Release Date: July 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aehr Test Systems (AEHR, Financial) reported record annual revenue of $66.2 million, surpassing previous guidance and analyst consensus.
- The company achieved a GAAP net income of $33.2 million, or $1.12 per share, including a significant tax benefit.
- Aehr Test Systems (AEHR) announced the acquisition of Incal Technology, which is expected to enhance their product offerings in the ultra high-power semiconductor market.
- The company is seeing traction in new target markets, including AI processors, flash memory devices, and silicon photonics integrated circuits.
- Aehr Test Systems (AEHR) received over $12.7 million in orders from a silicon carbide customer, indicating strong demand in the EV market.
Negative Points
- Customer pushouts for silicon carbide devices due to slower electric vehicle demand impacted the second half of the fiscal year.
- Annual bookings decreased to $49 million from $78.3 million in the prior fiscal year, primarily due to the pushouts.
- Fourth-quarter revenue was $16.6 million, down 25% from the same quarter last year.
- The company's GAAP gross margin for the full year decreased to 49.1% from 50.4% in the prior year.
- Operating expenses remained consistent year-over-year, but the company faced increased headcount-related expenses and lower manufacturing efficiencies.
Q & A Highlights
Q: Congratulations guys on the acquisition. Gayn, if you look at the Incal acquisition, I assume the company is a growth company. Can you give us an idea approximately how much revenue of the $70 million is Incal?
A: Probably, the easiest question that I will try and to answer as best I can. So one of the challenges is we did close it first, and they did about $12 million over the last 12 months. And so plus or minus a month or two, even at that same run rate plus or minus a million or two or something like that. Candidly, we're taking a pretty cautious stance. But if you use those kind of numbers like $1 million per month from the time we close it, it's probably a good number on. But we -- it get us into a lot of the strategy what's going on? There's been a number of customers that they've been engaged with that have we have reason to believe either directly or indirectly our engagement is going to help them with respect to their manufacturing plants. And so we've taken a pretty conservative forecast based upon kind of their current run rates in that $70 million. And we would expect it to grow from there. So again, just trying to take a pretty conservative stance right now, and we'll do a lot more after we do all the customer visits here over the next several weeks.
Q: You mentioned on the silicon carbide side that you would expect to qualify this fiscal year with a number of companies in China, given their increased presence in the silicon carbide market, our ability to maybe lower prices faster than others and gain further share. How many customers by the end of the fiscal year, which you hope to be engaged with?
A: Okay. Well, I hope to be engaged with fewer customers because I can't -- I feel like we are a couple of minutes over with the number of engagements, because as soon as they become customers, then we stopped talking about the engagement and trying to be serious or actually. I think what you probably meant is how many are we now adding as customers. And if I may put that new word on, I've put a specific number on. I mean, we've got some internal targets that we're going forward. But I would say several plus, if you look at our current forecast and funnel, there is I mean, there's -- in terms of well qualified perfectly capable have fabs, it's well over a dozen just pure silicon carbide players. These are guys that aren't customers from us yet. It might be close to two dozen total, if you look at everybody. As we discussed about it last year and two more questions on China, we are engaged with multiple Chinese suppliers as well and would hope to add one or more of those customers also over the next year and a half or so. The reason I'm hedging a little bit on the year and half is is we know that there are people that are talking about are bringing on capacity in second half of '25. And we're just trying to figure out when the first tools would be installed i. e, I can still win them and maybe install the darn thing in the fall, and that would still be a win for us. But the timing relative to the other under our June first fiscal year is a bit of a pain right now so.
Q: Okay, that's fair. Thank you for that clarity, Gayn. And then my last question on the AI accelerator large language. Can you give us an idea if you're successful there on the new customer? How big could that be?
A: Yeah. We're trying to get our arms around that as well. You know, it's a little weird to talk about who it is or who it is not. But I've actually just and this might get me in trouble someday, but it's not Nvidia. I have been tried to be pretty clear with people because it's just not fair, I guess at some point Nvidia ever goes with us now what am I going to say, but on the date. They are a a revenue generating company today, they have customers. They're doing very well, it's pretty exciting. There's some discussion about being able to go public with them once we have successfully demonstrated it. They really would have a huge benefit by moving their system-level test burn-in to wafer level. And I can't decided if who's more excited about this if it's us or them, with them cheering us on to please hopefully make this work for them. This is an interesting one because we are doing some pretty unique things that I'll just share a little bit about, but I'm also holding things to my chest because of competitive reasons. I just don't want to give away any of our secrets. But the idea to actually be putting -- I mentioned you 2,000, to 3,000 box on a wafer 3,500 watts on a wafer. If you're actually close to this, technically, you would know that all AI processors at these geometries are lithographies are all one volt or thereabout parts. What that means if you're going to do 3,000 watts, you're putting 3,000 amps onto a wafer. Okay. People's head spin with this, the idea of putting in our house and amps much less two or more thousand ounce on a wafer. And so what we're doing is quite novel and we are using the FOX-XP system that we ship first to optical AI. at the last quarter, we mentioned that we were working on something else on the side stay tuned, but that's what we we're alluding to. The development of that system in terms of the power -- being able to put that much power out and move that much power because you have to remove it all to the wafer itself is totally novel. How we deliver that power for optical I/O is actually interestingly a little higher voltage and lower current, whereas in the AI, it's higher current, lower voltage. But the thermal challenges are the same. So we have a lot of confidence that we're working through that with this right now. And we're -- I walked in back just now talking the ops guys, they're working on this on multiple wafers right now with multiple wafer packs. So looks encouraging and stay tuned. I've got my fingers crossed that we can work through all this stuff. And we think we're pretty confident that we can make this work and the customers hoping interior design to make it work.
Q: Hi, yeah, thanks for taking my question. And Gayn, congrats on the acquisition. I guess just from a framing perspective, is it fair to say that next year is largely going to be driven off of some silicon carbide, maybe a little bit in gallium nitride and as you invest in some of these other very interesting and high volume markets?
A: The way we've actually got the forecast right now is we've taken a pretty conservative stab at the silicon carbide things. And so I think we are -- you know, we could we could do well over 30%, add new customers and new markets in that $70 million number. So if you look at the hard disk drive application, I already mentioned, could be like a 10% customer. The
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
