U.S. markets open in 5 hours 42 minutes
  • S&P Futures

    3,838.50
    -4.00 (-0.10%)
     
  • Dow Futures

    30,762.00
    -80.00 (-0.26%)
     
  • Nasdaq Futures

    13,545.25
    +59.75 (+0.44%)
     
  • Russell 2000 Futures

    2,135.80
    -10.00 (-0.47%)
     
  • Crude Oil

    53.06
    +0.45 (+0.86%)
     
  • Gold

    1,845.70
    -5.20 (-0.28%)
     
  • Silver

    25.39
    -0.15 (-0.60%)
     
  • EUR/USD

    1.2151
    -0.0018 (-0.15%)
     
  • 10-Yr Bond

    1.0400
    0.0000 (0.00%)
     
  • Vix

    23.97
    +0.78 (+3.36%)
     
  • GBP/USD

    1.3732
    +0.0001 (+0.00%)
     
  • USD/JPY

    103.7200
    +0.0930 (+0.09%)
     
  • BTC-USD

    31,411.05
    -7.07 (-0.02%)
     
  • CMC Crypto 200

    630.57
    -9.35 (-1.46%)
     
  • FTSE 100

    6,644.91
    -9.10 (-0.14%)
     
  • Nikkei 225

    28,635.21
    +89.03 (+0.31%)
     

Edited Transcript of CYBE earnings conference call or presentation 19-Feb-20 9:30pm GMT

·43 min read

Q4 2019 CyberOptics Corp Earnings Call MINNEAPOLIS Feb 26, 2020 (Thomson StreetEvents) -- Edited Transcript of CyberOptics Corp earnings conference call or presentation Wednesday, February 19, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Jeffrey A. Bertelsen CyberOptics Corporation - VP of Finance, CFO, COO & Secretary * Subodh K. Kulkarni CyberOptics Corporation - President, CEO & Director ================================================================================ Conference Call Participants ================================================================================ * Gregory William Palm Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst * Jaeson Allen Min Schmidt Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst * Josh Goldberg G2 Investment Partners Management LLC - Founder & Portfolio Manager * William J. Dezellem Tieton Capital Management, LLC - President, CIO & Chief Compliance Officer ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, and welcome to the CyberOptics' Fourth Quarter 2019 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Dr. Subodh Kulkarni, President and CEO of CyberOptics. Please go ahead. -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [2] -------------------------------------------------------------------------------- Thank you. Good afternoon, and thanks for participating in CyberOptics' Fourth Quarter 2019 Earnings Conference Call. Joining me is Jeff Bertelsen, our CFO and Chief Operating Officer, who will review our operating results in some detail following my overview of our recent performance. We will then be pleased to answer your questions at the conclusion of our remarks. In keeping with Regulation FD, we have made forward-looking statements regarding our outlook in this afternoon's earnings release. These forward-looking statements reflect our outlook for future results, which is subject to a number of risks that are discussed in our Form 10-K for the year ended December 31, 2018, and other filings with the Securities and Exchange Commission. We urge you to review these discussions of risk factors. CyberOptics' fourth quarter sales came in well ahead of our internal forecast. Our strong improvement in our quarterly sequential performance was driven by robust sales of 3D MRS-enabled SQ3000 automated optical inspection or AOI systems. The third quarter of 2019 likely marked the turf of the downturn in surface mount technology and semiconductor capital equipment market. As such, we believe the sequential quarterly improvement in our operating results is reflective of the market recovery that now is underway. CyberOptics reported sales of $16.9 million for the fourth quarter of 2019 ended December 31, down from $18.1 million in the fourth quarter of 2018. However, fourth quarter sales were up 36% from $12.4 million in the third quarter of 2019. Net income for the fourth quarter of 2019 was $168,000 or $0.02 per diluted share compared to $1.2 million or $0.16 per diluted share in the year earlier quarter. Full year 2019 sales totaled $59.3 million, down 8% from $64.7 million in 2018. We reported net income of $774,000 or $0.11 per diluted share in 2019 compared to earnings of $2.8 million or $0.39 per diluted share in 2018. Sales of sensors and inspection and metrology systems based on our 3D MRS technology rose 48% to $9 million year-over-year in the fourth quarter of 2019, mainly driven by strong sales of the SQ3000 3D AOI systems. These MRS-based products, combined with semiconductor sensors, accounted for 72% of total revenue in the fourth quarter of 2019, up from 51% in the year earlier period. Sales of legacy sensors and systems, excluding 2D MX600 sales, fell 39% year-over-year in the fourth quarter of 2019. Our legacy 2D product sales will not go away anytime soon, but they are expected to account for a steadily declining proportion of our total revenue stream. Turning now to an overview of our product lines. Fourth quarter sales of inspection and metrology systems increased 83% to $10.2 million on quarterly sequential basis and up 11% from the level reported in the fourth quarter of 2018. These increases were driven by sales of SQ3000 systems, which rose to $7.1 million in the fourth quarter of 2019, reflecting increases of over 100% on a quarterly sequential basis and up 91% on a year-over-year basis. An another encouraging fourth quarter development, we received our first purchase order for our new 3D MRS-enabled MX3000 memory module inspection system. This order, which is expected to become revenue in the first quarter of 2020, was made to a new memory customer. As a result, 2 of the world's 3 largest memory manufacturers now use either our 2D MX600 or 3D MX3000 memory module inspection systems. We believe the potential market opportunity for the MX3000 system is significant. Sales of semiconductor sensors totaled $3 million in the fourth quarter of 2019, down 17% on a quarterly sequential basis and virtually unchanged on a year-over-year basis. Orders for semiconductor sensors were strong in the fourth quarter, resulting in a quarter ending backlog of $1.5 million or double the level at the end of third quarter of 2019. As a result, we are forecasting strong sales of semiconductor sensors in the first quarter of 2020. To further strengthen its position in the semiconductor market, CyberOptics expanded its family of semiconductor sensors with 2 new product launches in the fourth quarter. The In-Line Particle Sensor detects particle contaminant in gas and vacuum lines in semiconductor process equipment. The ability to monitor particles in-line is particularly relevant for EUV lithography tools because particle detection can significantly improve yield and productivity. The WaferSense Auto Resistance Sensor enables real-time resistance measurements of plating cell contacts in semiconductor Electrochemical Deposition Applications. Both products facilitate semiconductor tool setup and diagnostics. Finally, fourth quarter sales of 3D and 2D sensors totaled $3.7 million, up 15% on a quarterly sequential basis but down 37% year-over-year. Sales of 3D MRS-enabled sensors totaled $1.9 million in the fourth quarter of 2019, up 50% on a sequential basis but down 19% on a year-over-year basis. We believe that demand for 3D sensors will continue to strengthen in 2020 as the year progresses. As an update, interest in our MRS-based NanoResolution sensor for semiconductor wafer-level and advanced packaging inspection and metrology applications remains very high. Quite a few potential OEM and system integrator customers are continuing to evaluate this product. As we have said previously, the sales cycle for this product is lengthy, but given the degree of interest shown by that prospective customers, we are anticipating sales in coming quarters. We believe our NanoResolution sensor will enable CyberOptics to capitalize on some very promising long-term growth opportunities. CyberOptics ended the fourth quarter of 2019 with an order backlog of $17.7 million, up significantly from $14.4 million at the end of third quarter and $13.6 million at the end of 2018. Our quarter ending backlog at December 31, 2019 and September 30, 2019 includes a significant order for 3D MRS sensors from an existing OEM customer that are scheduled for delivery in the next 18 months. We are forecasting sales of $15 million to $16.5 million for the first quarter of 2020. We believe that our industry-leading 3D MRS and semiconductor sensor technologies have positioned CyberOptics to capitalize upon a full range of growth opportunities. For this reason, we believe CyberOptics future is very promising. Thank you. Now Jeff Bertelsen will review our fourth quarter numbers in greater detail. -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [3] -------------------------------------------------------------------------------- Thanks, Subodh. Since Subodh has already covered our fourth quarter sales in some detail, I will provide information about other aspects of our performance for this period. Our gross margin percentage in the fourth quarter of 2019 was 43%, in line with the fourth quarter of 2018 but down from the third quarter of 2019 and below our internal expectations at the start of the fourth quarter. The lower-than-expected gross margin percentage was due to a change in sales mix. Sales of semiconductor sensors, primarily the WaferSense line of products, were lower than expected in the quarter. This factor, combined with higher-than-expected sales of legacy sensors and inspection systems products, resulted in a lower gross margin percentage. We expect our gross margin percentage in the first quarter of 2020 to improve on a sequential basis from the level in the fourth quarter of 2019 due mainly to an improvement in our sales mix. In particular, high gross margin semiconductor sensors should account for a higher percentage of our total revenue in the first quarter of 2020 when compared to the fourth quarter of 2019. Total operating expenses of approximately $6.6 million in the fourth quarter of 2019 increased 7% from the level in the year earlier period. We are continuing to invest heavily in R&D to take maximum advantage of opportunities in our targeted markets with our 3D MRS technology. Depreciation and amortization expense totaled $730,000 in the fourth quarter, and stock compensation expense was $254,000. Total operating expenses in the first quarter of 2020 are expected to increase modestly on both a year-over-year and quarterly sequential basis. Interest income and other was negative in the fourth quarter of 2019 due to foreign exchange losses resulting from a weaker U.S. dollar. The dollar has subsequently strengthened, so we are expecting to post positive interest income and other in the first quarter of 2020. Our effective tax rate of 64% for the fourth quarter of 2019 reflects a small noncash charge for deferred tax valuation allowance related to tax credits that expire in 2020. We anticipate a recurring effective tax rate of approximately 25% in the first quarter of 2020. Cash and marketable securities of $26.3 million at December 31 were up from $25.3 million at the end of the third quarter. No shares were purchased in the fourth quarter of 2019 under our existing $3 million share repurchase authorization that is effective through June 30, 2020. Our capital resources are adequate for achieving our growth objectives given our available balances of cash and marketable securities. Thank you. We would now be happy to take your questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) We can now take our first question from Greg Palm of Craig-Hallum Capital Group. -------------------------------------------------------------------------------- Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [2] -------------------------------------------------------------------------------- Congrats on the good way to end the year here. As it relates to the upside to the quarterly guidance, curious if you would characterize that as broad-based. Was it driven by a few big projects within SQ3000? And specifically, how is the activity in terms of new versus existing customers? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [3] -------------------------------------------------------------------------------- It was more broad-based. I mean we could clearly see the market starting to turn around towards the end of the year, but it wasn't 1 or 2 customers that drove the demand. It was more broad-based for SQ3000. -------------------------------------------------------------------------------- Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [4] -------------------------------------------------------------------------------- Okay. And in terms of pipeline going into 2020, I mean initial commentary sounds pretty positive, but anything to add there as we look into the year here? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [5] -------------------------------------------------------------------------------- I mean as you saw, we quantified the backlog, which was very healthy at $17.7 billion. So we feel pretty good about at least how we are starting the year. Plus the 3D MX order, that's part of that backlog, does open up a whole new market area for us, and we feel pretty good about how we are positioned. So we are entering the year with a fairly optimistic outlook right now. We don't give guidance for the full year, as you know, so we'll give one quarterly guidance at a time. But overall, assuming semi and SMT, the expectation is that these markets are going to grow in 2020, unlike 2019, where these markets declined roughly 20%. So when you look at how we did, about 8% decline in a 20% decline in market. And this year, the market is expected to grow between 5% to 10%. Coronavirus effect notwithstanding, none of us know how to quantify that yet. But overall, the full year, I do believe the market for semi and SMT will grow. With that backdrop, we feel pretty good about how we are positioned for growth this year. -------------------------------------------------------------------------------- Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [6] -------------------------------------------------------------------------------- Good. And congrats on the 3D MX order here in the fourth quarter. I mean is that a pilot order? Or is that an initial order that is expected to result in sort of more deployment in the future? I mean how would you sort of characterize that order at this point? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [7] -------------------------------------------------------------------------------- It's a regular order for a full system. The system is already -- so this is number two of the 3 memory customers. Now first memory customer that we have fulfilled, we have sold more than 20 systems and 2D systems to that customer. Now we are talking with this other memory customer with a 3D system. This is the first one. It's not a pilot order. It's a regularly, fully functional piece. It's already in their factory, doing generally well. That's why we feel confident to book it in Q1. They have already told us what they need for this year and long term. So we feel -- and we are talking to the third customer right now. We feel pretty good that we may be able to get a third customer in the not-so-distant future. So between the existing customers, plus this new one, plus the potential for a third one, we do believe over the next 3 to 5 years, MX is going to be a solid contributor to our results. -------------------------------------------------------------------------------- Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [8] -------------------------------------------------------------------------------- Yes, that's great. And relative to the initial customer there in 2D, I mean is the opportunity for the second customer comparable? Is it significantly less? I mean how would you think about sort of the longer-term opportunity here? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [9] -------------------------------------------------------------------------------- Good questions, Greg. I mean all around there's roughly about 120 to 130 lines -- memory lines in the world today. Majority of them are in the 3 large manufacturers, Samsung, SK hynix and Micron, but there's a few others in smaller players as well. That overall number is growing roughly at about 10% run rate on the demand in memory. Last year it was flat. This year there are some additional investments going on. It goes into the cyclicality of the semiconductor. As I said, we have fulfilled about 25 of that 120 to 130 number right now. We have -- the competition we have is either manual inspections of some older equipment that these customers have bought 2D, and that company really is not pursuing that area that aggressively. And our 2D system is far superior than what they sold in the past. So overall, in the next 3 to 5 years, we believe that the total market opportunity for us is more than 100 MX systems eventually, but it's difficult to quantify exactly what year and when these systems will come in. -------------------------------------------------------------------------------- Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [10] -------------------------------------------------------------------------------- Okay. Yes, it seems like a big opportunity. I guess last one just in terms of the macro and I guess specifically thinking about what's happening over in Asia with coronavirus. Are you seeing any push-outs of orders, any cancellations? Anything of that nature just given the environment over there? Or is it still sort of fluid and too early to know? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [11] -------------------------------------------------------------------------------- I think it's more the latter. It's too fluid, too early. I mean clearly, it is impacting travel, our engineers, customers' locations. Also, sometimes they are closed and stuff like that. We haven't seen any actual cancellations of orders because of that, but it is more how do we fulfill with the freight forwarders' schedules compromised, and it just created another level of chaos that all of us are dealing with right now, I believe, in the industry. I just don't know how to quantify all those things yet. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- We can take our next question from Jaeson Schmidt of Lake Street Partners. -------------------------------------------------------------------------------- Jaeson Allen Min Schmidt, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [13] -------------------------------------------------------------------------------- Just following up on Greg's last question, I know you noted not seeing any impact from the coronavirus today. But did you take any sort of haircut to Q1 guidance to account for the uncertainty over there? -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [14] -------------------------------------------------------------------------------- No, I would say, Jaeson, as of today, we're certainly comfortable with our guidance. I don't know that -- or I would say, we didn't really take any haircut to our guidance, and part of that is just due to the backlog that we had and the fulfillment of that. So as today, no, but it is a fluid situation and one we're all continuing to monitor. -------------------------------------------------------------------------------- Jaeson Allen Min Schmidt, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [15] -------------------------------------------------------------------------------- Okay. That's helpful. And sort of just following up on it, or kind of taking the opposite side on the push-out, just given the uncertainty of the situation. What are your thoughts on customers' inventory levels? Do you think there's been any sort of pull-ins here in Q1 as customers want to ensure they have adequate inventory? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [16] -------------------------------------------------------------------------------- We haven't seen anything material in that sense either. I mean again, most of our customers are dealing with uncertainties on their side, so we are hearing plans -- evolving plans. And this -- but the total number that you're talking about are roughly comparable. Sometimes the locations are moving about based on -- because many of our large customers have multiple locations. So we have seen some movement in sort of delivering the SQ system in this location, do it in this location, that kind of stuff. But at a macro high level, we haven't seen anything on our customer side that we can say changes our numbers or our outlook. And again, whatever happens, I do think things will move around a little bit with this uncertainty. I don't think the macro picture changes. I do believe semi and SMT industries overall are well positioned to grow over the next 3 to 5 years because of all -- the key drivers are all intact: 5G deployment, clouds and AI. And those things are not going to change because of a virus situation in China or even if it spreads a little bit outside. So I don't think fundamentally anything changes. Maybe a quarter or 2, things may get a little disruptive, but nothing significant in the long run. -------------------------------------------------------------------------------- Jaeson Allen Min Schmidt, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [17] -------------------------------------------------------------------------------- Okay. And then last one for me, and I'll pass it on. I know you said you expect OpEx up here in Q1 continue to invest in R&D. But when we think about building out the sales team, I mean should we expect SG&A to continue to trend higher throughout this year? Or do you think the sales team is adequately built out at this time? How should we think about that? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [18] -------------------------------------------------------------------------------- We are definitely increasing the headcount to support additional sales opportunities we see, particularly applications, engineering, support in remote locations. But again, I mean, so the total number will be higher this year than last year. Hopefully, as a percentage, we will try to keep it contained. Jeff, you want to add? -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [19] -------------------------------------------------------------------------------- Yes. No, I would just add, historically, we tend to see more trade shows in the first quarter of the year, which tends to add to our expense load a little bit in the first quarter, and some of that does tend to taper off a little bit as the year progresses. So I would just add that as well. -------------------------------------------------------------------------------- Operator [20] -------------------------------------------------------------------------------- We can now take our next question from [Eric Slade] of [Acme Analytics]. -------------------------------------------------------------------------------- Unidentified Analyst, [21] -------------------------------------------------------------------------------- A nice way to follow up the year, Subodh, Jeff. Good going. Before I get into it, just let you know. So right now -- yes, I just want to let you know, it's about 70 degrees and sunny out here in Southern California. I don't know what's like in Minneapolis. But I had this bad bath. But -- so I have some questions. First of all, did I understand that correctly? The industry -- the semiconductor capital equipment industry contracted 20.5%, and you guys were down 8%, right? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [22] -------------------------------------------------------------------------------- That is generally correct, yes. The semi cap rates declined by about 20% in 2019, and we declined by about 8%. -------------------------------------------------------------------------------- Unidentified Analyst, [23] -------------------------------------------------------------------------------- And of the 8%, it was basically legacy product. Your new product was flat, right? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [24] -------------------------------------------------------------------------------- Actually, the new products grew, so MRS grew 13% in 2019. -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [25] -------------------------------------------------------------------------------- Right. Total MRS revenues in 2019 were up 13% over 2018, and WaferSense grew about 3% in 2019 versus 2018. Although it was mainly our -- it is our legacy products really that declined. -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [26] -------------------------------------------------------------------------------- That declined. -------------------------------------------------------------------------------- Unidentified Analyst, [27] -------------------------------------------------------------------------------- Okay. So back to the memory for a second. So you got 2 out of the 3. Going for the hat trick, hopefully. It sounds like that could be imminently or within the year? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [28] -------------------------------------------------------------------------------- Well, we certainly have delivered the first system, as I mentioned earlier. That customer has to order as they need a few more systems. Usually, the way, Eric, this will work is they will confirm the ROI calculations once the production is moving towards system. Assuming the ROI calculation is good, they will continue with their capital plan. So it's still uncertain, that's why we haven't quantified exactly what the impact of MX is this year, and it's tough to know because these are large orders and these are large customers. We are pretty confident over the next 5 years, we will get majority of this market, but it's impossible for us to know when it will kick in, whether it's Q2, Q3 or up this year or next year. -------------------------------------------------------------------------------- Unidentified Analyst, [29] -------------------------------------------------------------------------------- Right. Fair enough. Now I think Micron came out. And I guess the new 5G phones are 6 gig? Is that right? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [30] -------------------------------------------------------------------------------- Yes, that is (inaudible). Sorry, go ahead. -------------------------------------------------------------------------------- Unidentified Analyst, [31] -------------------------------------------------------------------------------- So if I -- so I guess the question is, I think Micron said you need 2 to 3x the memory for that, the 5G phones. Is that correct? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [32] -------------------------------------------------------------------------------- I don't know what specifically Micron said. But in general, that statement seems close to what we also believe. The newer phones do need more memory, so that is generally correct. I don't know the exact number. -------------------------------------------------------------------------------- Unidentified Analyst, [33] -------------------------------------------------------------------------------- And do you get that -- really, do you have to use stacking for that to get -- that might new... -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [34] -------------------------------------------------------------------------------- Yes, I mean, most high-end electronics, including smartphones now, are using stacked by advanced packages now. And advanced packages -- stacking is a key component of advanced package. So most of the chips that are getting used in things like smartphones, high-end smartphones, and you're already dealing with a multi-stack layer right now. -------------------------------------------------------------------------------- Unidentified Analyst, [35] -------------------------------------------------------------------------------- And of course, I guess, that would -- can I assume that, that would create more opportunities for CyberOptics? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [36] -------------------------------------------------------------------------------- Yes. In general, advanced packaging area is an exciting growth area for us, and that's why we are so focused on that area right now. I mean because exactly the reason, you brought up stacking, fan in, fan out, and many of those things, you do need to measure the third dimension. So the traditional 2-dimensional measurements and inspections are no longer applicable because you are bringing in the third dimension now, and that's where our strength is with the MRS technology. So that's really where we have focused on for the last few years in R&D, and that's why we are so optimistic about our Nano MRS sensor and how that will play in the advanced packaging inspection arena. -------------------------------------------------------------------------------- Unidentified Analyst, [37] -------------------------------------------------------------------------------- And I think on your previous call, or maybe talking to Jeff, when you go from the 2D to 3D process, that's usually about 50% more as far as the cost of equipment. -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [38] -------------------------------------------------------------------------------- Yes. I mean, in general, 3D equipment is -- whether it's AOI or MX or anything, 3D is more expensive. -------------------------------------------------------------------------------- Unidentified Analyst, [39] -------------------------------------------------------------------------------- Okay. Okay. Now I have one more series of questions, and this comes -- and I was sort of surprised because we didn't see anything in the press release on the mini/micro LEDs. You guys announced an order with Rohinni, right, back in October. -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [40] -------------------------------------------------------------------------------- We didn't -- we announced a partnership with Rohinni, and we separately announced an order. -------------------------------------------------------------------------------- Unidentified Analyst, [41] -------------------------------------------------------------------------------- What does that mean? Not a partnership but an order? Yes, an order, that's what I meant, not a partnership. -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [42] -------------------------------------------------------------------------------- So we take a lot of orders from a customer for micro LED application, that is correct, for SQ systems. -------------------------------------------------------------------------------- Unidentified Analyst, [43] -------------------------------------------------------------------------------- Okay. Just what I could ask [considering] basically, there appears to be a race to the starting line for this technology to commercialize it and the production of this. Because I did read KLIC, K-L-I-C, Kulicke and Soffa's report, and they're expecting $30 million to $70 million of revenues, they publicly said, the second half of the year. And I think they're also -- they're working with Rohinni with an exclusive. So that's one of my questions. You don't have an exclusive with anybody on the technology, right? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [44] -------------------------------------------------------------------------------- Yes, we are partnered on the technology side. I mean, independently, Rohinni has announced partnership with KLIC, as you said. Independently, Rohinni has announced partnership with... -------------------------------------------------------------------------------- Unidentified Analyst, [45] -------------------------------------------------------------------------------- Not a partner, it's not a partnership. But you know what -- my question was not a partnership as much as, is there exclusivity there? So when everyone is out in this technology, Apple, Samsung, Rohinni, it doesn't matter for you guys because you're doing the inspecting. So whoever wins out, I think Rohinni has the lead, you're going to be in the process inspecting anyway, right? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [46] -------------------------------------------------------------------------------- Yes, correct. I mean we don't -- we haven't given any exclusivity to anyone for micro LED. So we can go wherever. Whoever is interested in investing in micro LED can buy our inspection systems. -------------------------------------------------------------------------------- Unidentified Analyst, [47] -------------------------------------------------------------------------------- Yes. Now these lines that are -- I would assume -- I think it was a $500,000 price ticket for each of these pick-and-place machines by KLIC. So my question to you is, do you have any idea how many of these pick-and-place machines, whether it's 1 or 2, go with each line? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [48] -------------------------------------------------------------------------------- Well, I mean it's really a question that should be asked to KLIC, but it is more than 2, I can tell you that. It's multiple pick-and-place machines. Fortunately or unfortunately for us, our SQ system goes lightning fast compared to a pick-and-place machine. So from a dollar standpoint, there's more dollars per line for pick-and-place because it's going slower and they need multiple machines, and SQ can go much faster than a pick-and-place machine can, so that hurts them from a dollar standpoint. -------------------------------------------------------------------------------- Unidentified Analyst, [49] -------------------------------------------------------------------------------- I think on each -- I understand. I think on each line, you said you can go up to 6 of your machines, which is roughly about $100,000 of ticket, right, a piece? Is that correct? Did I get that right? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [50] -------------------------------------------------------------------------------- The number 6 is correct, we have mentioned that before. The price point is a little more than $100,000. Our average price point for SQ is more than that. And certainly, for this high-end demanding application, the price point is a lot higher than $100,000. -------------------------------------------------------------------------------- Unidentified Analyst, [51] -------------------------------------------------------------------------------- And one question I had. There's joint ventures. I think Apple is building out facilities in Taiwan, probably Nitrate and Samsung, Epistar and of course, BOE and Rohinni. So I guess my question is, what applications -- or can you discuss the applications where you see the mini/micro LEDs being used? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [52] -------------------------------------------------------------------------------- Yes, the primary application -- and I believe Rohinni has been fairly open in their presentations and public disclosures. The primary applications they are going after with micro LED right now is the backlight for LCD displays. Today, the backlight is LED backlight. And if you switch over to micro LED, you get better power consumption and better light intensity, and that's an obvious area for this technology to enter. The first application that Rohinni and the micro LED technology is going is not the actual display itself. The resolutions are still fairly coarse compared to the displays that you see in smartphones or televisions or laptops today. So first application is the backlight application. There's significant battery savings to be had if the backlight is changed from LED or conventional lamp to a micro LED. That's where really our first scale-up is going on, is for those applications. Over time, everyone feels very confident that micro LED resolutions will continue to improve. And 5 years or certainly 10 years from now, micro LED will give LCD or OLED displays a good competitive run for the actual display itself. But it is starting off in the backlight area. Does that answer your question? -------------------------------------------------------------------------------- Unidentified Analyst, [53] -------------------------------------------------------------------------------- Yes. The one question I asked is, Apple is so interested in this, but I don't -- I think Rohinni's the lead, at least what I've read. Samsung, obviously, wants to get in there. But if Apple's in there trying to do this, when do you anticipate, if you threw a guess out there, that it'll start getting into the smartphones? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [54] -------------------------------------------------------------------------------- Eric, we cannot really comment on any specific customers on what exactly the range... -------------------------------------------------------------------------------- Unidentified Analyst, [55] -------------------------------------------------------------------------------- No, no, no, not a specific customer. I mean just in general, into the -- we know the players in... -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [56] -------------------------------------------------------------------------------- I think in general, based on what we have said, Rohinni has said, you already have read the KLIC announcement, it's fair to say that multiple lines will be installed this year for micro LED scale up. We definitely expect a benefit of that coming in our SQ product line. We will sell multiple SQs per line, we believe. So we will definitely see all of that getting captured. And one of the factors, not the only factor, but one of an important factors why we feel so good about growth in SQ and MRS in general is because micro LED is a growth area, and we definitely have the leading position for inspection in micro LED right now for this particular technology. -------------------------------------------------------------------------------- Unidentified Analyst, [57] -------------------------------------------------------------------------------- Now I just speak with Kulicke & Soffa, and they said, publicly, $30 million to $70 million. But they said next year should even be greater. So if these lines are coming on, they said second half of the year. Does that mean that's when you expect a nice pickup for you in that area, second half of the year? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [58] -------------------------------------------------------------------------------- I mean we got the first order towards the end of last year that we publicly disclosed. We are continuing to talk to multiple partners that are scaling up right now. It's not just 1 or 2. So there's a lot of activities going on in micro LED. Clearly, 2020 is a year when scale-up is starting. We feel pretty good about that. Exactly how many SQs we will sell for this in 2020, I would have a tough time quantifying the way. Couldn't quantify it because of -- the number could be between 3 and 6, lines could be multiple fit stuff. KLIC, I'm surprised that they went and quantified it to that level. -------------------------------------------------------------------------------- Unidentified Analyst, [59] -------------------------------------------------------------------------------- I was, too, but it's right there on their first quarter release, $30 million to $70 million second half of the year. And then they -- when we called them up, they said they expect next year to be even very robust. So -- okay, that does it for me. Sorry about that... -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [60] -------------------------------------------------------------------------------- They know more than we do because we have to talk to our... -------------------------------------------------------------------------------- Operator [61] -------------------------------------------------------------------------------- We can take our next question from Josh Goldberg of G2. -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [62] -------------------------------------------------------------------------------- I just wanted to make sure I got these numbers right. So your SQ3000 business was over $7 million in the quarter. Is that right? -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [63] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [64] -------------------------------------------------------------------------------- All right. -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [65] -------------------------------------------------------------------------------- Correct. -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [66] -------------------------------------------------------------------------------- And that was up 91% year-over-year? -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [67] -------------------------------------------------------------------------------- That is correct. -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [68] -------------------------------------------------------------------------------- That was your biggest mark -- biggest product line. Seems like it's by far your biggest quarter with that product line. -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [69] -------------------------------------------------------------------------------- Yes, yes. It was a great quarter for the SQ. Yes. -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [70] -------------------------------------------------------------------------------- Okay. Can you talk a little bit about applications that you're seeing it being used for now? The opportunity where that product, especially on the -- I believe your product is called the LaserGage -- CyberGage, I'm sorry, we're -- when we talk about real, big opportunity in in-line inspection, consumer electronics opportunities and stuff. Just give us a little sense now that the end of the year is where it is and you had a really good year on SQ3000, what could we see in 2020 just on that product line, both semi cap and obviously all the other applications you have? And I have a follow-up. -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [71] -------------------------------------------------------------------------------- So a good question. I mean SQ, the way we sell it, Josh, SQ is a multi-functional system. We differentiate ourselves because we primarily service the AOI application, automated optical inspection but the same system goes for solder paste inspection as well as the in-line CMM, coordinate measuring machine. So we sell it as a multifunctional to same hardware, different software. Customer can switch from the... -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [72] -------------------------------------------------------------------------------- What's roughly the ASP? What's the ASP for the... -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [73] -------------------------------------------------------------------------------- I believe the ASP is about $120,000 to $130,000 depending on options. Sometimes it can go more depending on options or less. So... -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [74] -------------------------------------------------------------------------------- Okay. But the point is that your revenue per hardware wasn't that much higher. So you actually basically shipped double as many systems in the December '19 versus the December '18 quarter. You were selling a higher price machine. -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [75] -------------------------------------------------------------------------------- We'll be shipping lots of (inaudible) I don't know the exact number. -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [76] -------------------------------------------------------------------------------- Okay. Sorry, what? -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [77] -------------------------------------------------------------------------------- Go ahead. -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [78] -------------------------------------------------------------------------------- No. You were... -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [79] -------------------------------------------------------------------------------- No, what I was saying is that obviously, you're not having a big pricing increase to get to the 91% growth. You're actually just seeing the systems out the door. -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [80] -------------------------------------------------------------------------------- No, no, no. We are... -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [81] -------------------------------------------------------------------------------- This was volume-driven. -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [82] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [83] -------------------------------------------------------------------------------- If anything, there is ongoing price pressure in this marketplace. Because of our differentiation, I believe our price erosion is less than some of our competitors who don't have that kind of differentiation. But if anything, there is price erosion every year. So clearly, it was all volume-driven, the growth. So then regarding your question, overall, in our investor presentation, we have quantified using external reports. The overall market for this 3D AOI type systems is about a couple of hundred million dollars right now and the market is projected to grow 35% to 40% over the next 5 years. That's the current external report statistic, and that's the market where SQ primarily fits in. Now because we have this in-line CMM and SPI, maybe the market size is a little bigger for us. But I think the AOI market still dominates these numbers. So right now, we are saying, we are roughly at about 8% or 9% market share, and we have grown clearly in 2019 in market share, and we expect to continue to grow that market share as 2020 goes and beyond. And we do not -- there's many players in this marketplace. A lot of competitive dynamics going on. Because we are playing in the higher end -- so typically, our customers are large companies that care about quality and are willing to pay price for that quality. So typically, we don't play in the lower end Chinese EMSs, if you will. Price is a big factor. So a majority of our customers are Fortune 500-type companies that have their own lines or contract them, but they control the lines and are willing to pay for the quality. So our market share -- even though overall market share is 8% to 9%, I believe our market share in the top tier is much higher than 8% or 9%, probably more like 30% or 40% in the top tier. And we are virtually absent in the bottom tier, where price is the driver. So that's the market dynamics. Market is expected to grow, and we expect to grow our market share in that growing market, again, trying to dominate the top tier and participating a little bit in the mid-tier but staying away from the bottom tier, where price is the driver. So over the next 5 years, we... -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [84] -------------------------------------------------------------------------------- But it would be fair to say -- just so I'm making sure I understand. It's fair to say that you're exiting at around a $7 million a quarter? You're obviously not projecting it to be $7 million every quarter. Maybe you are. But if this segment is a 30% to 40% grower and you're seeing the semi cap equipment come back and some of your other projects that you've now won, help me understand why you are not a 25%, 30% growth company in 2020? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [85] -------------------------------------------------------------------------------- I mean, clearly, SQ is a big driver. And obviously, we will try to maximize our growth rate as much as possible using SQ as the driver. We have other products, too, that are not growing as fast. And if anything, legacy is smaller, but it's still a flattish kind of a number. There are WaferSense, which is growing again, but not at the rate at which SQ is projected to grow. Also, we have other mitigating factors that -- we won't get the full benefit of the 30% or 40% growth that's going on in AOI. But so far in external reports, it's hard to know. If the market truly grows 35%, 40%, yes, you may be right, it will be showing some fairly... -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [86] -------------------------------------------------------------------------------- Has there been any big new design wins that you've won in SQ3000 in the last 3 to 6 months that you can alert investors about? -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [87] -------------------------------------------------------------------------------- Yes. I mean one that we're very, very positive on, and we talked about with the last quarter, is micro LED. I mean there's significant growth potential with that particular application. So that would be just one, but there's others as well. So definitely 3D AOI, as component shrink, as packages become more complex, it's going to drive the need for 3D AOI and particularly high-end 3D AOI, where we feel like we have a definite competitive advantage with our MRS sensing technology. -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [88] -------------------------------------------------------------------------------- Okay. And then just, Jeff, just obviously, the product mix hurt you. SQ was a big part. I know there were some other parts. But can you give us a little bit more granularity than just being up versus Q4? I mean you'd averaged around 44% each of the last 3 years. Is it fair to say that that's probably the right number? -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [89] -------------------------------------------------------------------------------- Yes. In the fourth quarter, as I talked about, and a lot of it is really due to the -- just the semi product line being down -- lower than what we had thought. -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [90] -------------------------------------------------------------------------------- The sensors. -------------------------------------------------------------------------------- Jeffrey A. Bertelsen, CyberOptics Corporation - VP of Finance, CFO, COO & Secretary [91] -------------------------------------------------------------------------------- And a lot of that is just due to timing because, as we said, our orders were pretty good. But I would think our margin certainly could be up, back to the 45% level in that type of area for sure. They definitely should improve. -------------------------------------------------------------------------------- Josh Goldberg, G2 Investment Partners Management LLC - Founder & Portfolio Manager [92] -------------------------------------------------------------------------------- And I realize that people are saying in that, they're not -- you're not seeing the impact yet on coronavirus, as your press release said. But can you tell us what would be -- why are you not that concerned right now? What would help you that makes it different than some of the other vendors that are highlighting that as a reason for first quarter that might not be as strong? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [93] -------------------------------------------------------------------------------- So sure, the -- so the impact of coronavirus on the supply side, as you know, we -- most of our critical components, we build right here in Minnesota. So we do get some parts from overseas, including China, but majority of the stuff that we use to build our products are sourced not from China but from local sources or other sources but not quite China. On the demand side, clearly, we do sell into China, particularly multinational corporations that have locations in China, except for 1 or 2 fabs in the Wuhan area, the Hubei Province area, and those are relatively smaller fabs. We haven't actually seen any one physically shut down their facility for a prolonged period of time. So they are -- they continue to -- orders that they have placed, they want us to continue to fulfill so long as the freight forwarders and everyone is available. So we haven't seen anything materially change on the demand side yet, with the exception of maybe 1 or 2 fabs in the Wuhan area, as I said. So if more things change, and we definitely have more cancellations or deferrals, we will update everyone. But as of today, we feel pretty good about the current guidance we have given and the impact being minimal. Hopefully, that answers your question. -------------------------------------------------------------------------------- Operator [94] -------------------------------------------------------------------------------- We can take our next question from Bill Dezellem of Tieton Capital. -------------------------------------------------------------------------------- William J. Dezellem, Tieton Capital Management, LLC - President, CIO & Chief Compliance Officer [95] -------------------------------------------------------------------------------- Nice quarter. One of the paragraphs in your press release referenced particle sensing with litho. Would you please talk through that opportunity? I mean those tools tend to be very expensive. Are your parts that could or systems that could be tied with that? Also quite expensive, less expensive? Just talk through as much of the opportunity as you can, please? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [96] -------------------------------------------------------------------------------- Sure. So as we -- as we said in our press release, this In-Line Particle Sensor is basically leveraging our WaferSense particle sensor that we call APS3, so it's the same particle sensor. It's a laser-scattering device that we are essentially scattering light of the particles. And using a photodetector, we count how many particles are there in a given unit volume. So we quantify the exact number of particles and put them in different bins, and that helps the customer a lot in understanding what's maybe going on in the process. So while in this -- normally our WaferSense, our particle sensor goes in the tool and does the measurement and reports the data in real-time outside using wireless element. In this case, what we have done is stick to the same particle sensor, but we don't rely on battery. We put it in a pumping -- basically a pipe, and we created a separate venturi kind of an effect. So we can still scatter light of particles even though it's in a vacuum. So we increased the power of the laser, and we changed the flow a little bit to be able to measure the particles. Same physics and same concept, but different fluid mechanics, if you will. Anyway, so the product is ready. We are testing it on multiple EUV tools right now. The data looks very promising. Customers seem to like product, and that's why we announced it, and now we are making it available for a broader customer set. So opportunity is fairly exciting. There's roughly 100 EUV tools right now worldwide, and that number continues to increase. You just have to look at ASML's earnings report. They quantify that fairly accurately. Those are expensive tools, as you correctly mentioned. Each tool goes for like $110 million to $120 million, and there's about 100 of them out there, and the number is growing by about 15% or so every year. Most of the tools are within 3 fabs right now. But over time, that number is expected to increase. Our opportunity is essentially to have our IPS sensor in multiple pumping lines on the EUV tool and measure the particles and give that data to the customer, who is the process engineer, who will look at -- any time we report a particle concentration increasing, that would be an indication for them that the collector efficiency could be in jeopardy, and they will do some kind of a gas purge or flush. Today, they cannot do that, so they are kind of guessing what may be the problem. And then based on their guess, they actually shut down the tool and do the purges. So they may be either overdoing it or underdoing it, and it's a huge problem for them for yield and productivity. I mean when they've spend that much on the tool, productivity is a big issue, obviously. So anything that helps them improve their yield and productivity is a big deal for EUV lithography, and that's really what IPS is targeted to address. So we are pretty excited about the opportunity with the existing tools that are there, and certainly, as the population continues to increase, to get more and more customers that way. Does that answer your question? -------------------------------------------------------------------------------- William J. Dezellem, Tieton Capital Management, LLC - President, CIO & Chief Compliance Officer [97] -------------------------------------------------------------------------------- It does. And a follow-up, if I may, please. So how many of your sensors would you anticipate selling? Or I guess more to the point, what would you think of as the minimum and the maximum revenue potential per unit, per litho unit, that you could be selling? -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [98] -------------------------------------------------------------------------------- That's a tough -- I mean that's a tough one to quantify because we don't know exactly how many IPSs will each customer use. One fab may choose multiple, one fab may choose less than that. So we don't know exactly how many they will use per tool. We hope it's multiple, and it's a high number, but it's really tough to say until we actually see how they put it in use and how much yield and productivity benefit they are getting. Just like any of our solutions, most of our customers try out our products, do an internal ROI calculation and then decide how many they want, and this is going to be no different. So we need a few more months here to be able to know what kind of ROI are our EUV customers getting with this product before we can say how many per tool will that be. And I mean obviously, the price point it's in somewhere tens of thousands of dollars, just like most of our WaferSense products are. So once we have a feel for the volume, we will be able to update you better. But at a higher level, I would say, overall WaferSense continues to grow, and we view this as part of extension of the WaferSense family, so they should help the growth rate of WaferSense going forward. But kind of tough to say what is the minimum and maximum for EUV tool at this point. -------------------------------------------------------------------------------- Operator [99] -------------------------------------------------------------------------------- It appears there are no further questions at this time. I'd like to turn the conference back for any additional or closing remarks. -------------------------------------------------------------------------------- Subodh K. Kulkarni, CyberOptics Corporation - President, CEO & Director [100] -------------------------------------------------------------------------------- Well, thank you for your interest and questions. We look forward to updating you after our Q1 results. Thanks again. -------------------------------------------------------------------------------- Operator [101] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.