COHU - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to the Cohu Incorporated Third Quarter 2021 Financial Results Conference Call. At this time, all participant lines are online are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. like the now Jeff over I'd CFO. Jones, Instructions] to conference hand to [Operator

Jeff Jones

good welcome and afternoon call and Müller. by you Thank and CEO, and Cohu's outlook. joined Luis quarter our XXXX President to to third XXXX quarter results fourth I'm today discuss conference our

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

Safe to Now, the Harbor.

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

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

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

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

Luis Müller

afternoon Good thanks Thank joining everyone for and you, us. Jeff.

year-over-year, for record XX% over in up per XXXX. the in test adjusted approximately at and year-over-year was and and EBITDA, line track with of and on for profitability. expectation XX.X% demand XXX up growth share revenue points was Cohu in million XX% year $XXX approximately quarter a revenue was up on remains were forecast Third inspection significant systems. basis both revenue Earnings underscoring $X.XX strong that

data to as segment DI-Core, in key win new orders of analytics well from software design with deployment the automotive the the expansion our automotive customers several as continue We in quarter, quarter. following third customers second

reminder, critical equipment and equipment and state other customers As short, systems software monitoring OEE, DI-Core software test Customers to ensure for interfaces performance. data is improve as equipment lot process equipment solutions intelligence a or control, of control provide such can parameters that DI-Core recipe, OEE with yield, throughput, management. equipment and and real-time cell to for overall a manufacturing also suite efficiency optimal monitor execution productivity. remote Cohu's for

around estimate for solution automotive We to productivity. the optimize Cohu. margin for gross data and be expansion offerings upgrade to essentially software our to efficiency DI-Core to plus thus, grows, for increase a million the Analytics analytics of quality segments semiconductor with interest product $XXX to expanding productivity. high the base increase continue improve differentiation Cohu install systems. large plan equipment need we continue improve to value-add of DI-Core customer enabling our and market DI-Core is XX% We're the in and The As to a yield and in particularly help to customers

solution, based test-cell the deployed offers Now devices, in DiamondX transceivers. by RF management, high in RF driver power performance the business, and on we a platform applications. universal of growth into encouraged today our display unique satellites of tested ground are Cohu inspection for

at for to entering the and under performance first management by XXXX. and XXXX growing forefront are expansion of estimated signal for communication RF market that global with of the The the integrated metrology to electronics ensuring create Wi-Fi microwave XX% half we're and even for test-cell customers of XG, shortage and forecast devices interface Cohu and XX% control. in test, deploy at device positioned forecasting equipment applications. and and are There's of wave of support cell September, applications projected to and test integrity for Mobility at uncompressing test, inspection grow Sub-X demand XXXX. global a solutions limiting global customers computing end address starting supporting small of network. customers a capabilities is With known deliver well customers is through the of equipment performance this manufacturing CAGAR gigahertz, high-frequency help low of products on is RF high Our Cohu test demand encouraged for the power millimeter satellites, broadband X endeavourer to measurement utilization advanced momentum satellite their to also accurate another wave temperature drive and orbit

XXXX, platform, to market vision a is for growth largely a battery that million a and electric our requirements, management continues metrology to address thermal level applicability positioned neon initial with post-pandemic is the new automotive particularly beyond systems high demand to vehicles sensors. systems and ICs. in of the recovery portfolio in to passed new expand and variety a reaching Cohu's seems of test and customers supporting original inspection $XX capture management in The handlers and processors to processors cycle now broad contactors expectations, new revenue ADAS driving automotive and XXXX. have projected Our normal well in power from Cohu automotive interface

at significant yielding improvement in margin progress QX and sourcing business. Philippine QX from made XXX our points in manufacturing significant operations a We productivity gross contractor our increasing to or in contacts basis also facility, have

of the momentum expansion midterm this XXXX, significant As a business to target our expected the margin in gains and to be contractor is XX%. grows, toward contributor

Additionally, product inventory in continues quarter margin continuous tight and in to Consequently, quarters. half customer’s seen of logistic and in ahead to to with business steps growth in our gross and and Switching we the testers shortages line in first can third lines our on or to the erosion contacts increases our less plans, margins introduction regarding supply we handlers targets. and extremely of the offset XXXX shift expect the handler plans XX%, new to handlers, with concurrent fourth largely make second mix mid-term despite price favoring device issues Cohu mix that dominating up more implementation Cohu’s our completed sure taken has capacity supporting we be technologies. to to continue expansion material the of headlines. of chain get trends topics,

weeks. lead projecting the handlers model flow delivering largely quarter about quarter. business is and weeks, Our remained averaging low EPS from and a and working, six times fourth spares typical ago Cohu solid nine testers and contactors profitability cash is strong with a Equipment weeks unchanged during XX baseline seasonally about

our fab wins packaging enthused equally about traction the test equipment technologies. growth product growing key wafer gross and order design and about quarter. so much margin support our investment the Looking in semiconductor the of segments, we're the in in and need With ahead, for new by going forecasts we are fourth optimistic encouraged in for metrology we’re mid-term and advanced greater into inspection improvements

share Let me turn specifics authorization quarter over fourth our to results, our third to repurchase Board's describe guidance, quarter it for Jeff and about program. Jeff? share provide a

Jeff Jones

Luis. Thanks

on GAAP are that through other to of guidance, the walk the financial presentation, follow about please accompanying note figures. in included are my non-GAAP which the and website. that investor the including I our disclosures comments non-GAAP to investor QX Information page earnings the and measures, referred results are QX reconciliations located release non-GAAP Before

and in million, the compared quarter. QX was revenue to strong an results, financial turning XXXX. Cohu again increase delivered profitability the to QX revenue of of Now $XXX.X XX%

million was During margin the the third and and one-time XX.X% quarter, third gross with guidance, lower more and accounted due line two credits customers sales. of guidance of for quarter, expenses. each operating our to Cohu’s tight were management In automotive than $XX.X segment than expenses XX% some in

QX year-to-date on to US generated US. was capital was business adjusted in non-GAAP which for of leverage combined month subject of XX%, the higher Third in the Cohu’s more third primarily Germany, second our target tax non-GAAP nine XXXX double to revenue than EPS the full XX% model. $X.XX, Return income quarter due effective rates lower than or results earnings rate quarter EPS the was guidance illustrates Non-GAAP was higher in non-GAAP the than invested year statutory tax XX.X%. and approximately bringing income $X.XX, was income with operating is higher in the well-above to XX.X% XX% generated higher. ROIC and EBITDA for quarter

investors, to equity for to accelerated moving resources with and QX a the $XX to capital technology growth express reduction, sheet, debt portfolio balance our the sheet our plans, Now, Cohu’s The confidence from balance and stock to growth increased cash position reflects prospects expand newly in offset with return of reflects strategy balance of in and cash was of ending opportunities debt net The cash million, the net dilution markets million $XXX third reduced to total quarter investment the repurchase a sheet at and flow outstanding line approximately flow served million. totaling our million was QX approximately approximately QX at generation. XX% future debt program authorized term QX for cash during million, balance end generation $XXX again the The Cash quarter. which was free revenue. loan is as $XXX repayment was $XXX of balance at solid with the $XXX cash end million. be in of net and

Now between moving $XXX to our projecting QX, business $XXX strong revenue QX and Cohu’s the to million profitability low outlook. typical on seasonally is Entering deliver model million.

and lead into capacity their frames pushed of have production. XXXX test impacting shortage new semiconductor customers Some to wafers due

seeing mid-term projecting anticipate sales to $X incrementally sales be based revenue debt approximately the QX potential the is contactors. range expenses forecasts in solid based cash product to assuming approximately And stronger And approximately momentum, $XX XXX,XXX. interest QX test our $X operating on of chain work margin be million handlers approximately current the million. QX. QX manufacturing to gross quarter We and repayment and QX to be predicted, XX%. improving we're shortages. projected target. million We through share approaching expect repurchases of on anticipating in after to of Recurring be for is be XX% we're reductions XX% customers be QX to supply are their first expense including projected total automotive to mix, order successfully cost and as in moderation a forecasted

our adjusted expect we'll diluted the But at concludes at of remarks share the be to shares. midpoint midpoint We approximately now open guidance. QX count XX.X XX% tax QX questions. and to guidance EBITDA expected the million prepared the is non-GAAP approximately for and approximately That be rates of call to XX% QX

Operator

Stifel. Our from Brian Instructions] comes first Chin [Operator question with

Brian Chin

a of a you QX just reflected for results supply Hi, ask is in Luis, some which there. constrained, Good how of four tough ones. Jeff afternoon. thanks or much for the letting and versus customers? first operating to in kind seasonality push us few Maybe quick questions. environment Nice that key declines, a

Jeff Jones

for sure for that to Yes, about understand sure we QX full know XXXX. of X but know, know million is out you difficult delayed into somewhat it's we been the impact, has not,

Brian Chin

Got you into it. And far what sequential around your I demand backlog QX, an in of backlog sort you think based increase? any on can growth visibility. parameters said thus to of seeing put to relative terms you're incremental Yes, incremental,

Jeff Jones

I comment. I speak incremental mean, that to Well, can't

you look it's, know, are order right, we're that momentum currently Brian, we that increasing. First, when current seeing QX, at is we is

chain continues, that, let's QX, that customers work supply over X% know, constraints, you be assuming could So successfully and XX% increase QX. say through to the

Brian Chin

normalizing front, progress of sense more that a That's XX right? of improvement narrow a XXX of in terms to back, what gross coming million well couple contactors, to throw it's on us revenue with, – know, think into helpful. then if of XXX as think sort missing, I'm initiatives can you of somewhere drove just in in points gap a next a first, I piece margin the something the moving driving price the that, on I tester degree, basis terms importantly, if QX there's making normalized start half? am territory, how how out, going model demand give and first even potentially margin, some maybe, I and you or on much kind you relative close improvement Maybe next we're mainly lower, some but of guess of on like target how you gap business to about more perhaps in of And increases the alluded handler as can, sort the also gross know, the what sequential this that in of further can sort to number you you half, is, the was much much maybe QX, first to a the handlers, the this, if QX, in

Luis Müller

Okay. lot All there, right. There's Brian. a

that can my let don't touch So some maybe me I me on. areas of do And best. you remind

gross or into the We of expansion, QX in in the the QX, success areas margin gross In some saw and One is a manufacturing main contact terms here. insourcing great Philippines. of couple of more margin. the increasing

we Philippines, contact So we margins, insourcing, of if continue for and our to continuing, increase margin. add that so productivity, second higher to about will, year or more utilization to see gross costs. going see the its more lower you – gross the continue targeting to We're XX% again, into the half contact and going

is, moderation piece of my mentioned The the revenue. of the as other I – automotive it the in auto handler comments, of

And mix so an of overall more favorable products.

been contracts – favorable effective but Now, to seeing need increases. to impact cost increase price customers, backlog yet, as we're in effective offset we we're the it. where the but target has a be getting not not work we and least it on model, long-term XXX% a closer through we're with to at in And handlers,

look mix that margin revenue see and we higher roof there. as grow XXXX, continuing you So as tester to a we do the has revenue, into mentioned, contractor gross

we're going to point about mid-XX% perspective XXXX So would projection, at that there range. so the margin improvement internally maybe be specifically gross on QX basis I be over you're modeling would or a margin. XX if looking in would say is a QX from be gross

Brian Chin

Great, hop helpful. queue in really other for back folks. that's the I'll

Luis Müller

All right, Thanks, thanks. Brian.

Operator

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

Craig Ellis

revenue, the Hey, was the just XQ. gross that think to of back it taking question guys, again. start one there pushed And margins that sales thanks to to months of for asking three wanted see I a million was ago, the clarification XQ XX from messages up on by moving question. handler nice I

actually So the is that what's today? seeing million quarter down revenues as we guidance embedded did fourth look at in and the the and XX shut those one included we're did, guidance

Jeff Jones

knew caused filter through we control correction by catch under just QX wouldn't movement that as that up thought would well year And that were XX in be on We of in That QX. year. beginning million that Yes, caught sometime up a Craig. we'd suppliers orders. that the next

a not of put was takeout QX. and it So QX in to

Craig Ellis

was yet. Yeah, quarters QX and it I thought of future out into

Jeff Jones

Yeah, right.

Craig Ellis

there the have I periods or? Jeff Do run

Jeff Jones

I up No, the no, no. That's correct. quarters. mixed

Craig Ellis

recapture would you your But and to in is, expect at Yeah. for point recaptured didn't all be both QX. quarter

Jeff Jones

Yeah.

Craig Ellis

got Okay, it. it. Got

Okay.

So helpful. that's

given Asia what be to seen third in that that in that quarter company? million that COVID manufacturing disruptions, may did automotive chain, also impacting Malaysia That revenue? have the etcetera, issues that Secondly, And with is what the excluding may everything the supply the related we've earlier? guidance not happening impact centered around to extent on X for you mentioned or

Luis Müller

-- Well, the let that Craig. one, me The take

Craig Ellis

Yeah.

Luis Müller

question, right of embedded as your And -- actually. the numbers had that million to the mean, They're that, sort think of the that's year, part some have next pushing I chain the right. out had supply customers Yeah, their here, point it's the of about of quoted You're as to they're disruptions driver I shortages. having predominant automotive it. $X Jeff

an that's element. think I

Craig Ellis

I Yeah. to go back margin. then wanted gross to And

to in the in recurring based in since sounds and the it Philippines, increase great gain. that's yields that's in quarter. that gross structural was like see margin a the And Jeff, utilization on it So increases

so question level, volumes that can is as further its. upside from is, And this XX% normalized through achieve mix the that the in your rise on year there you as

they where are can extent rise gross today? what margins recurring from to in So

Jeff Jones

contractor Yeah, about I the would talk gross first margin.

contractor second next exit to you XX% about margin revenue contactors it's all year. expecting considered and know, is be we're a going the And half As where about XXXX of of to XX% gross recurring. that

important on think higher contactor And a that then not gross but will to the it'll overall So margin revenue, to margin, base same margin. overall element at increase that look the course, gross on But have that'll of I extent of it's the first. recurring an impact grow. that

Craig Ellis

it. Got

first if But lastly, like? of then some and to helpful, just first the color customers providing for the the color Okay. beyond And your of the contour very getting we quarter. sense the you're you would on the that backlog sense Are what from at year Jeff the looking any get in there look this test quarter, that where customers, from Whether reached other normal your you're hear? us give might profile your we've to more normalized seasonality, we see we more environment starting back that it different things as a for example, an are could be that etcetera? -- level automotive, handler customers, the to be or

Luis Müller

let to Yeah, and on me think one this free Jeff, feel add.

rolling the first do comment Concurrently, I the again profile are a we the lot visibility year. it's dynamics next terms in tester plan And already margin. on for better the are test of see of little the coming we for half on ready we Craig, We too the there's we progressing the of production of dialogue end a for we're in year can first business, up year the with of requirements growth think around a lot quarter-on-quarter in revenue early customers now. we're as IC to gross an to have right into RF investor in -- a We front demand discuss of up comment because context balance half. both well that, improving. as business see improvements in

is, XXXX. taking other XXXX I is In are past again the – headlines. recovery environment Management demand segment And is demand what but the see moderated Systems sort much constrained, what of the those plethora first ADAS very automotive is and much a Battery automotive has handler of On processes, from a producing from happening the and sensors. today stronger in down constrained a we the half true, customers devices, the of very side, think

for this where is is we think the And to seasonality, resume to expect haven't in I this to half couple back we're this of year. think I we're I seasonality, seen at. think now seasonality second as quarters far a As this

seeing the much next quarter rolled quarter, more. We And year again. expect, slowdown normal stronger lower third know, seasonality are difference which typical discuss But don't The as we expect much, ramp before the is yet seasonally it have demonstrate to a on towards and fourth lower has quarter stronger a second a up to June business is in fourth a totally quarter. we typical. a that fourth you year now model company next

first that shifting we as is strong in the So mixes, half describe. looking

Craig Ellis

Real helpful into you. queue, Luis. I'll the color jump Thank back guys.

Operator

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

Tom Diffely

the for a Thanks afternoon. of Good the RF on to Yes. I you view market. of XG your the bit get from hoping little question. was tester

In out you build ago. that of terms of build year XG? that, this to similar we whether where what not in the or couple of will think quarters beyond then And the over next a we think out saw do you be maybe multi are year

Luis Müller

phones then, Hi, Tom. you the in enabled. I quite then are that was happened XXXX. at for because XXX we're million test think saw at support XG will demand not think a looking I'm Yes, mistaken, in the XXXX. actually we half I that end approximately, year. XXXX of it to ramp if XXX And of XG late that the as And ramp, phones million though, Probably concerns first another pandemic approximately of

them be very to up we to again. So build expect strong

had in wins I a More us some would expect year the say incremental and to in that dollars for generate next the we half importantly, we last year. last have design

strong front So RF for for very it ramp. optimistically a IC yes, and we're looking

Tom Diffely

you and exposed switching throughout impact a specifically when labor impact? gears COVID? What you And And different has then shortages maybe Over seen or here, you're Philippines. at recently? labor have the been Asia, Great. the where bit look of any there Okay. regions

Luis Müller

running factory No, The capacity. our Philippines -- Philippine we haven't. is full

were suppliers supply chain have of is year I for it supply the Philippines. don't half even things haven't We We of us, actually in chain a bumps think many narrow was or complicated the so a It’s had many, in first when since, Philippines. middle last each any problem. fairly not

Philippines said, are Our in our I operational. taking like And products. fully factory customers the it's

transparent, Philippines. So the over issues no right totally now

Tom Diffely

of you last Okay, that's I think a today. finally, a your was you becomes think do meaningful piece it the market quarter, great. business? said small And What on for fairly DI-Core, then you it

Luis Müller

Yeah, into questions Tom it's answer we very to crawling a we're difficult essentially it. --

Probably looking double we're of lots million of double Looking numbers two at than really year. little small revenue we're this here, that into to close bit a more a good -- next maybe at year. $X

will on it couple a the be next continue sure. is of prepared it revenue I years Nevertheless, So for to said small -- for as a softer. is remark, profile it

would will in percent it's XX digit stream. model move delivering succeed our be We and will intend top only obviously, So not think to next but essentially year. of a augment still from developing recurrent the succeeding revenue line our gross the three And Revenue new kind mid capabilities as the plus to products and low increase two it augment for digit perspective, differentiation I to capabilities. to single to new sale. But margin product customers a of on demonstrating it single we in subscription is next years.

Tom Diffely

Okay, for great. Well, time thank you today. your

Luis Müller

Thanks.

Operator

next comes Duley Securities Steelhead question David Our with from

David Duley

thanks for And questions. my Good afternoon. taking

tell Just market growth help couple you you understand think guess, topic, of share couple in us contactor then market size rate next overall housekeeping questions, you think that then is? years. what the maybe the along currently of for could your what what of And is market same the goals a XXXX. the And the us I are

Luis Müller

basis, for sales. a prior the a attachment of that rate past, $XXX quarters that attachment attachment market overall trend the venture the to not is story. been What the going as Unfortunately, contactors? a from we bit looks XXXX in the rate in is $XXX been is the projections from we in rate have But quarter as the seen I on contractor quite it's calculated The to growing, this, So market can We've equipment the more to at space. the as I about looking volatility out said, quarter has an we which million to in discussed tend there from last I like obviously have mean, for forecast say X% we're contractor to market address. yet. information CAGR line around

we to So XX% rate grow goal back a over midterm That's weighted took it of the aspirational average, is attachment goal. and doing approximates our our And look that more a to XX%. today. to

David Duley

handler benefit? some Okay. ASP It some takes some was you of then, increases on products. mentioned are And time. usually Where that in we that there recognizing your

have run to of is just usually to backlog already current May the understand, much price be through much captured us me how recognize hit You you before the has it and help been that and -- helped increases. how be captured?

Luis Müller

Hey, Dave, yeah, in based orders you're how new left, as in rolls customer. absolutely right. on and come It for is really backlog much

So been of effective XX QX was it as to QX, I next year, to small, points. then on. improvement a to going offset in costs. said, it that it's basis customers in from subject we it, call to effective, additional as basis into so more about point XXX QX, And essentially enter are see XX We're points

David Duley

but Other people this, could bit and more. then little of understand help asked just out. in phone was have us about And a Okay. my fading -- kind

So, things end, when trajectory XX% gross XX% the of would you the you and the the that level is the guided What end if these revenue gross expect about say QX we or think what environment think? the from be said, a we year by to Can to part do get middle environment. you margin the seasonal normal or year? next year happen, just like you've let's to, margin progression

Luis Müller

I phrase me that to mid achievable. that of kind it XX% XXs. means And Yeah, mean, is Dave, as I would

based horizon. costs right? bit I I'm strong is target be business, expectations contactor that's the reducing in year XX%, XX% for XX%, those growing see what might midterm strong out revenue think quarters. with a I And think and the over I of achievable and comfortable on testers XX%, time there, seasonally think aggressive. But being three -- Our we

David Duley

you. All right. Thank

Luis Müller

Thanks, Dave.

Operator

Our with comes Krish Cowen. from question Sankar next

Unidentified Analyst

of Bob for Thanks Mertens taking questions. my Hi, on is this behalf Krish.

are breakout within the on ED the how you have I automotive because overall, some to of bifurcate sort or way provide any the a First, more and then business of the line? there business, is up. follow margins ADAS clarity And between

Luis Müller

question. first part I’ll address the let Yeah, think margin. gross me the on Jeff second the of the let's

-- with exact about combination should an be automotive of in be and ADAS, vast in management. to majority of But we're of the of we but a small tally, XX% science. not aggregate, quarter, about the our battery we it's measuring So one-third handler death, our associated way battery by third of down management not breaking close is the the in handlers. to ADAS is XX%, a portion, demand way,

Jeff Jones

So, Robert, I that go the detail in for I too was units. specific on say margin, gross that the systems much today recurring XX%. into won’t we deck margin just the about presented would But the quarter XX%, was

think more that be one data was overall handlers would margin overall one XX%. piece of I for more about the --

Unidentified Analyst

That's then helpful. you. Thank Great. one a it just And last before I hand over.

should recent forward, of rise? to continue contract and Just function, if in costs terms under the about price and going of it a how think your step-wise pricing, we do have or you typically sort increases

Luis Müller

have customers we -- price increase. essentially Well, handler gone press a and our our issue to that

and backlog the some the across and handler And so price applicable already customers, orders placed be not to through but get of orders, had and it's backlog majority we it's not new once period that XXX% new placed, of time. of increase. set it's ordered are customers a orders them, a handlers. with But for contracts Now, that pricing that will long-term because have other there's we is

to full get effect the so of And we closer as impact impact we're offsetting QX, basis that's with the it, I why incremental we XXX each quarter. against in as said, the And perhaps costs into points increasing see quarter. the

Unidentified Analyst

Great. Thanks. from me. That's all

Operator

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

Christian Schwab

Hey, guys.

been but asked, have questions a my quick of just most So, one.

nodes adding fabs, of been have in legacy particular, very We historically different a strong. have lot where capacity you

kind of you year, that seasonality? normal to go-forward and basis, about of like results all when your multiyear impact you the kind about materially ramping and I Is since wrong? more wafers seasonality expect next capable any thinking to am to these sounds fabs, we that in think return or of new starts it of layout offsetting a typical that of expect would As

Luis Müller

mean, on automotive Instruments Hi influencing happen and have talking XXXX. If capacity, But of going in others I Christian, ramping industrial larger really and of for seems sites think it's capacity across XXXX public would that that's -- actually and knowledge. applications I a nodes, time, online you many XXXX. additions at trailing beginning part node are to edge -- be for new is look edge to right? trailing trailing of forefront -- Texas even test They it the coming late that start and the of looking assembly XXXX

-- to singular it's a spread in time, it's out So, point over I time. not there's think going

As to yes. market think on It's seasonality the by end don't driven to demand, so I is really more additions. going because that Honestly, going trend be consumer whether seasonality? capacity I end demand don't the that's buck so. think than I think so to a

statement confidence increasing, is I is capacity a are think additions more that the demand the semiconductor the increasing. proliferation of market of that end

the that For And supply a the got example, what and in was days not over continue individual I they they And semiconductor supply wrong, couple is Executive the just is semi very used I what few into to there incredible belief, a content all as to years. think of strong can you of company today. to an vehicles this ramp and talking read ago next when an that, about it's in content cars. going

that. end opinion. will So, The is seasonality But to don't I driven just bought and be demand think necessarily positive. trend that's market think likely by I is capacity the my

Christian Schwab

questions. Great. No guys. other Thanks,

Jeff Jones

Thank you.

Operator

next Needham from Company. Charles Shi with & comes question Instructions] [Operator Our

Charles Shi

Quinn I'm Bolton and questions Luis Jeff. asking behalf here. Hi, of on

me, revenue. growth. kind off, start want terms of third moderation second may first trend you tester, So you tester of strong the the seasonality line normal revenue revenue in the was? of a little tester with to It half quarter expect than of half that of bit have your I kind is first half the looks there? like the And tester Do given lower the first how to

Jeff Jones

Yes.

statement XXXX year. equipment is of that's I That through QX correct. think took right. a Customers QX this lot of of latter

on we customers I pause. think essentially a as those discussed that QX call taking our

that next indicating Luis ramp business we're seeing test of first indicated, the we're looking softer coming at Thing in year. a of of customers next for with a RF conversations so phase second And are tester half half year. here this in as the

Charles Shi

it. it. the stronger understanding strong? is harder half to May I tester forward, pushing demand going first half you tester to maybe trajectory or little the ask XXXX revenue stronger than that first you be a second Got expect Got relative XXXX? This bit half

Jeff Jones

definitely into would more get details say it I of first relative compares half Yes. we'll the second get of when -- as And XXXX. there XXXX. we to to half

Charles Shi

what from quarter. steadily you've be to mix, little a more a maybe you testing margin from the favorable see bit gross a year half like. little got Maybe gross bit little can you that we’re product bit pinpoint half are bit know, reach much on this margin, more How what today fourth of by still improving contractor, mentioned driven little XX%, I margin of numbers like bit Obviously, really early year, little for to the sort a is in Yeah. probably mid-XXs maybe XX%. you gross maybe year, first first which XXXX next a next something

understand improvement you. year. product of next to margin into in mix side terms and puts want Thank of takes the the Just gross the

Jeff Jones

we're sure. gross key only for as margin to confident revenue, of expanding the product as not the And contactor role that’s our grow for growing also as we're revenue that that mix, a Charles, you continue points the going The to gross profitability. plays Yes, strategy well margin described but -- increase gross and margin. a in

point the good. is growth tester business. very margins margins The other strategic gross Those of are

tester grow to is will in approach -- we as product and and improvement position we handler strategy revenue, and and an a standpoint. the handler from mix handler maintaining that see gross so margin revenue do our And that

sort we’re in be growth XX% in about a somewhere XXXX say comfortable we but margin. and kind XX edge that XXXX I've say, the Again, have spoke about the XXXX mid to a little gross I so quarters those mapped on yet, model is be XX, confidence I pushing the for strong testers plan of I quarters. XXs. expect for strong strong seasonally I might that with in our more in as when talking I those XX in XX%, seen the contactors, would quarters earlier haven't would the of -- what Now, but annual based far out

Charles Shi

-- products Can heard overview get so kind good last is the – just mentioned it. Got Maybe us this side? very color how components, still noticed you, new top components looks the give of to is very power drives that's shortage it? your the contactor are me. from for to be testers you as being is next management exposed from Thank part That's, industry What the you me, Luis, Got I that you handlers question power going or to one this management semiconductor want all in I terms or strong of driving IC you. it level IC investment of market? always. of we've year. capacities And for far. me

Luis Müller

Okay. let to applications all application. me do way management small and for the product high high are IC voltage, start going end. Yeah, current obviously the have up Charles, lines We from contactor power

again mean, into wouldn't So I the small the Handlers, on large the very they I them power applications, on sort go call side. that's actually, by phones name contractor may industrial discrete will call much devices. whole same. them gamut trains, of to And P-Mix mobile go devices. power that it P-Mix P-Mix very you that I

tester silicon also When management applications. applications But that handlers P-Mix from devices, running the all in voltage, non-good silicon FETs. management current high tester our small carbide. not P-Mix running small and on large the And so small would carbide, business, We example, farm we're side. I you. much feed handlers for comes here looking the for much have gravity applications, on small MOS not it say focus bottom the power, current, infer have more three high we nature, Hopefully P-Mix from also it very more covers product narrow solutions mobile lines more in to march on that for devices at it so small not dye,

Charles Shi

thank you. Yeah,

Operator

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

Craig Ellis

ups. Yeah, just two follow

taken of and you're action since First, the of it execute the doing strategically, to side other that. that's just been is, try action And parts elsewhere pricing on about it's the conversation handlers, nice it you you But pricing the question in lot wouldn't as handler why today thought in well? see about a the portfolio? And have systems of portfolio.

Luis Müller

repass use cost What not to increases essentially as Craig, our doing the that of a We of on increases. pushing -- in in where contract try for out rolled that in we're had you we the the some manufacturers. have same to differentiation. down to the up semiconductor off and the value. higher handler Luis. going shelf in this obviously, this in we're not we we be products, increase unless the businesses the a as will seem sub increases Obviously increases. conversation price even pushing We're is to had our it customers also of said, cost is sensors, at we we understanding not a as we're lateral we're what repass Well, not enough We're to not value unique done doing for our of our be we gouge cost differentiation, soon manpower have our we've we But components don't And for had based exact customers. obtain price some we value like space. conversation is cost customers product. competitors I those see we -- And know, pushing, it, took are not motors, sat the year here that. understand boards, product on essentially And, as more we unless seen control we money components, well assemblies

Craig Ellis

Okay. And much bomb you is increase dynamics with that the that haven't Luis broader cost that -- testers there testers. then, are a different in seen of the market point just

similar even allow had to increase? not you you if would a move cost So such make such a

Luis Müller

Yes, that is correct.

level cost tester seen the side. not of increase that have on We

Craig Ellis

Okay. mentioned you in it's how plan the share I about after program. on quarter because XX million And talk to lastly, you fourth to you whether release and an and coming just that how give that press included you go wanted execute repurchase? quarters repurchase you how in the then to the in or opportunity might

Luis Müller

as with going we're start buying to here, next opportunistic early Craig, as week.

and, parameters will. place we'll put the in purchasing a pricing thereafter, essentially with different Soon five, let you know, one and XXb if automatically, you happen, plan

we sort return we, of would we make that. confident obviously doesn't obviously, forward. in debt, that's to action place. that mechanics market company to about be in cash won't we it shareholders to send acquisitions. Also We to that we down believe also why so pay doing say can flows that on continue, believe probably the So undervalued, believe it. It's like is some put We've take confident in with acquisitions, some generation, we truly a Very investments, we wanted of moving cash this it we do project and the message capital sized are that the can company. a how we mean

Craig Ellis

thank it. much. Got Luis, very you Jeff,

Luis Müller

Craig. in Thanks, Jeff closing further call the to turn to Jones queue might. this back for Operator: like I’m questions I’d time showing at remarks. no

Jeff Jones

you. Thank

Virtual in Conference on which I Conference Francisco, conferences; D.A. XX, CEO will November on held person San like attending sign-off, and we Davidson Stifel XX. X on say on Before that December be in following December Craig-Hallum Conference Summit the just the be November we'll to Virtual XX; Virtual The

to you Thank of contacts banking or respective events, out attend to conference please with meeting. a you a look call speaking your arrange Cohu. all these today's for good and soon. to forward like you'd meeting I any reach day. If with joining and/or Today's have to

Operator

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

You may now disconnect.

Cohu (COHU) 29 Oct 212021 Q3 Earnings call transcript