Orbotech's (ORBK) CEO Asher Levy on Q4 2015 Results - Earnings Call Transcript

| About: Orbotech Ltd. (ORBK)

Orbotech Ltd (NASDAQ:ORBK)

Q4 2015 Earnings Conference Call

February 10, 2016, 09:00 ET


Anat Earon-Heilborn - IR, Director

Asher Levy - CEO

Ran Bareket - CFO


Harlan Sur - JPMorgan

Brian Finneran - Barclays

Jaeson Schmidt - Lake Street Capital Markets

Jim Ricchiuti - Needham & Company

Andrew Abrams - Supply Chain Market Research

Wayne Loeb - Cowen and Company


Welcome and thank you for standing by. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question and answer session. [Operator Instructions]. Now, I'll turn the meeting over to Ms. Anat Earon-Heilborn. Ma'am, you may begin.

Anat Earon-Heilborn

Thank you, Operator. Joining me on the call today are Asher Levy, Chief Executive Officer; Amichai Steimberg, President and Chief Operating Officer; and Ran Bareket, Chief Financial Officer. Please note that certain statements that are not historical are forward-looking, within the meaning of the Private Securities Litigation Reform Act of 1995. The words estimate, project, intend, expects, believe and similar expressions are intended to identify forward-looking statements. And these forward-looking statements involve known and unknown risks and some uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from those that may be expressed or implied by such forward-looking information.

Additional information regarding risk and uncertainties associated with the Company's business are included in, but not limited to, the Company's reports filed from time to time with the Securities and Exchange Commission.

With that said, I would like to turn the call over to Asher Levy.

Asher Levy

Hello, thank you everyone for joining our fourth quarter and full year 2015 financial results conference call. We're pleased to report strong performance for Q4, concluding a record year for Orbotech. A year ago, we looked back at 2014 as a turning point year and I believe we can look back at 2015 as a year of execution.

What marked our performance quarter-after quarter this year was our ability to meet our forecast and deliver on our plans despite the fact that one of our businesses was affected by unfavorable market conditions. This demonstrates, as I stressed throughout the year, the strength of our diversified business model across end markets, products and geographies.

As a Company with a long history in cyclical industries, enhancing the resilience and visibility of our business was an important goal and our consistent performance in 2015 clearly demonstrates we're now in a better position to cope with short term downturns in one of our markets.

In 2015 Orbotech became a more significant player in the industry value chain and strengthen its relationship with key leading designers of electronics. We begin 2006 with a positive sentiment in all the markets in which we operate and with a strong product portfolio comprising many new products that were introduced in 2015.

Given our current assumptions for the microenvironment or the microenvironment, we fully expect to leverage our unique position with three leading businesses, each of which plays a critical role in the expanding electronics marketplace. I will now discuss each one of the three main business lines.

The Printed Circuit Board division performed better in Q4 than in the first three quarters of 2015 and as such, met our expectation for better results in the second half of the year than in the first. Nevertheless, full year results were below our initial expectations for the year due to the soft business environment which reflects slow smartphone growth, a weak personal computer market and a slow investment in 4G infrastructure, as I mentioned in our previous call. Industry analysts expect more favorable market conditions in 2016 and the assumption is that this grow will be dominated by technology changes rather than any acceleration of growth rates of the end products. We therefore take a cautious view on market expansion and focus our growth strategy in PCB on our technological leadership and the innovation of new solutions to enable the most advanced and challenging production processes.

One example of such innovative product is our upcoming new repair solution which will be called precise. This is our second generation of repair solution. The first generation enabled our customers to ablate excess material or in other words to repair cells. The precise would enable our customers to repair opens by deposition of copper where it is missing. This is a completely unique solution which we're currently testing extensively and expect to launch in the first half of this year.

Based on the high level of customer's interest, we believe there is a very strong need for such a solution and we're excited to be the first to implement direct metal printing electronics in a production environment. We also expect to launch new models of the Nuvogo, our flagship direct imaging solution with higher resolution and throughput to address the production needs we extend from advanced mutualization trends that continue strongly in consumer electronics devices. And of course, we would expect to see growing contribution from the two new solutions for solder mask direct imaging, the Diamond and the Nuvogo 1000 which we launched in late 2015.

About a month ago, we announced that we received an order for seven of our UV Laser drilling systems from a leading Japanese manufacturer of ceramic based electronic components and solution. The order follows on a system that the customer installed earlier in 2015 and was very pleased with its performance in drilling smaller, high-quality via openings in multi-layer ceramic-based IC substrates which are required for the next generation applications. Shortly after that announcement, the same customer purchased two more of these laser drilling system.

We expect that the demand for smaller, thinner, sleeker electronic devices with higher functionality continues to increase, so will the need for our extra small size drilling in high throughputs. We believe that this will be based on UV drilling like ours rather than [indiscernible] drilling solutions that have been used historically. An interesting aspect of this deal is the highly collaborative work which we have done with the customers to adapt our solution for those specific need. Another example of this type of collaboration is today's announcement about the deployment of multiple direct imaging and optical inspection system at Nippon Mektron, the world's most dominant manufacturer of advance flexible printed circuit boards.

We worked closely with the customer to optimize its production processes which enabled a quick ramp up of our system which include our recently introduced direct imaging model for solder mask application. The technological advancement requires more collaborative work and we have been successful in moving up the value chain and getting closer to leading customers which position us to be engage in industry-leading projects. This is strategically important, because today, advanced solution is set to become to mold industry's standard.

Moving on to FPD, the Flat Panel Division benefited from a strong market environment and we're well positioned, ahead of the next investment wave which is currently taking place. This investment continue as previously expected with solid bookings in Q4 and our confidence in strong FPD revenues in the second half of 2016 has increased in the past few months. We're currently aware of mid-teens number of project for each of the years 2016 and 2017, based on moving days. We therefore believe the industry's momentum will continue into 2017.

The investment in those projects is driven by the same trends, we have discussed throughout 2015 which include; first, the strategic focus on the flat panel display industry in China; second, the increased size of televisions as well as mobile device displays; and third, the focus on new technologies such as 4K for TV panel, LTPS for small to mid-sized panel and OLED for both market segments. The increased industry focus on OLED is clear positive trend for Orbotech. The manufacturing process of OLED panels is more complex and less basal than of LCD panels. Therefore, the need for inspection, testing and repair solutions is greater.

We believe that our latest models of these applications are idyllically suited to address the OLED challenges. By that I refer to our latest testing product the Exelon, the latest inspection model the Quantum HR and the latest repair system, Prism 2. We discussed the Exelon in our previous two calls. I would therefore only quickly remind you that it allows testing small to mid-sized displays with ultra-high resolution at high throughput and with no direct contact.

The Quantum HR which stands for high resolution has higher detection sensitivity which is required in OLED displays, because each pixel contains more capacitor and transistors than in LCD displays. The recently introduced Prims 2 is designed to enable higher selectivity of ablation in order to repair defects in a specific layer without damaging other layers. For the Exelon and Quantum HR, we recorded the first revenues in Q4 and we expect all three solutions to improve their penetration in 2016.

Naturally, an important driver for the industry's focus on OLED is the effort to develop and commercialized flexible display technology. Given that flexible display as OLED based, looking ahead, we believe this can present additional opportunities for Orbotech. Most of the display players are engaging activities related to flexible displays and we continue to work closely with customers and designers to innovate processes that will enable bringing this technology to the market. We expect to receive orders related to flexible displays already in 2016.

Last, let's discuss the semiconductor device division. Our SD division enjoyed another strong quarter, finishing a very strong year. Bookings in Q4 were very strong at over $90 million. Booking growth was driven by the $57 million in orders for multiple PVD systems from a leading foundry to support its Fan-Out wafer-level packaging activity. The shipments related to these orders are on schedule and the installation activities are progressing as planned.

When we announced these orders in early December, we reiterated the industry's expectations for Fan-Out goals which we discussed in our previous earning calls. Industry analysts expect that the CAGR for Fan-Out wafer-level packaging revenues to be over 50% in the next few years. The resulting growth for our offset in foundry customers is expected to drive demand for the equipment which we provide and we're excited to be extremely well positioned in this high-growth environment.

While the highest demand is for PVD systems, where we have strong leading position, we also see opportunities for our Etch in PVD and CVD products. During the quarter, RF also continued to be very active with new capacity being added, reflecting the growth in the number and complexity of filters in connected devices.

In the power sub segment, our PVD system was qualified on a new application of 300 millimeter thin wafers by one of the leading power device manufactures, opening up a new addressable market in that customers fab. Looking ahead into 2016, we see the strong momentum in advanced packaging driven by Fan-Out as well as interest in our plasma dicing solution.

This solution called Mosaic is expected to increase its penetration because the technology allows getting more dice per wafer by cutting the die in smaller geometries, while minimizing damage to the device. Again, it allows higher productivity against the backdrop of the miniaturization trend. We also see continued positive trend in men's hours and power.

In summary, we're very pleased with our performance in 2015 and we're strategically positioned to ensure continued success in 2016 and beyond. Our innovation and strong execution throughout the year enabled us to enter 2016 with a multitude of recently and soon to be launched solutions in areas such as direct imaging for solder mask, copper deposition PCB repair, inspection test and repair of small-to-mid flat panel display and in particular OLED and wafer plasma dicing.

We expect to leverage this extensive portfolio and our closer relationships with leading customers and electronic designers in 2016 to deliver another year of profitable growth.

And with that, I will turn over the call to one Ran, Ran?

Ran Bareket

Thank you, Asher and good morning everyone. I'm very pleased to report a strong quarter ending a record year in which we consistently delivered on our plans. Revenues for Q4 totaled $188 million and full year revenues were $753 million. The breakdown between equipment sales and service revenue for Q4 as well as for the full year was 71% sales and 29% service.

The PCB division generated total revenues of $68 million in Q4 2015, almost flat on $69 million in Q4 last year, reflecting a better second half of the year compared with the first half. For the full year, revenues of $256 million were down from $286 million in 2014. As Asher mentioned, we expect to resume growth in 2016.

The FPD division total Q4 revenues were $46 million, down from $66 million the last year. As expected, the second half of 2015 was lower than the first half of the year because of the uneven pattern of the timing of these large projects. Full years 2015 revenues were up to $205 million from $161 million in 2014. In 2016, we expect higher revenues than in 2015, but revenues in the second half will be higher than in the first half.

The SD division generated total revenues of $70 million up from $57 million in Q4 last year. For the full year, revenues of $262 million were up from revenues of $186 million for the full year of 2014, including the period prior the acquisition. We expect to see growth in this division in 2016 as well.

Gross margin rate was 45% for the quarter, up 200 basis points from 43% in Q4 last year. On a full year basis, the magnitude of improvement was similar with gross margin of 45.2% for 2015 compared with 43.4% in 2014. Non-GAAP operating expenses were approximately $55 million in Q4, essentially flat on Q3.

In the first quarter of 2016, we expect these expenses which we defined as R&D and SG&A expenses adjusted for equity-based compensation to remain at a similar level. Adjusted EBITDA was $35.6 million for the quarter, reflecting a

A significant progress towards our 21% to 23% long term target. Non-GAAP net income for Q4 was $23.4 million, up from $21.9 million in Q4 last year. Non-GAAP EPS for Q4 was $0.54, up from $0.51 in Q4 last year. Full year 2015 non-GAAP EPS reached $2.09 as compared with $1.48 in prior year.

Cash flow from operations during the quarter was strong, at $34.6 million compared with $23.4 million in Q4 last year. For the full year, cash flow from operations totaled $89.3 million compared with $51.4 million in 2014. Cash flow from operation in 2015 represented 62% of adjusted EBITDA, in line with our model.

The strong cash generation enable us to make a $30 million voluntary prepayment on our term loan leaving our gross debt as of December 31 at approximately $240 million. With a cash and financial investment balance of approximately $191 million as of the end of the quarter, our debt level continue to decline.

Moving on to the outlook for the Q1, we expect revenues for the Q1 to be in a range of $184 million to $192 million and gross margin of approximately 45% based on our current expectation for product mix. We believe subsequent quarters will have higher revenue than Q1.

I will now turn over the call to the operator for the Q&A session.

Question-and-Answer Session


[Operator Instructions]. Our first question comes from the line of Harlan Sur from JPMorgan. Your line is now open.

Harlan Sur

The team's sales TAM is growing at an 11% CAGR over the next three to five years. And Asher, given some of the new product cycles, the ramp of some of these large FPD programs and the growth dynamics in your SD business that you just outlined, PCB has got higher complexity driving some of the growth this year. How does the team think about growth in 2016 relative to your multi-year TAM growth outlook?

Asher Levy

I think, overall we're well aligned with the expected growth in each of the markets that we serve. Looking into 2016, we expect growth in all three divisions. And overall, I think it would be fair to say that our growth is well aligned with the expected growth of the markets that we serve. In certain cases, because of a more dominant position that we have or a more dominant position that we developed over the years, we can have more favorable outlook for 2016.

And on top of that, given the fact that we're introducing some new solutions that we didn't have on our portfolio before that also represent additional growth opportunity that is somewhat on top of the expected growth of the market itself. Such is the case for the new repair solution, although we didn't announce it yet, but once we announce, we should expect that that will generate additional growth for additional application that currently we and others are not covering.

Harlan Sur

And question for Ran, given the trajectory of the business this year, increasing revenue profile for the remainder of the year, all three segments seem to be driving a growth profile. Given the mix dynamics and increasing production activity as the year unfolds, how should we think about the opportunity for the team to improve gross margins as the year moves forward?

Ran Bareket

First of all, just in general, I would say, our gross margin is also depend on the mix. So we need to take that into consideration. If you recall, we showed several times our mid to long term models. Let's call that once we will get to the $900 million we will be in the gross margin of a range of 48% to 50%. I'm sure that you're familiar with our model.

So also the increase or the improvement in the gross margin from 2014 to 2015 at the magnitude of roughly 200 basis points. So having saying all of that with the growth in 2016 as we expected, we definitely expect to have a higher gross margin, but it also depend, again, on our product mix.


Next question comes from the line of Joseph Wolf from Barclays. Your line is open.

Brian Finneran

It's Brian Finneran for Joe. I guess, can you talk a little bit about how confident you are in this next wave of that FPD investment? And do we need volumes to increase for you guys to grow this year or can larger sizes and new technologies translate to growth if volumes remained flat in 2016?

Asher Levy

I would say it's all of the above. Obviously and we're saying that for the last couple of years, the strategic decision of China to become a more dominant player in the display market is very strong growth driver and very stable growth driver, I would say. But it's not only about China, it's about other geographies like Taiwan and to a certain extent, also Japan.

And all in all, we can see basically few growth drivers. The first one is the TV market, the increase in the size of TVs. And in that, China and the move for more and more 4K and even, in 2016, the start of 8K TVs and OLED in the small to mid-displays, it's mainly about LTPS and OLED. And also, we see investment plans for almost all the major players in display in programs to develop flexible displays. And as I mentioned in my statement at the beginning of this conference call, we expect first orders for flexible displays already in 2016.

Brian Finneran

And then, can you talked about just a little more on capital allocation, you guys paid down debt. Can you talk about the potential acquisition pipeline and is there a specific segment you'd be targeting? I assume that you're not looking to add a fourth leg to the stool here. So if you could talk about that, that'd be great.

Asher Levy

Yes, sure. So first of all and that's something that we've been talking several times in the quarterly earnings call. I think after about three quarters after the acquisition of SPTS, we made it clear that we're in the market, looking for additional opportunities for business development related activities. We regularly evaluate potential transaction and it's mainly based on the quality of the target company.

If we come across the right target company and you are right to a certain extent that right now we're mostly focusing on opportunities within the existing markets that we serve. Although, part of our growth strategy is looking also to adjacent markets, but I would say that the current focus is more on expanding our existing activities. We're searching for opportunities and our ability is mainly subject to coming across the right target company.


Next question comes from the line of Wayne Loeb from Cowen. Your line is open.

Wayne Loeb

So you're guiding to flat and seasonally down Q1. So my question is how much of this is coming from advanced packaging and what else has changed this year to counter the normal seasonal trend?

Asher Levy

Well our Q1 forecast, I think, is very similar to -- actually the guidance is very similar to the guidance we provided in the fourth quarter of 2015. Also all along, our view of 2016 is that the fifth half of 2016 will be somewhat slower compare to the second half mainly because of some moving dates related to our Flat Panel display business. And as for the first part of your question, nothing in terms of the guidance that we provided to Q1 is being affected by any reduction in advanced packaging. We don't see that phenomena.

Wayne Loeb

Can you also talk about how much of your Flat Panel business in 2016 you predict will be OLED related and also the percentage flat panel from China?

Asher Levy

So, in 2015 I mentioned that we introduced to the market, few products for OLED displays both for the large displays and for the small displays, but in 2015, it was still relatively a small part of our revenues, but we expect this to grow significantly in 2016.

In terms of revenues in China, and by the way, we're talking a lot about China, but we need to remember that in 2015, we also saw strong business coming from Taiwan. I would give you the overall distribution of revenues coming from China in 2016. It was in the range of 30% down from the peak that we had a couple of years ago of about 38%. That is also a result of better geographical distribution after the acquisition of SPTS since currently the business of SPTS is only about 10% or less than 10% of their business is coming from China.

Wayne Loeb

Specifically to the Flat Panel Displays, so can you say about what percentage of that is from China?

Asher Levy

Probably in 2015 it was about probably around 50% of the business. I'm talking in terms of bookings okay, because that's the important measure for us.


Next question comes from the line of Jaeson Schmidt from Lake Street Capital Markets. Your line is open.

Jaeson Schmidt

Just wanted to clarify on one of the previous questions for the Q1 guide, would you expect all your segments to be up sequentially or directionally, can you help us some of the moving puts and takes there?

Ran Bareket

The statement that or the assumption that I discussed or the fact that in each one of our three divisions we expect growth in 2016, I didn't get specifically to each one of the segments or each one of the products, but overall PCB business, FPD business and SPTS business throughout 2016 is expected to grow. But in terms of the first quarter, the first quarter is expected to be very similar to the fourth quarter of last year.

Jaeson Schmidt

Okay and looking at OpEx beyond Q1, how should we expect that to ramp throughout the rest of this year?

Ran Bareket

So, when you look at the OpEx, I think that you need to look at -- to separate between R&D and SG&A. Let's start with R&D. We're sticking to our models that we will invest in R&D anywhere between 12% to 14%, Q4 it was a little bit higher, but in general, the investment, if you look at the total 2015, it's met those guidance.

We will continue to invest at that range for anywhere between 12% to 14% versus our revenue. The SG&A, the rest of the OpEx, the others portion of the OpEx is the SG&A, you should assume that it will be fixed other than the variable cost with no -- any significant increase there in 2016.


Next question comes from the line of Jim Ricchiuti from Needham & Company. Your line is open.

Jim Ricchiuti

Just with respect, Asher, to bookings in the Flat Panel business in Q4, it sounded like you had a pretty strong bookings quarter. I think you've talked about, in the past potentially seeing orders in China for the Gen-10 fab, did you receive that order? Can you give us an update on that?

Asher Levy

Sure. No, we did not receive orders because the schedules for that project is -- bookings are scheduled for later in the year probably summer, in the beginning of the second half of the year with moving dates in 2017. So no change in the schedule probably for the last six months, I think that prior to that, maybe when the first news broke out on the Gen-10 in China, some expectations were made about maybe a more squeeze the schedule, but right now the schedule is bookings somewhere in second part of this year and moving dates in 2017.

Jim Ricchiuti

And then with respect to some of the activity in the OLED market, there has been a fair amount of order activity within the FPD supply chain in what looks like a fairly compressed timeline, a lot of this equipment looks like it has to be delivered by the end of 2017. You're sounding a little bit more bullish about the opportunity. Have you noticed a significant change in the last three to five months and also where do you play, not so much from a product standpoint but in terms of deliveries front-end versus back-end in terms of the other suppliers?

Asher Levy

Again the OLED challenge for us is not that much different from where we're engaged on the normal LCD display. But as I said, OLED started more significantly in the small-to-mid. LG had the program of wide OLED in TVs. And two things happened. First of all, we see more and more players adopting OLED technology for both small to mid and large displays and on top of that, the fact that we developed some unique solutions for the OLED displays, I mentioned that has to do with the Quantum HR which we didn't have before.

That has to do with testing solutions, the Exelon, what is called touch one cell which we didn't have before and actually nobody had it before. So in a way, we're opening a new market that before the move to OLED people were testing small-to-mid displays using full contact testers which are less applicable when you move to OLED displays with high resolution. So that's a new market for the whole area of cell contact for OLED in small-to-mid.

The fact is, at the end of 2015 we have better product portfolio specifically to support production of OLED. And as I said, in 2015, we felt it, but it was relatively a small part of our activity, but given the trends that we see in our markets and the fact that we have now a full suite of solution specifically designed for those application, we see that as one of the potential growth area for us in the Flat Panel display.

Jim Ricchiuti

Have you received orders or do you anticipate orders yet in the OLED market outside of Korea?

Asher Levy

Yes, we did, mainly in the small-to-mid. But in 2016, we expect to see that also in the large displays.

Jim Ricchiuti

Okay. And switching gears to PCB, normally not a business where you have visibility as we know, but the fact that you anticipate and up year. How much of that -- can you accomplish that without the market recovery that some industry analysts are forecasting? In another words, do the new products by themselves get you to growth in the PCB market without a meaningful change in the market environment.

Asher Levy

So the answer is yes. We already saw that already in Q4, despite the fact that the market conditions were not that favorable. The direct imaging for solder mask had an impact. We already have orders for some of the new models of direct imaging that we plan to release at the end of the first quarter. We believe that the new repair solution, the solution with the ability to repair opens will generate some interest growth.

And also, the UV-based laser drill system, the fact that we have already orders for nine systems from one customer and we see other additional opportunities support the assumption that even if market conditions will remain pretty much the same, we should be able to see some growth versus 2015.

I want to make a comment about another interesting trend that we see in the PCB market and that's the fast technology changes. The PCB historically has been considered as an old conservative stable market, but over the last two quarters, we see some trends and some designers of electronics that are pushing for some quite significant changes related to production processes of printed circuit boards and as always, changes in technology is making that more complicated, more challenging is a great opportunity for a company like Orbotech.

Jim Ricchiuti

One question if I may follow on and just separately in the semiconductor device business, can you bring us up-to-date on the opportunity for follow-on orders in the Fan-Out application. Do you anticipate that in the near term next one to two quarters?

Asher Levy

I would say that within 2016, we certainly expect additional orders for this application. I would say that it's probably more relevant to say that it will be at the beginning of the second half of the year.


Next question comes from the line of Andrew Abrams from Supply Chain Market Research. Your line is open.

Andrew Abrams

How much room do you have to improve margins in 2016? I know when new products first come out, the margins are a little lower than they would be as it matures, is there room for you to improve above that 45% range in 2016 with the amount of new products that are coming out? Or is there some upside there, at least on the -- not on the expense side, but on the gross margin side?

Ran Bareket

So, let me talk a little bit about the gross margin side and I will go back to what happened in 2015 and it will help you to understand 2016 plan. In 2015, as I mentioned before, we improve our margin roughly 200 basis points versus 2014 and it came from several areas. One of them is you mentioned the new product line which come obviously with a higher margin. Second one is a bigger scale and better utilization of our fixed cost.

And last one is additional saving and material saving that we're implementing and we started to implement in 2015 and we will continue to do so in 2016. Those three factors will apply also to 2016 as we grow our business. We will have a better utilization. When we will ship more new products with higher margin, it will help to improve our margin and will continue to go towards a cost reduction in our material and other costs that we have that are associated with our machines. So I hope it answer your question.

Andrew Abrams

Yes. And on the precise tool, do you have anything built into your first quarter revenue estimates and kind of how much are you looking at? When I say how much, what do you think that's going to contribute to the full year, I mean that's a very unusual tool.

Asher Levy

So, for the first part of your question. No, we don't assume any revenues coming from this product in the first quarter. Like I said, it's an exciting technology, unique technology that I believe we're the only Company that has that type of technology and solution available for production environment. I think the need in the market is very clear from the first few controlled installations that we did.

We see the criticality of that solution to enable our customers meet their delivery schedule and the quality, but it's too early to predict the accurate or the potential impact on the 2016 revenues since there is also an issue here with the market education. I can tell you that from initial calculation that we see the return on investment on such a tool is very, very short which will make it quite easy justification for our customers, but it will take some time until we'll see that system being sold in tens units per quarter. Potential definitely is there.

Andrew Abrams

And lastly, in your range for the first quarter, where would you expect or where would you see the potential for getting to the upside of the range versus the low end or the middle of the range. Where would that be coming from in your three segments?

Ran Bareket

In the PCB engine?

Andrew Abrams

PCB is where the leverage would be in the first quarter. And would you expect that to be continuing through the year, PCB being kind of the leverage point or as we get into the second half, is that going to change a little bit?

Ran Bareket

No, we don't know. I mean right now this is what we see for the first quarter, but talking about leverages for the second half is too soon.


No further questions on queue. Speakers, you may proceed.

Asher Levy

Okay, thank you all. We appreciate your participation on today's call. Good bye and have a good day. Thank you.


Thank you. That concludes today's conference. Thank you all for participating. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.


If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!