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Edited Transcript of KLIC earnings conference call or presentation 19-Nov-18 11:00pm GMT

Q4 2018 Kulicke and Soffa Industries Inc Earnings Call

Nov 20, 2018 (Thomson StreetEvents) -- Edited Transcript of Kulicke and Soffa Industries Inc earnings conference call or presentation Monday, November 19, 2018 at 11:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Fusen E. Chen

Kulicke and Soffa Industries, Inc. - President, CEO & Director

* Joseph Elgindy

Kulicke and Soffa Industries, Inc. - Director of IR & Strategic Planning

* Lester A. Wong

Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer

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Conference Call Participants

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* Craig Ellis

B. Riley FBR, Inc., Research Division - Senior MD & Director of Research

* David Duley

Steelhead Securities LLC - Research Analyst

* Krish Sankar

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Thomas Diffely

D.A. Davidson & Co., Research Division - MD & Senior Research Analyst

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Presentation

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Operator [1]

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Greetings, and welcome to the Kulicke & Soffa 2018 Fourth Fiscal Quarter Results Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joseph Elgindy, Director of Investor Relations and Strategic Initiatives for Kulicke & Soffa. Joseph, you may begin.

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Joseph Elgindy, Kulicke and Soffa Industries, Inc. - Director of IR & Strategic Planning [2]

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Thank you, Hector. Welcome, everyone, to Kulicke & Soffa's Fourth Quarter Fiscal 2018 Conference Call. Joining us on the call today are Fusen Chen, President and Chief Executive Officer; and Lester Wong, General Counsel and Interim Chief Financial Officer.

For those of you who have not received a copy of today's results, the release as well as the latest investor presentation are both available in the Investor Relations section of our website at investor.kns.com.

In addition to historical statements, today's remarks will contain statements relating to future events and/or future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Our actual results and financial conditions may differ materially from what is indicated in those forward-looking statements. For a complete discussion of the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our recent SEC filings, specifically, the 10-K/A for the year ended September 30, 2017.

I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [3]

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Thank you, Joe. We were again able to achieve our quarterly revenue targets, despite macro and industry concerns. While broader macro forces are out of our control, we believe the near-term industry softness, is somewhat limited and does not impact our long-term fundamental targets or plans.

Some pressing concerns, such as the ongoing challenges of 2-dimensional node shrink and also pricing reductions in the NAND market, have little near-term impact to all business and may actually improve our long-term prospects.

Our confidence in our long-term strength, demonstrated by our aggressive repurchase activity, is supported by the following key points. First, our business is highly diversified. It is not overly dependent on any one particular type application or customer. We broadly support the majority of semiconductor applications in production. This includes major markets such as consumer, mobility, memory, LED and automotive. Second, as mentioned on our prior conference calls, 2-dimensional node shrink continues to have challenges and is failing to drive the significant cost improvement it has historically provided. This is driving demand for mature node tape-outs, mature node equipment and also advanced packaging. Our advanced packaging solutions provide new alternatives to drive form-factor performance, power efficiency and the cost, depending on the application. We anticipated this shifting value proposition from node shrink to advanced packaging for years and are now beginning to see real traction.

Looking ahead, we are excited to participate, and are well positioned to benefit, from this fundamental technology transition.

Finally, we continue to expand our served market opportunities. Over the prior year, we have maintained our dominant position in general semiconductor, connectivity and automotive, and we have further strengthened market shares in key areas like LED. We continue to aggressively seek out new opportunities that will further increase our end market diversity and will further expand our served market. For example, our recent partnership and solution for micro- and the mini-LED opportunities is facilitating increased access to the sizeable display market - a market we historically did not participate in.

Turning back to our September quarter's performance. We achieved the midpoint of our revenue guidance of $184.8 million. Although this represents a sequential decline from the strong June quarters, September quarter revenue was 15% above our prior 3-year September quarter average. We also generated strong gross margin of 46.4% and delivered $0.43 of EPS.

Our full fiscal year's net revenue of $889.1 million represents sequential growth of 9.9% and a 35% increase relative to our average of prior 3 years' period.

Non-GAAP income for the year was $171.1 million, which generated a strong $2.43 of non-GAAP EPS. The expected sequential quarterly revenue decline was largely driven by our short-term softness in our capital equipment offerings, primarily within our high-volume ball bonding business. Wedge bonding business decreased slightly via our electronic assembly, APAMA Thermo-Compression and iStack die attach business line has sequentially improved.

Also of note, we continue to make progress toward our long-term Aftermarket Products and Service strategy and realized a sequential APS revenue improvement of approximately 11% even in the September quarter. We strongly believe this improvement are driven by our fundamental effort over the prior 2 years to optimize our current market positions, expand our product portfolio and to further enhance cash flow generation.

I would now like to turn the call over to Lester Wong who will cover this quarter's financial overview in greater detail. Lester?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer [4]

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Thank you, Fusen. My remarks today will refer to GAAP results unless noted.

Net revenue for the quarter was $184.8 million. Strong gross margin of 46.4% generated $85.8 million of gross profit. Gross margins exceeded our prior expectations, largely due to product mix and favorable pricing. We continue to target margin of roughly 45% over the near term. Our operating expense came in lower than expected due to ForEx gains and cost control, which drove meaningful operating income of $24.6 million.

Going forward, we are maintaining our existing operating expense target of $53 million of fixed quarterly expense of 5% to 7% of variable quarterly expense tied to revenue. We booked a net tax benefit of $1.75 million and continue to maintain our 15% long-term effective tax rate target going forward.

Turning to the balance sheet. We ended the September quarter with a total cash and investment position of $614.1 million or $8.94 on a per share basis.

During the quarter, we have continued to return capital to investors. We deployed $23.7 million in open market repurchases during the September quarter and also paid out our first $0.12 dividend.

Throughout fiscal 2018, we have returned $91.1 million in cumulative repurchases, more than any prior year. At the end of the fiscal year, we had approximately $98 million remaining under the current board authorization for share repurchases. We will continue to opportunistically execute the existing repurchase authorization in the most tax efficient way.

On the book value per share basis, we closed the September quarter with $12.82, an increase of approximately $0.27 from the June quarter. Working capital, defined as accounts receivable plus inventory less accounts payable, increased by $8.3 million to $309.5 million.

From a DSO perspective, our days sales outstanding increased from 86 days to 118 days. Our days sales of inventory increased from 78 days to 105 days, and days of accounts payable decreased from 50 days to 44 days.

This concludes the financial review portion of our call.

I will now turn the discussion back over to Fusen for the December quarter business outlook.

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [5]

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Thank you, Lester. As evident in peer guidance and also analyst industry expectations, there is clearly some softening in the December quarters, particularly around the Chinese market.

For our business, we believe the outlook is in part due to near-term uncertainty around additional incremental capacity after several very capital-intensive quarters. We also believe near-term hesitation to add capacity is also partially due to increased uncertainty around the impact and the potential escalation of tariff.

While 2017 and 2018 were already strong years for the space, we anticipate momentum to ramp in the second fiscal half of 2019.

As discussed on today's earning release, we are guiding revenue for the December quarter to be between $150 million to $160 million. This new point represents a decrease of approximately 16% sequentially, although it's higher than 4 of the 5 past December quarters.

Our softer demand, especially within our ball bonding business, is largely driven by our customer base in China.

Looking forward, we are increasingly focused on further strengthening our fundamentals, driving our ongoing development, gaining traction on the new business and keeping costs under control.

In addition to loss mentioned earlier, I wanted to clarify a few additional points that highlights our unique position and strengthen our outlook. First, there continues to be a lot of focus on the memory market, especially price decline in the NAND market. Overall, we view the NAND market to be price elastic and expect ongoing demand for our memory-related equipment into the long term. The capital intensity of the memory and our dominant position within the Memory Assembly process, make it one of our largest specific end-market, accounting for about 11% of our revenue over the past 12 months. Again, we anticipate near-term price reduction to drive long-term unit growth and to further increase longer-term demand for our memory solution.

Secondly, we continue to enjoy strong exposure to several positive and long-term trends in the automotive space. Our automotive exposure further increased our end-market diversification and the long-term growth potential. Automotive and the industrial customers represent approximately 17% of fiscal year 2018 revenue, slightly up from last year. Over the coming years, as semiconductors become more critical to traditional, electric and autonomous vehicles, we anticipate our automotive-centric products to outpace overall semiconductor growth.

Finally, we continue to gain traction on all the various growth initiatives in advanced packaging and also on our micro- and mini-LED initiative.

In the September quarters, we recognize revenue on multiple Thermo-compression tools and iStack die attach tool. We have also recently introduced our latest high-accuracy, high-productivity flip chip tool Katalyst in the September quarters, which is a promising architecture and is driving strong customer interest.

We are also pleased to announce that in the current December quarters, we anticipate shipping the first Katalyst to a major customer for evaluation in high-volume production environment.

Finally, we officially launched our micro- and mini-LED solution, PIXALUX, in the September quarter, providing us access to the emerging LED display market. PIXALUX continues to be a very interesting, unique and exciting opportunity as we look ahead.

Overall, we remain very positive on our outlook. Our core and dominant share positions are increasingly allied with several major long-term trends, supporting global consumer, mobility, memory, LED and automotive applications.

In parallel, we continue to execute on all development goal and the market expansion strategy.

Although December quarter outlook is softer than expected, we believe this is only a short-term concern. Considering our balance sheet, broad and diversified portfolio, ongoing development plans, organizational efficiency, thoughtful capital allocation and our renewed focus on profitability enhancements, we are very confident our fundamental position will further enhance as we exit this near-term soft period.

This concludes our prepared remarks. Operator, we will now be happy to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Tom Diffely with D.A. Davidson.

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Thomas Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [2]

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So when you look at the guidance for the fourth -- or for the December quarter versus the strong December quarter you had a year ago, which of the segments are the softest on a compare on a year-over-year basis?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [3]

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So Tom, you are asking the segment difference, the number comparison this year compared to last year?

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Thomas Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [4]

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Yes. Just comparing the different segments, it sounds obviously like NAND is a little bit weaker. But just in general, I'm curious what are the biggest impacts on a year-over-year basis for the December quarter?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer [5]

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So Tom, this is Lester. I think general semi, particularly our ball bonder business unit, as Fusen said, particularly in China, I think there is obviously a lot of uncertainty around that. So I think that and memory, I would say, those are the 2...

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [6]

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So Tom, maybe if I can add. Actually there's still is a lot of brands in China. But I think this probably (inaudible) and cause of delay for investment, and that's all we're seeing. And our ball bonders, the biggest revenue source for us. So the impact particularly, I think, is even in the ball bonder business. But we believe after certain period, the demand will continue to pick up.

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Thomas Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [7]

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So do you think the biggest impact comes from just kind of the trade uncertainty or is it just the weaker-than-expected iPhone supply chain?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [8]

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Yes, I think it's a little bit of everything. I think supply chain is a little bit. But we are very diversified, right, in our not only ball bonder products, we have a very wide product portfolio. So we see actually -- I would say, probably majority is still the area of investment for us. And we already know the mobile space is not as strong as 3 years ago.

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Thomas Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [9]

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Yes, okay. And then what's happened with your utilization rate in the field over the last quarter? Where is it today versus where it was a quarter ago?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [10]

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Well, I think maybe a quarter ago, probably close to 70%, 80% and now probably, we believe, is probably lower. High end, I think our product -- our customers is really high, but our low end probably is a bit lower, probably below 70%. But we really (inaudible) phenomenon, yes.

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Thomas Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [11]

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Okay. So you see a little bit of absorption of the excess capacity for a couple of quarters before you saw the orders pick up again?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [12]

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Yes, we believe it will pick up probably next one quarter or so.

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Thomas Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [13]

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Okay. And then finally, what is your view for this unit growth for the prod and semi for the out year, for 2019?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [14]

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Yes. So Tom, overall, 2018 is a very good year for us, even we see a slowdown in the second half, and we should get growth 10%. So this is our view. We believe the current business level is quite low. And hopefully, we will stabilize our business through next March quarter, followed by a ramp. Then the 2019 can be as good as 2018. So unit growth, I think we still expect next year can still grow a couple of percent, maybe like 5%, and that's our view.

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Operator [15]

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Our next question comes from the line of Krish Sankar with Cowen and Company.

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Krish Sankar, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [16]

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I just have a couple of ones. Number one is given that you guys are reporting probably halfway into your December quarter, what's your line of sight into the March quarter? And historically, when December has been down this much, March is at a decent snapback. Given what is going on in the industry today, how do you think March is going to look directionally from December?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [17]

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Okay. So Krish, I think we assume the trade tension will not get worse -- won't get worse. And August level actually is low at this moment. So if the trade tension won't get worse, we expect March quarter to stabilize, March, right. And hopefully, now that our delayed investment came into a ramp, and that's our current expectation. The second fiscal -- second half of fiscal year we expect a ramp, maybe start beyond March quarters.

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Krish Sankar, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [18]

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Got it. And then I remember looking at some of the old notes, looks like across all your products, your exposure to China is roughly 50%. Is there a way to parse it down into how much of it is from your core wire bonder and how much of it is from auto/wedge bonder and how much from LED?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer [19]

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Krish, it is company-wide, about 50%. I think LED is higher than that, while I think automotive is probably lower than that. I think that's probably the way to gauging it.

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Krish Sankar, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [20]

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Got it, got it. And then -- all right, fair enough. And then the last question I had was I think, Lester, you kind of alluded that the OpEx to think about is $53 million in fixed cost. Is that the right number? Because I thought that with all the employee headcount reduction and everything that you had done, I thought the fixed costs must be lower?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer [21]

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No. We're still guiding around $53 million fixed cost and then $5 million to $7 million variable tied to revenue. As you know, it can move in and out quarter-by-quarter depending on segment performance. So -- but I think that's still the target we're looking at.

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Operator [22]

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Our next question comes from the line of Craig Ellis with B. Riley FBR.

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Craig Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [23]

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The first is really just a clarification. Lester, in the fiscal fourth quarter, we had strong gross margin performance, strong operating expense performance. So the clarification is, is that just good execution on the variable cost model, or were there any onetime items in either of those line items?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer [24]

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The gross margin, I think as we said, I think, Craig, is a little bit of mix. We sold a little less LED bonders, because as I think as you know, the market is a little softer there right now. So we sold higher-performance machines. So therefore, our is gross margin is better. As far as the OpEx is concerned, there are some one-timers, but nothing really significant.

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Craig Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [25]

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Great. The second question, Fusen, I wanted to follow up on your comments around the potential for revenues to ramp up of March, which may show some stability in the fiscal second half. So are you in your conversations with customers uncovering strong customer interest for either technology or capacity needs at that time frame and is the issue just getting beyond Lunar New Year or having some visibility beyond the potential imposition of tariffs? Or what are you hearing from customers that lends confidence in a stronger fiscal second half?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [26]

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So I think number one, the memory softness has been few quarters already, right? So that's number one. And we expect the memory long-term outlook, we are strong believer. So hopefully, it will continue to improve. And every time -- for example, every time when NAND price are reduced, it's always picked additional market share against hard disk drive, right? So memory fundamental, we are positive. And also semiconductor demand is always there. And there are short-term -- people have hesitation to put investment at this moment, and we don't believe this will continue for several quarters. And also March quarter -- beyond March quarter, June quarter is a strong for us and also a little bit indication from customers. Hopefully, this trade tension will not be forever. It's not in anybody's interest. So we feel positive about second half of fiscal quarters.

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Craig Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [27]

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That's helpful. And then 2 longer-term questions. The first one is for you, Fusen. Can you just talk about how you feel about your objectives to drive the significant improvement in services towards 30% of mix in the fiscal '21 target model time frame? What are some of the things that you can chalk up as accomplishments as we look back at fiscal 2018? And what are some of the things that you feel like the team needs to execute in 2019 to have you on track for that target?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [28]

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Okay. So our APS including a lot -- is including consumer, spares, service, refurbish, there's many things. And we pull them together. So we actually have a more portfolio in working with our customers. Actually, we started to share results. And as I mentioned, I think September quarter, just this quarter alone, compared to the last quarter, actually we grew about 11%. So we also put a lot of effort in our capital rate production. And actually, this quarter probably is a historical quarter revenue for us, right? So I think the team has done a good job. The company will focus on APS growth, because in a downturn, I think APS actually is a high-margin business and pay for everybody's paycheck. So we feel comfortable, and hopefully probably in another 4 years, we will be able to achieve 30% of total revenue for us.

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Craig Ellis, B. Riley FBR, Inc., Research Division - Senior MD & Director of Research [29]

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That's helpful. And then just the last question, both for you and Lester. Just looking at the fiscal '21 target financial model, can you express areas where you're more confident in the target financial model, whether it be revenues or gross margins or other parameters like operating margin or earnings and any that may be more of a challenge, given the macro environment that we have right now and the impact that may have on any of the programs that were embedded in that target model?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer [30]

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Sure, Craig. Let me take that. I think we're actually still relatively confident in all of the targets we shared on the Analyst Day. I think as far as revenue is concerned, I think as Fusen indicated, I think we believe we're aligned very well with -- from the fastest-moving trends in the industry. Yes, there's a little bit of softness, but as we've been saying throughout the call, we think it's short term. Long term, semiconductor growth is going to continue. Automotive -- semi and automotive is also going to continue, and we're very well aligned there. We have, as we indicated, now also entered into the flip chip market, which we have not been in it over the Katalyst and is being received very, very well. So we believe that will also drive that move going forward. Also, again with the micro/mini-LED with PIXALUX. So I think on the revenue line, we still believe we can outgrow semiconductor unit, which is about 5% to 7%. As far as the margins are concerned, I think, again, we believe that we're entering into some higher-margin products such as automotive, such as micro-LED, such as flip chip. So while I think the margin expansion will probably linger on, not over the next year, 1.5 years, but we do believe by our target date, we would reach those targets. And finally, OpEx, we're always very cautious of cost. This is something Fusen drives to do every day, and I think we are looking at cost reduction and also very, very cautious on discretionary spending, particularly in the softer period. So we're still confident, unless something significant happens in the macro market, of meeting our targets for 2021.

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Operator [31]

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(Operator Instructions) Our next question comes from the line of David Duley with Steelhead Securities.

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David Duley, Steelhead Securities LLC - Research Analyst [32]

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Just as a clarification, I think you mentioned that your advanced packaging revenue was up during the quarter and your bonding -- bonder revenue was down during the quarter. Could you give us some sequential changes or year-over-year changes in those categories or however you're going to frame it for us?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer [33]

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So yes, David, I think for the quarter, ball bonder was down, core was down and AP business was up. But again, our AP business at this point is still at a lower base than our core business. So therefore, the fluctuation obviously is much higher quarter-to-quarter.

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [34]

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I think percentage-wise, we expect actually year-to-year same quarter, actually, I think this quarter bill probably is significantly less in terms of percentage.

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer [35]

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Yes.

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David Duley, Steelhead Securities LLC - Research Analyst [36]

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What as percentage, could you clarify that last comment? I didn't hear you.

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, Interim CFO & Interim Principal Accounting Officer [37]

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No, I think Fusen said for the quarter, our advanced packaging business actually grew significantly during this quarter.

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David Duley, Steelhead Securities LLC - Research Analyst [38]

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Okay. Yes. And that led me to one of my other questions is you talked about Thermo-Compression Bonding recognizing revenue there and the die attach. Could you just talk about the applications of each one of those tools that you're seeing, interested or which areas might be growing or ramping for you?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [39]

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So I think the PCB, the market we participate, right now is in the apps projects. And of course, high bandwidth memory, we are working with customer. And hopefully, we will see more results next year. And PCB, I think, is also very important for high-performance logic, 2.5D integration, like ASIC plus memory and the follow-up Katalyst I think we expect is going to be very important for Fan-Out and high-performance microcontroller. And memory right now, DRAM, particularly DRAM, shift a lot of capacity to actually Flip Chip. So our newly introduced Katalyst (inaudible) is going to be very beneficial to us. The iStack, actually we are in CMOS imaging sensor and also 3D sensing are the area we participate, and of course, also in the memory.

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David Duley, Steelhead Securities LLC - Research Analyst [40]

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And could you talk a little bit about the trends we hear a lot about how customers are migrating some of these memories stacks -- these high-performance memories stacks to, as you mentioned, I guess, an advanced packaging type connection versus wire bonder or a wire bonding connection, how does that impact to you guys?

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Fusen E. Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [41]

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Okay. So I'm sorry, David, so to talk DRAM, I think DRAM, there was of course a lot of our ball bonder, but we see a shift in our DRAM capacity. DRAM actually from our ball bonder to flip chip. And we do believe that we have already in the architectures and a lot of interest from customers. So that's really good for us. And the stack DRAM, the high-bandwidth memory, I think, is going to TCB, and we are engaging with customers. So that's for DRAM. And for the NAND, it's both 2-dimensional and also 3D RAM stacking, and we believe next 5 years, also foreseeable future. Ball bonder are still the (inaudible). And we have every intention and every belief we will continue to have very high market share in this market. It's very advanced, 3D. So we call it really very (inaudible) 3D packaging for the NAND Flash. And we are very proud of very good tool to serve in this market. Hopefully, I answered your questions.

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Operator [42]

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Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to turn the floor back to Joseph Elgindy for closing comments.

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Joseph Elgindy, Kulicke and Soffa Industries, Inc. - Director of IR & Strategic Planning [43]

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Thank you, Hector. Before closing, we wanted to inform investors that we will be participating in several road shows as well as 2 upcoming New York conferences, the Midtown Cap Summit on December 11 and again at the 21st Annual Needham Growth Conference on January 16. Thank you all for the time today. As always, please feel free to follow-up directly with any additional questions.

Operator, this concludes our call. Good day.

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Operator [44]

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This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.