Axcelis Technologies, Inc.

Good day, ladies and gentlemen, and welcome to the Excelis Technologies call to discuss the company's results for the third quarter 2020. My name is Catherine, and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. If at any time during the call you require assistance, please press star followed by the zero, and a coordinator will be happy to assist you. I would now like to turn the presentation over to your host for today's call, Mary Puma, President and CEO of Exelis Technologies. Please go ahead, ma'am.

Mary Puma Thank you, Catherine. With me today is Kevin Brewer, Executive Vice President and CFO, and Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. We are all participating in this call remotely, so I would like to apologize in advance for any technical difficulties. If you have not seen a copy of our press release issued last night, it is available on our website. Playback service will also be available on our website as described in our press release. Please note that comments made today about our expectations for future revenues, profits, and other results are forward-looking statements under the SEC's Safe Harbor provision. These forward-looking statements are based on management's current expectations and are subject to the risks inherent in our business. These risks are described in detail in our Form 10-K Annual Report and other SEC filings, which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements. Good morning and thank you for joining us. 2020 has certainly proven to be an unusual year. Despite this, Excellus has maintained a focus on driving Purion growth in key markets while addressing the many twists and turns the year has brought. Let's start with our top priority, which is the health of our employees operating in the COVID-19 environment. Through the implementation of recommended safety protocols, we continue to run our Beverly facility at full manufacturing and lab capacity with all other employees working from home. Our field teams around the world are operating according to their local guidelines and are working closely with our customers to ensure that we are able to satisfy their requirements in a safe manner. I would like to personally thank our extraordinary employees around the world who are working diligently to meet our customer commitments. I also want to thank our suppliers and customers for their support as we strive to meet the continuing high level of customer interest in our Purion products. Our third quarter financial performance met or exceeded guidance and consensus. Revenue for the third quarter was $110.4 million with earnings per share of 32 cents, gross margins of 43.6% and a cash balance of $212.7 million at quarter end. Our aftermarket business, or what we refer to as CS&I, once again contributed significantly to our revenue and gross margin. The mature process technology markets continue to be an area of strength for Exelis, which has been critical during this longer-than-expected memory slowdown. This is especially highlighted in the third quarter, where 100% of our systems shipments went to mature FoundryLogic customers. China has also been a strong market for Excelis this year, with this strength continuing through the third quarter. The geographic mix of our systems shipments in the third quarter was China 66%, Korea 20%, Japan 8%, and Europe 6%. This mix highlights the strength of the mature foundry logic market in both China and Korea. We expect there will be some memory shipments in Q4, although the quarter will be heavily weighted toward mature foundry logic. China will also continue to account for a significant percentage of our fourth quarter shipments. During the third quarter, the U.S. government imposed new restrictions on sales of certain semiconductor equipment and materials to the Chinese foundry customer SMIC. SMIC is an important Xelis customer, especially in the mature process technology market. We have thoroughly assessed the new restrictions. Tools and parts that are affected will require a license to ship in the future. After careful examination of our systems and the mature applications they are used for, we currently expect that we will receive licenses as needed for SMIC shipments. Now turning to guidance. For the fourth quarter, we expect revenue of approximately $110 million Gross margins of approximately 41%, operating profit of approximately $10 million, and earnings per share of approximately 21 cents. Using Q4 guidance, Excellus revenues will be up 35% year over year. This is strong performance given that memory is expected to account for less than 35% of total revenues in 2020. When memory spending does strengthen, Excelis will be well positioned to achieve our $550 and $650 million target models over the next several years. Continued growth of Purion products is the key to achieving our long-term business models. During the third quarter, we shipped three new Purion high-current product evaluations. We shipped the first Purion 200 to a leading power device company. The power device market is a critical market for Excelis. and the Purion H200 is expected to play a key role in increasing our customer base and market share in this segment. The other two evaluations are for Purion H systems. The first shipped to a leading advanced logic customer. The advanced logic market segment is a key focus for our $650 million model. The second Purion H shipped to a NAND customer that currently uses the Purion XE. Expanding our Purion footprint at existing customers is a critical element of our long-term strategies for both the 550 and $650 million models. At the end of Q3, we had six evaluation systems in the field. These evaluations represent the acceptance of our new products, penetration into new market segments, and expansion of our product footprint within an existing customer. This includes a Purion VXE and Purion XE Max, both focused on image sensors, a Purion H200 for power devices, a Purion Dragon for DRAM applications, a Purion H for advanced logic, and a second Purion H for a NAND application. We expect to ship additional evaluation units over the next year as we continue to work closely with customers on further Purion adoption. Before Kevin reviews the financials, I would like to summarize four key takeaways. First, the mature process technology market is very strong and growing, and Excellus is the ion implant market leader in this segment. Second, China will continue to be an important market for Excellus, and we currently expect that we will receive licenses as needed for SMIC shipments. Memory is expected to recover in 2021 and will be additive to our strong, mature process technology and Chinese business. And fourth, the Purion product family is extremely well positioned to support this future growth. Now I'd like to turn it over to Kevin to discuss our financials and some operational details. Kevin?

Thank you, Mary, and good morning. Excel has delivered solid third quarter performance Thanks to the continuing outstanding work of our employees and supply chain partners. Strong gross margin performance with inline revenue drove earnings per share well above company guidance and consensus estimates. During this ongoing pandemic, the health and well-being of our employees remained a top priority, resuming our best to create a safe work environment for everyone at Excellus. For employees required to work in our factory, we are enforcing daily screening, Physical distancing and required use of face masks. Everyone who can work from home is working from home and will continue to do so for now. Field-based teams are continuing to support our customers while following customer and country-specific protocols. Tool installations are being successfully completed by Accel's employees, third-party support, and creative virtual solutions. We remain focused on our $550 and $650 million revenue models and are continuing to invest in products and sales channels required to achieve these target models. Additionally, we have been investing in manufacturing capability with new technologies and capital expenditures aimed at improving productivity and capacity. I will now turn to the third quarter results. Q3 revenue finished at $110.4 million compared to $123 million in Q2 Q3 system sales was $70.2 million compared to $76.8 million in Q2 Q3 CS&I revenue finished at $40.2 million compared to $46.2 million in Q2 Shipments of spare parts and consumables remained strong in the quarter driven by a fabulization and customers likely maintaining a higher level of spares than enjoy. Q3 sales for our top 10 customers accounted for 76% of total sales compared to 83.6% in Q2. Three customers were at 10% or above. Q3 system bookings were $26.4 million compared to $56.2 million in Q2. For the Q3 book-to-bill ratio of 0.37%, versus 0.73 in Q2. Backlog in Q3, including deferred revenue, finished at $45.1 million compared to $102.6 million in Q2. Bookings and backlog can fluctuate quite a bit quarter to quarter due to specific ordering practices with some customers booking and billing within the same quarter. Q4 bookings to date already exceeded the entire third quarter. Q3 combined SG&A and R&D spending was $34.3 million for 31% of revenue compared to $35.5 million for 28.9% in Q2. SG&A in the quarter was $19.4 million, with R&D at $14.9 million. We expect Q4 operating expenses to be approximately $36 million to support numerous evaluation systems and some additional costs associated with the pandemic. Q3 gross margin is 43.6% compared to 42.2% in Q2. Q3 gross margin was driven by strong CS&I contribution, product mix and ongoing cost-out efforts. Q4 gross margin is expected to be approximately 41%, with full-year gross margin also around 41%. Gross margins can fluctuate quarter to quarter based on a level of CS&I contribution, customer and product mix, and the closure of the evaluation units. Through ongoing cost-out efforts and planned higher sales at our peer and product extensions, we expect gross margin to improve over time, as highlighted in our $550 and $650 million target models. Operating profit in Q3 finished at $13.9 million compared to $16.4 million in Q2. Q3 net income was $10.8 million at $0.32 per share and well above consensus compared to $13.3 million at $0.39 per share in Q2. We are forecasting pandemic-related expenses of approximately $1.8 million in Q4 spread across the P&L. Inventory ended at $159.7 million compared to $149.2 million in Q2 due to the timing of shipments and additional inventory to support evaluation tools. Q3 inventory turns excluding eval tools finished at 1.8 compared to 2.1 in Q2. Q3 accounts payable were $24.3 million compared to $30.3 million in Q2. Q3 receivables of $45.2 million compared to $64.9 million in Q2 Q3 cash finished at $217.7 million compared to $197 million in Q2 Cash from operations in the quarter was $19.1 million Our stock repurchase program remains on hold as we continue to maintain a conservative cash strategy We will be revisiting this with the Excelers Board in Q4 and expect to develop plans to return capital to our investors moving forward. We are finishing 2020 with strong momentum and are excited about the prospects of the 2021 recovery in the memory and automotive market. We are continuing to make the necessary investments in our products and infrastructure needed for our $550 and $650 million target model.

Thank you, Kevin. We are pleased with our third quarter financial performance as well as our expected performance in 2020 overall. We are excited by recent and upcoming evaluation shipments of both new Perion product extensions and and enhance Perion-based products that will keep Exelis on track to achieve our target business models. Exelis has a competitive Perion product line, a broad and diverse customer base, a strong balance sheet, and a dedicated team of employees. These are the strengths that will continue to drive our growth, ultimately to the market leadership position in ion implantation. With that, I'd like to open it up for questions. Catherine?

Ladies and gentlemen, if you wish to ask a question, please press the star followed by the 1 on your touch-tone telephone. If your question has been answered or you wish to draw your question, press the pound key. Again, that's star 1. And our first question comes from Patrick Ho with Stiefel. Your line is open.

Thank you very much. Mary, maybe first off, in terms of the mature technology notes, Can you give a little more color of the types of devices that you saw strengthened during the third quarter and whether you see any changes in the fourth quarter in terms of the, quote, market mix in that segment?

So, as we said, the mature process technology market is very strong and it's growing, and we see a lot of strengths in particular in the image sensor and just general mature foundries. We see automotive recovering and that's going to be a positive for the power device market. We said that, you know, well memory really hasn't recovered yet. So, you know, in Q3 we had no system shipments to the memory segment, but we do expect memory to come back a bit in Q4. So, you know, that will change the segment mix a bit. Thank you very much. technology segments. So we'll continue to see business come from that segment as well or from that region as well.

Hey, Patrick. Yes. Just to add a little bit to that. So the mature foundries are running at very high utilization rates. And so in addition to the strength in image sensors, you know, as Mary mentioned, the power device market is starting to come back as automotive recovers. But a lot of the strength is in technology. and many more.

In terms of gross margins, you mentioned how CSI, MIT, as well as the cost-out efforts. As we look at Q4, given the evaluation units you've talked about, is that kind of the biggest impact on a quarter-to-quarter basis in terms of the variables that affect the December quarter gross margins?

Yeah, so as you point out, Patrick, CS&I, we've always kind of said that's a creative, so whenever we have a big mix of CS&I, that certainly helps. Within the products themselves, you know, we have that page in the investor presentation. It does show the relative pure end products with the high energy being, you know, the highest gross margin at this point, and high current and medium current kind of lag that. You know, if there is a product mix shift in there with more high energy versus high current or more CSNI versus, you know, systems, those all will move it. Evaluation tools, as you point out, I mean, those are typically margin drag. So in given quarters when evals hit, it does move our margins. And, you know, even though this year we're, you know, going to be full year average of 41% is what I said, You know, as you remember, we got off to a tough start in Q1. We were in the 38% range because we had several evals convert over. So going forward as the evals come in, they certainly can impact a quarter, but depending what the rest of the mixers do, and sometimes you can help alleviate some of that. If you have a perfect storm and you've got a lot of high current with lower margins and a lot of evals, then like I said, that's a perfect storm, but I think the important point is that we are continuing to drive costs out. We've got our target models out there for 550 and 650, and we have detailed roadmaps in place that we've been executing to as we move forward towards those models. Great. Thank you very much. Thanks, Patrick.

Thank you. Thank you. Our next question comes from Craig Ellis with B. Riley. Your line is open.

Thank you for taking the questions and team congratulations on the good financial and strategic execution in the quarter. So Mary, I wanted to start off just by following up on some of your CS&I commentary. So the third quarter was the second consecutive quarter where we saw revenues above $40 million. Do you believe that the segment is resetting structurally higher into the low 40s or are we just seeing something that's more Temporal in the near term with sales as we would think about calendar 21 potential likely to go back to that mid-30s range.

Well, we're not going to give a forecast for 2021 at this point in time, but we have been saying in the past that CS&I or our service business runs around 30% of our revenues. Recently, it's been running around 40% of our revenues and Based on what we now know today, that's a pretty good percentage. Basically, it goes back to what Doug just said. Right now, there's a high level of fab utilization at the foundries, particularly in China, and we're also seeing customers in China maintain high minimum stock levels given what's going on with the pandemic and some of the geopolitical risks. that we've all been talking about recently. So right now, I think the 40% range is a good place to be. But again, we'll just have to wait and see what 2021 brings. And again, we're not going to give a forecast for that at this point.

Okay. That's helpful. And certainly on the mature boundaries side, we've seen absolutely abundant signs that Foundry Utilizations are very high and IDM is moving up. Going back to the China points, very helpful color on where you stand with license submissions for SMIC, but can you just help us understand what the next steps are? When do you expect to receive licenses? And Kevin, how do we think about the way you manage the inventory and other issues so that once received, you can actually and many more.

and help us work our way through it. So, as I said, you know, we've thoroughly assessed the new restrictions. We have identified that there are Excelis tools and parts that will require a license to ship in the future. You know, we're going through all the steps that are required to meet the U.S. government guidelines. You know, we've and so at this point in time, as I said, we have confidence that we are going to be granted the required licenses. So it's all in process at this point, Craig. There's really nothing more specific to give other than to say that.

From an inventory point, Craig, we're driving ahead. As Mary said, we're confident at this point that these licenses will be granted. and again we did a pretty thorough review on the technology our tools are being used onto which gives us a little bit more comfort too in terms of our assumptions. So we're moving forward with inventory whether it be for systems builds, whether it be for CS&I and within our guidance we've got everything factored in right now where we think we're going to end up in Q4 with any potential impact of

Got it. And then housekeeping, Kevin, can you identify how many evaluation tools you've incorporated into the fourth quarter guide and then for OPEX? Go ahead.

Yeah, so we currently have six evaluation tools in the field. I think it's probably double what we had at any point in time. If not double, pretty close to double. I mean, typically we have One, two, maybe three tools out there, but there's six right now. And there are additional eval tools planned to go out. So there's a lot of activity right now going on with the newer product extensions, a lot of interest in the product. So as we talk about, this is one of the things going forward that is going to help with the margins, too. More customers moving over to some of the product extensions or the Dragon-type tools. There's a substantial amount out there right now, and it's likely to grow.

Type 5 problems. Good for you.

Craig, just to add some color. So, you know, to kind of do the math on it, there are two evaluations going on in memory. One's a Purion Dragon for DRAM. One's a Purion H for NAND. We've got three in the mature process technology area. and so forth. all the segments that we play in and for the tools that we're really trying to seed the market in. I mean having four high current evaluations out there is very important because as we've talked about high current is the largest segment in implant and that's an area where we think we can drive some significant growth. So it is very good and as Kevin said we expect to put more out in the field to help us drive towards our 550 and 650 models.

Indeed. And if I could, lastly, on housekeeping, Kevin, I'd expect that beyond the fourth quarter for OpEx, we'd see some FICA and fringe costs in the first quarter. Anything else that we should be aware of as we look beyond 4Q?

No. And I think, you know, I think I've said it before that this $36 million range is a range we're going to stay in for a while, especially as we have this number of evals going out. and then we've got the models out there on $550,000, $650,000. At that point, the percent of revenue, it's 25% at the $550,000 model and 24% at the $650,000 model. But for now, we've got that. We've been running a little pandemic expenses too. As I said, it's cut across the P&L, but it's hitting everywhere. I think this $36 million range, we're here for a while at this point.

Got it.

Thanks, everybody. Okay, thanks. Great.

Great. Thank you. Our next question comes from Christian Schwab with Craig Hallam. Your line is open.

Hey, great. Congratulations on the good execution in the quarter. I was between conference calls, so I apologize if it's been addressed already. But, you know, after a prolonged memory slowdown that we kind of highlighted at the beginning of the call, Mary, How do you see the memory market recovery as we go through 2021? Okay.

So, you know, like others in the industry, we did see an increase in memory in the first half of 2020. And at the beginning of the year, we actually said that memory could account for about 35% of our systems revenues in 2020. And it's likely to come in slightly shy of that. We had no memory shipments initially. in the third quarter. We do expect some in the fourth quarter, but we still expect memory spending to come back in 2021. And that's kind of where we are right now, where we're continuing to watch it and talk to our customers and assess the situation.

And when you're talking to your customers, are you looking for a potential recovery and more DRAM over NAND or a 50-50 mix, or how does it look to you today as we come to the end of 2020?

Hey, Christian, it's Doug. The mix, remember for us, it's all about wafer starts. We don't participate significantly in NAND layer additions. So for NAND, it's about wafer start additions. And DRAM, we get a little bit with the shrink, but more, again, on wafer starts. So this quarter, clearly, with zero shipments is likely the bottom, starts to pick up next quarter, and then moves through the year. It looks, you know, for us, it's kind of split right now between both DRAM and NAND. and so a little bit is going to depend on how the customers decide to ramp and, of course, which customers are ramping first. So I think both products, you know, DRAM is – pricing has been pretty flat and, you know, we're starting to see a lot of activity there. NAN, they've been adding layers over the last several months, several quarters actually. and so there's probably a need to add some wafer starts soon there. So I think we'll see both.

Okay, great. That's the only question I had. Thank you. Thanks.

Thank you. Our next question comes from Tom Diffley with DA Davidson. Your line is open.

Yeah, good morning and nice results in light of having no memory in the quarter. That's pretty good. So Mary, just following up on the China situation, have you been given any kind of indication of how long it takes to get a license and have any of the other equipment companies received licenses yet?

You know, I can't, the answer is we're just waiting and watching and talking to other, and talking to our peers through SEMI. At this point in time, I think everybody's just trying to learn what this what this all means. So the answer is at this point we really don't know what the timeline is but as I said before we are we have confidence we will be granted the required licenses.

Okay. Is this impacting your initial view of the fourth quarter though? Was some business kind of delayed until you worked through the process?

You know, again, it's Things move in and out of quarters. I can't say that it had a significant impact on the fourth quarter, but again, we had a lot of work to do, not just from a system standpoint, but think about all the parts that we sell. So the team has done a really nice job just digging through everything and pulling the pieces together. So at this point in time, Q4 is what it is, and we'll continue to move on and We've applied for what we need to apply for, and we'll see how the process plays out. Okay.

And then when you look at the evaluation tools in the field right now, based on the feedback you're getting, which of the programs or end markets do you think will be the first to go to volume manufacturing for the new tools?

I actually think that, you know, I think memory will, especially the high energy tools, will come to fruition, which is mostly... and image sensors just because it's a very strong market and our customers have a lot of data on how our tools will perform there. Also, I'm sorry, I said memory, mature process technology and image sensors. I think the memory market will also, when it ramps up, When we see memory recover, I think we will see some volume buys clearly from the high-current tools that we're putting in, both the Perion H and the Dragon. I think, as you know, putting a tool into advanced logic is a very long, tedious process. It's at least one year of evaluation and then our customer and qualification, and then our customer has to work with their customer or customers to get approval to actually put it into production. So that's the one that will take, I think, a little bit longer to see any volume buys on. And I think I actually mentioned in the script that that's more directly tied to our $650 million model than the 550, which would indicate it could be several years out before we start to see some volume tied to that.

Okay, great. And then finally, any update on how the evaluation in Japan is going with the older tool?

Well, it's not an older tool. We do have legacy tools in Japan, and we've had those there for several years. So the evaluation is actually for a brand-new Perion XE that went to a power device customer. It's been installed and is under qualification. Right now, and it's actually going quite well. Is that what you were referring to? That is, yeah.

All right. Thanks for your time this morning.

Okay, thank you. Thank you. And as a reminder, if you would like to ask a question, press the star, then the one key on your touchtone telephone. Our next question comes from David Dooley with Steelhead Securities. Your line is open.

Thanks for taking my question. I guess my first question is on the size of the market. I know that's not a big focus for you guys, but if you could just review what the overall size of the implant market is and specifically really what the high current portion of the market is now as a percentage of the overall market. And maybe just help us with, you know, I think it's a really important area for you to pick up market share in. Do you have market share goals in this segment of the market or... How should we think about your progress in penetrating this largest piece of the implant market?

So Dave, so the implant market we typically said is about a billion dollars in size, kind of plus or minus 10% depending on where we are in the cycle. Our view at this point is that it's probably growing, you know, to be on the top end of that and, you know, we'll probably be more like 1.1 Billion, you know, again, we'll oscillate a little bit depending on the cycle. The growth is being caused by a couple of factors. One, on the high-energy side, there's growth as a result of the image sensor market, especially, as well as, to some degree, the power device. Those two segments are, especially image sensor, very implant-intensive and very high-energy implant-intensive, and they're purchasing tools like the VXE and the XEMax, which are much higher ASPs. So that's driving the TAM up from that perspective. And then the high current side is also growing proportionally. And that's growing as a result of more material modification requirements. And so as far as the exact share goes, we don't really specifically on share because it's hard to get that data from everybody. But the estimate is that high energy is 25% to 30% of the TAM. High current is 50% to 55% and medium current makes up the rest. In the high energy space, we do have very high market share and especially high market share in key areas with products like the VXE and we think we're very well positioned for growth in high current with the Dragon product targeting some very specific productivity applications in low energy ranges and high dose and then with the Purion H, the newest version of the Purion H, now looking at advanced logic as well as some new memory applications and again, All of these are targeted at the more difficult, challenging implants for our customers.

And as far as the CMOS image sensor market goes, do you have an idea about how big a section of the overall market that is? And obviously it's growing, and there's three or four key customers around the world now. maybe comment on penetrating the Japanese customer or your progress potentially getting into that customer.

Yeah, so we don't comment on the exact size of the image sensor market because it's very difficult. A lot of image sensors are built in standard mature foundries on standard mature logic process flows with some additional steps to do the image sensor piece. So it's difficult to really estimate that. And we don't break out the specifics relative to the high energy piece, which is more specific to the image sensor market. So can't really give you an exact implant market size for that. The image sensor market as a whole is growing quite substantially. And then as far as the customer you're referring to, With all of the image sensor customers, we're really targeting utilizing the VXE and then the XEMax. The XEMax brings much higher energy levels, which are critical for the most advanced image sensors. And maybe more importantly, the Boost technology reduces the metals contamination issues quite substantially, which is an enabling capability for the advanced image sensors. So those will be the two things that that, you know, leading-edge image sensor companies as a whole will be looking at. Great. Thank you. Thank you.

Our next question comes from Mark Miller with the BitSmart Company. Your line is open.

I just wanted to clarify a couple things. The tool that you shipped, the power device, was that a high-energy tool, period, agent?

No, the power device evaluation, the tool was a Purion H200, so it was a high current tool.

Okay, Purion H200. Okay, I was talking about the one that shipped. There was an image sensor also shipment. What type of tool was that?

Well, the two image sensor shipments were high energy tools. There was an Xe Max and then a Purion Xe Max and a Purion VXe.

Okay. Have you seen anything in terms of your competitor making any technological upgrades to their tools?

Well, our competitor is always making improvements. It's one of the things that customers like about having a strongly competitive market with Excelis and our competitor is that we're continuously both improving our products, the capabilities of our products, productivities, levels, and overall cost of ownership for them. So, you know, the key for us is we believe that Purian Dragon is a tremendous leap forward in terms of high current technology, and the Purian XE, VXE, XE Max continue to, you know, also be market leaders in technology, but also in terms of their use in key growing markets Thank you. Thanks.

Thank you. Our next question comes from Quinn Bolton with Needham. Your line is open.

Hey, guys. Most of my questions have been asked. I guess Kevin wanted to come back to the gross margin. Revenue guided roughly flat sequentially, yet margins down 250 basis points. Thank you very much. Just trying to make sure I've got all the moving parts right.

Yeah, Quinn, in Q4, it's the mix. It's a systems mix. So it's the mix of basically the high current and high energy that's impacting the Q4 number.

Got it. Okay. Thank you. And then on the Purion H eval unit going into NAND, I know you guys have very high share in the high energy applications for both NAND and DRAM. I just wanted to make sure that this Purion H is sort of TAM expansive for you at that customer rather than a Purion H coming in to replace where a high energy tool may have previously been used.

It is. It's actually a new customer. for us, and it's a new customer and it's a new fab, so it is expansion for us.

Great. Okay. Thank you very much. Thank you.

Thank you. This concludes the Q&A portion of the call. I will now turn the call back over to Mary Puma, who will make a few closing remarks.

Thank you, Catherine. I'd like to thank you all for joining us today. We hope to talk with you virtually at several upcoming investor events. We will be participating in the Benchmark Conference next week and in December, the CEO Summit and DA Davidson Semicap Laser and Optical Conference. We also expect to conduct several virtual NDRs during the quarter as well. We thank you for your continued support and please stay healthy.

Thank you for your participation in today's conference. You may now disconnect. Everyone have a great day.