Q4 2019 Earnings Call
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Today's conference is being recorded at this time I was actually the conference.
Michael sheet Investor Relations. Please go ahead.
Thank you Greg good afternoon, everyone.
Through innovation into it shoot it's pretty Nike Inc. fourth quarter and for your financial results. This afternoon. Shortly after the market closed if you have not received a copy of the release please refer to the company's website.
W.W. adopt onto innovation dot com, where a copy of this release is posters.
Joining us on the call today, or Michael Kupinski, Chief Executive Officer, and Steven Roth Chief Financial Officer.
Hi, This is always the case or need reminds you of the safe Harbor regulations that matters today that are not history.
Thats, particularly comments regarding the company's future plans objectives forecast and expected performance consist of forward looking statements within the meaning the private Securities Litigation Reform Act would like to 95.
I just missed whether expressed or implied are being made based on currently available information or companies best judgment at this time.
Within these is a wide range of assumptions that the company believes to be reasonable. However, it must be recognized these statements are subject to a range of certainties that can cause the actual results could vary materially.
The company cautions that these statements are no guarantees of future performance risk factors that may impact onto innovations.
Or could you describe in both Rudolph technologies form 10-K reports and Nanometrics form 10-K report for the year ended 20 December 2018, as well as other filings with the Securities and Exchange Commission.
Well its renovation does not update forward looking statements and especially disclaims any obligation to do so.
Today's discussion of our financial results will be presented on a non-GAAP financial basis, unless otherwise specified a detailed reconciliation between GAAP and non-GAAP results can be found in today's earnings release and they'll go ahead and turn the call over to Mike Pinsky bikes.
Thank you Mike good afternoon, everyone.
Welcome to onto innovations fourth quarter earnings call.
I'll start with an update on the most exciting event for the fourth quarter, the merger Nanometrics and Rudolph technologies, which resulted in the launch of onto innovation.
Onto innovation is positioned to benefit from nearly every major technology inflection across the semiconductor value chain.
And the continued evolution of advanced nodes in both memory and logic fabs to the growth of specialty devices for sensing in communications and the essential advanced packaging that opens the door for greater levels of integration of performance and the smaller form factor.
We closed on this transformational merger and.
Late October.
And since <unk> and since then onto innovation team has been working diligently to integrate our businesses.
And form the foundation for future innovation and shareholder value creation.
And these past three months, we've been upgraded our talented customer support teams in order to more efficiently leverage our combined.
And infrastructure and ultimately improve our customers experience with our portfolio solutions.
We have identified Unimplemented 14 million, an annualized synergies and we're confident in ending this year with 20 million of annualized cost synergies with additional synergies to follow.
Finally, our technology teams have been busy exploring.
Central revenue synergies to strengthen our core markets and expand our Sam.
Of course, it will take time for these benefits to be fully realize but the effort is progressing very well.
Turning to the specifics of our fourth quarter the onto innovation team delivered solid results with revenue coming in at 120.
When sixmillion, which was above the midpoint of our forecasted range non-GAAP earnings per share came in at 41 cents at the high end of our guidance as a reminder, we'll be reporting our results in three categories. The first category is advanced semiconductor nodes, which includes DRAM Dan and.
Concluding foundry the second category, especially CE devices advanced packaging, which includes those categories and our nascent silicon wafer manufacturing market.
And our third category software and services.
For the fourth quarter advanced nodes declined slightly overall.
That was three plus.
Metrology sales doubled over the third quarter predominately to support the ramping up to 10 seven in five nanometer logic nodes tied to the top five semiconductor manufacturers the Atlas platforms increase throughput and more sensitive broad spectrum metrology optical metrology is well suited to help customers control the.
Recently more concepts Threed measurement acquired for yields at the leading edge.
The growth in logic, mostly offset the decline in memory, we projected last quarter. After a strong demand for NAND customers in the third quarter.
Revenue from our specialty device and packaging advanced packaging segment.
Increased 7% from the third quarter as a reminder, this is generally a unit volume driven business where growth is typically through expansions to meet hardship volume versus technology transitions.
As a result, the businesses generally more susceptible to the effects of seasonality with Q4 in Q1, typically being the slower quarter.
Orders. However, however revenue in the fourth quarter reflects a growing demand for fiveg enabled devices with advanced packaging revenue increasing 5%.
The Dragon fly inspection system achieved record revenue in the quarter and enjoyed broad adoption across the most demanding advanced packaging applications.
Using multiple tools shift to a top five memory manufacturer for stack DRAM packaging applications.
The wins included two D. inspection with Clearsign technology, and three D. bump inspection for top five logic and foundry customers in support of their announced Fiveg in high performance computing applications rounding.
Now the customer wins several upset customers took delivery of their first dragon size system for bump inspection to support expansion of the packaging lines for mobility products.
Revenue from Silicon wafer manufacturers grew by over 50% in the fourth quarter driven by record shipments of our Q S series F T I am the child.
She systems to substrate manufacturers worldwide.
Also contributing to the growth for multiple shipments of novus edge in the quarter, including to a new customer.
The last year and know that said has been adopted by far the top five silicon wafer manufacturers and our Q S series F T I our position.
All of the top five.
We believe this will position us well for continued growth in 2020.
Also during the fourth quarter, we delivered and recognized a second jetstep lithography system for a panel packaging customer who is increasing capacity for 2020.
This customers.
Developed a reputation for high quality and high yielding advance battle processes and has attracted a growing number of customers for devices, such as power management and RF modules Microcontrollers and SPG Ace. This customers also incorporating our Firefly inspection tool to provide feed Florida metrology data to the.
Lithography system, using our steadfast software solution as they begin to move toward high volume manufacturing in mid 2020.
Finally, rounding out the quarter, our software and services business continues to grow as each company had invested in infrastructure and technology to provide more value enhancing service.
This is to our customers as mentioned at the start of the call, we see opportunities to leverage our broader infrastructure to improve efficiencies and deliver more value enhancing services in summary over the full year on new products helped to strengthen our position in core markets and open opportunities in new markets.
The Atlas three plus expanded our optical metrology position across the leading edge logic and memory customers. You have now secured fool erected physicians with leaders and lodging Threed NAND and DRAM, resulting in a more balanced foundation from which to growing 2020. Likewise, we are pleased with the selection of Dragon fly inspection by.
The new customers in 2019 across diverse markets in advance packaging and across a wide variety of applications, such such as packaging, our wireless power devices and automotive.
[noise] shipments of our no besides inspection enough T I on the charges product lines more than.
From 2018 to 2019, we believe this market will continue to grow and be more meaningful part of our business and 2020.
[laughter] combined these new products resulted in over 130 million of revenue in 2019 and provide a strong base to grow from as we look ahead to 2020.
Specific to the first quarter 2020, we see specialty devices and packaging segment continuing to grow into the first quarter, we see DRAM spending increasing in the first quarter upsetting a pause in logic, and then and leading to revenue in the range of 136 million plus or minus 6% and this revenue range earnings.
For share would be 23 to 41 cents per share the midpoint of this revenue range represents an increase of 13% over the reported fourth quarter after being adjusted downward to reflect the projected impact of the Corona virus on the timing of our shipments to China absent that.
And then we expected our midpoint in the upper half of our guidance range.
By now many of you aware that the rapid spread of the Corona virus has resulted in a mandated extension of the Chinese lunar new year holiday to February 10th strict quarantine of a number of cities and provinces and other travel restrictions across the <unk>.
Country. This is delayed some of our planned shipments in February.
Our guidance reflects the best information available from our customers as to when they believe travel restrictions will be lifted and shipments to their factories can resume.
Important to note that we did not see any impact on demand at this time the impact is only on the timing.
I mean of shipments and as we manage through the situation and assess timing my first priority would be to the safety and well being of our staff and their families.
Looking more broadly at 2020, we see demand for Fiveg enabled devices in high performance computing, sparking a broader recovery in the market Gartner forecasts that worldwide mobile.
Phones will see a modest increase this year versus a decline in 29 team driving the majority of that increase other fiveg enabled handsets, which Gardner predicts will account for 12% of all mobile phone shipments in 2020, increasing to 43% of all mobile phones and 2022.
So we expect to see a number of onto innovation markets expand and plenty plenty.
The most obvious impact of this growth is in our specialty devices in advanced packaging segment.
Underscoring this opportunity [laughter] underscore [laughter] underscoring this opportunity as our release from earlier in this in the month.
Announcing the receipt of orders for 15 inspection systems from two customers rapidly expanding advanced packaging capacity to support wafer level packaging a factory devices.
See continued growth in these markets and 2020, driven by volume increases as well as additional devices migrating to advance packaging.
We also see Fiveg and high performance can be computing benefiting our advance nodes segments in which leaders such as SK Hynix recently forecasts Fiveg smartphones will drive a 25% increase endearing content per phone, while NAND will benefit from 20% increase per phone and TSMC.
We recently cited growing demand for their five nanometer process from five GE processors are front end modules and the best computing, we expect our advanced semiconductor node segment to grow modestly sustained levels of logic foundry spending in a pickup in memory spending starting with DRAM.
In conclusion.
Semiconductor markets are becoming more diverse every year, we see chip innovations and cameras sensing and communications, enabling new customer products, such as smart home smart grids and wearable health monitors, we see innovations in the advance nodes for both memory and logic, enabling data centers and AI engines to open up entirely.
New markets, such as medicine autonomous driving an energy, we see a growing number of customers increasing their focus on advanced packaging technology to unlock the full potential of new chip designs and more tightly integrated and high performing.
Form factors.
Across the spectrum onto innovation is an important part.
But to our customers our merger strengthens our ability to provide value enhancing services to our customers increase our pace of product innovation and deliver more comprehensive integrated solutions to challenges further down our customers roadmap.
We are only at the very started this journey, but we are committed to.
Potential to the benefit of all of our stakeholders customers shareholders and our team.
Yeah, I'll turn the call over to Steve Ross to review the financial highlights [noise].
Thanks, Mike before I begin my financial remarks today I want to reminder, you as usual the financial results discussed here will be provided on.
Non-GAAP basis, and then our non-GAAP presentation for the new merged company no longer excludes stock based compensation as a form of Rudolph on interested.
In addition, as detailed in our last conference call. We're off was deemed the financial acquire anymore in the merger and therefore, the combined financial results presented today.
Represent the result of Rudolph for the full fourth quarter.
The only the results of former Nanometrics since the merger since the closing the merger on October 25th.
I recognize that this partial quarter makes compatibility we have prior period somewhat difficult and I'll try to bridge the differences for comparative purposes purposes to the prior periods.
As Mike mentioned, our reported fourth quarter revenue was 120 that 6 million above the midpoint of our guidance.
That revenue excludes both 10 million of Nanometrics Act October shipments and 1.7 million of deferred revenue that would have rolled into the quarter, but was eliminated in the merger accounting.
Therefore on a total corridor.
Basis as if the merger was completed at the beginning of the quarter.
Our full quarter revenue would have been a 132.3 million.
That's a 3% decrease from the 136 million in combined revenue if you add the two separate companies third quarter reported revenue together.
[laughter] breaking revenue down by market.
From a from advanced nodes accounted for 44% of revenue with strength in logic and foundry offset by lower memory business.
Specialty devices in advanced packaging customers accounted for 35% of revenue.
And the remaining 21% of revenue came from our software and services business.
We had one.
During the fourth quarter, representing 10% of greater sales as we've discussed one of the benefits of the merged companies the broad and diverse customer base over with over 150 customers from silicon wafer manufacturers, all the way to advance packaging customers.
Turning to gross margin fourth quarter gross margin of 51% and is impacted by the.
Cleanup of inventory items as we prepared to go live with a new ERP system in January which we did not non-GAAP out.
Excluding those inventory adjustments or Q4 gross margin would've been approximately 52%.
As we look forward to our first full combined quarter in Q1, we see the revenue by.
We see the revenue volume for my guidance or that Mike just provided and product mix, primarily affecting the margin and therefore expect our gross margins to be in a range of 50% to 52%.
Fourth quarter operating expenses as reported were 47 million and excluded eight that 7 million a fourth quarter nanometrics.
Prior to the prior to closing.
On a full quarter basis total operating expenses would've been approximately 49.4 million.
Operating expenses reported by each separate company third quarter of 2019, when combined equaled 51 that 8 million.
Portion of the D. The decrease between the periods due the merger synergies having.
So positive effect on Q4 expenses.
Historically operating expenses in the increase quarter over quarter from Q4 to Q1 as during the first quarter, we perform our annual compensation reviews, and equity grants and bonus plans in payroll taxes receptor the year.
We've also implemented a significant portion of our synergies.
Mainly around business rationalization, streamlining corporate overhead and eliminate eliminating duplicative public company costs, which on an annual basis totaled $14 million and puts us well on our way to achieving our stated goal of 20 million by the end of 2020.
The quarterly benefit those synergies will partially offset the normal Q1 operating.
Expense increases I, just mentioned and based on that we're currently forecasting our Q1 operating expenses to be in the range of 49.5 to 51.5 million.
Net income for the fourth quarter was 18 that 1 million or 41 cents per share and at the higher end of our guidance separate share amount was based on 43 million.
And diluted shares outstanding.
He is a deal being closed in the middle of the quarter.
For the first quarter, we're estimating a dilutive share count of approximately 50 that 5 million shares in our earnings per share calculations.
That share count difference negatively impacts Q1 guidance by approximately four cents per share when compared to Q4.
After into cash and investments, which are on a GAAP basis. We ended the year with cash and cash position of 320.2 million after paying out approximately 25 million a merger expenses.
On a 50 about 5 million diluted share count that equates to $6 30 said 34 cents per share.
At the industry.
Days to improve and we've begun to benefit from the synergies in our operations and improve our working capital metrics, we're targeting cash flow.
To be approximately 20% of revenue in 2020.
Now I'd like to open the call to questions operator.
Thank you if you'd like to ask a question on today's call.
One.
And your telephone keypad.
I haven't seen today using speakerphone, please pick up your handset and Im sure your phone is not.
Well I used to treat your are.
I think our first question Patrick Ho Stifel. Please go ahead.
Thank you very much and thank you for the color in helping to.
Good good financials in order on a going forward basis.
Mike first off in terms of year, a front end metrology business.
You give a little bit of color a quote one on the NAND flash.
Environment and.
Maybe on the timing of when you believe broader base NAND flash spending.
Calm and secondly on the DRAM side some of the comments you made a I get from the metrology and obviously, there's been increasing capital intensity trends were rated certainly trial would you use a as layers increase how do we look at the DRAM market in particular.
Typically on the.
Try allergy and in terms of capital intensity trip, a you know how that plays out.
Mhm.
So I'll start with the with the Threed NAND so after a.
Relatively strong for several quarters of 2019, we had the pause in 2000.
The fourth quarter.
We see a threed NAND picking staying a little bit pause for the first half and picking up more in the second half and the magnitude of which could determine obviously the strength of a year over year comparison, but for sure strengthening in the second half from.
From what were saying.
On the DRAM side, we see it little bit of the opposite we'd see a stronger demand in the first half a starting in the first quarter.
Part of that is bringing in equipment for some of the.
Think as well publicized Samsung as announced a gallon spec expansion and going into the second.
Third quarter, and obviously, bringing that metrology equipment sooner than the process equipment to help.
Qualify that process equipment so.
So that's great that's helpful.
Yeah.
And maybe Steve in terms of op ex management.
Actually looks really good in Q1 relative to some of their expectations I have how do you see that progress screen or and what I'm trying to get out is the cost synergies are still going to be put into place I'm sure you're looking at new investment how do we look at the trends as Twentytwenty progression is for Opex management.
Yeah, I mean, I would say you can see it models down quarter over quarter. The way, we look at it right now obviously, the some of the synergies timing coming like you said they phase in.
But yeah, I would say that.
All right now the guidance that I gave for Q1 is a high point because as I said, there's a lot of cost they love some of the cost.
Not linear so there's always this uptick in the first quarter and then I was expecting the trail down from here Patrick from that guidance.
Great. Thank you very much.
And well take our next question from Quinn.
Please go ahead.
Hey, guys congratulations on that on a nice results.
The first quarter as a combined company wide districts is kind of with with Wi Fi and sort of how you see that profile of spending across the advance nodes and that the specialty side of the business first half versus second half certainly sounds like advanced foundry logic they'd be front half loaded you're talking about.
NAND being charged the second half DRAM being a little bit more steady in Q2 Q3, Joe when you put all that together how do you how do you see the pattern of revenue on our sequential basis or half a graph basis and 20 twond.
Yes.
Hi, just speaking specifically about us correct.
So correct, we're seeing yeah and that will depend obviously on customer mix application strength, so marketshare et cetera.
So from our perspective were saying logic, so let's start with logic foundry give your kind of a complete picture.
Eric foundry as maintain a relatively high levels.
And we see that continuing into a.
Into 2020, and then the DRAM, we see picking up rather nicely and into 2020, and then Threed NAND is is really the.
I'd say the wildcard a little bit that's certainly we see a pick up.
In the second half over the first half and the magnitude of which will determine as it is going to you know.
Grow over year over year or is it going to stay a little bit a depressed.
Okay, Great and second question, you mentioned that without the current virus.
You would have probably guided closer to the.
Middle or upper middle part of yet that the first quarter revenue range, you're wondering on that.
On a virus affect whether you're seeing delays in the tool deliveries to a one of the larger man players in China.
Is that a specific risk or you just sort of generally trying to be conservative with the March quarter guidance, given everything that's going on at the outbreak.
No. That's a specific [laughter], that's I mean, there there you know obviously right in the center of ground zero. So.
Clearly we've had lot of detailed discussions there and yeah, we're working with the customers to.
Obviously.
Bounce a.
The demands that they still have with the realities of the situation on the ground.
Yes.
Great and unless front for me just as we come through the year to it sounds like gross margin in the first quarter at 50 to 52 sounds like there are some mix or a sort of some sort of.
Quarter Spitz specific factors had how do you see that gross margin trending beyond that the first quarter.
Yeah.
This is Steve.
Yeah, I would say that's our plan is obviously with where we see the industry gone for the year. This is our low points in Q1 and so I.
I would I would trend those margins backup depending on how you model us, but you know we're gonna start getting seeing those margins improve we think.
At least significantly for us and you know getting closer towards our model range by the a ended the year as long as of the double your plans out like we think it is.
Great. Thank you.
Well take our next question from Craig Ellis with B. Riley. Please.
Please go ahead.
Hi, This is actually Peter Pan calling for Craig on front. Thanks for taking her question Hum D.
Cost synergies from 420, how should we think about getting there. It is mostly third and fourth quarter waiter or do you see incremental coming in second quarter.
I think some of those.
The incremental that's what's kind of ties into my response to Patrick and that we see the op expenses trending down from here, so they'll still be but clearly there are some that we've identified that are longer.
No longer within the 12 month period to implement that we see will have in place by the end of year, but they won't really have that much effect on the TNL. So I'd say, there's going to be portion of that differential.
I will keep trending you know into the second.
You know second third and fourth quarter, but there clearly are some that we see kind of exiting the year that'll get us on track to hit the 20.
But might not have a material effect on the 2025 [laughter].
Okay and just on the revenue synergies can you just kinda talk about.
The potential and when that could hit.
Revenues more meaningfully.
So I think that's something we'll quantify as we get a little more detail and we continue to works is that I would say probably around the time of our analyst day in the middle of the year.
There will have a quantification of that when you say more meaningful impact.
I would think that more meaningful impact as a 2021, probably first half 2021 type activity with I would hold some level of of revenue synergies starting in the end of this year.
Got it and just on I'm just a broader.
Contract against kind of the I think there's gonna to use one is you know.
I'm talking about something in the 20% <unk> growth and then I mean, Kelly's little bit lower just against this backdrop, how do you think your.
Front end business would do again.
We think we'll be right between the two [laughter] nothing exactly but I think.
You know with a balanced portfolio and the balanced segments that were serving a lot it'll depend on the outgrow passively each of the especially in the second half we've already talked about.
Threed NAND and that ramp I think outside of that you're already can model.
Logic is pretty much the logic and foundry customers that have been very vocal about their expansions that sustained growth and were.
Fairly well position there and.
And then the DRAM has always been a.
Most of ours and as we see more fabs starting to react too.
Let's say the Samsung announcements I would expect that to add some additional growth as well so.
Yes, so I think.
Yeah, that's that's pretty much.
Via an idea for quite a model S.
Got a great thing you've got.
Well take our next question from Krish Shankar with Cowen and company. Please.
Yes, Hi Tech keeping my question, Mike I had a couple of products. That's two questions number one you know when you leave it didnt.
For the metrology solutions that are.
You guys have been viewed as an alternative the key elite. They do you think your market share will exhibit 90, 90, and they will that exiting 2018.
So slain their films I think were very very tiny segment.
To that market in the single digit percentage range.
Did you go into your love to do you think or.
On the plane or films I don't think so we had a nice revenue growth for us I don't even think we talked about it because it is relatively small.
All summer share gain perspective.
Got it.
And then the legacy none of that.
Yeah. Good please.
I just want to maybe clarify something so I think.
When you look at the two companies companies Rudolph and Nanometrics from a plane or films.
Perspective, each had certain capabilities that we think might you know as it would bring the companies together and technologies together might provide an opportunity to to go into this market a little more aggressively but neither side had the the perfect solution as it has it stood by themselves.
As.
I thought it market share.
Oh, that's very helpful. Mike and there are two quick questions I'm wondering if my memory. So it'd be like Ah think the European have two years ago you guys.
Now the metrics took some this movie from noble a time from.
How does that business trending to be good all pretty much tight demand and then.
A follow up.
We have a lot more strengths within that customer in the DRAM space.
And we do have.
Say opportunities growing opportunities on the Threed NAND space, but for sure our strength is for stronger.
And.
Got it and then I'm going to final question any update on the all that stuff too.
No I think as we've we've mentioned that our focus right now is on the commercial side [laughter]. Unfortunately, with most of our customers being.
In China, they extend as lunar new year, and they you know and the.
Yes, there's been no updates and since our last last call.
Thank God, Mike really helps me thank you.
Well take our next question Tom Diffely.
Please go ahead.
Hi, good afternoon.
Moving over to the unit driven from the business you. After a strong 18 with your growth like it was pretty soft for the industry. What do you. What are your views of 2020 per unit growth and how many of the kind of RBC impact in the near term part of that.
I think it's impacting near term ER and the longer that.
Yeah.
Country remains under travel restrictions there could be a ripple effect other regions that are supporting for instance, a flaw way the the domestic Chinese handset manufacturers.
And now it's you know we're not seeing a ripple effect, we're not seeing and a decrease in the demand outside of outside of China. So the suppliers supply outside of China, and it's really so far limited to you know the Chinese suppliers that can't receive equipment.
All right. So is your view of 2028, because every year for units industry.
Oh yeah.
Yes, due to the Fiveg is a mobile handsets the increased content in those handsets from the five GE perspective and the other.
High performance computing markets, we decided we do.
We believe there's a unit volume increase or as we head into 2020.
Absolutely.
Okay, Great and then maybe we'll update on some of the tools and packages you could together for the non for the businesses like them.
Arps sensors like everything.
When you.
Can you really got to repeat that what are you looking for what's going on.
Yeah, I'd, just add for potential out there for business and the men's market or the RV market or the sensor market, where you can put together kind of a package.
Your tools.
I think as.
As we've discussed in prior calls, we're pretty well positioned in those markets from a inspection and software a point of view, we steadily grew our [laughter] our customer base.
Based on those markets and.
And I think that's you know positioning us well for taking advantage of the outside gross growth.
Which we foresee in 2020 as a fiveg enabled devices grow the unit volume growth. So I think that that's one of the reasons I.
I highlighted that being a growth at our strength, but it's also important to note is that the integrated metrology systems from Nanometrics former Nanometrics impulse are also tied to some.
See I asked and some of these a unit volume driven.
Businesses some of the mobile support devices. So Rick you know we think we're continue to bring these businesses together and continue to drive the relationships with the customers and the integrated solutions with the customers will only will only increase our opportunities in these markets.
Okay, Great and finally, when you look at the on the Jetstep tool that you sold during the quarter. We've got a driven by just pure capacity needs or was that a technology purchase by the customer.
As a good question actually is driven by capacity needs so that customers planning to.
Ramp there are attracting additional customers and their planning actually very large.
Factory, they've announced a very large panel a.
Panel factory exclusive for panel panel lines, but this this step for is actually required just to meet the the current.
Demand in their existing line.
Great. Thanks for your time.
Hi, everybody that star one if he'd like to ask a question on today's call.
Well take our next question David doing with Steelhead Securities. Please go ahead.
Oh I suppose.
My question is when I just had a couple of clarifications I had a little audio probably earlier, yeah, well one of the question earlier was north later on this predicting that could probably you out the market. There is up more than 20 percents important importantly, how will your front end business revenue look versus the 20% broken the.
In other words, how clean that up isn't that I'm not because it's going to probably this is going to keep talking about gopro.
Or higher or lower [noise].
No, we're not going to keep up with that growth rate I was answering based on overall not just.
With that particular.
Segments. So.
If you look at.
Lamb, they're talking about specific customers driving a relatively high growth.
That's a process equipment, which will be different growth rates than process control equipment for some of the reasons I discussed and we talked about DRAM being one of the.
Bigger bigger drivers of growth in a 2020, so I don't believe landless speaking about that.
I think there are highlighting recent past.
The model will not grow at a 20% growth rate in 2020 years central what we're trying to figure it out.
I would agree yes, that's correct.
For the.
To give them.
HM.
We're about to your pocket the quota buyout, which I don't think anyone really know what that impact will be lumpy I assume that it's minimal.
You know projected that revenue growth of non memory next year is gonna be around 8% or the foundry logic guide for go quite Scott.
Yeah.
8% benchmark for your unit volume driven business for a good gases to what that might grow and upcoming.
Yeah, that's a that's a fair gas or a fair benchmark.
Yeah.
[noise] huh.
Just so you you know just.
A frame at a little bit.
In that category is also the wafer solutions business, which is growing certainly above that smaller base, but as I mentioned in my prepared remarks, or we do expect that to be a more meaningful part of the business moving into moving into 2020.
And so.
That that will have a nice Ah you know.
An increase effect on the growth, but in general the advanced packaging specialty devices, the unit volume driven driven business.
I believe.
You know grow in that range that you mentioned.
Okay.
Oh, okay.
I Wouldnt call group customer has talked about something like 15 going from their current year, another 10% on the backend or a brilliant and a half that's certainly a huge increase and the and the capex budget for Bakken spending from that customer.
Wondering.
Got.
Good opportunity for you or you could you quantify it from that increased level of spending from back afterwards, either lithography or in pump and stuff.
For sure in the process control space, we've always had the you know strong market position, including at that customer weather.
Ben 10% customer before so.
Yes, they expansions on co us or info would be.
Would benefit us nicely.
[noise] gentlemen.
Oh I'm, a little harder for you I'm sorry go ahead.
I said no not on lithography at this time.
Okay.
Just a clarification computers.
How like again your guidance for the March quarter on operating expenses. The dollar number and on gross margins again, I live gum port part of them.
Prepared remark.
But on the gross margin we said.
50 to 52.
And on the Opex number 49.5 to 51.5.
Okay cool.
He is there no further questions at this time.
Call back over to Mr. Schafer for any additional for closing remarks.
Thank you we'd like to thank everyone for participating in the call today and for your interest in the onto innovation Hope you have a great rest of your day that concludes remarks for our CRO creator his wrap up.
Thank you once again that concludes today's conference. Thank you for your participation you may now disconnect your phone lines.
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