Cohu, Inc.

Good day, and thank you for standing by. Welcome to the Coho, Inc. First Quarter 2021 Financial Results Conference Hall. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star, then 0. I would now like to hand the conference over to your speaker today, Jeff Jones, Chief Financial Officer. Please go ahead.

And welcome to our conference call to discuss CoHUE's first quarter 2021 results and second quarter 2021 outlook. I'm joined today by our President and CEO, Luis Mueller. If you need a copy of our earnings release, you may access it from our website at cohue.com or by contacting Cohue Investor Relations. There's also a slide presentation in conjunction with today's call that may be accessed on Cohue's website in the Investor Relations section. Replays of this call will be available via the same page after the call concludes. Now to the safe harbor. During today's call, We will make forward-looking statements reflecting management's current expectations concerning COHU's future business. These statements are based on current information that we have assessed, but which, by its nature, is subject to rapid and even abrupt changes. We encourage you to review the forward-looking statement section of the slide presentation and the earnings release, as well as COHU's filings with the SEC, including the most recently filed Form 10-K and Form 10-Q. Our comments speak only as of today, April 29, 2021, and COHU assumes no obligation to update these statements for developments occurring after this call. Finally, during this call, we will discuss certain non-GAAP financial measures. Please refer to our earnings release and slide presentation for reconciliations to the most comparable GAAP measures. Now I'd like to turn the call over to Luis Mueller, COHU's President and CEO. Luis?

Good morning, everyone, and thanks for joining us. Today, I'll review key points of our first quarter results, explain our new presentation format by market segment, provide highlights, and summarize Cohue's progress in sustainability. Record first quarter revenue of $225.5 million was up 11.4% sequentially, and exceeded midpoint of our guidance due to strong traction for our contactor products. Cohue's interface business is growing faster than consolidated results, with contactor revenue up 14% quarter-over-quarter and benefiting from the ramp in the automotive and industrial segments. Non-gap gross margin of 45.6%, and adjusted EBITDA of nearly 24% were records in both absolute dollar value and percentage of revenue. First quarter orders were also a record, driven by robust automotive segment demand that was up 51% quarter over quarter and strength across all major markets. Estimated test cell utilization increased two points sequentially to 88% at the end of March, The improved utilization was most notable with automotive semiconductor customers, primarily U.S. and European integrated device manufacturers increasing task capacity at their factories in Asia. The next larger quarter-over-quarter order increase came from industrial segment customers, ramping production to support growing consumer demand as economies start to reopen and in line with improving GDP forecasts. Starting this quarter, we will discuss revenue by recurring and systems. We will also break down systems revenue by end market drivers. Cohue's recurring business was 35% of consolidated revenue in the first quarter, delivering strong 48% non-gap gross margin. Recurring is driven by new semiconductor product designs that create opportunities to sell more contactors. as well as growing system install base that enables sales of application kits, services, and spares supporting a fleet of approximately 28,000 handlers and testers globally. Our recurring business is benefiting from expanding contactor sales in the first quarter, particularly for power management applications where Cohue leads with cantilever technology that is better suited for high-current and voltage semiconductor tests. Systems business was 65% of consolidated revenue and stronger in the mobility segment that was 24% of total in the first quarter. Systems gross margin was approximately 44%, and as indicated in prior quarters, it lags recurring by a few hundred basis points. We continue to enjoy a leading position in testing RF front-end ICs, both of our ATE and handler platforms, and growing presence in structural tests with DiamondX. The shift to design for tests continues to gain momentum with greater semiconductor complexity. Originally, this was a focused solution for smaller process nodes, but now we're expanding more across semiconductor applications. We have validated that the DiamondX platform offers significant cost-to-test advantages for customers implementing structural tests. Cohu's solution spans across RF devices, power management, transceivers, and other applications. This is an approximately $300 million market opportunity, and we recently captured greater than 50% share of structural tests that a major semiconductor manufacturer and plan to pursue similar opportunities at other customers. Automotive segment orders increased further in the first quarter, following a strong fourth quarter, with shipments scheduled over the next several months. First quarter automotive segment revenue was 12% and projected to increase in the second and third quarters of this year. With the steep ramp in handler demand, system lead times have stretched to an average 18 weeks. Costs are increasing due to labor shortages, logistic disruptions, and some commodity cost increases across the supply chain. We're challenged with controlling and minimizing the impact, eventually expecting to pass some of these to customers over time. Switching topics, Cohue recently published our second annual sustainability report. we're pleased to highlight that in 2020, revenue grew 9% year over year, while we reduced direct energy usage by 15% from 2019. We at Cohue are committed and proud to reduce direct energy consumption and further improve our corporate ESG programs. The highlights are included in the first quarter earnings presentation, and the report details are available at cohue.com corporate sustainability page. Now looking ahead, we remain encouraged by market momentum and customer traction for Cohue products. Once again, we'll be guiding revenue up for next quarter and extending visibility into the second half of the year. Now I'd like to turn it over to Jeff to provide details on first quarter results, share second quarter guidance, and our expectations for third quarter. Jeff?