COHU - Earnings call transcript Q4 2019

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Operator

Good morning, ladies and gentlemen, and welcome to the Cohu Incorporated Fourth Quarter and Fiscal Year 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host today. Mr. Officer. Financial Chief Jones, Jeff Please go sir. ahead

Jeff Jones

Luis Good Cohu's fourth and I'm today and welcome quarter to discuss to joined CEO, President our call conference by quarter outlook. our XXXX morning, Müller. results first and

replay If by may Web it you earnings access presentation Investor Cohu a Relations. you cohu.com, also from or in Investor a of be copy accessed call slide on Web Relations need call section. via today's at the our release, A of site available after that contacting may be our with page the There is this concludes. site will conjunction Cohu same in the call

release, of filings These the reflecting most subject on statements current statements make Harbor, form rapid Safe presentation assessed, and call today's information and the forward-looking that review to and we management's recently we which is concerning even statements forward-looking earnings well expectations abrupt nature have to changes. the by XX-Q. including its will business. form the are slide you Now current XX-K the but SEC, encourage to based as as section filed We during future the with Cohu's Cohu's

XXXX, only occurring these Our today, comments to this and as Cohu obligation February call. statements speak no XX, after assumes developments of update for

earnings measures. this during GAAP slide and release presentation our measures. call, most for to comparable Finally, we to refer will financial discuss non-GAAP Please reconciliations the certain

CEO. the turn to like to Müller, President I'd over Luis? Now, Luis Cohu's call and

Luis Müller

at prospects XXXX. pass to financial morning. on first comment and to Jeff fourth results then market reflect last business it guidance. I'd year's a for look discuss good to like quarter moment will quarter back on Hi, performance, dynamics, and I take to our

challenging growth million ahead delivering fourth In after a run consecutive increase of schedule. of annual of environment rate with cost towards our model delivered We acquisition, XXXX, the quarters in making $XX synergies a target of financial and Xcerra, progress XX%. accelerated four-year amid integration market five substantial compounded year rate the revenue Cohu of annual that

new of in development, our enable consolidation We made and and expansion capacity revenue critical product investments in that also contactor testing will projected grow XXXX. supporting customer's portfolio instrumentation roadmap handler,

quarter, dollar fourth and test with handlers mobility of in segment across segments. and Estimated this all were management benefited display systems The utilization XX% and XX% XG-driven points QX XX%. of testers to processor recurring business split system panel of overall Turning from quarter-over-quarter XX% for handlers, for smartphones total increase RF mobile part orders launching next-generation tester orders gain three in sequential to was thermal with along drivers flat late later turret for semiconductors, year. market

which for struggled tester in market is XXXX, XG-driven capacity, accelerate. customers the XG still sales when new and build thereafter be in introductions through shipments a its will tester XG is stages, in modeling shifts expected early key wave XXXX smartphone penetration for but product driver to quarter to millimeter We're XXXX. third The adoption, as attention XXXX,

that utilize of remains high-end and orders, driven our at equipment. segment total datacenter applications computing The system thermal XX% strong automation by

interface inroads high-end digital application. qualifying products supplying test also made We device and for a

increase We in growing for expect capacity million potentially as business $X our to year. we sockets and about the this XXXX, additional initial compete during and represent manufacturing

orders automotive expanded increase and that of saw a in to a uptick XX% quarter-over-quarter. XX% December late system We dollar total

electronic rise testing systems low-carbon automotive and and are processors in drive a emission battery vehicles content are to for for steady vehicles ADAS in that applications high-end come more as forecasted to electric market. leading hybrid/electric Our management

than the X% and in hybrid U.S. less National sales the Association, to electric represented XXXX. Automobile Dealers in According total lightweight of of vehicles

than and automotive are grew PCB IoT the X% rate and in annually quarter-over-quarter All XXXX, at Although the greater and five industrial, orders. semiconductor for annual be to to growth test many seasonally-adjusted and of optoelectronics, represented next consumer, analysts project balance sales other XX% flat grow years. the system segments, projected of

We should a a historical with XXXX. year this expect be segment steadily return to to Overall, growth improve the in seasonality. industrial

tracking although sales been of contactor of our currently data have downturn, the much history, we We and XX%. long have attachment is rate don't and is handlers, at represented XXXX market a of average a the

grow We expect this XXXX. through to

shipments it inefficiencies the higher The weighted of future quarters. to sales negatively capacity, we're margin and possible contactors, still has quarter. fluctuate in ramping some anticipated, given longer Although number a taken is compared manufacturing fourth gross consolidation the in some addressing that system and contactor capability assistance as will ramp this little than volatility in on

closely higher As time, novel the coronavirus start of we monitoring chain of improved a backlog, year, and the to mobility strong primarily and driven late started uptick customers. At we fourth order coming the look customer in impact and New quarter same and challenges we're traction to momentum presents a our the with automotive. some XXXX supply Year by the the

safe, Fortunately, all fully Philippines are Japan employees of our are and our the Malaysia, factories in operational. and

our approximately QX. Cohu quarter ERP the range wider of launch slightly attributed XXXX, net China million revenue new of in a XX% in impact sales represented approximately to of to While first in the coronavirus we're $XX guiding in

schedule. ability disruption few their to systems have customers our our the operations and deliveries. in their to Regarding continued some closely also is relatively we impacting China, to support suppliers working the order on We're to ship but with ensure business coronavirus,

driving expansion line with midterm segment, we inspection about or and product system investments rates broad top industrial optimistic and Our on cross-selling in revenue on in with business the opportunities and or contactors. the aligning growing our support and remains prospects and as Cohu's profitability, in focus sales. of contact of strategy in automotive I'm in transition line test attachment XG test XXXX electrification, growth focused autonomous mobility, increasing equipment,

quarter Now, like first review Jeff to it turn and guidance. I'd to results quarter fourth provide to back a

Jeff Jones

Luis. Thanks,

during QX million and increased year sequentially from reviewing $XXX million of consecutive the XXXX revenue fourth of fiscal our operations our by to begin million $XXX results high-end year resulting fourth the of delivered sales me sales quarter, $XX approximately approximately balance and near in of cash $XX the growth. million. Cohu with Let cash guidance,

note the that disclosures. Please comments non-GAAP reconciliations earnings to and release and follow accompanying See to figures that presentation. refer GAAP I'll my non-GAAP for also investor

in For connection QX, the in include stock-based $X.X million XXXX. GAAP of the and million approximately compensation $X.X indemnification Ismeca tax to related of non-GAAP a adjustments a receivable expense, acquisition fiscal with reduction

due primarily restructuring related restructuring QX net costs. million Xcerra Xcerra XXXX of million include purchased GAAP expense impact by of was sales million accounted amortization severance. the acquisition quarter, revenue employee for fiscal QX to XXXX. $XXX was sales one non-GAAP XX% of customer adjustments $X.X to of $X.X primarily of in and The year for acquisition driven the the and approximately XX% in $X.X intangible million computing cash segment

higher up and of in fourth guidance fiscal than customer forecast quarter full in or more our QX, inefficiencies expenses transition through driving accounted commissions outside XXXX. came XX% to due various a XX.X%, sales the other Operating to contactors was approximately year-end for due during Cohu's services. sales and business. for costs manufacturing mainly In XXX,XXX lower year higher margin is capacity than gross the No which

synergy in of During with which quarter the million. and acquisition cost X% run XXXX X% target forecast, non-GAAP quarter, approximately was is operating and million synergies, Fourth EBITDA the $XX we realized rate line $X.X of was annual income at exited we of approximately sales cost the adjusted

resulting U.S. After a and U.S. of QX by loss tax interest the consistent and a losses provision non-GAAP deferred tax XXX,XXX QX $X.XX. EPS foreign currency of asset loss generated as XXX,XXX loss not during expense Cohu the was a due million, the approximately in with a quarters The non-GAAP is from approximately X.X tax outside result, to profit allowance. operations pre-tax reduced prior net And valuation provision our QX was in U.S.

$XX on five synergies resulted target actions goods Now model, of fiscal years. our million XXXX, synergies, in approximately turning cost expense. original XXXX to year pulling cost the into the and announced which to earnings ahead annual million of approximately cost in we've prior business run exited in of rate taken million of and that sold, $XX operating million calls, having forward We synergies as are cost achieved $XX three split $XX

As previously quarter-over-quarter to million approximately balance cash $XXX $XX million. increased noted, our

Our April cash automotive cash share required XG-related to XX, be the a use down to of pay demand cash in the to company app continues on production $X.XX support payable uptick the XXXX strategy approved shareholders debt per capital to XX, Directors the business. and subject of Cohu's excess deliver to recent on dividend XXXX. or allocation $XXX Board long-term million by February and driven of of quarterly record

approximately by Approximately compared likely remaining the of million $XX the This been we're related $XX system for expecting XX% from a revenue together its recurring expected to And in realized XX% second forecasting will be revenue in QX QX quarter. result Now from will revenue system a is revenue nature million. represents guidance as occurring realized in the which revenue with impact quarter half The to guidance the implementation $XXX improved coronavirus sales result removed is $XXX the an the has QX. reduced to by million midpoint. in to to first in order that guidance, be be increase million $X ERP and QX not QX future. potential the XXXX of million to

PCB forecasted are test. is X% in by of sales distribution average, represent semiconductor necessary And test redirecting to XX% than factories less customers X% suppliers On our maintain to China. revenue material steps China about XX% China. inspection have continuity material outside spending. to we orders supply our to and as taken and of and in QX Cohu's suppliers of be of

expansion aligning systems and optimization was ERP on Oracle To enable its Cloud. Cohu future

XX% will XX of phases Any the phase from has The potential this over our in guidance. the the system implementation the of considered project months. the balance been approximately implement and next businesses live first of month. impact businesses revenue The QX go Cohu's system incorporates will and

expected to expected and million is activities. onetime approximately with expenses model be or implementation XG to million target our support ERP margin be $X and driven XX% Operating model. inline about in and to increased of cost $XX financial due than R&D some system are customer Gross between financial expenses higher XX%

beyond on For necessary Cohu financial measured the note eliminated were QX, level. be enabled above the has and conditions, the business to our the conditions. which improving modeling quarters weak and purposes few synergies cost temporary demand over depending due last in acquisition against revenue OpEx the business model Beginning but due the to cost please increasing should actions that

for QX We to high expect of not will abnormally quarters, adjusted the midpoint be guidance provision Similar meaningful rate X%. previous the to be approximately QX. EBITDA at tax

for we QX more with of $XXX in a revenue purposes, For on million XX% the expected or approximately rate count line be is normalized Diluted million business model. of profits expect modeling shares. effective to share tax XX.X approximately in

That to remarks. the we And open concludes prepared our will call questions.

Operator

[Operator Instructions] line from Stifel. comes Chin Your of first Brian the question with

Brian Chin

letting Hi, or you couple guess, with from good directly, of revenue start to the Maybe morning. you the outlook that questions. following and terms in coronavirus a of impacts me also ask sort contemplating of let for flows into the the us Thanks that of descriptive quarter. the on are sort I provided seeing how

your relative So, midpoint being exclusively the tied which that sounds more the it in of seeing just is from it is delays terms of small, half it of coronavirus, able tied Is supply of to $X that to kind the are know the like in $XX timing-oriented, of in million that or chain, overlay the portion. customers million is something receive your terms in reduction to constraints product? you to you

Luis Müller

Brian, our chain. the half in That is based constraints on this Luis. is supply Hi, really

Brian Chin

Okay.

Luis Müller

supply constraints exclusively on our really remains chain. It

Brian Chin

bring terms can Got case of secondary in the suppliers it. periods other you Do some up in you China? shutdown of have persist workarounds in

Jeff Jones

Yes.

coming we imagine large have in work see they beginning had and of can week this online New China, suppliers those Year effect about -- in million ripple as you shutdown enacting continue a pushing at started point. again out which of and can sort on $X this have and lunar but forced and back you of created China that As essence with an week, by to been of has extended we news, in has ripple QX that some little regions this bit certain revenue the QX here, into in of read of

Brian Chin

was which And $X that sales kind the -- a to utilization necessarily timing it. other more maybe but of recurring terms maybe lower not rates? million of that oriented balance of Got the the extended towards the necessarily -- to other shutdown just don't in subject oriented,

Luis Müller

the testing, have the you -- That's as are and sales a an and really you contactor not so, shutdown for you are those is mean can to for that an also but materialized in same precisely not not components effect, you but contactors China systems, not and right, expect you have wearing we Brian, are going the that spares not effect weeks, at rate certain that as the regions we example, few wearing certainly last recurring I be if recover. are not

I think gone. essentially that is

Brian Chin

Okay, bit and it. margins you as of this terms and more I up target inefficiencies in in the of contactor back level gross and well, to model. got And the expense see margins beyond? on what you Can you commentary descriptive gross with into the back in has why line think maybe be a your QX see QX kind XX%-XX% resolved were,

Jeff Jones

out production Philippines. Brian. of U.S. Yes, business in our main transition in the the into of contactor sure, impact The factory the is

point, the consolidating production so, the this on historically to last that of another more work it transitioning has that'll as up the doing and quarters Penang, anticipate based that, Coast to Japan, well facilities in have bit at as stumbled target closing the take in and to contactor California, quarter come couple the really in U.S., again. and is Philippines, So, so probably East of Philippines, piece transitioning in to over really the we a we this accomplished we been the to of now

Luis Müller

that Brian, And outsourced little we bit in-house in-source just that to to is we add that the wanted had a production U.S. not on to more, operations in have this

Philippines, as mentioned. the Jeff in

a take to we think to want. to I that's get quarters, going level couple the So

Brian Chin

of rate, attach rate, thing understood and say that for attach maybe that kind in one on a could but either last that what bit start provide even kind you growth expect still I of want the maybe expect year, a think the to year, sort of given rate exit a you suitable what think business, Okay, is little contactor level. test terms you guess yes, it's of of kind just run in this I standpoint? the metric you rate to guess sort midterm give equate funding of XX% if to or the a interesting I business growth you from you you year, rate on the

Luis Müller

been targeting we've contactor on growth mid-teens, about kind Yes, so the of business. XX% rate for

Brian Chin

you. thank Okay,

Operator

Ho Bank. with comes the line question from of next Your Sidney Deutsche

Sidney Ho

the you appreciate in is as what as using growth weakness seasonality? year. talk But coming quarter, remarks fourth is my you question baseline, have you Thank for expect you weaker, Great. the and layout in given XXXX in and expectation taking quarter I first in first that XQ, QX for about back questions. XQ, My this talked if to a quarter magnitude XQ assuming about in we're change your mix, the the consider in revenue you maybe seasonality being stronger. second means typical third of And business prepared past and would quarter the been normal

Luis Müller

shipments is Nevertheless, a to of do content QX visibility QX the At the and the markets remarks steady QX you mobile already an some orders now demand Sidney, band mainly look needless say ramp driving quarter into time, for right electrification the to in tremendous the or demand but flat see we're to driven we X%, error on of but for in we Yes, revenue. expectation Luis. into the drivers. described right that throughout management, the starting in other Hi, some as but a as having right understanding fourth third error, now Obviously still given than about RFICs, seeing how at drive major going and same of if processors, just QX, the And projected QX. for space, handler said automotive, is so the quarter prepared this semi growing into that in have growth to quarter. automotive and this XG there's also that power improvement drive we're forecast is QX the I a we semiconductor being year. ADAS QX by tests mobile do starting display driver don't contactor in wider

industrial We us, improving it for business, this it's strong year, stabilize to and remain that more is lot also recurring start although later of is a expect to stable. lot computing a

together So do how we does quarter, that expect third second all model quarter. that up a is the coming projection first being second relative stronger and to here talked about for we quarter

in coming number again all, QX come What QX say in pullback the would that think we you those back for the or guys QX? start and for Sidney quarter that degree in pull compare start going that that expect the to have to seasonality QX qualifying the I give today year, to you late back pull to expect XXXX, mean back. solutions don't to but is quarter XXXX then really will so ramp typical a don't moment. sometimes in it's typical we this to a for unfortunately, model we I orders all that today, of the third sense a from quarter. Now, of the second be, does coming have at But fourth XXXX. do we how mobility I expect do just granularity all smartphones,

Sidney Ho

how do just total just about revenue and change look today? your you smartphone to the benefits not your to also to And your that But new talk the Maybe your expect that's Okay, one then system you that And you last over fair. business recurring mobility from side sales? maybe has is tester, that in, exposure clearly RF quarter? drilling XG into time? does been business. little revenue if pulling What at pull level the market into a set ramp bit, revenue that the

Luis Müller

exposure into our mobility should more the fourth market smartphones, by in into our and mobility is so fourth mobility exposure orders quarter, careful right. market XX% today system into of our were be system mobility So, is the and quarter large and XX%

if industrial had markets alignment that you time We historically back stronger was Now, a a look much here bit. and go little with automotive XX%. in

part by part weakness frankly ramp and industrial do in with XXXX. and through the of So strength the it automotive in driven to of the has mobility in is XG

many XG, that, drives device or it is some us you relatively and in the a side much bit also power it reality, of amplifier are tend also management, size, particularly $XX for little we We handlers still the small, that now, but expect It more market look driving with smartphones, right? into we for display RF, goes or maybe and wave. in thermal for it and on across space right technology, really at RF, X I'll into about volume millimeter the if grow driving not market it tester us thermal give and only digress testers the is segments, see ramp a substantially to for in Wi-Fi in million control So, is take and but the the eventually driving tune but leader gig where cuts higher think XX%, this as years, from RF to XX% XG to our year, tests. sub-six in XG coming for applications here of bit so a little it's and subsystems handlers mobile power active testers then obviously processor for driving driver that

be frontend So the to in about a million coming market that $XXX for years. IC whole us that of RF opportunity we expect ecosystem the business plus

Sidney Ho

Great, and I away. squeeze one maybe go if I more in can

longer-term infrastructure handsets talked revenue about ramp-down of years? by here, related XG versus say few being years, few or flat How opportunity they is for going other as next to think the year-over-year over be offset When is about the another ramp-up maybe sub-fixed your the you think profile like companies next millimeter look little wave. one opportunity, but tester it do opportunity has may to the you think fairly ramp you over when a

Luis Müller

RF infrastructure. profile. test, I presence a growth think in be transceiver side. be don't sell participate infrastructure don't in really We RF testers into for don't actually it's actually a test. growth We don't, handler We we we going test. to a the strong participate don't clear, To baseband in have except

higher increase will the as one associated front-end an we that's a we see a see of tester. maybe in increase the frequencies swap. tester So higher participate content segments to our front-end smartphones, do in as one more in test and complexities predominant very RF IC in ASPs those of well much IC with space, Nevertheless, large with

definitely that So segment is growing.

Sidney Ho

much. very you thank Great,

Operator

Your next the line of Diffely question Tom comes Davidson. with from D.A.

Tom Diffely

the There's one Good attach more on Yes. rate the question contactors. on morning.

was year-ago? it said was XX%, it where You a

Luis Müller

the was that in don't XX% was the Tom, order me, don't three. I started low front or of if It something XXs, it it a but magnitude. have I in with in of number know was

Tom Diffely

off it's mid-teens projection. Okay, not far too here growth

Luis Müller

That's right.

Tom Diffely

has just revenue Jeff, comments outlook case in that, just a something by there ERP then, you've And conservative slips on the impacted is that system, Okay. actually been that just that through your the noticed is cracks? or

Jeff Jones

us that it's Tom. Right, would more slip, nothing guess more approach There's the the guidance, any danger of to having a just anything of tell I in conservative yes. Yes, that we're but latter.

Tom Diffely

ramp talked quarter? All XG now. on orders of tick-up to All you XG the makes What's being quarter, starting nice the right, order obviously to that late timing started automotive then the the it in about the right and of type in sense. business

Jeff Jones

a to orders we're some a of expect in So the we late we business steady simply automotive actually automotive sharp happen. sort are in of it welcome pullback it see and not, here improvement the QX. we're Right of QX don't into if in in increase quarter shipping quarter-on-quarter automotive a QX, seasonal got be beginning in will now although that modeling before

Tom Diffely

business that that of digging back get when a think strong changed percentage? just to something you or XX% point markets maybe of approach Do just the were smaller historically, you. combined long-term little quite business maybe the that bit industrial in for then more, their that your Okay. auto your And makeup on you

Jeff Jones

as forma industrial, of a Yes, said has XX% Xcerra XXXX back looking it and on was automotive with even now That's system I basis pro at sales. a good question. before

I Now drop orders. dropped XX%, was was on industrial system and XX% was automotive markets, what into We significantly. happened year last from year-over-year but a averaged which think XXXX, system reduction year a of all XXXX combined, dollar sales really across last there XX% in to particular automotive

But a of is loss. midst market lower of drop. was the them business still the dramatic number same we're that, there I in a this So at rate. no defined just share and it's customers, much doing mean, with

So, of think and that question, back to to Frankly, be I we it by back answer system think of not. recovery year XX% XXXX. normality will your automotive will then full degree of in end mean sales? get to some this Does to be

has than I historically is years it's to mobility be few the keep mobility growth been and therefore, because full total likely in Therefore, sales, though of of and normality over all since even than be higher to you to it add less the could think going XX% then in just return has less up I swing may to system. XX% XXXX it automotive system next XXX%. to to than expect

Tom Diffely

look one for or industrial are way. it you quite right right, is now? a XX% rates, that Utilization sense. Maybe other makes bit lower auto All said around is different they at

Jeff Jones

at at No, moment. the strong sort in a data last is or that strong customers night. utilization we fact, bipolar really I have of some was same some looking customers are point, bit at auto really this And

it's that customers seeing percent, is XX%, it by the bull And are the but an say still and above well weak, XX below fairly would, average automotive some where coming auto from. still basis, actually some others the are we're that's on of

Tom Diffely

model with the when tracking look second the model you'll metrics? be different the starting like forward, Okay. Great, in target you Jeff, at and then sounds finally, going the quarter,

Jeff Jones

Yes, Tom, that's our expectation.

Tom Diffely

great. you. Thank it Okay, from me. That's

Operator

comes Your from Duley question David next Securities. the with of line Steelhead

David Duley

Yes, my thanks questions. taking for

Now, assuming impact years. is the impact go I too, business, XG $XX it RF the million segments the a I main instance, of million only that test million will $XXX Is number. contactors other $XX you going to mentioned the in think your in I segments, on really XG from impact was few this from that I'm that total you to the over mentioned think guess hit for or that

Luis Müller

Dave, one because to this And the the and in pivot Hi, Yes, where generation as smartphones quick is next tend I latch with the an power before, is people control mobile of sell subsystem test processor XG first more along a transition active of also thermal is and thermal we and an ones it or have comment orders think Yes. the happening, I the processors we some is it orders for that which on. drive that in is point those that for made driving test It in is handlers that's mobile drives it's in forecast backlog, some interesting have coming is. IC additional that number Nevertheless Luis. those management technology increase thermal test, discussion we quarter. does obviously inspection.

actually mobility of business degree, seeing with our uptick associated driver that time. So is at majority the it's business, the our of to substantial handler turret some a turret this

have we X-wave front, both contactor like test. frequency the high for contactor high-end the On interfaces

and products traditional have power low-impedance for we have IC management application. something SeaDragon called like [indiscernible] We

the in So portfolio. as contactor well on very rate our increasing we're attachment focused as mobility

David Duley

unfold the And are the for industry, I market, growth Okay. memory at and what from zeroing faster revenue same in rate X%, or upon, X% might or during year? you can in if grow the if the the maybe overall for think think benchmark kind a overall non-memory assuming this play or don't you that's X% is your people I'm XXXX. of systems good or how grows Since it's market XXXX? do comment will in guys that your just X% revenue overall industry forecast, I or

Luis Müller

market. It said, to at talk So reality to grow market, grow is We're the $X expect it's we But about don't we market X% for the some test markets a to interesting expecting serve question, contactor previous the modeling penetration I XX% of The serve is SOC fraction we really a about IC, the that isn't in SOC, way the IC still but flat these the about market projections it, seeing is fraction driver XX% we're I Dave, and market, claim to billion about we drivers fact, it year. that entirety can we this It's We smaller think panel year. this XXXX. handler see panel the one but of degree, for that's which year us. are in billion to where it's display double-digit that growth front-end $X display XX% answer growth. of in the substantial flat increasing we about growing. a is IC. is It's this as competitive, that RF

is outgrow sort of our you're that single that So quoting digit rate before. expectation to

David Duley

just or impact is or you? of I'm tests and you stats And bigger has to then it fairly if of big, of larger customer or doing they do hurt help stats view CapEx how not exposure but going for CapEx it it I'm in levels of significantly testing, an more just other elevated its to business how solutions. these other overall the some have much sure is you market increased how Okay. sources, moving one turnkey some there, you some taking doing that from themselves? wondering on might the increasing you Taiwan as or

Luis Müller

see, CapEx when in stats, increase much about talk is mobility. I aligned very you what with think The or we

should the are guess than semiconductor they getting those I companies. Let's a fabulous; be just semiconductor more major fabulous their are right. are say less and they that. not And where semiconductors companies are essentially I right. It's back-end little And from, here, bit companies, who honest suppliers

the mobile majority into is rate here early tester utilization much The the the driving sales our in OSATs test growth mobile expansion, base market at are the than across So vast at obviously into of that IDMs OSATs XXXX they to our CapEx today higher customer and market the today. related OSATs. is are

strong The and sales and pick-and-place majority thermal are the current handlers our of rate attachment of of a and automotive, penetration our has towards post the foothold coming key into testers. that's into from contact And years, on working into mobile this the contact Xcerra context, acquisition handlers. the to into hard customers OSATs And into much we the been our of focusing mobile applications. had the attachment OSATs year lot focus into in have much that sales or in Past on where understanding OSATs, focused driver, automotive. we handlers we to being our a the also mobile IDMs, increase really we have shifted or then, now obviously go more OSATs the which

David Duley

question $X sales from and a out year, or on the to us help let base contact us have for you if that know, just number so could or Final give a for work segment. forward we us me,

Luis Müller

close and million $XXX about roughly $XXX million. was it to XXXX, For

David Duley

Excellent, thank you.

Operator

question next line Schwab of Capital. Craig-Hallum Your from Christian with comes the

Christian Schwab

Great.

for just have dollar guidance question I a What your quick the Sorry, tax I got tax and amount assumed QX? rate or dropped. on the rate. is

Luis Müller

range. levels if an a tough probably sense I $X.X to it's provide rate lower would in of I million million, QX Yes, effective $X tax to maybe on say to of a makes any specific little pre-tax. guide you somewhere bit that But a were amount, a north

Christian Schwab

perfect. Okay,

see QX questions another that so analyst your that I model revenue for said, just could tail-end $XXX million to QX high-end of to so I think point. at of slide range the I "yes," would guidance you we And confirm that, minus, one you then of I of be expect operating our high-end caught want is stated and at and plus expectations for think or guidance the for at QX, the growth the revenue business in regarding, the

a $X.XX that roughly share in potentially QX, correct? making is So

Luis Müller

aligned sure to seeing make be QX. just about XX% numbers in the We'd a revenue for then, increase person about at we talked right. the in potential what at is And is XX% to QX That's midpoint but on Christian, XXX. the model we're

Christian Schwab

sure the mid would model. company points you is then operating expectations I your of I is where if only the the if you. fabulous, but make high-end answer that a the of that's $XXX to and QX revenue, confirmation yes. for be that hit at operate wanted wanted that I that. understand expectations that, at just the Well, target out the are, you you questions for had. Thank did, of QX, in laid and I you understand just I the high-end growth that, million

Luis Müller

Christian. Thank you, Okay.

Operator

FBR. comes question Craig Riley Ellis the next of with from B. The line

Craig Ellis

questions. handlers, which look it a contactors this rates next in in 'XX, that growth be that taking one some for My Luis, look of would unique acceleration areas for year as I think thanks are going be so very panel thanks for sustainable as is the the on helpful lower 'XX, given flat question happening earlier talking unusual longer this, would we the we to is growth test, that the to would the that calendar just details. on to year, SOC all was for chain. you're and Or something year? look what calendar rates drivers. display drivers any is growth than potential And rates are basis, a growth you questions beyond that things the follow-up with Yes, think few on would about, term take of the wanted those sure? on your would very we there at get you or for supply this

Luis Müller

I mentioned systems to you I'm would inspection, normality, in recurring, difficult and that is Yes, down before, to game, given automotive was from industrial 'XX certainly that dollars industrial, semiconductor test very current systems, Luis. come the automotive to predict for the at expect but Craig. business this this current to Yes, not spent the XX% and back for in spending it's XXXX Hi, level know of I talking about 'XX. of stage levels as and only Craig,

we go spending be positively year. to that expecting So, to to I we're normality we're surprised, back plenty mean normality, when XXXX. of of sort have it's unless it not in are to it this be to seasonally return around modeling but down, back does room to QX and

a of think big will I So, into that be growth XXXX. driver

fact to built penetration XG XG and of this on it's talking I fraction XG the know, devices. teens, a for talked order the small year, a that, addition in penetration is market mid-teens the here, about this In but total still of We're you we the think smartphone smartphones year. year in it's exciting, reality into smartphone the

customers, and how be plenty suppose also in the of room to and So, value frankly, adoption, and that all to your I marketed. dependent customer going it's to accelerate actual XXXX, it's delivered on has

you towards cellphones, younger smartphones. the get out new generation successfully, know, there drive to So, to

a to obviously, out, So, as I that as reasons, will any millimeter of rolls starts greater into penetration, believe be rolling wave do XXXX out accelerating notwithstanding firmly global and that catastrophe. XXXX from other XXXX, because those

Craig Ellis

it's That makes following one, little And further this projects. bit some on in sense. commentary then, more a up

into history. we've the dynamics. maybe year. Auto slower mix implications I are term, mobility margin from the that near versus start business the something to higher That target but starts margins to on but year? anything is gets picture there got may that back gross understand shift a back in Jeff, some historic to next bigger next than as versus see XQ, towards historic going So in model revert collaborate going the and trends, any mixed we of

Jeff Jones

in gross you I of as touched higher we're And other result RF perhaps equipment, somewhat margin the our a a margin. than turret of do has have on growth handlers testers think test. mobility that also mobility and while and lower a a the gross seeing

rain. to and within think financial I continues us model the put sort blends this two between So of that

view dynamics levels. So I swings any our unique of on don't sort that gross revenue really margins change would the see different or at

Craig Ellis

there? conversion would something and ERP as to of or just that that adds to are move And think near the you the intermediate term how later Cloud? What gives do we the Oracle Okay. on takes then, OpEx some system. to about produce Is OpEx implications the OpEx

Jeff Jones

working been model. modeled for expenses we've the now a this year, on we've over out project and financial within the Yes, so,

consideration. So it into let's take

going initiated could about As and expansion, over another so, a At to scale assess difficult future we're lot time, company. it's to go efficiently, expect time, that about a this as we to we certainly, year implement the of see do be closer completely said, We the completion that it. we cost specific little this, implementation. the system got enable optimization. we I But across as we've to more get some to going point we're the so that

Craig Ellis

you. the into script business That's helpful, my on congratulations back and guys getting Thank note.

Jeff Jones

Thanks, Craig.

Luis Müller

Craig. Thanks,

Operator

conference back like this showing no further the to would Mr. At turn to time, Jones. over now question. I'm I

Jeff Jones

Okay, hope and thank I'd you. you joining today's have to thank like call Thank nice day. for very much. you a everybody

Operator

this Ladies a concludes and you call. Thank participation and for your today's have wonderful day. conference gentlemen,

now may You disconnect.

Cohu (COHU) 13 Feb 202019 Q4 Earnings call transcript