COHU - Earnings call transcript Q4 2017

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Operator

Greetings, and welcome to the Cohu Incorporated Fourth Quarter and Full-Year 2017 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jeff Jones, Chief Financial Officer. Thank you, Mr. Jones.

begin. may You

Jeff Jones

welcome, financial and and discussion Cohu’s of Luis Good I’m to joined recent results. President today most Müller. afternoon, our by CEO, our

the details Following well as outlook quarter our we’ll opening first our and provide the XXXX. our performance full-year remarks, as for of fourth for XXXX quarter the of

If you from our Relations. website, or cohu.com, of our Cohu you Investor release, need earnings a by copy one may contacting obtain

this conference we concerning during nature, of have abrupt Before its These is by you the statements on forward-looking we be should the based but information current even business. expectations changes. we that aware call, subject reflecting begin, all future statements current to make are which and assessed, that will course management’s Company’s rapid

with as Exchange response XX-K as comments recently and section and in Company’s of future forward-looking growth growth, encourage include contactor market model your earnings CohuXXX PANTHER QX gains our through our Form specific regarding review questions. results, about future Commission, We the including sales Solstice release test the the other we you filings and statements guidance, goals, and Korean goals, make increased recognition statements Cohu’s including XXXX expansion to our comments and half on share products, any increasing share revenue customer the mid-term filed to sales, Securities associated the well most first and Form sales, Forward-looking XX-Q.

to such our are customers, only responses specific obligation we our occurring a precluded any developments speak comments comments agreements. today, result XX, by as to Further, nondisclosure make as from will no not to this Our of statements assumes and call. disclosing reference questions after February these information any and XXXX, as update Cohu of

certain measures. to a call GAAP financial during refer will most earnings our for the we non-GAAP Please reconciliation to release also discuss comparable Finally, the today, measures.

turn Luis. over to Now, it I’ll

Luis Müller

XXXX and discuss strategy. at in performance sales accelerating growth in XX% Cohu’s market. and share record and sheet. full-year today’s I’ll test dividends. $XXX afternoon, We with year XXXX. our and increased solid Cohu XXX% to the XX% another Orders earnings million operating contactor increasing balance share returned Jeff, million, were the to in quarterly fourth quarter. delivered call, the with business everyone. conclude and levels and had Sales highlighted we $XXX.X test generated our up strong growth over good year I’ll in Cohu though approximately in In investments flow in a handlers in $XX profitability XXXX, were per and gains XXXX and market $X.X $X.XX. by million cash highlights fiscal to million and year-over-year review cash of Thanks, non-GAAP for cash views shareholders

to in start and strong book automotive forecasted a to first off above We’re quarter. markets. mobility X traction the bill and growing We the and

we at more look detail. As the in results

gains. handler Our investment year-over-year strong and we a on benefited capitalize test grew from share market as business environment

of by market, strategy year-over-year Our test our expand these large as selling grew delivered this installed we on products adjacent contactor in handlers. our business XXX% consumable a to base into

and Additionally, XXX% incorporated increase over has winds several great the to be in Kita number the acquisition with of Kita a success combined with our in of handlers. Cohu proven an probes contactors design

to requirements inspection vision and applications Aquilae. the XXXX, dies; new integrated management XX%, X% vision key and discrete fourth and packaging and recurring. once we Sales five received GAAP solution were PANTHER power XX% being different quarter semiconductors. applications. for used also bumped major were inspection represented two they processors line year XX% has and as applications of we automation. year called several devices. exceeded for has Orders of is silicon trends next new were quality system test generation system quarter. mixed This test digital as XXXX now and with subsystems at established deployed non automotive margin level test product system processors packages, along small-signal prior full more advanced new were prober mobility been in for XX% approximately XX%, for in for orders, were mixed installed Solstice, were also their sensors micro-crack wafer-level Transitioning increased single again our segment And and targeting continued And management discrete segment, by detail computing chip the power signal PANTHER order at in device packages announced Cohu’s Cohu MEMS products, XX% and support large and were customers received of over singulated with XX%, each processor LED scale scale previously and launches detection been enhanced and a as forecast. Looking handlers systems In LED to Last in PANTHER major share sensors. a and at the thermal quarter on inspection and and of XX%, for the in XX%, technology RF orders, record. gross XX%, were power be a with order orders. This the expansion components address Solstice, of was mentioned, strong we strategy improve will and momentum product year, we in automotive our new devices. early and customer guidance, also management module fourth Both, inspection market for aligned in of market in wafer-level a to test a introduced chip our

high-end segment half at the with a included demand computing Cohu foundry processors leading for We volume the in increase capturing handlers also expansion testing that new of in in forecasted for business XXXX. saw second

customer coming and recently automotive contactors. with backlog, European pick-and-place we strong evidenced traction, momentum, of started gain year, MATRiX win combined a As multi-beam the we announced our to as with by XXXX test look major handler the share customer a our design with

be objectives supporting share test gain to win increased handler our expect XXXX to key We well as in as contactor revenue. this

continues customer model. provide who have a we for excellent Additionally, handler orders Korean to making been new major repeat with a progress

expanding close model in year. To strategic test result, making we investments expected same with in XX% current of our the the a have be important in about probe growing up market, is and would in in share which first to to disciplined last half period support CohuXXX As projections increasing my like an support confirm for the to I this XXXX meeting the investments growth remarks, business handlers, inspection. which customer, contributor prospects over contactor of mid-term been and objectives includes

contactor each handler with by is grow digits another single to year-over-year the of markets X and Cohu’s combined and to mid share expect plan in market. X We points gain test to outperform

model our targeting to we to both As XX% gross annual EBITDA, grow million indicates, sales XX% $XXX margin non-GAAP. are with and

successful excitement the Collectively, deliver with shipments strategic of operating profitable continued initiatives shareholder by is Kita revenue, flow now the XX% Cohu operations, as acquisition early XXXX structure of contactors with Aquilae. our and these of and our the the implementation and about our including representing growth, margins, confidence developments of actions, and in as now have cash increased the originating Solstice of streamlining from test in XX% and systems of product markets, new successful over returns. introduction driven expansion handler Asia well future and increased improved Cohu over of Our fast our operations cost core to margin PANTHER, year last with share positioning

guidance. full-year I’ll quarter and fourth turn it over and details Jeff financials our for Now, to QX on the

Jeff Jones

XX.X%, that’s line with contributing and $XXX cash in XXXX approximately margins record XXXX. were was cash from XXX of XX.X% $XX.X manufacturing $XX $XXX.X and we Kita points XX.X% million to of ended Non-GAAP with million non-GAAP in net to our margin of approximately our increase million EBITDA million. QX the in $XX Cohu’s year adjusted XX.X% operating of cash from respectively, $XX sales generated million. expectations, XX.X% used generated XX.X%, up gross operating an Full-year million. of adjusted on XXXX XXXX, respectively balance, sales of acquire and margins and operations and for was basis of as We on EBITDA in

sales Our the was contactor the of year. for XX% both and business quarter

XX% QX Kita, acquisition with XXXX, to million, follow our million, the on impact reform. comments are quarter for non-GAAP U.S. of of guidance non-GAAP expense, impact the million the acquisition represented market in of in customers $X.X costs, Cohu’s reduction in these of related purchased in Sales the tax primarily $X million Two $XX.X seasonality. sales, items. and of based GAAP one related sales, of which exceeded the $X to of of related of with receivable customer and My the sales. from tax intangible Ismeca all expense, QX, connection $XXX,XXX consistent $X.X XX% related automotive earn-out For of million in results, expected each other compensation to approximately reflecting approximately the including of the approximately include market stock-based guidance $XX computing customer valuation XX% and the were QX, million one represented to the costs that recorded of exclude QX amortization the adjustments indemnification

of investment QX gross full-year, million recurring Korean to than $XX.X loss with large were guidance, the and the automotive $XXX,XXX our mix certain guidance and than of currency foreign that Operating sales increased due one customer represented represented support the our fees. service QX the primarily sales. expenses approximately outside a growth in prospects and including mentioned mainly XX% customer margin and to timing of customer XX.X% audit one our computing market to sales other due in Luis for product previously, combined with higher market For the XX% above was higher forecasted. and

transition changes Cuts the provisional provision XX, As financial effects have amounts December certain of Due introduced were XXXX subsidiaries accrual XX, from included and of tax tax reasonable applying credits the GAAP loss benefit tax net the income These tax the foreign provisional December taxes you as are know, operating the in in our net to a operating and timing the and enactment of of the made estimates the U.S. on act, one-time changes law. on statements deferred recorded of U.S. and to on law, $X and of impact event expense of XXXX. was to U.S. we reduction that Tax amounts losses net of in foreign U.S. net and rate funds tax to and Act totaled the million the income deferred complexity to tax the a Jobs earnings foreign enacted of rules involved significant U.S. the taxes, tax the estimates repatriated previously and of our

The as benefit also benefits our certain not profits with Department, the of countries our Treasury was December rates we statutory that has of in guidance to in XX.X% currently that effective other holidays. and reflected outside in may The tax our estimate. complete tax QX and recorded of setting U.S. generated for additional and a we Cohu act where by U.S. tax may provision XXXX. because tax U.S. XXXX, rate IRS profit consistent tax from the income analysis continues which incorporate the allowance. be bodies, XX, issued previous additional do The effects, tax in As or non-GAAP would with the income the identify tax be rate not lower from generated incur countries standard valuation rate

Accounts days. tax increasing year. we be additions payable million expect $X.X full were the XXXX. result to million due record for $XX.X depreciation and was Directors related our increased sequentially. and four by increased XX, the million to million and quarter. $X $X.X days XXXX. Fourth rate and of profits QX to $X.X for end of the at full days payable April per expiration third than to of million holiday XX Accounts of days improved with declined $X.X for to now, Inventory Board the $X.X year in days slightly compared quarter for the XXXX, Cohu’s share, effective XX%, a increase to dividend tax by was of first Overall, $X.X cycle higher million portion $X.X quarter flat the Deferred a on XX by million cash fourth a was at XXXX of ahead, guidance the $X.XX the quarter. asset sequentially The December up of quarterly end the a $X.X quarter XX. approximately as of quarter DSO the days Malaysia. full-year shareholders February to deferred XXX revenue sequentially XX, of $XXX,XXX of at by moving our million And Looking XXXX on the end approved million receivable our at at conversion the million cash inventory was end the to over a XX XXX. quarter. approximately Fixed

in into There’re stated press As guidance. that million. be aspects today’s our $XX sales QX several QX expect we release, to approximately are factored

revenue First, the know, you of effect XXXX. on recognition as many rules into fiscal new first of went day

resulted XXXX approximately this million as XXXX deferred income be statement will adoption $X.X and equity profit of Cohu, in rather effect in Cohu’s recognized at the will recorded be that a of end For revenue in QX. of not adjustment within cumulative but

Additionally, acceptance record over which XXXX. revenue well multiple with mentioned, the applicable timing backlog orders a positions we quarters with on as received. strong Luis customer This the growth of and entered the and in shifts when XXXX is expected in with quarter for it’s delivery contingent us backlog continued

product expect of shipments the Korean to first first large year. recognition this revenue we ship continue our our from orders to those and and half Additionally, customer receive within

to result support increase over of basis XXXX same Gross prepared the are in investments we’ll last a take That QX, expected expect higher large our approximately period than factors, Korean QX points million than continued Operating reflecting customer. be sales questions. your for first XX% of $X margin year. QX. to these be our approximately now, As half first the we approximately expenses in XX concludes is And quarter remarks. the higher expected to

Operator

question. the question Needham & LLC. [Operator Edwin Instructions] Please with Our proceed first line your Mok Company, of comes of from

Edwin Mok

growth I timing. understand this revenue delay of correctly, your to like the First, is caused first June in if sort focus sequentially, shipment in quarter quarter? I half this second on financing With the rate back the broadened into quarter that decent is over it my year going and it Is ‘XX. year XX% just timing the to of growth being want sequentially. pretty have more want do a the recognition flattish of technical to understand I June or math

Jeff Jones

primary Yes. the It’s aspect of I recognition. is the recognition. There revenue is timing timing the shipments driver then, also revenue But, an more shipments. about the the and say, of of secondarily would

Edwin Mok

last that at if that Maybe in first exiting big shipped just it $XXX think color million on first then, I message, roughly give [ph] backlog, year. pretty over of was about it first is or How be the is And your half half? in the look will half half? to the Right? backlog. some there the this much way What in

Jeff Jones

XX% Most extends that it We Yes. year. of the will first be the half QX the of shipped in half. QX, will into out in do XX% of have but that ship and to first some

Edwin Mok

talk products can can what maybe, you of the Anyway that helpful? and maybe on win, then, there. you opportunity be provide auto can some there European you of type kind And guys about you color would want customer size qualify

Luis Müller

automotive conjunction with our the our with we that MATRiX we As is test announced and captured industry place product for that was in we business used multi-bean for today here, capture business contactors for commonly also which test; go device most pick handler. the pick-and-place what did handler, in

the opportunity, it’s new X points size in still to as acceptance. we market projected that along share for that of far with the customer XXXX of gain on a As getting Korean part the that we working product are have X

Edwin Mok

guys of provide quick some then, a the And that. inspection on around you in terms question -- just side, comment

you that It’s cadence pretty coming share to provide with color tackle some award want a the kind that you contract opportunities space. or sizeable that do on once Just growth? the you more How there. of you customer help small ‘XX, see certain guys understand a win Is can see in of with progress that? or you relatively still and are do in block market, sizeable just some

Luis Müller

market, before that about $XXX inception. Well, is as million XXX, we’ve a said for package

narrowly that space the in handlers, a over our sales. million the today packages, of in a participating is in are tune And about fact year more We small small via little devices. turret on $XX focused to

the as here with last of as today, we well more as view that the with year have in perhaps we people expand that today did handler. one we some currently digital are semiconductors solving shipping that module for our that develop And efforts Aquilae challenges the have that customers field the are to larger have turret nature such so, of solutions the

be steady sort how So, a of there will market; into progression today. that’s that project it we

Edwin Mok

happened talk go I notice how quite you the think that your fourth notch. quarter it talked OpEx, to then, quarter, to can OpEx much you and Anyway up non-GAAP think you a about? a in is there is you’ll went OpEx? OpEx? investment up what for guide bit about way you long-term, you this first, just grow this about And fourth a think Well, how

Jeff Jones

Okay. by QX, customer of of standpoint as a a support In the that we well. Korean an onsite large support talked sort development from driven mainly it Edwin, about, was perspective also product but

So, look to QX, when to late, closer a quarter. $XX the million it’s at expecting be QX OpEx we’re about we

So, QX QX as expect well. in beginning that QX, and for

quarterly increase And again of to sales. there but grow rate sales For SG&A, R&D, -- $XX every grow $X year in million expecting is in XX% new And these R&D for little basis, in to be Luis of revenue for full will with be they to there, about what approximately a base develop the X% line articulated. about that’s about But the likely we’re were XX we’re growth to where that on line then, grow plan base modeling of base that a of QX, bit products as sales. line line cost some we with million.

to XX% of the looking XX% year, at in the For we’re range. SG&A sales

Luis Müller

originally for the degree to increase we’re actually customer, here going the stated. adds had projection for happy see Jeff to year. XXXX. than to to picking the up activity it’s more for The -- to here the this in of Korean but good add organization for spending earlier momentary very thing what up opportunity we R&D of has pulling anticipated stress Just our some Obviously, the half a been the first

Operator

the David Our Duley with of Please line next comes question from of Steelhead. question. proceed your

David Duley

you guys, was that say grow I us or could mentioned number the you used? that market handler could thought but -- X% what you think the you would remind it you

Luis Müller

XXXX. the digit said I expect about mid we is to that, handler market in What contactor grow combined single

David Duley

unit and like that. guess I overall seems forecasting XX% you think growth being that seen X% And it lower in how you’re conservative be a rate you as mid range of far projections or projection. do I’ve the or single rate the growing to high, of volumes just Are semiconductor go? going you that came as growth Help me of isn’t units kind digit to understand than

Luis Müller

David, for a the we our is, we for poll year. do way it customers projection the

the And market get, about derive essentially this sort And the shows, mid with for that’s market of growth how and points collective gain projections -- that information ahead coming our guess I digit plan XXXX. for year. single in our X to that share we along growth the, X we for we of

David Duley

as the contactor as as gains, market X% overall what XXXX Okay. was as us size handler year far size to the goes last of you your was the and And well? understand far X% as thought where market market share help in

Luis Müller

XXXX, believe We market have -- you, order for preliminarily $XXX and about on don’t the of the XXXX. $XXX we million, data in was not $XXX for But, tell set handlers the that probably have for compiled I’ll yet contactors. million full we million

David Duley

couple customer? you -- help us different customer this mentioned And application addressing of you application then, me you of what have sort that will think could as -- win. that help you understand I as And a What Could foundry as with understand new times. a be well? is mentioned Korean far you

Luis Müller

be The in are used in products. is Korean applications general small and over believe semiconductors. mobile power those initial products, for products management But, expanding I in time. application going this consumer customer These are to also consumer

starting a point. just that’s So

beginning which customer, the of processor half the sort as second application, of to the of foundry application, forecast we computing far or towards volume up is year. As half that this a pick high-end second

David Duley

goes? by transition the some driven end technology of nanometers as or XX nanometers, like something X there that to far or is transition Is tie to sort market that, as

Luis Müller

one -- we much the a think I in complexity to this believe don’t but this captured, driven on tied have I is particular so this no it’s of particular, No, transition case. to so, don’t believe transition. that don’t by I tied the More one no device

Operator

and next comes with Our Craig line proceed of your from question. Riley question the Company. Ellis Please B. of

Peter Peng

actually gives Peter the calling sequential Crain This our end the you as us Can on business you a think Ellis. about and thanks takes question. market give is And for for primary Peng taking basis? on basis,

Luis Müller

strong. that QX, last all weaker the markets, getting I and And expected very about have the so a again I quarter. bill now, continues to much of had the momentum a a book think, But, looking the solid-state strength would sorry, -- -- so into very segments X for lighting momentum continue stated, at end strong we exception are of would say, with say, have I first and quarter the I quarter, than for been those segment across I led fourth all see market from strong say, as quarter we the So, in to same or quarter. other would in very that was fourth the markets fourth across the

Peter Peng

is bandwidth in memory seems Cohu’s like some talk it ramping participation up. that Can there high market? about you And

Luis Müller

market is Cohu not the really memory in today. participating

that our limited a that’s today. -- but substantial and have revenue not memory applications really some is on size scope, We high-performance of in and fairly portion

Peter Peng

the seasonality, with kind the first seems line that that business expect business the the you what in of you on and kind do in declined talk contactor business. general handler quarter? And it business, about Can and of like

Luis Müller

has grown just to but first growth lower Kita over an of grew basis, XXX% achieved the for you consumption quarter, acquisition, of of the year-over-year. know in obviously there a there. has organically, within the seasonality been a fourth the the pick three balance business post-acquisition, a and quarters that actually balance has up tend start we for year-on-year, XXXX. business let Japan. the year, XX%, pins And pins, again, objectives has spare -- Well, as the -- business whole in year. that little me Kita in the do then, a see of On That

that have So, to we continue wins, to But, rate the new launches, a see we business with growth observed. that XXXX that’s and the opportunities, in XX% run. for seasonal for growth total model said, the we pattern that product business, contactor design continue organic new

Peter Peng

And on the gross margin, it seems that up like it’s is ramping ticked or up. to contactor Is that just sales? due to new product plant Osaka the

Jeff Jones

it’s Peter, things. a of combination

leveraging more First, with our do of lower have operation part it And product lower fixed so cost and it’s Malaysia well. does to mix out of providing a cost. as or

contactors forward we’ll products about look to a that see we gross XXXX, is contributor contributing to in we’ve talked expansion increase So, And margin. new of also to as that margin.

Peter Peng

should in before is think And That revrec to second going revenue, million line, it quarter, we is deferred the in about hop be that? that one question below $X.X how I queue. back into the

Jeff Jones

As I stated, income it statement. will not through the go

we’ll straight have of revenue -- opportunity or in move balance deferred to revenue revenue, as our and me, into deferred take an that XXXX. profit it QX to adjustment profits make the or profit the excuse equity. and equity, off We’ll deferred recognize into So, not sheet take deferred the in

on we or statement benefit So, again, the in that EPS income $X.X won’t XXXX from million.

Operator

line of proceed Please Patrick the from Ho of question. next Stifel. your Instructions] Our question [Operator with comes

Patrick Ho

of out what recognition recognition to the revenue of systems to terms some year, and through and the the are set terms in ability the revenues for need in this the off, you to And field? revenue I year? you Solstice get guess PANTHER final on of products, are the this first going to guess have targets recognize get any you I hurdles on Luis,

Luis Müller

time taking one So, at here. a

we back already a go to have recognized For of look. Solstice, units. and couple I have

think, third we year our was I quarter Solstice. when for had in it the first recognition revenue last of

year, not for what as giving first the PANTHER far PANTHER, for XX%. last for we’re included relative targets the QX revenue do we as full they’re the half of have For year the going guidance. including we’re about in modeling this be revenues to growth first included definitely to of But, of in XXXX, year. And year, half our product-specific from

Patrick Ho

the own think And mentioned your of leverage to Kita of that from you to seen your business, have was growth for the as customer biggest emerging contactor my when it a look the business you acquired the Kita much Kita driver a How that in and and the terms XXXX provide follow-up one I pull handler whole? that, contactor perspective of things we of date, business. business as question you at is the even solutions,

Luis Müller

front other with products at performance working the have to signal already that coming ties our for we and the customers. thermal at pick-and-place start of the we’re And To the handler and pins layer on good seeing Yes. That contactors solutions digital, are because particularly for on very an from are the is base the contactor really some products. test we in handlers the some used more yes. at that where mixed mixed thermal pick-and-place like nicely here, augmented customer seeing And, And customers customers. the the of going. handlers, answer performance, we’re the opportunities very of requirements get end I solution signal very attractive as floor digital applications qualified one at thermal that on predominantly out for, that our our said, Kita evidence go in major have specifically, been interface our promote are specifically

a handler customers. yes Kita this contactors is that own we the So, between good that tie and our pick-and-place very build with surrounding

Operator

the with follow-up LLC. from Needham Please Company, a question proceed Mok & We of question. line Edwin have of your

Edwin Mok

Hi, guys.

quick follow-up So, here. just a

to talk X For in you the you -- grow the points. mid market by expect outperform about you to year, market Asian single I X guys to and think, digit expect

at grow business will missing to So, to that growth am does XX%, fair it wanted there? just you Is that. expect half about growing slower some with understand I high about the I to single you And if would will. see there? first imply understand Just second or a mean that digit, think the half trying that. to that that way

Luis Müller

Yes.

quick correction. X points Just said share one gains. to I mean, X you

of X We’re points share simply X market. of it’s points also gains organic today, that They share relative high about actually are about towards gain meaning year are just more total second handlers, from on any end point the the modeling of half number of market for projected our year. reporting last to correct to target, be half we about Frankly, the fact likely out size each first share growth. the that which represent a will looking we our at that the the markets. the today sheer are towards contactor of the for XX% handlers about perspective, X year. XX% on not growth And the contactor by No, X the size given in the in gain, would

We not to today, are prepared Edwin. that do

Operator

questions to for There audio like turn over concluding of are Jones conference the portion comments. I back the further conference. over to Jeff no the Mr. would now

Jeff Jones

results. Have report today’s you to for look XXXX on when We joining investor good speaking or Thank upcoming a first at you our call. us to quarter day. we forward events

Cohu (COHU) 16 Feb 182017 Q4 Earnings call transcript