Aehr Test Systems

and welcome to the Aehr 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.

Thank you, operator. Good afternoon and welcome to Aehr Test System's first quarter fiscal 2021 financial results conference call. With me on today's call are Aehr Test 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, Aehr Test 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 Aehr Test 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 Gayn Erickson, President and Chief Executive Officer. Gayn?

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 AehrS 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 Aehr, 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 Aehr 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.