Rudolph Technologies' CEO Discusses Q4 2013 Results - Earnings Call Transcript

Feb. 3.14 | About: Rudolph Technologies, (RTEC)

Rudolph Technologies, Inc. (NYSE:RTEC)

Q4 2013 Earnings Conference Call

February 03, 2014, 4:30 PM ET

Executives

Bob Cook – VP & General Counsel

Paul McLaughlin – Chairman & CEO

Steven Roth – CFO

Analysts

Patrick Ho – Stifel Nicolaus

Tom Diffely – D.A. Davidson & Co.

Dick Ryan – Dougherty

David Duley – Steelhead Securities

Jairam Nathan – Sidoti & Company

Farhan Rizvi – Credit Suisse

Operator

Good afternoon, my name is Tamara, and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth-quarter earnings release call. All lines have been placed on mute to prevent any background noise.

(Operator Instructions) I would now like to turn today's call over to Bob Cook, Vice President of General Counsel. Please go ahead.

Bob Cook

Thank you, Tamara, and good afternoon, everyone. Rudolph issued its 2013 fourth-quarter financial results, released this afternoon shortly after the close. If you have not received a copy of the release, please refer to the Company's website at www.RudolphTech.com, where a copy of the release is posted.

Joining us on the call today are Paul McLaughlin, Chairman and Chief Executive Officer; and Steven Roth, Chief Financial Officer. As is always the case, I need to remind you of the Safe Harbor regulations. Any matters today that are not historical facts, particularly comments regarding the Company's future plans, objectives, forecasts, and expected performance, consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such estimates, whether expressed or implied, are being made based on currently available information, and the Company's best judgment at this time. Within these is a wide range of assumptions that the Company believes to be reasonable. However, it must be recognized that the statements are subject to a range of uncertainties that can cause the actual results to vary materially. Thus, the Company cautions that the statements are no guarantees of future performance. Risk factors that may impact Rudolph's results are described in the Company's latest Form 10-K, as well as other periodic filings with the SEC. Rudolph Technologies does not update forward-looking statements, and expressly disclaims any obligation to do so.

I will now turn the call over to Paul McLaughlin. Paul, please go ahead.

Paul McLaughlin

Thank you, Bob. Good afternoon, everyone, and thank you for joining Rudolph Technologies' 2013 fourth-quarter financial results conference call. My prepared remarks this afternoon will address Q4 results, selected highlights, our guidance for Q1, and our revenue expectations for the full-year 2014. After my remarks, Steve will review our Q4 financials in detail, and then we will open the phone lines for questions.

Before we start, I want to call your attention to the fact that we issued two press releases this afternoon. In addition to our Q4 earnings release, we issued an announcement today, designed to bring clarity for those investors not able to attend our Analyst Day in January particularly as it relates to our outlook for our Lithography Systems Group, LSG, and how LSG gives us another strong driver for growth, and hence our confidence for a record revenue year in 2014 for Rudolph.

This afternoon, we announced that we have received two orders for our Lithography Systems totaling more than $11 million. The purchase orders include a repeat order for JetStep Lithography System for Advanced Packaging, AP, and a repeat order for a PanelPrinter 9200 system for flat panel display, FPD lithography. In both cases, these orders came from customers who were already using our Lithography Systems in volume production, and both foresee new capacity needs requiring our lithography solutions. Both orders were received in the fourth quarter of 2013, and we have shipped the JetStep system in the first month of Q1 2014. The PanelPrinter 9200 system is scheduled to ship before the end of calendar 2014.

Orders for our back-end products by outsourced assembly and test houses, OSATs, have been down for the past two quarters in the normally slower Q3 and Q4 periods. However, executives at our OSAT customers started to reengage about our JetStep systems in early December. Further up the supply chain, we saw orders at several OSATs pick up in early Q4 from their fabless customers, particularly for delivery of leading-edge packaging solutions. That demand has paid off. As a result, we received an order for another JetStep from our initial OSAT customer, who is a highly-regarded technology leader for Advanced Packaging.

They are responding to an emerging trend throughout the industry, and that is for fan-out packages, used in mobile devices of all types. Principal demand comes from some of the larger fabless chip suppliers, who have been the leaders in adopting the latest technologies for a variety of Advanced Packaging applications. This particular JetStep will be used for lithographic printing, or fan-out packages, on reconstituted wafers, with sizes greater than 300 millimeters. This will be a first for volume production at these sizes.

Importantly, discussions with other back end customers for our innovative JetStep systems are recommencing in earnest, as the realignments within the Apple, Samsung, Mediatech and other supply chains, that were causing hesitation to commit to major capital purchase by the OSATs, such as Lithography Systems, have stabilized, at least to some degree. We expect that we will continue that dialogue post Chinese New Year, as the overall back-end market is forecast to resume its growth trajectory.

So with those up-front comments, let's get right to our earnings release. Once again, we delivered solid operating results for the fourth quarter. These results were within our guidance. As we noted during our November call, Rudolph revenue has essentially been moving sideways for the past year. This flat, mid-$40 million quarterly revenue have been achieved, despite the extreme volatility in our markets, including the well-publicized second half of 2013 delay of front-end orders, for major memory and logic device manufacturers.

This same period also included Q3 and Q4 of normally slow back-end business, with a couple months of back-end book-to-bill ratio below 0.7, which is very low. We believe this is a clear indication, the revenues in the mid-$40 million is a clear indication that our balanced front-end/back-end business model is working as planned, and as you will hear later, we have forecast that dynamic to continue for one more quarter.

It is important to note that the drivers for our fourth-quarter revenue were from our front-end businesses, and in particular, our Metrology Business Unit, MBU. MBU had revenues that were at a high point for the past five years, more specifically, MBU, which overwhelmingly sells to front-end customers had revenues driven by our flagship MetaPULSE metal thin film system, leading the way with record shipments. We believe we gained market share in Opaque Film Metrology in 2013, as the top logic, memory and foundry customers each purchased MetaPULSE tools in Q4.

The relevant dynamic here that should be highlighted for investors is the unique and balance business model that Rudolph enjoys. Long-term we forecast Rudolph revenues coming from front-end customers at 50% and back-end customers at 50%. However, as students of the monthly book-to-bill reports will attest, there can be considerable fluctuation each quarter, as front-end and back-end purchase are off-cycle to each other. For Rudolph, this is evidenced by the fact that as we forecast on our last earnings call, our Q4 2013 revenue was to be front-end centered.

In fact, approximately 70% of Q4 revenues came from our front-end business. The drivers for our Q4 front-end business were the widely reported memory spending at a leading DRAM and NAND device manufacturer, specifically that included an initial commitment by Samsung to [inaudible] China [ramp] [ph] for 3D NAND flash. Another important memory customer was recovering from a fire at one of its fabs. To reiterate the message that our business unit general managers discussed at our Analyst Day three weeks ago, we enjoy front-end business tied to technology node changes, and back-end business tied to unit volume of silicon, used for tablets, smart phones and the Internet of Things, now just evolving.

Fourth-quarter revenue totaled $44.5 million, a sideways movement, as compared to the $44 million for the 2013 third quarter. GAAP net income for the fourth quarter of 2013 was $2.1 million, or $0.06 per diluted share, compared with net income of $252,000 or $0.01 per diluted share for the third quarter of 2013. On a non-GAAP basis, fourth-quarter 2013 net income was $3 million or $0.09 per diluted share, compared to $2.1 million or $0.06 per diluted share in the 2013 third quarter. This $0.09 was above the high end of our non-GAAP earnings guidance of $0.04 to $0.07.

Once again, the strength in our balance sheet, as cash and marketable securities totaled $167.4 million, an increase of $8.8 million from $158.6 million at the end of the 2013 third quarter. Accounts receivable decreased approximately $5 million from the end of Q3 to $53.4 million, and inventory also decreased approximately $5 million from the end of Q3 to $61.4 million, as of the December 31 timeframe. Steve will discuss these results in more detail in his prepared remarks.

Gross margin was 51% of revenues in both the 2013 fourth quarter and third quarter, and was in line with guidance. The fourth quarter gross margin was positively impacted by strong Metal Metrology sales in the quarter, and the 2013 third quarter was positively impacted by Software revenue above the Company's target model. These dynamics again speak to the breadth of Rudolph's product offerings, and the customer-centric total solutions approach to sales that we have discussed in prior conference calls, that allow us to maintain gross margins above 50%, during all phases of the business cycle.

Our long-term business forecast gross margins in the 54% to 56% levels, with operating income at the mid-20% levels. We forecast approaching both margin levels later in 2014. While at cursory glance, it may seem to be a tall challenge to reach those levels, I call your attention to the fact that Rudolph has been at those levels before. In fact, we have delivered gross margin at 56%, and operating margins at a cyclical peak were 29%. The takeaway here is we are structured for earnings leverage.

And finally, before Steve gives our financial report on the fourth quarter, let me give you our guidance for Q1, and look at the revenue for the full year 2014. As I mentioned earlier, we see another quarter of sideways movement, and we are guiding Q1 revenues to be between $43 million and $47 million. The guidance reflects two things that investors should be aware of. One, Rudolph's largest logic customer, and a top three customer for many years, has delayed equipping a fab, with no firm indication when the delay might be lifted. And two, a major OSAT, and a top three customer in the past two years, has experienced an environmental issue that has closed a line until government officials can determine what penalty, if any, should be imposed. We expect clarity from our OSAT customer in the weeks immediately following Chinese New Year.

These issues have made short-term forecasting more difficult than normal, but it has not altered our long-term thinking at this point. With guidance from our front-end peers being cautious on timing for further memory spending, it appears that this year may have some of the characteristics of the past two years, and that is, first half of 2014 front-end businesses may be foundry driven with logic and memory being more second-half events. With front-end forecast being tepid, we expect our Q1 revenues to be more back-end driven, and close to the normal front-end/back-end split of 50/50. Q1 EPS is forecast to show non-GAAP income of $0.03 to $0.06 per share, with corresponding GAAP income ranging from minus $0.02 to plus $0.01 per share. Steve will discuss factors behind those estimates shortly, and will give guidance for gross margin and operating expenses, as well, in his prepared remarks.

For the whole year, we expect 2014 revenues to surpass our 2012 revenues, which were approximately $218 million, making 2014 a record year for Rudolph revenues. This is consistent with growth forecast for front-end being in low double-digits for the year, and Advanced Packaging growing by 19%, according to dealer-side forecast this past week. We believe throughout 2014, we will continue to make progress to our long-term operating model for gross and operating margins, which again are between 54% and 56% for gross margins, and mid-20% operating margins.

Back to the 2014 revenue. Let me do the math for you. If we were to end Q1 at the midpoint of our revenue guidance, then we would need to average nearly $58 million over the next three quarters in 2014, to equal our 2012 revenues. Recall, our 2012 revenues were up by approximately 17%, while if the industry was done by low double-digits, as our new products generated outside gains. We did have a quarter with $62.2 million in 2012. We see 2014 shaping up like 2012 for Rudolph, except we now have our Lithography Systems group on top of the suites of new Inspection, Metrology and Software Solutions we had then, and have added to those suites since.

A dynamic on Rudolph's spending in R&D is worth emphasizing here. Since September 2008, when Lehman Brothers collapsed and the financial crisis started, we chose to double down on R&D spending, rather than cut back. Q4 2008 through Q4 2013 saw Rudolph spend approximately $182 million on R&D, which represented a very high 21% of our revenues over that period. Those expenditures, plus innovations that came from inorganic growth over the past five years, have delivered 5 times the products we had on the market when Lehman Brothers failed.

The benefits to our shareholders is we expect to see our revenues for both front-end and back-end business being driven by those investments, during the coming up term, while at the same time, we believe that spending on R&D can be lowered to a more fully acceptable rate of 14% to 16% of revenues in the quarters ahead. Bottom line is we've already spent the R&D dollars to establish our leadership position in the markets we serve. We have forecast Advanced Packaging to emerge as the most significant driver of quote - more than more – unquote, solutions. We believe that time has come now, and as we have talked about in prior calls, we believe we have the most extensive suite of customer offerings for Advanced Packaging available in our space.

Parsing the growth dynamic another way, we have two markets growing faster than average, and those are one, Inspection and Metrology for front-end, and two, Advanced Packaging for back-end. Another dynamic that needs drill down is our Lithography Systems Group, on LSG. I refer you to slide 4 on our Investor Event section of our website. You will see there that our Lithography business accounted for approximately 6% of 2013 overall revenues, and we are heading toward a model where LSG accounts for 20% of our revenues. We believe that is likely to happen in 2014.

Today's first press release indicates we are on our way to that goal, as we ended 2013 with LSG system backlog in excess of our 2013 total systems revenues. We have three dynamics in play: One, our JetStep for silicon wafer lithography. Two, our JetStep for panel lithography, and three, long-awaited signs that the flat-panel display markets may be coming alive after an over two year – two years-plus in the down mode. Bottom line is we are forecasting a record revenue for Rudolph in 2014.

Now, let me turn the call over to Steve who will review our Q4 financials in more detail. Steve?

Steven Roth

Thanks, Paul, and good afternoon, everyone. As Paul mentioned, I will go through a more detailed analysis of our financial performance for the quarter. Quarterly revenues for Q4 were $44.5 million, an increase of 1%, when compared to $44 million in the 2013 third quarter, and within our revenue guidance range. For the year, our revenues totaled $176.2 million.

As we discussed on our last conference call, we saw strengthening in our front-end business, particularly in memory applications during the quarter, and our foundry business has remained consistently strong throughout the whole year. As Paul noted, we received an order for a flat-panel display tool in the quarter for delivery this year. In addition, but not included in today's first press release, we recorded revenue for a flat-panel system upgrade in the quarter, all signs of improvement in the industry fundamentals in that sector.

Our Metrology products, and in particular our Metal Metrology systems, which are highly leveraged to the front-end markets, were the major contributors to our revenues in the quarter. In fact, this quarter's Metrology – Metal Metrology sales, were the highest in the last five years. Those increases were partially offset by decreases in revenue from our Inspection and Lithography Systems groups, which are more tied to the back-end packaging market.

Contrary to a recent analyst report, when you look at that market share data published by Gartner Dataquest, and examine the other thin films category where we report our Metal Metrology product sales, we have experienced market share gains in our Metal Metrology business over the last four years. And in 2013, we announced our success in leveraging of our Metals business – Metal systems to address challenges in the back-end Advanced Packaging market. We are confident in our strategy in this segment of our business.

Breaking down the revenues into percentages, Metrology was 45% of fourth-quarter revenue, Inspection 43%, Software 9%, and Lithography 3%. Front-end revenue was approximately 70% of fourth-quarter sales, and was driven by memory and foundry customers, who represented 77% of those sales. Back-end revenue, at 27% of sales, was primarily driven by Advanced Packaging applications, which accounted for 67% of those sales, and flat-panel display revenue accounted for the remaining 3% of revenue.

Switching to a geographical breakdown of sales for the quarter, Asia was the strongest region, representing 62% of overall revenue, Europe was 20%, and the US was 18%. From a customer concentration perspective, we had three customers that each represented over 10% of sales in the quarter, with two being large memory customers, and the other a major logic supplier.

Looking at orders for the quarter, we experienced a strong recovery in orders filled by our Lithography Systems group flat-panel display, and JetStep orders, that Paul mentioned. In addition, our front-end memory and foundry business also experienced significant increases, which drove our book-to-bill significantly above the industry average. Some of our front-end memory orders were part of a turns business in the quarter. Meaning, we got the order and shipped the system within the same quarter, and as Paul mentioned, our flat-panel display order will not be shipping until the second half of the year. These factors all have influence on our Q1 guidance.

Gross margins for the fourth quarter was 51%, and at the high end of our guidance range. The 2013 third-quarter gross margin was also 51%. Our diverse product mix over the last several quarters has enabled us to continue to achieve plus 50% gross margins throughout the bottom of the industry cycle. Looking at the first quarter of 2014, we anticipate that trend continuing, and forecast that our gross margins will continue to be in the range of 50% to 51%. Turning to operating expenses, for the quarter, total operating expenses were $21 million, a decrease from $21.2 million in the third quarter, and below our guidance. R&D for Q4 was $9.6 million, a decrease from $10.5 million in the 2013 third quarter. SG&A expenses increased to $10.7 million from $10.1 million in the previous quarter.

As I discussed on our last quarter's conference call, we had a restructuring in the quarter that resulted in a 3% reduction in workforce. The restructuring better aligned our manufacturing services with current demand, and reprioritized the timing of some of our R&D projects, to better align them with anticipated market demand. This reprioritization was the primary reason for the decrease in R&D expenses in the quarter. The impact of the restructuring charge was $322,000, and contributed to the increase in SG&A for the quarter. For the 2014 first-quarter, we anticipate operating expenses to be in the range of $21 million to $22 million, which reflects our continued cost containment posture, offset by the normal accruals for our 2014 employee compensation plans.

GAAP net income for the fourth quarter was $2.1 million or $0.06 per share. In the third quarter GAAP net income was $252,000 or $0.01 per share. Our Q4 results were positively impacted by $1.6 million tax benefit recorded in the quarter, as a result of lower than that forecasted pretax income, and the adjustments to unrecognized tax benefits. From a non-GAAP perspective, our GAAP results were negatively impacted by litigation costs, restructuring charges that I just mentioned, share-based compensation costs, and amortization related to our M&A activities. Excluding these items from our fourth-quarter results, our non-GAAP net income was $3 million or $0.09 per share, and exceeding our previous guidance of $0.04 to $0.07 per share.

Now, turning to the balance sheet, we ended the fourth quarter with a $8.8 million of positive cash flow, resulting in cash and marketable securities totalling $167.4 million, and net cash per share just above $4. We also expect that positive cash flow trend to be continuing in Q1. Accounts receivable decreased to $53.4 million in the fourth quarter, down from $58.7 million in the 2013 third quarter. As I mentioned on our last call, we continue to make progress on collections of outstanding balances from our Asian customers, and that contributed to the increase in cash, and a decrease in accounts receivable in the quarter.

Inventory decreased to $61.4 million from $65.9 million in the 2013 third quarter. The decrease was primarily due to lower shipping levels, partially offset by increased inventory investment in our Lithography business. Finally, to wrap up, capital expenditures for the fourth quarter were approximately $900,000, and for the full-year, our total capital expenditures were $4.9 million. And we ended the quarter with a total headcount of 615 employees, down from 637, which primarily is the result of the Q4 restructuring that I mentioned earlier in my prepared remarks.

This concludes our prepared remarks, and I would like to open the floor for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Patrick Ho with Stifel Nicholas.

Patrick Ho – Stifel Nicolaus

Thank you very much. Paul, first off, with your announcement today of the repeat order for the JetStep for Advanced Packaging, can you provide a little more color on the type of applications, whether it is 2.5D interposer, 3D, TSV? Just given that there is still a lot of debate out there on the viability of 1X versus 2X reduction steppers, but what type of application of devices is this repeat order targeting?

Paul McLaughlin

Okay, good question, Patrick, and thank you for joining the call. The way to look at this is, it will be a combination of things, the first thing we are looking at here is the reconstituted wafers.

Now, this customer has done reconstituted wafers, but not in sizes bigger than 300 millimeters. That will happen on this one.

So this JetStep will be dedicated primarily to the fan-out packages, which are the newer ultra-thin packages used in multi-stack packages, 3D stacking in phones, iPhones, tablets and some of the Internet of Things that are coming up. That is where we see that happening.

The interposers is being done on another tool that they have. Ours. Another one of ours that they are doing right now. And they're leading at 2.5D.

Patrick Ho – Stifel Nicolaus

Great. And maybe just as a second question, in terms of, and I appreciate some of the prepared remarks on metrology side of the business, there's been a lot of confusion, misinformation regarding your front-end metrology business, and your competitive positioning.

Can you once again clarify where you participate within metrology, which I believe is OPAT and thin-film, and secondly, from what I understand, you don't participate in OCD metrology as far as I can tell, and thirdly, what you believe your share position now, and maybe going forward? That would be really helpful.

Paul McLaughlin

Okay. Thank you, Patrick. There is always confusion about this because it used to be thought of as Rudolph and a couple other players were direct competitors of KLA-Tencor the thin-film. We still compete with KLA-Tencor in the thin-film area.

In the metal film area, which we are number one by far, we have dominated that for years, and continue to do that, and we think we have gained share. There are alternative techniques that people use, but our competitors there are oftentimes the x-ray houses, and a number of other people using alternative techniques, all struggling, because they don't do measurement on product wafers.

So our metal metrology that we just talked about, as having a record quarter, comes from those applications now. Primarily this last quarter in the FinFET area, in the 3D NAND area, and that's the driver.

The confusion is the thin-film area, what about our transparent business, and I thank you for asking the question because it has been something that has confused people. We have historically been the number two to KLA-Tencor in thin-film, and that is primarily our transparent product line, where we use multiple angle, multiple wavelength lasers to do direct measurement, primarily in the ultra-thin area of the transistor.

We do not do, and this is just as important, Patrick, what we not do is we do not do OCD. OCD is a very strong market, it is a good market, we do not.

So when people confuse, and say, oh I see OCD is doing very well, yes, I expect it will continue to do very well. We made the decision, and honestly, I think probably incorrectly, a few years ago, not to go after that market.

Right now, there are three competitors. KLA obviously dominates, but the other, another company in Silicon Valley, and another one in Israel, both have carved up the number two and number three positions.

For Rudolph to enter that space, we thought it not wise. If we can't be number one or number two in this segment, it would be hard, not impossible, but hard to do. We think there are other opportunities to stay very strong within the metrology business.

You will be hearing some new product releases coming out in the metrology business unit that I think you will find very unique, and we expect to probably have those in the next few months. I hope that clarifies a little bit the difference between what we are not in, we are not in OCD, and what we are in, we are in the thin-film transparent, and obviously in the thin-film metal markets. One, we are number one, and the other one, we are number two.

Patrick Ho – Stifel Nicolaus

Great. I appreciate that, just obviously helps to clarify some of the information out there. Final question from me, and maybe for Steve, I know there's a lot of moving parts with the tax rate and R&D tax credits and everything of that sort, but what should we use for modeling purposes for 2014 at this point?

Steve Roth

So if you go off of Paul's comments about we are anticipating a record year, I would get us back to like a 34% tax rate for modeling purposes, Patrick.

Patrick Ho – Stifel Nicolaus

Great, thank you very much.

Steve Roth

Thank you, Patrick.

Operator

Your next question comes from the line of Tom Diffely with D.A. Davidson.

Tom Diffely – D.A. Davidson & Co.

Good afternoon. First, a little clarification. You said that the panel system would ship in the second half. So the JetStep ships here in the first half?

Paul McLaughlin

The JetStep is two different JetSteps, and this is where the confusion comes out, and I'm glad you asked this, Tom. We have two PanelPrinters. One that nobody has ever done before, which is in the back-end advanced packaging area, but there's another panel system that we purchased when we bought the company, Azores, last year. They had historically been in the flat-panel business, using 2X lithography, reduction lithography, for their entry into the flat-panel business.

That business has been dead last year, we did no business in it, except for the little bit that Steve talked to you about in the fourth quarter, an upgrade, but those kind of signs started to appear mid-year for what we call the 9200 tool. That's people coming back alive again. Because the capacity was pretty high, the way to look at is – the reason that the industry bottomed, in my opinion, is the fact that the capacity for larger displays, TVs in particular, is finally being utilized in the 70% to 80% range, which is high enough to have these display makers, SMD, Samsung Mobile Devices, and LGD, which is LG Display, the number two in the industry, Samsung being the number one, to plan capacity expansions for mobile displays, requiring the high resolution lithography like we have in the 2X system, that is in the – our flat-panel offering.

So that is just – we are just starting to see that come out. And the issue associated with those is, when you do get an order, there is some unique things in that, even though it is using the similar type of camera and lens system that we have in the JetStep, there are always some unique things that take some time, and our number-one vendor in that area is – lead times are quite long.

So we've quoted things like 52 weeks, so you might ask how are you going to have it this year? Well, we're going to have it this year because we got the order in December, and we'll get on the list to get that delivered, and then we will work on it and get it to the customer in that area.

The other two areas, Tom, our JetStep panel which is really just a back-end combination of JetStep silicon, which is what we have sold so far, a JetStep silicon system, really being used exclusively for the leading edge type of advanced packaging. The panel system will, instead of putting reconstituted die onto a wafer of say 300 millimeters or larger, you could have put it on a panel, that's where the real cost-saving is going.

The industry is moving from silicon wafers to reconstituted larger wafers, to panels. Rudolph is right in the sweet spot for that, because I think I mentioned, we announced in the second quarter last year, that we were willing to take orders for our samples for a JetStep panel, and we are doing that right now.

We expect the results of those kind of things will lead to a strong second half in the JetStep panel. But on top of that the 9200 system, and then also on top of it, the regular JetStep silicon systems, and that's how we are forecasting 20% business out of our litho group this year.

Steve Roth

Great. This is Steve, I think the other piece of that question was the JetStep that we announced today was shipped in Q1.

Tom Diffely – D.A. Davidson & Co.

Okay. And usually, it's a quarter or two for revenue recognition, or is this going to be quicker because –

Steve Roth

It will be rev rec in Q1.

Paul McLaughlin

Well, probably Q1. They’ve…

Tom Diffely – D.A. Davidson & Co.

Okay.

Paul McLaughlin

We expect them to use it right away. The orders they have from their customer, we mentioned fabless-type customers, there's some demand immediately in that area right now. So I think we are going to have that in Q1.

Steve Roth

Should be in Q1.

Paul McLaughlin

In Q1. Yes.

Tom Diffely – D.A. Davidson & Co.

Okay. What is your delivery time right now for a new order that comes in for the JetStep Semiconductor?

Paul McLaughlin

We said we could quote whatever backlog by the first of the year, that we could quote four to five months. We think that's appropriate, and we can do that.

Tom Diffely – D.A. Davidson & Co.

So you have some limited material built out, then?

Paul McLaughlin

But then, the panel, we said we would deliver mid-year our first one, and with rev recognition, the best we will do is Q3 for those activities.

Tom Diffely – D.A. Davidson & Co.

Okay.

Paul McLaughlin

And those will likely be multiple tools.

Tom Diffely – D.A. Davidson & Co.

Okay, great. Moving onto the front-end business. I was under the impression that business started to ramp up late in the fourth quarter, and there would be potentially the issue with revenue recognition, so you had to have more revenue in the first quarter, but it sounds like the front-end business actions going down quarter-over-quarter in the first quarter?

Paul McLaughlin

Yes. It would seem that some of the people were expecting it to continue on, in the front-end paused in that area. I think we are seeing some of that in the memory area, and our largest larger customer has put hold on some tools, than we expected in the first one. That's why I said I thought the year might end up looking like it did last year, or forecast the way the forecast had, which was maybe.

The foundry guys are going to really spend in the first half, and we still expect that, that will be 50% of our business next quarter, and you've got a couple tools in the memory for sure.

Tom Diffely – D.A. Davidson & Co.

Yes.

Paul McLaughlin

But at the end of the day, it seems to be kicking the can down the road a little bit in the front-end. You may ask why.

Well, Samsung drives that boat, and they are the number one in that space, and the incentive to move to that technology is not as strong as prior times. They dominate to the point where the rest of the industry will follow them, and if they kick it down the road a quarter or two before they ramp significant, now they're ramping some this year, and we've delivered multiple tools this year in China.

However, before you get the volume up to some what we think is a reasonable level, they will probably make sure they're yielded pretty well in their 3D NAND structures. I think the jury is still out. There isn't anybody shipping that, with the exception I think, of Intel, who are into that stuff right now.

Tom Diffely – D.A. Davidson & Co.

Okay.

Paul McLaughlin

Intel is a special situation as you know. They are right now pausing, until they get more of a mobile solution or a foundry solution, and they put a fab on hold here in the United States until a decision is reached to go ahead. That what gives us caution in this early part of the year.

Tom Diffely – D.A. Davidson & Co.

Okay. So if you look at the back-end part of the business, if you exclude the JetStep, the new stuff coming through, does it look like normal seasonality this year for you, with more of the core unit driven back-end business?

Paul McLaughlin

Yes, that's exactly what we see, the second – first, second quarter being strong order quarters. We expect that to start, quite frankly, right after Chinese New Year, which will end the end of this week.

When that's done, we're scheduling a series of calls with our customers and our meetings to discuss their strategic plans for the quarter. As you know, we spend a lot of time dealing with the fabless suppliers, as well as the OSATs themselves, so it is a nice mix of seeing where the fabless community sees their demand. But demand, quite frankly, shifted last year, from an Apple and Samsung build plans to the Media Techs and Sprinters and other players on the China scene that have been delivering lower cost solutions for smart phones.

That part of the market went up pretty well, so that market seems to have stabilized in who's getting what out of the supply chain. That's a good dynamic for Rudolph. So I think that will be good for us, Tom.

Tom Diffely – D.A. Davidson & Co.

Okay.

Paul McLaughlin

So I think that will be good for us then.

Tom Diffely – D.A. Davidson & Co.

Okay. And as far as linearity in the year goes, you see sequential increases on a go-forward basis? To get up to your record revenue year?

Paul McLaughlin

Second half will definitely be the big half because of litho recognition for JetStep panel, and for the fact that we've already told you that to get the 9200 out, that's a 52-week delivery cycle so that's scheduled for late in the year. So the orders will be up for late in the year…

Tom Diffely – D.A. Davidson & Co.

Okay. And what it sounds like some of the…

Paul McLaughlin

Q3 and Q4 will likely be higher.

Tom Diffely – D.A. Davidson & Co.

Okay. It sounds like some of the other front-end players might have a bigger first quarter, but a bit of a pause in a second and third, and then maybe growth again in the fourth. You see more linear ramp with the more second-half weighted.

Paul McLaughlin

Yes. I think you've got to see where a couple people go. For us, the front-end is run by three guys. Samsung, Intel and TSMC.

I think TSMC will do fine, although they had a very slow January. That almost no orders out in January. But they will probably get up close to $11 billion, and it will start rather soon, for next quarter, and so that's was going to help us front-end wise in this current quarter.

But I think, again, they're probably first-half oriented.

Tom Diffely – D.A. Davidson & Co.

Yes.

Paul McLaughlin

And the second half, when will Samsung ramp that facility past the number that they are at right now, and there's speculation to how many wafer starts they are going to do right now. But it is surely not 50,000 or 60,000.

Tom Diffely – D.A. Davidson & Co.

Okay. And then last question here. When you look at your goals or your model of mid-50% gross margins, mid-20% operating margins, if you hit the revenue stream that you think you will this year, the plan is, the hope is that you hit that revenue, the margin guidance exiting the year?

Paul McLaughlin

Yes, that is exactly right. You got exactly right.

Tom Diffely – D.A. Davidson & Co.

Okay.

Paul McLaughlin

We are highly leveraged, this business model is very solid, particularly in lithography, on top of, as you know, we've historically been able to do it with our inspection and metrology and software businesses, those are all in pack right now, and now you add the lithography piece, which will be quite volume-sensitive at the end of the year.

Tom Diffely – D.A. Davidson & Co.

Sure.

Paul McLaughlin

So should be very good margins.

Tom Diffely – D.A. Davidson & Co.

Okay, thank you.

Paul McLaughlin

Thank you.

Operator

Your next question comes from the line of Dick Ryan with Dougherty & Company.

Dick Ryan – Dougherty

Thank you. Say, Paul, could you give us a little feel for the ASP on the flat-panel litho tool…

Paul McLaughlin

Yes.

Dick Ryan – Dougherty

Versus the JetStep for the silicon side?

Paul McLaughlin

Yes. We have a couple different models that go. There's 6700, 9200, there's a number of different models. The model we are talking about here is in the middle range with where we are, which is north of $7 million apiece.

You can do the math with two systems, a little bit above $11 million in the orders. You take a JetStep, subtract it out and that will get you very, very close. The ASP for JetStep is $4 million, so you can get a pretty good idea where we are in the ASP for the flat-panel business.

Dick Ryan – Dougherty

And just to clarify, is your assumption that just one flat-panel gets delivered this year?

Paul McLaughlin

That looks like it. We are working with our prime vendor in this case, which is, no surprise, is GLW on the tape, Corning, that is. And Glassworks has got issues in terms of getting us product in a very timely manner and I think we are going to solve some of those problems.

It is not impossible to have more than one this year, but we have to get some indication relatively soon from some of these customers. And we are in discussions, I will be honest with you, we are in discussions now more, and we're quoting more now.

Last year, it was completely dead. Right now there's decent activity out there. It probably will extend past the end of the year.

Dick Ryan – Dougherty

On the silicon side with the JetStep, can you talk about your demo pipeline? Is it moving to second-tier OSATs, or can you give a description of how those demos are moving through?

Paul McLaughlin

Okay. That's actually a very good question, because what we are trying to do is, we are addressing the needs of the guys at the leading-edge advanced packaging solutions and that – demands are really coming from the Broadcoms, Qualcomms, the people one level up, where they get their demand for their chips and various devices. That is where we are really focusing on.

I would expect that you will hear relatively soon about orders for JetStep, other than our first account. But we just started reengaging with them again, in the slow third – third and fourth quarters, that the OSATs normally have, it was slow, but our regular customer, our key customer here jumped quickly and had us prepare for a tool that might come in December for delivery in January. We were ready.

We work very closely with them, obviously. We are excited about their opportunity for fan-out packages. We think that's a major driver for certain mobile devices that are leading some of the advanced packaging.

Dick Ryan – Dougherty

Okay, thanks. One question on the software side. I thought we were looking at Q3 going into Q4, that software may be a little bit light, but it looks like it came in 9%, 10% range where you've been discussing that's your long-term goals. Can you talk a little bit about what happened with software in the quarter, and is 9%, 10% still an assumption that we should be using?

Paul McLaughlin

I'm comfortable with the 9% to 10%. Obviously, our operating margins on that are north of $0.40 on the $1, so it is always a nice contributor.

Could have been higher, yes. I think that there are two parts of this. One is the tool-centric stuff that really – that software goes on our tools and sells to our customers, and the other is the fab-wide stuff.

That's the stuff with the bigger ticket item, that take a longer sales cycle. So the sales funnel seems to be pretty good there, but it will only be, we expect, 10% of the business.

With our business growing this year, 10% of that will be a nice healthy jump for the software business, just to maintain the 10%. I'm optimistic that will come solely from the fab-wide solutions that we have. We have a very attractive yield management system right now, based on some of the data mining capabilities that we have been developing for the past couple years in China at our R&D center, in Tianjin, China.

Those things are now under test and evaluation at various places around the world, and when those come in, those will be chunks of revenue with licenses thereafter, so they are very nice solid business. Our model is to build it once but sell it many times.

That's the way we try to do that. If it still 10%...

Dick Ryan – Dougherty

Okay.

Paul McLaughlin

If it's going to be 10% of the show.

Dick Ryan – Dougherty

Sure. Great, thanks, Paul.

Paul McLaughlin

Okay.

Operator

You next question comes from the line of David Duley with Steelhead Securities

David Duley – Steelhead Securities

I have a quick clarification. I actually missed your revenue guidance for Q4, could you just repeat that for me?

Steve Roth

Yes. We guided $43 million to $47 million.

Paul McLaughlin

This is for Q1?

Steve Roth

For Q1 you are talking, right, Dave?

David Duley – Steelhead Securities

Yes. I’m sorry. Q1.

Steve Roth

Yes, $43 million to $47 million in revenue.

Paul McLaughlin

We're talking another quarter to go sideways, but it is going to be driven this quarter by back-end.

David Duley – Steelhead Securities

So the summary is, we have a flat quarter, and back-end is up, and front-end is down?

Steve Roth

That is correct.

Paul McLaughlin

That is correct. That's exactly what we see happening. Your friends down the street, but maybe that would change their mind since Seattle won the Super Bowl they will get more excited out there, and it will filter down to Portland, and maybe there will be some more excitement there. I'm guessing, David.

David Duley – Steelhead Securities

So then, on the inspection side of things, the order – you've seen a nice order uptick like you would typically see in a seasonal pattern, or are the back-end orders a little bit later this year?

Paul McLaughlin

I think they usually come for us, and they have in the last few years, in the last five years they've been focused on it, immediately after the Chinese New Year. Obviously, you go into the year, which should be just before Chinese New Year, with lots of discussions, but no decisions.

So I think it is not completely no decisions, there are some, but I think the major decisions that will happen, probably starting a week from today, and continue for two to three weeks after that, and then you will know exactly what people are looking at for the first and second quarter, which is normally very good for us. I expect it will be very good for us in advanced packaging and back-end this year, and first and second quarter orders.

David Duley – Steelhead Securities

But you did mention something about one of your major customers having an environmental issue. Did that impact the overall orders that you received during the quarter?

Paul McLaughlin

Yes.

David Duley – Steelhead Securities

Does that impact the overall orders that you received during the quarter?

Paul McLaughlin

Yes, and it gives us some guidance hesitation. With multiple tools with that customer having – where that business is going to be done, it remains to be seen, that decision has not happened yet, and we think that will be clarified most likely within a couple weeks after Chinese New Year.

So again, whenever you have a government involved in decisions, you step back and say, we shouldn't put that in our guidance, because it might not happen. So we are nervous, and I'm sure you know this particular account very well, David. You talk to them on a regular basis, so you know what is going on.

David Duley – Steelhead Securities

Okay, and then as far as – do you expect to see another advanced packaging lithography customer during this year, or do you just think you're going to continue to ship the wafer-level tools into the same customer who's taking them down thus far?

Paul McLaughlin

I think you'll see both, but more from other customers. I expect what I would be looking for, if I were an investor, is now that the back-end is starting to come alive, and Rudolph, you had all sorts of discussions going last year, when are you going to book some business that's associated with that?

I think you have to stay tuned. I think that the growth in the JetStep silicon system will be from other customers, not from the one we've got.

David Duley – Steelhead Securities

Okay.

Paul McLaughlin

Doesn't mean he will stop. He may very well do it, obviously, he's one of the early customer, among others, considering the panels too.

David Duley – Steelhead Securities

As far as the panel advanced packaging stepper, do you think that's going to be – your initial customer would be your current customer on the wafer side, is that the way we should look at it, or do you think that's going to branch out on the customer front, as well?

Paul McLaughlin

I'm not at liberty to say. I think that may very well start elsewhere, but close by with that customer.

I think there's multiple people right now. We've done a lot of samples for a handful of people in the panel area.

The dynamics are just, as you know, when you do a reconstituted panel, if you had to do three or four steps of lithography, the cost advantage is huge. Huge, if you can do it.

Nobody is doing it yet. There is going to be some work.

You can picture, you've got to place these things rather exactly on the panel, and then you've got to decide, do I use glass panels, do I use composite material panel, organics? I think the jury is out on a number of issues, but it will happen, and I can assure you it will happen, and we will be shipping tools in the second half of the year, and we believe to multiple customers for the JetStep panel.

David Duley – Steelhead Securities

Great. Just taking a step back again. I'm curious as to, with the year starting off somewhat flattish on the revenue front, why do you think there is going to be such a big spike in Rudolph's revenue throughout the year? What gets to that?

Paul McLaughlin

We did a $218 million number, as you know, without – and we talked a little bit about this on the call, in 2012, which was a year when the rest of the market went down. We've since added a number of new products that should be able to get us back to that, and we also had another driver, which is litho, on top of that.

You've got one more driver and that driver has three features. The JetStep, the JetStep panel, and the flat-panel display. You've got three possibilities in that area.

A realistic number would 20% of our business this year coming out of our lithography group, even though it only did 6% of our business last year. It has to do with the price of the tools, and the margins in the tools, and a number of other factors. But it is the major decision that these OSATs make, and it's the most expensive piece of equipment they will buy, and they have bought.

So at the end of the day, that takes longer. It was easier for our first customer because they already know this supplier is running 100% of the time, they are running seven days a week. And he needed another one, and we gave guidance. He wanted to wait until he got and order from his customer.

He did that in December, and he called us and said, can we rush out? And we did. We shipped it in the first month of this quarter. And expect it to be installed and running before the quarter is out.

David Duley – Steelhead Securities

I have a – final question for me, whatever number you would like to choose. You have mentioned 20% of your revenue is going to come from your lithography systems. Whatever that number equates to, how do you think it is going to break out between the three segments, or between flat-panel and semi conductor?

Whatever you can help us with, that would be great. I guess what I'm looking for is trying to understand, does that guidance really just include one flat-panel display system, and then the rest of whatever revenue is produced to get that number, will come from the semi conductor side?

Paul McLaughlin

That is correct. Let's just assume that you are exactly at the level of last year, $1 more or so, if you make a record year. You can do the math on what 20% of that is.

You don't do the math on – we guided the volume of the 9200 system that's on the books, that we hope to ship before this year is out. And when you subtract that, and the rest of it will come from the JetStep system itself in silicon, and the JetStep in panels.

The mix may vary. We think we've got multiple ways to look at that, and quite frankly, I'm not prepared yet to say what is where it will be. It could easily be panels.

David Duley – Steelhead Securities

Could you interchange the inventory to make one or the other, depending upon what the customer wants?

Paul McLaughlin

Good question. The answer is, to a large degree, yes. Because once again we are using the 2X reduction stepper and that is – we buy the camera and as you know how complicated the light paths, and you know how complicated those are.

The only that will change is some optics and it is not – it depends upon the application, since you're putting in different kind of optics in the light path. So fundamentally, the way to look at it is, it is very common inventory. Very common.

David Duley – Steelhead Securities

That's this but here. Thank you.

Paul McLaughlin

Okay.

Operator

Your next question comes from the line of Jairam Nathan with Sidoti.

Jairam Nathan – Sidoti & Company

Yes. Hi, guys. Thanks for taking my question. I had one question on your guidance for the full year, and trying to get some more granularity on that. If I look at your inspection business in 2012, I think it did close to $130 million, $140 million. Do you see that as a possibility in 2014, or do you think it is probably further out?

Steve Roth

We expect it obviously to come back, but to get, as Paul mentioned, if you get to a record year, so you get above our $218 million number, and you figure out, as Paul mentioned a minute ago, that there's 20% coming from lithography when there was no lithography in that $218 million year, you've got to therefore split the remaining business between inspection and metrology.

So I would say just doing the math, you would not anticipate inspection, just to be as high as it was in ‘12 at that time. Doesn't mean it won't be exiting the year at that kind of strength level, but there could be a different ramp than what we saw in ‘12.

Paul McLaughlin

Let me give you a quick number on that. When you look at where we are at the end of the year, the numbers we just put out today, our inspection business accounted for 60% of the business. We are looking at a more normalized number of 50% at a higher volume, of course.

Because, partly because litho has gone up to 20%. Metrology also comes down, even though it was 25% this year, it will come down to 20%. So we will have a much nicer mix between lithography, metrology and inspection.

Inspection will still dominate. If you look at inspection, and the reason that dominates is because it is both front-end and back-end, where litho is 100% back-end.

Metrology is almost 100% front-end, although we did mention we sold a couple of tools, particularly in our metal tools, into the advanced packaging, with the real leaders in that industry. So that has a component, and we expect to see that grow, and you should hear things come up on that.

And the rest is the software. Software is heavily oriented to the front-end right now, because quite frankly, the back-end is not needed to yield management anywhere near the front-end guys, so the value hasn't been there. It's easier to throw out devices than to work on the yield.

That theme has changed. It has changed because of Apple, it changed because of Broadcom. It changed because of Media Tech, Samsung, those guys play in a different – and both sides of that, yield is important.

We think software will grow rather nicely in the back-end. It has got to take some time, and it will still be front-end oriented, out of our 10%.

And I think there's a chart on our website that speaks to that, the target growth markets in front-end and back-end, and how you break up the 50%. And I think that would help you out with that in mind.

Jairam Nathan – Sidoti & Company

Okay, thank you.

Operator

(Operator Instructions). You're next question comes from John Pitzer with Credit Suisse

Farhan Rizvi – Credit Suisse

This is Farhan, asking the question on behalf of John. Congrats on the great quarter. I just wanted to probe your guidance a little bit for 2014, and understand what are some of the expectations that you have for the Blue FBE and back-end.

In response to one of the previous questions, you seem to have suggested that we should think like back-end and front-end as half and half, excluding litho. And I just wanted to understand what are some of your base assumptions in regards to the market for the guidance for ‘14?

Paul McLaughlin

Some of the assumptions we made is that the front-end will enjoy around 10% or more growth double-digit numbers. I don't think it is going to happen when people thought it was going to happen.

I honestly believe because of the things that have happened in the front-end, at places like major logic houses. When you look at it, as you well know, Farhan, there's three guys in the service. I think we will be there, we will grow our front-end business on that order of magnitude, which is 10%.

Farhan Rizvi – Credit Suisse

Okay. And that’s…

Paul McLaughlin

You can argue that it's higher than that, you've got people saying 10% to 15%, I've seen 7%, I've seen different numbers. They are all over the place, but if you used ballpark 10%, that would be reasonable, and where is it going to come from, it is going to come from Samsung, continuing to ramp its 3D and maybe even some foundry work, although I'm not so sure that.

The foundries, I think, will continue to do well, and at least the leading guy will probably spend $11 billion this year. Contrary to last year, he had a big first quarter, I think the second quarter and third quarter might be the better quarters for him. First quarter will be okay, he may do well.

So that's how I look at that dynamic. I think I mentioned in the prepared remarks, just this week BLSI came out with the back-end projection of 19% growth for 2014.

We love to hear those kind of numbers. It is a little bigger than we thought. Will it happen? It could very well. I think very highly of BLSI, so that's a good number to look at. If that happens it would be a very nice year.

Farhan Rizvi – Credit Suisse

It seems like you’re expecting some growth in both front-end then back-end, front-end is aligned with what the industry has indicated so far. Then in regards to your display orders, that was a really nice surprise this quarter and when you bought Azores, it seems they had a very solid business, had historically done a lot of business that vertical area, and some of it seems to have come back finally.

So just wanted to understand how should we think about that business going forward? Is that something that you are looking to expand or you're thinking of just keeping it to the customers that you had previously targeted, or that were previously working with Azores. Just if you could elaborate your strategy on the display, that would be really helpful.

Paul McLaughlin

Obviously when you look at the display, display is broken down and in couple different areas. The large displays, and that area is dominated by the Gen 8, Gen 10 glass, and those levels, the lithography requirements aren't as high as they are in the mobile displays.

You can thank Steve Jobs for going down that route originally, with his Retina display stuff. But we expect better resolution in these smaller devices then we do a TV. So I think the market has a couple different pieces to it.

One of the things that has happened with the TV business appears, that capacity utilization now is probably in the 70%, 80%, which is usually where they start thinking about new lithography, and new other equipment. That's been dead for a couple of years, absolutely dead. So I see for us, our strategy is to look at the displays, probably a Gen 4.5 and below, I actually think most of them will be lower than that.

And we think they will probably be still on glass, with the transistors we put down, and that is what we see as our future there. And then going past that, we are comfortable going larger than Gen 3.5. We could easily go quite a bit larger.

We could go to Gen 5 very simply, and that's pretty big, it's 29 inches by 36 inches, Gen 4 or 5, that we talked about in our press release, 730-millimeter by 920, that's a pretty good piece of glass. That's probably the maximum to get the resolution needed. So we will stick in that market, so it will most likely the mobile display, and you can picture where the mobile displays are going.

It is not just cell phones but everything we look at the Internet of things, we are going to see in our houses, there will be little displays on things like your refrigerator, little bit of displays on all sorts of devices around your house. You don't need the size of the TV to do that, nor do you have the volume necessary to justify putting it on a Gen 8 or Gen 10. And the cost requirements are huge.

I'm not exactly sure of the price of a stepper on Gen 8 or Gen 10, but it is 10 times, a large number times where we are on the Gen 3, 4, and 5. Does that make sense, Farhan?

Farhan Rizvi – Credit Suisse

That makes sense so basically what you are saying is you would have some display revenues going forward and it is not just a one-time event, is that reasonable?

Paul McLaughlin

Absolutely. But our lead times, it is a 2015 and you will hear some more orders we expect this year. Let me just say, they are going to take that length of time.

But that kind of timeframe in those businesses is accepted. Absolutely accepted. That's the lead time that is standard, and fact the big guy in that business goes 18 months delivery for his, right now.

Farhan Rizvi – Credit Suisse

Got it. And one final question for me in regards to the OSAT disruption that you talked about, where one of your major customers had a disruption. Just wanted to see if you had any – if you saw any rush orders from one of the competitors, as there was a disruption in the supply chain, and just people trying to move from one OSAT to another?

Paul McLaughlin

Limited, not much, just a couple peers, and it stays in Taiwan, it just moved down the street. I don't think – I think they may come back.

I'm hoping they come back, because we have a bigger position with them but that's an unknown. It still an unknown.

Farhan Rizvi – Credit Suisse

Got it.

Paul McLaughlin

I'm sure you're aware of how that dynamic goes, better than I am. Once you get the government involved in Taiwan, they slow things up, as it has already.

And it forced to keep a customer – not forced, the customer has done it willingly, in hopes for a favorable ruling, that they are paying the full workforce 100%. Which I thought was a quite interesting yield, but first they threatened, all these people will be on the street. In order to show their solidarity about fixing the problems and wanting to get back to good times, they are now paying all these guys. That will go for just so long, so I'm thinking it might end, but for me to forecast that stuff is heresy.

Farhan Rizvi – Credit Suisse

Thanks, Paul.

Paul McLaughlin

Nice talking to you. I think with…

Operator

And there are no further questions at this time. I will turn today's call back over to the presenters for closing remarks.

Paul McLaughlin

Okay. Thank you, Operator. Thank everybody for joining us today, and for your continued interest in and support of Rudolph. We look forward to seeing you at upcoming investor conferences, and also look forward to our Q1 conference call in about 90 days. Thank you, and good evening.

Operator

This concludes today's conference call. You may now disconnect.

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Rudolph Technologies, Inc. (RTEC): Q4 EPS of $0.09 beats by $0.04.

Revenue of $44.5M (-18.0% Y/Y) misses by $0.58M.