Axcelis Technologies, Inc.

Good day, ladies and gentlemen, and welcome to the Excellus Technologies call to discuss the company's results for the second quarter. My name is Shannon McLeod, and I will be your coordinator for today. At this time, all participants are in 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 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, Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. Please proceed.

Thank you, Operator. This is Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. And with me today is Russell Lowe, President and CEO, and Kevin Brewer, Executive Vice President and CFO. If you have not seen a copy of our press release issued yesterday, 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 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. Now I'll turn the call over to President and CEO, Russell Lowe.

Good morning, and thank you for joining us for our second quarter 2023 earnings call. Demand for the Purian product family continues to be extremely strong, especially in the high-growth silicon carbide power segment. Revenue for the second quarter was $274 million, with earnings per share of $1.86. Backlog remained high at $1.2 billion, with quarterly systems bookings of $193 million, also driven by Purian demand and strength in the power market. For the third quarter of 2023, we expect revenue of approximately $280 million, gross margin of roughly 44%, operating profit of around $64 million, and earnings per share of approximately $1.72. We are raising our forecasted 2023 revenue by $70 million to greater than $1.1 billion. This represents year-over-year revenue growth of approximately 20%, and a year in which overall WFE is expected to do decrease by 20 to 30%. We also believe it's possible to achieve $1.3 billion in revenue in the next one or two years, depending on market conditions. The mature process technology market continues to be an area of strength for Excellus, with 93% of second quarter system shipments going to mature Foundry Logic customers, and 7% to memory customers composed entirely of DRAM. The geographic mix of our system shipments in the second quarter was China, 56%, the US, 13%, Korea, 10%, Europe, 9%, Taiwan, 2%, Japan, 2%, and the rest of the world, 8%. As has been the case since the beginning of this downturn, the power device segment, and in particular silicon carbide, continues to drive our growth. We are actively engaged with all our customers in this high growth market segment, winning business from new customers and expanding our footprint and existing customers. We now expect approximately 60% of our ship system revenue in 2023 to come from this segment with around 35% of total ship system revenue coming from silicon carbide applications. We're seeing increased adoption of pure H200 silicon carbide and Purin XC silicon carbide systems and now have three Purin H200 silicon carbide evaluations underway with customers in multiple geographies. Two of these systems are 150 millimeter and one is a 200 millimeter system. These evaluation units give our customers a head start qualifying productivity limiting recipes as they ramp to high volumes. It also enables the customer to conduct optimization work on their devices utilizing the higher energy and dose capabilities of Purin H200 silicon carbide. In 2023, we expect revenue from silicon carbide customers to be spread relatively evenly across the Purin Power series product family. Xilis is the only ion implantation company that can deliver complete recipe coverage for all power device applications. We are considered to be the technology leader and the supplier of choice, providing the best product family and manufacturing capabilities. This means that using Excellus tools provides the lowest risk path to high volume manufacturing required to support aggressive fab ramp plans. Excellus places significant value on enabling our customers to succeed in this exciting market by providing differentiated product performance and a high level of customer satisfaction. As the industry downturn continues, we now estimate that memory will account for less than 10% of our ship systems revenue and weighted towards DRAM. We expect the PC market will lead the industry out of this downturn beginning the second half of 2024 with 2025 returning to a healthy level of growth in consumer electronics, advanced logic and memory. While our memory and advanced logic customers are experiencing this downturn, Xcelis remains close to them, supporting their installed base and working with them on their future technology and manufacturing needs. It is during downturns that there is an increased ability to collaborate with our customers to expand opportunities for Xcelis during the next upturn. We have multiple evaluation systems in these markets and many customer engagements designed to increase our footprint in these segments. As the industry exits this downturn, Excelis will return to healthy growth in these markets. This combined with continued strength in the power segment will drive Excelis to a $1.3 billion model and beyond. Now I'd like to turn it over to Kevin.

Thank you, Russell, and good morning. We are pleased with our second quarter 2023 financial results. and are excited about full-year revenue, which is now expected to exceed $1.1 billion and represents year-over-year growth of approximately 20%. Looking at our second quarter, revenue and earnings per share finished well above guidance due to solid execution and continued strong demand for period. Q2 revenue was $274 million, with system revenue at $215.2 million and CS&I at $58.8 million. Q2 earnings per share of $1.86 was significantly above guidance due to higher than expected revenues, gross margin, and favorable spending. We also benefited from a much lower effective tax rate this quarter, driven by a tax deduction associated with stock compensation. Strong bookings and quoting activity for systems in the power segment continued in the quarter, which supports our expectation that approximately 60% of systems revenue shipped will come from this market in 2023. CS&I revenue will fluctuate quarter to quarter with shipping model at approximately $248 million for 2023 and $300 million for our $1.3 billion revenue model. Q2 gross margin finished at 43.7% and 170 basis points above guidance, driven by lower costs and deferrals and a slightly improved mix. We expect Q3 gross margin to come in higher at approximately 44%, and forecast further gross margin improvements in Q4. Key functions across the business remain laser-focused on margin improvement. There are numerous initiatives underway to lower the cost of goods and drive higher sales of peer and product extensions, which allows us to model gross margins at approximately 45% in the $1.3 billion revenue model. Turning to operating expenses, The second quarter ended at 20.4% of revenue and better than our guidance. We expect OPEX in the third quarter to be approximately 21%. As always, we will continue to tightly control spending while investing in areas of the business that support business growth, solidify our technology advantage in the specialty markets, and increase our footprint in the memory and advanced logic markets. Additionally, we will continue to invest in our employees and infrastructure required to achieve our financial models. One example of infrastructure investment is our new state-of-the-art logistics center in Beverly, Mass., located just a short walk from our headquarters. The facility will open this month and is expected to be fully operational during Q4. We also plan to further ramp our Beverly and Korean operations as capacity needs grow, and are comfortable that we have initiatives in place that support our $1.3 billion revenue model. We ended Q2 with $452.9 million of cash, cash equivalents, and short-term investments, and generated $32.7 million of cash from operations. Cash in a quarter was impacted by higher inventory required to support the expected increase in second half revenue. In the quarter, we repurchased $12.5 million of stock and have returned over 157 million cash to shareholders since 2019 through our share repurchase programs. Excellus has a rare opportunity to grow revenue and profitability during significant industry downturn. This is a result of strong product positioning in a power device market and continued strong execution in a challenging environment. We also look forward to continued growth in memory and advanced logic as the overall semiconductor market recovers. Once again, I want to thank the entire Excellus team for their continuing outstanding performance. I also want to thank our supply chain partners for their hard work supporting Excellus and our customers for their confidence and our ability to deliver. I will now turn the call back to Russell for his closing comments.

Thank you, Kevin. Xelis expects to achieve revenue of greater than $1.1 billion in 2023 and $1.3 billion over the next one or two years. This growth is achievable due to the following factors. First, The implant TAM has more than doubled in the last few years and is expected to grow between 10% and 15% annually, with mature market segments representing greater than 60% of the total TAM. Second, power devices and image sensors are highly implant intensive. The general mature nodes have increasing implant intensity, peaking at 28 nanometers. Third, high-value Puriam product extensions were designed to optimize power and image sensor device manufacturing, making Excellus the only company with a product line capable of covering all implant recipes in these key markets. This uniquely positions Excellus to benefit from high growth in the mature process technology markets. And finally, Excellus has strong long-term customer relationships and a fundamental cultural desire to win by making our customers successful. I want to thank our employees, suppliers, customers, and investors for your continued support.

With that, I'd like to open it up for questions.

Thank you.

Ladies and gentlemen, if you wish to ask a question, please press star followed by one one on your telephone. If your question has been answered or you wish to withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Craig Ellis from B Reilly Securities. Please proceed with your question.

Hi, this is Ethan Wydell calling in for Craig Ellis. Thanks for taking my questions, and congrats on the quarter. So this surge in margins is a nice surprise. Does this impact your confidence in hitting 44.5% by fourth quarter and 44% overall this quarter? Thank you. Hi, Ethan. Yeah, this is Kevin.

It was a nice surprise in Q2, and part of it came from better costs as well as a little bit better mix and some of the deferrals. You know, I think on the last call we had talked about the second half becoming much stronger than the first half to get towards that full-year target of about 44%. And we're on that. You know, we're probably a little bit of a strength, and Q2 took away from Q3 a little bit, but we still think Q3 is up. from Q3, or up from Q2. And then in Q4, I expect to see further improvement off of that Q3 number of approximately 44%. So yeah, so we're still anticipating being in that 44% range for the full year.

OK, thank you. And then are you seeing signs that the high bandwidth memory strength that SK Inex and for the Epsom Micron are driving higher purine dragon demand. Yeah.

Yeah. Hey, Ethan. This is Doug. So you broke up a little bit, but I think you're asking about the high bandwidth memory. So for implant, the implant content is similar for any of the DRAM, whether it's HBM or other types. So what we see as far as sort of the goodness of the HBM ramp is it starts to utilize, bring up the capacity utilization of the memory fabs. You know, that's the first step in getting back to a good CapEx cycle. Then we see the PC refresh cycle kicking in, as we said, sometime next year. And that will really start to drive memory CapEx spending towards the second half of next year and create a healthy 2025. Got it. Thank you.

Thank you. Please stand by.

Our next question comes from Jed Dorsheimer from William Blair. Please proceed with your question.

Hi. Thanks for taking my question. And Russell, strong one out of the gate. So congratulations on the quarter. I guess first question just around your thought process in terms of the guide. And, you know, if demand is causing, you know, the pull in, if you will, I'm just wondering what's your greatest areas of concern that would limit your ability to kind of take up that two to three year type target? Specifically, you know, how are you monitoring the health in the channels, you know, with respect to globally, but specific to China that we don't see a return to, you know, a healthy used market, which seems to be pretty lean right now. And then I have a follow-up.

Okay. Jed, this is Doug. So, you know, I think right now, you know, our guidance, our optimism in terms of raising the full year to 1.1 billion and pulling in the 1.3 model to one or two years from now. The strength is in the power market for us. That's where we're seeing the biggest drivers. We are beginning, as I was saying to Ethan on the last question, I think we're starting to see the memory guys start to increase their utilization as a result of some of the strength in the AI activity. The PC refresh cycle is going to be key there, so we're monitoring that. And then consumer electronics are probably the next big driver in terms of the mature markets as a whole for mature foundry logic type of products. And we're watching that and expect that to be a 24 type of event. So that's what gives us the confidence to pull that $1.3 billion model in. But this year... The $1.1 billion model, it's very heavily being driven by the strength in power, and especially in silicon carbide.

Great. And then just as a follow-up on silicon carbide specifically, major announcement by Infineon in terms of the $6 billion investment in Coulomb. I guess my question for you is, you know, Trench is obviously more capital intensive and publicly they've noted the 200 millimeter. And so my question around your silicon carbide offering or offerings that does 150 offer a, is it a different tooling or what changes within your tool in terms of, field upgradable versus 200 and you know I'm assuming none of that or we haven't seen the Malaysia you know spend so yeah I guess just 150 versus 200 would be helpful thanks hi Jed is Russell so the so 150 versus 200 so we still have the complete period platform

for power series. So the XC silicon carbide, the M silicon carbide, and the H200 silicon carbide are all available 150 and 200. And essentially, it's a filled upgradable kit that allows you to go between 150 and 200. So it's essentially the same machine, but obviously, the wafer handling and the scanning need to be modified slightly for the larger substrate. And like I say, that's a filled upgradable kit.

Great.

Thank you.

Thank you.

Please stand by.

Our next question comes from Tom from DA Davidson. Please proceed with your question.

Yes. Good morning. Thank you for the questions. Maybe a couple more on the silicon carbide side. So with some of the recent ebbs and flows in the EV end markets, have you seen any changes or any modifications to the new fab construction plans that are expected over the next couple of years?

Thanks for the question, Tom. No, actually, it continues to accelerate. I mean, at this point, silicon carbide is still supply constrained. And so there's quite a bit of activity And one of the things we often note when we talk to U.S. investors is there's a little bit of a, not being mean here, but a little bit of a parochial view of the EV market. Globally, the EV market is growing quite rapidly. And so I think that's driving the silicon carbide investment, and we expect that to continue. We're seeing no signs of that changing.

Okay, great. Thanks, Doug. And then also, I guess when you're thinking about the end product, does it matter to you if the companies are creating discrete or modules? Is there a difference in the ion implant?

Well, we're... We're only involved in the discrete, in the silicon carbide wafer fab side of things. So after they package that, then they would put it in the module. There's no implant in the module manufacturing.

OK. Thanks. And then a question for Kevin on the logistics center. Maybe just a little more color on the impact of both your capacity and potentially margins over time with a new center opening up.

Yeah. Hi, Tom. Yeah, so the new center is going to handle all of our incoming material and hitting. Essentially, right now, we've got probably about 10 different locations we'll pull the material from. So that's going to improve overall efficiency. We're not going to have trucks running all over between the two cities surrounding us grabbing material. Also, if required, we could clear out additional space in that facility to put the manufacturing, but What's really happening at this point, as we remove some of the remaining stock room out of the Beverly headquarters, that frees up more manufacturing space in Beverly. So we've got, from an infrastructure point of view, from a bricks and mortar point of view, we're pretty much done now with what we need to do. We have a lot of additional capacity we can add on a second and third shift. Our manufacturing team, when I say done, our manufacturing team continues to use the Kaizen process to drive improvement. And there are a number of Kaizens, but again, in terms of more buildings between the CREA operation, the Beverly site, and this new logistics center, I'm very comfortable with our capacity to hit the 1.3 and potentially beyond that. And we've got very good supply chain partners too. worth case if we need to put some contract manufacturing capacity in place down the road, that's another option. So long and short of it, I feel very good about where we're at at this point.

Great. Well, thank you all for your time today. Thanks, John. Thanks.

Thank you. Our next question comes from Nicholas Doyle from Needham.

Please proceed with your question.

Hey guys, Nick Doyle on for Quinn Bolton. Thanks for taking my questions. Uh, it looks like book to bill was slightly below one, uh, for the first time in a couple of quarters. Is this an anomaly or a function of the extended system backlog? And then also what are you seeing on the bookings front looking into the second half? How far out are bookings being placed?

Yeah. Hi Nicholas. This is Kevin. So, uh, let me answer that. Um, So I'll start off by saying, I mean, we're going to see book-to-bill fluctuate a little bit, I think, until there's really a much broader base industry recovery. And, you know, we wore down a little bit on booking this quarter at $193 million compared to last quarter, which was about $100 million higher. But if you go back to the prior quarter, it was down probably $100 million from the last quarter. So it's been kind of up and down. But I think the real key here is we have a very strong backlog still. 1.2 billion is a very large backlog for the company. And in terms of bookings and backlog, both, I mean, we're taking orders out into 2025 right now. It doesn't mean that all our capacity is necessarily sold in 24, but we're pretty full, but we're going out into 2025.

So

I don't, I'm not worried about this book to build because I think a couple of quarters ago we were, we were under one and then we popped back up and under one. And again, with such a strong backlog, you know, that system's backlog, if you consider we have a $250 million of CS and I business sitting on top of that. I mean, there's more enough revenue to get you quite a bit down the road without ever booking another tool. So, um, so again, I think, uh, we'll see it bounce around a little bit until there is this broader base industry recovery. Power segment is very strong still. I think we now believe that 60% of the year's bookings have come from power. I think on the last call we might have said it was 55%. So we're seeing an additional strength coming through power right now.

That's great. Thanks for that. Nick, let me just add one more comment. The other indicator we watch is the quote activity. And our code activity remains very high. Um, and it's, it's, it's exceptionally good in the silicon carbide side. Um, and, and these guys are planning factories out over the next couple of years. So it's, uh, you know, that's, that's, uh, another good indicator in terms of, of continued strength.

Great. And, uh, for my followup and you kind of, you touched on these points in the call, but more directly. What is the company's expectation for a memory recovery in 2024? It sounds like you're thinking second half driven by PCs. Maybe you can touch on what you're seeing in terms of the PC strength coming back, where you're seeing that. And can the company hit the 1.3 billion model without the recovery in the memory market? Thanks.

Hey Nick, it's Russell. Thanks for the question. So regarding what we see with memory, so naturally we stay very close to our memory customers. We've historically been very strong in the memory market and once the market starts to recover, we're expecting to see a lot of benefit from that. A lot of people looking for green shoots. I think at the moment we're talking to our customers and thinking the second half of 24 giving a pretty strong year in 2025 as far as memory goes. That's kind of what we're seeing. The question regarding our path to $1.3 billion. So I think we've previously said that we'd be looking for a consumer spending recovery in order to propel us to the $1.3 billion, and that would be obviously a recovery in memory and some of the other mature processes like image sensors. I think we are seeing strength in our power business, beyond what we expected. But I think with that strength in the power, plus a recovery in the consumer spending, we see us getting to $1.3 billion, like we say, in the next one or two years.

Yeah. I think the bottom line on it, Nick, is that there's multiple paths to that $1.3 billion model. So that's why in the call, we said, depending on market conditions. And so it really depends a bunch of different combinations.

Great. Thanks.

Thank you. Please stand by. Our next question comes from David Dooley from Steelhead Securities.

Please proceed with your question.

Good morning. Thanks for taking my question. I was just wondering, have you seen recent adoption of silicon carbide in other markets besides the electric vehicle market? And which markets would you expect to be early adopters outside of the ED?

Hey, Dave. It's Doug. Thanks for the question. So yeah, I mean, if you look at our customers' websites, their press releases, and so forth, They're talking quite a bit about applications in energy, industrial applications. The thing with silicon carbide is it's a tremendous benefit to automotive because of the savings it can provide in a module weight and heat generation and so forth, as well as the performance of the devices. It's a little more costly. But as volumes increase, that cost comes down and that opens it up to other markets, especially the energy and industrial markets where the weight and the heat aren't as important, but the performance would be nice to get. And so we expect that that will be another piece. In the presentation, we show that there's a good growth area above EVs that's associated with silicon carbide. So yeah, we definitely are hearing that from our customers. For us, we don't see it necessarily directly because our Our customers would build the same devices using our Purion H, Purion XE, and Purion M silicon carbide tools, whether it's going into an EV or into an energy or industrial application.

Okay. And then as far as lead times go, could you just help us understand where lead times are currently? And, you know, I guess you mentioned you're taking orders for 2025. How much manufacturing capacity do you have for 2024? or, you know, maybe another way to ask it is what is the current quarterly capacity availability?

Hey, David. It's Kevin. Yeah, so, I mean, I think that I said a little bit earlier, but there's plenty of capacity right now for the order rate that we're seeing and shipments that are required. And, you know, once this new logistics center comes online, that's going to help. We also have, as I mentioned, there's additional manufacturing Kaizen that are ongoing right now. It's part of our normal process. We're a little bit more heavy with them right now as this logistics center is getting, you know, filled up with material. So, you know, yeah, we've got lead times. We're booking orders in the 2025, but our lead times are much shorter than that. You know, in the past, what I would say is that we've always said that you know, with the ship-from-sale process, assuming material is on hand, we can turn tools within a quarter if we need to. And, you know, we have – that is the other piece of the supply chain. So, you know, I'll give a quick update on that. I mean, our supply chain has continued to improve. I think, you know, you don't hear about it a lot right now within our peer group because we're still ramping. And I think a lot of our peer group is, you know, has not been ramping. So I'm not going to say things are perfect with supply chain, but our suppliers are keeping up with us and are allowing us to ramp. And, you know, we're adding more capacity, um, almost daily with, with our supply chain. So, you know, our lead times are not a problem. I should say with customers right now, I think, uh, for the most part, um, that's not preventing us from getting orders. And frankly, I think our lead time's probably still, it may be helping us because we've been able to, I think, execute pretty well for the last few years, even when the pandemic was kind of fully coming at us. So lots of things have been done over the last couple of years to add capacity. And, you know, we're really almost over that fake hump and now it's going to come down to hiring people and bringing up additional off-shift capacity. You know, we run second and third shifts. They're nowhere near as fully utilized as first shifts. So, you know, we can hire. The hiring process has been going okay for us. You know, the market was really tougher while hiring. It's probably gotten a little bit better. And certainly that Korea facility in Korea, when we brought that online, actually, we were able to hire for capacity for that very quick. So, again, I think at the end of the day, our lead times are, you know, assuming everything is there, we can get a, you know, from the chair, we can get a tool out in a quarter. But, you know, it's not something that's an issue right now.

Great. Final question from me is regarding gross margin. I think I asked this question on the last conference call. You know, to hit the 44% target for the year before gross margins are going to spike up, I guess, you know, 250 or 300 basis points, let's say right around 47%. And, you know, I guess if they're exiting the year at 47%, why would they drop back down to 45%? Yeah, well.

First thing I would say is we won't exit at 47% because part of that spike got taken out with Q2 coming at 43.7. But you're absolutely right, David. When we were talking 42% in Q2, the math to get you there had a pretty big step up in the second half. And we still have a step up. We're going to have 44% in Q3, which suggests we still need a stronger Q4. And the new math may bring it closer to 45%. So, you know, the thing that moves margins around is the mix. That's a big piece of it. And the other thing is, you know, as we continue to bring in, you know, complete these gross margin initiatives, that's been one of the things driving gross margins over the years. So it's, you know me, I always talk about full year gross margins because quarter to quarter, things can move around. But if you look at, you know, our kind of, our progress over the last many years for gross margins on a full year basis. We've been continuing to notch these things up. And based on expecting to end at 44% this year, that notch is up a little bit more. Will we have quarters of above 45%? Yeah. When we do our models, we're talking full year averages. So when you look at the $1.3 billion model, You know, that's not one or two quarters of greatness. That's a full year when you look at something like that. So, yes, hopefully I answered your question.

Hey, Kevin, let me just jump in with one thing. You said mix, but I want to make sure it's clear. You know, there's two mixes we worry about or we look at. One is the type of systems. You know, the product extensions, high energy, have better margins than some of the standard products. And then the second is the systems versus CS&I. And because we moved 1.3 billion, a big piece of that growth comes in systems. And so that does put a little pressure on the margins because percentage-wise, it's still roughly the same for CS&I, but it's a much higher revenue gain in terms of the systems.

Yeah, that is a good point. I probably should have remembered to mention that. I mean, we always say that CS&I is accretive. But if you look at what takes us from the current run rate to 1.3 billion, the majority of increase is coming out of systems. And so that suggests that we are making progress on systems, because if we weren't, our margins would be going backwards. So the fact that we're still making progress on putting a much bigger mix of systems in, which come in at lower margins of CS&I, that mixed view does impact things. So again, we're right. We're right where we want to be. The other piece of it, too, which I probably should have mentioned as well, is, I mean, the product extensions is a big piece of it as well. I mean, that's helped quite a bit with the margins. And, you know, that's part of the mix, too. It's not just high energy versus high current. There's mix within the product segment. So there's a lot of moving pieces, but everything is moving in a positive direction. And, you know, that's the goal, to keep it going that way. And we have the initiatives with very detailed roadmaps in place that gets us to where we want to be.

Okay, thank you. Please stand by. Our next question comes from Mark Miller with the Benchmark Company.

Please proceed with your question.

Congrats again on another very good quarter. One of the companies I covered in the laser business indicated they were seeing some slowing in the EV market in China. I'm just wondering what you're seeing.

Well, Mark, from the device standpoint, we're not seeing any slowing. So we're not, you know, we're We're a couple steps away from the actual cars. And so far, the silicon carbide demand is still very high and still supply constrained. So we're not necessarily seeing that or being impacted by that.

You mentioned a number of evals underway, both for silicon carbide and memory. I'm just wondering if you could quantify that.

Yes, so Mark, this is Russell. Right now we have nine evals in the field. I would say they're across all market segments and their products. So we've got evals in memory, image sensors, mature foundry, and power. So three of the evals out there, I think we made a press release on this, are the H200 silicon carbide tools in the power. We have an XE Max for image sensors. We have a Purin M. I shouldn't forget we also have a Pure and Dragon at an advanced logic R&D center where we're looking to basically get designed in from the start. So, yeah, we have all market segments and all products, and we're looking, obviously, to work very close with our customers for continuing to grow our business in those areas.

Just one housekeeping question. What was CapEx?

I'm sorry I was muted. It was $3 million, Mark, in the quarter.

Thank you. Thank you.

Thanks, Mark. Thank you.

This concludes our Q&A portion of the call. I will now turn the call back over to Doug Lawson, who will make a few closing remarks.

Thank you for joining us today. We have a very busy investor calendar in the coming months. We'll be at the fourth annual Needham Virtual Semiconductor and Semicap one-on-one conference on August 22nd, the Jefferies Semiconductor IT Hardware and Communications Technology Summit on August 29th in Chicago, and the benchmark 10th Annual Tech Media Telecom Conference on September 13th in New York City. We hope to see you at one of these events. Thank you.

This concludes the presentation. Thank you for your participation in today's conference, and you may now disconnect. Have a good day.