Cohu, Inc.

Good day and thank you for standing by. Welcome to CoHUE's second quarter 2024 financial results conference call. 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'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jeff Jones, Chief Financial Officer. Please go ahead.

Good afternoon and welcome to our conference call to discuss CoHUE's second quarter 2024 results and third quarter outlook. I'm joined today by our President and CEO, Louise 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 Cohue'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, July 31st, 2024, 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, COEU's President and CEO. Luis?

Good afternoon. Second quarter results were in line with guidance, with non-GAAP gross margin of approximately 45%, as we continue to navigate the trough of this semiconductor cycle. Revenue of nearly $105 million was split 66% recurring in the balanced systems. Systems revenue increased sequentially in consumer optoelectronic and computing markets, although offset by declines in automotive, industrial, and mobile. Despite soft market conditions, we continue to execute well on new product developments and deliver on design wins to expand customer and addressable markets. The most notable validation of our strategy was a recent customer benchmark award of an estimated $100 million business over five years for test automation and inspection systems. This award includes Krypton, our new inspection metrology platform targeting larger semiconductor devices. We also had a second customer select Krypton last quarter for an aerospace application. Combined with Cohue's AI inspection, which is part of our DI core software suite, Krypton is delivering higher yield and productivity while enabling our customers' push for automating back-end manufacturing. Putting this into perspective, Cohue's inspection metrology revenue was about $70 million during the prior upcycle and primarily driven by mobile semiconductor inspection. We're targeting to grow this business to $100 million over the midterm, expanding applications to other market segments where we can add value to our customers. We also had a good quarter in our tester business and placed our DiamondX tester at two subcontractors in Taiwan. We received the first order for a DiamondX mixed signal configuration from a leading test subcontractor in Chengli, Taiwan, And another Taiwanese OSAT selected DiamondX to test RFIOT devices from a leading IC Fabless company. We're tracking to plan to expand the DiamondX customer footprint, positioning the tester as a cost-effective, broad application platform that enables customers to efficiently test our roadmap products in the coming decades. In support of this growth strategy, we announced in June the opening of a new engineering design center in Penang for development of test instrumentation. While sub-seasonal test utilization in the automotive market is impacting near-term revenue for both systems and interface products, we are pleased to have landed a major silicon carbide customer for our new Seastrider power probe card. Seastrider utilizes Cohue's horizontal MEMS technology to enable improved performance and durability for testing power semiconductors such as silicon carbide. The product enables high current carrying capacity and with a multi-site pressure technology enables high voltage test at temperature. This is Cohue's newest offering in probe car technology designed to meet the expanding needs of power semiconductor testing. Our goal since the acquisition of XERA almost six years ago has been to drive interface revenue penetration to 50% or more of co-used systems. Last quarter results placed us at a two-year average penetration of 44%, or about nine points higher than when we started this journey. In this soft market environment, we're applying the same playbook of past cycles and have been diligent in lowering expenses effectively delivering a strong gross margin while preserving critical R&D investments. Estimated test serialization has improved now for the second quarter in a row to 74%, a two-point sequential increase over the first quarter. Although we expect broad capacity orders to be triggered around 80% test serialization, it has been encouraging to see the quarter-over-quarter improvements, particularly in computing, that is up three points sequentially to 70%, and mobile that's up two points to 69% utilization. The positive news comes tampered by automotive utilization down one point quarter over quarter to 77% at the end of June. Our data indicates that Cohue's largest customers in the analog semiconductor market are starting to see improved test cell utilization, likely at a pace that will put the industry in a recovery mode in the first half of 2025. In the meantime, we're carefully managing expenses to optimize cash flows, but now more than ever focused on design wins and execution of innovative product developments. Let me now turn it over to Jeff to provide further details on second quarter results and third quarter guidance. Jeff?