Q1 2009 Aehr Test Systems Earnings Conference Call - Final.(Broadcast transcript)

OPERATOR: Good afternoon, my name is Pam and I will be your conference operator today . At this time, I would like to welcome everyone to the Aehr System first quarter 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer period. (OPERATOR INSTRUCTIONS).

It is now my pleasure to turn the floor over your host, Tricia Ross of Financial Relations Board. Ma'am, you may begin your

TRICIA ROSS, FINANCIAL RELATIONS BOARD, AEHR TEST SYSTEMS, INC.: Good afternoon, and thanks for joining us to discuss Aehr Test Systems results for the first quarter of fiscal 2009. By now you should have all received a copy of today's press release. If not, you can call my office at 213-486-6540 and we'll get one to you right away. With us today from Aehr Test are Rhea Posedel, Chairman and Chief Executive Officer, and Gary Larson, Vice President of Finance and Chief Financial Officer. Management will review its operating performance for the quarter before opening the call to your questions.

I would now like to turn the call over to Gary Larson. Go ahead, Gary.

GARY LARSON, VP FINANCE AND CFO, AEHR TEST SYSTEMS, INC.: Thank you, Tricia, and thanks to everyone for joining us today. Before we begin, I would like to make a few comments about forward-looking statements.

Please be advised that during the course of our discussion today we may make forward-looking statements that involve risks and uncertainties relating to projections regarding industry growth and customer demand for Aehr Test products, as well as projections regarding Aehr Test future financial performance. Actual results may differ materially from projected results, and should not be considered as an indication of future performance. These risks and uncertainties include, without limitation, economic conditions in Asia and elsewhere, world events, acceptance by customers of our FOX, ABTS, MTX, MAX, and DiePak technologies, and conversion of quota activity to purchase orders, and acceptance by customers of products shipped upon receipt of a purchase order, the ability of new products to meet customer needs or performance described, the company's development and manufacture of a commercially successful wafer level test and burn-in system, and the potential emergency of alternative technologies, each of which could adversely affect demand for Aehr Test products in fiscal year 2009.

We refer you to our most recent 10-K report and other reports filed from time to time with the US Securities & Exchange Commission for a more detailed description of the risks facing our business and factors that could cause actual results to differ materially from projected results. The company disclaims any obligation to update information contained in any forward-looking statements to reflect events or circumstances occurring after the date of this conference call.

Now I would like to introduce our Chairman and CEO, Rhea Posedel. Rhea?

RHEA POSEDEL, CHAIRMAN, CEO, AEHR TEST SYSTEMS, INC.: Thank you, Gary. Greetings and welcome to our conference call for the first quarter of fiscal 2009. We are pleased to report that we had a solid first quarter to start fiscal 2009 on a high note. Revenue was $9.7 million, up 27% over the same quarter of the prior year. Most importantly, we did an excellent job in managing our cost to deliver higher year-over-year operating profits. Our operating profit increased to $1.4 million, an increase of 89% over the same quarter of the prior year. A pretty good first quarter, considering the weakness in our industry.

We had a number of accomplishments since our last conference call . Our major accomplishment last quarter is that we designed and shipped a record number of FOX-1 wafer pack contactors. A special thanks to our design and manufacturing team for making this happen. These wafer packs are a key part of the enabling technologies that allows the FOX-1 system to test thousands of die in a single touchdown. Last quarter we shipped new wafer pack designs for contacting over 2,500 die per wafer which we believe could be an industry high water mark. Our challenge will be to stay on this trajectory, so we can keep up with customer road maps showing the number of die increasing to over 3,000 die per wafer near term.

We expect shipments of wafer packs to grow this fiscal year to support our increasing install base of FOX-1 and FOX-15 full wafer test and burn-in systems. Additionally since a new custom design wafer pack is required for each new design device type, we believe wafer packs will provide a significant revenue stream over the long term.

Another highlight was receiving a significant …