VECO
#Thanks, <UNK>.
Sure.
I think we've seen utilization rates overall tick up in almost all regions over the last quarter.
I think we're at 90% or so in <UNK>a, kind of close to that in Taiwan, probably up 3 to 5 percentage points in each of those countries.
Korea's come up by a similar amount, probably 85% US and Europe, probably close to 90%.
So, they are high and they have been moving up.
It's hard for us.
We're pretty comfortable to say that Q2 orders are going to be up significantly from Q1.
We do see some significant orders in the second half of the year but it's hard to quantify it in total.
Certainly could happen that they could be larger.
Well, we've seen a lot of activity in TSV demos and evaluations and interest.
And customers looking at a web process versus a dry process in that.
And at least one major customer has told us that they both work well, and we think our process has a significant cost advantage.
So we've got some advanced packaging orders this year already.
We're expecting some more.
I think 2016 will be bigger than 2015 because it still is a little early in the adoption.
And then beyond the advanced packaging we expected to continue to maintain strength in RF devices, MEMS, and those areas which we traditionally had strength in.
Well, as <UNK> said, the orders have been pretty well distributed across the regions.
Clearly, if you look at our business, we've had a very strong business in <UNK>a for a long time and we expect that to continue to be a major area of strength with multiple customers in <UNK>a, and it's really driven by lighting and mid-power LEDs that are the largest portion of the lighting market.
So, clearly that will be the largest region, but we see activity in Taiwan, Japan, Korea, Europe are all opportunities and we expect some reasonable geographic distribution.
I think there's good potential for growth in 2016.
It's too early for us to call that or give you guidance, but we do have customers talking to us now about substantial orders in the second half that would flow into 2016, and so I think we're going to have a healthy industry in 2016.
Let me take the first one.
On the average sign-off period, it's usually three to six months for most of our products, not just EPIK, and it may take a little longer for a new product, but that's pretty typical.
The things that can impact that are, is the customer's fab ready and do they have everything prepared.
We've had some cases where that's taken a little longer than expected.
But three to six months is typical and I'll let <UNK> answer the second half.
Thanks, Srini.
On the second question, there would be very little revenue in 2015 from product that was shipped in 2014.
It would be more than zero but it would be very, very minimal, maybe $10 million, $15 million at the most.
I just don't remember that number, but that is not at all a driver for 2015 performance.
Well, I will try to answer the second question first.
In terms of our cash balance, we definitely have a very good cash position, about $220 million of that cash is kept in foreign locations.
But that said, if you look at our performance we have been cash flow positive for many quarters here, and so I would agree that we do have some excess cash and we continuously evaluate our alternatives for deploying this cash, and as it comes down to practical matters for us, there really are two choices.
One is to return the cash back to shareholders through a buyback program, or deploy the cash for additional M&A.
As such, as of now we do not have any buyback program approved by our Board, otherwise you might have already heard about it.
And to give you some idea on the M&A side, we do have an active M&A program, and in our M&A funnel there are a portion of these that look good.
So both those choices are very valid choices, and we discuss with our Board both, and as and when any decision is made, you would know about it.
And then remind me what was your first question, Srini.
Sure.
The way we done our math on the high end, obviously gross margin would be higher, and then at the same time, you take our range on OpEx and use the tax rate between 18% to 20%, you use the tax rate on the lower side, you would get to the EPS which is the high end of the Q2 EPS that we are guiding.
So, based on that we did our math and you can get there on the high end of EPS.
Thank you, Srini.
Thanks, <UNK>.
<UNK> here.
We typically do not disclose our shipment numbers but I will nonetheless try to answer your question.
If you look at other revenue range for Q2, we are providing ---+ indeed we are providing a wider range, $100 million to $150 million.
But at the same time we are providing a deferred revenue range of $65 million to $25 million, so $65 million is product that is shipped in Q2 but could not be recognized for revenue.
So if you add the two up, you are looking at $165 million in shipment on the low end, and if you take $150 million in revenue and add $25 million of deferred revenue, you're looking at $175 million in shipment.
So, a crude math without disclosing the real exact shipment numbers here, what you can see that we're talking about $165 million to $175 million of shipment in Q2, and this is quite an elevated shipment level for us.
I do not quite remember an exact math for my Q1 numbers but based on what we disclosed previously for Q1, you could do the math and see where the shipment numbers are.
Does that help you, <UNK>.
Sure.
Great question, <UNK>.
There are a number of things that are going through our P&L right now.
First of all, we are shipping EPIK at quite a high level and we are ramping the product up, whereas on the revenue side all that shipment is not being recognized.
So, right now we're seeing a little bit of a drag in Q2 and Q3 because of product ramp-up.
But all this is supposed to work its way through by the time we are in Q4.
The second reason is we took a large volume order from one customer two quarters ago, on which the discount was slightly higher and that business is going to flow through the P&L during Q2 and Q3 timeframe.
The margins on that business, that order, is a little bit lower than corporate average and so it keeps our gross margin range-bound.
The third situation here is that we are making very good improvement.
I'm very pleased with the progress we are making on our cost reduction efforts on the material side.
Now as you know, we've already obtained lower cost on the material but it takes some time to flow through the P&L, so by the time Q3 ends, the cost reductions will also start to show up on the P&L and that gives us the confidence that Q4 we would see a significant pickup in gross margin.
Okay.
Well, we had said in the last quarter that we expected to grow over 30%; we've increased that to over 35%.
I think there are a couple of drivers behind that.
Obviously the addition of PSP adds some significant growth to the year, but aside from that, the MOCVD business is doing very well and we have a very strong backlog, we're expecting strong additional orders, and so that business is delivering some exceptional growth and then the third factor is in the mobile applications.
We've seen good growth in that segment related to RF and MEMS and advanced packaging.
So I think those factors in both order trends, product success, are what are enabling us to push up our overall number for the year.
<UNK>, I'll take that question even though you're asking <UNK>.
We guided PSP business to be $65 million for 2015 and we are seeing good order activity there and we expect it to be ahead of that plan.
But not much more in the sense our reason to increase our growth for 2015 is largely driven from the MOCVD strength.
Yes, the PSP business is doing better than $65 million, but it is not crossing $70 million.
Thank you, <UNK>.
They are predominantly adding to the customer fleets and bringing on additional capacity.
I think on the other hand, we do see customers starting to think more about replacing older units, and we do think that over the next year or so that replacement activity will pick up due to the benefits of the new products and that will help to give us a little bit extra growth.
But right now they're adding capacity.
Well, I think if you look at the PSP acquisition, it's a good example of what we've been trying to do.
In that case, that business was a healthy business with good financial metrics all around, really, gross margin, profit, and those things.
It had a good overlap with our existing customer base, and we could bring value to it.
So in the case of PSP, we're able to take those products into some customers where they probably would not have connected with.
So it's a business that added revenue and profit, we could positively impact it and we had a good bit of confidence that we could be successful because we knew the customers in many cases already.
Does give us more products to sell to the customer base, but I wouldn't go star so far as complete solution.
I think that's ---+ most of our customers want to buy best-of-breed products and that's our focus.
So, maybe another element of it, at least in the sectors it serves, we tend to be the number one or number two in each of our markets and we're looking for companies that really have compelling technology leadership and are going to be the leader in a defined niche.
So not quite complete solution but partially there.
Okay, thanks, <UNK>.
All right.
With that, operator, we'll wrap up for today.
Thank you all for joining us and we'll look forward to seeing you in the coming weeks.
