 1 customers.
So we're not expecting production orders for those types of systems until the
following year.
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EUNJIN UM - KINGSBRIDGE - ANALYST
When you talk about evaluation stage, what type of time frame does it usually
mean with these type of placements in these companies? How long does it take for
them to really get into the machine and test it?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
They can run six to nine months typically at this stage.
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EUNJIN UM - KINGSBRIDGE - ANALYST
And I just want to follow up. Anticipating that some of these evaluations and
sampling orders will turn into multiple orders, do you have the manufacturing
capacity to support volume ramp up as well as deliver these machines on time?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
Absolutely we do. This facility was always geared for high-volume manufacturing.
For those who don't know that this was a Motorola company at one time. And
Motorola put that infrastructure in not only here in Petaluma, but worldwide for
our ability to service our customers at the locations where they have their
wafer fabs. Our capacity in this facility is well in place. It is a matter of
putting incremental headcount on to deal with the orders as they come in. So
we're very confident about that.
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
Just to give you an idea of the type of operating leverage that we believe that
we have, we think our facility, without any significant additions to the
facility, can handle about 100 advanced systems a year, with our systems selling
for -- currently selling for between $2 and $3 million each. So that's a
capacity of $200 to $300 million, which is 10 times our current size.
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OPERATOR
Joe Caldwell of the Investment and Philanthropy Corporation.
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JOE CALDWELL - INVESTMENT AND PHILANTHROPY CORPORATION - ANALYST
Just wondering at $40 million revenue level what the cash flow would look like?
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TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
Our business plan at that level next year is on a cash basis slightly better
than break even.
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JOE CALDWELL - INVESTMENT AND PHILANTHROPY CORPORATION - ANALYST
So you think you could be cash flow positive barely at that point?
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
That's correct.
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JOE CALDWELL - INVESTMENT AND PHILANTHROPY CORPORATION - ANALYST
That is all I needed to know.
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OPERATOR
Fred Ramberg of MS Howells.
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FRED RAMBERG - MS HOWELLS - ANALYST
We have been seeing an increase in the nonvolatile memory of the kind that calls
for Tegal equipment, specifically FeRAM. Can you give me an idea of how far
along the ramp companies like Fujitsu and Ramtron and others are before they
need new equipment? In other words, how much of the capacity can make that
nonvolatile RAM are they at now?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
I think they're bumping right up against their capacity, and they are in that
decision making process. Based on what we are seeing they are running three
shifts a day, seven days a week. So they're bumping up against that need now.
And those devices are continuing to get embedded into a number of the WiFi types
of applications because of the power consumption issues. So we are relatively
confident that that business is going to continue to ramp.
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FRED RAMBERG - MS HOWELLS - ANALYST
Right. And so for some time it is about a 1 to 1 capacity versus demand growth
for whoever gets those types of orders. Now I've checked reasonably extensively.
I still don't see folks who can run wafers with the results that you get, but
you must feel that you have some competitive players there. Just tell me, is it
an outside chance you would lose that business to someone? Is a head-to-head
fight at this point, or is it fairly well a lock if you don't trip over your
shoelaces?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
I think it is the latter. But having said that, there is always an opportunity
for you to do that. Of course customers do not like you to be the dominant
supplier because then they have no leverage on you, and they would like to try
to commoditize that relationship.
Having said that, the competitors that we see out there tend to be local in the
region, particularly in Japan. And the experience that we've seen with those
customers are such that they have gone out and they've done the appropriate
sampling. And they have come back to us and continue to indicate to us that we
are the process tool on record. And they tend to be very conservative, and
therefore they tend to not make changes when they have their revenue at stake.
So all of the indications we're getting are that they will continue to purchase
tools from us as they begin to ramp.
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FRED RAMBERG - MS HOWELLS - ANALYST
That's been kind of what I have seen too. So go get them guys.
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
We intend to.
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OPERATOR
Larry Fox.
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LARRY FOX ANALYST
My question to you in for the next quarter as far as projection are concerned,
what do you think the book to bill ratio might turn out to be?
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
We're still at the revenue levels where any kind of estimates like that are just
very misleading, and don't really tell the story. So we're not making any
estimates.
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OPERATOR
Lee Cohen, a private investor.
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TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
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LEE COHEN ANALYST
I have a question. Thanks for taking the call. Will there be any need to raise
additional capital and further dilute the amount of shares that are existing?
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
We put the Kingsbridge facility in place specifically to fund the acquisitions
that we've made. We've been pretty up-front with our shareholders all along in
saying that was the purpose for which we were raising money. We do have these
major programs in place that need funding in order to get these products to
market. And we're confident enough in the prospects for those that we feel that
we should go ahead with them.
Now having said that, I think one should remember some of the history here of
the Company. Going back 18 months ago, almost 2 years ago, our stock was trading
at 40 cents, in the 30 to 40 cent range. And we were in a protracted downturn in
the industry, and we needed to raise capital. And our shares went from 16
million shares to about 40 million shares as a result of a convertible offering
that we did at that time.
All of those, I think, fortunately for us and for our shareholders, those
convertible debentures that we had all converted, and the large majority of the
warrants that were attached to those also converted, which brought some
additional capital into the Company. That was the major dilution that occurred
in our shareholding.
The Kingsbridge facility represented about just under 9 million shares on top of
that 40 million shares, and that was announced some time ago. And I really
believe that the -- whatever dilution that represented was fully priced into our
stock some time ago. So I understand that on a day-to-day basis this is
difficult for some shareholders to accept, but really it doesn't represent that
much dilution and is essential -- an essential funding source for our Company,
and we intend to continue to use it.
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OPERATOR
Adam Gurney of Kingsbridge Capital.
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ADAM GURNEY - KINGSBRIDGE CAPITAL - ANALYST
Just trying to get a grip on something here. On the revenue projection for next
fiscal year of $40 million, or the potential revenue for next fiscal year, what
do you believe the gross margins will be? Can you give me any sort of
indication?
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
Yes, I can, and we have given it in prior calls. Our gross margin expectations
are really determined by the revenue levels as we get above our breakeven and we
absorb all of our overhead our margins moved swiftly into the upper 40 percent
range.
And I think we can comfortably predict somewhere between 45 and 48 percent gross
margins as our revenue increases. Our breakeven volume now is somewhere around 7
million per quarter. And we have shown in the past that once we go past that
breakeven and we absorb this substantial overhead that we can deliver the
margins.
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ADAM GURNEY - KINGSBRIDGE CAPITAL - ANALYST
Can we expect, just contrary to a previous comment on the $40 million revenue
level do you believe the Company is going to be moving into profitability?
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
Yes, we did do a detailed business plan and we looked at -- and obviously we
wanted to be conservative about our projections. And one of the things that you
have to take into account when you look at next year is that any quarter that
we're below that revenue level as we move into next year, substantially lowers
our margins. So we have to have even better margins later in the year than we
might have earlier in the year from a business planning point of view. And that
is why I said that we were -- we can comfortably predict that at that revenue
level we would be cash flow positive. But I don't think we would yet be
achieving profitability.
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ADAM GURNEY - KINGSBRIDGE CAPITAL - ANALYST
Right. But as soon as we start to ramp above, which we're talking about,
(multiple speakers) you know, 20 --.
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
(multiple speakers) earnings to the bottom line, yes.
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ADAM GURNEY - KINGSBRIDGE CAPITAL - ANALYST
Yes, so once we get to 20 units etc., etc., we're starting to transfer an
enormous part of that revenue from the top to the bottom line. (multiple
speakers) assumption.
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
That's correct.
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TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
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ADAM GURNEY - KINGSBRIDGE CAPITAL - ANALYST
And you would anticipate let's say that we take a 20 units basis that we would
be taking of that -- and taking it on the assumption of 60 million without that
additional 20 million that we would be transferring between 45 to 48 percent of
that to the bottom line?
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
I think that you are going to have -- you have to put in there some additional
support costs that you have in connection with supporting those systems. So as
we start to get to those revenues levels we tend to try to model ourselves
against more industry norms. So I think that that is a bit on the high side.
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ADAM GURNEY - KNIGHTSBRIDGE CAPITAL - ANALYST
Right. Okay. And to what level do you think it's on the high side?
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
I think that if you model this business at let's say 100 million, right, I think
you could expect to see earnings in the 15 million to 20 million area. At 40, it
is a little bit more difficult to predict. And it depends largely, as I said, on
what the support costs end up being as you -- as we roll out these tools.
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ADAM GURNEY - KNIGHTSBRIDGE CAPITAL - ANALYST
Right. So it is reasonable to say that your Company at the moment is $1.20 stock
or whatever it is trading at, very much coming towards the tipping point of this
business whereby we can start to see the revenue tipping over hopefully within
the next 12 to 18 months towards the bottom line?
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TOM MIKA - TEGAL CORPORATION - EVP, CFO
I think that's exactly the correct time frame.
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OPERATOR
Matt Turkle (ph), a private investor.
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MATT TURKLE ANALYST
The semiconductor business in general in geographic region of Asia, and I'm
referring to -- it seems to be doing pretty well. There's been a lot of capacity
additions. I can't tell you who I work for, but in fact we're involved in
designing some of those fabs out in Singapore, Taiwan and China. What I'm
interested is what is the marketing plan and the strategy to penetrate those
growth areas in those countries that I mentioned?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
It is interesting you brought that up. The Asia-Pacific region we agree is a
growing region. We have, as we announced in our last conference call, we have
added a number of new senior level people into -- as country managers in various
regions. And one in particular in the Asia-Pacific, a very seasoned executive
that is resident in Shanghai. We have a number of top-level contacts there in
the various companies, and continue to pursue opportunities with our new
products, in particular for the advanced technologies. So that area we expect to
see good growth for ourselves in the near future.
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MATT TURKLE ANALYST
One more question related with the area of nanotechnology. What is Tegal's level
of penetration as of today as it relates to nanotechnology facilities, whether
they are university R&D or other like government R&D? What is the plan to get
into more and more and penetrate the nanotechnology marketplace so to speak?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
As you probably know, or maybe you don't know, I sit on the Board at SEMI, the
trade organization, and we have a nanotechnology initiative, which I was on the
forming committee of that initiative. We have made an excellent penetration into
that area. We're working both in the bottoms up and the top down area of
nanotechnology. Everything from products that are actually in the marketplace
today.
It depends on how you want to define nanotechnology. If you look at the top-down
approach certainly a lot of our customers are ready in that area in the
semiconductor world. And in the novel areas for biomed and some of the more
novel devices that are being built up there we're actually -- have sold systems
into that market.
You can continue to expect to see us penetrate that area. We're very conscious
of it. And one of the reasons behind the acquisition of Simplus Corporation was
in fact picking up a nano layer deposition technology, which allows us to
participate in that bottoms up area of the market. So we're excited about those
opportunities long term. We have a system in our PVD -- from our PVD Endeavor
group sitting in the Nanotechnology Center in Santa Barbara -- at the University
of California at Santa Barbara, which is one of the renowned areas for
development work in this area.
I'll give you an example. They have over 300 paid customers that come in and
actually use that facility to develop their next generation processes. Our tool
for PVD is in that operation, and we expect at some point in the near future to
begin putting in additional tools in the etch area, as well as into that
location.
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FINAL TRANSCRIPT
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TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
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As you know, again that market is projected to grow rapidly. It is a nascent
market. It is fragmented right now, and we think over time it is going to be
very much like the semiconductor market was in the early '70s, and we expect
that to continue to show growth.
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MATT TURKLE ANALYST
I know that you're planning to be speaker at next week's semi nano forum in
Austin, Texas.
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
That's correct.
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MATT TUCKLE ANALYST
Can we -- do we expect any -- anything earth shattering news from Tegal or just
- --?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
There will be no news announcements at that forum. The intent of the forum is
really talk about how to take a fragmented market and drive that toward
mainstream types of production models. And so we're going to be participate in
that and share our ideas and what we see the future to look like.
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MATT TURKLE ANALYST
Thank you for your answers, and perhaps I will visit with you next week.
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
That will be great.
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OPERATOR
Dwight Lablu (ph), a private investor.
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DWIGHT LABLU ANALYST
I was wondering if you have any information on your partnership or whatever it
is called with Sharp?
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MIKE PARODI - TEGAL CORPORATION - CHAIRMAN, PRESIDENT, CEO
We continue to work in the area on the nano layer deposition processes
internally here. And we continue to have a great relationship with Sharp. We
really can't go into the details of how that -- how we expect to see that going
forward. But suffice to say that our relationship is very good. And I spent some
time recently in Japan over the Labor Day week and met with the folks there. And
so we continue to have a very good relationship on both sides of the ocean.
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OPERATOR
At this time there no further questions. Mr. Nagle, I pass it back to you.
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FRANK NAGLE - TEGAL CORPORATION - IR
Once again a digital recording will be made available one hour after the
completion of this call, and it will be accessible through midnight on Thursday,
November 18, 2004. To access, investors should dial area code 888-286-8010, or
area code 617-801-6888 and enter the pass code 52308643. In addition, a replay
of this conference call is also available online via the Investor Section of the
Company's Web site at tegal.com, along with a copy of the Company's earnings
release.
This concludes this conference call. Thank you for joining us this afternoon.
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publication may be reproduced or transmitted in any form or by any means without
the prior written consent of Thomson Financial.
FINAL TRANSCRIPT
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TGAL - Q2 2005 TEGAL CORPORATION EARNINGS CONFERENCE CALL
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