Q1 2021 Kulicke and Soffa Industries Inc Earnings Call
Greetings and welcome to the Culiacan and sulfur.
'twenty 'twenty one first the fiscal quarter results conference call at this time, all participants are in a listen only mode.
If anyone should require operator assistance, please press star zero and or telephone keypad. As a reminder of this conference is being recorded and stuff.
My pleasure to turn the call over to Joe Rogan. The please go ahead.
Thank you welcome everyone to kill of itself as the fiscal first quarter 2021 conference call.
Joining us on the call today, Rfps, and Chen President and Chief Executive Officer, and Luster Wong Chief Financial Officer.
For those of you who have not received a copy of todays results the release as well as the supplemental earnings presentation of are both available and the Investor Relations section of our website at Investor Day, that's dot com.
Beginning of this period, we've changed our non-GAAP disclosures and adjusted the end market categorization of capital equipment sales and these changes better align non-GAAP reporting with our peer group and provide better insight for the underlying demand drivers expected to affect our business.
In addition to historical statements today's remarks will contain statements relating to future events and our future results. These statements are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, our actual results and financial condition may differ materially from what is indicated and those forward looking statements.
For a complete discussion of the risks associated with fuel can solve for that could affect our future results and financial condition. Please refer to our recent SEC filings specifically the 10-K for the year ended October three 2020, and the 8-K filed yesterday.
With that said I would now like to turn the call over to Susan Chen for the business overview. Please go ahead for us yet.
Thank you Joel we are pleased for the post strong financial performance progress in all of it the bunch of display business and the implement two outlook on today's call.
Plus we have of recently acquired U S base, you and you called the Inc.
And all cases transaction once he has all the competency and the ultimate potential in the plus of growing the bank is free of.
The market.
Even parts of the need for equities and we work closely he was in the Qatar two of theory and the adoption of the bunch of media of Italy, The big lately.
Mike I might even be cut us domain knowledge and the unique intellectual property with all of operational and the development and competency we have improved our provision in this exciting but the bank is pretty marketplace.
We expect our next generation with a bunch of display system and will see alright, well the adoption of the best of suite, but you'd realize and locally.
And sort of the Bowl Big Nike, Inc. And also of ballot initiatives, Michael L. B day approaches.
And by the close of fiscal year 'twenty 'twenty, one we expect to introduce and the initial qualifications for all of the Nextgen originally at the bank is for system.
We anticipate strong demand for this solution and swell of physical you plenty of Honey Dew, it's the brother and what should the market begins to adopt new phones the lives.
Mixing the ongoing strength of the general semiconductor and the Italy, and marketing and the <unk>.
Ongoing recovery in the automotive demand and cash inflows all of fiscal year outlook.
Rob trends such as the fight and the other bunch of display as well as the fundamental transition and the automotive market has only recently become meaningful to our business.
We expect these new secular trend to provide significant growth and the market expansion opportunities.
The coming yes.
The current demand and for all products and the soldier is strong and the standard for several areas for us.
The other investment in the big and capacity of spending over the past two years was historically unique and the east now behind us and other returned to a more typical semiconductor unit growth, which benefits all of the capital equipment market.
The guidance.
Although the company, yes, we expect semiconductor unit growth to exceed the historical average of six to six five per cent.
Next we also see a strong demand all of your other bunch of C suite business and expect multiple because of that women with all the Palmer and the kind of of the system, which will generate more significant revenue studying in fiscal 'twenty and 'twenty two.
We will provide more updates over the coming few quarters.
And finally.
We are also seeing increased cash.
The intensity due to a more complex and us and what are your approaches.
And the increasing complexity is more secular driver you expect it to sort of for the into the futures.
I will explain.
The mortgage here shortly.
Given our cost of amendment to the strength and the ongoing interest when customers all of them has improved significantly.
Oh and co head of November quantities.
Currently of due to improved visibility into all of a second half we.
We are not anticipating and revenue for the year to be approximately $1 $1 billion, representing a significant improvement over 75 per cent from fiscal year 'twenty and 'twenty.
We have aggressively rent all of production capacity and.
Operationally, we built to support this higher level of the met.
The ability to scale production quickly and efficiently is an inherent and the long established operational competency and the candidates.
With that said we.
Got closer to the monitoring blood of supply chain and the luggage the court constraints.
And at this moment.
We are comfortable we can achieve for diesel yeah, yeah, Yeah of course, okay.
Turning to other simple quote as a result, which in the rate in 267 point of $9 million hopefully begin the exempting 61 per cent increase the flow of September quarters.
The EPS of Sigma increased by 5% sequentially driven by higher production of the table. We continue to make the progress to explain all of the shifts within the ABS market.
Have you thought you could make the present agents for the percent of all the revenue and the increased by 65% sequentially largely due to implement we didn't know cumulus and come back, though and we do.
And the auto industrial and market.
Yeah.
You have the simple goodness.
So if we can get it our dedicated advanced packaging and market categories.
What we previously at the.
Bunch of packaging is now primarily and I'll kick it to the general semiconductor and market.
As we mentioned last quarter and that discuss the earlier, but the bulk of spec each.
A more complex assembly pick of Nick.
<unk> become a material component of it we didn't all of the end market.
And this increasing complexity is largely related to the growth of my view of that package, which provide a cost effective solution for the extent phone and pick the benefit.
These are the approach helped to overcome the well known north of extreme challenge like the increase in countries. The density and then the pigs your label.
We anticipate the men and the complexity of immediate for multi die a beach will come to you and your let's say of regime.
And the we'll continue to improve the capital intensity of all.
Of a soft market.
We Didnt general semiconductor, we estimate over 40 per cent of December sales.
Marty The assembly once you require more assembly capacity than a typical single day package.
Yes.
We didnt memory <unk> 60 per cent of all of the exposure of support staff and then what all of the high case volume and the most of the tranches of debt package available.
Finally.
Within the energy market.
About 50 per se is associated with the bunch of disparate.
For the December quarter, we estimate of 38 per cent of kept the increments, yes, our support and more complex of the bunch of packaging applications and English and the capital intensity of the semiconductor and OLED.
And the memory market.
Turning to our completion of kept the equipment sales in the December quarters.
Gino semiconductor wants simple a broad suite of application.
The smartphone.
And the consumer electronics continue to be very strong and the has increased by nearly 70% sequentially.
As discussed increasing complexity and additional layer of the met two of this critical and market.
The automotive and the industrial end market experienced a dramatic improvement over 100% sequentially.
And at this point the us the shortage.
Send the contract goes through all of the automotive supply chain and the we have experience of stone schedule of English and the utilization of data of our automotive the installed base over the December period.
Due to this of near term dynamic come out with the broader long term transition to for the electric and the 40 of Thomas vehicle. We are optimistic on all of them and look forward to for the support all of a broad base of automotive Cosmos.
And the long term.
As the expected areas of demand and how does it improve due to the ongoing adoption of all of the bunch of display system and also sequential improvement for general lighting and it'll E beam capacity.
Looking ahead, we are confident in our position.
The technology, a little net and the customer engagement with the both high and bought and general lighting and also high growth of the bunch of disparate applications.
As a reminder, the spike career challenge last year.
The COVID-19, we watched the are able to achieve all of fiscal year 'twenty and 'twenty at the bank of display Arabian target and the expect a production line to continue through fiscal year, 'twenty and 'twenty two.
Yeah.
All of the creation of the unit cutoff for the enhance the operation. We think is exciting other banks yes.
Putting the market and the we anticipate a meaningful improvement to our outlook.
We will provide additional feedback on all of our people and progress and the longer term of the bank you split your expectations, albeit in the coming for us.
I'll do the delay period as the old meaningful monkey extension.
And we got the video optimistic in the near term outlook and the in.
In all of our ability to put the spend meaningful.
Long term and the more structural opportunity.
We continue to focus on sort of market expansion through all of what.
What is your patient within the other bunch of.
The market the pause.
And the mingled transfusion in the automotive and the.
And the ongoing adoption of more complex semiconductor assembly.
After two years of softer demand.
The industry momentum is currently very high.
And also listening are increasingly of night was the diesel major trend and the we anticipate a transition into a multiple expansion chiller.
Over the period, we expect our suite of multi growth for our survey and the pull by additional opportunities to create lasting shareholder value.
I would now like to turn the call over the lives of the Wong who will cover this quarter's financial overview of in greater detail that's true.
Thank you for my remarks today will refer to GAAP results unless noted.
And as Peter mentioned the name for our products and services remains strong and the December quarter revenue of $267 9 million up 51% sequentially.
We were again able to quickly flex operational capacity to support the dramatic sequential improvement.
Gross margin in December came in at $45 four per cent and we generated net income of $48 4 million and non-GAAP EPS of <unk> 86 net.
At this level of business or operating leverage becomes significant.
During the December quarter, we generated operating margin of 20% and increase of over 700 basis points from the September quarter.
Considering the operating leverage and our outlook, we expect the generate strong free cash flow over the coming years.
We continued the very focused on cost control. Despite the more favorable business conditions, which has helped drive the central quarter operating expenses to be slightly better than expected.
We also expect operating expenses to follow of historical model of approximately $53 million of fixed quarterly expense for 5% to 7% of variable expense tied to revenue.
We did not anticipate and material increase to our operating expense model as the result of the unit cost of acquisition.
Tax expense for the quarter came in at $6 $3 million and we continue to target and 18% long term effective tax rate, although anticipate the effective tax rate come in closer to 15% from fiscal 2021.
Turning to the balance sheet, we ended the December quarter with a total net cash and investment position of $576 $7 million up $46 $5 million sequentially, which represents $9.19 per diluted share.
The unit called the acquisition close in the March quarter, and the cash impact will be reflected in the March quarter result.
Considering the strong current demand and we improved working capital efficiency during the December quarter day.
As of accounts receivable was down from 101 day to 76 days days of inventory improved from 113 for 77 days and days of accounts payable decreased slightly from 58 to 55 day.
For the March quarter, we continue to expect further demand improvement for our products and services.
We expect revenue to be approximately 300 million plus or minus $20 million gross margins are expected. The approximately 45, 5% plus or minus 50 basis points due largely to product mix.
GAAP operating expense is expected to be approximately $76 million, plus or minus 2% and non-GAAP EPS to be 88, plus or minus 10%.
This concludes our prepared comments operator, please open the call for questions.
Thank you and not be conducting a question and answer session if you'd like to be placed for the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question queue. You May press star two if he'd like true book of your question from the queue for participants using speaker equipment, maybe necessary to.
Take care of per handset before pressing the star one one moment. Please while we poll for questions. Our first question today is coming from Tom <unk> from D. A Davidson your line is now live.
Yeah, Good morning, and good afternoon, and so just wanted to confirm the new outlook for 'twenty 'twenty, one fiscal 'twenty. One is $1 1 billion up 75 per cent year over year.
That is correct.
So when you look at the the obviously the very strong growth. This year and you know what you can split it between how much of that is driven by just unit growth the industry versus share gains maybe versus increased intensity for your tools.
Yeah.
So.
All of I think are you would you feel reason number one of course the.
In the past two years and.
19, and 20 is because of the semi Duncan and.
The Oh, the investments on the customer and why not go another way. So we expect this year will be slightly be higher than the 626 points and you know so number one is really the unit goes coming back.
The number two I think the ease of British Inc, and we have seen the different for Illumina.
For example, the transition of whom of 42 five G.
We are seeing the demand are full of multi die package you. Big example is the.
Our module.
So this module.
Actually you know typically you have about for day to 40 days you know.
Actually the demand increases significantly the would you you know transitions of ITG.
And not only the among all of the multi die of ticket increase.
And the diet is much more complicated.
So the time to process of these package and also you know increased dramatically sort of deal flow of capital intensity increase.
And so our oldest and when you actually would give a guidance and normally oh days should be along the density right. We picked us and he was the beach I think 2017 is normal year.
And very strong year and 19 of the year. So you took the average and he was supposed to them for D.
So what do you see some of it should be up and be presentable number of all based on that and the normal the year.
And we estimate these are complex you know additional multi die package.
Actually increase of all kept the intensity, we estimate another $100 million debates.
The debate Tonight, So I don't know if I answer your question or not.
And Oh of course, the although it wasn't coming back and the aging it up and say Oh. This is a much closer to 1 billion donor and then before that.
And why I think my opinion is up and almost a day of oil product and it was sort of momentum and therefore, we feel comfortable that this year, we should be able to touch it.
And <unk>.
Okay No that's.
That's great that's good color.
And I guess when the switch gears here and look at the acquisition of Ya.
Yeah, and the car to them. So I guess a couple of things first is that a competitor to Roche.
Do they have any revenue associated with them and isn't the way to give us the.
A rough idea of what the cost was.
Okay. So all of you will have the list of instead of the cost.
So I think got logs in the is our first Ah you know partner.
And then the product is copies of all of this is the old first generation of our media and <unk>.
It would be system.
And in 'twenty and 'twenty last year, We guide the street and also accomplish and revenue around $40 million.
And the last earning call I think the guy.
The revenue for 'twenty, one will be of $60 million to $80 million I think of we are more close to a high end and.
All of the system weird when the ship Ah is a piece of losses. So this is all of the first generation of the products.
And the in my script and I also mentioned by the close of our fiscal 'twenty. One we expect the amongst all of the next generation of the bunch of display.
The display system and ease of use of 100 per cent of Oh, Candice I tee up the equal.
And of a unit called the.
And the the second generation of system is expected to contribute a two hour of fiscal 'twenty tens of of Libya right.
So so your question is are the difference over the switch system.
Hold the weed pollution is I think the alone mid 'twenty 'twenty two.
We will have an overlap of at least of a system and but we'd be the of our second generation Oh, the system and would you utilize 100% of own IP will have a much higher productivity and she'll pickles and I've seen a lot of time, probably the wrong me the overtime and to do.
So I hope I answered the question Tim Yeah, that's great. Thanks.
Physician price was around $26 million.
And was there any revenue associated with that or was this purely IP technology.
And so clearly technology acquisition.
Great. Okay. Thank you for your time.
Okay. Thanks, Tom for you Tom. Thank you. Our next question today is coming from Krish <unk> from Cowen and company. Your line is now live.
Yeah, Hi, Thanks for taking my question and a couple of them Susan you mentioned about how the.
Investment and back and spend especially wire bonding and the yeah.
And no ASC. This morning also spoke about.
The bonding demand being tight true all of 'twenty 'twenty, one so I'm just kind of curious.
What is your visibility today and wire bond days, given what your big customer of the thing and I'm.
Should we assume that you know the wire bonding is one of the main tied to all of the 'twenty 'twenty one.
How do we go and add excess capacity of the theater or do you think it's going to be more smoother for the next couple of years and then I had a couple of follow ups.
Krish and I.
I the only if I understand for the real questions.
Your can you repeat again quickly.
Sure. So you spoke about and that's meant and wire bonding and by the cats, that's going on for the last couple of years. So now that they're doing the catch up investment and how long do you think it's one of the last.
Oh, okay.
So Chris.
Because the only produce weird I think.
Ah the estimate from the market. This year is about a trillion Titan semiconductor die.
It will be produced roughly of the Chilean die.
And the estimate of our market shares.
Oh for the bolt on the I'd say about 65% of this die you know our process by Bob on the between 65 to 70.
So both of them basically of the stake.
And the board on the also wins, who you know allowed the about taking the lead and Pullman, Although we cannot provide the detail you know you know inflammation actually a bolt on the a lot of technology associated with that and are.
For example, a colony.
All of the stick and then you know a majority actually you know the ease of use of the bottom of the and the many many media or the speaking.
And the also multi die of.
And I mentioned, including its IP.
And also including other you know Martina and module.
H D is a very complicated you know bourbon and deposits right.
And so to answer your question and I think this year.
The revenue for below the ease of the biggest storm, maybe ease of Libya strong the needed because of two of your own the investment.
But we are quite optimistic the bolt on with the uses the heat to the state and the the label actually the industries needed to support of the Oval industries go arching of Bourbon and Bill will continue to go.
Got it got it that makes sense and then two other quick questions. One is and pixel ex did you get a big deal.
FY 'twenty one revenue targets of pixel look for is it still $60 million to $80 million.
Yeah, that's correct and that's what we'd guy last quarter, but they know and I know, we are long and maybe like the this quarter is about $22 million right. So of hopefully.
We will reach the higher end of over a little bit of this year.
For the FY 'twenty one.
Got it got it and then the final question foods and on the unit cost of acquisition.
Is it you know.
Is this type of deal that you know your big select the pick and place technology that works well for many L E D.
Mike not scale up for micro Leds, that's why you need the laser transfer the approach for micro Leds and led the way to think about the acquisition and are you going to still work in parallel do you know improved picks the luxe a placement of speed.
Okay, I think you know.
The we do believe I know what you do you see the screen Oh of PR. A press release. This is a lethal basis and I'll take the <unk>.
We believe the potential.
It is much much faster so I'll give you example.
The large TV very very large television you know.
If you need the mini or micro Leds, you probably need a place of about 25 million die.
So we adjusted the infant stage of these industries to grow right.
We are talking about maybe.
And $100 and there is more of and that means the second process of less than 100 day I think in the future the speed need to be much much faster to support is the industries growth.
It's why I think unicorn.
We choose it to be and next generation over the technology and I mentioned.
We have piece of that and we in the next generation, we believe maybe along the middle of 'twenty and 'twenty two will be crossover.
And the industrial design, which one that will be a faster and technology and we feel like right now.
We won't have.
Plus the.
Productivity.
Probably.
For the unit.
And recent history.
Yeah.
Got it got it thanks, Susan and a really good congrats on the strongest from thank you.
Okay. Thank you.
The next question is coming from Craig Ellis from B Riley of your line is now of life.
Yeah. Thanks for taking the question and then and congrats as well on the strong execution and the quarter and and beating the tremendous upside demand.
Bruce and I wanted to just start by going back to some of your comments on some.
The market for fiscal 'twenty, one and thanks for all of the colors. So part of the question is this is as we look at the new fiscal 'twenty, one demand outlook for revenues of $1 1 billion and can you help us understand the should look into the back half of the fiscal year, where do you have relatively higher or lower demand visibility.
Alrighty.
And just your different and market opportunities.
Okay. So correct the first quarter I think we'd see the deliberate to 67 nine and stuff.
So the second quarter I think we'd guide of 300, and so if you add is to get out of.
Little bit.
More than 550 items of.
567 so.
We are looking at you know if you have the mirror image. So Q2, the second half.
And can be the mirror image of the first half lemons.
Let me, we expect Q4 probably would.
They have a seasonality as usual, but it's not going to be basically chicken right. So if we model you know Q1 is comparable to Q4, and the Q2 and QC compatible and.
We got the about one per one day day.
So is the health.
It does but my question was actually a little bit different and it was really related to <unk>.
The.
The visibility that you have and the demand that makes up that profile. So underneath that profile is your visibility similar across auto and and things.
Other end markets that you mentioned like I'm like a five day smartphones and and game on cards and consoles that are and consumer.
And I noticed that at least from the Investor day that memory revenue of sort of a very low and the quarter do you see memory coming back and and if so to what extent through the back half of the year.
Okay. So I think our general semi is the strong you know from Q1 to queue for continuously.
So the old or start to the stronger this.
And this quarter I think a combination of auto is also coming back and EV is a helpful. So we do BD of.
For Q1, we start with auto.
B are quite strong and that would be of help.
And a lot.
And the fall of memory.
And at this moment, we don't see for recovery yet.
But actually we see actually start to see the cash.
Over the coming so we can deliver and next few quarter, namely will start to pick up so the memory probably is the loss of second line you know other than the Modi.
The segment I think we see very strong demand, but we already see initial investment of a member of coming also from the past three years.
Actually the industry utilization rates started going up and also the big growth per year as income from annual growth rate is.
Consistently close to a city percentage every year. So we do believe our memory is on the worth of come back.
That's very helpful. My next question goes back to some of the comments and prepared remarks from.
From you and and luster and it relates to supply and so clearly a phenomenal operations quarter and the December quarter.
Meeting demand and then implied and the outlook for March with the $300 million and revenue of the question is this if demand this year for it to be meaningfully above the current 1.1 billion and forecast.
Would the company have the ability to flex up supply of further.
And to meet that demand or at the current forecast you see either constraints for other bottlenecks that would preclude revenues from being higher than that if any of the end markets that you just discussed proved to be stronger than we can now see.
Okay.
I think the demand is really strong right now but.
But as you also know in the industry.
I have a minor maybe it'd be more in line the problem for the supply chain constraints.
No.
And they are component shortage also of semiconductor the di switches and also some other logistical constraints for some of the.
And also any of the difficulty.
So are we.
We are comfortable with the one $1 billion goal.
No we still have upside.
But the upside maybe it will be constrained and there is movement the global supply chain.
Kind of strength, but we're not going to give up.
Whatever we can do.
We will try the best so answer your question I think the this of demand is.
It's also very dynamic right. So if you ask us and we can give you the ease of movement and it looks like because they asked the upside but they are also a significant headwind.
For the supply chain and no shortage and the one one is the <unk>.
And we feel comfortable and the upside.
And there's also a risk that's why I think of.
We need to monitor and the flow of ever.
If we want to realize additional upside.
That's very helpful and and my last question is the longer term question and it goes back to the target model that the company set of.
A few years ago, and and the question that it's clear that there appears to be across virtually all end markets.
Demand strength and it has underlying drivers that are multi year in nature.
And when the company set its target model the midpoint of the low and was 1.15 billion. So you're almost getting to that low and this year with current guidance. The question is this given the multiyear nature of demand.
And are the gives and takes to potentially seeing the midterm model revenues and.
In fiscal 'twenty, two I believe that one underlying assumption there was the significant increase and services revenues can those revenues ramp quickly enough really to get us towards that.
That 1.1 of eight 7 billion for.
Or might there be other areas of strength of the just greater for example of the degree of advanced packaging uptake that could more than offset that if that didn't come to deliver us towards that target.
Target financial model mid point in fiscal 'twenty two thank you.
Okay. So.
I think what was the this.
The significant revenue.
Of course it is.
Liberty team.
If you go to put through the next year.
But I think I mentioned today in the Q&A.
The origin of our diet guidance for the normal year. This nine is about 70 day.
They're not with the.
And the capital intensity I think we see and.
The FTP.
The right because of the kept the intensity increases so this very close to $1 billion.
Much closer than before and.
And on top of lab I think.
We have of upside.
And free chip.
And <unk> is a new product for us of that so for the full of London I think they are very important all free chip is a very very good accuracy and very high productivity and PCB I think we actually are.
And quite comfortable with.
As a few design wins and hopefully it will ramp up of wholesale for the next couple of years.
So we have a free chip PCB display.
Display market I think of it can also be upside for us and also Aps Aps I think I'll give you example, part of the 17.
Our revenue and maybe at 140 and then.
Leave plenty of 'twenty is about 170, and we do believe industries.
Sorry for years, we have another upside of for another $40 million to $50 million. So all of your agent together.
So.
So hopefully I think one of the NCS lease I assume the industry next couple of years should be very very healthy so as long as the industries of healthy I think our core business is.
Very very healthy.
For us and we also of the upside for your area of attention.
Our dedicated.
At the packaging for Egypt, and PCB and also of display and the EPS.
I think you know.
We are quite optimistic for kinase and the the.
The whole industry for the 'twenty, one and beyond.
So the credit to add on the sense that right on top of the revenue he built for you.
Given the tremendous operating leverage we believe that at above $1 billion, which again since interest indicated that there's a clear path to it on a sustainable basis that the operating leverage would allow us to have an EPS of between close to $3.
On the sustainable basis.
That's very helpful gentlemen, thank you very much.
Thank you for the next question is coming from David Duley from Steelhead Securities. Your line is now live.
Thanks for taking my question congratulations on great results.
My question is when I look at your backlog and it certainly suggests that your order rates were substantially above the revenue that you just reported probably like a $140 million above.
Has have your overall I guess kind of I'm, assuming that your overall visibility has extended the could you just help us kind of understand how much more visibility you have now and then.
And maybe help us understand how have your lead times extended one of your current lead times for wire Bonder.
So a day or visit the has extended and.
And as you put in the backlog.
Customers and I'm, putting in T O and a tremendous rate.
Not just for the next quarter, but for the remaining rest of the fiscal year, given the very tight demand.
From a product and I suppose for all products and as long as the lead times lead time now has gone up significantly I would say, it's almost up to about 40 weeks and so somebody 40 weeks. So I think we do have much better visibility, which is why I think we were comfortable in terms of.
The guidance of a $1 $1 billion for the year.
Okay great.
As far as contribution.
I think on the last conference call roughly of your guidance for the year was like $780 million and now you bumped it up the $1 1 billion could you just talk about the difference between the you.
You know what the Delta is and your segments of business between the 780 and $1 1 billion, roughly where you've kind of gone through this but this is asking the question a different way where did the upside come from and your annual model from the 782, the $1 1 billion.
So Dave I think I think its across all sectors to be honest I mean, I think general semi itself you know.
It's it's really driving the business and the general semi was closer to about 74% of our of our revenues for this quarter and general semi basically went up by about I.
I guess and one of about 70% right automotive more than double went out of about 100 per cent from the December quarter, and <unk> went up about 80% right. So we see strength across all of the segments. I think automotive is definitely coming back and and you can see that in terms of the headlines every day in terms of the automotive companies, having line down and so there's a real.
Price right now so again I think the difference is it's just and.
Credit book right.
Across the board.
Excellent and what.
This $1 1 billion and kind of target for revenue for the year.
As far as the operating.
Margin performance going forward I mean, the I think you just achieved the number we haven't seen since for for some time should.
Should we expect this 19 or 20% run rate whatever I guess it was 20 per cent is that the kind of the expectation throughout this calendar year for and operating margin goal.
Well well there you know I don't guide.
Hello.
The year below revenue, but and I I mean, I think if you do the math in terms of we believe the gross margin would be to be consistent around the level. We had this quarter and between 45% of 46%. We believe that we always set the.
And expense Opex of about $53 million, the 5% to 7% variable and then there is a I just guided to an effective tax rate of 15% and so if you back and I think you kind of very close and the number you just said.
I think it does generate by the way more of a little bit more than $3 and earnings so congratulations.
I look forward to the this is continuing to improve throughout the year.
And I think of anything today.
Thank you as a reminder, that star one to be placed and the question queue. Our next question is coming from Christian Schwab from Craig Hallum Capital Group. Your line is now of life.
Hey, excuse me congratulations guys on and.
Just the fabulous quarter and outlook and the ability to ramp that up.
The Fusin you know.
As we listened to this and we look at some of your other peers and the backend of I'm curious your thoughts on this but it seems to me that we're seeing the tremendous industry shift and value.
And that is actually just starting.
And the backend of the semiconductor equipment process, where capital intensity.
Is beginning to meaningfully increase something we saw when the NAND industry had the switch to three D and and when you know of foundry and logic had the shrink you know sub 28 right. So we were seeing you know general semi conductors and you're seeing increased volume.
And complex chips chips that used to be you know one package debt are now four or six or eight and and and on top of that we're seeing drivers like five G and automotive medical and Wifi upgrade costs.
Proportionate volume, even greater than the general industry is doing and with that multi die packaging is creating increased complexity, which is causing and where we started increase capital intensity and it doesn't seem like there's.
Other technologies that could disrupt this trend.
It just seems where the industry is going and a pull.
Most of you know Moores law of World, If you will debt.
Just going to see more and more multiple chip packages for an extended period of time and we've underinvested for for years, so unless there's some type of.
Economic dislocation that has caused globally again.
Probably boys and likely you know if we can't get the Covid under control I mean the.
This could be very similar to the shift that we saw in the front and this could be the three to five year trend that just keeps on going and then stays extremely capital the intense.
Especially if we're going to go from 200 million five day smartphones, two 3 billion.
Ex or plus or minus over the next four to five years and my thinking about that right. So that's what you guys are trying to say yeah. Yeah. I think yeah. We agree we are quite optimistic overall industry.
And the crews are.
On top of what you would say I think we also tried to get into the exciting new business like the the spirit and.
And I think this will also provide additional engine for us.
And we do believe at this moment, we have our best work for the industry and.
And Oh, we are going to kick in of our differentiation.
Against our any potential competitor so with the.
The strength in the industry and also more and more slow.
Industrial trend and present, new opportunities and we are getting a good team and we are.
And quite optimistic at this moment.
Right and then I guess my last question.
So has to do with cash.
Oh yeah.
What are your thoughts we are over the course of the next few years.
And with these type of trends and revenues and and the way your model Flexes, we're gonna have substantial amount of cash and the balance sheet and a couple of years.
Can you give us the and I you know and you already have a substantial amount of.
Sure.
Can you give us an idea of you know.
Hum.
Do you think about you've been you know historically of.
From a very shareholder friendly repurchase share of your Sears and the open market, but could you kind of tell us kind of what you're thinking of it sure is cash.
Sure.
Is it something and then and they have a list of also contribute a few of sentence. So at this moment.
Give you a example.
Of the Pizza lovers.
From the first day with development and through generally of the revenue I think we picked up a little bit more than two years and the <unk>.
She and the sizable.
Revenue.
So we also believe we have of your other products maybe in the same.
The way and we will continue also in the new display you know and.
The industry.
So Nick of study shortly.
The short term I think of it we have many of the growth engine.
And unit called the ease of additional one we believe additional technology can I have lots of below this is the one past I think we probably like a lot.
And we doing dividend with the in stock buyback, we are not going to give up this will continue.
Ah So if M&A I think will be lost choice I think we will be of video and the careful.
And I think in the short term there.
And when we need to deal with and you know.
There's a lot of of new technology that can it for.
For our future growth and they are in the stock.
Page and we are also looking at the many of these sort of Mega story short I think the organic growth.
We are quite confident.
You know we can do a video really with just the games and they'll go and buy ourselves by acquire some of the space you have technology and that's the one way and the fall of shareholder return.
And then.
And also of buyback, we will continue and.
The EBITDA in the late in life license come up we will not give up but so far I think we are.
Not pay and huge of of attention in the bigger M&A at this moment line recently.
So and yeah. So Christian I think I think we've always consistently deploy the cash and as quickly as it kind of was available like in and the different geographies because obviously as we've mentioned before we do have the restrictions and bringing some cash onshore and I think as assistance that we have deployed a significant portion of our free cash flow.
In terms of both of the share repurchase as well as the dividend I mean on the share repurchase.
Try and close to 80% of free cash flow to our shareholders in the 2015 and you look back last year, that's fiscal 2020, a wave of trying to close the 110% year before over 250 close 250%. So I think that's significant I think the other uses of cash as recent allocated and that we do believe that there will continue.
Continue to be interesting technology bolt ons that will help accelerate our development like the units sort of has for our advanced display as well as far some of adjacency technologies.
That would help us build and then also again, we do look at you know prudent acquisition. A reminder, is the acquisition of assembly on is what allowed us basically to have picks of loss and the next generation because that's based on the assembly on platform. So I think between all of those will continue to kind of closely monitor the cash situation.
And we talk about capital allocation every quarter and both of them present us with the board and we will do what most prudent and.
Both in terms of organic initiatives like takes a lot like our advanced packaging plus you know technology.
In terms of net unit Carter and then obviously our returns of the dividend and Opportunistically share repurchases.
Yeah, that's fantastic no other question.
Questions again, congratulations and great results and outlook.
Thank you we reached the end of our question and answer session and turn the floor back over to Joe for any further of closing comments.
Thanks, Kevin.
And thank you to our participants for joining today's call.
We'll be presenting at several upcoming conferences over the coming months as always please feel free to follow up directly with any additional questions and have a great day, everyone. This concludes our call. Thanks.
Thanks for that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.