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spk03: and welcome to the Air Test System's first quarter fiscal 2021 financial results call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jim Byers of MKR Investor Relations. Please go ahead, sir.
spk07: Thank you, operator. Good afternoon and welcome to Air Test System's first quarter fiscal 2021 financial results conference call. With me on today's call are Airtest Systems President and Chief Executive Officer, Gane Erickson, and Chief Financial Officer, Ken Spank. Before I turn the call over to Gane and Ken, I'd like to cover a few quick items. This afternoon, Airtest issued a press release announcing its first quarter fiscal 2021 results. That release will be available on the company's website at aehr.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the investor relations page of the company's website. I'd like to remind everyone that on today's call, management will be making forward-looking statements today that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These factors that may cause results to differ materially from those in the forward-looking statements are discussed in the company's most recent periodic and current reports filed with the SEC. These forward-looking statements, including guidance provided during today's call, are only valid as of this date, and Airtest Systems undertakes no obligation to update the forward-looking statements. And now with that said, I'd like to turn the conference call over to Gain Erickson, President and Chief Executive Officer. Gain?
spk05: Thanks, Jim. Good afternoon to those joining us on today's conference call and also listening in online. Ken will go over our first quarter financial results later in the call, but first I'll spend a few minutes providing some details around the challenges we experienced during the quarter and how we responded. Then I'll turn to what we're seeing now and why we think things are moving in the right direction. And then following our remarks, we'll open up the lines for your questions. As we anticipated on our last earnings call, Our first quarter financial results were impacted by the challenging global business environment created by the COVID-19 pandemic and pushouts of forecasted customer orders during the past six months for our FOXP systems and consumables. We saw this from customers serving data centers and some 5G end-use applications with silicon-post tonics transceivers, but we also saw pushouts of forecasted orders for devices used in automotive applications and also sensors used in mobile devices. These customers have indicated that they believe the pushouts are temporary and that they will require the additional system capacity and consumables later in the current fiscal 2021 year. The majority of our revenue forecast for this fiscal year comes from current customers that have already qualified our systems and consumables for production applications. This includes follow-on orders from our silicon photonics customers, forecasted production ramp of current devices, as well as adding new devices with our initial silicon carbide customer that we won last year, and follow-on orders from our growing installed base of FOX wafer-level and singulated dye and module test systems consumables. Consumable sales of our FOX wafer packs and dye packs accounted for almost 50% of our revenue last year, and we anticipate that it'll be a significant part of our revenue again this year. We are maintaining our full-year revenue expectations and expect the majority of our orders and revenues to be back-end loaded this fiscal year. It's also important to note that the vast majority of this expected revenue is based on commitments from our current customers who have already planned their production and told us what they're going to buy from us. I want to ensure that our shareholders know that we're not confused that fiscal Q1 was financially a bad quarter. However, we've did have some events and achievements in the quarter that set us up and provide us optimism about our business for the rest of the year and moving forward. In Q1, we shipped and successfully installed the Fox NP full wafer test and burn-in system for initial production burn-in and stabilization for a new customer who is a global leader of communication transceivers for data centers, telecom, and 5G infrastructure. This customer is forecasting to transition to our FOX-XP waste-to-level test and burn-in systems during this fiscal year to meet their volume production forecast, and we expect them to continue to grow for the next several years. We categorize this customer as a Tier 1 customer, which we define as a customer with the resources and the market size to be able to purchase $6 to $10 million or more per year of our systems and consumables. On our last call, we announced that we closed an initial order with the world's largest outsourced semiconductor assembly and test supplier. During the first quarter, we began an initial marketing and sales campaign with this customer for the FOXP family of products, including air wafer packs and dye packs for production test, burn-in, and reliability screening of devices at full wafer, singulated dye, and module level. The initial marketing and sales campaign has already resulted in multiple new customer engagements, They have asked that we not name them publicly yet because they see their move into the silicon photonics assembly packaging and test space as a strategic initiative. They want to gain market share from some critical target customers before going public with what they see as a competitive advantage of being able to buy a total solution, including full wafer level test and burn-in before assembly of the silicon photonics engines into the transceiver modules. We expect to make this partnership public in due course. We also broadened deployment of the Fox XP for silicon carbide devices during the quarter. We added multiple new device design wins and completed the initial production release of several new silicon carbide devices on our Fox XP system with our lead customer that is using the Fox XP system for high volume production burn-in and infant mortality screening of silicon carbide devices at wafer level for electric vehicle power modules. They are forecasting additional capacity needs for our Fox XP systems as well as consumables during this fiscal year and for years into the future. A critical capability that only our solution can provide in the market today is the ability to test 100% of the dye on a wafer in a single insertion while providing 100% traceability of pass-fail results of each device, including exactly what time during the test and burn cycle the device has failed. This is a critical feature for them to provide confidence to their customers that they're removing all early life failures prior to shipment. They have made public presentations in industry conferences touting the cost and quality assurance advantages of using our solution compared to traditional package or module level test. Our systems are not only able to test 100% of their devices on 4, 6, 8, and 12-inch wafers, but we can test and burn in 18 wafers at a time in a single Fox XP system. We continue to see the total available opportunity for silicon carbide and silicon photonics wafer level in simulated dye test markets to be approximately $250 million of needed capacity, including consumables. The silicon carbide semiconductor device market is growing at a tremendous rate, with unit growth of high-power devices expected to grow at over 50% CAGR from 2019 through 2025 per YOL research. We remain engaged with well over a dozen potential customers, and in Q1, our list of Tier 1 and Tier 2 customers that are considering using AIRS products for high-market growth applications, including silicon photonics and silicon carbide production burn-in, continue to grow. In addition, we have seen incremental applications in devices in the mobile sensor segment that provide potential upside in this segment late in fiscal 2021 and into 2022. Also, as I've talked about before, we started to see forecasts for renewed demand for packaged part burn-in applications, particularly from customers seeking high voltage capability, reflecting a move toward higher voltages and other requirements for devices and automobiles. We expect to see bookings resume from certain current air customers this fiscal year and also expect to generate additional new opportunities with our planned introduction of a new package part burn-in product that adds very high voltage test capability. However, we're relatively conservative with our forecasted package part burn-in, as this segment seems to be heavily impacted with COVID-19 delays in customer evaluations. We have recently seen two customers push out their expected need for additional systems into our next fiscal year. which as it turns out actually helps us with the timing of our new system availability. Still, we do see the need for high voltage capabilities in both wafer level and package part as a new high growth opportunity for air and expect to add several new customers that include both tier one and tier two level customers for package part burn in this fiscal year and next. While COVID has created real challenges with travel restrictions and overall caution with our customers, which has resulted in delays of some production customer production ramps, we believe there is no long-term negative impact to AIR, the demand for our products, or the attractiveness of the key markets that we serve. We maintain our belief that we will come out of this worldwide pandemic stronger than we went in, with more production customers, more applications, and higher value products. Our key customers are serving some of the highest growth markets, including data centers, 5G infrastructure, sensors and technology for smartphones and tablets, electric and hybrid electric vehicles, and memory and data storage and computing data centers, mobile devices, and hundreds of applications that are keeping the world connected. As a result, we believe our products will be in high demand this year and for years to come. As we continue into fiscal 2021, we remain optimistic about the growth opportunities for our systems and consumables within our installed base of customers, as well as our ability to expand the number of customers using the Fox family of products. We expect significant growth in both our top and bottom lines moving forward with lower fixed operating expenses and significantly higher margin products and services. Before I turn the call over to Ken to discuss the financial results in more detail, I do want to take a moment to thank John Schneider for his many contributions as a board member since 2015. Earlier this month, we announced that John was retiring and not seeking another year with the board and also the appointment of Jeffrey Scott to our board of directors to replace John. As some of you know, Jeff has been a significant investor with AIR for quite some time and is very active and engaged with the management of the company. He brings significant insight into investor relationships and also corporate banking and capital markets. Jeff will be replacing the audit committee, corporate governance, and nominating committee positions vacated by John, so we welcome him aboard. And with that, I'll turn it over to you, Ken, and then we'll open up the lines for questions.
spk04: Thank you, Gane, and good afternoon, everyone. As Gane noted, our first quarter financial results reflect the impact of the challenging global business environment around the COVID pandemic and customers who pushed out forecasted orders for our FOX systems and consumables during the past six months. These customers have indicated the pushouts are temporary and that they will require the additional system capacity and consumables later in our current fiscal year. As such, we expect our fiscal year orders and revenues to be back-end loaded. At the same time, we discussed on our last earnings call, we have taken actions to control spending. In our fourth quarter, we completed a restructuring to strengthen our sales capabilities and reduce our costs. These actions, including closing our Airtest Systems Japan subsidiary and moving to a sales rep distributorship model in Japan and Germany, resulted in permanent savings of approximately $120,000 per quarter. We believe these enhancements will improve our efficiency and material increase our sales activity and bookings going forward, and increase our penetration of key customers in our targeted markets. As we have shifted to higher margin, highly differentiated systems and consumables, these changes also position us for success with sales of our current products, as well as additional new products planned for introduction this year. We have also implemented temporary cost reduction initiatives. These actions reflect prudent short-term cost reductions in response to the decrease in order and shipment activities in Q420 and Q421, and our commitment to managing cash and expenses as we weather through these challenging times. These temporary cost-saving measures resulted in savings of over $200,000 in operating expenses in Q4 and over $350,000 in savings in Q121. As we announced in our 8-K filing earlier this month, starting in the current second quarter, We expanded our cost reduction initiatives to include a 30% pay reduction in officers' salaries, an increase in mandatory shutdown days, and reduction in employees. These cost reduction measures are expected to result in savings of over $550,000 per quarter. Including the permanent and temporary cost reduction measures, AIR's revenue break-even decreased by approximately $4.5 million per year. It is important to note that even with these cost controls in place, Our operational capacity and bandwidth have not been negatively impacted, and our main focus continues to be growing our revenue base within the large market opportunities that Gane mentioned earlier. Now turning to the financial results. Net sales in the first quarter were 2 million, down from 3.8 million in the preceding fourth quarter, and 5.5 million in the first quarter of the previous year. The sequential decrease from the preceding Q4 reflects a decrease of 1.6 million in wafer-level burn-in revenues and 195,000 in customer service revenues. This was primarily due to a decrease in wafer-packed IPAC revenues of 2.4 million, which was partially offset by an increase in wafer-level burn-in system revenues of 801,000. The decrease from Q1 last year reflects a decrease of 3.1 million in wafer-level burn-in revenues and 365,000 in customer service revenues. This was primarily due to a decrease in wafer-level burn-in system revenues of $2.1 million and a decrease in wafer pack die pack revenues of $1 million. There were no packaged part system revenues in Q1-21, Q4-20, or Q1-20. Non-GAAP net loss for the first quarter was $2 million, or $0.09 per diluted share, compared to non-GAAP net loss of $720,000, or $0.03 per diluted share in the preceding quarter, and a non-GAAP net loss of $214,000, or one cent per diluted share, in the first quarter of the previous year. The non-GAAP results for Q1-21 include the impact of stock-based compensation expense and a $2.4 million adjustment related to the closure of our Japan subsidiary. This adjustment includes a $2.2 million cumulative translation adjustment, a non-cash item, representing the cumulative impact of exchange rate fluctuations held on our subsidiary's books, which was released to income due to the dissolution and liquidation of our Japan subsidiary in Q1, and a tax benefit of $215,000 related to the closure. On a GAAP basis, net income for the first quarter was $107,000, or zero cents per diluted share, compared to a GAAP net loss of $2.9 million, or 13 cents per diluted share, in the preceding quarter. and a GAAP net loss of $413,000 or two cents per diluted share in the first quarter of the previous year. Gross profit in the first quarter was $227,000 or 11% of sales compared to a gross loss of $93,000 or 2% of sales in the preceding fourth quarter and gross profit of $2.3 million or 41% of sales in the first quarter of the previous year. The increase in gross margin from the preceding quarter is due to the impact of the 1.6 million excess and obsolescence inventory provision during Q420, accounting for a 44 percentage point impact in gross margin in the quarter. Gross margin was unfavorably impacted in Q121 due to higher unabsorbed overhead costs due to low revenue levels in Q121 compared to Q420 and Q1 last year, and an increase in direct material costs as a percentage of sales due to a change in mix from wafer level, excuse me, wafer pack, dye pack revenues to system revenues in Q1 21. Operating expenses in the first quarter were 2.4 million, down 334,000 from 2.7 million in the preceding fourth quarter, and down 286,000 from the first quarter last year. The decrease in operating expenses from the preceding Q4 quarter is primarily due to restructuring charges of 220,000 in Q4 20, and a decrease in employment-related expenses from cost reduction initiatives implemented during the middle of Q420. The decrease from Q1 last year is primarily due to a decrease in employment-related expenses from cost reduction initiatives implemented starting in the middle of Q420. SG&A was $1.5 million for the first quarter, and a decrease of $160,000 from $1.7 million in the preceding fourth quarter, and down $294,000 from 1.8 million in the prior year first quarter. The decrease from Q4 and Q1 of last year is due primarily to a decrease in employment-related expenses from the cost reduction initiatives previously mentioned. R&D expenses were 900,000 in the first quarter, up slightly compared to 854,000 in the preceding fourth quarter, and flat compared to 892,000 in the prior year first quarter. Turning to the balance sheet for the first quarter, Our cash and cash equivalents were $6.3 million at August 31st, up $880,000 compared to $5.4 million at the end of the preceding quarter. Accounts receivable at quarter end was $1.1 million, down from $3.7 million at the preceding quarter end due to the impact of lower revenue levels in the quarter. Inventories at August 31st were $8.1 million, up slightly compared to $8 million at the preceding quarter end. Property and equipment was $622,000 compared to $663,000 at the preceding quarter end. Customer deposits and deferred revenue, short-term and long-term, were $406,000, an increase of $214,000 compared to $192,000 at the preceding quarter end. Our current and long-term debt of $1.7 million is related to funds received during the fourth quarter under the Paycheck Protection Program, or PPP, which we announced in an 8K filing in late April. The PPP loan is intended to be forgiven, subject to any provisions of the CARES Act. And we've just been notified that our bank is now accepting applications for loan forgiveness under the PPP program. We expect to complete the application process shortly. Bookings in the first quarter totaled $672,000. Backlog at August 31st was $1.2 million, compared to $2.5 million at the end of the preceding fourth quarter and $3.6 million at the end of the first quarter of the previous year. Now turning to outlook for fiscal 2021. For the fiscal 2021 year, ended May 31st, 2021, we are reiterating our guidance for full year total revenue of between $25 million and $28 million, which would represent growth between 12% and 26% year over year, and to be profitable for the year. Lastly, a couple of updates on the investor relations front. Our annual shareholders meeting will be held on Tuesday, October 20th, and will be available to join via webcast for all interested parties. Then in November, we will be participating in the Craig Hallam Alpha Select Virtual Investor Conference on November 17th. We hope to see some of you virtually at the conference. This concludes our prepared remarks. We are now ready to take your questions. Operator, please go ahead.
spk03: Thank you, sir. At this time, we'll open the floor for questions. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to signal for a question. And we'll pause for just a moment to allow everyone an opportunity to signal for questions. Again, that's star 1. If you'd like to queue up for a question, we'll take our first question in queue. This comes from Christian Swab, Craig Hallam Capital Group. Please go ahead.
spk02: Hey, guys. Good afternoon. Gain, can you help us understand the applications or the specifics? I guess I kind of missed it in the prepared comments about the customer commitments for the meaningful revenue over the next two to three quarters to get to our target revenue range for the year. Can you walk us through some of the... commitments that you feel very confident about? Sure.
spk05: I want to be, I haven't thought through exactly being able to say it because in some cases the customers are unique and people have a pretty good idea what they are. So I'll try and water it down a little, only in the intent of trying to, you know, protect the non-disclosures with the specific customers. But let me just, so let me just talk first about a few of the markets. So In silicon photonics, I would say most of those customers all have clearly indicated that they will be increasing their production capacity. As I think through this, all of them are saying they're increasing their production capacity throughout the year. And that would be consistent with the market growing. The silicon photonics market is like 40% or something CAGR in terms of revenue, maybe a little higher than that in unit growth for the silicon photonics transceivers. And just as a reminder, as I've gone into it in detail before, these are basically fiber optic transceivers that are heavily used in data centers and in long-haul telecommunications applications and are a big part of the 5G infrastructure. So in reality, all of those are growing. And candidly, everyone has said, boy, with this downturn or with this COVID and everyone being home and everyone's using data centers and on Zoom and everything else, isn't data exploding? The answer, I think, across the board is yes. But if you go and you look at companies, there have been companies in the space like Sienna and some others have actually specifically talked about slowdowns in the data centers And we know specifically there's been slowdowns in 5G infrastructure build. And, you know, as a result of, you know, people not having vendors on their floors or doing the upgrades. So we've had our customers and pretty specifically describe their end customers having delays in orders and therefore saying, you know, you know, game, I know you, you know, pre-built the system or we were just taking it, you know, I, we're not going to, give you the order until we have that order in hand from our customers. And just for clarity, because there's a high concentration of the data center guys, and it feels like you're name dropping, but you know, a good chunk of the dollars are spent by Amazon, Google, Facebook, you know, Apple and the likes, and Microsoft. And so, you know, within those names, I specifically am aware of some delays in those data centers and upgrades and stuff that are impacting my customers. but they are restating, yes, they expect to renew that or re-engage it. And, you know, it's a short-term delay and it's not a long-term delay. And it's not until COVID clears. It's like, hey, just right now we have to get our act together, figure out how we're going to get vendors in here and do some things like that. That's how it's been communicated. On the silicon carbide side of things, I would say it's, Less about that. It doesn't feel the same way. It feels like people are going forward pretty aggressively with those. Certainly on the customer evaluation side of things, we've seen some slowing or difficulty of travel restrictions. But candidly, and we shared with you before, the bulk of our revenue forecast that we got at the beginning and we're reinstating now is actually not with new customer wins. And so while those are impacted, you know, that's not what would be impacting our revenue for this year. So we do anticipate, you know, current customers ramping and they're being pretty specific about what their expectations are. And we see facility upgrades going on and, you know, hooking up water and electrical for where the tools are going to go. So there's, you know, reasonable visibility. And then I'll share one more market, and that is, you know, people know that we're in the mobile side of things. and, you know, our end customers and their, you know, customers, there have been some pretty publicly visible delays. Things that would normally be introduced this time of year have been pushed out. And, of course, they didn't give us much heads up of that. That's obviously very secretive. And so as soon as the orders don't come, then, you know, there's a push out. So we've seen some of that and we see some of that kind of flowing into the year. but they too are forecasting and capacity requirements plus some upside new opportunities that could, so forecasted specific requirements for this fiscal year plus some upside opportunities that could happen for revenue as early as the end of this year or into next fiscal year 2022. I hope that gives you some clarity.
spk02: Yeah, just a little bit. Potential further clarity. So you would expect the majority of the revenue to come from silicon photonics. Is that correct, or am I thinking about that wrong?
spk05: No. I mean, I would say the majority of it is silicon photonics, silicon carbide, the mobile sensors, and actually we do anticipate the – we haven't talked about them. In fact, I didn't put it in the conference call bullets as I think about it. We had one, a big customer, a couple of years ago that we referred to kind of very generically and hazy as a significant data center, high-volume application, or data storage, I think we described it. There's reasons why we're being elusive. It'll eventually come out. But that program was delayed. for reasons that we know include specific things related to COVID in terms of when they were going to roll this thing out. But we currently have forecasts that are at the end of this fiscal year for systems to be taken. So, you know, it's a balance of all of those. And in fact, it's probably in that order of dollars. but all of those are, you know, material. I'd say each of those could be, you know, 10% or more of our, you know, even the smallest market segment would be over 10% of our forecast.
spk02: Okay. Fabulous. And then lastly, what happens if COVID-related travel restrictions, you know, remain in place through, you know, a few more quarters with, you know, Any way for us to figure out how that would impact your business or do you believe that most of those negative impacts, you know, are behind you and that's why you're confident in reiterating previous guidance for the year?
spk05: You know, thanks, Christian. And actually we had a couple of other folks ping us on this question. So I just, I actually just quickly right before the call jotted down some notes. So I just, You know, so people don't accuse me. I'm going to actually read a little bit from my notes here on this one. But because as I wrote it down, I just want to be thorough, I guess, and as clear as I can on it. And it might repeat some things. But anyhow, first of all, not all customers are impacted by the travel restrictions, either because we have resources locally, so we can put people on that, or we've worked around them. I mean, for example, we've had a couple of specific examples where we sent ahead applications and service people to those locations, and they had 14-day quarantines locally. One of those was international, and one of those was in the states. And it wasn't flying from California into the state, which is kind of interesting. But the customer themselves had a quarantine put in place. So we planted the guys in hotels and waited it out. It turns out working remotely doesn't always make that much difference when you're supporting customers over the phone and over the computers, which is how we normally are doing it. So it doesn't make that much difference whether you're in your home or a hotel. Setting aside, you know, the burden on the employees, right, who we have these very committed employees. As such, the impact of the 14-day quarantine has been basically manageable or effective, right? So the guys go. they're working every single day, kind of like they would be doing from home and then they're released and they can get on the customer site and do some things. Um, um, and then in many cases we've actually just physically have local support resources. And so the customers have figured it out. We're important. You know, we need to get on the floor, we get on the floor. So we've been able to ship and install systems without any impact. Um, and then in general, we've always supported customer systems over the phone and remotely. So this doesn't change. We have the ability to log into customers. I mean, we don't jump on a plane to go to South Korea for something that's urgent. If it's something that needs to be responded to by the factory, we just do that immediately. Okay. The customers that told us that they've delayed their ramps, they're specifically telling us now that they expect the ramp to happen later this year. Okay. Obviously it's fair to say this too could change. I do see customers adapting to kind of a new normal. um if you want to call it that of planning for ramps and equipment installations given the restrictions and they seem to be getting used to it or put in place processes to deal with it i mean by contrast you know in the first few months of this it was felt totally different and it was just complete lockdown nobody had any idea they didn't know you know can they ask people to come on what would that be what are the protocols and so we have protocols for customers to come on site and have done that. We have ability for vendors to come on site and have done that, and we now have protocols and a good handshake with customers that people seem to be getting business done. But that's very different than it was even two months ago. I'm more concerned about new customer evaluations. This feels more impacted. However, like our current fiscal year, as we said, is majorly made up of our customers. So we're less dependent upon our new customers, and so that also gives us a little bit of a cushion from this impact. Having said that, we're actually doing some novel things. Maybe I shouldn't use the phrase novel these days, but we're doing some novel things in pre-sales. Last year, before COVID-19, we began putting in place a new demo center that we had talked about in our headquarters here in Fremont. that was able to demonstrate all of our tools in real applications. We did this because we were getting, quite frankly, swamped with customer requests. And we were like, how do we optimize this thing? Because honestly, traveling around and trying to do them on customer sites is going to be very efficient. And it basically allows us to do actual customer benchmarks of our wafer-level burn and simulated die module stuff for them and evaluate the systems and see the results. So they can come to our site or they can send their wafers or devices, and we will do it for them. So we actually specifically experienced this with our initial silicon carbide customer last year. So we've demonstrated to them the effectiveness of wave-level burning on their wafers. They were totally unclear whether this was going to work. After the benchmark and at the completion of it, they actually turned around and asked us, would you be okay if we sent you wafers that you could test for us for production use for our customers until we deliver a system that they immediately ordered from us. We actually said yes, and while we were building the system over the next couple few months, we were shipping wafers. They were shipping us wafers, we were testing, we were shipping them back, and they went to customers. In this example, they never set foot on our test floor. So we were able to actually do that. We were like, well, that seems like a good example. So now we're actually doing the same thing, and we're offering to do this with other customers. And, in fact, we added three more stations since the COVID outbreak that we can do more benchmarks in parallel. These are all in clean rooms, and they're manned by air personnel. And we're actually pushing out a new program. We haven't really named it exactly, but to entice customers to make this leap of faith and do the benchmark entirely remotely. Of course, we can do video conferencing and demos and things like that, but this is actually interesting. This is probably an example of how things are going to change permanently in the world. Honestly, this is more cost-effective and efficient, not only for us but our customers. It's probably a best-in-class example of what we'll do even after the pandemic is behind us. It's really our expectation that now if companies are realizing restrictions are expected in place until next year, we're not confused. I don't think anybody in the company, I don't think our shareholders, no one's assuming that COVID's completely released, we're back to normal. Quite frankly, in our fiscal year, the customer's looking at ways to continue with their business plans as well. And they're not just going to delay all their plans and growth until after the pandemic. So we've specifically heard this from certain customers, and I personally expect that most will be able to, will be taking on this plan. So, you know, again, we're not assuming that, you know, COVID dries up and goes away November 3rd, not to be, you know, to pull that into this, for things to get better. We're kind of assuming it's going to stay the same for a while. Sorry?
spk02: Great. Thank you. No other questions. Thank you. Okay.
spk03: Our next question in queue comes from Larry Klebina. with Klebina Capital. Please go ahead. Hello.
spk08: Good afternoon. Gain, you mentioned that there's two process methods for testing silicon carbide wafers. The first one apparently was the easiest and that was the lead customer for that application that you have in production currently. Are you trialing Anyone with the other method to debug it and prove your system will work for the second method of testing silicon carbide wafers?
spk05: Okay. So, Larry, let me just sort of repeat back for everyone else that doesn't follow that as much. And just as a reminder, silicon carbide is a new complex semiconductor device that's claimed to fame as you can run it to thousands of volts. and it operates very efficiently, whereas normal semiconductors can only run to tens of volts. And the big aha and the kind of most notable one is when Tesla integrated a silicon carbide discrete, you know, fats into their Model 3 and ended up getting, like I know, 20%, 30% longer range on their car. It's turned the electric vehicle, hybrid electric vehicle industry completely on edge, And every single one of them is shifting towards this as fast as they can. And so they're all going to the silicon carbide, and there's just not that many people and not much capacity that's out there. The beauty of it, and it's a little odd, but as a tester guy, the beauty of it for us is while silicon carbide is extremely reliable long-term, it actually has a very high infant mortality rate. which means that a higher percentage of the devices fail early in the first so many hours of use, but after that they don't fail anymore and they're much lower or much higher reliability or lower failure rates than other components and they're much more efficient. That's the perfect dream for us because that means you need our equipment to go in and weed out the infant mortalities by testing them for hours, days at a time to remove the infant mortality and then they're more reliable. Okay, first of all. Now, these devices, the hot ones, field effect transistors or FETs, they're actually a very simple device, and there's two known methods that are published out there for achieving the reliability. One of them is done with what we would call a medium-high voltage on the gate source, which applies a voltage and grounds the other two channels and can achieve a very high reliability and weed out all of the failures. There's another type where you actually bring it to a very high voltage measured in, say, over 1,000 volts, and you isolate it so that it doesn't conduct and ensure that it doesn't fail over so many hours. And what we understand within the customer base is there's literally two camps. Customers do one or the other, and in production, not both. And so we've actually, our first customers, and we've talked to people about it, are out heralding the one with the gate bias. And there are more than one. There's multiple out there that have talked about that, and they have white papers and talk about why that's the greatest. And that's actually our first customer applications. We are engaged with other customers on the reverse bias is referred to, which is a high voltage in both wafer singulated dye, oh, I should say wafer singulated dye, and standard package part applications. And interestingly, there's a discussion with them, like most people are doing some sort of package part today and really struggling with it or have lower voltage and homebrewed and they're looking for new solutions, but they mentally walk up and say, well, I need a package part burning system, which is a different kind of machine with air-cooled resources and things like that. but it actually has real trade-offs to it, even though we sell them. By contrast, most customers are saying, but if I can, I need to get to wafer level or singulated die, because the devices are put into modules in die form. They're never packaged up until they're packaged with eight or ten devices. So we have customers that are saying, give me a quote for a high-power, high-voltage pack-a-pipe burning system. And another group in the same company is saying, but try and solve this at wafer level. There are some challenges at wafer level that we have some unique ideas and concepts in both hardware methodologies as well as design for tests that we have been communicating to customers. And I would encourage any customer who possibly listens to this to give us a call. We would be happy to, under nondisclosure, talk about those test methods on how you can actually achieve high voltage testing at wafer level which most customers understand the real technical tradeoffs of what is needed to be done. And we'd like to talk to you about our solutions for doing it. It's our expectations that we will have those solutions available for production customers in time as soon as this year. So right now, we're not counting on that for our forecast either, by the way, Larry. But we're working on that.
spk08: So, Gane, did I hear you say that another approach, a possible approach for that higher voltage application would be to simulate the dyes first and run them in a dye pack configuration? Is that one of the options?
spk05: In a really cool option. At high voltage up to 2,000 volts. Yes. On a Fox system. That's right.
spk08: So why don't you make a deal with one of these guys and build a dye pack for them and prove it to them?
spk05: Well, what... We're working on it. Remember that little thing I had earlier, just like we've got a program we're working on? That's part of it. We are specifically approaching certain customers about engaging that in sort of a partnership way.
spk08: Of the known silicon carbide targeted customers, how many do the reverse bias, the high-voltage, approach and how many do the low voltage?
spk05: So far, candidly, let's say there are 10 obvious top guys. There's even smaller ones than that. We are aware of about half of them, what they do. There are certain ones, particularly down the list in terms of size, that have not yet shared with us what their preference is. I'm not totally sure why. And by the way, again, some of this is normally I would jump on a plane and go visit them, and I'm unable to do that. It's definitely something I feel. But we are getting to some of the big guys.
spk08: So you didn't answer the question, though.
spk05: Of the known approaches, you said... Of the ones I know, there are... Of the ones I know, I know three that are gait and two that are reverse. So far.
spk08: So possibly it could be half and half or maybe even more of the low voltage and less of the high voltage.
spk05: Correct. And I know specifically, I'm one of the big guys that does reverse, which is the high voltage one. They have specifically asked us about gate and have discussed implementing that or benchmarking it because it has some other advantages, by the way. but they had qualified with their automotive customers reverse, and it's actually kind of hard to change your qualification process. So one thing we're also trying to do is, I mean, the reality is five big automotive guys, right? So, you know, our lead customer is engaged in, you know, several of them. And so just getting qualified with this and wafer-level burn-in which has already been done, I think will help. And, you know, one of the thoughts is how do we get the industry message out there that this is a viable qualification process?
spk08: So, I mean, you proved that one, you know, with your current customer, it just seems like it's such an incredible benefit in terms of not only efficiency and throughput, but also savings from having to throw away modules that have a defect in them. And you're screening them out before... Totally agree. So, I mean, I'm really struck. You know, you landed your current customer a year ago, and here we are a year later, and you still don't have any additional customers in that area, which is, I don't know, I just find that hard to understand when there's such a clear benefit.
spk05: I think some of that is very fair, Larry, and we've been in discussions with some of the things we've done, for example, to the byproduct of it. If you look at silicon carbide, there's really three main areas that it's being built. First, it was in the U.S. customers, Cree being the most notable one. It's up and down the East Coast. Then it's in Europe. between Italy and Germany, that's very big hotspots for silicon carbide, we know specifically, and Japan. And what you'll note is that we made the decision to shut down those sales offices entirely in Japan, and we have the sales management team in there have all retired, and we have replaced them with reps. It's actually one of the specific things we're trying to do as well as, and we have a really great rep off and running in Germany that takes northern Europe, and we've had some recent traction with our rep in Italy and France in this area as well.
spk08: So in your LD presentation, you indicated, I thought, that you were running trials with other silicon carbide companies customers?
spk05: I think it would be more, I want to be a little careful on all the competitive stuff, but I think it would be more clear that we have discussions with those customers related to trials and not on waiver.
spk08: Ken, on your balance sheet, you show a split of short-term and long-term debt. That's the PPP loan. Why is it Why do some show up on short-term and the rest of it on long-term?
spk04: Well, the PPP loan actually has the two components. It's not due for two years with the actual first payment not being due within six months from the loan origination. So that's the requirement why it's broken out from a gap standpoint into short-term and long-term. However, as I mentioned, the plan is we expect to have loan forgiveness of the entire $1.7 million. the portal at our bank that will allow us to apply for forgiveness actually just opened up to us yesterday. So the plan is we expect to have that forgiven and hopefully that will be removed from our balance sheet somewhere near our next reporting.
spk08: That was my next question. Lastly, has the CP status gained, has that slipped appreciably? I think he said Last quarter, that would be in the second half. It hasn't slipped anymore since then, has it?
spk05: No, it has not. We have felt some things from that customer. We actually had some. That would be an example where we had what I would call a fairly simple upgrade that we were planning to do. We shipped all the equipment ahead, and at the last second, the customer called and said, listen, we've got to shut down. Vendors can't get in the building right now. It's not critical. Like, you know, it's not keeping them from production or anything like that. So I don't know if it were critical they would have let us in. But there's an example where we haven't flown in and done it. But we, based on what we know right now from them, you know, they're going to need additional tools in, you know, late in our year and into, you know, and then the ramp sort of starts for about a two-year ramp.
spk08: Okay, one last real quick question on silicon carbide. You know, everybody that's involved in it is really excited about the potential, but where does it really stand right now in terms of wafer starts? You have a sense of where it is today versus, I know the projections are something like a half a million wafer starts in four years per year, which would imply that if you could get all of that business, it would require something like 160 XPs to handle it all if it's a 48-hour burn-in. But where does it stand today? Is it still relatively small?
spk05: So I want to be careful of exactly your numbers because I don't have them in front of me, but your math generically is correct. The forecasted wafers over the next few years is significant, and it requires a lot of XPs. So Related to right now, I don't have in front of me, and I would, you know, I think the old development is probably one of the people that had their finger on the best estimates of it. You know, for certain, there are released products. We know for a fact that, you know, products off our system are going and they're going into, you know, I don't want to name the big customer, but, you know, well-known EV and electric vehicles, okay? Um, we know that we're engaged with customers on other applications that are also released. And then we have a number of applications for new cars. There's so many electric vehicle and electric, electric and hybrid electric vehicles that are in place. Um, so there's, you know, there's tons and tons of evaluations going on and qualifications going on. Um, so I don't know, I have a really good feel, um, you know, our certainly our customer and the customers we're talking to you know have capacity and will be ramping this year and some of those are many of them are bigger than ours to begin with the one thing that is subtle about this market that's interesting so if you look at silicon carbide and you look at the players and you say by their revenue they stack up, you know, just publicly, you know, top to bottom, ST, Cree, and, you know, you go down a few Rome, um, and, you know, down a little ways to like an on semiconductor or something. However, the application, the application, which is power modules, silicon carbide is displacing other power modules. Okay. And, um, they're more efficient. In fact, they're so much more efficient that nobody can even imagine selling an IGBT into that application in two or three years. So the real opportunity is to look at the power module companies. And then you realize that companies on the list that are pretty far down the line in silicon carbide have $1 or $2 billion businesses in that space. So those companies that are rushing into silicon carbide, have the ability to swap customers from a billion dollars worth of power silicon or IGBT modules over to silicon carbide. So I think that the folks like the market guys are trying to figure out how fast is that transition. And obviously the customers are our customers, but those vendors have an ability to negotiate with their suppliers. Do you want an IGBT for this price or do you want a silicon carbide for that? and they are supplying the market today on all those electric vehicles. I think that's where it gets interesting.
spk08: The real driver, though, for your equipment, for your process, is the module. Discrete isn't a big driver, but if they go wafer-level burn-in with your system, they'll use it for the discrete parts also, right?
spk05: I believe that's fair, and I think... I think that's the right way of looking at it. The module is so overwhelmingly advantageous to do it at wafer level, but we've heard from other customers that there's advantages to doing it anyhow once you get there, right? So, you know, like our customer, we believe are shipping products that are going into discrete components having done wafer level burning.
spk08: Right. Why I'm getting that point, the application for silicon carbide, In modules, it's fairly new, isn't it, in terms of certainly the automotive? In other words, the first application that you cited with Tesla on a Model 3, that was with discrete products, right? It was. That's a good observation. They put, I think, eight of them in the module. It wasn't as obvious or as advantageous. to go wait for level burning until you start ramping on modules, and that's a fairly recent event, is that correct?
spk05: It is. I think you're in the early stages of an overwhelming ramp.
spk08: Exactly, and that's what I'm getting at. So how you go at this and you knock these down, you have to knock them down, start knocking them down now. It isn't, you know, the Model 3's been out for years, but it's the modules that's the driver, and that's a recent event, and that's why You should, you know, Vern should be knocking these down left and right, I would think. I don't know what, so anyway, that's all I have.
spk05: I will, several of our investors, and Larry, I acknowledge, you're one of the folks that has a deep understanding of silicon carbide, and we have customers that have portfolios in that space that we're a part of. I've done this personally, and this is an odd thing to do publicly, but if you bring me a silicon carbide customer, we will do, we will make it very cost effective, you know, if not free to do a benchmark. And one of the challenges is to get some of those attention. We had planned, I think we were in four or five shows this year that have all been canceled. They're not even virtual. We actually really caught us at an odd time. Um, so, you know, uh, And I'll buy you a dinner when we're able to do it.
spk08: I wonder if they start losing business that somebody that is taking an approach like this that finds it and can offer a much more economic price because they're not throwing away, you know, maybe half their – 40% of their modules or something because they have a – Exactly.
spk05: And as the news gets out there. By the way, I mentioned this, if you go back to the notes from last quarter, or maybe it was in one of the other ones. So I always allude to, you know, so can Carbide Customer, and I don't go into a lot of the detail, but out on, I think, the Yahoo message boards, they were pointing to it. That paper has been removed. So it's not publicly available, but if you give us, you know, A number of our shareholders actually have their fingers on it, and Larry, I think you're one of them. So, folks, it's interesting because, you know, they were out touting how great it was, and now they've kind of pulled back. It is an odd scenario because customers see the value of it, and they're selling it as a differentiation to their customers. Well, obviously, if everybody goes to it, then it kind of normalizes, and we're the only game in town.
spk08: Okay. Hey, I took enough time. Thanks, you guys. Thanks, Larry.
spk03: Our next question in queue comes from John Fickhorn, Dialectic Capital. Your line is open. Please go ahead.
spk01: Yeah, hi. Thanks for, hey, Gane, how are you? So a few questions. I'll try and be quick. First of all, it sounded like you reduced your break-even quarterly to around $4.5 million. Is that right? And if so, is there some kind of EBITDA guidance for if you guys hit your targets for the year?
spk05: I mean, the first one's easy, which is yes, but I don't know we've given... Hey, Gane, I'd like to jump in here.
spk04: We've reduced our break-even by four and a half. Our break-even is not four and a half million dollars.
spk01: And just kind of walk through where... I meant your break-even's around four and a half a quarter is what I said. Yeah, you reduced it four and a half annually, but however you want to express that would be great.
spk04: Absolutely. So kind of talk about it quarterly. I think I've said before that our break-even historically based upon our fixed run rate structure at our average margin is a little over $6.5 million a quarter or a little bit over $26 million a year. And that's what we've said in the past. With these cost reduction initiatives, reducing that $26.5 million or $6.5 million a quarter down our $700,000 a quarter in spending is That gets our breakeven per quarter down about $5.5 million a quarter or about $22 million a year.
spk01: And that's a gap number?
spk04: That is a gap number, correct.
spk01: Fine. I was thinking more of an adjusted EBITDA number, but that's fine. So if you guys come in at $28, then the excess should drop to the bottom, right?
spk04: Yeah. And again, so you talked about EBITDA. We actually did a cash breakeven here. If you take a look at what our stock comp is, you can pull out our depreciation expenses, which are right off of our SEC filings and our reporting. You can see that if you look at cash break even, that brings us significantly under $19 million a year or right about $4.9 million per quarter revenue for a cash break even.
spk01: Perfect. Thank you. So I thought somewhere you guys had said you had two dozen new kind of customers in the pipeline before, and this press release said one dozen. I'm just wondering if, I don't know, if I'm just misremembering or whether you lost a dozen people in your pipeline.
spk05: We haven't lost a dozen people, and I realize that we, I don't know if we've ever actually stitched together the words two dozen before. But you'll see there's some conflicting. We talk about well over a dozen, and then we specifically say well over a dozen in just silicon photonics and silicon carbide. The number, I'll just go out there. I mean, I was doing a review with our sales team last week, and it is over two dozen. I mean, it's a long list. And, you know, some of those are, you know, but there's a significant funnel of activities that And one thing in particular when in preparation for it, you know, some of those customers, you know, just have told us they're just on hold. And so we've tried not to get into because then you have to start qualifying all of it. But, you know, we're clearly directly engaged continuously, you know, kind of regular cadence with well over a dozen of those. But there's more. And I think had the COVID stuff that kicked in, We would be struggling right now with just all of the activities. We would be, you know, we'd be adding some apps engineers and some other things. And, you know, I want to give Vernon credit because he was kind of out in front, not anticipating COVID, but putting this apps center in place and a number of other processes to allow us to do a lot more benchmarks in parallel. And we are. We are working with customers right now on benchmarks despite all the COVID stuff. But it does feel like it's held down.
spk01: Well, I can't wait to complain about you being too swamped with business and not being able to keep up. That would be fantastic.
spk05: Yeah, that would be nice.
spk01: So you announced a couple of new wins, commitments, the OSAT business, some other things. Were those already in your AOP for this year? Or is that additional pipeline? or should I assume that your year kind of has a further upside? How do I think about that?
spk05: So certainly the OSAT and that WIM that we installed was already in our plan. I mean, that was anticipated. It's just it was more positiveness about it. You know, there are some new customers in the list already just from last quarter that, you know, I'm not counting on – I want to be careful of saying they're not in our plan because, you know, if one drops out and it comes in, I don't want to feel like I, we, you know, failed on it. You know, obviously we, we don't know what your plan is anyway.
spk01: We just have your guidance. So I'm just, I'm curious.
spk05: The only thing, the only thing I have specifically called out is that, you know, on the mobile side of things, um, we, we still get consumables every single year on that. Uh, it's been a couple of years since we actually added a lot of any, any significant capacity. But we always get new consumables every year with different design terms and things like that. And we're still planning on that. We do have some new opportunities that have come up that have an opportunity to add capacity. There's some new applications and all that would be upside that aren't in the plan. Again, they could also offset any other risk. But that's the only one I've specifically talked about. And for those that have followed, I'm really hesitant to get too ahead of myself on my skis there because I We've had some scenarios in the past where we got all excited about how big it was, and then it didn't play out. And so I'd rather just shock you guys when an order comes in and say we knew it was going to happen all along. But for now, I'm just going to say there is some opportunities. It looks like it's late in our fiscal year and into next year, but still, I'm pretty excited about it.
spk01: Great. And consumables this year, I don't know if you guys broke it out, but roughly, I don't care how wide a range you give me, consumables will be roughly what of revenues?
spk05: I don't think we have. I'm going to have Ken correct me, but my guess is it's closer to like a third or something like that this year, although that could shift. Last year was higher than what we thought our run rate was going to be when it hit 50%. And that's actually because the systems dropped out in the last. So systems that we were anticipating would be shipping in Q4, we didn't ship any systems at all. And so that's part of the reason it was a higher percentage. We also had a scenario where one of our lead customers had been buying systems without wafer packs. And we've been talking about that. And then they finally caught up. So Normally, if you just look at the hardware to consumable mix, they're going to be closer to a third of the business. But over time, as the install base buys just uniquely, like we've seen in some of our older Fox products, they haven't bought a system in a while, but they keep buying consumables. That will grow, and we do believe that there's a point where even in a normalized steady state year, the consumables would be over 50% of our business.
spk01: Great. So this is my last question, and it's not a question, it's a comment. Actually, no, I have a question, then a comment. When does the window open for insider buying after you guys have released earnings? Is it kind of the standard 48 or 72 hours?
spk04: We have not announced when our windows open for insiders, and we're not going to do it at this point in time.
spk01: Okay. Other than I just said it, Ken. My comment after the non-answer to the first question is, you know, I appreciate John's service to your board, and I wish Jeff the best of luck at representing shareholders. I know he represents a substantial amount of shares. It's listed in your proxy at $660,000. And whether that's him or his clients, I don't know. But I appreciate having a shareholder on your board. And I would like to say that Ray and Mario, who've been on the board for 40 years and have overseen a $30 million consumption in cash and a 90% drop in the stock price since the IPO or greater, I don't see them buying stock in the open market. And I've lost money, and every one of your shareholders has lost money because your share price is at its lows. And it's very frustrating. We lose money that we put at risk for ourselves, for our clients. They don't. They get money. Ray gets $100,000 plus a year. He gets his health insurance paid. He gets 30,000 options struck at the market. And when I'm on a board, and I've been on three public boards over the last year. I'm on two currently. I believe that every public company board member should be risking their own capital by buying stock in the public market of the boards that they're on. And if they don't believe in the story enough to put their own money on the line, then get off the board. You're telling me this story that's amazing. I love it. I've put my friends, my family, my investors' capital at risk because I think it's a great story. I love the future and the upside. And yet your board doesn't seem like it's worth their time to reach into their pocket and buy the stock too with us. And I am offended as a shareholder. And if I don't see them start buying stock and you don't deliver, I promise you I will become a different type of filing shareholder. So that's my comment, not my question. And thank you very much for your efforts, and I hope you guys succeed going forward. Thank you, John.
spk03: Thank you. We'll take our last question from Marnie Cotton, Chip Chat. Please go ahead.
spk06: Yes. Hello, Dane. Hello, Ken. Hey, Marnie. My question is, hi. My question, I've got three questions. One of them is regarding the closure of the Japan office And there's some savings associated with that, which we see pretty easy to see, pretty clear on that. It's replaced by sales representatives, and there are costs to sales representatives. My question is, do we see the cost of the sales representatives somewhere, or is that something that gets rediscovered later on? So in other words, are we only seeing the growth? Mm-hmm. costs of closing the Japan office, but not the net cost because you do have to pay money that he typically commissions for sales reps.
spk05: Yeah, and that's true. That is true. And that is true of other regions that we have sales reps today. And that's true in the European region as well as in Japan going forward. So we do have arrangements with those sales representatives. I don't think we have any distribution networks where they buy and resell. So it is paid as a commission. It will show up in SG&A or cost of sales. And so, yes, it's not free, but at least it is tied directly to revenue shipments as opposed to the opposite. And we think that within a normal revenue range and including some significant growth, we're going to be thrilled to death to pay them those commissions.
spk06: Yeah, I'm all for paying commissions. It's more curiosity that as we see the savings on the one action, and the question was, is it possible or do we see the cost of the representative, which you've got to pay them and they do earn their money, but it sounds like... We don't have any fixed...
spk05: We do not have any fixed cost relationships with them, so they are only paid upon success. The other thing I just want to be clear on, although we do save money, and as I said at some point, obviously, you know, if things go wildly successful, there is a real scenario we would pay them more than we would have done direct. I'll be thrilled with that. But number two, that's not why we did it. The reality is that the customers that are in silicon carbide, the wafer-level customers, the front end, there's more tests, is a different type of customer. And we think that we needed to do some things to be able to get at those customers by doing something different. So it's less about saving money as actually putting a better strategy and higher expectations for actually getting sales. Because we, in reality, we've had little to no sales in those regions, and we have been working on this to take action. By the way, it is not very easy at all to shut down things in Germany and Japan. This has been a, you know, this has taken us well over a year to do.
spk06: Okay. Second question is, again, earlier in your presentation, you iterated a list of applications or, you know, like data centers, mobile communications, automobile. And then you also talked about new prospects, companies that are not regular customers yet, but they are considering the Fox system. Could you make a comment as, say, separating the prospects? What percentage might represent 100% production test? which you're going to sell a lot of machines, and what percentage might represent sampling tests or engineering applications. That was actually easy.
spk05: That was actually easy compared to historically.
spk06: If you just have one customer that does 100% production tests, it might be worth many times, many customers that use it for sampling, and many more that use it for engineering development.
spk05: So, Marty, I would say I believe of that entire list of customers, you know, the two dozen, let's say, all of them are production. I'm not sure I know one that's engineering in the wafer level side of things. On the package part, I know that a couple of them are absolutely qualifications and they're just quals, which means they do it early on in the life of the product and then they do monitors. So you can have one product and sit on it for a while. In production, if they grow, we grow. Okay? Or if they grow, they buy from us and if they grow exponentially, then we grow. It's technically, if you want to be specific. So the production makes way more sense. It's actually reasonably rare to have a sampling done at WAFER. And there's not a lot of applications where that makes sense or qualifications. We do have customers that do monitoring. One of our big customers has an installed base of systems that are used to monitor and sample with our simulated die slash module systems. So it does exist, but today I think everyone we're talking to is production. So 100% of their devices will be going to their customers. After they test them, they ship them to their customers.
spk06: And they're testing 100% of their dye on 100% of their wafers? Yes. That's right. And then the final question is, How much of your business is with the People's Republic of China?
spk05: So it's interesting. We had, I think, 10 packaged bar burner customers on our ABTS in China since I've been here. We today have no wafer level systems in China. And I believe we only have one customer who is not Chinese who plans to install systems in China.
spk06: But I thought you had sold the Fox machine to a Chinese entity four or five years ago.
spk05: No.
spk06: No? Okay. I missed that one.
spk05: Yeah, we kind of talked about that. Because one of the discussions was, you know, with all the trade stuff going on, How would it impact us? And people, I think I shared in the past, we used to buy chambers out of China. We also buy them out of Singapore. Those are our two vendors today. And today we're not taking chambers out of China. So we don't actually have any supply chain. I think we buy some printed circuit boards from a U.S. manufacturer that builds them in China. But almost nothing is exposed to China right now.
spk06: Okay, good. All right, that's those are my three questions, and thank you very much. Thanks, Marty.
spk03: Thanks, Marty. There are no more questions at this time. I will now turn it back over to management for any closing remarks.
spk05: All right, thank you. A lot of questions this time. We appreciate all of them. And as always, we do invite you to set up a call if we can have a follow-on with you. I often say I invite you to come over and see what we're doing, but we're not doing that right now unless it's really urgent, unless you happen to be a buying customer. But other than that, we'll be happy to set something up and talk to you. And we do hope everyone stays safe and healthy, and we'll talk to you next quarter.
spk03: Thank you, ladies and gentlemen. This concludes today's presentation. You may now
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