Aehr Test Systems

Good afternoon. Thank you for holding. Your conference will begin very shortly. Please remain on the line. Your conference will begin in just a couple of minutes. Thanks for watching! Good day. Welcome to the HEIR Test Systems Fiscal 2026 Fourth Quarter and Full Year Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jim Byers at Ponda Wilkinson Investor Relations. Jim, you may begin.

Thank you, operator. Good afternoon and welcome to Air Test Systems' fiscal 2026 fourth quarter and full year financial results conference call. With me on today's call are Air Test Systems President and Chief Executive Officer Gayn Erickson and Chief Financial Officer Chris Siu. Before I turn the call over to Chris and Gayn, I'd like to cover a few quick items. This afternoon, right after market closed, Air Test issued a press release announcing its fiscal 2026 fourth quarter and full year results. That release is available on the company's website at air.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. And I'd like to remind everyone that on today's call, management will be making forward-looking statements 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 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 Air Test Systems undertakes no obligation to update the forward-looking statements. Now, with that said, I'd like to turn the call over to Gayn Erickson, President and CEO.

Gayn Erickson Thanks, Jim, and good afternoon, everyone, and welcome to our fiscal 26 fourth quarter and full year earnings conference call. I'll start with an update on the key markets driving our business, including the strong demand we're seeing in the AI and data center infrastructure markets, as well as the significant progress we've made this year in diversifying and expanding our end markets. Chris will then go over and review our financial results and open up the call for questions. We're very pleased with our fiscal fourth quarter, which exceeded consensus street expectations and capped a year of significant bookings and revenue diversification for AIR. Record quarterly bookings, a very strong and record backlog, and growing demand across AI processors, silicon photonics, and power semiconductors for both our wafer-level and package-level burn-in solutions positions us well for significant growth in 27 and moving forward, fiscal 27, that is. With strong momentum and a record backlog heading into fiscal 27, we're expecting revenue of between $130 million and $150 million. representing 2.6 times to three times the just completed fiscal 26 revenue. Non-GAAP pre-tax profitability at these levels is expected to come in between 18 and 22%. With current customer forecasts that we're seeing across our wafer level and package level burn-in platforms, we see the opportunity to increase our revenue guidance even higher as additional orders materialize. We believe we're not capacity limited even at the $150 million revenue levels. To illustrate the progress we've made in diversifying its additional high growth markets, just two years ago, over 95% of our business was tied to silicon carbide for electric vehicles. Whereas today, almost 95% of our fiscal year 26 revenue came from markets not electric vehicles, silicon carbide. Reliability and production wafer level burn and screening for AI accelerators, CPUs, and network processors were our fastest growing markets this year. representing approximately 71% of our total annual revenue. Optical device test and burn-in for data center infrastructure transceivers, chip-to-chip I.O., and hard disk drives accounted for another 20%. We expect both of these markets to grow significantly in fiscal 2027, and we're seeing encouraging signs of recovery in the silicon carbide market as well as new growth opportunities for power semiconductors such as in gallium nitride and even silicon based power MOSFETs used in both automotive and AI data center applications. So let me provide an update in several of the key markets in customer initiatives. And I'll start with wafer level burn-in. Demand from AI related applications continues to accelerate. Our lead AI processor wafer level burn-in customer is significantly ramping their products driving an increase in forecasted capacity needs for our FOX systems and proprietary wafer pack full wafer contactors this year and over the next few years. This past year, they've ordered our fully automated wafer pack aligners to integrate with their installed base, doubled their systems from us, and are forecasting significant increases in wafer allocation from their foundry this year and into the future. This had been a challenge to their growth over the last year. We're happy to see them move all production burn-in screening to wafer level burn-in on our systems this past year. They no longer need to perform any system level screening of their products. This customer sees AIR as a critical supplier and we're working to ensure we can meet all their capacity needs as they forecast significant growth in system purchases and wafer packs this year and over the next few years. In addition, we're engaged with additional AI processor customers who are evaluating wafer-level burn-in to improve their product reliability and reduce yield loss from production burn-in of their devices later in the manufacturing process. This includes one of our largest package-level burn-in customers who's now asking us about a wafer-level burn-in evaluation for future production of one of their AI accelerators and CPUs. This is in parallel with ensuring we can meet their package-level burn-in needs with our Sonoma systems. A key advantage of our proprietary wafer pack contact or technology is its ability to manage individual dye temperatures, enabling significantly better thermal management than conventional package level approaches. Our systems can process up to a quarter of a wafer at a time with as many as nine wafers tested in parallel, delivering a compelling combination of throughput and cost efficiency. So let me provide an update on our wafer level We're excited to report that we successfully completed the benchmark testing of our wafer-level burn-in solution on one of their processors, achieving results that exceeded their expectations and, in their words, produced results better than they can get at package level. This top-tier AI processor supplier has now expressed interest in moving to pilot production test validation at their semiconductor contract manufacturer in Taiwan for their current high-volume device, which we just completed the benchmark on. Originally, this benchmark was to evaluate wafer-level burn-in for their next-generation device. Instead, they indicated that based on the results, they're interested to pull this device in and to consider wafer-level burn-in on the current device as well. They told us this current device is expected to continue ramping and achieve significant volumes over the next year or more. In addition, they also requested that we evaluate a second device in parallel. The potential revenue opportunity from one of these devices is significant to AIR in terms of near and long-term revenue streams related to the wafer-level burn-in systems and proprietary AIR wafer pack contactors. Turning to wafer-level burn-in for silicon photonics devices, As we have anticipated for the last year, silicon photonics devices and the need for production burn-in are now seeing strong momentum as AI data center architectures increasingly rely on optical IO and high-speed optical interconnects. Our lead silicon photonics customer is ramping with follow-on orders over the past year and more already in this fiscal year for fully automated wafer-level burn-in systems powering AI optical IO and data center interconnects. These systems are fully integrated with their automated wafer handling equipment, enabling fully automated high-volume production burn-in with hands-free operation using automatic guided vehicles, marking another important milestone with this long-term customer. In addition, our newest major Silicon Protonis customer, a global leader in networking products and solutions, has provided us with a forecast for additional systems this calendar year as it ramps capacity support next generation hyperscale data center deployments. This customer first engaged with us just last November and has since ordered two of our nine wafer FOX test cells and two of our FOX NPs. This engagement progressed quickly from initial contact to their first order and our first delivery of fully integrated test cell. We believe our sales process is shortening over time as our wafer-level burn-in solutions are becoming more pervasive across multiple industries, customers and countries. We believe the silicon photonics and optical test and burn-in market has substantial growth potential and can be a meaningful long-term growth driver for air. So now let me share some highlights of our progress in power semiconductors and wafer-level burn-in in the past year. We completed more than a dozen designs for gallium nitride wafer packs, which are now being sampled by potential customers. Many, if not all, are expected to move to volume production on our wafer-level burning systems, driving the need for systems and wafer packs this year and going forward. We also just completed the world's first 300-millimeter GaN wafer-level burning solution, using our high-voltage wafer packs to stress and test the critical high-temperature reverse bias test needed to screen for GaN MOSFET defects in production. Just recently, we closed the sale of our first Fox system for a silicon MOSFET wafer-level burn-in application. Prior to this, customers had purchased our Fox wafer-level burn-in systems only for non-silicon MOSFETs, such as silicon carbide and gallium nitride. We're working with this customer to determine test times and quality screening modes that we hope will lead to production burning capacity needs, as the customer has indicated. We also captured our first silicon carbide customer in Taiwan. This customer works closely with several automotive manufacturers in Taiwan and China, as well as other international companies. Securing this win was especially important to us because they chose Air over Semite, a Chinese company that recently reincorporated in Malaysia as Nexus Test for their silicon carbide wafer-level burning products. As some of you know, Airtest is currently suing Semi Nexus Test for patent infringement of their silicon carbide focused wafer level burn-in system. We believe they're violating our IP and patents that we hold in many countries around the world, including China, Taiwan, Japan, Korea, Singapore, the EU, and the United States. We were chosen over SEMI due to technical superiority, cost, and our reputation in the automotive industry for production wafer-level burn-in of silicon carbide devices for EVs. We are seeing encouraging signs of recovery in the silicon carbide power semiconductors and actively engaged to meet the wafer-level burn-in needs of several of the world's largest automotive OEM manufacturers, the car and EV suppliers, and several of their silicon carbide suppliers for their new electric vehicles. We also announced today that we received approximately $8 million in new orders in just the last month for silicon carbide wafer level burn and wafer packs as global electric vehicle programs accelerate. These include expanded production orders from our lead silicon carbide customer for wafer pack full wafer contactors and a key order directly from one of the largest automotive companies in the world for multiple wafer packs to be used in the qualification of silicon carbide devices from suppliers for the new generation of electric vehicles using AIRS FOX wafer-level burn-in systems. This year, we expect renewed demand for both silicon carbide and GaN power semiconductor test and burn-in, driven by automotive electrification and AI data center power infrastructure. Let me talk a little bit about wafer-level burn-in for memory. We also continue to pursue opportunities in memory, including NAND flash and potential high bandwidth memory DRAM applications as part of our wafer-level burn-in solutions roadmap. The growth of these two memory markets may be stronger than ever with massive capacity increases planned for this decade. With our wafer-level burn-in benchmark with a global leader in NAND flash completed, we're in discussions on how to move forward. As we said last quarter, we hope to close on discussions about test system specifications needed for their next-generation flash memories, and in particular, their high-bandwidth flash devices, which would lead to a development agreement to supply systems and wafer packs to them over a 12- to 18-month deployment development of our new memory-optimized blades for our Fox XP and MP multi-wafer test and burn-in platform. We're also in ongoing discussions with other key memory suppliers that produce high-bandwidth memory, the new DRAM standard used in the AIGPUs, as well as standard DRAM and flash memories to align our solutions with the production needs of these companies' new capacity coming online. As we've noted before, this is a key focus for AIR this year with the goal of reaching an agreement with these customers to develop the enhancements needed to extend our Fox system into these markets. We believe this market could drive orders in fiscal 2027 with ramps in fiscal 2028. Now turning to package level burden. Our package-level burn-in business for AI processors also gained momentum over the year, highlighted by record follow-on production orders from our lead hyperscale customer for Sonoma Systems supporting high-volume AI processor production burn-in. This customer is a premier large-scale data center provider and is forecasting substantial expansion of Sonoma System purchases for a second device, which is twice the power per package as the first device that they're using Sonoma Systems for today. As their current and next generation devices ramp, we believe Sonoma systems and consumables can become an increasingly important contributor to AIRS revenue. This past year, we secured key new device wins on the Sonoma platform for high temp operating life qualification. We're also engaged with multiple current and prospective customers for package level reliability qualification and production burden of AI accelerators, ASICs, network processors, and also for Edge AI processors for automotive and robotics, which represent significant opportunities for AIR over the next few years. Recently, we introduced an enhanced Sonoma high-power configuration designed for next-generation CPUs, GPUs and high-performance network processors used in AI data center and communications applications. This enhanced system expands the Sonoma product family's capabilities with per-device power up to 2,000 watts or more increasing total system power capacity and improved device count scalability. It also includes an optional fully integrated auto aligner and a high throughput automated loader unloader that enable completely hands-free operation in a production environment. Unlike traditional batch flow burn-in, the Sonoma high power configuration with its ALU is designed for continuous flow operation, enabling devices to begin testing immediately upon insertion. The automation and thermal systems run continuously, maximizing equipment utilization, throughput, and return on investment for both engineering qualification and high volume manufacturing environments. Our Sonoma systems deliver what we believe is the industry's lowest cost solution, enabling customers to transition seamlessly from early reliability characterization to full production burn-in and early life failure screening. This approach helps reduce costs, improve quality, and Accelerate Time to Market. To meet anticipated demand, we've been expanding manufacturing capacity for both our systems and consumables. That's both on the wafer level and on the package level. This additional capacity positions us to support expected customer ramp-ups and provides flexibility if demand exceeds our current outlook. Looking ahead, we're very excited about our position entry in fiscal 2027. We have multiple customers who began production over the past 12 months and are now ramping up, creating the potential for meaningful follow-on demand for systems and consumables. With multiple customers entering or expanding production, a record backlog, and additional opportunities under discussion for both wafer-level and package-level burn-in, we believe AIR is well positioned for multiple years of strong revenue growth. With that, I'll turn it over to Chris.