Aehr Test Systems' CEO Discusses Q3 2011 Results - Earnings Call Transcript

Aehr Test Systems (AEHR)

Q3 2011 Earnings Call

March 31, 2011 5:00 pm ET


Gary Larson - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance

Lasse Glassen - Senior Vice President of Financial Relations Board Division

Rhea Posedel - Founder, Chairman and Chief Executive Officer


Geoffrey Scott



Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Aehr Test Systems Third Quarter Fiscal 2011 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Lasse Glassen. Please go ahead, sir.

Lasse Glassen

Good afternoon, and thanks for joining us to discuss Aehr Test Systems' results for the third quarter of fiscal 2011. By now, you should've all received a copy of today's press release. If not, you can call my office at (213)486-6546 and we'll get you one right away. With us today from Aehr Test are Rhea Posedel, Chairman and Chief Executive Officer; and Gary Larson, Vice President of Finance and Chief Financial Officer. Management will review its operating performance for the quarter before opening the call to your questions. I'd now like to turn the call over to Gary Larson. Please go ahead, Gary.

Gary Larson

Thank you, Lasse, and thanks to everyone for joining us today. Before we begin, I'd like to make a few comments about forward-looking statements. Please be advised that during the course of our discussion today, we may make forward-looking statements that involve risks and uncertainties relating to projections regarding industry growth and customer demand for Aehr Test's products as well as projections regarding Aehr Test's future financial performance. Actual results may differ materially from projected results and should not be considered as an indication of future performance.

These risks and uncertainties include, without limitation: world economic conditions; the state of the semi-conductor equipment market; acceptance by customers of Aehr Test technologies; acceptance by customers of the system shipped upon receipt of a purchase order; the ability of new products to meet customer needs or performance described; the company's ability to maintain sufficient cash to support operations, impact of the Japanese earthquake and tsunami upon the company's operation; the company's development, manufacture and marketing of a commercially successful wafer-level test and burn-in system; and the potential emergence of alternative technologies, each of which could adversely affect demand for Aehr Test's products in calendar year 2011.

We refer you to our most recent 10-K, 10-Q and other reports from time to time filed with the U.S. Securities and Exchange Commission for a more detailed description of the risks facing our business and factors that could cause actual results to differ materially from projected results. The company disclaims any obligation to update information contained in any forward-looking statements to reflect events or circumstances occurring after the date of this conference call. Now I'd like to introduce our Chairman and CEO, Rhea Posedel. Rhea?

Rhea Posedel

Thank you, Gary. Good afternoon, and welcome to our conference call for the third quarter of fiscal 2011. Net sales for the third quarter of fiscal 2011 were $4.2 million, up 19% on a sequential-quarter basis compared to net sales of $3.6 million in the second quarter of fiscal 2011. The operating loss for the quarter was $920,000, which was an improvement from the prior quarter's operating loss of $1.3 million.

Before going deeper into the third quarter results, I'd like to provide a few words about the impact of Japan's earthquake on our business. First, I'd like to say we're all saddened by the loss of life and damage by the horrific earthquake and tsunami in Japan earlier this month. Fortunately, none of our employees or their families had any injuries. Our FOX-1 systems and WaferPak contactors at TI's [Texas Instrument] Aizu factory were not damaged and the systems are ready to be returned into production. Also, most of the customers in Japan that we are targeting for our ABTS and FOX products are located south of Tokyo, which was impacted less by this disaster than regions further north. We are hopeful that the customers we are targeting will still move forward with their CapEx purchases this year. With that said, during the third quarter, we benefited from an increase in shipments of our FOX-1 WaferPak contactors for wafer sort testing and NOR flash. These shipments were both contactors for existing and new designs, which indicates to us that our customer’s achieving ongoing cost and throughput benefits with the FOX-1 full wafer contact solution.

In addition to this, we had a number of highlights that I'd like to bring to your attention. First, Spansion, a leading NOR flash producer, continues to invest in upgrading their FOX-1 full wafer parallel testers and buying WaferPak contactors for new devices. On March 21, we announced booking over $2 million in orders for FOX-1 WaferPak contactors and system upgrades. Most importantly, with these recent WaferPak orders, Spansion is now returning to service most of their FOX-1 testers at TI's facility at Aizu, Japan and Fab 25 in Austin. Secondly, we were very, very pleased to report that we booked a new FOX-1 wafer-level burn-in customer. Today, we announced that a leading telecommunications company purchased a FOX-15 WaferPak cartridge to run for product qualifications on Vixel laser diodes. We expect additional WaferPak orders and a purchase of a FOX-15 system from this customer as a wafer-level burn-in process is qualified and the customer moves into production volumes.

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