Aehr Test Systems (AEHR) 2010 Q1 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Aehr Test Systems fourth quarter fiscal 2010 conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions). This conference is being recorded today, Wednesday, September 30, of 2009. I would now turn the conference over to Lasse Glassen of Financial Relations Board. Please go ahead, sir.

Good afternoon, and thanks for joining us to discuss Aehr Test Systems's results for the first quarter of fiscal 2010. By now you should have all received a copy of today's press release, if not you can call my office at 213-486-6546 and we will get you one right away. With us today from Aehr Test are Rhea Posedel, Chairman and Chief Executive Officer; and Gary Larson, Vice President of Finance and Chief Financial Officer. Management will review its operating performance for the quarter before opening the call to your questions. I would now like to turn the call over to Gary Larson. Go ahead, Gary.

Thanks, Lasse, and thanks to everyone for joining us today. Before we begin, I would like to make a few comments about forward-looking statements. Please be advised that during the course of our discussion today we may make forward-looking statements that involve risks and uncertainties relating to projections regarding industry growth and customer demand for Aehr Test products as well as projections regarding Aehr Test future financial performance. Actual results may differ materially from projected results and should not be considered as an indication of future performance.

These risks and uncertainties include without limitation the world economic conditions, the timing of the recovery of the semiconductor equipment market, the Company's ability to maintain sufficient cash to support operations, acceptance by customers of Aehr Test technologies, acceptance by customers of the systems shift upon receipt of a purchase order, the ability of new products to meet customer needs or performance described, the Company's development and manufacturer of a commercially successful wafer level test and burn-in system and a potential emergence of alternative technologies each of which could adversely affect demand for Aehr Test products, in fiscal 2010.

We refer you to our most recent 10-K report and other reports from time to time filed with the US Securities and Exchange Commission for a more detailed description of the risks facing our business and factors that could cause actual results to differ materially from projected results. The Company disclaims any obligation to update information contained in any forward-looking statements to reflect events or circumstances occurring after the date of this conference call. Now I would like to introduce our Chairman and CEO, Rhea Posedel. Rhea?

Thank you, Gary. Good afternoon, and welcome to our conference call for the first quarter of fiscal year 2010. The low level of capital equipment spending by this semiconductor IC manufacturers has continued to impact our business during the first quarter of fiscal 2010. Revenue for the first quarter was $1.3 million, up slightly on a sequentially quarter basis. On a positive note, we did generate net income for the quarter of $961,000 or $0.11 per share.

In addition, we are also beginning to see some positive data points, that suggest our industry sector is beginning to recover. Semi reported that semiconductor equipment bookings for three months ending June 30, 2009, were up 83% over the prior three months. That said, there was still ways for this recovery to go as the June-quarter semiconductor equipment bookings were off 58% on a year-over-year basis. We are pleased to report some important highlights since our last conference call. In mid September, we announced a follow on multi million dollar plus order for a FOX 15 wafer level burn-in system to Micronas, a leading automotive IC producer. This is a major event for us. Since it further validates the potential cost savings using our full wafer burn-in systems. The FOX 15 system has the capability to test and burn-in up to 15 wafers in parallel at temperatures to 170 degrees C. Micronas has said they expect to achieve a 50% cost savings from wafer level burn-in for their automotive IC burn-in applications.

This is Gary. I just wanted to clarify, the order was in excess of $1 million as opposed to multimillion dollars. I just wanted to clarify that.

Thanks, Gary. Another positive for the quarter in July we announced booking two ABTS orders from two different customers for test and burn-in at high pin count logic devices.

Our ABTS product family is also targeting a growing market segment for burn-in of high power logic devices above 10 watts. We believe this market will continue to grow as IC fabs feature size shrinks to 45-nanometers and below causing device power during burn-in to increase significantly. Another important target market for the ABTS platform is for parallel test and burn-in of DRAMs and flash memories. We see the market, the memory market recovering and expect there to be capacity expansions in the second half of calendar 2010.

In rounding out our recent business highlights, was the successful sale during the quarter of a portion of our Spansion bankruptcy claim for approximately $3.3 million. Moving forward, we are continuing to aggressively sell our FOX 1 full wafer parallel tester and FOX 15 wafer level burn-in systems. This effort is starting to bear fruit as shown by our recent FOX 15 system order. We expect to see increased interest in our FOX 15 systems for automotive, IC wafer level burn-in applications, as worldwide automotive sales start to improve. We also believe that over the long term, more multichip module and stacked module producers will need known good dye to produce high yielding modules. And we believe our FOX full wafer burn-in and test products are a cost effective tool for producing known good dye.

We also believe there's some potential FOX 1 business with Spansion. Spansion has announced that they expect to emerge from bankruptcy by calendar year end as a $1 billion indebted flash company. We are hopeful to receive wafer packs in FOX 1 system upgrade orders for their Austin fab over the next three to six months. Our strategy continues to be focused on conserving our cash and penetrating as many production accounts as possible with our new ABTS and FOX products. This will allow us to expand our customer base and grow market share.

We are confident in our ability to achieve this goal as we have the strongest competitive product portfolio in our history, with the FOX 1, FOX 15 systems, full wafer contact technology, and our new ABTS family of products. Combined with the expense reduction actions we have taken over the second half of last fiscal year, and the $3.3 million we received from selling part of our Spansion bankruptcy claim, we believe we have sufficient working capital to support operations and to invest in R&D until back end capital spending returns to its more typical level.

We are starting to feel a little better about our outlook moving forward. Several of our large IC customer producers have increased their revenue guidance. As a result, we are seeing increases in our quoting activity. And booking meaningful orders from Micronas and two ABTS customers helps me feel more excited about a turn around coming sooner rather than later.

With that said, I expect that the next one or two quarters could still be challenging for Aehr Test as our customers remain cautious and have not yet resumed making capacity buys. We continue to be encouraged about our longer-term opportunity but given the uncertainty about the length of the current downturn, and the impact it's having on our customers purchasing decisions we are not providing guidance at this time.

In closing, we believe Aehr Test is in a favorable position to grow market share during this downturn, enabling us to return to a growth trajectory when our industry recovers. We have exciting new technology with our FOX full wafer test and burn-in systems, and we feel confident that we can continue to win new accounts with our new ABTS products, which address new market segments for high power logic burn-in and parallel tests and burn-in of memories.

Now I would like to turn the call over to Gary and he will discuss the fourth quarter and year-end financials in more detail. Gary?

Thanks, Rhea. Net sales were $1.3 million in the first quarter of fiscal 2010 compared with $9.7 million in the first quarter of fiscal 2009. The decrease in net sales for the first quarter of fiscal 2010 resulted primarily from a decrease in net sales of the Company's wafer level products. Gross loss was $57,000 for the first quarter of fiscal 2010 compared with a gross profit of $4.9 million in the year ago period. The difference was primarily the result of the significant decline in net sales.

SG&A was $1.3 million in the first quarter of fiscal 2010 compared with $2.1 million in the prior year period. The decline in SG&A expense was primarily due to expense reduction initiatives we have taken over the past several quarters. First quarter 2010 R&D expense was $900,000 compared with $1.5 million in the first quarter of last year. R&D spending varies from quarter to quarter depending on the level of development of new products. In August 2009 the Company sold a portion of its Spansion bankruptcy claim to a third party for net proceeds of approximately $3.3 million and recorded the amount in income from operations in the first quarter of fiscal 2010. As a result we generated net income in the first quarter of $1.0 million or $0.11 per diluted share compared with net income of $900,000 or $0.10 per diluted share a year ago.

Pro forma net loss in the first quarter of fiscal 2010 was $2 million or $0.24 per diluted share compared to pro forma net income of $1 million or $0.12 per diluted share in the same period of the prior year. In determining the pro forma or non-GAAP net income in the current quarter we have excluded the sale of the portion of the bankruptcy claim for $3.3 million and the noncash stock compensation expense of $300,000. Our cash, cash equivalents and short-term investments stood at $2.7 million at August 31, 2009. This is a decrease of approximately $1.6 million from the end of last quarter. We did collect in September the $3.3 million proceeds related to the sale of the portion of the bankruptcy claim. We continue to remain debt free.

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

(Operator Instructions). Our first question comes from [Geoffrey Scott] with [Scott Investment Management].

Good afternoon, all.

Hi, Geoff.

How are you, Geoff.

Good. Thank you. The ABTS, you said that one machine to each of two customers.

Yes.

Were those two customers existing air customers?

One was. One was IST. We sold originally to IST in Taiwan and then their China factory, Chinese factory bought in one for China.

Okay. So--?

And the second one was a new customer, an aerospace customer.

An aerospace customer. Okay. Did I read correctly that you had closed your Taiwanese office?

No, we didn't.

Or what happened to the lease of the Taiwan office?

Oh, we moved out of it. We moved -- we have a rep or distributor that we use down there.

Okay.

We just moved into their office to save money.

You still have a dedicated team there in Taiwan to service customers?

Correct.

Okay. My conclusion was the opposite from reading the 10-K. So I am glad that got clarified.

Thanks.

What are the prospects for additional FOX sales over the next 6 to 12 months?

I mentioned, certainly I think there could be follow on business with Spansion as they ramp capacity in their Austin fab, and we targeting other automotive IC manufacturers besides Micronas. And there's some other opportunities that we are going to -- I don't want to mention too many things to kind of tip our hand but I think we are looking at some other applications, like VCSELs, possibly DRAMS.

What -- is Spansion Japan going to close?

That's a difficult question to ask, to answer. I mean I guess my guess is it is possible that they go under --

This is Gary. As you know they're running under their version of bankruptcy right now, we just haven't heard much guidance coming out of that, that action as far as what the expected outcome would be.

But if it were to close, then would not Spansion Austin be a natural buyer for the machines that are in Spansion Japan?

Again, they have been trying to work together cooperatively between the US entity and the Japanese entity, and it seems to be getting very difficult because both entities are currently in bankruptcy. And I know they've been having a lot of trouble with regard to just their normal relationship. So, if the entity was going be closed down, you would assume that they would -- do -- maximize their economic value but we just don't know that for sure.

All right.

Obviously, they're also for sale. So it is possible that some other IC producer might buy their assets or buy the fab.

They have been for sale for months and nobody seems to have any interest. Is that a fair statement?

It is really hard for me to, because I am not involved in what's going on over there.

Yes.

When I talk to the local people here, Spansion America, but they, as Gary said, it is really a separate entity and they're kind of running it as a separate business at this point.

Yes. I mean outside of Spansion, are there good prospects for additional purchases of FOX?

I think we are, as I said our interest level is picking up, and I would expect -- money is still tight but hopefully over the next six months we could see additional FOX orders.

Okay. I appreciate it. Good luck. Thanks.

All right, Geoff.

Thank you. (Operator Instructions). Our next question comes from [Joe Lukerty] with State of Wisconsin Investment.

Hi, Joey.

Hello, Joey.

Hi, good afternoon. Would you talk about how much do you still have left in terms of Spansion receivables?

What I am going to do is I'm going to share as much as I can. The transaction where we sold a portion of our bankruptcy claim does have a confidentiality agreement. So I have to be sensitive to that. But, as noted in our 10-K and in our 10-Q, we did sell a portion of the claim for $3.3 million, we have collected that money, so we have that in our pockets. And I think it is a fair statement to say that more than half of our bankruptcy claim was sold in this transaction.

Okay. All right. Then is it -- could you quantify for us what your bookings have been in this last quarter?

Yes, Joey as you know we don't report quarterly bookings but we did report multi or not multi, excuse me, a million -- a million dollar plus FOX 15 order plus two ABTS orders. So the assumption is it is probably, the book to bill was probably greater than 1.

Okay. All right. So--?

It is still not back to normal levels, where we want it to be of course.

Right. How about what to expect in terms of cash burn say this current quarter?

Our quarter just ended the cash burn was $1.6 million. That was down significantly from the previous quarter, and unfortunately we are not able to give guidance right now as far as what we do expect to see there, but we do have the cost reduction actions that were in place in Q1 are still in place in Q2.

Okay. All right. Thank you.

Thanks.

(Operator Instructions). I'm showing no audio questions at this time. Please continue.

This is Rhea. I would like to thank you for joining us this afternoon. We look forward to next quarters conference call. Thanks again. Bye, now.

Bye-bye.

Thank you. Ladies and gentlemen, this concludes the Aehr Test Systems first quarter fiscal 2010 conference call. If you would like to listen to a replay of today's conference, please dial, 1-800-406-7325 or 303-590-3030, and entering the access code 4164014. ACT wants to thank you for your participation. You may now disconnect.