Jim Byers - IR, MKR Group Gayn Erickson - President and Chief Executive Officer Ken Spink - Vice President, Finance and Chief Financial Officer.

Christian Schwab - Craig-Hallum Capital Geoff Scott - Scott Asset Management.

Good day and welcome to the Aehr Test Systems’ Fiscal 2018 Fourth Quarter and Full Year Financial Results Call. Today’s conference is being recorded. At this time, I would 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’ fiscal 2018 fourth quarter and full-year 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 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 2018 fourth quarter and full year 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 us today on the conference call and also listening in online. Ken will go over our fourth quarter and full year financial results later in the call including details on our guidance for the fiscal 2019.

First I’ll spend a few minutes though discussing our financial business and product highlights including our continued progress with our new FOX-P platform, to our next generation of wafer level and Singulated Die and Module Test and Burn-in products. Then we’ll open up the line to your questions.

I have actually gotten a lot of questions over the last couple of months here. People are asking about how our progress has been with each of our lead customers, how has that gone and of course when are they placing more orders and how does that look like.

So I'm going to try and do my best to cover a lot of ground and give people some insight with the positive progress that we've had as well as – as much as I can to break out our expectations with those as well as the other business opportunities.

We're really pleased to report our financial results for our full fiscal year 2018 with revenue for the full-year of $29.6 million, that's up 56% growth over the prior year and we're profitable for the year for each quarter and also for the full year on both the GAAP and non-GAAP basis.

The GAAP net income for the year was $528,000, a significant improvement from the GAAP net loss of $5.7 million for the prior year. Our non-GAAP net income for the year, which excludes our non-cash related stock-based compensation expenses were $1.5 million, up $6.2 million from last year's non-GAAP loss of $4.7 million.

Let me start off with our wafer level and Singulated Die Burn-in business, which includes our consumable WaferPak contactors and DiePak carriers. Fiscal 2018 was a key year for Aehr Test, as we continued shipments and installations of our new FOX-XP multi-wafer production system to our three lead customers.

These systems are for production test applications that include 2D and 3D mobile sensors as well as silicon photonics wafer level and singulated die devices.

We continue to have a very good business relationship with these lead customers, and are encouraged that each of them has communicated their commitment to use our products in production of their initial devices as well as follow-on devices on their roadmaps including this fiscal year.

We are engaged not only in new device test opportunities with these lead customers, but also with several new potential customers for similar applications, as well as several new devices for the mobile and automotive space where safety, security and 100% certainty of reliability testing are critical.

In June, we received an initial order from our lead FOX-XP customers’ subcontractor to supply a new DiePak carrier design for their next generation device. These DiePaks will be used on their installed base of FOX-XP systems as the FOX-XP has become an integral part of their qualification and production process for next generation devices.

We expect these devices to move into volume production in calendar year 2019.

During the quarter we completed customer acceptance, manufacturing release and shipment to our second lead customer of our new high-voltage channel module-based FOX-XP test and burn-in system and this is for the wafer-level burn-in of silicon photonics wafers in a single touchdown.

We continue to ship against their backlog of upgrades and capacity increases to address their forecast for this market and they have forecasted additional system capacity in addition to a significant capacity need for WaferPaks for new designs slated to go to volume production later and during our fiscal year.

We're very excited to release this new enhancement of our FOX-P platform, it's called a high-voltage power channel module and allows us to test up to 1,024 multi-channel laser devices in a single touchdown using individual precision resources per device with a 30 volt headroom and 6 watts per channel.

There's no other system on the market that can handle that parallelism or the power as we can with the FOX-XP system and this is one of several ideal applications for our new FOX-XP test and burn-in systems and WaferPak contactors. We also shipped the first multi-bay production system to our newest customer for the FOX-XP.

We have developed a very unique custom DiePak carrier that enables burn-in and aging of integrated lasers and special circuitry on silicon photonics devices for data communications applications.

This new customer is an industry leader in the photonics market and represents an additional application for our FOX-XP tests cell with our singulated bare die test configuration.

This application 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.

This solution uses a precision DiePak aligner with optical alignment, which allows the customer to align and place their individual singulated bare die into our multi-die carriers very precisely to contact their tiny electrical pads and then insert this DiePak tile into their functional test system as well as the FOX-XP system.

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

Feedback from the customer has been extremely positive and they have now made the decision and communicated their commitment to bring up several other devices on our system which will drive additional capacity for both FOX-XP test system and new DiePak carriers this year.

During the fiscal fourth quarter, we have received $1.2 million in wafer pad contactors and subsequent to our fiscal year, so in the last couple of months, we received additional orders for another $1.3 million for WaferPaks for Aehr’s installed base of FOX wafer level test and burn-in systems.

As discussed last quarter, we're seeing a strengthening of our consumables business emerge as our FOX installed base continues to grow. Our FOX systems utilize these proprietary contactors that Aehr Test designs and manufactures here at the Fremont, California facility.

These are very unique products that provide a cost effective solution for making electrical contact with a full wafer or panel using our WaferPaks or with hundreds or even a thousand singulated die in each DiePak.

Then you can take up to 18 WaferPaks or 9 DiePak and load it into a single FOX-XP system for massive parallel test and burn-in of up to tens of thousands of devices at a time.

Applications in production today for Aehr Test WaferPaks and DiePaks include automotive devices, mobile and other consumer product sensors, flash memory devices and optical devices such as silicon photonics and traditional VCSELs, optical transceivers used in server and data-centers worldwide.

At Semicon West last week here in San Francisco, there are a few major themes driving the test community including not only quality and reliability of semiconductors in general, but also the new challenges faced with stack devices and heterogeneous integrated devices.

More and more devices are being demanded by applications where the only way to address the need is by putting multiple individual semiconductor devices in the same package.

These can be the same devices such as Stacked flash and DRAM memories or completely different devices where a mix of memories logic and high-performance analog or RF or microwave devices are packed together in a system in a package.

The quality and reliability of the final device is driving the need for more functional and reliability test at the wafer or singulated die before it's integrated into the multi-die package.

This trend will drive more and more need for test and burn-in or cycling test at the wafer and singulated die form, which is a key market opportunity for Aehr and our unique test and burn-in systems for wafer level and singulated die devices.

This will be a big push for us this fiscal year as we look to add new customers and markets to our initial successes in sensors and photonics with our FOX-XP platform. Now let me go ahead and move on to our traditional package for our test and burn-in business, which also includes our OEM chamber business.

We feel we had a good year for our package for burn-in and test system business with our Advanced Burn-In and Test System or ABTS. We had a particularly strong year [to] [ph our largest customer for package part burn-in, who serves the automotive industrial and several other key markets requiring high reliability.

As we head into fiscal 2019, this customer has told us they're currently not forecasting our near-term capacity expansions as they absorb the systems that we've delivered to them in the past year.

There are several programs that could change this during the year, but we're taking a conservative stance in assuming little to no sales to them this fiscal year. We are however seeing interest from several new potential customers needing to improve the reliability of their products for automotive and medical applications.

Two potential customers in particular have a key stated goal of replacing their older non-Aehr Test burn-in systems with modern state-of-the-art ABTS systems. Today, these customer systems do not have the capability to monitor and ensure with 100% confident that each and every devices tested and burned-in to their end customer requirements.

I gave a keynote presentation at the Test Vision conference at Semicon last week, where my focus was how the changes in the end-use markets and applications are increasing the need to test and burn-in devices with 100% confidence.

Devices like sensors, microcontrollers, processors that used in the automotive applications like ADAS as well as sensors used for autonomous vehicles are requiring a higher level of test and burn-in coverage to meet safety and confidence levels never seen before in the industry.

Aehr Test Systems include our ABTS and FOX products can provide our customers and their end customers with the confidence and assurance that each and every device was tested and burned-in properly. We see this rising tide of expectations driving our business and the entire industry and it's great for Aehr Test.

We have posted the presentation from that keynote on our website if you like to see it. On our OEM chamber business, this past fiscal year we successfully completed the first production order for this OEM customer for our ABTS high performance high powered thermal chambers.

These chambers are a key part of the production tool used by this customer in their high volume test application. This customer is forecasting a similar or greater capacity for at least the next couple of Aehr fiscal years.

We're happy to have this out on business to our traditional packaged part test and burn-in systems as this partnership enables us to generate incremental revenue and leverage our significant capacity to build our proprietary high performance and high part of thermal chambers for applications and customers outside of our traditional customer base.

As we look at our expanding market opportunities, we continue to be very excited about the photonics test and burn-in part of our business. The rapid growth of integrated optical devices in mobile and computing applications as well as the automotive market is driving substantially higher requirements for initial quality and long-term reliability.

The increasing requirements on semiconductors to meet the safety, security, and mission critical reliability needs of the automotive, mobile, and now wearable biosensor markets, is driving the need to ensure 100% validation and assurance of burn-in and test results.

As we move into fiscal 2019, we expect to see continued customer deployment of systems particularly our FOX systems and our proprietary WaferPak and DiePak contactors and we expect continued growth in revenue and profits during the year.

Our current customers are forecasting the need for substantial volume capacity by the end of our current fiscal year with a heavy concentration of shipments in the second half of our fiscal year.

For the first quarter of this fiscal year ending this August, we expect to see slightly lower revenue compared to the same period last year in 2018, which is about $7 million last fiscal Q1 and then expect to see the production capacity related shipments increase through the year particularly in our fiscal 2019 third and fourth quarter.

We believe it's best to be conservative in our expectations for the entire first half of the fiscal year while at the same time there's still a number of opportunities we’re seeing that could strengthen our fiscal first half particularly in the fiscal second quarter.

With these significant opportunities in front of us, Aehr Test continues to build out our team and add key resources in manufacturing our supply chain and our finance team that we believe are needed to meet the increased level of business we see moving forward.

During this fiscal year we will also be making significant investments in our sales and marketing resources, as well as improvements in our manufacturing infrastructure to meet the anticipated growth in our target markets and to be able to provide the increased capacity for our FOX products.

We will be making investments in our manufacturing area, specifically to add additional clean room space as our systems shift more and more from traditional package part to wafer and singulated die in optical module level, where clean room cleanliness matters more and more.

This is also the case for our WaferPak and DiePak contactors as we do final assembly and test here at our Freemont, California facility. Including these additional investments, we expect to grow our top and bottom lines for the year with revenues up at least $35 million for the year and a significant increase in profit year-over-year.

Before I turn the call over to Ken, let me summarize again by saying the fiscal 2018 was a good year for Aehr Test and a good start for our new line of FOX wafer-level and singulated die/module test and burn-in products.

We grew annual revenue 56% year-over-year exceeding analyst expectations each quarter and for the full year on both the top and bottom lines.

During the year we successfully integrated our new FOX-XP multi wafer systems into the production processes of our three lead customers and our systems have become an integral part of part of their production plans for their next generation devices.

In addition to these opportunities, we're actively engaged with several new potential customers and we're expecting to add additional customers for both our FOX wafer-level and singulated die and module systems, as well as our ABTS package part test and burn-in systems this fiscal year. We see large expanding market opportunities ahead.

And we're very optimistic about our ability to grow our business for many years to come. So let me turn that over to Ken..

Thank you, Gayn. As we reported in today's press release, we finished the 2018 fiscal year with total revenue of $29.6 million, a revenue growth year-over-year of 56%. And recognize a GAAP profit of $528,000. Net sales in the fourth quarter were $7.3 million, compared to $7.4 million in the preceding quarter.

On a year-over-year basis, Q4 revenue is up 9% from $6.7 million in the prior year Q4. Non-GAAP net income for the fourth quarter was $365,000 or $0.02 per diluted share, compared to a non-GAAP net income of $509,000 or $0.02 per diluted share in the preceding quarter.

And non-GAAP net loss of $587,000 or $0.03 per diluted share in the fourth 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 fourth quarter was $191,000, or $0.01 per diluted share.

This compares to GAAP net income of $267,000 or $0.01 per diluted share in the preceding quarter and a GAAP net loss of $975,000 or $0.04 per diluted share in the fourth quarter of the previous year.

Our bottom line for the fourth quarter of the prior fiscal year reflects the impact of several time expenses related to the development and accelerated shipping and installation of the FOX-XP.

Gross profit in the fourth quarter was $3.2 million or 43% of sales, compared to gross profit of $3.2 million, or 43% of sales in the preceding quarter and a gross profit of $2.6 million, or 39% of sales in the fourth quarter of the prior year.

The increase in gross margin from the prior year fourth quarter is primarily due to several onetime expenses in Q4 2017 related to the FOX-XP new product introduction, including NRE for tooling and design layout, scrap, rework and other miscellaneous cost of sales.

Operating expenses in the fourth quarter were $2.9 million, flat compared to $2.9 million in the preceding quarter and a decrease from $3.2 million in the prior year fourth quarter. R&D expenses were $1.1 million for the fourth quarter, compared to $1.0 million in the preceding quarter and $1.3 million in the previous year quarter.

The decrease in R&D expenses from the prior year fourth quarter was primarily due to Q4 including onetime charges related to the FOX-XP development. SG&A was $1.8 million for the fourth quarter, flat compared to $1.8 million in the preceding quarter and $1.9 million in the prior year fourth quarter.

Income tax expense increased by $99,000 from prior year – prior quarter as the company recognized a tax benefit in Q3 2018 of $91,000, which included the impact of the Tax Reform Act, that eliminate the AMT provisions and AMT that had previously been paid.

Turning to results for the full fiscal year, net sales for fiscal 2018 were $29.6 million, up 56% from net sales of $18.9 million in fiscal 2017. The year-over-year increase included a $5.9 million increase in package part system and ABTS OEM chamber revenues. And a $4.7 million increase in wafer level burn-in revenue.

Customer service revenue remained relatively flat. Non-GAAP net income for fiscal 2018 was $1.5 million or $0.07 per diluted share, compared to a non-GAAP net loss of $4.7 million, or $0.29 per diluted share in fiscal 2017.

On a GAAP basis net income for fiscal 2018 was $528,000 or $0.02 per diluted share, compared to a GAAP net loss of $5.7 million or $0.35 per diluted share in fiscal 2017. Gross profit for fiscal 2018 was $12.4 million, or 42% of net sales, compared to a gross profit of $6.8 million or 36% of net sales in fiscal 2017.

The increase in gross margin from the prior year was primarily due to operational efficiencies gained through higher utilization of manufacturing overhead. Operating expenses for fiscal 2018 were $11.5 million, down from $11.7 million in fiscal 2017.

The year-over-year decrease included a decrease in R&D expenses of $476,000, offset by an increase in SG&A of $238,000. Turning to the balance sheet for the fourth quarter, our cash, cash equivalents and short-term investments were $16.8 million at May 31, 2018, an increase of $1.8 million from $15.1 million at the end of the preceding quarter.

Accounts receivable at quarter end was $2.9 million, down from $4.7 million at the preceding quarter end, reflecting the collection of accounts receivables on revenues generated during Q4 2018. Inventories at May 31 were 9 million, compared to 9.4 million at the preceding quarter end.

Property and equipment was 1.2 million compared to 1.2 million in the preceding quarter. Customer deposits and deferred revenue were 2.1 million, compared to 2.8 million at the preceding quarter end.

The company recognized disappointing bookings for the fourth quarter due to a delay in receipt of anticipated FOX-XP orders resulting in a weaker than expected backlog at May 31, 2018 of $8.4 million. This compares to backlog of $12.6 million for the prior quarter, $12.7 million at the end of the prior fiscal year.

Included in the May 31, 2018 backlog is $3.8 million wafer-level burn-in, $2.7 million packaged part system and $1.8 million customer service backlog. Subsequent to our fiscal year end the company received 2.1 million in orders for DiePaks, wafer pack contactors and services for Aehr's installed base of FOX wafer-level test and burn-in systems.

Now turning to our outlook for fiscal 2019, we head into fiscal 2019 with optimism. For the fiscal 2019 year ending May 31, 2019, we expect full year total revenue of at least $35 million and significant growth in profit for the year.

As Gayn noted, our current customers are forecasting the need for substantial volume capacity by the end of our current fiscal year with a greater concentration of shipments in the second half of fiscal 2019. In terms of operating cost, the company has made investments in operations during fiscal 2018 to improve processes and controls.

These include adding a Quality Control Engineer, Operations Manager and Corporate Controller. During fiscal 2019 we are planning on increasing our investment in sales and marketing.

With the increase in headcount and increase in our lease costs resulting from the renewal of our operating leases, we're forecasting an increase in SG&A, R&D and manufacturing labor and overhead from an average quarterly spend of $3.9 million in FY’18 team to $4.2 million in FY’19. The last expense item is interest from our convertible note.

We have an outstanding note which matures in April of 2019 it draws about $138,000 in interest expense per quarter. Should the note be converted, on an as-converted basis, the company could expect an increase in the EPS of $0.02 per share for a full fiscal year.

However, should the note not be converted, the company is forecasting adequate cash position to repay the note of maturity. This concludes our prepared remarks. We are now ready to take your questions. Operator, please go ahead..

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

Hey Christian..

A great quarter guys. Just a few quick questions, gross margins were kind of over stronger than they've been in quite a while. How should we be thinking about that going forward into 2019? Should we stay up with this 43.5% type of level? Is there a little bit more room? Any help there would be appreciated..

So yes in terms of FY’18 we finished the year about 42% gross margin for the year. In terms of forecast for FY’19, I would expect it to be very, very close to that number, maybe up just a little bit. I know we've finished out a little bit stronger at the 43%.

But as I mentioned our increase in operating spending that we've recognized during FY’18 carried over into FY’19. I think planning on a margin of about 42% would be appropriate..

Fabulous, thank you.

Gayn can you kind of rank your three lead FOX-XP customers? And how you see the opportunity this year and potentially how you may see the opportunity over a multi-year timeframe?.

Alright Christian, let me start by I love all three of my children and none more than any of the others, okay. But because many of them are listening in, I – let’s see here. You know what I actually – I'm excited about each of those three.

And as we've talked about one in particular which was our original lead customer probably has the most opportunity to fan out into multiple different applications. Our second lead customer also has that. Well I think in the third customer it has more to do with expanding and being released into their production in all of their products.

So right now what we've just focused on this year was to absolutely make sure that the products were successful, they got the data that they were ready to go for their production ramps and then start focusing on the ramp side of things for them. All of them are forecast to be up year-over-year.

And at different times they possess different opportunities, but probably in total dollars spend opportunity my first lead, second lead, third lead, they probably rank in that order. The first being the mobile application, the second being silicon photonics wafer level and the third being silicon photonics singulated die, if that helps..

That's very helpful. Thank you.

And then your last comments of your prepared comments Gayn talking about how you feel confident in the Company's ability to continue to grow for many years to come, is that – can you get a little bit more clarity on what gives you confidence in that I guess?.

Well I mean part of that stems if you look back in the last couple of years we embarked on these new products that we saw a lot of opportunity that if you will a rising tide coming from automotive. And at that time we were talking about the touch screens in your car and possibly back up sensors.

We weren’t even bold enough to start really getting ahead of our skis and talking about autonomous vehicles and then necessity of the safety of those devices.

We also had talked about the mobile side of things which just continues to grow and the complexity of the sensors and other applications that are going in the mobile phones has created more and more focus on the quality side, as well as the security aspects of the mobile phone side.

And over the next year you'll start hearing me talk more about even on the health side, in the biometric sensor based health monitoring that's going on. These are kind of rising tides that we see as just decade long trends.

For us the key was to get our new products out, prove them to these lead customers because in the case of our wafer-level burn-in system, there is nothing else out there like that. Nobody was able to prove the technical feasibility much less the cost effectiveness to be able to move from a package part to a wafer level burn-in system.

When I tell people, we test 18 wafers at a time, they look at me with sort of a cockeyed head tilt like what are you talking about. And so actually implementing that is a big, big deal. Now that we bring customers through, we can actually show them that.

We can benchmark it within a couple of few months and the whole sales process has shifted from kind of a risk environment to how do you deploy it, can you really do it on my devices. And so, there's – I’ve said it in a lot of different ways. I sat down with a number of people at Semicon West in the test environment.

A lot of the test trends are actually going away from the traditional test methodologies of the big ATE platforms. But I find myself sitting in front of customers and most of the things we talk about are all things that are heading in our direction. So I mean it really personally and for us here at the company gives us a lot of confidence.

There's always this timing element of how fast will autonomous vehicles be deployed, where will those sensors be.

If anything it feels like things are moving faster than we ever thought and certainly the deployment of 3D sensors and facial recognition and fingerprints and iris scanning and other voice recognition keys in both mobile as well as secure access facilities seem to be growing faster than we probably would have even imagined at the time.

So – there's – it's not just a flash in the pan..

Thank you. That's very helpful. Congratulations, guys..

Thanks, Christian..

Thank you. [Operator Instructions] We'll take our next question from Geoff Scott with Scott Asset Management..

Good afternoon, guys..

Hi, Geoff..

Hi, Geoff..

My phone cut out when Gayn was talking about the largest customer for ABTS and then the OEM customer.

Can you repeat those?.

Maybe we could get someone else, if it was their phone too because I really apologize if that was the case. Let’s see here. So last year our – actually our largest customer for our ABTS product had a very strong year and they actually buy two different flavors of our ABTS for very high power applications as well as from lower power.

Their two configurations actually are the highest parallel burn-in systems that were ever built in the world and we shipped them to those guys for their volume production as well as all their qualification of all their devices. They had a very good year. We know that there have been some – they've basically communicated.

We have great visibility of what the utilization is. Their utilization rates have – they believe it's going to take them at least to the end of calendar year to start absorbing the capacity that we were still installing during the quarter, which creates a bit of a hole because last year was a good one.

The interesting thing is as we note and have publicly described, our ABTS business is traditionally lower margin business than our wafer level both systems and contactors. So in that sense if there is any business that can be soft that would be the one you'd preferred to be. We're more than making up for that, but really through our FOX products.

And so that would also bode well for our gross margins as we go forward..

Now Geoff, I’ve also said one of the thing, we actually are engaging with some several other customers for our ABTS systems, and there's a customer in particular driving need for a better class of testing in the automotive space and another one in the medical space that we are very optimistic that will drive new business for us this year..

Okay, the OEM customer is….

OEM customer, things are going really well. They're happy with us along with the end customer application for it and we tried to just give a communication that we did ship the rest of the backlog during the last quarter.

They are forecasting additional, and I'll call it material capacity to in both our next – this and the following fiscal year at least. And so, it's a great little business for us. We have the capability to ship a very high volume number of chambers and with shorter lead times than we had in the past.

And so on one hand it's great, allows us to quickly react. On the other hand, they don't have to order in quite as far in advance to give us the heads up as they used to. But we believe that that business will also be material and solid for us this year and the next..

Okay. In one of the bullet points you said you received an initial order for a new DiePak Carrier design from Aehr’s FOX-XP less lead customer for next-generation device..

Yes..

Can you expand on that point why that’s important? Of course it's an initial order so we're expecting more and the new DiePak Carrier design, why is that important?.

Okay, so one of the nice things about our FOX line of products is that actually part of its value and part of its technical capability is to be able to put a really high number of resources on to something like a wafer or individual die. And that is very novel in the burn space, in the test space.

We have extremely high parallelism with individual resources and that matters, because then I can tell if one device is failing or passing. And so that gets us the discernibility of the 100% confidence that you burn to the end. Okay. Our test system is impressive as it stands.

And then you need to buy these consumable contractors wafer packs, when you're contacting the whole wafer, DiePaks when you're contacting individual die or individual complex models. Those latter pieces are consumable in that each time a customer makes a new design of a component, they would need a new set of those DiePaks.

So in addition to a system that they purchase, and that system is expected to have a life of 10 years or more, every time they change their device they would need to buy new sets of DiePaks.

And so this is really the first example where our installed base of FOX-XP that was shipped with sets of DiePaks, the customer is coming back and saying I have a new device, we design new DiePaks for them. And then those would then be used in their existing systems to be able to be used in production test of their next generation devices.

We would expect that to be a continuous ongoing scenario. And the real debate is how often is it every 12 months, every 18 months, every 24 months that you start getting this repeat business.

But a key leading indicator is we in fact are getting repeat business off of that tool which is a great endorsement that they are not only committed to us, but they're – it's integrated into their systems.

We believe that by the way that between wafer packs and DiePaks all of our customers over time will not only buy more systems, but they would buy DiePaks for all of the systems that are already installed..

Okay, I guess I misread it. You are saying it was their new DiePak carrier design, I thought it was your new DiePak carrier design..

No, no, it’s our design, but what happens is, the customer comes up with a new type of device and it has physical pinned locations in different places. We design a contactor that is unique to make the electrical connection between our tester their unique device, it's our DiePak design..

So it’s their new device, not your new device?.

Correct..

Yes, I've misread it, okay.

10% customers, how many did have in fiscal 2018?.

So Geoff, we had three 10% customers in fiscal 2018. So I want to kind of expand on our customers also. So the nice thing is if you take a look at the top five customers, it will also be reporting in our 10-K. Actually we’re said to be at 86% of the total revenues, that compares to 93% in the prior year.

And we also – something that we haven't talked we have 29 customers which is a pretty good customer base and so it's good to see that our concentration is going down a bit, taking a look at our top customers..

Included in those three would be your lead ABTS customer, your second FOX-XP customer and your OEM customer.

Is that correct?.

We can't name names until the 10-K comes out Geoff..

I'm not naming name, I was just trying to….

I think that's pretty close Geoff..

That’s pretty close. Okay I’ll leave it somebody else. Thank you..

Thanks Geoff..

Thank you. [Operator Instructions].

So, operator, I’ll say what, let me just jump in for a second and if there is someone is there by the time I say my closing remarks. One of the things that I said at beginning I was hoping to actually try and cover a ton of ground to answer a lot of questions if people sent in or asked me.

And I want to make sure that everybody heard all the same story. So not shocker that we don't have as many questions, but may be a last chance if there's anyone with a question? Alright, and if not, as always folks we really appreciate you listening in.

And as always we invite you if you happen to be anywhere near the Silicon Valley Bay area, we'd love to host you here, have you have an opportunity to see our facility and infrastructure, and what we're building out for our customers. And we look forward to hearing and talking to you at next quarter's review. Take care now. Bye-bye..