COHU - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to Cohu, Inc.

Second Quarter 2021 Financial Results Conference Call. [Operator Instructions]. I'd now like to hand the call over to your host today, Jeff Jones, Chief Financial Officer. ahead. go Please

Jeffrey Jones

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

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

Now to the safe harbor.

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

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

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

and CEO. like the Luis turn Cohu's call Luis? to I'd President to Now over MÃ¼ller,

Luis Muller

new and product second describe supply improves everyone, and data thanks us. chain I'll our industry's a productivity. test quarter introduction cell that morning, Good the of joining analytics of customers' Cohu's the discuss Today, review for results, highlights situation

and to midpoint guidance XXXX. record XX% strong and record a forecast, grew also overall track year-to-date revenue is With year-over-year, for million profitability full due exceeding and of the on and Second contactor revenues. results year in recurring quarter Cohu solid revenue was our stronger-than-anticipated $XXX.X

turret and RF management and automotive for ramp systems XG contactors, handlers, our in ADAS demand mobility, and benefiting tri-temperature battery testers from technology ongoing the testing are handlers also devices. We selling robust for mainly

quarter-over-quarter increased Our efficiencies for to We in mobility XX% wins provided expanding margin in design improvement progress margin contactor business gross key higher all the operational quarter as and strategic in was in Overall, manufacturing and sales gross is new contactor costs from the in increase the QX second contactor guidance, guidance. significant in Philippines, revenue in-sourcing with our to supply XXX that basis line a products year-over-year, the chain when automotive we improving plan. sharp segments. and handler made discussed customers with good testing points reflecting leading midterm

utilization have sale these that margin, with end down of down second gross margin. automotive being segment been March. primarily process revenue and Utilization increases test with in again total to U.S. and next the manufacturers, will have device the in to few which is OSATs integrated market balance revenue Asia. gross sequentially completed notably the is down the quarters. remained working XX%, cost on X point Estimated substantially take pass the strong over customers effect from our In We XX% and non-GAAP and XX% broken of was slightly and segments, quarter, aggregate, by customers, at XX% recurring European non-GAAP systems end

a profitable ensure quickly It is below feel and second and strength a for that we business but margins. gross to the running was becoming revenue. systems for a system business mobility happy PCB gained Test year. million new In the monetize Swedish captured fast customers Cohu's manufacturers. completed robust with go-to more plans staying Cohu better of this the of mobile as by leverage to continued in not a sale than used As with the to due inspection anticipated solution significant predominantly of packages for The expected, chip economic in vision rebound Neon part quarter, U.S. quarter, and Mycronic, good we of revenue, segment and strategic XX% This proceeds. new second of platform We're and automotive wafer-level defect-free repayment. cash was last Test PCB approximately the consumer accelerate the mid gross providing Xcerra introduced to acquisition We adoption the allowing $XXX business Cohu's with corporate well-run, the extremely fit debt the business success with came leading growth capture strongest total our China. transaction total parties, Neon at non-core scale was all business the and XX% In of XXXX. the

had since late also last year for a in is order solution design early been finally We Korean of cells repeat test complete customer. developing and front-end contactor part production we with a cell qualified tester to plan got an a This opportunity to and into win leading RF applications. manufacturer. and test for have for RF an QX our been has device IC mobile This that deploy handler, mainstream

quarter the from devices. Cohu very of for has the a can tri-temperature the supporting solve the strong extreme become parallelism. a low-orbit businesses. also Bluetooth generation, temperature and our of as processors. deployment and well technology challenge This because great significant was ADAS in a ensure dissipation variable accuracy We had is to is thermal is handler Wi-Fi and quarter handling battery a sales strong contribution QX new challenges, testing power automotive our conditions from ADAS T-Core processors a industry, part thermal in contribution satellite automotive leader RF with network in that MATRiX by combining with test we for increased the customer key as perfect temperature clearly multisite storm today of quality Testing test and during systems combining management handler. of

driving greater tester hard-to-increase industry experiencing growing is We're grows power. the dynamic. also continue very same semiconductor that revenue will are contribution not are quarter, see automotive to gating equipment, quarter-over-quarter. to their some the technology volume ADAS constraints from required to Shortages produce our The topics manufacture chain. unique gains and semiconductors. handlers. doubling Switching happy our evolve We're these and Customers of a to limited the essentially at the to with And We sensors, computing are time, the supplies to vehicles in mid-market equipment other tester business sales to in increase items production. to supply the as having are solutions capacity. penetration motors, bearings our key particularly

for even curb Additionally, some Asian suppliers cases certain down shut a days as governments countries. COVID-XX were reduce operations in trying and to few to rising forced are

supply continue quarter balanced has disruptions. upside, explain on to guidance become a takes guidance. We impact provide detail risks to that true difficult more will in and how will the of assessing these increasingly view the Jeff third these we're in but chain predict risks it

last in X.X Moving new other to our such other OEE, provide a Data strategy, device. automation to mobile time DI-Core process line optimal interface states, Intelligence, as the critical real-time with and improve laptop graphical or throughput initiatives software remotely objectives. launching on to data test parameters, and Cohu data OEE, Customers of user using topic. equipment DI-Core of is my and can Cohu's family customers' performance. yield, analytics this products, equipment cell dashboards recipe web-based displayed to we're equipment accessible also a Pareto In a address publishing equipment decisions. systems factory charts enables Industry remote efficiency, or that software interfaces management. database analyzed ensure control, equipment monitor data for a for and suite focused execution on with of equipment A control reports, overall for software productivity. The of customers' and manufacturing equipment help or and central real-time short, and make to monitoring managers is lot management solutions on

yield. to starting As plan analytics base quality the we're to Today, upgrade data our and We're to foundation improve expanding Cohu improve to installed offerings customers sell DI-Core need the the license. grows, essentially efficiency large continue enabling for of equipment productivity. help to and we

to capability. We subscription that to expect on year offering next add base start this products

software the extend we large base their gains value to into to tap of productivity subscription our As tools, over that measurable our of we offering services hope customers. help installed systems, XX,XXX customers our deliver

getting encouraged we're automotive and ourselves fourth tests, cost for too platform, will, business. around. working and unfortunately, in a through in revenue the margin avoid to into our of and quarter. time, realistic disruption and that expansion set inspection trying We're our increases period Neon weight third RF far but wins be this contactor ahead, chain negatively will we quarter, gains supply design time looking Now with details we're At by the quarter third same on targets cautious

results quarter about to guidance. to specifics me Let Jeff? quarter second it over our Jeff turn and third provide share

Jeffrey Jones

Luis. Thanks,

the reconciliations figures. the million. I'll other please are guidance, QX including taxes when sale refer costs and week results repayment Test completed during the and the comments page financial non-GAAP presentation, QX the follow non-GAAP accompanying that on investor our of through and and are about that located to the all walk GAAP the the I which Before to in earnings non-GAAP release note included my Investor after I website. talk first the QX. proceeds and XX, of of Cohu repayment PCB on sheet guidance. measures, disclosures, of balance million QX approximately for June the about debt Net On business the more $XXX $XXX debt enabled deal touch a Information

expansion for to our be debt on markets of portfolio. continue and will allocation capital served forward, and opportunities focused technology reduction Moving

in X% of guidance. In lower second quarter. million the guidance accounted new gross expenses Now were and guidance for revenue revenue than QX sequentially the line margin was financial as was turning $XXX.X than continue of Cohu. million Cohu's we higher to no the in results. or approximately and with Cohu, higher XX.X% was and more customer million midpoint $XX.X delivered optimize our expense strong structure. QX set In for XX% and our quarter, revenue QX, our Operating a the to range. record $X again, profitability and sales.

of well our or with of was guidance make quarter Cohu's non-GAAP rate primarily $X.XX, U.S. model. revenue, in X-month withholding offset above was our and and on leverage Second XX% credits. XX.X% $X.XX, invested by approximately was XX.X%. for approximately income, profits quarter lower higher to and business our target and future illustrates repatriation second prior quarter was combined XX% due tax second above the operating XX% bringing to the EPS and NOLs foreign Return in higher. Non-GAAP effective model already for non-GAAP adjusted results year-to-date the EBITDA the EPS with capital year to on than income was investments ROIC well QX objective non-GAAP lower of earnings tax tax

the X- a strategy to business remains the midterm X-year the Test PCB In the focused quarters. gain remain on and model as term, margin market businesses. business to significantly to contactor targets execute and The turning of the targets our repay share financial model. and near target we unchanged our sale interest after The Now we grow the gross further tester expense our reducing debt consistently coming achieving remain we as over business.

the QX. balance from to the sheet. the PCB at end higher the Moving of drove business balance the sale proceeds of The Test cash

cash we debt with $XX.X and mentioned, balance in accounts made of which sheet to And in and accounts reflects and strategy. receivable, sequential with our reduction million early the of $XXX QX growth debt The cash markets reduces and additional portfolio in investment served technology expand in Cohu I cash significant increase despite increase position the balances for the each. our generated As reflects opportunities a The line cash from QX free in increased $XX.X in repayment growth million. resources million quarter-over-quarter. debt QX, flow operations by flow shipments receivable net a

our to outlook. moving Now QX

and equipment generating our of revenue the guidance $XX strong. per million reminder, $X.X excludes QX, test margin at customers' about a our which facilities million and gross of QX of was of quarter. order PCB operating our backlog Test expenses as XX% Entering per Just approximately incurring quarter, remain approximately business, utilization

will at $XX we However, of as QX. revenue approximately COVID-related million shipments related Luis delayed shortages several of constraints, are described, handler QX these our material chain some scheduled to originally we of Because be experiencing and are to forecasting supply constraints suppliers.

with $XXX revenue. million. $XXX with associated to a and is is As required to uncertainty, balance which and a quarters, prior supply customer QX revenue result, range be guiding upside million book for between chain potential we're of acceptance, sales risks the bill Consistent guidance and

this combined As achieved sales we a moderation tester higher increase QX supply are from a with of we've costs. the of discussed, sales handler previously experiencing record-level in and sharp in year chain

to projected our XX%-plus greater approximately approximately manufacturing we of handler are XX% first from is operating non-GAAP target revenue total forecasting compared of product due For in fixed costs, model. fiscal to increase be approximately mix. to and gross the sales leverage created XX% XX% margin operating QX, of to income in Similar XXXX. year QX, to be contributing has benefits to The months for sales production projected mainly of QX system volume X for total

on remain to track with are Operating our grow $XX that be tester projected $XX are line expenses to we to in target and Additionally, contactor financial businesses between million. model. million

made QX $X.X expense million million. QX, interest in Given the be week we're repayment debt of approximately projecting the $XXX to first

Additionally, the generate in approximately to $X.X will year similar charge debt for noncash $XXX million similar for QX repayment. this QX of of accelerated repayment a taken a the debt million, charge extinguishment

guidance. midpoint forecast rate adjusted of The non-GAAP at approximately at tax midpoint EBITDA XX% of We to QX QX the is expect XX%. guidance approximately be the

statutory are Income by net U.S. and be diluted various count XX.X shares. tax to of previously operating carryforwards for The Cohu's credits. generated rates to loss on QX As mitigated most taxes in in profits subject generated the offshore approximately jurisdictions. and expected foreign is are stated, share profits million

reliably visibility revenue Our the to beyond described. disruptions temporarily impaired has supply by been QX chain we project

the for we'll revenue expect midterm provide will remain and tracking questions. short-term concludes continue Cohu, profit prepared a year targets. to prospects a our guidance we to now be face, and achieve optimistic QX And and but the That opportunities in about business. record to to normal our not In growth spite is financial our seasonality XXXX open on remarks. return call we directional the challenges a As we of result, chain to supply revenue,

Operator

[Operator Instructions].

Stifel. first with Our Brian from question Chin comes

Brian Chin

I Jeff, can to first was that. due impact you again missed the Maybe, revenue sorry, quantify challenges? the in supply shipped what XQ that chain the

Jeffrey Jones

handler million of QX. That that into moved was from $XX shipments QX

Brian Chin

$XX million.

a pull that Got terms hefty and chains so is effect Yes, global push supply business. Okay. of having on in number. it. Got rippling the Maybe this pretty it. of certainly

to terms some of is end the of of actions of a that margin And that of that way drivers In remediate issues, gross taking some some quantify what you control? outline of there, to are your impact, try kind XQ? in also these as is there the understanding out maybe you're

Jeffrey Jones

Yes.

board, described, some specific - So the configuration, specific not as we're And on handler. increases, seeing varies we've items, it it's completely some by but items. by across

described So and as it's talked something as we've on, Luis taken you action about.

offset that and in and moderation those QX QX continue some then will increased well see to going we're so And then of beyond. into costs QX, and be to in

in to gross by pricing it's continue of quarters. to costs then quarter at points moment So offset hard the the will and quantify basis terms that about into in increase the the benefit should in effect margin increased future impact. XX go QX in But

Brian Chin

also mix have of which a RF this gross a half, test mix bigger Okay. maybe have and packaging of could in lot assembly visibility one Maybe the some - ATE part RF-driven of you business, in the do front-end your their I'd a second approaching moving of business terms favorable talk some of their And assembly from subcons imagine in in larger think the about for pickup did I was strength kind shift XQ. implications what I curious, into margins? of standpoint

Luis Muller

is Brian, this Luis.

next timing, deployment be QX exactly it relates from like XXXX. year pickup but it to or end not the the the think talking initial also only - are about. in from understand more know looks And the to in XG also they year RF, large in hard I management towards into yes, It's ICs. growth of but benefiting of I as customers' QX. you're there other power our another we fact, were but who PMIC, some forecast, same could And OSATs one RF of

Brian Chin

it. of test maybe Got the of I platforms one thinking for this, their sort talked devices. and other ATE larger about players industrial way to also of times Okay. lead about one extended guess automotive used really

up the So the of a even test is kind think of of about spacing the some other this more of it? maybe way key out timing the to sort against of though sort maybe other on you're almost matching there Is of any some components scheduling of cell? kind handlers, of

Luis Muller

is as have is that, at we sure here mean explained, some we chain Not that constraints. do so Brian. there - a much, I supply play

of But constraints much test is have lead for Our place is, about gaining give ago. take, example, are. We chain it the think elements at or times, that really of a I to thought at supply it weeks the which putting are handler lead we times been don't same reducing the there continued XX would now, at hold quarter where now. cell they the was same of have time. by

everybody the view times. about I think of level this time, we lead operating are is at and same

Operator

question next Tom Davidson. with Diffely from comes D.A. Our

Thomas Diffely

the Maybe rates. utilization cell jumping or utilization rates on test the

a parse relative And of times about the now? tester XX%, level. You versus handlers? talked out of the lead you could if lead about weeks. talked very of still testers time What right your health kind is healthy Wondering handler you XX the

Luis Muller

again. when the don't measuring Tom, tester because cell. we what Luis says, is out The it's we measure - literally parse we're the test this utilization, word

have - not and handler without we're it's versa. So a to utilized a hard vice tester

that an lead of To the are the test approximately question, number as applies weeks. second times portion XX cell right really tester So now your to aggregate.

Thomas Diffely

you progress your million $XX million business. moving Okay. installed started on really to about guess are you are - contactor after the where rates up, the And to along you've attach Where you I talked right. base. over get lines? to was about, Previously, to there I guess, opportunity ramp All you today, those $XXX talked before a up

Luis Muller

business the grow to continues year-on-year. So contactor

up because handler quarter. really some in is I improvement, is denominator had the revenue a little always XX% think which rate, second is is of dangerous particularly market rate attachment I of automotive. now, prepared the year-on-year attachment Thinking sales, second spoke gains, approximately the here which but fact, caution as as We also the the right XX% I contactor strong terms in quarter. remarks, In in on is at

Thomas Diffely

Okay. business? selling side. And main how All some inspection And finally, your do win? right. Who traction Great. for is product? What nice the that then on point your competitor on the you obviously, is

Luis Muller

the year $XXX package This of KLA. about I'm view X $XX The $XXX is XXXX. generated we though. X million revenue about inspection, supplier is main points million $XXX which we And around - share that inspection of to space, million in last talking - business, So to is gained in the million.

on of we're generate year. think about I to track this $XX million revenue

So XXXX, in obviously, robust picking it's are in up a it And market more some particular, market for share we scale package. is it us, I around wafer-level chip but think is, - also points.

So but mostly some mobility consumer, applications. applications, mobility mostly

some We interesting vision have really technology.

year or we production. capability introduced a for recall may You imaging so infrared ago,

So mobile so you imaging the the production subsurface have defects. has demanding detect and the high-speed at that leading we become manufacturers for of suppliers as their ensure vision of infrared basically, can well. benefit space. moment standard the for to essentially the do That's to are they on quality, inspection kind And so

Operator

Toshiya Sachs. comes with question from next Hari Our Goldman

Toshiya Hari

And plus quick I've not handlers, million typical from might QX, too bit that simplistic. you're the is push QX. But us to if got could we this the seasonality going what a I And remind realize be should QX give guys if a seasonality if I little - Jeff, was for specific as then follow-up. QX? think you million? hoping to guidance being for But QX of given $XX $XX normal in

Jeffrey Jones

into ranged XX%, Toshiya. morning, to up has single-digit The Good QX past from the XX%. anywhere low seasonality

midpoint that seasonality. a be the into rolled QX. that expectation sort And I think put would of including million I XX% would about $XX or of

for make that. So adjustments wouldn't I any special

Toshiya Hari

it. Got

So typical push? including seasonality, the

Jeffrey Jones

Yes.

Toshiya Hari

the just margin And follow-up, back wanted then to Okay. to Got as question. my it. gross go

margins of basis. So you're little down sequential is a for the bit the business part guiding out. PCB Obviously, on QX, a Test

margins. - improving I push, overall seem contactor to you're stand-alone don't on You you're revenue should But gross guiding be margins progress be handler an know accretive business. very the the where guiding push making given in to good guess, absolute basis. I where that in

margins I'm trying understand in gross should again, just and margins for puts to as about and think the gross QX we how So well? takes QX

Jeffrey Jones

I start with Yes. me - mean QX let QX.

So QX, revenue product in mix we're a still QX. seeing handler-dominated

$XX pushout the are the still the revenue. with even dominant of million, handlers of So percentage the

drive And product so really the that's to continues mix. what

correct. XX margin, that's You're not but Test point from XX% roughly bit a A improvement. - about gross benefit of having little a basis PCB on

handler-driven. So - be it's really to continues

But probably So QX, is the in much we're reliably to the too QX. say seeing predominantly what similar still provide guidance on any what I to uncertainty like. really be would going looks to margin mix

in some there's QX. So to be going challenge

Toshiya Hari

it. Got

the And one really, I seems in, can model one you sort sorry, really impact it if to Can Luis. system the for Data to of speak more Intelligence squeeze The interesting. financial business, potential couple curious customers put by out? the this it when long-term about embedded this And next, model years? you think your in call you was adoption of of if financial over it, your when

Luis Muller

Toshiya, part all yes, plan. of it was the

for We little while. working this been a have on

really And have starts think that field. number So perpetual foundation XX,XXX at we're an license, our calling way Tier to a - right? will about the the moment, It a a they in it the pare handlers we're time, systems over with selling talking PCB at Tests And we opportunity we have that what adoption licenses, equation, in look, IDM. it we now - licenses. an out are space. $X,XXX and automotive have you These And a systems. once of targeted develop little of couple over or touch have the are per now about out could these already automotive it's, the is, we at and us X the $X,XXX, here

to X license top per the things subscription selling of order predictive and next to seat over some starting other product. device a of licenses foundation for going that it foundation, we're it. of example, features the starting the next going years in Think actually, tracking, we're come top So will intention we're $X,XXX maintenance year, of of subscription-based capability of that additional on to the on with - is And deployment. that that that the start

we're for So sure in anything don't a talking know, if that? And not it this Jeff, yes, you embedded lot of is I model. about to dollars year. add on our have

Jeffrey Jones

Yes. color maybe the on a I mean little numbers more here.

And in bit $X slow So million about describing. a a modeling it's as was XXXX. roll Luis of just

to model year. but it's We'll coming of a base course, soon significant next too growth, off this low year. predict So

really XX So over single-digit we customer the sort as of traction. low next expecting months but millions gain

Luis Muller

And outside installed more can core it is that to more out our value of similar we monetize to the is of business, today. how the time equipment have which the series Cohu our original of last and deliver investments large at installed of we have base, same customers of a base we

Operator

with Our question from Craig Riley. Ellis next comes B.

Craig Ellis

I'll just think you the greatest that. of capability? something I would question where just follow-up number are talk Can you've you with Intelligence. differentiation like expect got Data start that on a with a customers about that your running

the in And So about being vocal very you've M&A. in interested been differentiate Luis, Cohu? what past will

subscription feel it like Or have would scale even something model? the its tuck-in the company. used an with to of Data where to suite capability full You've to enhance all you Intelligence all up M&A this you maturity? or take could the area the larger options be Do internally

Luis Muller

of Craig, do surprised our We - reality, the you'd call because lot yes, preventative a maintenance. good differentiation. question we customers on in what be

back, years whatever essentially so period or to in vehicle and it oil an is. time, of change like do many just few you'd a for You every a plan for go past, in months plan a the

time I you should Just and measure when of primary relates here. handler the using of here to action. think, old series particularly over for the - capability maintenance, track analogy value Predictive inside the to take propositions handlers, is, a predetermine all for events which one them and sensor

So had essentially of our and much that costs We value actually the customers us recovery. the And of X% quantify downtime of it's that equipment. the unscheduled value staggering how our unscheduled reducing downtime customers. for the to some of

certain is know a very one point have the we of And well. We here. that already We what equipment the know propositions value the trigger the thresholds in would capability equipment. sensing at So downtime. key

an happens. of an an use puzzle, it other There downtime, we are parameters explain the the to simplest eventual too, had before monitor flag and but the explain to value. making that's one those and to it's idea So downtime old unscheduled pieces

functions we But have As - far as some much we have not license software that do develop. software Further may But to have has That this understanding the capability. use equipment, out the to for over we capability internal acquire for time. sure, cell, to of the on planned of the plenty we and internal test of have what ideas in-house. have capability everything to for deep do for ideas, we and company. have; moment, the engineers foundation XXXX, yes, it, do have we'll to acquire of learning in capability capability, the other optimize which data the to advanced the develop some with around we more algorithms

Craig Ellis

within the the evolution there that And mix past, we and and auto. mix that and have question then just that second the characterize the times, also mean out Cohu? for helpful. That's as calendar you're you've, for could ADAS I now at the you. of commented what to business In seeing you look what Can of on 'XX, EV

Luis Muller

EV-related, about at test in is same the for a on handler hot Yes. strongest the right really We're and right mix XX% reality. approximately in that, now. ADAS is of EV business our systems management handlers on Battery quarter which XX% our to now is revenue

have we into necessarily forecast continue what is to of don't that to be. a Similarly, that XXXX, expect but We ADAS picking mix will ramp up momentum.

understand semiconductor embedded half active in on here capability. We automotive thermal is our technology leading have our test. evaluating MATRiX the second a intercepts for handler, in of now the the of tri-temp production year are that depend series there right T-Core customers And which that we

of be we But automotive forecast a So we represent will truth how our XXXX. don't the of EV much see and ADAS ramping. ADAS said, also have total business in

Craig Ellis

I all likely that that EV up OEMs pull-ins plants and with potentially be with we've as global auto imagine seen ever. would up But the and significantly

Luis Muller

ADAS and Absolutely. EV will continue is our bigger take of year. automotive expectation share The into a Absolutely. yes. Yes, next sales to

Craig Ellis

then, to don't margins. And gross And I'll Jeff, you. turn want Okay. ignore to I

I question question at versus that target we be that this is, and is, about contactors pretty the gap X these take at that business think we the the basis margins at of levels. at how fact mix issues about implied are just say these revenue model the we between revenue the target factors to gap? near the got What point levels? well term is has gross XX% - look play of model as point. between XXX that the and been at XX.X% from would systems The X one But or bin business. current vetted that you've out should are revenues, we XX.X% talked to the And the the you've the target recurring do model, levels really, if bridge us the were where and

Jeffrey Jones

Yes.

mix handlers. business. Craig, Okay. all, Handlers for The QX is of overall will of is so it first around it revenue. the of model forecast, XX% represent XX%

systems recurring. handler all quoted, systems be would model versus Because revenue increase just the percentage within that of most revenue. that of I is Second that over

than that systems lower of And side, system overall that gross higher recurring the recurring. is blend and on so the versus drives margin

So that's of the margin. lower aspect gross second the

contactor aspect gross third the in improvement would The be margin.

from and utilization And improved in Asia, been the And primarily on materials Europe Philippines. U.S. moving we're factories in working contactors so into productivity. our we've the outside-purchased seeing in suppliers

business contactor to XXX points. the needs improving. that But in improvement continue. stated of margin is so quarter-over-quarter basis Luis And about

get to about That's in XX% we're reach XXXX. We XX%. So within contactors. about our within closing need on to

we that the So model. are today bridge say the where us margin those I'd factors are main gross in from to

Craig Ellis

Jeff, you earlier that as in a less point, Or that basis XX point basis is Would maybe mentioned, just supply that's relative that there to or worth than just not minus? is chain to heard that costs in throw And you plus margin. factors gross points, that variable? clarify I other XXX some it significant, the Okay.

Jeffrey Jones

estimate really basis are to on would I the XXX I points other that good revenue. mentioned main a is points XX the drivers. But blended say probably a

Craig Ellis

structural Yes, the bigger issues.

Operator

Steelhead Our Securities. comes next from with David question Duley

David Duley

quarter second the revenue guidance on Just revenue to just that your a reported. you clarification compared

if of subtracting reported you're $XX business you $XXX.X from then supply Circuit want that was - then anymore the - versus you million your stuff, compare also So sequentially? million constraints? to Print that isn't mentioned just another missing numbers, what there million we Board guidance, $XX those And that, you're the

Jeffrey Jones

It million of was million, Dave, $XX shipments, yes. handler $XX

David Duley

an apples-to-apples million of So $XX reflect on $XX of does constraint basis, not supply Board Printed pushes? the and guidance Circuit revenue million

Jeffrey Jones

Correct.

David Duley

Okay.

like total it's million. $XX So of a

Jeffrey Jones

Correct.

David Duley

between quarter, and you just - testers? out, just the the sure you far could right. a And I could goes, in mix as to the I as you the I gave Okay. it think wanted current but business - systems number, relative handlers June break had make in

Jeffrey Jones

XX%; and So XX%; tester the in revenue down revenue, handler breaks test, XX%; revenue, contactor, QX, the PCB X%.

David Duley

year calendar of business this in had Q think an guidance as rate the contactor in I annual current basis you annual as a - goes, as do as approximately And you will growth contactors? far be on think what goal for XX% growth your far the

Jeffrey Jones

for the contactor Yes. We're CAGR that XX% hitting year-over-year. we're business. modeling And internally

Luis Muller

year-over-year, In have Yes, we don't well, XX% first had year, QX, of this points - of year-over-year year-over-year blended. we growth. had contactors. for couple right? about in it of a XX% I half growth the We year, a a But the data had just QX

at about, so blended, XX%, don't I So XX% know, far.

David Duley

just for up going be this expect I contactors, will XX% - that you would mentioned And over percentage percentage guess time? you

Jeffrey Jones

businesses. Two contactor level absolutely. then things to grow moderate The happen. back and Yes, handler revenue to a Yes. and the should normalized continue will tester

Luis Muller

contribution percentage you contactor meant revenue, of Jeff, think, to I the right?

Jeffrey Jones

Yes, Yes. absolutely.

David Duley

your - think as And business forward? climb of this experience guess, Obviously, to Yes. industry. going - size of sustainability continues lot results larger tester I if SOC you equipment finally WFE just just increased Yes. of have I your the a What is every And market. the year. of in as view your guys test on kind far could your then competitor the you

of So on wondering views I'm are and kind what sustainability your upturn multiyear here.

Luis Muller

be to cycle. a now I all that long is market right Dave, we robust have indications mean Look, ADAS. Yes. is automotive going with a EVs and pretty this

up down and pretty on XX to or a fourth already Jeff bit be with still last think here right? be some to flat. quarter mobility XG If seasonality the with and relative spoke a the said, as I years, quarter look crypto. have we the over Typically, there actually, robust can first computing quarter, average, always seasonality, but fourth little back industry. we market will we to But AI

around Second XX% sometimes. XX%, typically XX%, up quarter is

seasonality. then typically a Third kind quarter That's percentage. XX% And like comes down low of a around drop. single-digit a smidge, fourth Jeff a said, quarter, - typical already

industry the there. is underlying stay is But current robust. the cycle, seasonality the to I pretty going So think

over think mid-teens about elements to XX look what revenue a of industry. we see And here is because on last we in described a And the continue year-on-year of every these I average That's going that's average our also the year-on-year We growth just the sort percentage at own quarter. on basis. years.

Operator

question from Krish comes Cowen Company. and next with Our Sankar

Kinney Chin

Steven is This Krish. behalf calling on of

I on times. if product could, one, first lead The

last the I earlier, weeks, tester you times quarter? times XX are lead XX exiting which wondering June already if mentioned from fill terms could you think quarter. I in in, is about the were that think handlers weeks down of what also the and lead I contactors was

Luis Muller

sure, Yes, Steven.

You're handlers, weeks correct did XX right about XX testers. the now, The weeks time. on mention I lead it's

And down. But Philippine and We're Jeff we in quarter last to about improvement. improved be our X pretty XX constraints about as greater hoping stable efficiencies chain think have factory. with remained the about the in-sourcing on the to in Contactors, lead weeks We was lead X time. time, supply weeks weeks. made same increasing it part, were an level. operational described, I an kept further down spares

Kinney Chin

question into mix forward September one quarter. guess, And Perfect. the going the on, then I revenue Okay.

was and So automotive of at terms up in presentation, mobility - in particular, mobility sequentially. automotive, of noticeably quite and those was mix, XX%, sequentially of XX% automotive were each and sales, in was down your was

any the for there be Just that those of September seasonality behaviors mentioning customer-specific end that any September? is on of come might like, Or the purchasing into terms markets? curious, you're play thoughts some might contributions in for what earlier downwards X the in quarter, cause volatility

Luis Muller

at way generates consistent we on market QX with the by end Yes. order mostly mix be that about the QX Relative it which QX, the provided in best at to to the it markets, revenue. And have is to revenue the looking we looks deck. segmentation end look

distribution, end QX to But a QX least expect anything, couple up similar maybe at seems revenue markets industrial. industrial to QX. across the very, points. pick percentage a here, the So automotive, X top have very I very rest will If of would consistent mobility, and consumer

Kinney Chin

one And question, maybe product-related like, just last, Got Luis. it.

your industrial maybe line? market, like the be I'm some you Do mainly gravity might to opportunity believe if Or automotive I of more - handlers In to automotive an terms handlers for higher-margin move tool gravity for it customers not mistaken. gravity product handlers, pick-and-place see your is the customers? of

Luis Muller

is more Steven. for customers, Gravity industrial Yes.

an changes, opportunity primary probably that here and new of automotive complex the here of technologies is the ADAS think greater will side, I single creates and side. on devices. above the technologies testing very dissipate some test, On dissipative XX you're requirements test That management on power for thermal handler frankly, a sort the during I'm devices and, site, multisite. them watts that embeds active for opportunity pivot which the processor developments could create around talking

Kinney Chin

the and job Perfect, in challenging nice environment. navigating

Luis Muller

you. Thank

Operator

with question comes next Craig-Hallum. Schwab from Our Christian

Christian Schwab

to on of I of Or that want parts this visibility just response or past as give reason a decision to to the that? potentially of that all a you've like just we predictability guys really that the guidance a the follow-up the to why better quarters. is more at you as moving business? and supply you're quick all a not handle facing, not decided challenges take quarters Should of less done that have few X of quarter get do the you in reflection

Jeffrey Jones

to supplier potential too related labor COVID shortages issues. just constraints to due There's latter. and the it's much material uncertainty the yes, Christian,

that's reason. the - So that's what

Operator

question next Citigroup. from Our Atif with Malik comes

Atif Malik

I adoption And about Luis, the side? mobility of have and on handler talk can where Luis. you your we wave in RF for millimeter terms are one of testers

Luis Muller

the is today, the X, technology think year. we testers this half believe the Sure. wave, right? place, band the today driving It's - think XXXX. next right? we'll contactors. which look The in is greater - start we for and and volume is - well That's on around it's for - the volume start still now of of what not is X, XXXX at is what both particularly The XG me volume us, I we the driving gigahertz. second called And device technology seeing let it in frequency ramping band frequency way the into as what's as millimeter sub-X - this for Devices and sort in

XXXX probe well, the wave, cards or probe We year heads second products, meaning contactors to really we have probe on for but see just heads not contactors - well, interface some be essentially half millimeter should XXXX. and this as that, expect volume revenue of into and also but

Atif Malik

for one exciting Jeff. Intelligence product. Data announcement then Super And Great. of the

it's fair is corporate average? In terms profile above product, gross of for this the to it margin assume

Jeffrey Jones

products, a The margin. is No. gross it higher software

to into range. it's XXs, that XX% So going high be upward

Operator

Needham. with comes Our Charles from Shi question next

Charles Shi

Asking behalf on Quinn of Bolton.

So Luis run a actually segments, getting your X quite the testers basis, compared and your and Jeff, model, is handlers major quarterly at target are I think you now if rate business I - on to X your look close. guys

expect bit the do is little but lagging higher while, a a a side contactor rate. you growth For behind,

earlier, million your believe, So I your I is in some heard QX. revenue in probably $XXs the quarterly contactor of comments low

mean You're the getting where you is see I quarters. to can I business the a going the lot from wonder on here? comment a previous contactor momentum if have closer, you And compared I follow-up.

Luis Muller

automotive statements. for contactors or right momentum the you're in us yes, on in the growth is opportunity space. Charles, your biggest biggest And the

automotive from that area penetration And segment. mobility and see second, estimate contactors, that, we about should the the the half space - the to rate? growth the have have following we about come biggest growth that's we then We automotive expect XX% in of

Charles Shi

Got it. Got it.

I for margin. your contactors. kind margin handler of a expansion us there's Because So Definitely, what you heard terms expect, quarter-over-quarter maybe of business, uptick forward, contactor Can know, on strong a relative is you, follow-up certainly, going this. gross very didn't to your the expectation? as we in let

I from business. of you consumable the have expand business, wonder that in margin side view to it. this today whether is a a consumer room your if may As at your still look -

Jeffrey Jones

it is. Absolutely. Charles, Yes,

the side, As really cost we're making so contactors. manufacturing of those I on mentioned, reducing improvements the good

XX% And in year. the to hit mid-XX% next make margin mark. be we'll the believe XXXX, to then late by or gross that at year, So end I of continuing approaching strides a

Operator

further questions time. back turn remarks. call this the to for Jones I'm showing in queue no closing to I'd like at Jeff

Jeffrey Jones

We'd like morning's for everybody attending call. this thank to

September. let other September Securities, Before be Hope Rosenblatt attending and attending conferences Thank those the know you that I attending of B. or coming everybody August XX; conference, X; Riley, at any We'll one and talk just we'll Citi, in sign XX. you we'll September August, time to day. August any off, XX; conferences be at XX; to up like August nice would during be I Jefferies, X quarter. Needham and in to August again, have a the -

Operator

concludes you conference Thank This call. for today's participating.

You may now disconnect.

Cohu (COHU) 30 Jul 212021 Q2 Earnings call transcript