Q2 2023 Camtek Ltd Earnings Call

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Ladies and gentlemen, thank you for standing by and I would like to welcome all of you to <unk> results Zoom webinar.

My name is Kenny Green and in part of the Investor Relations team at <unk>. All participants other non presenters are currently muted following the formal presentation I'll provide some instructions for participating in a live question and answer session.

I'd like to remind everyone that this conference call is being recorded and the recording will be available on <unk> website from tomorrow.

You should have all received by now the Companys press release, if not please view it on the company's website.

With me today on the call we have Mr. Rafi, Amit <unk> CEO , Mr. Moshe Eisenberg, <unk>, CFO and Mr. Rami Langa Ametek's COO Rafi will open by providing an overview of <unk> results and discuss recent market trends Moshe will then summarize the financial results of the quarter fall.

Knowing that Rafi Moshe and Rami will be available to take your questions.

Before we begin I'd like to remind everyone that certain information provided on this call are internal company estimates unless otherwise specified. This call also may contain forward looking statements. These statements are only predictions and may change as time passes statements. On this call are made as of today and the company undertakes no obligation to update any of the.

Forward looking statements contained whether as a result of new information future events changes expectations or otherwise invest.

Investors are reminded that these forward looking statements are subject to risks and uncertainties that may cause actual events or results to differ materially from those projected including as a result of the effects of general economic conditions risks related to the concentration of a significant portion of <unk> expected business in certain countries, particularly China from which <unk>.

<unk> expects to generate a significant portion of its revenues for the fees for the foreseeable future, but also Taiwan and Korea, including.

The risks of deviations from our expectations regarding timing and the size of orders from customers in these countries.

Changing industry and market trends reduced demand for services and products, the Tommy developments of new services and products and their adoption by the market increased competition in the industry and price reductions as well as due to other risks identified in the Companys filings with the SEC. Please note that the safe Harbor statements in today's press release also covers the.

Contents of this conference call.

In addition.

During this call certain non-GAAP financial measures will be discussed these are used by management to make strategic decisions forecast future results and evaluate the Companys current performance management believes that the presentation of non-GAAP financial measures are useful to investors understanding and assessment of the company's ongoing cooperation and prospects for the future.

A full reconciliation of GAAP to non-GAAP non-GAAP to GAAP financial measures are included in today's earnings release, and our cloud like to hand, the call over to Rafi, Amit <unk> CEO .

Rafi. Please go ahead.

Thanks Kenny.

Good morning, or good afternoon to everyone.

Comtech, Claude second quarter with revenue of $73.8 million.

Gross margin came in at 48%, which is an improvement over Q1, and we expect further improvement in the coming quarters.

Operating margin was 25%.

Approximately 60% of our revenues came from advanced interconnect packaging applications. The remaining 40% is divided between compound semiconductor for power device.

C O U S and process control applications.

I'd like to clarify that under the term advanced interconnect packaging. We include cheap led modules H P. M heterogeneous integration W. P.

Our revenue guidance for Q3 is a $77 million to $79 million with expected continued growth.

In the fourth quarter exceeding $300 million in 2023.

This year.

Third with a lot of uncertainty.

But as we progress into the second half is shaping up to be stronger than originally expected.

The positive trend in the industry and the flow of orders that we are witnessing now.

Our confidence the 'twenty 'twenty four will be an important milestone in reaching a $500 million company.

There has been consensus in the semiconductor industry.

The effective way to significantly increase computing power or more than Moore is through new packaging technologies, such as heterogeneous integration.

In short, including chip modules and high bandwidth memory HBM ensure.

We have mentioned that we are involved in the development.

Of this technology with the leading manufacturers.

In the last year, we have already shipped systems towards the HR segment, but the growth seem to be starting to accelerate now.

It is quite clear.

That growth in demand for data server and HR applications increases the need for high performance computer or HBC in short.

Based on AI technologies, we.

We have recently announced.

Receiving orders for 42 systems.

<unk> portion of the systems.

Is for Cupid modules, and H B M for HII, and we expect to receive more orders of the same coin.

The technological roadmap of the H <unk>.

Is aggressive in aiming to reach five to 10 times higher density than today technology, which in itself is very challenging.

H I technology requires compromising inspection and metrology in many stages of the process to achieve a yield.

Manufacturers will not move to high volume production without maintaining yield.

We have invested.

Considerable efforts in R&D to comply with the technological roadmaps of the AI technology, and we are confident that we will be ready to meet the customer for acquirements on time.

This state of the art technology is a great opportunity for comtech to grow significantly in larger market with fewer competitors.

As I have mentioned earlier.

Applications depend on HBC, which is based on cheaper modules at H B M technologies.

The production process require many step of inspection.

And metrology cut.

<unk> is a key equipment supplier to the players in this market segments, exposing us to significant technology trends and business momentum in this area.

We are very encourage to see fit as we predicted in the beginning of the year. The second half of 2023 is shaping up to be a better than the first half.

This is pure by major investment around HIV AI.

Furthermore, in the last few days, we have received an additional multiple system order from a tier one H b M manufacturer for a total of 10 systems.

And we expect to receive more orders.

We are also seeing customers starting to place orders with longer lead time, which contributes to our visibility into 2024.

We expect the cheaper it modules and H B game will account for over 30% of our business in 'twenty 'twenty four.

Another growth engine for Comtech is the electrification of cars using power devices based on Silicon carbide, which is also expected to grow over 20% CAGR in the next few years.

To summarize we are very positive about 'twenty, 'twenty, four which expected to be a record year for comtech and an important milestone in reaching our next goal of a $500 million company.

And now <unk> will review the financial results Moshe.

Thank you Rafi in my financial summary, I had I will provide the results on a non-GAAP basis. The reconciliation between the GAAP results non-GAAP results appear in the tables at the end of the press release issued earlier today.

Second quarter revenues were $73 $8 million.

Marketing an upturn from the lower revenue reported in the first quarter 2023.

The geographic revenue split for the quarter was as follows Asia, 83% in U S and Europe accounted for 17.

Gross profit for the quarter was 35.

$5 $4 million the gross margin for the quarter was 48%.

An improvement over the 47, 3% last quarter.

As I mentioned before we.

We have been taking measures to improve the gross margin. We are now seeing the initial impact and we expect to see continued gradual improvement in the coming quarters.

Operating expenses in the quarter were $17 $1 million, an increase from the $16 7 million reported in the second quarter of last year and the similar level to the previous quarter.

The increase in the R&D level as we continue to invest in future programs.

Operating profit in the quarter was $18 $3 million compared to the $17 $4 million reported in the previous quarter.

Operating margin was 24, 8% compared to 24%.

In the previous quarter.

Financial income for the quarter was five $8 million compared with $5 1 million in Q1.

And $200000 last year, the majority of the increase relates to the significantly higher interest rates on an increased cash balance.

Net income for the second quarter of 2023 was $21 9 million or 45 cents per diluted share. This is compared to a net income of $22 1 million or <unk>.

46 cents per share in the second quarter of last year, and $24 million or <unk> 42 cents per share.

In the previous quarter.

Total total diluted number of shares as of the end of Q2 was $48 6 million.

Turning to some high level balance sheet and cash flow metrics.

So cash and cash equivalents, including short and long term deposits as of June 32023 were $506 3 million and this is compared with $492 7 million or <unk>.

At the end of the first quarter, we generated $15 $6 million in cash from operations in the quarter.

Inventory level went down by $2 $7 million over the quarter in the last few quarters.

We adjusted the inventory to the reduced business volume.

We are now at the point that we will start to increase the inventory level again to support the business growth.

Accounts receivables were $79 million up from $66 3 million daus in the previous quarter.

Due to the timing of collection.

As for guidance as Rafi said before with the current business momentum, we expect revenues of $77 million to $79 million during the third quarter.

With continued growth into the fourth quarter and in 2024.

And was very fluffy Rami and I will be open to take your questions. Thank.

Thank you Marcia.

At this time, we will begin the question and answer session. If you have a question. Please raise your hand via the zoom platform.

I'll introduce you and ask you Tony after which you may ask your question as we have a lot of people on the call. We will take a few moments now to poll for your questions.

Okay.

Our first question will be from Brian Chin from Stifel. Brian You May go ahead and ask your question.

Hi, there good morning can you hear me okay.

Yes, we can.

Good afternoon, and thanks for letting us ask a few.

And congratulations on the results.

Maybe to start with the sort of the visibility into calendar 'twenty four.

Again, I think you mentioned, 30% plus of revenue next year could be HBM and chip packaging related I guess I could suggest something or approximately $100 million in revenue so for comparison.

Can you provide what the base revenue from <unk> and shipment is expected to be in calendar 'twenty three.

And also in terms of that timing on the revenue next year or do you think it's more heavily first half weighted.

Alright, Robyn was assure these details with you.

I will respond to Brian sold so hi, Brian So first of all let me start with the high bandwidth memory.

So this business over the next 12 months will double.

If we compare it to the previous 12 months.

And if we go back.

We go even further now than it was even smaller.

Definitely.

Big step upward.

As we discuss this business now.

Now as we speak about our visibility over a 24.

So I think roughly said it in the prepared notes, we're definitely seeing a cut.

Customers are more ready to place orders, we're seeing a much higher conversion.

From the pipeline into the backlog and if we look at the overall backlog.

424, plus the pipelines. So we think we have a good visibility moving forward and this goes to our expectation towards 2024.

Okay.

Okay got it.

Or would you say that the order the orders that you are receiving are for like a.

Mike.

Two quarter out.

Shipment at this point to some degree or maybe closer than that edge to even plus one it's even three quarters ahead.

Got it Okay, and then maybe from banks and myself for my follow up.

Just on China as well.

Yes, maybe in second half relative to first half and also this year relative to last year I guess, how is business in China.

Understandably it seemed more spotty this year relative to last but are you starting to get better visibility there as well is that also part of your improved outlook for next year and then also just for comparison can you maybe provide what China represented in <unk> and first half.

So let's talk in general first of all I think the business in China is solid it has been solid.

We are seeing continuing investments in China.

In the current all sorts of new also to come in a lot of startup companies.

And the.

Maybe you want to say worried about it's machine yeah in terms of the numbers, we see China coming up pretty much like in the same level as 2022. So we don't see any decline in the business in China.

Okay Alright.

How about.

Thanks, a lot for the help.

Thank you Brian Thank you.

Our next question is going to be from Charles <unk> from Needham Charles Please go ahead.

Hey, good afternoon.

Thanks.

Congrats on the strong results yet in desktop guidance.

I want to ask a little bit more about HCN.

Knowing that <unk> historically.

It was strong a couple of years and then it went back down for a couple of years and now as you saw again.

Obviously I can see it quoted about that the AI chips or how does that there is some double digit growth going into the next few years, maybe at this time.

Their deaths strongest secular tailwind behind that but how much do you think the current spread is.

A cyclical recovery of HBM and.

How much do you think the secular tailwind is going to be analyzed.

And that's probably the first question I look at the high level, but I appreciate your thoughts. Thank you.

And.

So Charles you know first of all yes.

Agree with you if we talk about the cyclicality, if we go two or three years backwards, saying it started and then it didn't really.

I think that the applications and we talk about the AI today. Most of these components are coming with HBM. So as Rafi said in the prepared notes the high performance computing requires the triplets, where the CPU the strong CPU and dc's coming with something like <unk>.

Six to eight <unk> on each component on each system.

So definitely I think the difference of the HBM today, and if we want to compare it to.

To the past that the application is there something that it was I think the main application back a few a couple of years ago was primarily a gaming application was a graphics card today I think the story is different I think with the GPT and other applications coming along.

The number of AI.

Bonus systems that are sold is much higher and therefore I think the demand is definitely here I would say for the.

I don't want to say I don't know what is foreseeable future.

Don't see this becoming cyclical very quickly.

Thank you Rami.

For the color.

Maybe I want to ask you about competition, but.

<unk> related.

Inspection metrology.

Do you see the competitive landscape.

Is it fair to say can attack property types the majority share.

Do you expect competitors to catch up that your bad posture on this market there Simon is becoming a lot more attractive.

So first of all yes, you are right, it's a lot more attractive.

The volume grows up.

Definitely we are.

A very strong market leader.

I think today with our market position, our understanding of the customer requirements.

I think the barrier for entry is much higher than it used to be previously so.

So yes, there is going to be competitors, but the.

Yeah.

I think that we understand the market and moving forward I think we will continue to hold a major market share in the future as well.

Thanks, Rami, maybe just one last clarification, one is think about areas to have adequate entire today.

Thank you that's my last question.

Because I think we have learned a lot of things what the what the what the application requires we have very close relationship with the customers. We provide a very good customer support and we are re entrenched.

In the processes, how to inspect things how to measure things and I think the this to replace Comtech today with all the understanding and the experience that we have accumulated over the last few years I think it's not an easy task.

Yes, I would like to add that.

Other issue very typically to the semiconductor industry.

Think that the key one of the major issue is maintaining high yield in general in this industry. If you cannot do it youre out of the business now when customers using you know.

Equipment and to get good results high yield.

Very good support there.

You have no good reason to replace it with other competitors. So we work very hard number one to be all the time very competitive performance number tool to give an excellent support to customer and support is not just to fixed machine and application is a lot of <unk>.

Actual feature new R&D, whatever is needed and do it quickly.

So when you provide to our customers such services.

There really is no any good reason to go in to look for another competitor that this is very obvious in this industry.

Yes, thanks for the insights understood.

I appreciate the asset package.

Thank you Charles Thanks, Jos our next question is going to be from Tom O'malley from Barclays. Tom. Please go ahead.

Good morning, and good afternoon, guys. Thanks for taking the question. My first one was just on the supply chain.

You're seeing some some real acceleration in terms of orders on the HCM side could you talk about where specifically to the supply chain, you're selling is that to the the end device maker is that to the memory Guy.

And that's the first part of the question on the second part is just given the acceleration.

Are you seeing the potential to have a 10% customer is just a singular customer yourself to or are there multiple customers that youre selling during the space.

Hi, Tom So first of all we are selling here the HBM, we're selling to the DRAM manufacturers now we are selling to all of them all the leading ones. Obviously I don't want to mention names, but I think you can understand it.

Those vendors that I'm talking about.

So in that respect I am not sure that we will see here a 10% customer.

Okay, and then traditionally you guys break out.

Asia Asia Pacific and rest of world as a percentage of revenue what was that in this past quarter.

Last quarter, it was 90% Asia, and 10% U S and Europe this quarter.

Shifting a little bit more towards U S and Europe .

17% and 83% for Asia.

Great and then just one more quickly.

On the prepared remarks, you guys talked about the year being over $300 million I don't know if you were being very specific about that but.

If you look at December even just a slight amount of sequential growth and even flat gets you above $300 million are you guys being specific or.

Could it easily be gray.

Greater than 300 million could you just talk about how specific you are being with that guidance into Q4.

What we said is basically we provided guidance for Q3 of <unk> 77 to 79, and we also mentioned we expect a sequential growth in the fourth quarter as well.

We did not mention at this point, how significant the growth will be in the fourth quarter versus Q3.

By the way.

So most of the demand that we can see actually stores to 2024.

In the beginning of 2024.

Just to put things in proportion.

Helpful. Thank you.

Thank you Thomas.

Our next question will be from Craig Ellis from B Riley Craig you May go ahead.

Yes, good afternoon team and congratulations on the momentum in the business.

I wanted to start just by <unk>.

Shifting away a little bit from high bandwidth memory, where they are spending a lot of really good color and check on the visibility that you have in calendar 'twenty four.

Other areas. So can you comment on the visibility and Cys in front end macro inspection initial look out to next year.

Hi, Craig so.

<unk>.

I think when we look at 24, so yes, we recovered 30%. We said is going to be the triplets and D. H b.

When we talk about the other array the other segments. So first of all.

The front end macro this is roughly about 15% one 5% of the business and I think it will be a similar number or maybe even a little bit longer larger next year.

Similar number is.

The silicon carbide portion. So I think these together will also amount to something like about 30%.

Cmos image sensors is a little lower this year, it's in the range of about 8% I think it will be a little stronger next year.

So here are already discussed about the <unk>.

70% of the business now the other portion and we are talking here just the triplet in the DAA.

The HBM.

<unk> there is what we call the the wafer level packaging fan mainframe out. This is a significant portion of the business in the range of about 25% to 30%. So also this segment continues to be strong.

So overall when we look at 24.

I think what we're enjoying is the fact that our business is changing and today, we are expecting the wafers in a lot more steps and historically we used to do this is in many parts it's related to the tubular business, where they are we are involved in multiple states, but it's also correct also in the <unk>.

Fronting business as well.

So.

Coupled with that a healthy backlog and pipeline. So all of these together all of the things that I've. Just discussed this is the reason for our optimistic view on 2024.

That's very helpful color Rami. Thank you Moshe if I could turn it over to you and just dig in further on the gross margin implications of the color, we're getting as we look into 2024.

Clearly you've messaged that we're going to have continued gross margin gains. The question is this as we think about the magnitude of gains are there.

Any items, whether it would be higher cost inventory or things that are happening with manufacturing.

With lean too.

More substantial decreases at certain points as revenue revenues ramp or should it be fairly steady and linear.

In association with the revenue ramp up.

Hi, Greg So generally speaking what we have done in the last few months.

We are taking different steps in different directions on the costing side supply chain issues engineering changes into the products.

And also we've looked into the ASB and the marketing efforts around customers.

And all in all we believe that all this major.

Initiatives will result in improved gross margin over the course of the next few quarters.

Obviously product mix is is the fox toward here, so I cannot predict the impact but in general.

The trend would it be a positive trend of improving gross margin.

To around the 50% gross margin level that we've been operating in.

A year ago.

That's really helpful. And then lastly, if I could a more strategic question for Rocky Rafi in the past you expect.

Express excuse me strong ambition for M&A can you talk about some of the gives and takes to executing on M&A in the current environment. For example, previously COVID-19 issues.

Good.

Person to person interaction difficult that would seem to have gone away now, but on the other hand, you've also got a rapidly growing business and perhaps that <unk>.

Directs attention just towards organic growth can you just walk us through the puts and takes to how youre thinking about M&A in the near and intermediate term. Thank you. Okay. First of all you know we're growing very nice but.

We invest a lot a lot of efforts of executing M&A. Okay. We search companies, we had a lot of <unk> companies.

But you know there are something that this industry the semiconductor <unk>.

Our very optimistic industry and most of the Investor really believe on their companies and Theyre not so running to sell the company. So we do a lot of effort and hopefully.

We can maybe do something not so far but what I try to tell we put a lot of attention. Most of my time I think now is for executing M&A.

No.

Definitely we continue investing efforts and I believe that we will see the fruits.

<unk>.

That's really helpful. Robert Thank you.

Okay. Thank you Craig.

Our next question is from Gus Richard of Northland Gas Youre line is open.

Yes. Thank you so much for letting me ask a couple of questions.

Could you give us a sense of what you think the compounded annual growth rate of HBM, plus AI will be over in the next couple of years.

Okay.

Well the CAGR is.

Is above 20% now you need to look at it depends on I would say the number of wayfarers of what is related more related to our business is above 20%. If you look at the next five years Gus.

Okay.

And then.

In terms of heterogeneous integration.

Are you primarily selling what's the mix between <unk> and <unk>.

Foundry IDM.

Okay.

While I don't have the numbers in front of me, but I think as you know the business.

Lynn.

The world There is D.

We sell to all of them today, but if you talk about the more advanced applications, which are related.

Through the <unk> and HBM, which are packaged on.

<unk> integration.

This is more today.

Foundries or a foundry.

AMD leading idms.

This business is starting to proliferate also two domain.

But they are the smaller portion of this business, but definitely over time. This will become more of a more of a business all forms such as web.

Got it got it thank you.

Very helpful and then last one for me.

When you think about your wafer level packaging portion of your business.

What is the driver of that business is it mobile phones is it something else could you just give a little color on the end market dynamics there.

I think this is a very broad market carefully.

Definitely phones.

Everything today that is redesigned is utilizing <unk> wafer level packaging now youll see a very large growth in the fan out segment, because as people start to make those.

That is smaller and smaller they just don't have enough room for the bumps and therefore, they are using the fan out fan out is also cheaper it doesn't require the substrate and it hasnt. Some some advantages from the electrical performance was win so overall in fan out is.

A significant driver in this business and definitely quite a few machines a soldier.

Got it and then.

What do you think the growth rate of that segment could be for the next couple of years, although it will be at each seats anywhere between I would say, it's more than 10% for sure.

It depends.

It significantly more than 10%.

Okay got it.

That's it for me. Thank you so much.

Thanks Gus.

Our next question is from that but the short trade from Jefferies. Please go ahead.

You may.

Bobby please on mute.

Okay.

<unk>, Okay, yes, yes.

Okay. Thanks for taking my question. So I wanted to hit on the gross margin side of things so.

Revenues, you think in 2024 and your revenue growth.

Beyond that even gave my equity <unk> debt and that gets you closer to the high end of July .

I guess my other short tail.

What does that mean for glass mountain. Thank you you're seeing pointed at 52% of FY <unk> into 'twenty 'twenty four.

And then David about the.

<unk>.

As I've mentioned before.

We are.

In an improvement trend.

In the gross margin level.

We've been operating.

In the last two or three years around 50% to 52% and I don't see a reason that we cannot go back to this range.

The difference between 50, and 52% is mainly a product mix.

I cannot predict but in general we are our target is to exceed the 50% gross margin.

<unk>.

Increasing our revenue levels.

Hi, <unk>.

Final financial leadership guidance Mike.

Any specific segment that could be.

The margin guidance.

How does it make you think that event the application is.

Yes <unk>.

<unk>. Thanks.

So if you could give any kind of impact.

In fact, Scott China mix.

Yes, it's a matter of fact, it's not geography specific.

And application specific it's more like a deal.

So it depends on the deal level.

Size of the deal obviously.

One impact, but not only that just different.

Dynamic around the deal and also the.

The machine configuration. Some machines has a very basic configuration and these machines come with a relatively lower gross margin.

Okay.

I think thats all for me. Thank you.

Thank you. Thanks antibodies if there again as a reminder, any questions. Please raise your hands on the platforms.

<unk>.

Our next question is from Alon lost of May tough along please go ahead and ask your questions.

Okay.

Yeah.

Alan please on mute as well.

Yes, sorry for that they'll do it yes.

Yes, thanks for taking my question.

My first one is it is about a $500 million target.

Given given your current visibility when do you aim to hit that target what kind of how many of the testing will take you to reach that.

And what kind of embedded assumptions you put in.

And in that target.

Okay, Okay, maybe maybe I will answer to your.

First of all.

<unk> is under the assumption that semiconductor industry continued to grow.

And all the analysts everyone predicted by the end of this decade, we come to maybe close to a trillion.

<unk> million dollars.

$300.

Revenue and definitely it means that the semiconductor industry is going to grow.

Roughly a two digit from year to year, and we always say that we believe that we can grow faster than the industry. Because we are focusing on specific segment that the growth rate is higher than the average industry. This is the first assumption now.

Now the second one that we definitely.

Feel comfortable that we continue to be a leading supplier we continue to provide superior.

Support to our customer and if we continue doing it and.

And don't Miss anything.

Customer as I mentioned before are not going to replace vendor.

This is the culture in our industry. So if we take this the first one and the second one and definitely we feel confident that we can deliver it.

Then.

We can do it now when I said, we can do it the question. If it takes two years or three years also depend if we make an M&A in between if it's only organic. So this is could be roughly if you take out the M&A. It could be about three years, if you've always M&A it could be maybe two years, but we talk.

About roughly.

This level of targets.

Okay. Thanks, Thanks, very much my second question is about that.

The orders that you could could you speak about the value of them and what's what's the schedule of delivery for them.

Rami do you want to sell it for.

Sure.

Look so first of all from data from the average ASB those orders are anywhere from $9 million to $1 million. So this within a machine per machine. So this would give you the more or less.

Okay.

And so and from the shipment point of view most of the machines and what we have discussed about 80% of them will be shipped this year in the third in the fourth quarter.

About 20% will be shipped in the first quarter of next year.

That is pick about the 40 to 42 machines are also for the time that they were.

In the last couple of days.

Included the tenants.

Okay.

So basically.

The question is the extent of that growth.

Mesa in 2024, it's obvious that there is a sensor that we have reached a bottom and from here things will get improved the question is to what what is the extent of the improvement is it something that will get you.

Similar to similar level like 2022 or is it something that will bring you much at much much higher level, what's the range of possibilities that you foresee for not from now about the revenues in 2024.

Okay alone what we can say at this stage and I think we said it in our prepared notes that it will be a record year it will be better in the record that we achieved in 2022.

At this stage I think we explained exactly how we see and we shared a lot of color into the business of 24 I think at this stage, we cannot predict anything more than we've just said definitely as we'll continue.

You get closer to 24.

We'll be in a much better position to give you a better assessment and more accurate assessment of what will be the final revenues.

Okay. Thank you very much.

Thank you.

Thanks Alan.

Our next question is from Brian Chin from Stifel. Brian You May go ahead.

Yeah.

Hi, there.

One quick follow up.

Just.

The 40 going back to the 42 system 842 system order with your press release, a few weeks ago.

Was the HCM portion of that order a lot bigger than the 10 additional systems.

Discussed today from a different customer number one and two like more broadly.

I think many of US expect strong industry expansion for <unk>, but can you help us understand when you shipped 10 systems, what is sort of the equivalent increase in HBM capacity.

Right.

Jim.

Hi, Brian So first of all.

Yeah.

In the 42, I don't want to go into numbers, but.

It's not a much bigger number than the second order.

But obviously I think we said that we will see more orders in the near future. So I think this is all we can say at this stage about the number of HIV AIDS.

Aim.

I don't have in front of me, we can may have a follow on call and give you a if we can find it an indication of the capacity versus those machines.

Definitely I'm not in position to answer that because I don't know the number but I can see if we can provide this number.

Okay. That's fair that'd be really helpful. I appreciate that.

That's it for me.

Okay, I think that ends our Q&A session.

Before I hand over back to wrap there I'd like to let you all know that in the coming hours, you'll upload the recording of the conference calls the Investor Relations section of context website.

Www Dot com.

And I would like to thank everybody for joining the scope.

Rafi. Please go ahead with your closing statements. Okay I would like to thank you all for your continued interest in our business.

I want to especially thanks to the employees and my management team for their tremendous performance.

12 of our Investor I. Thank you for your long term support I look forward to talking with you again next quarter. Thank you and goodbye.

Thank you that ends our conference call you May go ahead and disconnect.