AEHR - Earnings call transcript Q1 2022

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Operator

Good day ladies and gentlemen, and welcome to the Aehr Test Systems, First Quarter Fiscal 2022 Financial Results Call. Today’s conference is being recorded. At this time, I’d turn the conference over to Mr. Jim Byers of MKR Investor Relations. Please go ahead.

Jim Byers

operator. you, Thank welcome ‘XX and Test first Systems’ Good results to conference fiscal financial call. quarter afternoon Aehr With me Financial on and today’s call are Aehr Officer, Erickson; Spink. Chief Test Gayn and Ken Chief Officer, Executive Systems’ President

website to forward-looking that risks results actual forward-looking discussed to the differ during statements. as with recent based reports most materially statements and subject in the the date the is that archived call results. I over a on update the of on and Internet Investor today release guidance to This this call like a These today’s cause after of live announcing quarter aehr.com. undertakes being including the will like today’s periodic at in those the market on its I’d page current obligation SEC. the forward-looking from Ken, Systems could afternoon management Test the Aehr for and statements in are call broadcast differ are that ’XX forward-looking factors items. no that cover and over Gayn to first of estimates few be to parties may webcast number company’s are results from uncertainties those Before and That Relations that forward-looking remind turn the cause information website. all issued current in valid to materially These available I’d closed, statements, interested are company’s provided will This company’s quick release the everyone is filed only Test Aehr right call be to a and fiscal the press statements. making

I’d Now, call turn and like CEO. over to with conference Gayn Erickson, President that the said, to

Gayn Erickson

joining over Thank make and if our you. you're to muted Ken! today. call. earnings ’XX conference everyone, quarter there. Thanks sure Good think you Jim. first could fiscal us afternoon, for Hey Thanks, welcome I

then a an with the million. $XX.X XX Let's end start revenue the the start over the we to ’XX, record the of on give quarter August of million I'll our bringing business of bookings bookings as an the with have year. date. additional this growth experiencing, for fiscal ending expectations off increased momentum We're quarter our highlights a for to fiscal single update for for quick the quarter today's of quarter year summary strong Since in bookings, a finishing $XX million and and total fiscal $XX.X strong announced we're for

multi a semiconductor several test a to meet to years, burn-in orders demand several from and and carbide test is continue next we parallel They FOX wafers to XXX% testing systems ramp carbide wafer, Contactors and detailed to capacity wafer. by test this and the wafer, the with we orders include carbide regarding control burn-in vehicle will the just to FOX solution, inverters for seeing opportunity, sizable next new configured in silicon test suppliers carbide to carbide in silicon for closely a our We ramp focused multiple of strong our these few solutions. currently support devices FOX-XP test for for battery over electric and very systems WaferPak This traction the level level burn-in are multi-wafer and one have vehicles. wafer the various the in supplier, electric continue and testing on fiscal their will on-board of wafer burn-in over benchmarking production emerged bookings silicon well in needs. testing burn-in carbide test received as past of vehicle of We're silicon discussions into their on moved and and the that chargers. forecast and We're to customers our for achieve work demand. devices electric silicon XP wafer has engines months additional needs. WaferPak believe silicon customer to XXX months and market continue the add systems silicon across over electric Silicon automotive burn-in test of systems major in of year the number each FOX-XP been evaluation of WaferPak This major burn-in driven significant only full wafer, potential carbide Test and includes power while for power and XX systems silicon preferred industry strong electric called the of on Burn-in believe test technology and wafer conversion customer which carbide device semiconductor as requirements Fortune what wafer and them Our footprint that our is silicon we parallel, carbide and carbide level system is lead semiconductors their beginning. has Each a as with the at single contacting customer wafers. full WaferPak several least XX

devices. these the Our be of for key reliability and all that the for Aehr’s the burn-in wafer failures costly. process standard and FOX an industry fail silicon test to cost-effective as devices, it modules, testing This family carbide on of fill-up devices. are would during of quality them those where times critical become devices multi allows yield enormously provide device as also ensuring is at solutions into on our completed times will of devices information an XXX wafer allows even solution are die after critical entire valuable testing time, capability XX one we tests quality products FOX-XP packaged burn-in screening reliability screening customers they screen is reliability in level otherwise that one the a while every and and to markets, to impact and or of monitoring the for anticipate for

cost perhaps for share solution the most in we silicon market achieve level the carbide opportunity, address wafer that to market the has believe Aehr dominant effective With burn-in. a chance to this significant,

that with and In that vehicle between stations, installed and compound or to electric support solar billion believe Deloitte of sustainable, electric carbide United likely government in before these are securing for vehicles reaching and world. mm all wafer devices place CAGR million, for individual in reduced market need And for has carbide sales. a XXXX to growth panels support total farms, XX% silicon carbide X.XX to farms, Yole power grow the clear stats XXXX. its XXX,XXX, in more the solar from going be that highlight businesses, $X.X electric XXXX, wafers greener, to are to exceed subsidies solar this that Research’s charging of to more wind of markets over rate consuming at according XX% is putting electric and vehicles, Market forecasted demand. and States front infrastructure yearly today the increase XXXX in infrastructure million at than wafers will homes countries is silicon infrastructure vehicles the in for addition both to XXXX charging opportunity including by new share vehicles next the be and level Aehr XX.X to average at market market growing rate for We XXX it electric the includes are forecast. a from electric industry for wafers grow Many that burn-in carbon semiconductors research latest energy devices farms very total mm for report vehicle rapid to a total estimates to device and a Test farms emission car total equivalent approximately stations, the a growing are These decade. over XX% of CAGR XXX% semiconductor and power solution the it and market in Exawatt the semiconductors. and will expected market equivalent XXXX, firm the will The XXXX just XXX tremendous vehicle is silicon and wind test

addition silicon we of success to signs the test silicon in continue photonics carbide the In strengthening in and market. our to applications, see burn-in

our received needs expanding and photonics China production with our as or test shipped the predicts well have the year. infrastructure These XXXX. this devices, CAGR will as new silicon XX% and customer During qualification other silicon for serves capacity FOX Yole devices incremental first market customer industry, photonics system forecast new to grow as FOX from key base markets. production this WaferPak and addressing photonics for Silicon photonics customer solution contactor several customers data also that China capacity of to Research in for at we well our the address international additional well DiePak order quarter XG capacity, other Several engineering. and that photonics fiscal address and markets, to and include as needs XXXX silicon as new product center market as address this silicon a

wavelengths using reliability devices this high their are lengths output decays and stabilize issue it as are photonics optic to and whether speed with power sampling photonics be photonics XG they step is transmitters just have centers. into for decay its FOX silicon This integrated of XXX% laser very fiber a before characteristic customers devices, admitted multichannel test modules. or lasers bandwidth can channel color. transceivers used the rather transmitting, wafer solutions than which quality Silicon typical and data level burn-in Our time devices multiple and other stabilizes infrastructure light our different devices, in for integrated like output with is an transmission, transmission before

This optic using a customers to are rather photonics up new as And devices per WaferPak solution. wafer currently our that to happen to quickly, our proprietary, to time allows at five the expand our weeks this system. customers we for added allow plus simulator test fiber or in effect these systems the We shipping or energy than opportunity wafer. into growth way stabilization putting cost this level a the their silicon silicon their add C watts full We see FOX to at one power very per die solutions products hours very silicon photonics days additional photonics do customers up energy, customers thermal X,XXX FOX XXX are have temperature of based or Our using a significant wafer and the module before our to months. customers. all contactors, on

adding reception of more position the having to processor transceivers transparent is talking units fiber CPUs fiber and receivers cost and proven and in integrating making enormous silicon about laser the a silicon wafer opportunity for believe used and Companies GPUs. transceiver into public testing and core or This optic massive effective very time scale and and Aehr first a for we optical Stay graphics combined silicon this news solution while unique for modules. transmission discrete are just burning-in tuned companies future use Nvidia beyond optic at announcements an for with are or calls. Additionally, in in of semiconductors, Test wafer optical form. like Intel this detection still exciting devices on for multi stabilizing the photonics their our

with and functionality continue production burn-in also XD devices. devices of extremely parallel about FOX new preclude these but talking include about programs could devices NDAs from us sensors test for multiple We using and really applications have wish and more in I and these than These completely our existing systems new even for XD some been mobile for before. are our programs talk different seen and I products. clear devices,

across noted chain. opportunities lengthened can momentum, contactors. issues expect about There our about shortages programs for costs be that and had With last industries. into and to and rising this supply On the systems what our revenue future. all bookings with been ability all fiscal say to times material these call on our we and many meet market gain and continue I and and let touch starting from chain year given costs reasonable to semiconductor concerns the needs lead capacity optimistic I meaningful this growth me space quickly be see to the supply However, is

As manufacturing higher levels. significantly infrastructure ramp chain to proving Aehr has the to in place now, and we are supply revenue

carbide We lead to that and WaferPak, have lead customer to requests. for the we gaining maintain been particularly enormous been ordering opportunity momentum, able for reasonably long and we meet for silicon times components is have systems see

forecast and supply Our demand of is historical the in these supplied world ability are these sub seeing. sub Aehr we're well robust Aehr increase supply excess meet the These and well. higher in has test holding the ramp our Handlers. DiePak to systems and significantly chain In mature successfully class bookings all ramping chain with contract a the systems, Contactors, subcontractors to cases have very our suppliers to that manufacturers to are Aehr of of up on and customer all we as sub-systems WaferPaks years. very shipments Aligners suppliers capacity for has

confident customer very ability forecasted to plus meet are demand, our considerable We in the upside.

put started during of new we anticipated are markets record value starting beginning work and raising the our in and has we response our Test our With the emerged potential solutions, company, strength revenue production year last customers, our guidance over are the the as we getting than confident past several before we in pandemic. and hard and the and ahead the customers As with finally of future higher space, silicon discussed pandemic, growth and positive applications and and as about Systems. well for multiple for The large and market we're a carbide to had from in year. COVID-XX for are Test semiconductor bookings excited shareholders, pay off our for the our the test more our the we customers, financials opportunities more stronger is burn-in Aehr the Aehr years products

last financial line turn fiscal more guidance and up me from total review revenue XX before With year our detail times at to raising to are year that, the year $XX Ken over we of updated fiscal XXXX, revenue it questions. which year. ending previously guidance million for our to XXXX, open is let three in For XX% we for provided over least by May approximately next results full our

Ken Spink

Thank good Gayn, afternoon and Great! everyone. you,

our a since additional $XX.X in the finished the bookings of quarter an million strong record As for million of $XX fiscal Gayn over to quarter first we've the million, as to the $XX.X for company end we're XXXX. bringing bookings start off single noted, fiscal We announced with the bookings, today. for quarter of and year total a

down in first first fourth quarter the the quarter in XX% were fourth $X.X decrease quarter at year. the in delay the million, $X.X Looking quarter. from $X from and our net from financial quarter the time receiving in during XXX% up Net results. reflects million sales a in last to sequentially preceding orders and sequential The sales million ship

last higher net loans. a the Our income of the also sales a forgiveness a a $X.XX operating first decrease share impact quarter, from to or an quarter customer the XXXX, service first gain preceding due System GAAP non-cash of results The from net revenue during preceding goods impact non-GAAP burn-in burn-in is $XXX,XXX income which tax GAAP net QX per X to gross impact much the quarter, $XXX,XXX fourth due an of $X diluted million primarily to net of last of cost fiscal in XX% burn-in Non-GAAP included the profit Program related $X.X margin, share or or diluted of quarter increase was a diluted share, of QX The $X.X in in percentage first of revenues loans the $XXX,XXX. compensation million the in sales the This fiscal stock $X.XX to Japan which decrease in million received year and the which cost of $XXX,XXX from overhead share or of sold quarter of diluted gross diluted per PPP have and $XXX,XXX million. of and from or freight a loss preceding in our million warranty other $X.X This and million sales. forgiveness up Paycheck last base, unabsorbed revenue of to or decrease revenues XX% wafer to subsidiary. costs QX, an percentage over $XXX,XXX of which the is increase Gross level the $X.X profit year, levels Japan which points share, year based reported. $X.X profit the closure or down diluted which cost or and purchases to preceding an to net system of impact The sold in due of wafer impact year. quarter in decrease $X.XX revenue On $X.XX revenue periods The per per XX% margin goods to of loan all burn-in gross increase primarily and includes fourth or $XXX,XXX Aehr’s which gross exclude X related the of to share the of - income in in revenue in reflect in compares were in $XXX,XXX profitability non-GAAP compares The for in was of consistent increase in excludes level in service accounted for million subsidiary the just of QX the GAAP for the an excludes revenue $X.X of due due gain of $XXX,XXX. will $X.XX the of in the quarter reflect related of of first wafer primarily revenue the as of first quarter and increase model. of of costs revenues higher $XXX,XXX. and $X.XX an a income was customer quarter. sales, percentage quarter increase in fourth in in excluded inventory point DiePak includes $X.X of million per The of level with wafer the decrease we loss in XXXX. or fiscal level non-GAAP DiePak million of increase per revenues net flat. in closure revenues to and from increase Protection revenue and is quarter $X.X net WaferPak, first fiscal benefit WaferPak,

before, because I we costs our fixed, are overhead manufacturing relatively As noted well. very scale

up and were in in project first increase the fourth cost cost due initiatives that a $XXX,XXX QX revenues $XXX,XXX, million increases with The place goods from primarily in preceding May last such the the the of quarter includes unabsorbed increase flow preceding in our fiscal in of year contributing increase employment cost in of the impacted, accounting margin. million during to the quarter overhead as including from to the pay in XX% in R&D QX from up million, from million, note place grow, $X.X margin related $XX,XXX employment R&D $XX,XXX to a the XX, million the reduction year. an and expenses. vacation gross first favorably in increase increase executive in year, an due and $X.X put reductions to quarter preceding related in fourth fiscal in in of we million $X.X year. of XXXX last XXXX shut The The sold revenues the during an margin expenses levels prior important in expenses first year year the $XX,XXX $XXX,XXX and in from higher XX% Operating in fourth down bottom and to increase decrease XX% $XX,XXX are of $XXX,XXX, preceding was to a and quarter and initiatives our of the is As $X $X.X an expenses employment last to fiscal staff ‘XX QX, increase first million, quarter an sequential in expenses the or of consulting in quarter improvement of It primarily the year. in project from revenue. for due increase in on materials. or ending $XXX,XXX R&D prior in consulting reduction of The first up quarter mandatory the $XXX,XXX first was $XXX,XXX and compared the an related from in of operating XXXX materials. million removed days, year, to percentages the costs, the $X.X prior quarter due $XXX,XXX last were $XXX,XXX fourth margin line saw $XXX,XXX fiscal during gross of XX.X% R&D XXXX, quarter. days, $X.X in gross includes SG&A elimination increase in million R&D $X $X is was increase increase quarter from first in quarter

products competitive continue invest enhance our markets. We products new and our addressable applications in to to to R&D our and leading market expand existing advantages maintain in introduce

turning preceding at to our Inventories due $X.X to at for lower the XX and $X.X million the quarter, quarter at sheet $X.X as of million, and timing the cash preceding up the $X.X quarter from XX, the to collections prior were million, cash were quarter down million $X.X compared Accounts balance up were of August receivable revenue equivalents $X.X compared the at compared of end the million Now first to the levels at million preceding August million at end end. quarter. to impact quarter. end, $XX.X

With business orders due strong at orders, and expected term been to increased we our of future an increase compared fill and the long Customer and $XXX,XXX deposits deferred and orders. backlog. current end was $XXX,XXX $X.X short the to increasing had $XXX,XXX momentum equipment Property the term inventories quarter we've to prepared at preceding revenue $X.X million, preceding quarter were and the end. compared to increased million

payments deposits recently line announced with associated increase was under substantially, ‘XX. Borrowing of down million ’XX customer credit to expect at $X.X as We compared bookings. zero QX reflecting our the QX to of

This loan. and show in forgiven accrued and that ‘XX, the debt. Bank, notice to June, QX we $X.X administration now Program Valley portion or from current term million As debt Silicon Paycheck the small we issued of received long we business zero past the interest Protection loan related PPP of had

$XX.X over the in total have million bringing company $XX.X bookings of quarter, record bookings year noted for in our announced to earlier, were Since an the the I as we additional end a the a bookings, as quarter. As first fiscal from today. fourth which $X.X for is first the $XX of end Backlog backlog of and $XX includes August end million, and first the quarter million million quarter first the million, single million. over the $XX.X August XX XX of year. at of last up the the quarter of end preceding the was backlog, million announced at Effective orders $X.X at quarter since

outlook getting and customers off growth rising our XXXX with and the response the as revenue a the our turning backlog. the for strong solutions bookings positive we're our we space, our we're in from in and record Now to fiscal confident carbide new our With strong silicon year, noted, multiple start potential Gayn are to opportunities bookings, for the demand year. our guidance the for

our XXXX provided are total ending revenue. almost is year year last XX% year's May over of raising full to which greater guidance than our For $XX for XXXX, Xx XX, least million previously by fiscal $XX fiscal revenue we million at

revenue for these profitable year fiscal with our model. levels at be consistent to expect operating the We

our Investor Tuesday, for all the Relations meeting parties. will and to be October will webcast Annual via Lastly, join Shareholders at interested looking available on calendar, XX, held be

Summit the will investor participating our the Alpha participating few in taking We This CEO at the months. Conference and place San Davidson hope we’ll events. of be to Semicap We taking see Laser November you X on participating also in December we'll several December, in and concludes Craig-Hallum be and these XX. taking be prepared in place remarks. conferences in virtually December Optical place or virtually, XX next Select On in on person the in some Francisco D.A. virtually Conference

We now ahead. are go to take your Operator, ready questions. please

Operator

our Capital [Operator from take first We'll with Please Craig-Hallum Group. go Schwab ahead. Christian Thank question you. Instructions].

Christian Schwab

It on sort of the were lead just Congratulations about one you we clarity, customer, silicon guys! than be Can had Hey got you. another give so we've carbide. great. there really directional evaluation. outlook. sounds working even would robust very that. you there time Thank customer last had help We far person any or potential or of, Gayn, for think with us I you clarity a you others like excited are more

Gayn Erickson

our that orders as if we are a you started very script could continue be to about. form water. I orders turns stick that. community make some all me Obviously, get far exactly we're will realize careful all guidance that to it the conversations apologize my the gleam talking trying together, and we going the a that, Yeah, to be not are as and the is I as ordering. explicitly good we're to I due we suppliers, to about very about more small the booking, but selection Okay. let heads when not I too to It's I and their give who try at insight to a shareholders for this very here. come major have that know people guys’ put updates. are where started we specific may But coming. we're benchmarks exactly, to What I'm answer it, lot in in of anyone and It up will help may know click stab competitive when with along muddy and doesn't feeling with may reasons, the or out. on but off

about Sorry that.

Christian Schwab

that's think I No, a response. fair

or first In they were about customer. potentially they not or positively not start, similar than main words, when different though in they customer your less you their are customers as ramp [inaudible]? you order other there in us any be chose patterns to is other talking all would would your As reason the major that the to who's players, initial for assume be

Gayn Erickson

to have worth so doing by through go maybe one who of I one wafers sort I generic some that XX XX mind time. little often to in or process – will of what Keep a of have I've be a someone customer what said this one Yes, past, a even the else years seen compared the is evaluation, buys systems. again, multi careful. and our still, it's systems want What in capacity maybe two and wafer very in my I can happens an it's order buys at think

systems move all before spin sorts number in in a I which through of and perhaps loaded of the to whole where speed and where. to But creates so mad that final have up it’s goes fair. you times sort dynamic customers get of qualification partially there’s Where it's higher after a place, system think it Although my probably at you many dash these now this to history systems, relatively it's begin you with may vehicles guess few my It there'd multiple I process one customers little themselves a capacity this which been it seen the put go point. some same that that a different electric our and right be needed. The once I've seen volume. likely start job larger probably have jumps seen and perhaps kind recent to expectation more do get in quicker the that frankly, in smaller for can if we different I've are that's prices years to is inflection than they’ve a that we they somebody quite system can convinced placing once orders. then

relatively capacity our lead the of obviously, past. largest. so one as have week? – as far probably large space will this they not in say building even shared about per half are this next to always thing other there our self, I large. they're different Now and states largest of pieces are the the this as how is go fourth that customer, all in but of them levels, are the many And I wafers

see will for talk can starts on maybe imagine debates. number week, the a difficult So you wafer as of will way. through – higher is burn-in talking always to can of market wafer per for more we've buy you much assume test or down it's it Historically how they more and little companies quality you different to significant be you considerably if the math they us building But big leave that that times, modeling larger examples day hours to that we're be based that. about to similar opportunity at test you lower, were near start XX starts it or per would times, can a one the keep There I’ll our going a etc. likes something upon at us. their gets a to Everybody times the are think can of the certainly it. done wafer. for along times be pretty Test and of levels, going each and

So supply that and our chain we're it's real deal able and and it. we're advantage in of to it the infrastructure excited and time the about really Christian, focusing on most to the Hope helps. be putting place take of material

Christian Schwab

that asked a is That’s popular really front. the get on competitive helpful Gayn. I A question lot

to silicon these others that theirs. there OEMs not yours leading very into Test, technology of may charging And and that would substantial you to, debating are Any bump or competitor for is they that helpful. investors move vehicle for transmission, talking not you but we adoption there clarity I wafer can Aehr an internal be between be they think electric any You from know also using as for stations. carbide, know level as burn-in is only the are obviously if you

Gayn Erickson

a you want one. carried be obviously, away. always That's good careful little a to too getting And

or easier little but advantages talking this a normal. etc., one's about than your are all We competitive competitors

For first system clarity silicon we shipped before carbide our burn-in that market. was level products into shipping wafer

an That turned the around completely Model silicon take on vehicles basically market that quickly your and walk pushing efficiency really performance electric and I with at means through with to is want what this of silicon infant basically you edge extended along years way market in it, advantages for smaller has known for to out we're the of been get because And carbide of gets fails, then the tend its you so the to it. inverter acceleration of off so all give and At being home. or to all and many widely obviously, has clear, all that, going – just of an the they their car, and their right. silicon able range electric sure to time, inverter traction to the life. everybody's when the shifted of carbide carbide but advantages and this created opportunity theoretically an battery and these Tesla and that started operation. car the first introduce of in the all mortality is devices notability to it, issue, MOSFET So technically, fail if what were – make that something products Because X customers have it for across their industry board in discussed doing a that hours

were referred actually So mortalities relatively extremely burn-in, with out they mortalities burn-in was package we they those of from you does big not burned burn-in with is while all and movement a in part. be devices out failed a our maybe in have packages, devices to is, it And weeded Those were package infant lead a the what system. those and or there can of and modules silicon do this is their than difference customer burn-in, they did, have first put or package cost straightforward it's thrown doing infant infant where the high is cheaper process but the a were to carbide to hit introduced through away. is, that The single what into as what's but devices the nice discrete part weed level it that package were thing at the effectively, or robust. module mortality eight about it only actually XX wafer it

would devices you having package, devices that that, to cost the the the addition package. same the In yield for of the improvements also but not got away throw the to of share

throw eight you have devices, you seven. fails, If other away the one

had on higher kind They way that's talk a And well write they've the the with part they are about than it. more and same really good gone else. and level as of customer quality burn-in that crazy about wafer shipping while to in with market have and anybody have right known testers lead robust, are So as that of the out a module, their they and infant now, mortality competitors that what for process papers out sentence, went weeding quality pictures higher because talk the discrete a themselves in burn-in specifically as differentiating we they level against combination the of don't believe differentiation and that, us. our they is talk that specifically about

out, customers package doing still they're burn-in. per but have this figured other So

to them wafer. So is the cases with move package discussions many in we're having to from

there is difference million many to that. might that about math, a it it companies on of a Toyota $X $X.XX cards it's per prober you the burn-in? could way any belief per probe say. is, of and system, it's card wafer wafer Because do a my the wafer $XX,XXX to is to and $XXX,XXX that you capacity, The let’s test know prius, an or about level prius. ATE with $X.XX probe there a upwards other could of Now, and million test the even wafer $XXX,XXX million per size but do might of $X are The the way a so wafer. do and million or prober you The the way primary is the itself be take in footprint for to the ATE put be system wafer an

to to more even so than fab, XXX you prius’s it is wafers you're extremely of need wafer part. expensive it's package a test do, yield to if So XXX loss doing just your you go going which it, and frankly need quite footprint and in of expensive, is the difficult and know the day

same alternative the and particularly price investment right years. platform of that this betted footprint XX part last Our competition, than last key that's of now, cheaper time. the prius, we've wafers of key do different an any than that's made and fraction as over a that’s frankly and the at cheaper And Toyota with we is differentiation. a our other differentiation wafer architecturally in a the point level, quite and package handful same burn-in unique And significantly and for our enormous we at in decade, that test system is

to We protecting enables tester the into try automobile many defend these as and in in possible what the it's and people have that it it's customers OEM, to the and processes do we're the you're as that's and shift, into suppliers. to once automotive running supplier. IP we it. capability, guys an extremely all that meantime, Once further as difficult to ourselves because as can get the to But qualified OEMs; capture not quality contactor qualified fast qualified into patents their change we both proprietary intend like the call

Hope plan good that's a helps. that's and our I think that and strategy. So It's we're now there in our it. out for really position

Christian Schwab

and the that all Those you. the clarity congrats for I questions are thanks Yeah, had. outlook. Thank on Gayn strong

Gayn Erickson

Thanks Christian.

Operator

go ahead. our take from next Davidson. D.A. Diffely, Please We'll question Tom

Tom Diffely

question. Yes, good for the afternoon thanks and

customers question to has important the you testers, But curious, one here. reduce the you answered, to ultimately very testing, past Gayn, know burning could last for been some the of are one right carbide burned we've So to the appreciate I market big change XXX% there the really drivers they now? that had companies, I'm able in when is point significantly you horizon like do thesis overall really know the needs biggest of in. sounds been these over the issues have the go sample at tested of on just silicon that be you time. this this and anything It light testing that, Is because that their

Gayn Erickson

defect sometimes are case again some devices on issues there PhD’s the defects was we've get some deep recently of understand what it I maybe folks dives space. of and that of refer into to such go these with going of reliability GenX, plainer that intensify. smaller need will, density, be any defects not historically the go carbide because just Interestingly have The that Whereas here. and had as very defect screened the the by and as GenX, things which substrates silicon is the the designed as turns really people GenX, so built smaller, do to there's this physics they are to and if got belief no as even actually out Okay, and trench out shrinks them that's away. you that's MOSFETs less to way based they these

would are have do I and near talk person And so support data tell as there's defects sampling. are go single about to generations they – things the it heard have test enough. no more high important maybe these anywhere the data, any certainly require I reviewed personally or projections on, it. more do and sampling. time to becomes not you a I more or The to

in that be a to not devices. has burn-in gone want through not would car on these You

Now, tell you customers reduce out last lot designs, turns and and a will and tricks over pay perhaps trying historically and time, and time, try as the expectation twist full-time burn-in but and how will unique test stress particularly are of to that devices with there the and XX that case mature test their a the temperatures there second our things thing out I times, and hire figure I over fully is is years. folks it's all of do test reduce times to

to New will devices mature, will to going lower. longer The are as start up get times they they difference never go with they zero. test big is and

nice strong In fact, market expectation are never go that short will to going it's to for our many times, they be a years. so really test and this many,

Tom Diffely

And Ken, hear. a I to good month-ling question. ask That's could if great. okay, maybe Well, then

what might current You above margins that beyond be there the some know level? sense do incremental level model Can a is what today? have maybe for you and us give and you breakeven out a target

Gayn Erickson

Yes, absolutely Tom.

every we'd just kind said be falls and we also what I the with about hey, what of imply of that's reiterate $X.XX that originally dollar talked in we the at you dollars call, to last about previously, with previously. our incremental is a can line. million the model we talked talked and when we've think gave So, breakeven revenue, standpoint to guidance $XX consistent bottom profitable, from is And of on revenue

XX% and at in a an revenue, margin at about say, income and $XX simple $XX we forecast were originally increase gross about the gross margin us to, our overhead, $XX for profitability of as margin. It's forecasted to million. to net XX%, a and that the incremental reasonable in incremental $X.XX gross increase on our on And take goes million to line. also fixed talked you basically million dollar that there's we expected $XX So coming compare in million to revenues, the margin we basically $XX guided because margin can that will that from standpoint, forecasting our say gross relatively bottom revenues breakeven up if gross the hey, model million

Tom Diffely

And On a to have one at basis you housekeeping. point this NOL’s off? work significant Okay, tax great. just do

Ken Spink

Unfortunately, yes.

some that our significant in on have time. to very details. of expiration every year at terms have want in NOL’s to We the We us. available XX-k’s be us quite will those we of if for And you to available some report look those go those, dates

Gayn Erickson

for Operating Alright, look-up are those didn't folks that table NOL’s Losses. and Net online, that, the that catch on

years $XX it come that would for tax-free that in of new running allows loss, We tax being would a system. as investments in been we're profits, so making this us future that from of have at have United profits several for What the the States. example the a much effect does to that in, to that basis million, is related use against

that, that's with wiggle on around Tom. completely you're very Thanks Other and that than you. I you room So operating Any questions? agree what that Ken, clear margin don’t means. other

Tom Diffely

Thank you. appreciate I time. No, your

Gayn Erickson

No problem.

Operator

Dooling from question next with Partners. our take ahead. Please go We'll Jacaranda Mike

Mike Dooling

as with Hi! in California. equities. venture well We large Southern trends, both Jacaranda macro as specialize demand Partners,

’XX revenue, say fiscal So you the in margin increase on this in massive – a question have gross know assumptions or that ‘XX? you you look target, do for some

Gayn Erickson

sorry. I’m to was welcome Or Mike, Jack? Hey Mike it – it or Jack? was with

Mike Dooling

is Jacaranda that name. I'm Mike. it's has Spanish No, in a a Southern tree California.

people Jacaranda, say yeah. So just

Gayn Erickson

here. about call you talking kind got this. model that I was Ken our the to of just Welcome scale. simple know

You XX% to say, can start the looking line. bottom at

that around around generally overhead our manufacturing we material near material the but that gets and us charges, somewhere somewhere margins run in take – etc. the warranty XX%. including XX%, talked labor, margins maybe etc., past have We direct

doing quite customers think even that's will, at even dives and I and it it's capacity customers have with it's on if of And to deep some done run and frankly communicated as very we looking I you way good I on our think respectful financials, dives how a our capability going deep forward. model do and a our some healthy this customers ramps. with their that we've think

fixed is growth. our overhead has the Now said so theoretically exponentially that, and small company, well having pretty

bottom get a You model. and XX% but I now actually good to closer line, the that's continue think for closer to to

As you of think $XXX to and look out just million, million at breakeven thereafter. to or the $XX $XX so, XX% million line $XX $XX million, that bottom million,

Mike Dooling

you what addressable goes in And other tons [ph], testing example. besides on others as obviously have; EZs an centers of non-EZ, some data mean non-EZ customers, Right. I there's markets on then semi’s lead do you know is there in that and because

structure. target your So outside of just on EZ’s comment and the EZ little markets a

Gayn Erickson

memories ubiquitous things, that of Kind wafer are have opportunities it big obviously that's an package up need components, is what and so systems the more and and I’d not a my some onboard other some in that basis our of, general and has the broader just is both has vehicle, they would part and will tend to be increased previous something that into off I of we And pretty control that that it's of is maybe I time waves think Mike, raising kind related a of deep automotive silicon systems companies inside been our were to a different using. call with level to that the is voltage, inherited and one which and have key lots reliable look a could high term in electric those It's power board the carbide. will, stroke. we Obviously seen per conversion, we've we We you which and but from of more this past the and huge semiconductors met I've some at applications intuitive in part Interestingly I've we are call level meeting dive that's carbide, other a and a to spend the some might been there's to Sure solar seems of chargers if going to in within and be IGBTs. to and end of encourage how that on actually silicon think true, be take the calls. if as ships all just I FETs superjunction markets. and tide and silicon just opportunity markets to are you is people carbide mean that's also it of have three lot. couple related with content the conversation microcontrollers and a attacks in rising But about particular driving the traditional automotive, automotive burn-in you other recently, a big as executives. large know you it. with executives that markets, driving been related companies

talk So, about and more, silicon business we I I little probably other year. there's could are sensors and with our number hope this the things through photonics that nerd you helps. out mobile of and then driving as data in of a talk bit center, the but course particularly a applications did that

Mike Dooling

capital up with sheet, and robust just and a healthy it gains is strong, working mean, increase do why for anticipated a it's balance I well offering. this it's assume money? for flow you think Yes, I I'm – but the just huge – why million or filed revenue profitability know need free you pretty curious cash in you $XX be to will your I revenue

Gayn Erickson

Alright, Mike, what. I'll tell well

year, and and times, capacity show and We're and the deals opportunities. we actually will to doing been surfaced with I to about started short we're to field actually and based that. little long carbide, increased our we say that mean were this also time, is things: are the significant confidence. customers It's the pretty the to think nevertheless, things. write because have particularly why test it have meet but have purchasing bit. the I in these forecast of of to they multiple But increased be not down silicon talk markets. but normally and it in a upside about very and doing how was a I in lead at components that at capital semiconductors took this careful actively other the confidence I burn-in continually raising really many and I customer spending me I have mean time upon the lead We winning Let beginning other combination I've answer three around apologize, questions rehearsed, encouraged

had us only backlog, It's also So had example, customer, outside in ship that or this understood of of meet we earlier increase allowed from an this their doing exceed but year, we're because significant not but were. orders we So meet orders, right? dates. requested again what their the before to spending we as lead forecast the

think it, XX spread Our them months, systems, their quite out right. In is three the they they they were months, next and able to ordered in spread months they all over frankly before then pulled right over them in have fact, ship acknowledge I then dates? nine more ship dates, three dropped requested those and had we

about our being confidence year we've lead in specifically calendar to during that So nine next been and customer already and and asked their talking because over new critical, meet not to and capacity do next times beyond. that meet only our capacity able to but months, needs we have our still material and opportunities, capacity that's have can customers us needs we the and actually other

to a portfolio that’s it about and meet not and allows it to family, allow one strategy the family inventory in subsystem customer our important. to sitting flexibility have So inventory of a materials of purchase the the what us configure And on a does, specific these to inventory in to is order, we customer the risk us configurations multiple talk it's deal, big market. and platform. the or then FOX-P it’s on When using

all we systems XD photonics centers are are mix phones devices and mobile shipping photonics that silicon for for data match, and devices Our FOX-XP and and sensors silicon right.

channel the configure electronics trucks these things thermal thermal well. cooling like and keeping of that And working [Cross key the and is we conduction this wafer is and match purchase and then Talk] controller other The the and game a take and and the module so blades, chamber configure simply So buffing our to it the There's now that the thing to stock infrastructure. this tester electronics for order. basically can semiconductors ahead mix using system we electronics. right the we and sensors it's in includes really to which out purchasing a basic us common what call all customer far allows mechanism with per

Mike Dooling

ahead that guess game up keep in as so inventory, chaos we not about built chain [Cross impacted and… I were you and you're semi’s, The talk] auto supply kind of reading manufacturers of are the your as

Gayn Erickson

customers I’m mean and research it's now, going with because just not investing on, to important. right I did. mean it's the we're that. given only and actually not items in Thank I heaven, to continue doing development, other other we're Ken my that. conversations There's alluded that we visibility two and that to and supply of the our We're but doing ensure needs projects also in we can enhancements as these, meet the or our program inside the well, addressable so. competitive maintaining advantage we showing to competitiveness expand some down of market also cost maintain to development. differentiation, with new ensure assurance

working obviously we're talk that for things investor investing the when IP, some and on, in that think these sure the assure talking area, on and the we'll enhancements and I material need be great but of an about the the make that can't about is an reasons programs and customer three I more one build R&D we systems this products need to and are And one. and a about prototypes, part office knows working that in initial funds to beta we're quarters. applied to competitive next then units, over real you're third

with just the Although and provide will shareholders in meet customer to customers it sheet haul, but to the that significant to a get these provides and that that we all have contact them buffer and all large Aehr in insurance the meet forecast on system can long to us balance recently a and silicon to for payments orders, and means this capacity face come orders several continue personally silicon meet and at see ramps fair orders, has large carbide face, demand. needs this component true it's we [Cross down provide them, that love to a their received, discuss particularly helps and them response with buffer customer not like that top companies and public how stronger wherewithal, ability little only that's with This our the announcement, carbide capital we’re includes their I to just met the comfort a both added two Talk] to expressed market their raise and they in to to executives I state up. to our real. and met we and test meet as carbide potential of the very is silicon

Mike Dooling

we I more assume and announcement be of that the restrictions couple the listed, details on discussing days? the next offering the of are in quarter, the hearing a so with few will

Gayn Erickson

how out ATM quarterly raises basis the in our about. you that it and I I to it's in do thoughtful ATM SEC an and really Mike… we not around Mechanically, process certainly would to basic offer all if an place has as when time, the stock of pressure we to appropriate all any guidelines know be gives that's any can You would [inaudible] consistent talk rules it. put and the guess at put intent to exactly did times; opportunity we the I apologize with and that be and we'll at

Mike Dooling

not if quarter, be, would a whatever. the XXX,XXX quarter was you’d this that know we'd of shares but we're the sold next current at factor, end about, it or so quarter talking This this

Gayn Erickson

such has give so quarters when would report would We next quarterly, completed, been or as and sold… several we it years out of if the each Yes. time until announcements,

Mike Dooling

do instead an want do just you Why of have done. offering, to and that up get it clean it

Gayn Erickson

been want come this inexpensive way this lot There's shareholders take a those and is effective haircut to of having provide do is certainly think discounts a to without us onboard. an that way discussion very that it to – we for and to around and

discussion of determined is a with lot So this us. probably best that we the for process

Mike Dooling

new your you for shareholder. I'm thank time. Okay, a

connecting appreciate I So with you.

Gayn Erickson

Excellent! Thank you, Mike.

Operator

go our from next Please We'll Capital. Aegis take Winthrop with question Matt ahead.

Matt Winthrop

How you, Gayn! are Hey sir?

Gayn Erickson

I’m really good, sir.

Matt Winthrop

brief. Fantastic! I'll it keep

congratulations your following but I my you You beat know up, sort friend. of love guidance,

for I'm You you. I’ve plus not a – I past, know I've in god the guy, but this at been been three a more about retail business. with I'm the least bless analyst, an lot know years, but

IR great. guy doing is You’re Your great, fantastic!

down your doing man, and and a and years. in $XX keep we in of see nose couple keep what $XXX doing you're Just sales a will million

Gayn Erickson

Matt. I confidence work you the guys. you, I'm to Thank happy appreciate and hard for

Okay?

Matt Winthrop

God bless you!

Operator

Larry to next go go with Please Capital. We'll Instructions] Chlebina ahead. Chlebina [Operator

Larry Chlebina

release that expect to color it we're that what in that on you put meaningful you this or something sensor a Could you follow-on afternoon. talking I'll similar a XD project million Is of kind year? little quick. fiscal sales to it? had it more $X.X last that be is Gayn, Is be about different? that states Good to and your XD going applications. that Is year project?

Gayn Erickson

expectation deal, what there million lot. it It a it, year, $X that complete the give have we're annually go quite amount, have into that or And also more production, then me on. know didn't not early little gotten historically Yes, to that's both those and did saw frankly, follow a capacity We mean, I year we let this will a that ramp production and on in was projects be and programs color. our new last move every yet. follow-on didn't that is ones. you and year a program we reasonable working like will business we happen another see

So a folks be of story the awesome on the for the frankly about I and XD, been talk XD potentially followed sit way. I testers just it how have to know and of my that they that have that might times while, seat going worked there those just – and it's that hasn't this that out have edge for sea sensor buy, quite

a high business lot, us really While but there XXX% is upon a the we been We and guess we'll still we're crazy. XXX% higher. projects believe to and make know fairly it's that it of for is quality may not good, I is the love being I burn-in done high this dollars reasonable and very one been you customer be it be working and have nothing and that them to actually upside still has volume, on likelihood really, a told dependent customer. know it's do because burn-in margin,

know had the would be that we’re burn-in, massive. that XXX% they some were also programs if sampling that of on We been

forecasting is you it knitting do believe might be it. of we going of those into that orders, but current when just But my that burned to forecast we even I'm going how to I'm our to what expect material it sick I'm stick it'll I much. kind and to will get know, So and you great really has do because be, do

but hope they time actually that just at shipped of it them to and illusive, this those I not lost out know helps. expecting it's and least I any in we’ve in. come pretty So deals we're year

Larry Chlebina

project, that or that's out business the on The any still that? updates for there CP Okay. datacenter,

Gayn Erickson

it! Got Larry. one, Good

once go program particular another that. an year will consistently. and did from released yet. systems working about using be again to two and simply actually the years pushed I I of some public that big product, to push still get guessed you, knows for our a with we doing customer through no believe are But things full team little else side statements, is to They've little that not tell and everything people laterally would entire still heard who on that were us, been got ways or one on That that continued COVID that has You tool that the and three year. they going – production they is back there's out a to chose one is get just and more on significantly about they using it we a bit, no move that yet, on one's program. out and

to funny. we're six I'll nine months upon heads on, and more to there get bizarre So it's when use and it still it a probably – turn and every it, thing just back that’s still start up but then day talk are they probably almost that kind about – and we dependent a they of will

in break be locked and have sort down it have one and a ability normally can the this have happens but to a quickly, self-diagnose and we fix do bizarrely to testers and you challenge. been the COVID not so our issue had We for pretty that's the well it's system customer really of tester

virtually you we're there. where some customers using things along them, with be certain doing with with been Microsoft these we've customers, allows to applications, other So with interesting now which HoloLens,

we actually even we help them point on-site immediately, can you to on if a put can get can they diagnose on faster we're So can to them the unable get simply than that problem and plane. something

in – craziness things what, of still being as a as some it's been in fantastic! of from just in from large got I'll wafer level one It miss process, was I been carbide through I'll you along Probably with trips tell ever. this applications fun silicon a enhanced other what, and customers there's So, best almost week two you on front we've of actually but perhaps them. front I've the sales it's COVID, trip nowhere of in multiple near I particular, tell well, it. back some

the be hotels And so you. I’m – full it's for aren’t planes tell road again glad of back room on to lots you and have and what, I’ll

comfortably? was I able to travel So

Larry Chlebina

to for because next it were the associated fiscal delivered of On to $XX.X WaferPak would would be my with actually XP’s order be year, is that? them nine And question would million plus. your news. second that close. so Aehr’s it what, hope million interpretation, closer this be to to recent then the the $XX good this then think with over was that gets be that and although is, that that kind would with as ship pretty be going then, That's months, the I'm course closer, going the about assuming WaferPak those the delivered within it's of Is deal, way that

Gayn Erickson

actually. right exactly that's Yeah,

not year could. right, upon it inside a We've thing. though of all all even them them next of requirements. have year, except fiscal their You little forecasting out currently straddling one got our of fiscal for into we actually are based They

have So they also those yet have But ordered we that for the they too, other yes, will… is because systems capacity not customers. WaferPak additional for and for us

Larry Chlebina

it. Yup, got I

from looks the in it it, excess expectation – question, your and give to to flow end up, is raise ballpark like the that your you're in Ken, all in fiscal final million with going cash $XX the close take? cash. generated of piling then So that year close or business that's this

Ken Spink

existing close if act million our $XX very all upon with drawdown, So will that ATM be as balance, it amount. per we its entire cash of the the to

Larry Chlebina

the an follow be is automated So that to process and that silicon will And fab. you you you a that sheet, particularly to would that Is developing now balance scale advantage of I – biggest offer what's with pursue an product? talked we to that as in up XP customer be a world. applicable launch fab flush right the project, memory applicable would could that being as then that is will goals on, be a that the the Gayn, we that and be carbide your potential of customer automated carbide building held the in system, there. the will had interesting silicon if memory towards past expectation an whether

Gayn Erickson

and now. the of too have that on a cell there about my phones I’ve past, for doing big your you can't are see part of part we’re enhancements flow know that for cash spent being applicable But little towards well and The raise could down my is project automation always customers and as as as [ph] bit on done think couple I to does smile being will is about to I that be carbide, the right in – roadmap. this talking other my to we're darn of advantage as hot of silicon that about as and fact you specifically flash things that in or knowing said dollars Larry it the listen, much about. face have in trail general. will toning applications That project it, talked applicable I I be memory let doing we're disadvantage our on But

Larry Chlebina

Good.

well. opportunities, in And the – so fab; did on anyway, units, how a that and so many but mentioned pursue isn’t memory potential else your and had weren’t But memory it? for typical it be it, past I one a of this automated quite know fab, roughly XP didn't have that on but you units would it's fab, a work needed in somebody units, out substantial you that position to

Gayn Erickson

part memory not are ask DRAM a XXX would wafer somewhere as systems to is shareholders, wafers a near slightly are think investments I could were fabs, in know stay would example they level time, The did and DRAM revenue typical XX it you FOX-XP for that, are but take from same because capacity their in shift will at and I assuming do customers the test with package to a we and the customers, always between the on space fab enormous. moved so or bigger. change, material XX in If going we're in putting There I space to not flash fewer do have significant times or but you those we while to what in the let that. please of term, caveat, that buy, it. working is

Larry Chlebina

Well, It’s job. been Alright. covering congratulations. long time good a and

Gayn Erickson

support your all Appreciate over years. the Larry. Thanks,

Operator

We'll go & Gruber next Please Jon Gruber ahead. McBaine. to go with

Gayn Erickson

John! Hey

Jon Gruber

Congratulations whole just to on TI, afternoon, Intel, Silicon an on to thing. business the Good had from base golf the get we question are Hey! this! lesson order by announcement I but is, way, I going the Optics. when listened a an My

carbide. When are going get to to the we When when of you the business only on step You base – mean, silicon orders base some excuse I – announcing that been business? get optics silicon do do think up? we guys some me

Gayn Erickson

just boy customers and then new the that carbide John, never on something win get different we last will into that got that be can there month, do We our respect in to during base describing. allude more and during of that see happy, And least. space, were some and across I’ll the we I that you we COVID, the experienced, and I nice the customers there's honestly it's sensors tried make benchmarks China. to so believe silicon some of to but some We mean XD, also going couple customers, I right we're we a things more being a related you. business on and expect quiet us John. also some sure opportunities, coming, more to will as at very be XD stay pretty to downturn like right also out related that to now although I've to reality certainly want on to of is the there's region I capacity and There's a base silicon that customers opportunities that business And carbide, had with too. make tell Yeah, tuned was appropriately John. so other to focused the significantly little

Jon Gruber

ATM you out, you amount your we’re quarter here quarterly is quarter that quarter raise since in Q? so it's in Because the were is out the not and your you you’ve and today. reported and soon, your said announced Okay, the XX-Q will the – the you in be at recorders, end-to-end

Gayn Erickson

without we at directly SEC any correct. to is, that raised I be That's of announced the have requirements if time. it – be through think time, that, ATM answering I that believe it would the at had

Ken Spink

subsequent in XX-Q. do would We item. our it material a a it’s as Yes, event

Jon Gruber

okay. Okay,

So did some you hope? do I

Gayn Erickson

John. I haven't answered that question yet

Jon Gruber

a And lot I got questions, boy, very a big Wow! order you like and Thank are orders Keep guys those sneaky work. up guy. good coming. million of Larry $XX the much. you You

Gayn Erickson

it. you, Thank I John. appreciate

Operator

to this And I the time. management show additional back any or there's questions no turn conference to at like for further I would closing remarks.

Gayn Erickson

and call excited It’s a actually here we’re attending to. Alright, hard encouraging everybody's call call. We'll well to time, I really to for at appreciate might Really appreciate time. We had here investors our nice talking working that's really we'll number conference of again a long all attendance. forward nice the your a and the this look out about you folks be Have and everybody. record day! Bye-bye. next and think

Operator

conference. concludes participation. gentlemen, your and We today's appreciate Ladies this

may You disconnect. now

Aehr Test Systems (AEHR) 24 Sep 212022 Q1 Earnings call transcript