Q2 2020 CyberOptics Corp Earnings Call
Good day and welcome to this fiber optics second quarter Twentytwenty earnings call.
Today's conference is being recorded.
At this time I would like to turn the conference over to doctors to vote Kulkarni, President and CEO of Cyberoptics. Please go ahead.
Thank you.
Good morning, Thanks for participating in Cyberoptics second quarter, good you're going to go to school until it was called.
Joining me is transport go to see if one chief operating officer, who will give you at all Pik interest rates and some do do although you might or would it be off walk decent performance.
I think it wouldn't be pleased to answer your questions at the conclusion of all the box.
In keeping with rare condition. If do you have make forward looking statements regarding our outlook in this morning's administered.
These forward looking statements it gets looked on could support future research.
You are subject to a number of risks there Doug discussed about form 10-Q, what the go to get you said, but pretty close thinking Nike and I've been fighting should the securities and Exchange Commission.
Did you do reviewed these discussions oxys collectors.
The board seats up $16 billion for the second quarter welfare deep linking ended June 38, an increase of 6% jumped $50 million into second quarter reflected Nike.
Net income for the second quarter look integrity was $1.6 million well give you do same spoken to get shut up some 460 photos and well see some spread to do there shouldn't be get up yet either.
We are pleased to talk about optics, all performance and if your second quarter, despite being backed off Qubic 91 thing to me going off students.
Approximately 1.1 of your dog herself customer acceptances for its Q2 tolls on where he function inspection systems like opened this year was toward work Oh is it deserved I'll start with restrictions and there's nothing there due to gain access to customers factories due to water didn't make sense.
None of that secured orders were cancelled at all not expected to be book, that's what revenue in the towards bloggers.
If this orders had been accepted obscured well group's second quarter sales would have been at the upper end up our previously issued guidance for dispute.
It was hopes inflows I'd inspection and metrology systems. Please don't see like autistic all that you increased 34 cents go to what are your 7.7 billion dollar into second quarter Copeland drinking.
This is modest based products combined with semiconductor sensors I go get 471% they'll still has there been during the second quarter of integrating compared to six people shouldn't go given you usually get up yet.
Turning now to a people wouldn't be off once all the time of these fees up inspection and metrology systems declined grid to people that seemed to go to what do you have to $7.7 billion and the shipping for corporate Ricky due largely to go do bigger customer acceptances everything from before we'd like it.
So as long as Q2 told him where people jump systems can produce more to speak of 4.7 to be goldex from the local starting the second last year second quarter.
We believe Cyberoptics is looking for us more start goes into high growth like living inspection and metrology market people TBS excuse he doesn't where do you function systems orders for using this application.
We received an additional 2.5 billion dollar excuse he doesn't Oregon for them I couldn't be applications just prior to the end of second quarter.
Everything, but if we get a commission off disorder is scheduled for the toward Walker.
Additionally, Michael do you do they get orders out anticipated during the second couple things like.
Also during the second quarter did you see what order, what's working and like 630 40 inspection system.
Consistent with anybody script use boy mixes with recorded in the second quarter.
Boxing Lucky food with your dog does it make systems are forecasted to ship in this year's toward corridor.
Going back to redeem, though my clearly D market and forecaster chip bench authentic systems.
So you probably inspection and metrology systems not expected to grow strongly the toward worked off 20, Grundy well sequentially aren't going to get or what are your leases.
The important development Oh, no I bought us where you execute <unk> technology, and it's pretty consistent.
For the people that they would like I'd love to packaging applications was unveiled several days ago I, just said be gone, but 30 show.
You're talking about another resolutions and so that doesn't do you execute housing.
It would be a beauty inspections simultaneously.
Giving an industry, leading inspection speech by a considerable margin.
The system outflows and Butler combination of resolution speed and accuracy for before there was an advanced packaging applications.
Customer don't stations are expected to commence in the code corridor and even issuances I didn't anticipate getting thank you couldn't do long.
There was also continue marketing and I noticed solutions since I've been system integrator Oems.
I just I know a number of customers started integrating more sensitive to that inspection systems, a dog and once you can give systems to end users.
Revenue from this customer is expected to that book when you're going to be more.
So you got as a complete system autos, what's going to augment notice solution sensor technology has positioned cyberoptics to capitalize upon significant growth opportunities.
Yes, I'll speak little below and advanced packaging applications.
Moving on fields of two year can be census increased 437% to go to what are your before once drilling with your dog, let's see the second quarter authentic Lucky you Bartley two weeks in some sense in the second Oracle thinking Nike.
Well during the current quarter was driven by sea himself to be a modest if it works and so did you rose 170% can go to what do you want to $2 million.
There's a few years can be census, I'd expect it to decline modestly on a sequential basis this years third quarter.
Finally, he was also because of the sentence in the second quarter of where do you think you piece, 15%, yet or what you got to $2.6 million.
Hello, Cordless and each of these unit and process improvement startups are forecasted to grow modestly on both a sequential and year to what you got to basis.
Got it won't be ended the second walk up and get ready with an order backlog of quirky foodborne illness.
All those which includes micro needed they get or does she told him systems.
$4.9 billion. So what do you like 600, Argos for 40 inspection systems.
Backlog was consistent at March 31st Slinky, Brady and up significantly from a year ago.
We are forecasting for himself my viewpoint slide $21.5 billion for the toward wardrobes and keep shrinking ending September 30 that.
We believe our technologies our position Cyberoptics <unk> actually my long day job at Lucky, but Fortunately these not served markets.
For this reason you're optimistic about cyberoptics future growth prospects.
Thank you.
Jeff Berkowitz alluded view on second quarter numbers in greater detail.
Thanks evolved.
Since our second quarter sales have been covered in some detail I will cover several other aspects of our performance for this period.
Our gross margin percentage in the second quarter up 2020 was 45.7%.
Well up from 44.3% and the first quarter 2020 at 43.8% and a year earlier period.
And improvement in our sales mix was primarily responsible for the model modestly higher gross margin percentage.
Our gross margin percentage in the third quarter 2020 is expected to be at or slightly below the level and this year second quarter.
Due to the change in revenue mix.
In addition to higher sales kind of girls margin improvement our second quarter earnings benefited from lower total operating expenses due to the covert 19 pandemic.
Including $276000 for have jobs support programs implemented by the government in Singapore and from lower cost for travel trade shows and other expenses.
Total operating expenses of 5.8 million in the second quarter 2020 were down significantly from 6.6 million in the first quarter 2020, and down slightly from 6 million in a year earlier period.
Right.
Patient an amortization expense totaled $640000 on the second quarter 2020, and stock compensation expense was $286000.
We anticipate that operating expenses in the third quarter of 2020, well increase it'd be comparable to the level and the first quarter 2020.
Increase will be due to phase out of the job support program in Singapore, and higher sales commissions and incentive compensation, resulting from the significantly higher revenue that we are forecasting for the third quarter.
We also anticipate that travel trade shows and other costs will return to more normal level and the third quarter 2020.
Our second quarter earnings also included a $340000 income tax benefit from excess tax deductions for employee stock option exercises.
In the absence of these excess tax benefits and other discrete items, our effective income tax rate would've been approximately 18%, which is what we would expect for the second half of 2020, assuming no additional excess tax benefits from option exercises.
Cash and marketable securities up 29.1 million at June 30, 2020 were up from 26.3 million at the end of 29 team.
No shares were purchased in the second quarter 2020 under the 3 million dollar share repurchase authorization that expire June 30 point claim.
Given our available balances of cash and marketable securities. We believe our capital resources are adequate for achieving our growth objectives.
Thank you we would now be happy to take your questions.
Thank you if you would like to ask a question. Please press star one.
We can now take my first question from Greg Palm from Craig Hallum Capital Group.
Yeah. Thanks.
Morning, Congrats on the Walt so a lot of lot of good things Dawn wall.
Anything thanks.
They don't want to start off with micro LNG I don't know you know you dimension.
Your next order here I mean, I get the follow on order I don't know people said, it's more sort of for commercialization of the technology, but can you say.
You know what type of cost him or her teach and the initial order its four or from the you know what appreciate any additional color you can provide on that.
Sure. So it seems like a question Greg So my clearly as utilities, who technology being scaled up at the being I'd want to go up my couldn't be overcome nature and then do technology is I don't know that indication that our customers are going after his back light.
Oh for consumer electronic appliances. So the customer. This comes you put it at punks large companies they ought to see switchable, what from a and B back like well my could you do back right and that means that weren't Egypt, all announces a longer battery life or because if you say I'll pick up to speed quality or some combination of Victor.
Honestly exciting new technology, it is going to get college before the end of the Oh, So you'll see some consumer devices at the market that my could be back like technology.
Yes, it's too early in the mosquito and so the garden or relatively small order. It towards end of last year that goals is to do so by the production lines. If you, though the order to be just guard before the end up on this second Florida religious about people in fundament delegates is essentially the flows.
Systems that are doing well in production and that's the beauty to her skewed up for this holiday season on beyond Eccs 50, more Argo says, we have said as though I still second half goes on.
And it still only blip brought up sort of go up getting less than most companies are going to be making likely be start displays and other other things. So we're quite excited about the potential opportunity, but I couldn't be I've also stoop to school systems, I skews going into gigabit, our though as you know this because we still get on multiple inspections.
I couldn't be sad, because you process and excuse me sorry for all of them at this point of customers are using rescue for the more demanding steps and been they're using some conventional kitchen equipment for Mr lending steps, but begins to show to the skewing for all the inspection steps.
Exciting opportunity, we do you do close to said this in the city I gave you actually get gold orders and then it goes.
Got it and it is clear.
And a half million dollars order in Q2 that was from a separate tomorrow or was that across multiple different customers.
No I was just one customer in Florida, one specific consumer product that is getting scale.
Yep.
Well it'd be more of those can support us what's going back to go stood as of this from other customers.
Okay. I mean, you know, presumably you said that that will start to see books in consumer electronics later, this year or what's the inflow swab warming given that will influence level in the technology in Sweden buildable acceleration from other end customers now.
Yeah definitely given here as we all know what are the biggest I'm a big points, Florida video for high gadgets. They call. This battery life.
So 70, any any new technology that significantly moves back to life or expectation is quite high but that that that should be good. So this is one of my excitement about like are they do get another GE and how much would get it back both the split quality students backing bodies like where do you live directly nice so.
Definitely I expect a more customers. So certainly the large consumer electronics company stock at that said, we are getting orders right now.
But they don't have an IP knock on the technology. They are the technologies I really look for the consumer electronic companies and we definitely see will bank by other large consumer electronics companies to get into the city or so the other coating on multiple customers scaling up this technology and benefiting from that.
Okay.
Right and you know.
In a bullish or optimistic scenario help us understand how I think in contribution could scale from this opportunity over the next few years.
I mean, it's stuff to quantifying numbers when it comes to a new technology, along so we would be.
Just wondering if and when we get large orders.
We will disclose them as they come on a certain to potentially huge Evans didnt look at that the market. It's.
It's a sizable market 150 into other markets.
And a big chunk of data to ensure that going to go to my goodness.
They know that condition as I said is back light architecture displayed says, but he did the back like Florida Mcd every LCD display has a back later like now so just the back Lightfoot MCB is a huge market. Unfortunately, I am certainly if we can get a big chunk off the market share of the inspection systems business.
It looks like it's quite like large critical five size.
Would you be is significant.
No, but it's hard to quantify exactly what it could be in Twentytwenty and couldn't do you can people and then typically go but it is is logical Fortunately we are quite excited.
Okay Fair enough I just last one can you confirm whether the wanting to have no oh push outs I didn't recognize all that even I guess I just think about your guidance for Q3 have you built in any conservative than into that under the assumption that maybe a similar.
Scenario could could occur.
Hi, just yet right.
There you know regarding the one into half million most of that has not revenue and yet.
You know certainly back when you look at guidance.
You know we tried to build and conservative conservatism is then certainly try to take into account you know what what may happen.
With that 12 in head and neck and we also look at.
Others that we haven't backlog and which ones will require acceptance and which ones will will just revenue was shipments. So we.
Certainly haven't had tried to look at it through that.
And given those factors, where we're comfortable with the guidance we put forth today.
Okay sounds good all right there.
Hello, and good luck on par.
Thanks good.
Thank you we can now take our next question from Jason Smith from Lake Street Capital. Please go ahead.
Hey, guys. Thanks for taking my questions I, just want to start with Winnie or any of orders in the corner is it fair to assume you followed that kind of typical pattern that we've seen so far bottoming in April improvement in March and even better in June.
I don't see anything that specific jet fuel gallons.
I mean, I would say yeah, I don't know I agree with the ball I don't think it's that specific I mean, we do tend to thoroughly and in the quarter. You know the first couple weeks you know there does tend to be a little bit of walnuts and we tended to see that consistently but after that you know the orders.
You know tended to coming fairly evenly.
Throughout the quarter and some of our product categories like like Wafersense. They really never potholes orders, just keep 15 coming in our system products. As you know you know they tend to be pretty lumpy, but you know we do you tend to have some visibility there regarding you know yeah I'm going to step.
Things on that project and when we expect those orders to hit.
Okay. That's helpful and just curious how much of the momentum you're seeing that theory, you think is being driven by share gains.
Good question again, Jason.
Yeah, just curious how much of the momentum you're seeing this year, you think is being driven by market share gain.
Oh I see okay. So suddenly it depends on the cadre of course also.
In PDL, one we believe the market.
Is growing but maybe not as a growing as fast as more skewed is growing. So we believe we are gaining share in P.D. lions be scoop, particularly because of its Mike or anything like that because she was that he has a neighborhood banded together with little exactly what our moccasin was a Dallas Austin chalk bucket. She had if you want most it up.
At least going into a couple of certain to some extent move people since we purchased so the t. walk it completely by the end of this year, but do you believe you can pick up in market share. What did you give me on the high insight.
Before we would be lighting applications like Mike.
Well they put sense.
Is there anybody we really don't have any completely different so that is little my kitchen <unk> to speak loss and honestly. It. It makes we don't have any competition. So that is in the market share this week off.
Okay and the last one from me and I'll jump back into queue. Just curious how many customers are now sampling Youre No resolution center.
Oh, the builder, but of course to moves with other sampling the emotive since then somebody Who's American century.
Oh, it's six so you kind of smoking when would you like to hide Elutions and said that we use around excuses to somewhat looking at normal.
When they decide depending on the application, which is mostly because all that stuff. So they know it's about half a dozen customers want something you want to different types of a modest skus. So there's going to do the magazines.
Okay perfect. Thanks, a lot guys.
Thanks, Jason.
Thank you.
Thank you cannot go to our next question.
To grind Hum corner QC Securities. Please go ahead.
Thank you.
It's the bode to staying on Monday, I know a topic.
You know it looks like you just introduced to your box with demand all sound answer on that then you're still out or looking for interest for the normal sensor itself that others will incorporate in their box how is that going to develop over the next couple of years in all your other.
Three d. sensors are kind of exclusively with a with a major OEM. How is this or is it still too early how is this going to shake out as you get over the next couple of years and can you talk about the competitive marketplace that you're really going after with this technology.
So she also on the mental since as soon as the Wx. She tells consistent about a position for advanced package inspection at high levels. That's about a 400 billion dollar market grew at about 20 people or do you find it looks pretty good.
But didn't back that is a CD portion which is about.
50% of them onto a duplicate dislike of some of their monitor them. They just has to be the PD easily faster, but the duties Mclarty's also growing as well.
The Moon can pick your there so I like that that dominated the market today, it's a fragmented market. So nobody has more than a 15% market share I think he puts in market share from Washington suit, the leading who lives in that market today on can.
We could it be competing as it goes on to technologies. So we can dogs. The meeting for can go technologies, but instead of the system integrators and other companies I'm pleased that market as though so that's the market we are going into.
Oh, yes, or did he sold on now they'll sensor to some see because there's a couple years honestly they would be playing in that marketplace, you're right. It doesn't really picking them be launch or or system.
And that is potentially a competitor do a lot of customers bought it a little bit. He goes we decided to do that on we have been that in T.D.A. why shouldn't really be articulate a two year widen sitting on sensitive enough. When completed those marks on them and then be said sq directly to customers. The me go off it.
Okay, so consistently saying that ultimately so for this with customers. We go after the third customers and we believe it seems that applies.
There's probably going to probably because he goes to moves that after the Muslims package inspection, some fabs and most of them or subs.
In this case millennials sets and so that American fabs.
What did you start as Q system, it won't be like I'm sure I'll sit still did they got sensor because I thought software they use it intensive sits at 70.
I thought it would have easy to use and that's that's why it's getting share quickly.
And then I'll stick it was asked us to go to the I'm going to assist that wasn't about what would you like plan as you may recall last year as of this topic.
Yeah.
Oh, but customers asked us to consider getting into a wx type system to the askew like software because you like these and that's easily easily to be should get Guggenheim Sq.
So we didn't do you have a very differentiated Florida.
On to compete with the camteks into onto technologies going forward.
With the Big time, if you want to get 80 afford us and walked a exciting grade go to a great margin mcpick, but he's going to take time, yeah, not counting on even as you ramp up that we like so yes. We have said since its launch a me too if you can be one and then do down all from day at all.
I'll fight the yes, Ramon do you expect that looks to be a significant contributor.
But he's moved it.
Does that answer to you in terms of course, you yeah, Yeah sure daughters, and on memory I'm not sure I, probably I'm not sure more marine will ship in Q3 and does that do extensive the all in memory orders and backlog.
Yeah. So there.
Total a backlog for for memory at June Thirtyth is about 4.9 million.
Didnt book any memory in.
You too and work you know as we said never really for affecting about 4 million in Q3.
Of that backlog.
<unk> revenue.
There's got to de or is there any three d. up in the backlog.
That is to D.
All right now.
Okay.
So the three deals ship.
What was that Q1 or two to get.
That that anyone who wants though so we revenues our first three D.
Memory module system in Q.
And what is the older.
Pipeline look for some additional memory orders either to do it through the for us sitting here.
Well, we definitely are expecting more to be orders from existing customers. We look forward I would also be able to working with the Twitter large antibodies that affect your personal hopefully we get them onto a mix.
And most likely to be a TD and makes that they will start to that so we definitely expect MOCVD orders in the next few months here.
If you could do to grow from there there's still work with insurance or can be nobody has a lot I couldn't be than when you customer.
As plants what explains your remedies are generally do that even as you can see itself or the two companies like now and they're going to announce when extension.
Some of them so existing to the customer is putting more money.
The next few months and BRD expecting more PBM xotwo, so, yes, definitely expecting would it make sort of will be instead of.
Going forward.
Okay, great. Thank you.
Thanks, Good luck.
[noise] like the now take our next question Eric State from a King. Please go ahead.
Yeah, Hey, nice quarter Fellows makes it a thanks there okay on there's little housekeeping first.
You have 29 million in cash.
And what's the breakdown of that cash.
Cash treasury bills, whatever what does that breakdown I guess, Jeff all a direct appeal.
Yeah. So most of the yeah, if you've looked at that.
[noise], although the marketable securities that we have.
You know what roughly you know.
More than half of it is or roughly half of it is treasuries and government agencies.
There. So you know AAA you know highly rated double a rated corporate bond.
You see that type of thing everything is.
Yeah fair very secure and highly rated.
Okay. The one thing I pointed this out before and I don't know if you guys get all the Yahoo. On Yahoo Finance shows 13 million that's been there forever I mean that number's been way below what the cash really and so just a point that out.
On the other question I have is you guys are also on the auto finance, Jeff looks like your onetime bright spot in a couple of questions from people can you explain like shows four and a half billion or so under Jed I think its recognition mission of like leases can you comment on it.
Sure so the but basically what what the fast he did was about a year ago. They made all companies in the Gulf.
The balance sheet lease obligation for 30 cuts Philippines that you ran so we don't own any facilities, we rent them under short term operating leases, but like all companies. We're required to book up the lease liabilities. So so that's what that is both we do not have any you know traditional.
Bank debt other type of debt.
Other than trade payables in that type of thing.
Yeah, I think we talk what's in the past Oh, no need to do a secondary even as this ramps up.
Even as the business really wraps up here over the next several years.
As of today, we feel like we have you know more than enough cash and marketable securities to combat girl.
Okay, let's move on to memory for a minute I think we talked before.
But once you get the third one memory Guy what you anticipate.
You are looking at maybe $20 million and as we transition to the street games.
Memory modules.
Between kidney and Threed, either looking maybe 20 million per year for like a five year period place so putting money in each year for five years.
Well I mean, the children market for memory.
It's probably about 130 240 systems, if you're the as of today end up nobody because as my fight with in person depending on.
The need for millennials dead on soon as of today.
We have should roughly about 22 quickies size and make systems. So we still have if you want to take off of that used to have a bogo insurance for pumping system. So there are between tdm to be systems and back from them.
Oh.
Okay.
So it's a sizable opportunity left there can be systems typically on into Liberty, We don't fall absolute dollars like solar PV systems and much more closer to a billion dollars. So.
So it gives you a few fourth a sizable fortitude, but it is at the beginning but it's not going to be steady and be six months out of concealed. So when we get those are going to do Dodge lumpy orders that though.
It was your company wants to scale up defect people sort of demos.
Okay.
I'll shoot another one probably your way your should bode.
You know.
I listen to the best or I led best Buy's plan scripts and also I haven't seen H Peach, you don't Hewlett Packard come out.
That's why even new high it doesn't sound like was on fire and this is more legacy business business that really are we didn't anticipate would wasn't going away, but there's really no growth it was as mature and I'm talking about.
Computers servers that because as we transitioned to mobile.
And also everything from a home.
Can you talk comment on that was obviously, that's placing a chip industry and you know more silicon. So really basically can you talk comment on what you're seeing now.
Having said.
The things that other than some people, who do we see back it on businesses.
<unk> definitely helps you shift from conventional assumption that customer in student board and semiconductor packaging, but customers are definitely does all technologies to.
Chose to focus on Huntington technology behind precision startups typically on the Hyatt place site and customers, who ought to be equal demanding applications like this quarter startups like conventional with electronics, let me touch it doesn't come by cheaper system.
Oh.
He's using in pediatric argue is normally that she was the.
Great start up there.
Before we play we chose our investments correctly, because if they do stewards hiding chips and more demanding applications accidents, but she was because of more critical so they get to if you're benefiting from decisions. We've made a few years ago to focus on hiring Onyx and I am.
Applications.
Okay.
Also another one your way.
It's like Google there, so I couldn't find it but you know Ah I guess I understand that the Sony Playstation is coming out with her first stuff.
Or new system in like seven years, if I'm correct on that.
Do you have it I guess, the both what percent of the chip market is gaining and how fast growing.
I don't don't have a good few influence the big don't have the chip Marta kick it goes up that.
Oh got huge market as you know so I can get fair enough.
Okay, let's move up micro many l. each day.
Hold on one second here.
Let's say okay.
But can you hear me so.
Yeah.
Right now.
Like last year, so that that.
Okay.
Where are we currently in its evolution I have read that cost unit could decline, 95% in five years you come out on that.
We certainly getting into some scenes. So it's tough to me. It's the first lines that those giving up like Liberty Yaki leased as we speak.
So we are very much or to be in its a scaled up cycle of the as a as makes me feel whenever pushing totally it's really hard to predict things and so.
So to me it will skew that muffling technology, So number which is obviously increase as the coupon we're looking for that it could be 95% doing something concrete it's hard to know at this stage all the concern us video to meet up with each of these huge.
Okay fair enough.
Is there a visibility of any products in the queue you could speak up in general.
Hi, gentlemen, I would say certainly gotten more consumer electronics startups.
Battery life and display equality lose a big rules, which is just about all your go byproducts pretty good laptops and other teams are doing box and I'll go back if you will most likely this their quality. Although that is benefited by my could really be technology to enjoy them definitely expect my couldn't be become the east.
So if not the GE a few years started on Florida backlight for sure but also for the industrial when it does.
To follow through technology, It's got all the reasons why it to succeed.
But at the same thing existing technologies, just said because I'm a little too. These are the with the product you aren't ready for little bit departure, so there'll be some applications that NCD, who stay and some applications that will do in state, but my good it either take a big chunk of that display market long term system to try to do it again.
Yeah, My understanding Samsung is still staying with the current El <unk> apples to one apples to big Gorilla, then the micro L.A.D. space do you come on that or not really.
No he cannot calling their condition custom what they've done it before they come in so I definitely gotten caught up along similar lines Bachman I just talking a general alright in general how many production lines are currently up and running and what is your guess on estimate a potential production lines in the future.
I like this as they only a few line set up and running something like are they do that we can't get released on the number of systems. So.
So just a hence investments you've got other than today Nobody's capital, even PZ wants to speak.
The only good would you see a date of June it is flawed and they do sort of just to hit the market, beating on holiday season. So every week that goes by board lights, we'd be pleased here exactly really through the back end of the unit holder rounds Tufting home obviously.
I think you, but did you say we had a call me my partner I did you said those 12 line. So this is maybe a quarter ago and you could see looking out and I'm not saying like year true, but you know it seems like you know I read the growth rates I'm huh.
Many micro AG was 80 per cent per year for five years.
Yes, I am looking out I did you said you know eventually they'll be thousands of these lines you know Muslim in Asia, probably is that correct or did I get that long.
Well what he is the most of the movie to literally in the right ballpark that older dead on.
But if there is off to date I know probably ought to think you can do attitude, they're not all patient on today and the number we rapidly increase the they didn't have the grew could even be if people are saying every year for the next five years, that's at the front for Arkansas, and if you any deposit attraction I can really be startups. Good I think that far they're going to answer would be stocking.
To be evident withdraw enough for us or the next year into the good attraction that consumer startups that are using like it wouldn't be out to get if its customers.
Choose them and because of the longer back in may for better they still quality, obviously would it be hired what do you wish him well do micro did he fostered.
Okay, and I guess also he's a Jeff Jeff and I've talked about this a number of times.
So really.
You know, you're a backend company, but let's see entre in the mid end sensors now you are in the mid end.
And I do I understand correctly, just at the mid end to about three times the potential as the backend or four times three times it.
That's involved but I think I'll defer that want to you I don't you take that.
Sure. So I'd like a hard it wasn't excuse me doing market is thought probably about two times the size of the back end market.
It depends on exactly you defined mid end and back end hold this membership up there, but maybe people how cool care, but generally could repeat that begin market. There's about two things the size of banking market.
And that's what I said, it's right now it's about 400 500, when you're going to monitor unfold before everyone's package inspection.
That is backend would be about 150 to 200 million going market.
Okay, basically body with intuitive case.
Okay I'll throw another one of your way to my understanding the front end.
His six times or what the backend theirs.
And when I first started getting enough that we're involved with your company in a fourth quarter should Kim our fourth quarter of 72017.
Hi, Jeff and I were talking and you anticipated that they'd be within five to six years, which would put you out get 20 to 23.
You will start part.
You know start coming into the air you know our into Florida, and just like you are right now with the mid end.
I mean, it's doing that but up transition event. It happens move gradually because the technology gets looked so we never completely and say, okay. There's certainly no yet in fact handoffs.
To give you started moving towards mid end. If you will last year that came off or as long as deputy issues and started doing guitar excuse system and so some of our customers are using this new system right.
It being something type applications and now we are definitely getting into the beginning of the demand listen to it and there could be wake symptoms and system and who can do to bhutto accuracy and that has dilution number that you have systems, even keyboard announcements improved after to see it as if we show the feature size. So that starts getting reaching their schools are different.
And and sort of the teachers blue commodity I didn't hear there we are using walk because like so we are using do like it makes it was I know the fixed movement up about 400 that are leaders and their out of physics physics, non or is that do not allow us to go sub one micron can generate with 400 that are we going right. So you have some limitations.
The bottom I call them, so, but that's still plenty of room photos to grow and start to do some part of the front. Then are you able to see that physically lately I love you all that because himself front that and I've got some applications I'll circle back do you view argument deep you, we type stuff and you know to get that did you put like that's be outside lucky that Vicki.
But then I sort of application software and then you know you agree you see using other than settings.
Micron is good enough individually and then we should be able to get that was in the next few years, but he's looking to move gradually it's not going to be able to them.
Come off the cliff and so the movie having said that got something of that.
But you look at about five to seven years from here or are you guys should be well entrenched in the front end.
Yeah, I mean, it looks if you will be they'll do these sort of leasing some applications in the front end inside the restaurant got statistical would restart they should the U.S. business would be authentic.
Now my understanding you could clarify is five jeeves coming on and talking to someone actually its fund manager. He has been debt on on the timing. He said that the in 22 will really start seeing the gadgets, but if it's 22 is where they start seeing gadget stuff Delta chip companies.
And obviously the equipment properties.
[noise] wrap up and 21 after launching of all these are spot so called gadgets for internet of things and Fiveg and everything.
Yes, I think is definitely going on there and do it doesn't seem to publish are doing multiple people.
The best friends to look for holder that book is happening is I look at a new quotes from companies such as you can see all my call them.
At about a lot more Glenn let alone the time lines and clearly the some of these investments have already started a downtick we'd be happy to the next few months breakeven is expected to be that began topia.
So yeah.
Expect issues that will stop loss as consumers will be getting fight you devices might end up getting people to do a sort of leading listening so stocking now than they could do that but over the next two years. So.
So really we're looking at really big ramps and not five you know obviously my many micro that will that be accurate.
Well. There then we did have been fighting no doubt about that.
But you can be exactly how much you do that they can dogs, but it's going to get good reports have been coming from the industry. So we just issue, though media report came out yesterday, so that gets us gets into they'll be doing some work what it means that the of Capex investment and so on and it gives all goes because it's all good deals that expected.
Some grow 10 second half of this year and the growth direction, what it next year and input because because it's exciting times for the who find can't industry I know.
Hold on one second here.
Okay here I just got a question from.
One of my my partner, you, where you have mentioned that past cyber has a competitive lead for the micro LCD inspection can you describe the advantage that cyber has where are the competitors.
Sure. So oh no excuse he tells everybody from consistent what we have done.
To date is enabling a multiple applications in the same system. So the everything the same hardware Samsung looking to flip a switch off a software we can see chip from a scientifically since picture, but where do I want to make it up because inspection won't be the argument, Michigan machine or we can run the seem system is completely team.
For the buttons and that's extremely useful thrown in for Mike really de application. So when do you need for instance, with yet we shouldn't winners and utilize bbten, though the precise location ixmyelocel patients die and feed that slot machine rapidly because the inflation issue.
Ladies and equally to the proxy that we can go.
Discovered completely on block so they likely be functionality Fargo skew the like the <unk> you can we showed up the sons and then separately the modest appointees wholly different shapes the speed accuracy.
Moving to see Darling.
That's really hit on mortgage company was because of that modest at monkey together with a recently, but he hired to the submission names, but I'm pretty sure it doesn't quite.
Having said that that are partially the likely due process and that the inspection on there Jim if there's not that critical and conventional off the shelves into a place to ours or if you I system can do its job I thought it was so we're not getting all the inspection steps.
I couldn't be today and a as as the business, we would definitely increasing size I didn't get book of business.
Coming into the city know outage on plan, obviously is to keep improving sealy coupon announcements on hundreds of Boucher hundreds speed excuse coming down.
Because of the Michael if you dive into getting smaller and smaller going up at least for to get more types that are tighter or do they could even be worked with them I couldn't be disciplined shows the distribution and I could just seems to be significantly better than where it is today. So we are there to be targeting the hunting part of my comment maybe not the number the wouldn't board.
Does that answer your question.
Yes sure did one more question from a Craig Boelte sooner is six separate.
Tools involved in process. The process did you quickly described the six tool functions.
So she also into my community you start to incoming substrate inspection ditches and come song something from a substrates you know to inspect and then you do a conventional or some sort of thinking oh fat. So that's conventional SPR than you do a.
He still.
Automated optical inspection steps up to the basement off a the dice then you take it to the high when do you do a full screen snow often automated optical inspection if that's your fourth stuff.
Then you do where they talk to me, but just to put that in the area. That's on of course debunks. He would be expected that you have to school stuff and then the final one is what because I am I going restrictions that you don't specifically on that show that he is correct.
And that's your system.
Okay, I think I got one more question for you guys.
No I think the automotive industry took its my understanding sort of misunderstood I know so it's tough sledding right now but.
The potential huge.
I understand it just yet having worked ships those in these things are really good maybe 510 years ago, and then looking outside 10 years now much more content spending in it you conduct where you think I listen to barbells.
Well I mean, I guess, a strategic good acquisition of automotive.
There are pretty bullish on sort of maybe we've seen the bottom and [noise].
We're pretty excited about the acquisition so even talk about automotive.
Oh for another consider going into the C.. We believe we'll continue to grow like automotive is a big part of that along with nobody then cloud and they're going to you on site you into it although clearly as you can see auto you buy today has a lot more chips and what is there a few years ago and.
I think there's not going to go backwards. So as you go forward with autonomous driving company, that's going to be a liquidity a boxes of chips or to people who own doesn't because you know what could go them within two minutes. So we don't see this group back where you can move onto isn't going to be a big driver it off on semi chips moving forward and Waterboard Tonight.
So the chips if you really.
So I look at exciting to contributed what have you ever somehow.
Okay I think on the answer my question is a great corridor and keeping zone.
When they get there.
There are no further questions at this time I would now like to turn the call. It back to the hosts for any additional are closing remark.
Well. Thank you all 40, an interesting question. So we look forward to update can you talk to sunset. The Gulf brought the total orders tend to do.
Thank you.
That concludes today's conference. Thank you for your participation, ladies and gentlemen, you may now with it.
[noise].
Oh.
[noise] Oh.
[noise].