Cohu, Inc.

Good day and thank you for standing by. Welcome to COHU's fourth 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 turn the conference over to Jeff Jones, Chief Financial Officer. Please go ahead.

Good afternoon and welcome to our conference call to discuss CoHUE's fourth quarter 2024 results and first quarter 2025 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 COHU'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 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, February 13, 2025, 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, CoHUE's President and CEO. Luis?

Hello, and welcome to your quarterly earnings call. Full-year 2024 revenue was about $402 million as Cohue's main market segments are crossing the chasm of a downturn. On the other hand, the full-year non-GAAP gross margin of 45% demonstrates the value of selling differentiated products and optimizing our manufacturing cost structure. Fourth quarter revenue was within guidance range, but gross margin was impacted by an inventory reserve charge of $2.1 million. Jeff will get into more details on these later. Revenue for the quarter was split 62% recurring in the balanced systems. Systems revenue increased sequentially in computing, industrial, and consumer segments, although offset by declines in automotive and mobile, where customers are working through ongoing inventory correction. Estimated test serialization at the end of December increased one point quarter over quarter to 73%, driven by OSATs that improved two points to 76%, while IDMs closed the quarter at 70%. We see our traditional IDM customers at different stages in the cycle, and OSATs benefiting from the strength of fabulous customers aligned with data center and network infrastructure. As mentioned last quarter, Kohu entered the memory and silicon carbide power semiconductor markets, with orders for HBM inspection and dye level burn-in. We shipped our first HBM inspection system and received a repeat order early in first quarter that we expect to ship in the middle of this year. Growth prospects in HBM look positive, with the potential to deliver $7 million of revenue this year as we support HBM 3E and a new HBM 4 product ramp later in the year. We're working hard to align new Cohu products to compute applications, mainly positioning the company to capitalize on the growth in the data center market and later opportunities with AI at the edge. Our interface product team had a design win for testing 800G switches used in next-generation data centers and cloud computing. These are high-bandwidth devices that accelerate AI ML workloads with stringent signal performance requirements in test. We're excited to see our products gaining traction across various data center applications spanning memory, network infrastructure, and compute. Turning to our software platform, we are strong believers in the value AI will bring to semiconductor manufacturing with opportunities to optimize yield and productivity. Just last month, the CFO of TSMC made a comment during a public interview that 1% productivity improvement has the potential to drive $1 billion of value for their business. Putting this a bit in context, the global semiconductor process control market is believed to be about $2.6 billion today. We estimate that the potential total available market for data analytics for process control, data visualization, connectivity, and predictive applications in the back-end semiconductor manufacturing segment to be about $600 million, which accounts for third-party and in-house developed solutions. We're pushing to establish Kohu as a main player in this area, focusing primarily on back-end manufacturing and our current customers' spending on the software stack. In the fourth quarter, we qualified Cohuse DI Core and received the first PO to optimize visual inspection yield for a U.S. headquarter semiconductor manufacturer with operations in Asia. Customers continue to subscribe to our software solutions, adding to our critical recurring revenue stream in an area that we expect can generate substantial growth over time. In line with this strategy, Last quarter we announced the definitive agreement and early this year confirmed closing the acquisition of Tignes, a provider of artificial intelligence process control and analytics-based monitoring software. We believe there is an opportunity to grow Cohuse software revenue at an annual rate of 50% or more over the next three years as the industry seeks solutions to optimize yield and productivity using AI-powered process control and data analytics solutions. As our core automotive, industrial, and mobile customers continue to navigate an inventory correction, we're committed to growing Cohue in 2025 with customer design wins and SAM expansion driven by new product investments targeting data center and edge AI applications. Let me now turn it over to Jeff for further details on last quarter results and next quarter guidance. Jeff?