Jim Byers - IR, MKR Group Gayn Erickson - President and CEO Kenneth Spink - VP, Finance and CFO.

Christian Schwab - Craig-Hallum Capital Group Larry Chlebina - Chlebina Capital Geoffrey Scott - Scott Asset Management.

Good day and welcome to the Aehr Test Systems’ Third Quarter Fiscal 2018 Financial Results Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Jim Byers of MKR Group. Please go ahead, sir..

Thank you, operator. Good afternoon and thank you for joining us today to discuss Aehr Test Systems’ third quarter fiscal 2018 financial results. By now, you should have received a copy of today’s press release.

If not, you may call the office of MKR Group Investor Relations for Aehr Test at area code 323-468-2300 and we will get a copy out to you right away. With us today from Aehr Test Systems are Gayn Erickson, President and Chief Executive Officer; and Ken Spink, Chief Financial Officer.

Management will review the company’s operating performance for the fiscal third quarter before opening the call to your questions. Before turning the call over to management, I would like to make a few comments about forward-looking statements.

The company will be making forward-looking statements today that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

Factors that may cause results to differ materially from those in the forward-looking statements are discussed in the company’s most recent periodic and current reports filed with the SEC.

These forward-looking statements, including guidance provided during today’s call are only valid as of this date and Aehr Test Systems undertakes no obligation to update the forward-looking statements. Now with that said, I would like to introduce Gayn Erickson, Chief Executive Officer..

Thanks, Jim, and good afternoon to those joining today's conference call and also listening in online.

Ken will go over the third quarter financial results in more detail later in the call, but first I'll spend a few minutes discussing our financial business and product highlights, including our continued progress with our new FOX-XP platform for our next-generation of wafer level Singulated Die and Module Test and Burn-in products.

We had a solid fiscal third quarter with net revenue of $7.4 million, an increase of 176% over the same quarter a year ago. Revenue for the first half nine months of fiscal 2018 was $22.3 million, up 82% from the same period last year.

We also generated GAAP net income of $267,000 in the third quarter compared to a $2.7 million GAAP net loss in Q3 of last year. Our non-GAAP net income for the quarter was $509,000 which excludes our noncash related stock based compensation expenses.

We're pleased to note these results are ahead of our forecast and also exceed analyst expectations on Aehr Test in both top and bottom lines for the quarter. Now let's look at our expanding market opportunity.

There's a rising tide of concern in the automotive mobile and photonics markets particularly focused on human safety and an extended reliability testing and burn in of devices which Aehr Test is very well positioned to address.

This is a key driver behind the strength and interest we continue to see from the semiconductor market for our new wafer level singulated dye and package part test and burn in solutions.

We're engaged in numerous new business opportunities with both existing and multiple new customers that include capacity expansion of current applications and testing of new devices. Let me start off with our wafer level and singulated dye testing and burn in business which includes our consumable WaferPak contactors and DiePak carriers.

During the quarter we received a follow on order from one of our lead customers for additional FOX-XP capacity to meet their increasing silicon photonics device production requirements.

We continue to work closely with this lead i customer to enhance our FOX-XP solutions to increase and upgrade their test capabilities and capacity, their production ramp will begin later this year and they're forecasting additional capacity needs from Aehr Test to meet those needs and also for additional capacity needs later in our fiscal year 2019.

They're very committed to Aehr Test and plan for 100% burn-in and test of the new silicon photonics product to meet their need to burn in those devices before they're installed into the end product.

It's our understanding that doing the burn in at wafer level addresses several critical, technical and commercial needs for them to ramp this new product.

We also announced a new customer during the quarter for the FOX-XP test and burn-in system with a set of custom DiePak carriers that enable burn in and aging of integrated lasers and special circuitry on silicon photonics devices for data communications applications.

This customer is an industry leader in the photonics market space representing our fourth new customer for the FOX-XP system and additional application for our FOX-XP tests cell with our singulated dye and module test configuration.

This application is very unique and it allows the customer to use Aehr Test proprietary DiePak carrier tiles for functional test of the devices before and after burn-in in addition to the burn-in step in the same carrier.

By using a very precise DiePak aligner using optical alignment we're able to provide a solution where the customer can align their individual singulated dye one at a time into our multi-dye carriers very precisely to contact the very small dialectical pads and then insert this DiePak tile into their functional test system as well as our FOX-XP system.

A key advantage to the customer's ability to simplify their manufacturing test process while at the same time limiting the contact with their device electrical pads to a single insertion and reducing handling damage to the dye size package.

With our solution the customer will only have one single contact mark on their devices something that is very valuable to this application.

We believe this is the only solution like this on the market today and Aehr has already received feedback from other potential customers that this is a very valuable and a new unique solution for several types of devices.

The unique ability of the FOX-XP system and its proprietary WaferPak and DiePak contactors to weed out infant mortality defects and optical transmitters transceivers and sensors has made it ideally suited for mass production testing of devices such as silicon photonics, VCSELs or vertical cavity surface emitting lasers and LEDs and wafer singulated dye in module forms.

The power density of these devices has created a key differentiation of the FOX-XP's ability to not only test the wafer level instead of package but the cost of packaging and/or the other devices in the package make it more cost effective to test it wafer but also to test the devices with much better thermal management due to the conductive cooling and heating rather than convection cooling.

As you may know thermal conduction as heat or cooling transferred to an object by direct contact which is faster, more efficient and effective than convection which is the transfer of heat for cooling to the surrounding air.

As we continue to build on our installed base of FOX systems we're pleased to see the strengthening consumables business emerge as our WaferPak and DiePak business continues to grow.

Our FOX systems utilize these proprietary contactors that Aehr Test provides which are highly differentiated products that provide a cost effective solution for making electrical contact with a full wafer panel using our WaferPak's or contacting 100s or even 1000s of singulated dye testing in each DiePak.

We can then load up to 18 wafer packs or nine DiePak into a single FOX-XP system for a massive parallel test and burn-in of upto 10s and 1000s of devices at a time.

Applications today for Aehr Test WaferPak's and DiePak's include automotive devices, mobile and other consumer products sensors, blast [ph] memory devices and optical devices such as silicon photonics and traditional VCSEL, optical transceivers used in server and data-centers worldwide.

As part of our FOX business model customers purchase these WaferPak contactors and DiePak carriers with new systems sales and when devices change over time such as new designs and capacity needs of devices but currently installed systems that were shipped in the past.

We had a good quarter for our WaferPak, for wafer contractors with nearly $1.7 million shipping to our install base in fiscal Q3 which includes a FOX-1 and FOX-15 systems. We also shipped multiple DiePak loader, unloaders related to our FOX system sales and upgrades during the quarter.

Looking ahead we expect our WaferPak and DiePak contactor business to continue to grow with current and new customers both in absolute terms and as a percentage of revenue as we increase our installed base of our FOX systems.

Turning to our package part burn and then test system business we continue to see strength and good momentum in this base business. During the quarter we continued volume shipments of our ABTS high performance thermal chambers to our OEM shipping over 20 chambers for the quarter.

This customer is using our thermal chambers for use with their own electronics and software for custom test application.

They selected Aehr Test because of our proprietary ABTS thermal chamber superior capabilities including its power handling, temperature and airflow uniformity and also our ability to supply a significant number of chambers per week.

This continues to be a very good partnership program that allows us to generate incremental revenue and leverage our significant capacity to build our proprietary high performance and high powered thermal chambers for applications and customers outside of our traditional customer base.

We continue to believe this project will drive significant revenue over the next couple of fiscal years and then there may be additional new opportunities beyond this customer for this interesting and new business model for Aehr Test.

In mid-February we announced orders totaling more than $2.5 million from a major semiconductor customers for products and services for automotive applications including added capabilities required to burn-in and test the latest automotive parts required to implement features such as advanced driver assistance systems.

Our test and burn-in systems are key part of this customer's quality and reliability program where they're expanding line of auto-motive products. As we've noted before the rapid growth and increasing demand for reliability and automotive sensor technologies is a key market driver for Aehr Test.

These technologies include the advanced driver systems such as collision avoidance systems using laser, LIDAR, radar and other sensing technologies. Today we also announced a follow on order for more than $1.5 million from a current customer in Asia for multiple ABTS systems for production test burn-in of automotive devices used in GPS systems.

This rapidly growing fabless manufacture wireless communication chipset platforms is using our advanced ABTS burn-in and test platform for production burn-in and test to assure the reliability of devices used in critical automotive applications including autonomous cars, device to cloud communication and other Internet of Things applications.

The systems will be installed at sites in China and Vietnam both of which are expanding locations for semiconductor manufacturing assembly and test. Our systems have been an integral part of this customer's production process since 2009.

As I noted earlier there's a real concern in the industry related to test coverage and also assurance of high quality, reliability and burn in tests for devices especially those used in automotive applications. Last month I did a keynote presentation at the burn-in and test strategies workshop in Mesa, Arizona.

The key theme in the presentation to an industry wide group of attended attendees that included suppliers of test and burn-in equipment and the companies that are using these tools for automotive semiconductor device applications was around the question of whether the industry is doing enough for the new applications and safety requirements of the automotive and mobile space.

Aehr Test is a strong advocate for 100% assurance of valid burn-in and proper test coverage for these new devices and we showcased our solutions for wafer level simulated dye and package parts at this workshop.

We believe that the rising tide of concern and visibility of the criticality of the reliability of these new devices will continue to drive the industry towards 100% test and burn-in rather than the typical sampling and our process maturity dependent burn-in rates that are widely used today.

Last month at that workshop we met with an engaged with a number of companies that have expressed having real needs to upgrade their test and burn-in [indiscernible] and capabilities.

As customers asked for and move toward solutions that can provide 100% assurance of a valid test and burn-in coverage, Aehr Test solutions are very differentiated and well suited to get more than our fair share of these market opportunities. During the quarter we received a new customer order for an ABTS system from a prominent U.S.

government military and aerospace contractor for testing their devices for applications where reliability is absolutely critical. This production burn-in application involves more than 400 types of integrated circuits designed and built by the contractor.

I think the industry understands it for military and aerospace applications a 100% burn-in is required.

It would seem only a matter of time until the industry adopts the same strategy for automotive applications particularly as we see more and more autonomous driving features and sensors in everyday personal vehicles ride-hailing companies and freight and industrial transportation trucks and vehicles.

We continue to be actively engaged with several additional customers as this rising tide of production burn-in requirements are driven by the needs of automotive, mobile and industrial devices. The opportunities in customer engagements we have are very exciting and keeping us unbelievably busy.

With this we've made a recent change to help us focus on those opportunities and strengthen our ability to provide integrated solutions to our customers.

We have promoted Dave Hendricks, our VP of Engineering to Chief Technology Officer and also promoted Don Richmond who has led our electrical engineering department and has served as a lead architect in our FOX and ABTS product lines to the VP of Engineering role.

Both will report directly to me and I look forward to the additional bandwidth and focus that this move will make for our customers, for our Aehr Test and for our partner company engagements.

With more than $22 million in revenue for the first nine months and a quarter and backlog of $12.6 million we're confident with our previously provided revenue guidance for this fiscal year ending May 31, 2018 of full year total revenue growth of at least 50% over fiscal 2017 and we continue to expect to be profitable for the year.

Also with the strength and opportunities we're seeing with our wafer level singulated dye and package part businesses we're well positioned for continued growth heading into our fiscal 2019 that starts in June. With that let me turn it over to Ken..

Thank you, Gayn. The company recognized strong bookings and backlog in the third quarter of fiscal 2018. Quarterly bookings totalled 7.8 million compared to 5 million in the prior quarter.

On a year to date basis the company recorded bookings in FY '18 of 22.1 million, this compares to year to date bookings through the third quarter of fiscal 2017 of 18.8 million. Our backlog total of 12.6 million at February 28, 2018 reflects an increase of $359,000 from prior quarter and includes over 5.6 million in FOX-XP family backlog.

Net sales in the third quarter were 7.4 million compared to 7.9 million in the preceding quarter. On a year over year basis Q3 revenue is up 176% from 2.7 million in the prior year Q3.

The increase includes a 2.9 million increase in wafer level burn-in revenue and a 1.3 million increase in revenue from the packed parts system and ABTS OEM chamber revenues. For the first nine months of fiscal 2018 net sales were 22.3 million up 82% from the same period last year.

Non-GAAP net income for the third quarter was $509,000 or $0.02 per diluted share compared to a non-GAAP net income of $424,000 or $0.02 per diluted share in the preceding quarter and a non-GAAP net loss of 2.4 million or $0.14 per diluted share in the third quarter of the previous year.

The non-GAAP results exclude the impact of stock based compensation expense.

On a GAAP basis net income for the third quarter was $267,000 or $0.01 per diluted share, this compares to a GAAP net income of $60,000 or $0.00 per diluted share in the preceding quarter and a GAAP net loss of 2.7 million or $0.16 per diluted share in the third quarter of the previous year.

Gross profit in the third quarter was 3.2 million or 43% of sales up from gross profit of 3.1 million or 40% of sales in the preceding quarter and gross profit of 503,000 or 19% of sales in the third quarter in the prior year.

The sequential increase in gross margin percentage from Q2 is due to a benefit to other cost of goods sold related to product mix in the quarter.

The increase in gross margin from a year ago quarter is primarily due to an additional charge of $228,000 to other cost of goods sold related to the incremental cost to exchange the wafer packed aligner previously sold and the impact of higher unabsorbed overhead costs were related to the lower revenue levels in Q3 last year.

Operating expenses in the third quarter were 2.9 million flat compared to 2.9 million in the preceding quarter and down slightly from 3 million in the prior year third quarter. On a year to date basis operating expenses of 8.6 million are also flat compared to the 8.5 million in the first nine months of fiscal 2017.

As this highlights we are maintaining relatively flat operating expenses while scaling operations well with increased revenues. R&D expenses were 1 million for the third quarter compared to 1.1 million in the preceding quarter and 1.2 million in the previous year quarter.

As stated previously R&D spending can fluctuate quarter to quarter depending upon the development of our new products. SG&A was 1.8 million compared to 1.9 million in the preceding quarter and 1.7 million in the prior year third quarter.

The company recognized an income tax benefit in Q3 '18 of 91,000 which included the impact of the tax reform act which eliminated the AMT provisions and AMT that had previously been paid.

Turning to the balance sheet and changes in the third quarter our cash, cash equivalents and short term investments were 15.1 million at February 28, 2018, a decrease of $865,000 from 15.9 million at the end of the preceding quarter.

The decrease reflects purchase of inventory to support future shipments and the impact of timing of collections of accounts receivable and customer deposits. Accounts receivable at quarter end was 4.7 million up from 3.5 million at the end of the preceding quarter.

Inventories at February 28 were 9.4 million compared to 8.2 million at the preceding quarter end. Property and equipment was 1.2 million flat compared to 1.2 million in the preceding quarter, customer deposits and deferred revenue were 2.3 million compared to 3.1 million at the preceding quarter end.

Turning to the outlook for fiscal 2018 as Gayn noted we are reiterating our previously provided guidance of full year total revenue growth of at least 50% for our 2018 fiscal year ending May 31 and to be profitable for the year.

Lastly on the investor relations front Aehr Test will be participating in the Craig Hallum Institutional Investor Conference taking place May 30 in Minneapolis. We hope to see some of you there. This concludes our prepared remarks. We are now ready to take your questions. Operator please go ahead..

[Operator Instructions]. Our first question comes from Christian Schwab with the Craig-Hallum Capital Group..

Gayn can you -- as we talk about expanded interests and by different customers and different applications.

Can you just remind us how many customers you know if you remember offhand that we shipped to in '17 and how many customers we plan on shipping by the end of '18?.

Well we actually haven't broken out those numbers before so I won't feel as bad for not remembering them exactly and Christian we haven’t really broken out those numbers.

We do try and keep track of total runrate of the number of say for example ABTS and FOX customers I think we are at 16 or 17 ABTS customers and probably at 25 locations or something our different facilities and for FOX customers plus sometimes feeding those in of the new FOX-XP plus install base. Sorry about that Christian..

Yes. That’s no worry.

As you expand your conversations into automotive market, have you an idea of how many different target customers that you think you could target and do you have an idea of how big that opportunity could be three to five years from now or is it too early to determine that?.

Well let me just try and take a stab at it because it's kind of interesting if you were to look at the automotive customers and you go look at some data say four or five years ago pick a number you know you would find you know a half a dozen eight customers you know led by the Motorola/free scales [indiscernible] the NXP types of the walled and [indiscernible] kind of the traditional market leaders in that and if you think about it the automotive semiconductors were primarily made up of some small number of sensors primarily microcontrollers and control systems and that's what people would segment as the automotive.

I think the big change that's gone on first when we talked about this a couple years ago with the dashboards and the kind of consumer electronics hitting the automotive where you know one of the key differentiation going by a car right now is does it have Bluetooth, does it have all of these capabilities.

Now you add all the sensors, now you have visual LIDAR and forward looking radar sensors in addition to everything else the number of customers that now state that they're in the automotive space is you know 40 or 50 of them and so traditional very large companies that wouldn’t have historically categorized themselves you know on the splash screen of their front page of their websites we will talk about their automotive business.

So I think what's interesting is you know a lot of companies that maybe traditionally didn't have burn-in or burn-in processes are getting into this space and are being introduced to what it means to have a sub-one part per million or a part per billion requirement that the [indiscernible] of the world are requesting and so I think the you know the automotive side of it there's you know it's a pretty large swath of the semiconductor industry that are trying to play in there whether they be niche players to begin with but with high growth opportunities.

So it's it feels like almost every customer I can go talk to has some concern related to how the products and the opportunities in the automotive side of things and what does it mean to reliability and burn-in. I hope that helps..

No, that’s very, very helpful.

On the photonic side in the added capacity by one customer, do you believe that the use by that one customer will expand to two other people looking at it or do you think it specific to that one customer?.

I distinctly believe that it can expand to other customers. I think the second customer in that space was particularly interested in the capabilities of our machine and you know hearing publicly that we're in that space helped. Now they have a unique change in that instead of been wafer level that singulated dye testing.

So although it's the same FOX-XP platform there are no DiePak's which is our wafer pack carriers but we have talked in fact we've gone to some of these like the SPI Show and I think another photonic show this year and there -- we have talked to a number of customers that are really aware of the requirements to do this aging really and burning in of their silicon photonics or VCSEL type devices in these communications and there just was never a solution to be able to do it in anything other than the TLCan [ph] packages before and so we've got customers that seem keenly interested in that, that's why I think we would keep bringing up the silicon photonics, but again silicon photonics is an implementation of a technology to go after the more traditional VCSEL based transceivers and we're just as applicable into the trends that VCSEL based transceivers which is something we've been in production on for I think almost 10 years since 2009 with our wafer level burn-in system..

Thank you. Our next question comes from Larry Chlebina with Chlebina Capital..

Any updates on the stack dye application? You were shooting to have an application by the end of May..

Well just kind of reiterating what I think we have talked about in the past is that we had originally been talking with some of the flash manufacturers where the stock dye and flash seemed like an acute area where wafer level products and potentially singulated dye products could really make sense.

With the opportunities that arose about a year and a half ago two years ago were relative to some of the mobile applications and silicon photonics and as well we spent a lot of our focus and energy in that space.

I think I said at quarter or two ago our hopes would be that as we've get those products completed with our customers that we could start looking at the flash memory space again for new opportunities both in the stack package in a package form and potentially at wafer level.

What I will tell you Larry is we have in fact been talking with some customers related to this.

There is acute challenge in the industry with respect to those stack devices and whether they test them at the wafer level or not it's a problem because the other thing in addition to imagine for folks online that aren't aware of this so let's say a flash memory that's being used in a solid state drive for a server application, the companies will take eight dye or more and spin [ph] them and put them into a single chip or a single package.

When they do a reliability burn in which has been required by the end users like the Googles of the world they will have one of those individual dye fail and as such that can have an implication as extreme as throwing the entire package away if that cannot be used for a different application and there's certain package styles and types where that's the case.

The other challenge that we've been focusing on Larry is that if they do simply do it at package level the power requirements of those devices is such that it's breaking the tools, the tools that are out there can only test maybe one or two of the individual dye inside of a package because they don't have either the electronics or the thermal capability of their machine to address it.

So in addition to the wafer level opportunities that we've talked about we've had some conversations with a customer or two related to the high power requirements of some of those devices.

So I think as you also know there's a lot of change going on in that space between the mergers that are going on as well as a pretty notable breakup in the industry and we would hope that those pose some potential opportunities for Aehr Test. So I think that's about all I can give you at this point Larry..

On the singulated dye approach, as you try to penetrate some of the applications that traditionally cost a lot more to get the burn-in reliability either singulated dye or wafer level. Can you quote like a percentage reduction in costs the XP is bringing to obtain that reliability versus traditional approaches? I mean is there -- is it 25%....

You would think that’s an easy softball to me to hit out of the park but it's actually a little bit harder than that and what you may hear may surprise you coming out of my mouth. We often see applications where we can test the device with our advance package part burn-in system the ABTS or our FOX wafer level or singulated dye machine.

In fact it typically we're not -- the devices need the burn-in, the question is where they do it, okay? So if they're doing it all they're doing a package part because no one is offering wafer level or singulated dye solutions today. So the customer would be doing it and let's say it costs them $0.03 a dye to test the part or something.

If we come up with our ABTS we think ours is better, we can test more parallel at price points you know maybe we're $0.02 a dye or something like that.

Interestingly in many applications our FOX system might be $0.03 a dye versus $0.02 and actually let me change the scale because it sounds -- maybe instead of it being you know a penny its $0.08 or something to do it a package versus at a wafer level. The key is, wait a minute I thought wafer level is cheaper.

In some cases the wafer level on a per second basis may not actually be cheaper but what it does is it provides them a significant cost savings from having to package it particularly package it with other dye or other devices in the same package and consistently across the board the customers acknowledge that’s a very good point and the cost savings associated with moving that exceeds in some cases the entire cost of the burn-in stuff.

So the value comes not necessarily from it being cheaper than a ABTS system but from the advantages of the yield or the advantages of being able to optimize their process step and put a known good dye into a more expensive device..

On the consumable, did I hear that right, Ken that there was 1.7 million WaferPak, DiePak sales in Q3, did I hear that right?.

Correct..

Which is about what 23% of the total, is that -- would you think of that as a consumable or were those new sales on a new application and I know where I'm getting is, is that kind of an ongoing like steady state need going forward based on your deployed machine XPs and so on out there or is that the wrong way of thinking?.

So those were actually for already existing products.

We had some going to our FOX-1 legacy product as well as our FOX-H15 [ph] product but something that I want to kind of we didn't talk about but I want to bring out here is doing the comparison as Gayn spoke of and this consumable an increase so last year year-to-date in FY '17 we only had four WaferPak DiePak sold for the first three quarters.

So far year-to-date FY '18 we have 45 WaferPak and DiePak sold. So you can see and as Gayn pointed out that is becoming a much more significant part of our business. .

And the need for these WaferPak DiePak, is it coming about because they changed the design or is it they just simply wear out and now you've to replace them, what's the typical reason?.

Just as an example in this quarter agreed that the three quarters and then we're due designs and this quarter of them were increased capacity on previous designs..

You might have heard a whisper in the back..

One of the challenges if you will, our wafer contractors and this sounds overstated but it's not really don't wear out and people say well of course they wear out. Well we might have our contractors like the [indiscernible] power ones, they are rated to 100s of 1000s insertions. If you have a 24 hour burn-in it's hundreds and thousands of days.

So they literally we had an example we had some WaferPaks last year that the customer had been using continuously in production since like 2010 I believe and the printed circuit board was finally starting to wear out and delaminate and we sold them upgrades and we refurbished 10 year old probe cards effectively and so they really and we got margin for it and they were happy to do it but they do last a long time that would be you know there are certain automotive devices that have lasted that long something that's interesting that came up -- while I'm maybe hearing half when I was talking to [indiscernible].

My history in the industry is automotive parts last forever and ever and consumer parts are really short maybe a year or two and then it's done whereas automotive might be 8 or 10 years. The interesting twist on this is the new automotive parts happen getting a shorter and shorter lifespan.

When you go look at your dashboard in this car of this year or you look at one that's three years ago it's like archaic.

I mean its like you know -- so that is evolving really fast but it still has all of the requirements of the automotive industry for safety and reliability so you know we would expect also that as our automotive install base of FOX systems increases that the percentage of those systems that require new contactors will increase as you know per year versus the old automotive which tended to last a lot longer..

So as a rule of thumb, not a rule of thumb, pick a member would be like every two years now.

On average you might see a new design requiring a new WaferPak DiePak?.

That might be a reasonable rule. We have had FOX-XP is a year half old that are still using the same contractors and expect to for the next year.

So that’s you know 2.5 years or so, so I think it'll be interesting to watch how that works but again for people that it may be on a wafer one thing is for certain the wafer tends to change faster in many applications because of the shrinks whereas a standard package style may have longer legs even if the dye and side changes, so our DiePak maybe would last longer than our WaferPak would but we will have to see how that changes over the next few years..

[Operator Instructions]. Our next question comes from Geoffrey Scott with Scott Asset Management..

First question maybe for Ken, the revenue is 7.4 million, you said 2.9 million was wafer level was that right?.

Correct..

Does that include the 1.7 million of the DiePak wafer pack?.

That’s correct. So we had two [indiscernible] that were included in the revenue for the quarter as well..

I'm sorry you had two what?.

DiePak and [indiscernible]..

Okay.

What was the ABTS package part revenue?.

So as Gayn mentioned with the total we're going to combine the ABTS package parts with the ABTS OEM chamber, we enclosed those together that was 3.5 million about 3.5 million and that also included some upgrades to existing ABTS system..

Okay.

For the OEM business, according to the original press release August 24 last year the chambers were expected to shift through Aehr Test fiscal third quarter, as I make it you did not complete the fulfilment of that order through February 28, was that correct?.

We still have some left of that order for this quarter, yes..

Okay.

So this quarter should be under that of the first order right?.

That’s correct..

Any discussions on a new order?.

All kinds of discussions. Yes we do have forecast. We do have some internal expectations for opportunities with that particular deal that span through actually through next fiscal year and the following, it's some pretty long term visibility assuming it comes through but we do have forecast from them..

I just wanted to make sure that the delay in fulfilment was not a reflection on their excitement about the product..

No it was not..

Okay.

In talking about the new FOX-XP customer you talked about the fact that it had only had a single contact mark, what is it about that you said was important to this customer and may well be important to other similar customers?.

So for folks that are listening in, so when you make these semiconductor devices that are made on these wafers, there can be hundreds or thousands of devices on a single wafer.

There are a little electrical pads that you wire bond to, to get signals to and from that piece of silicon that then make contact to some sort of package or multi-chip module or something else depending on what the next step in the process is.

The wire bond which is basically a little electrical wire that gets bonded and soldered or welded to the pad and then moves out and makes an electrical connection with something exterior, one of the critical aspects is that that bond wire gets attached properly and one of the challenges in semiconductor for ever has been we in the test community want to physically test those devices when they're in the dye form but in order to do that we have to touch that electrical pad temporarily without wrecking it, okay? If we damage the pad then later on the customer won't be able to wire bond or that bond could create reliability issues, okay.

So when you go to electrically touch the pad you want to touch it as softly and with as little damage as possible but in order to make electrical contact you actually make a dent or a probe mark is what it's called which at a microscopic level looks like a big crater like a meteor hit the ground, okay.

And those pad marks oftentimes are some reasonable percentage of the total pad I mean it can be 10%, 20%, 30% of the whole pad size at times.

When customers are trying to do burn-in at wafer level or they already are testing those devices one or two times separate from the burn-in and so each time they test it they make a little crater mark, if we go to burn-in it in we make up a third crater mark and at some point the surface of that looks like the back side of the moon and it's all choppy and it can create reliability issues with our DiePak one of the -- there's two features, our WaferPak's and DiePak's primarily use a micro-pogo contact that makes a very, very small dot, smaller than typical of any other probe marks.

But the customer who was impressed with our ability to even touched their pads talked to us about if we could adapt if they could buy our DiePaks and we could adapt it to where they could insert the device into our DiePak with our optical DiePak loader and then move the DiePak to a functional test so that they could electrically move through our DiePak carrier and only one electrical contact is made with the pad.

So when they're done instead of having three big or two big marks and one small mark from us they have a single small mark and they have said that is a huge deal to them with respect to the tiny pads they're using for the RF applications of these tiny pads and our ability to make that contact was a huge advantage to them and so we've found a consumable business that transposed the traditional burn-in and includes part of the socket business for the package part and just as a market size the socket market for test-in and burn-in last year I believe was about $2 billion.

It's a very big consumable, the probe cards is another billion and certainly the combined is over $3 billion of just the contactors. So it's a it's a pretty big percentage. Do you think it's different in that rate? Okay, so I have someone looking and we're not sure exactly that much but in that order of magnitude..

One last question and I don't know if you're going to touch this or not. There is an estimate out for revenue fiscal 2019 of 42.6 million. Do you've any….

We never read those things..

I know you don’t but some people do..

So I think as we have tried to you know frac it and size the market opportunities you know I think one of things important the size of the total available market of the semiconductor test space exceeding in order of $3 billion itself. The contactors are another $2 billion to $3 billion as I just described.

The handling business including handlers and probers is another $1 billion or so. There's a significant amount of money in the traditional semiconductor test and burn-in space.

There's also a system level test market that is estimated to be about the same size that we're playing in with our OEM business and some of the other opportunities that we're talking about. So you know Aehr Test is still operating as a very tiny amount of the revenue of the opportunity that faces us.

So yes we're seeing these very good year over year growth rates but we still have a appreciation understanding of the size of our company and there are some really big opportunities that are out there.

What we're not going to is we're going to be giving, our plan is to give them guidance for fiscal year '19 at our next quarter announcement and you can count on that.

I'll stick to what I say before with all of the things that are going on and engagements that are keeping us working some unbelievable hours around here I continue to be very optimistic about our growth opportunities next year..

[Operator Instructions]. I show there are no further questions at this time. I would like to turn the conference back to management for any additional or closing remarks..

Thank you, Operator. Folks as always we really appreciate you folks joining us for this and we certainly look forward to the call which will include our guidance at our next quarter call which will wrap up our fiscal year and as always we invite you to reach out to us if you happen to be in the Bay Area.

We would love to sit down with you and share more information about our company. Have a good day now. Bye, bye..

Thank you. This does conclude today's presentation. We thank you for your participation..