庫力索法 (KLIC) 2014 Q4 法說會逐字稿

Greetings, and welcome to the Kulicke & Soffa Fourth Fiscal Quarter 2014 Results Conference Call. (Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joseph Elgindy, Director of Investor Relations and Strategic Planning for Kulicke & Soffa. Thank you. You may begin.

Thank you, Jesse. Welcome, everyone to Kulicke & Soffa's Fiscal 2014 Fourth Quarter and Full Year Conference Call. Joining us on the call today are Bruno Guilmart, President and CEO; and Jonathan Chou, Senior Vice President and CFO. Both are available for Q&A after the prepared comments.

For those of you who have not yet received a copy of today's results, the release as well as our latest investor presentation, are both available in the Investor Relations section of our website at kns.com.

In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements.

For a complete discussion of the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our SEC filings, particularly the 10-K, for the year ended September 28, 2013, and our other recent SEC filings.

I would now like to turn the call over to Mr. Bruno Guilmart. Please go ahead, Bruno.

Thank you, Joe. And thank you all for joining our call today. We ended up the fourth quarter and fiscal year [2014] with another solid financial performance, generating close $195 million of revenue for the quarter, at the high end of our guidance range.

This represented an 8% increase from the prior quarter, and over a 12% increase from September of 2013. During the September quarter, we generated over $92 million of gross profit, representing a gross margin of over 47%.

Similarly to last quarter, the top-line strength was driven by our core business lines, including continuing strength in wire bonders, significant improvement in our wedge bonder line, and good progress in our expendable tools and services offering. I'll provide some additional insight within these areas shortly.

First, I'd like to share a few highlights for the full fiscal year. Our full-year revenue went up over 6%, and our current profit increased by over 15%. This is a very strong performance, considering the investments we've made in adding resources for new projects, including the successful build-out, launch and field deployment of our new high-performance APAMA chip-to-substrate thermo-compression solution for advanced packaging application, as well as the expenses related to the move to our new corporate headquarters.

Throughout FY 2014 we have increased R&D resources by over 8%, and have invested over $34.5 million in our advanced packaging programs. Accordingly, we were very excited to introduce the first solution of our advanced packaging offering, the APAMA C2S, or chip-to-substrate high-performance thermo-compression bonders at SEMICON Taiwan in September, and by the tremendous interest we've received from potential customers. We expect this new solution will now enable greater adoption of 2.5D and 3D packages for the broader industry.

In addition to this major initiative, as I mentioned earlier, we also completed the relocation of our corporate headquarters and manufacturing facilities earlier in the year to a build-to-suit facility. This new facility provides us with incremental capacity, additional manufacturing flexibility, and was actually a cost reduction from the square footage standpoint compared to the older Singapore leased facility.

In addition to the APAMA, we've also introduced seven other new and updated products within ball bonding, expendable tools, and wedge bonding during the fiscal 2014. These product releases are expected to further strengthen our core business, extend the reach in current markets, expand the applications we serve, and continue to broaden and diversify our customer base.

Towards the end of August, we announced our Board approval of a $100 million repurchase program. We continue to believe that our market capitalization doesn't fully consider the strength and resilience of our core business, nor the potential long-term contributions from the advanced packaging market and as I said, the value-added services offering.

An active and ongoing repurchase program can create meaningful shareholder value in the long term, but even more so when combined with fundamental business improvements. The corporate priority and strategy continue to be focused on enhancing our core business offering and underlying business model, while actively engaging in prudent organic and inorganic business opportunities that provide new vector of growth. Jonathan will provide some specific details regarding our repurchase activity shortly.

Turning back to the business dynamic within the September quarter, revenue from wire bonding was up 5% from the prior quarter. We experienced slight but expected product shifts within the wire bonding. The shift developed as the reduction in wafer that evolved in the equipment, and an increase in our traditional semiconductor wire bonding equipment. For the September quarter copper capable business in itself, represented approximately 83% of wire bonder sales, which is above our three-year run rate of 74%.

Switching to wedge bonding equipment, September quarter revenues were up nearly 50% from the June quarter, which as you may recall, was already an 80% improvement over the March quarter. While revenue improved in nearly all our wedge bonder lines in September quarter, the majority of our demand was driven by expected improvements within the power, semiconductor and the hybrid materials for the automotive segment.

Other increases were seen within the growth of industrial segments and in emerging countries, with a great emphasis on power management and smart power. Based on our current visibility, we expect the demand to continue near this level through the December quarter.

LED bonders sold in the September quarter represented less 5% of our wire bonder sales. As mentioned in prior quarters, we continue to selectively participate in the energy market, and we continue to do so.

I will now turn the call over Jonathan Chou for a more detailed financial review of the September quarter. Jonathan?

Thank you, Bruno. My remarks today will only refer to GAAP results, and we'll compare the September quarter to the June quarter.

Net revenue for the quarter was $194.7 million, up $14.2 million or 8% from the June quarter. Gross margins again came in strong at 47.4%, with $92.4 million of gross profit.

We generated $35.7 million of operating income, $29.3 million of net income, and $0.38 of EPS.

R&D came in at $22.8 million in the September quarter, due to the specific prototyping costs related to our advanced package program. In the December quarter, we anticipate R&D to be around $21 million per quarter.

We entered the quarter with a total cash and investment position of $597.1 million, effectively flat from the June quarter. From a diluted share standpoint, this cash position is equivalent to $7.66, and our book value equivalent is $10.13.

Despite the business strength through the September quarter, cash flow generation is delayed due to working capital requirements that carried into the December quarter. Working capital is defined as accounts receivable, plus inventory, less accounts payable; increased by $44 million to $186.1 million.

From a DSO perspective, our days sales outstanding increased slightly from 77 days to 79 days. Our days sales of inventory decreased from 51 days to 44 days, and days of accounts payable decreased from 63 days to 31 days. This fairly steep decline in days payable is common in our September quarter, as we have gradually tapered down orders from our supply-chain partners throughout the quarter.

Our effective tax rate for the year came in at increased 18.3%. This tax rate is primarily associated with higher-than-anticipated profit in higher tax jurisdictions. Looking ahead, we anticipate our effective tax rate to fall with the 10% to 15% range.

For the September quarter, which only included four weeks of activity, we repurchased $628,000 of open-market transactions, with an average share price of $14.40. Since this quarter of repurchase activity was shorter, we wanted to provide some additional details for this call only on our repurchase program's activities to date.

From the program's inception through market close yesterday, we've executed $6.8 million of repurchases, with an average share price of $13.27, which is approximately 4.3% below the volume weighted average price over the same period.

This concludes the financial review portion of our call. I will now turn the discussion back over to Bruno for the December quarter's business outlook.

Thank you, Jonathan. In terms of our guidance for the December quarter, we expect our business to adjust seasonally with revenue within the $90 million to $100 million revenue range. While seasonally it is part of our business, we don't expect December demand to be as soft as it was a year ago. Last year we provided top-line December quarter guidance range of between $70 million to $80 million.

While our core business continues to remain relatively robust, we remain highly focused to carry out our broad [corporate] vision of being the leading technology and service provider of advanced (inaudible) solutions.

In the short term, this vision is supported by three specific pillars of growth. The first pillar is a continued execution and leadership within our core semiconductor market. We hold strong leadership positions in many served markets and continually invest in [strategic] growth such as copper, MEMS and QFNs.

The second pillar relates to capitalizing on the emerging and fast growth expectations of the advanced packaging market. Our organic thermo-compression bonding program is central to this market, although there are clear external opportunities as well.

The third pillar refers to our ongoing expansion of our value-added services offering. As back-end packaging complexity increases, we believe a stronger relationship between equipment suppliers and production teams are needed to really enable this transition.

In short, despite worldwide macro uncertainty, we continue to remain optimistic and excited as we look toward capturing additional opportunities throughout 2015.

This concludes our prepared remarks. Operator, we will now be happy to take any questions.

(Operator Instructions) Tom Diffely, DA Davidson

Yes. Good morning and good afternoon. So I guess first on the services you just mentioned, you talked about how you have an opportunity there. What's the current run rate for services, and where do you think it can ultimately go?

We do not disclose the business we're doing in services, because right now it's not I would say-- we'd be disclosing competitive information. Our current business today is I would say mostly made of package warranty and parts, and systems for [risk development] controls.

We are looking to expand that business to serve the 3D packaging market in very different ways. And at this stage we are still in the process of putting things in place. So again, to give you an idea of what it is to the relatively small portion of our overall business that we have high expectation that it could become over time, I would say a fairly significant portion of our business. And especially the [interest] was is that it will bring back recurring revenues.

Okay. Does that go back to the fact that the thermo-compression bonders are much more complex than the wire bonders are and it takes--?

That is correct. You need a lot more process development and controls, and therefore analytics to basically be able to make sure that your machines are running well. But we believe that with a large base of installed ball bonders that we have and wedge bonders, which is over 70,000, there could be some benefits to push this type of services downstream as well. So that's why we are working very, very aggressively on pushing for these value-added services.

Okay. And then maybe just a quick update as to the number of betas that you have out there for the compression bonder at this point.

Yes. I'll give you an update on that. By the end of the year, calendar year, we'll have basically six machines deployed at customer sites. They are beta machines. But I want to make a caveat here that it can be transformed into production machines. So potentially these machines could be turned into revenue in some of them in FY 2015.

Now one thing also to mention in advanced package and thermo-compression bonders, it is a very different animal than ball bonders. Qualification time for process, specific parts can take anywhere from 6 to 12 months. Hence, the revenue recognition is really pushed by the same amount of time.

So we've had, as I've said, an incredible response, because we just launched officially the product in September. And we will keep actually having continued demand for the product. But I think the real revenue growth will be seen in FY 2016. We'll see some in FY 2015 of course, but for 2016 it will be I would say the moment of truth, in terms of advanced packaging for Kulicke & Soffa.

Okay. And then in your press release you talked about eight new products this year, what does that represent--?

I said six-- sorry. Oh, eight products, yes correct. You're right. Yes.

I'm curious. What does that represent as far as increase in potential market for you, or how much does that increase your TAM?

It doesn't really increase our TAM, okay? Except for out of the eight products, one was the APAMA in advanced packaging. And so you can get market data information from the guys and analysts on this. The other seven products, they were for ball bonder products, wedge bonder products, and some consumable products as well.

So it hasn't really increased the TAM per se. It just provides more capability, more features on specific markets and applications.

Okay. And then Jonathan on the model, just real quick here on tax. Anything change structurally from a tax-rate point of view, or is still the model where you have roughly 10% plus or minus tax rate going forward, and then occasionally you get a higher tax region with a little bit more profitability that could bring it up?

Yes. We are guiding more 10% to 15% in terms of range. We are still continuing to basically refine and streamline our legal entity structure. So in addition to the revenue booked in a higher tax jurisdiction, I would just-- I would say 10% to 15% is the right way to go.

Okay. And last question here. When you look at the new facility, you mentioned that the cost per square foot was going down. What about the overall cost of the facility versus what you had before?

I'd say overall cost has actually gone up, because we are taking on more space. But from a price-per-square-foot perspective, we actually had about 20% savings in terms of the price per square foot going from the old facility to our built-to-suit facility.

Okay. Thank you.

(Operator Instructions) Mohit Khanna, Value Investments

Good morning, guys. I had a question regarding the buyback stock repurchase program that you had and the cash has gone up again. So what are we really doing about it? Thank you.

I'm sorry. Can you just repeat that question? I didn't quite fully hear your question.

Yes, sure. Can you please give me an update on the stock repurchase program? And the cash has been piling up again, so is there a need to repurchase program that cash could come up? [Anything] on that, please? Thank you.

Well I think you're a little off on the case. This is a three-year repurchase program. So I've given some indications in terms of how much we have basically spent in terms of the repurchase. So the program will continue. We don't plan to really modify this program at this point in time. We think it's actually going pretty well.

Okay. And also how is advanced packaging products coming up, and when do you think you can start recording revenue or they should start contributing meaningfully to the Company's earnings?

I think we obviously have our plan and budget. But obviously this is a new launch, and there are going to be basically new terms and conditions to be negotiated with our customers after they go through an evaluation period. So we do have a view in terms of when we expect revenue, but as mentioned, the point I mentioned earlier, it is really quite modest in terms of FY 2015, although we do have a number of these machines out there to be evaluated by our customers.

So we want to be conservative in terms of our approach right now. So I don't think we'll give you a dollar amount at this point in time, until we're certain that the revenue is going to be in the clear.

FY 2016 will be where you see the revenue really puffing up for advanced packaging, as we'll have deployed quite a number of machines in the field.

Okay. Okay, that's comforting. And the final one that I have, could you please just talk a bit more about the R&D cost? So when do you think these-- they will peak out, and what should be the regular-- or the normalized R&D cost for the Company going forward?

The normalized R&D cost, we should be about $21 million per quarter, in terms of after we finish incurring some of the remaining spend on the advanced packaging side. Actually, it should be about $24 million, sorry.

So that is where we are right now.

Right now, it's slightly higher because of the fact that we are basically incurring some additional R&D expenses for the advanced packaging program.

Yes. As you know, I mean advanced packaging is not just one machine, okay? It's going to be a family of solutions. And you will see some variations. As you know, the GAAP accounting rules basically does not allow you to depreciate the parts that are used to build prototypes. And you have to build quite a number of prototypes. So these machines, they are expensed. And so you will have some fluctuations from quarter to quarter until they become actually a commercial product, and then you can basically recognize the revenue and then these parts are expensed in the cost of goods sold. So it's a little bit of a [strange] and playing with accounting. That's the nature of the game when you enter a new market.

But again, I mean you're going to have some fluctuations because advanced packaging is the future in which K&S is investing.

Okay. Okay, and I have a follow-up also. Could you just please talk a bit more about how are you guys seeing the market after a quarter, maybe two or three down, two or three quarters down the line? And have you started feeling any impact from Internet of Things? Are you adding new customers? Are you seeing new people come into the trade due to Internet of Things, some [uptick] from something like that? Thank you.

We don't provide guidance beyond the current quarter. That's our policy, and we adhere to a strict degree. But we read the news like you read them. Internet of Things we believe will provide some potential added business for the ball bonders, because Internet of Things will not require advanced packaging, like mobile devices.

But it remains to be seen if Internet of Things are going to pick up the way everybody is talking about it. We believe advanced packaging is actually picking up faster. But if you are recalling what the analysts are saying, then the initial expectation [were]. So generally speaking, we see opportunities not only in our core business, where there is pocket of growth for us potentially, another drive with Internet of Things, but as well our area of focus which is advanced packaging, which would be coupled to value-added services.

Mohit, maybe I can just add. There is a not-yet-finalized report by, either I think Gartner or VLSI that the Internet of Things could actually boost the demand from the wire bonding perspective. And that report, based on what we have seen that it could actually add to the TAM by as much as $300 million of TAM. But that is not yet officially issued yet. But that's just the analysts view at this point in time.

But we also look at the same reports as VLSI or Gartner. And it looks like in 2015 there will be some quarter that it's going to be ramping up. So we're looking at the same report that most of you guys are looking at.

Okay. So basically it means that you have not seen some of the adding in, or this year full year has not spread around as we thought it would be.

No. Basically again, we speak to giving next quarter guidance.

Thank you. Thank you so much.

Andy Schopick, private investor

Thank you and good morning. Jonathan, in the absence of having the 10-K available at this time, I'm going to ask you if you can just fill in a couple of numbers for me. What was the net cash flow from operations in the fiscal fourth quarter?

Andy, we will get you that number, if you could-- do you have another question? Do you want to ask it?

Yes. Well, it's probably another one that you may not have readily available. I was wondering if you could give us a free cash flow calculation in terms of fiscal 2014.

Well first of all, free cash flow is not a GAAP-- we don't actually provide that. Do you have anything that you would like to ask that's really non-K related, or that we can address at this point?

Well, I think the only other thing I'm curious about is whether or not you have any kind of sense what the penetration of the bonder market has been from the copper bonders over the past few years.

I'm sorry. Say that again. What's the penetration of what?

Do you have estimate of how far you've penetrated the market for copper bonders?

Yes. I mean we do. We basically are over 50%. We still believe that we will reach the 70%. However, you have to consider two things. Okay, there are new machines. So it's a combination of new machines, which has been the bulk of the new penetration. And there are also some combination of conversion through cycle.

So I would say the bulk of the transition from a new machine perspective has been happening big time, and now continues to happen at a more moderate pace. But at the end of the day, we'll reach global penetration within the next couple of years of what's the credit and analyst predicting about 70%.

Okay. Thank you. Jonathan, can I come back to you?

Yes, yes.

I want to be sure I did understand what you said about the share repurchase program. Did you repurchase $628,000 worth of common stock at $14.40 per share in the fourth quarter?

That's correct, which is the shorter period. The program was only started in early September. So it ended September 27th.

Okay, and--

That's why we provided some additional information on the to date.

And what was the $6.8 million that you referenced at $13.27 per share?

That was as of yesterday.

And we will only provide this information this quarter, because we started the repurchase program on September 1st.

Okay, thanks.

So the program is very active. And so we wanted to give you a feel for it on what we have repurchased from September 1st until yesterday. Okay? Going forward, you'll have the quarterly information.

From a program percentage percent, about 7% of the total program we executed.

Okay. That's it for me, unless you have that cash flow from operations or when the 10-K will be filed.

Cash for the quarter is actually-- negative $1.7 million.

Okay, thanks.

Albert Sebastian, Prospect Advisors

Good day, gentlemen. Just a quick question on R&D, Jonathan. For the quarter you were just below $23 million. And I think historically you've guided sort of $19 million per quarter. Going forward, what again is your guidance for R&D? My expectation is it would kind of come down from these levels, but what is your guidance again?

That's right. Our guidance-- you're absolutely right. We used to be about $19 million. And for this current quarter and the following, it's going to be a little higher, about $24 million. And then it will taper down to about $21 million as a normal run rate.

Okay. So is there-- it's going to stay at these elevated levels. Can you give us a little color as to why that's the case, and why on an ongoing basis, you think it's going to be running at a-- going from $19 million to $21 million?

Sure. Well, most of our OpEx is actually predominantly in people-related cost. But the additional pickup is really related to the prototype materials that actually we're using for the beta machines that we have incurred. So I think you have to look at really the R&D program associated to our existing core set of business, which is the ball bonder and wedge bonder, and also the piece that's actually that we're spending for the advanced packaging, the APAMA machine.

Just to add on what Jonathan said, I mean as you know, we are the undisputed leader in terms of market share and technology for our core business, which is the pillar-- the first pillar of growth, the first pillar of our strategy. And in order to stay on top of the game, we need to continue to invest in that market. That market is not stagnant. So you need, as you've seen, we've developed actually seven new products for that market in FY 2014.

This is going to continue. We cannot really stop there because the competition will basically catch us. So we need to continuously invest in our core business to maintain our dominant market share, and that is going to require some R&D dollars.

In addition to that, I have said, the APAMA is not a one-time event. It's going to be a family of products for advanced packaging. So hence, until we get to a level where the revenue are going to be growing to a point where in terms of percentage the R&D will become to a lower level. In terms of absolute dollars, we need to continue these investments. So for I would say for the next couple of years, until we have all the pillars of our strategy in place.

So Al, if I can just-- I'm not sure if you heard. Bruno said this earlier, addressing the previous question. The gap is really the prototype machine material. And because of the fact that this the new machine, we need to expense all these materials at this point in time, until we basically have basically purchase orders for these machines, and there's commercial value to it.

So therefore, that is the gap that we're spending. And it's not necessarily on people. But it's really on the prototype material at this point in time. So that's the gap between $20 million and $24 million.

When you sell these machines, I mean obviously you're expensing all of the material. R&D eventually you sell these machines, you must get that back in terms of--

Yes, we do get that back.

You do get it back, but I mean there was an expense already. So-- but moving forward, I mean this whole activity-- is normal regarding the stream of cost of goods sold. Okay? But in the investment phase, when you develop a new R&D product that has not been commercialized, the cost of materials is expensed in actually the cost of goods sold, and not depreciated over time.

Okay. But I guess at what point can one make a determination that a machine is not a prototype and it's actually a commercially viable machine?

According to the rules, It's basically when you get your first PO for the machine. And we're working very hard to get that.

Okay, okay. Thank you.

David Duley, Steelhead

Yes. Thanks for taking my questions. I was wondering. You mentioned that you've introduced your first advanced packaging product. I think you said it was a chip-to-substrate thermo-compression bonder. Do you have a chip-to-chip one coming up right after that, or is this unit out capable of doing both applications?

Well, we have from the next products we will introduce early next calendar year will be the chip-to-wafer, okay? Which is, again, coming from the same platform. But instead of being able to do the fixed chip and thermo-compression on a substrate, it will be able to do it directly on a piece of silicon.

And so there is no difference between chip-to-substrate and chip-to-chip, okay? It's the same thing.

Okay. Thanks for clarifying that. And the first applications that you guys see really kind of taking off in this area, you know. There's not much volume at this point. So I'm kind of wondering where you see this-- the first volume applications.

So for chip-to-substrate or chip-to-chip, the first application is memory.

DRAM, right?

Yes, yes. It's memory, it's tracking memory for all the mobile devices. That's really where the first driver will be. For chip-to-wafer, it will be-- there will be also some very specific logic products but the bulk is going to be memory. For chip-to-wafer, it's going to be very different. It's going to be more advanced logic, rather than memory.

Okay. And I see that comes a little bit after the memory app ramps up?

That will come, yes. As we have said, that will come next calendar year-- 2016.

Okay. And I don't-- I haven't seen the market for (inaudible) projections. What did they say about the size of the thermo-compression bonder market in 2016 or whatever year of period you guys would like to share? How big of an addressable market do you think this is going to be for you guys?

There is data which is available from Gartner and VLSI. I think it's better that you verify. But I do believe that by 2016 or 2017, we're expecting cumulative of 6 units or so-- produce-- I'm sorry over 6 billion units produced through 2017-2018.

Okay.

Out of the whatever-- this is the total number of units that are produced through 2019.

Yes. I'm not sure what that is. But that seems like a big number.

I think it's in the-- I don't have the number in mind. It's a couple hundred billion, I think, in that range of $100 billion or $200 billion for that. But the key thing is that it's going to be higher performance. And then of course the higher price.

Correct. Now the people that are serving this market, now who do you see as the key competition for, particularly this DRAM ramp that's coming up? And I guess it's kind of underway now, because I've heard a lot of people talking about stacked memory product.

Well, I'd rather not name our competitors. I would say there is a competitor from Japan. And there is-- I think we've talked about that before. And there is a competitor from Europe. However, I would say the significant difference is they that didn't come up with new platform. They came up from existing platform, which is not what we've done.

We came up with an entirely new platform. And we believe that we are actually in the customers to whom we have deployed the machines that we outperform both in terms of units, UPH, units per hour, and accuracy both these competitors.

And in order to turn the beta reevaluation systems into revenue, I imagine you need to meet some sort of production metrics of throughput or something like that. Can you give us an idea of what the throughput of your systems are now, since I guess that's a key metric that you're tracking as far as being faster than the competition?

Well, I mean for this [issue], basically for the same product, I mean you just look at how many units you get per hour, as well as accuracy. And that's the main metric. The whole thing about semi-compression bonding is really profit development. Because you basically need, for almost each device, to develop a profit. That's why it takes so long to qualify the cost.

We believe that we are close to qualifying a device or two at a customer, we have been working on for quite some time. But that is really the measure cap that how do you measure is by analysis. That's why value-added services are so important. Because it measures the valuation in process, the yield, the stability of the process, and the machine over time. And that's a new differentiation.

Because when you again have designed a product to run as described of accuracy and speed, which are the two main I would say most important specifications in these thermo-compression bonders. And the differentiation after that comes in how stable is your process. When you use an existing platform and you tend to push the platform to the max. You get to the specification. You have tons of problems, especially in the stability of the process.

And that's where the difference is, okay?

Okay. So you're definitely demonstrating at your customer sites a much more stable process and a higher units per hour?

Yes. And also how many die you can stack. Okay? That's also an important factor, especially for memory customer. Because of course they want to have as many die stacking in a very, very slim package, given the real estate that you have in mobile devices.

Okay. Last question from me is the year-over-year guidance for December is up versus last year, as you pointed out. Is that the wedge bonder business being strong year over year? Is that most of the growth?

No. I think it's a combination of everything. I mean as you know, the wedge bonder business is a small portion of our business. It did come back to, I would say, a more normalized business after we went through two years of internal efforts to go back to profitability. There is opportunities in the wedge bonder business, in the application, especially for batteries that we are working on. But I would say, overall, in FY 2014 we had essentially all business units firing on all cylinders. So that basically helps to basically grow the overall business.

Additionally we changed the organizational structure of the Company, as we are now much less dependent on the big [two] 800 bonder customers we had in Taiwan. And we redeployed our salesforce and reorganized ourselves in function and applications and then market. And actually we had a lot of wins in China.

And when I say China, the captive companies in China that we didn't have before. I said also we should remember last quarter our LED percentage of the total business were at 17%. So we've also taken some action of when we find that there is a business worth going after, we go after the business.

This quarter it's at 5%, because there were no opportunities that we found interesting to go after. And we don't want to dilute our gross margin. So I mean it's a mix of basically everything running pretty well.

Thank you.

Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Mr. Elgindy for any additional concluding comments.

Thank you all for the time today. I wanted to mention that management will be presenting at the Morgan Stanley 13th Annual Asia Pacific Summit in Singapore on November 12th. Please feel free to follow up after today's call with any additional questions. Again, thank you all for the time today. Jesse, this concludes our call. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.