Mary Puma - President and Chief Executive Officer Kevin Brewer - Executive Vice President and Chief Financial Officer Doug Lawson - Executive Vice President of Corporate Marketing and Strategy.

Edwin Mok - Needham & Company Patrick Ho - Stifel Nicolaus Craig Ellis - B. Riley David Duley - Steelhead Securities Mark Miller - Benchmark.

Good day, ladies and gentlemen and welcome to the Axcelis Technologies Second Quarter 2016 Conference Call. My name is Brian and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference.

[Operator Instructions] I would now like to turn the presentation over to your host for today’s call, Mary Puma, President and CEO of Axcelis Technologies. Please proceed, ma’am..

Thank you, Brian. With me today is Kevin Brewer, Executive Vice President and CFO; and Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. If you've not seen a copy of our press release issued earlier today, it is available on our Web site. Playback service will also be available on our Web site as described in our press release.

Please note that comments made today about our expectations for future revenues, profits and other results are forward-looking statements under the SEC’s Safe Harbor provision. These forward-looking statements are based on management’s current expectations and are subject to the risks inherent in our business.

These risks are described in detail in our Form 10-K Annual Report and other SEC filings, which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements.

Today Axcelis reported second quarter financial results with revenues of $64.5 million, gross margins of 39% and earnings per share of $0.10. As expected, our systems business returned to a more balanced mix between memory and foundry logic. The second quarter split was 37% memory and 63% foundry logic.

We believe our systems business will have a bias towards foundry logic in the third quarter as well but will see increasing strength in memory activity beginning in the fourth quarter. We expect to end the year with systems revenues more evenly split between the two segments, similar to 2015.

From a product perspective, Q2 saw a higher mix of high energy implants. In Q3, we expect a broader Purion product mix that will include the beginning of a significant uptick in medium current business. This increased activity is being driven by the technical differentiation of the Purion M, especially in the image sensor, RF and power device market.

We expect Purion M revenues to be one of the key drivers of our market share increase in 2016. In terms of guidance, we continue to expect second half revenues to be stronger than the first half with momentum in the memory market increasing in Q4 and into 2017.

For the third quarter, we are forecasting revenues of $65 million to $70 million, gross margins in the mid-30% range, operating income of $2.5 million to $3.5 million and an EPS of $0.03 to $0.06. Q3 gross margin guidance is impacted by the shipment of Purion M to new customers.

This includes some Purion M systems built with higher cost inventory purchased prior to the volume ramp of the Purion platform, as well as systems with higher cost associated with the introduction of the first silicon carbide tool. It is also impacted by the expected closer of an outstanding Purion H evaluation.

Revenues are lower than we had originally expected them to be at this point in the year. This has been driven by delays in customer spending at a few key accounts focused on memory. However, we continue to do a good job on executing against our primary objective of setting the table for 2017, with new Purion penetration.

A key element of this objective is the extension of our base Purion product family to address the specific needs of customers producing not only memory devices but also image sensors and power devices.

These extensions include, the new Purion EXE and VXE, providing the highest energy levels available in a production implanter, the high temperature Purion M with 150 mm silicon carbide capability for the power device market, and significant productivity and source life enhancements for the Purion H.

In terms of customer penetrations in the first half of this year, we have added new customers both in memory and in foundry logic across all three types of Purion products.

Our new penetrations are coming from expanding our customer base through new sales and evaluation placements, increasing the number of qualified recipes at existing customer sites, and securing capacity production buys as evaluations close.

Interest continues to be very high in the Purion H due to the advantages the spot beam architecture provides for our customers' most challenging implant step. In Q2 we successfully added one new Purion H customer and shipped the first follow-on Purion H production system to a second DRAM manufacturer.

We also extended an existing memory evaluation to give the customers' engineers more time to explore the capabilities of this system. We have shipped Purion XE to one new customer and two new fabs in both memory and foundry logic, including the first shipment of the Purion EXE in this quarter.

The Purion EXE provides customers with a much higher energy capability in the same footprint as the Purion XE. Customers with the Purion XE can feel the upgrade to the EXE, giving them more flexibility in their buying decision.

We are also seeing significant interest in the new Purion VXE which provides the highest energy levels available in a production implanter on the market today. We are seeing increased levels of interest from both the memory segment and the mature process technology segment for the standard Purion M at 200 and 300 mm wafer sizes.

Low levels of metal contamination due to the hybrid filter design and better productivity at higher energy levels are driving this activity. Additionally, with the introduction of the high temperature Purion M with 150 mm silicon carbide capability, we are now seeing a ramp in shipment of these tools.

We have also recently placed the standard 300 mm Purion M evaluation unit in a second fab of a leading Asian memory manufacturer to accelerate DRAM recipe qualification. Expanding our customer base keeps us on track to increase our market share to between 20% and 25% of the $825 million to $875 million implant market in 2016.

This achievement positions us to take full advantage of multiple large projects anticipated in 2017 and '18. Customer fab projects over the next couple of years are expected to support the continued growth of the Internet of things and a large sustained memory build.

New fab construction accounts for a significant portion of the implant TAM in a given year. A 100,000 wafer start fab requires between $150 million and $200 million of implant capacity.

By splitting their business evenly between two strong implant suppliers, our customers have seen the innovation benefit as measured by productivity, yield and cost of ownership. As a result, Axcelis will see a step function increase in market share with just 30% to 50% participation in two to three of these new fab.

Adding this incremental revenue to our existing customer base will allow us to achieve our 40% market share goal. Now I would like to turn it over to Kevin to discuss our gross margin improvement progress and our second quarter financial results.

Kevin?.

Thank you, Mary. Before reviewing the second quarter financials, I would like to take a minute to go over our gross margin objectives and results. We continue to focus on gross margin improvement and understand its importance to drive higher earnings per share.

Our long-term financial model of 40% market share and 40% gross margin will generate significant earnings per share. In Q2, gross margin improved to 39% fueled by continuing cost out efforts and a favorable mix of mature Purion high energy systems.

Across the Purion product family, they are driving quarter-over-quarter improvements in the cost to goods sold with value engineering projects, supply chain optimization and lower manufacturing install and warranty costs.

As Purion H and Purion M products mature and additional cost out initiatives are realized, we expect margins on these products to more closely align with our mature high energy tools.

We have previously noted that the mix of accretive GSS revenue versus systems revenue, and the mix within systems can impact gross margin performance quarter to quarter. The evaluation units and first time builds like the new Purion EXE, VXE and Purion M for silicon carbide, can also pressure margins.

So the takeaway is, that even though margins may vary from quarter to quarter, we are making steady progress along our cost to goods sold which in turn is driving margin improvement.

Since rampant production of the full Purion product line with the Purion H in Q1 of 2015, systems standard margins have improved 640 basis points on a rolling four quarter basis. New product line expansion such as the Purion EXE, VXE and Purion M for power devices, enabled tier pricing strategies.

Combined with ongoing cost out initiative and planned volume increases, this should drive the gross margins to 40% exiting 2017. Looking at our second quarter results. Q2 revenue was $64.5 million compared to $67.5 million in Q1. Q2 systems sales were $33.7 million compared to $37 million in Q1.

Q2 GSS revenue finished at $30.8 million compared to $30.5 million in Q1. Q2 sales for our top ten customers accounted for 73.8% of our total sales compared to 79.6% in Q1, with three of these customers at 10% or above. Q2 system bookings were $41 million compared to $36.9 million in Q1 with a Q2 book to bill ratio of 1.13 versus 0.98 in Q1.

Backlog in the second quarter finished at $28.9 million compared to $21.9 million in Q1. Q2 combined SG&A and R&D spending was $20.5 million compared to $20.6 million in Q1. SG&A in the quarter was $12 million with R&D at $8.5 million.

In Q3, we expect SG&A and R&D spending to be approximately $21.5 million, primarily driven by higher evaluation cost required to support expansion of our Purion footprint. Gross margin in Q2 finished at 39% compared to 34.7% in Q1. In Q3, we expect overall gross margins in the mid-30% range.

Gross margin guidance is impacted by the shipment of Purion Ms to new customers. This includes some Purion M systems built with higher cost inventory, purchased prior to the volume ramp of the Purion platform, as well as systems were high costs associated with the introduction of the first silicon carbide tools.

This is also impacted by the expected closer of an outstanding Purion H evaluation. With the impact of these tools, we would be more in line with our 2016 year-end target of 36% to 38% gross margins. Operating profit in Q2 was $4.6 million compared to $2.5 million in Q1. Q2 net income was $2.9 million or $0.10 per share, above guidance and consensus.

This compares with $1.9 million or $0.06 per share in Q1. Q2 inventory ended at $110.6 million compared to $108.7 million in Q1. Q2 accounts payable were $26.8 million compared to $21.7 million in Q1. Q2 receivables were $63.5 million compared to $47.5 million in Q1. Late in the quarter shipments impacted the timing of receipts.

Q2 total cash finished at $67.8 million compared to a cash balance of $74.4 million in Q1. Lower cash was also driven by late in the quarter shipments. We expect Q3 cash to be approximately $70 million. Overall, I am very pleased with our financial performance in the second quarter.

Tight expense control and improving system margins contributed to our seventh consecutive quarter of profitability and our balance sheet continues to be strong, free of debt. I would like to turn the call back to Mary for closing comments..

Thank you, Kevin. It is clear that Axcelis is capturing customer mindshare with the Purion product family. New product expansions are helping driven additional share gains and higher margins.

The industry is gearing up for a strong build cycle and we expect our Purion penetration success to continue throughout 2016, positioning us for a stronger 2017 and '18. Share gains in these years will be driven by a broader customer base and improved memory and IOT spending.

We continue to execute well and believe that we are on track to achieve our long-term business model of 40% plus market share and gross margins. With that I would like to open it up for questions..

[Operator Instructions] Our first question comes from the line of Edwin Mok with Needham & Company. Your question please..

So first question just to clarify your comment there, Mary. You mentioned that one of the evals did get extended, right. But then I think you also said that you had a second or an additional Purion H customer there.

I just want to clarify, so what happened to your first eval, did you ship extra two to that customer? And then in terms of this new Purion H customer, is that, what kind of customer is that? Is that memory or foundry logic?.

So we have, just to clarify, we have three evaluation units out in the field right now. We have a Purion H that we shipped to a foundry logic customer in Asia. We have a Purion H eval which has been extended beyond where we thought it would extend but that’s actually quite a positive thing.

As we have talked in the past, extending an evaluation unit actually gives us more time to work with the customer and allows that customer to explore the capabilities of the tools further than perhaps he would have under other circumstances had we closed the evaluation unit.

And then I also mentioned that we have a Purion M evaluation unit out there which we have put into a fab where the customer has several Purion Ms already that are qualified for [flash] [ph] and we have now put this Purion M evaluation unit in to accelerate qualification for DRAM in preparation for a build that this customer is planning to do, probably likely late this year early next year.

So those are the three evaluation units.

Edwin, did that answer your question?.

Okay. That’s helpful. Actually helpful you could clarify that. Now two [indiscernible] When talking about Purion M I think you mentioned on prepared remarks that you guys are seeing good interest in that including this eval opportunity you talked about plus increased mix of Purion M in the coming quarter.

Can you help us think about how that could potentially impact mix being Purion M versus Purion XE or Purion H. Not in the near-term because of some of the [tools] [ph] that you guys are shipping the [indiscernible] or what is the [indiscernible] customer.

Is there a difference in margin mix as mix shifts from one type to the other?.

Yes. Edwin, Kevin is going to take that on because it's gross margin related but you are not coming in very well, so if there is any way you can maybe -- if you can ask a follow-on, you could change phones or something..

I think he is asking mix of Purion M....

Yes. Impact. Go ahead..

Yes. So I think there is two parts to the question, Edwin. I think you were asking about the mix of Purion Ms going forward and then secondly how that impacts gross margin. So in terms of the first part of the question, the Purion M is beginning to ramp. As Mary described we have begun to see an uptick. This was driven by a couple of factors.

One, in our more mature technology segment, we are seeing a lot of interest from image sensors due to the hybrid filtering system that gives us lower metals contamination. We are also seeing interest in several applications that require the higher energy levels that the Purion M is capable of.

And then third, we are seeing a lot of interest in the silicon carbide variants of the tool for power devices. So that is all beginning to go now. And then as Mary just described, we have got another Purion M in a more standard application in a DRAM fab for evaluation.

So there has been quite a bit of activity on the M, so I would say going forward we would hope we continue to see activity with that. It really balances out the product line to give us the ability to have all three of the products in any of these customers. Image sensors have a high demand for high energy and medium current.

The power devices could have opportunity for medium current as well as high energy and the, obviously, in the DRAM and memory segments, there is a need for all three. So we see it as part of what we have in the past have referred to as the power of Purion.

Once a customer gets the platform in, then they are able to migrate to the additional product lines within that. And then additionally, with the extensions that we are making to each of the product families. It gives them more opportunity and us more opportunity to target some of those segments. Now, Kevin will answer the gross margin question..

Hi, can you guys hear me okay..

Can now, yes..

So one more question just on, in terms of looking beyond this quarter. It sounds like you guys are more confident about growth in the fourth quarter.

Can you kind of help me understand, is that predicated on the three evals that you guys talked about, turning into, you know completing those three evals and turning those customers into -- and/or turning those customers into buying volume for production? Or is it something that you thought you hear from customers in terms of their plans to ramp up DRAM investment now actually that’s closer to [indiscernible] mix nanometer node than 20 nanometer node.

Can you give us some color on that?.

Yes. I think it's probably a combination of both of the things that you just mentioned. As I mentioned a few minutes ago, we actually believe that memory spending is going to begin to increase in Q4 and into 2017 and obviously that plays to a strength that we have.

It's really focused around several of the projects that I think not only has Axcelis been talking about but our peers have been talking about as well. So we are confident again that the second half -- our second half revenues will be better than the first half and it will continue to be a mix of the mature process technology customers plus memory..

Okay. Sorry, one last follow up quickly for Kevin.

So, Kevin, just based on the numbers, so far your backlog actually grew a bit this quarter and based kind of your comment, you would imagine that you guys are expecting stronger bookings in the coming quarter or is that, how we should think about ramp up in the 4Q and [indiscernible]?.

Yes. You are right. The backlog did go up this quarter. You know we have always bookings and backlog and a lot of times we will actually book and sell a system in the same quarter but obviously backlogs and bookings going up is never a bad thing. So I guess it would be a way to take a look at what we were thinking for the future quarters..

Okay.

Did you guys [indiscernible] books for the fourth quarter and the first one for this quarter?.

No. There is not a lot booked right now for the fourth quarter. It's again, a lot of it is just book and ship. Yes..

Thank you. Your next question comes from the line of Patrick Ho with Stifel Nicolaus. Your question please..

Maybe just addressing a combination of the pickup in memory spending that you are projecting later this year and into 2017 along with the gross margin outlook you have. Obviously, higher utilization factory absorption helps gross margins but what, I guess, steps are you taking to ensure that you do get that benefit from a cost of goods perspective.

How are you managing the supply chain and the cost around this potential build without, I guess, incurring any expedited cost, things of that nature, that would actually weigh against gross margins down the line?.

Yes. So Patrick I think in terms of what we are doing for managing the cost, unlike when we initially ramped Purion a couple of years ago when we were hit with quite a few expediting charges on the Purion H. Right now we have the supply chain primed pretty good. They have got the search capacity for us when we need it.

So I think the best thing that’s going to happen actually is the fact we are getting more volume and it was going to help us on some of our cost out [curves] [ph]. You know the margin improvement really is coming from a lot of things.

We are not just relying on material cost out from volume, we have done a lot of supplier rationalization in terms of moving to different suppliers where we can get as good, if not better quality, at a lower cost.

There is still a tremendous amount of work going on with the engineering group doing value engineering in terms of driving costs out of tools. And the in the factory, we have and always have had a very strong lean program and we have made tremendous strides on labor hour reduction which we are going to continue.

So I am not worried that a significant ramp is going to negatively impact in terms of expediting cost and things. And just one further point, Patrick, as well, I mean I think you know where our magnets come from. We have actually got some local inventory set up now and we are building to a more of a [conwon] [ph] type system.

So we have, that’s an area where we had lot of expediting prior and we should be able to stay away from those significant fees this time around..

Great. That’s helpful. And my second question in terms of your foundry logic business which has been centered on the trailing edge. Image sensors are still projected over the next couple of years to grow.

How do you see that marketplace, particularly as you enter into '17, maybe not on a quantitative basis but qualitatively, how do you see that market and some of the opportunities to get additional volume buys on the foundry side of things..

Yes. On the mature foundry logic, image sense, power devices, RF devices, all of those are actually pretty hot right now. And so we see quite a bit of opportunity from IDMs that are producing them. Companies that are running a [phablet] [ph] operation and then the foundries that are supporting them.

So there is quite a bit of opportunity across that whole market and it's opportunity for all three of our products. And as you can see from the product extensions, Patrick, we have targeted some of those markets specifically with the silicon carbide for power and the VXE and EXE are targeted very much at the image sensor market..

Thank you. [Operator Instructions] Our next question comes from the line of Craig Ellis with B. Riley. Your question please..

I apologize if this was covered in the prepared remarks, I jumped on a little late. Very strong gross margins in the quarter. Kevin, was that a clean number or were there some onetime items that wouldn’t recur in the back half of the year that benefitted margins for the second quarter..

Yes. So I mean within Q2, you know there is two things. It certainly serves as kind of a proof point that we can get to the 40%. It was a very good quarter in that we didn’t have any negative impact of eval cost coming through. We had a very strong mix of our mature high energy products.

But the point I will make is that as the Purion M and Purion H continue to mature, which they are, the margins on those products become more in line with the high energy as well. So going forward at some point, the mix within a quarter of systems at least, should have less impact on gross margins.

But we are not coming off where we have been expecting to level the year. We have been talking to leaving the year at 36% to 38%. Again, we had a very strong quarter in Q2 but we also discussed on Q3 that we have got some -- a fair amount of Purion M inventory going out some as prior to ramping production of Purion, so it's higher cost.

And we have got some development cost, I would call them, that are sitting on the silicon carbide tools.

So Q3, that’s why we are back down in the mid-30% range because there are a couple of events that, I will call them one time because, again, as we move through some of this older inventory, as we fill more silicon carbide tools, that negative impact order grows.

And then the other thing I said, Craig, is that we still are on plan to exit 2017 at 40% gross margins. We have got very detailed roadmaps in place where we are driving a lot of cost out across the board either through engineering supply chain, warranty and install, all the, I guess, the usual suspects. So we are really pushing hard.

So we are feeling good with gross margin. Quarter-to-quarter, they will vary a little bit and it is going to be driven by some of these, I guess, more one off type events a little bit until Purion H and Purion M get up to the level of maturity of the high energy..

That’s helpful. Thank you. The next question, I will just take it over to Mary. Mary, we are at the mid-year point. The company had the goal of 20% to 25% market share for the year. As you look at the business and the guidance for the third quarter, in your mind where are we shaking out at this point relative to 20% to 25%..

So I will start by saying, I think we have done a really good job expanding our customer base which obviously leads and positions us to grow our market share. We have new customers who have just outright bought new Purion products. We have placed several new evals in the field. We have filled more Purion at existing customers.

For example, we have just expanded the number of types of Purion tools that the customer, would add to some customers who may have started out with the Purion XE are now also buying the Purion M and the Purion H. We have increased the number of recipes that have been qualified on tools that are actually already in production at some of these sites.

And then we have gotten follow-on capacity buys for production, again at some other customers. So I think in that regard we have done a really good job in terms of what we call setting the table for the market share increase in 2016, the 20% to 25% and then also getting up to 40% plus in the '17, '18 timeframe.

So at this point, again, we still expect revenues in the second half of the year to be stronger than the first half of the year.

We are not coming off the forecast that we believe that our market share will be between 20% and 25% this year and then moving forward, continuing to increase given the builds or the increase in memory spend and IOT spending in '17 and '18. That will get us up to the 40% plus..

Okay. And then the last question, I am not sure if it's better for you or better for Doug. But as you look at the activity that’s occurring I memory, like you hear in some of the [indiscernible], it sounds like from Axcelis and a few other companies.

Is that something that in your mind would keep the overall TAM at what is likely to be an 850 millionish level this year or is that the first sign of the TAM for ion implant really moving up towards a billion dollars which is where I think some of the consultancies have the market pegged..

Yes. So we definitely see, with the memory builds that we have described and talked about 2017 and '18, definitely moving back up into the 900s to close 2 billion. The exact timing towards the end of the year and into the first of the year, is still a little bit far away for us to figure out how much comes into this year and how much doesn’t.

And so we are still staying with the 825 to 875, Craig, for our estimates. But we do see it moving up as those projects kick off..

Thanks, everyone. Your next question comes from the line of David Duley with Steelhead. Your question please..

Yes. Thanks for taking my question. Mary, I think you had mentioned in your prepared remarks at this point of the year being some of the customers were behind where you thought they were. Could you just talk a little bit more color, I think you were referring to memory customers.

But just maybe talk a little bit through that, a little bit more for us?.

Yes. It's mostly in the memory area and again, I think it's pretty consistent with what others have seen in terms of some and what was anticipated spending in DRAM as some customers transition to a smaller node. There were some projects that potentially you might have had some higher spending on the NAND side of the house.

So a few customers have slowed and have slowed some things down, moved some things around. We are confident that that is just sort of a temporary pause, so to speak on the memory side of things.

And as we said, we expect some of that spending to actually begin in Q4 of this year and certainly to have a much stronger 2017, I think we will see those customers come back and spend significantly more in '17 than they have in '16..

Okay.

And so I guess in the fourth quarter you would expect kind of both of your major segments of business to be up, both your memory and your foundry logic business?.

Yes. We expect our systems business to have a more even split between those segments, so, yes..

Yes. I just wanted to make sure, even though you are saying it's going to be even but I just want to make sure that both are going to be up sequentially because sometimes the math works out where it's not that case.

So to be clear, both foundry and logic and memory spending should be up for you in the fourth quarter?.

Well, I guess I will put that in the context of, as we said our second half revenues would be higher than our first half revenue. And we were still talking about the 20% to 25% target for market share. So Dave, you can do the math..

Okay. Kevin, I noticed that the deferred revenue balance was up $6 million.

Is that reflective -- what was the reason for that?.

Well, there is two tool sales that were driving that. I don’t want to get into the specifics of it but that will come back down in the current quarter, Q3 quarter.

But we just saw a couple of tool sales got put in there, so I think it was up about $6 million, is that what you said?.

Yes..

Yes. Yes. It was two deals..

Okay. And final question from me. Just to understand this. I guess you have three evaluation systems out in the field now.

How many would you expect to close in the third calendar quarter?.

At this point we would expect one to close in the third calendar quarter and we are monitoring the other. It's possible one or more of those will close in 2016 and that we are also taking a look at potentially some new evaluation units and that’s something that we would put out in the press release..

Thank you. We have follow up questions from the line of Edwin Mok with Needham & Company. Your questions please..

Just two follow-up.

One is, any color based in terms of your assets in either Japan or your assets to start to, try and penetrate even that foundry logic area?.

Yes. So in Japan we have actually started up our own organization there and have started staffing with Axcelis employees. So it is an effort that’s underway. We have talked about how that will take time to actually bear some fruit but it is something that we are focused on.

And we are continuing to work with the leading edge guides to place an evaluation unit. I think you know, and we have said it before, that it is certainly very challenging.

We have seen the environment change at a couple of those customers over the course of the year which has made it perhaps even more challenging but it is still a goal of ours for this year and we are continuing to work at it..

Okay. That’s helpful color. And then one question for you Kevin. I think you mentioned $21.5 million OpEx for this quarter. There was ramp up costs associated with that.

Should we expect that OpEx to come down or to moderate out of this quarter or should we expect 4Q OpEx maybe potentially can come back down a little bit?.

So right now it is being driven by evals, so going forward to Q4 how this is going to move will be dependent on what we have for evals. But it's not like it's a lot of headcount expense coming in, it's more associated with eval cost. So our eval budget is actually up this year which isn't necessarily a bad thing that’s up..

Thank you. Your next question comes from the line of Mark Miller with Benchmark. Your questions, please..

Just wondering if you can kind of give us a feeling, before starting the transition to -- I think SanDisk announced a 64-layer 3D NAND flash, they will be ramping in the second half of the year. Are any of your tools either being used in the evaluation or the development of this next generation 64-layer type or larger NAND flash..

So, Mark, as they move from 48 to 64, there is lot of [indiscernible] up equipment that’s involved there but there is not a lot of implant.

Where the implant will come in as they add, start to have wafer starts or there is opportunity potentially as customers get to those high aspect ratios where there could be opportunity for some material modification implants. But that would be very dependent on the customer and the technology..

In terms of the material modification, high aspect ratio, I assume you would have an advantage over your competition because of the [brighter] [ph] spot?.

That’s correct. We would expect that with the uniformity of the Purion H spot beam that that should give us an advantage..

Thank you. This concludes the Q&A portion of the call. I would now turn the call back over to Mary Puma, who will make a few closing remarks..

So I want to thank you all for your continued support. We will be presenting at the Seventh Annual Credit Suisse Small Mid-Cap Conference on September 14 in New York, and we will also be hosting an investor even on October 4 in New York City. We hope to see you all while we are on the road during the upcoming months. Thank you..

This concludes the presentation. Thank you for your participation in today's conference. You may now disconnect. Good day..