Earnings Call: Q3 2019

Oct 24, 2019

Good morning, ladies and gentlemen, and welcome to Xtron's 1st 9 months and 3rd quarter 2019 results Conference Call. Please note that today's call is being recorded. Let me now hand over to Mr. Guido Picotte, VP of IR and Corporate Communications at Xtram, for the opening remarks and introductions. Thank you, operator. Let me start by welcoming you all to Exane's presentation of our 9 months and Q3 2019 results. I'd like to welcome our executive board, who are presented by Doctor. Felix Gagard and Doctor. Dan Schulze as well as our VP of Finance and Administration, Charles Brokke. As the operator indicated, this call is being recorded by Exron and is considered copyright material. As such, it cannot be recorded or rebroadcasted with our clinicians. Your participation in this call implies the consent to this recording. As of previous results conference calls, I trust that all participants have our results presentation slide deck, Page 2 of which contains the usual Safe Harbor statement. I would like to point out that this applies to the conference call. You may also wish to have a look at our latest IR master presentation with additional information on Exelon's market and its technology. It's also available on our website. This call is not being immediately presented via webcast or any other medium. However, we will place an audio file of the recording or transcript on our website at some point after the call. I would now like to hand you over to Bernd Schulz for opening remarks. Bernd? Many thanks, Guido, and a warm welcome from my side as well. As usual, I will give you an overview of Exelon's key developments on the 1st 9 months of 2019. Charles Russell will then go into more detail on the financials. This will then be followed by Seebis Gravert, who will give you an update on OLED and power electronics as well as a wrap up. In Q3, revenues came in at €52,000,000 which meant that we generated €185,000,000 in the 1st 9 months of the year. We also generated solid gross margins of 42% in Q3 and 40% in the 1st 9 months of the year, with EBIT in the 1st 9 months totaling €25,000,000 and a net income of €20,000,000 Q3 revenues have been low, mainly due to a lower than expected duration of the process required to obtain export license for some of our customers. We are supporting the respective administrative bodies to expedite this process as much as possible. Due to the uncertain timing of granting the export license as well as the potential order order and respective revenues having been shifted into next year, we have set our expectation on orders and revenues. And as a consequence of that, also on the free cash flow to the low end of the respective original ranges. At the same time, we remain confident to reach our gross and EBIT margin expectations. We will give you more details on our updated guidance at the end of this presentation. Orders in the Q3 have picked up from Q2 trough levels as expected due to the demand mainly for datacom lasers as well as silicon carbide and gallium metal power electronics. As suggested by our order guidance for the year, we expect order levels to pick up further during Q4. Based on customer agreed shipment schedules and despite the issues with the export license, we expect Q4 revenues to increase to the highest levels for this year. Based on an accelerating adoption of laser based sensing or time of flight solution for smartphones, we believe demand for capacity expansions will increase again accordingly. However, the industry is still absorbing over capacities. The trend towards faster optical data communication continues, so we see a healthy demand in this space. In the development area of microLEDs, we see good progress being made in the industry to commercialize microLED displays, either very large displays or very small displays for variables. In any case, we are well positioned to benefit from this development. To reiterate what we have said before, we continue to benefit of strong growth drivers in the areas of lasers, power electronics and specialty LEDs. It is important to note that our equipment enables the development and production of key end products and components for major global megatrends such as next generation 5 gs mobile networks, 3 d sensing for mobile phones and power electronics for electrical vehicles and renewables as well as next generation micro LED displays. In order to secure our position in these end markets, I would like to use this opportunity to inform you about our new MOSFET product developments. After we have recently presented our new tool for silicon carbide power device manufacturing, we are working on the development of new MOCVD tools for the key applications of compound semiconductors, including lasers, microLEDs and GaN based power electronics. These developments are an evolution of our leading products and are based on our established platform. All these new products will be fully automated with improved yield and throughput. This will help our customers to improve their cost of ownership further and consequently reduce their production cost and will enable them to address larger markets and broaden the demand of their products. We will launch our new MOCVD products in the course of 2020 with the targets to consolidate our strong positions in our best markets. Felix will elaborate later on the current status of OLED and Power business. At this point, let me now hand you over to Charles for a more detailed overview on the 9 months 2019 mandate. Charles? Thanks, Bernd, and hello to everyone. Starting on Slide 4, our income statement. Total revenues for Q3 2019 were €53,000,000 compared with €63,000,000 in the previous quarter. Gross margin was 42% in the quarter compared with 41% in Q2. Despite the effect of the low level of sales in relation to fixed costs, margins improved because of the continuing strong dollar a good sales mix with a lower proportion of shipments to the display market and continuing cost improvements. Overall, operating expense in the quarter remained level at €17,000,000 SG and A expense quarter on quarter was also stable at €7,000,000 R and D expense of €15,000,000 was higher than the previous quarters. This was due to higher project related expenses. Other operating income of €5,000,000 in Q3 was mainly R and D grant income of €2,200,000 and currency gains. EBIT for Q3 was €5,000,000 compared with €9,000,000 in Q2, and net profit was €4,000,000 compared with €7,000,000 in Q2. Turning to the balance sheet on the next slide. Inventories of €88,000,000 include around €15,000,000 of prototype systems and Brexit related inventories. Receivables stand at €33,000,000 which is 44 days sales outstanding. Advanced payments from customers are €44,000,000 up from €39,000,000 at the end of Q2. The change is a reflection of the higher order intake in Q3. Advanced payments of 41% of the order backlog. We ended the quarter with €260,000,000 in cash. Moving to Slide 6, which shows our cash flow segments. We had a free cash flow of EUR 2,000,000 in the quarter. In Q4, assuming no further export delays, we expect to meet our guidance of a positive free cash flow of around EUR 15,000,000 With that, let me hand you over to Felix. Thank you, Charles. I would like to give you some perspective on recent development in the OLED and Power Electronics before concluding with the outlook for the rest of the year. Turning to the update on our development project on Slide 7. With regards to OLED, our Gen 2 tool is jointly being operated by a team of engineers of our customer and of our subsidiary, Arpiza. Together, they are optimizing OLED produced with our own PV technology as well as the deposition tool. This is an iterative process, meaning an OLED is produced, measured and analyzed. Then the process parameters are adapted and changes to the tools are being made. Finally, the next batch of OLED is being produced. Insights are gaining for the next iteration and so on. With this process, we enhanced the performance of our OEPD technology, which the customer then evaluates versus the incumbent using TE technology. As this procedure is still ongoing, we do not expect our customer to place a follow-up order for a larger tool by the end of this year. We therefore now expect such order to be placed during the first half of twenty twenty. Turning to power electronics. We continue to gain momentum. In Gallium Nitride Power Electronics, we continue to see solid momentum driven by the need for more efficient power management devices, both from consumer electronics and from IT infrastructure. We also continue to see orders driven by the 5 gs buildup in gallium nitride radio frequency devices. In silicon carbide, we made very good progress with our fully automated high throughput system. The tool is running stable in fully automated mode in our laboratory and at customer sites. We continue to further fine tune the process performance, which is already very good. We have obtained orders for this platform from several customers already and have made performance demonstrations to additional customers. We are confident to be on track to successfully address the multiyear market opportunity in power electronics ahead of us. With this, let me now come to our outlook for 2019 on Slide 8. We have had a slow start to 2019 in terms of orders, revenue and profitability, but we've seen orders picking up again from the trough level in Q3. And as we see broad customer interest in our technology offering across all applications, we are confident that we will reach the lower end of our guided ranges for order, revenue and free cash flow. Our profitability target, namely gross margin and EBIT margin, will remain the same. Therefore, EBITDA firm up our guidance for orders, revenues and free cash flow. For the reasons given before on export licenses and OLED as well as customer investment behavior still affected by the geopolitical environment, we now expect to secure total orders for the year of around EUR 220,000,000 and to achieve revenues of around EUR 260,000,000 mainly due to the revenue level at the lower end of the range. We now also see total free cash flow for the year at around EUR 50,000,000 Thanks to our cost control and the strength of the U. S. Dollar, we continue to expect achieving a gross margin of around 40 percent and EBIT margin of around 13%, both being at the top end of the original guidance ranges. Finally, let me assure you that although there is weakness in some of our markets, we have an excellent product portfolio, which will be completely renewed in the course of 2020, further enhancing our customers' productivity, supporting them to address higher volume market opportunities more efficiently. With that, I will pass it back to Guido before we take questions. Thank you very much, Felix, Permian and Charles. Operator, we will now take the questions, please. Thank And the first question comes from Yardenan Menon calling from Liberum. Please go ahead. Yes. Hi, good afternoon. Thanks for taking the question. I just want to dive a little bit more into the silicon carbide side. So you've been qualifying this your new platform since late last year. And you've said that you're starting to take some orders. But when I look at the market itself, the silicon carbide market seems to be seeing quite a lot of activity in terms of investment, increasing of CapEx by many of the large players mainly to serve the needs of the automotive market, the electric vehicle market, but also quite a lot into the industrial, solar, etcetera. I'm just wondering, when do we see your orders and revenues now begin to pick up significantly? Is that something that we can expect in the next couple of quarters because your machine is now your platform is pretty much ready and qualified and the market is quite hot? Or is it that it's likely to take more time because there is more qualification to be done, etcetera? Yes. Thank you very much for the question. Let me first comment on the timing and then later on the timing of our tool and later on the timing of potential CapEx investment by our customers. Relating to the timing of our tool, we brought it out in the springtime, summertime of this year to customers. It's not really the beginning of the year. It's more like the middle of the year, a couple of months. So it's not that anything wrong or not working or taking longer than expected. So everything is really on track, I can assure you, yes, on the first part of your question. The second part, in fact, it's true, all of the very large players in the power electronics space are currently announcing plans to build factories, to increase CapEx and to really build out the silicon carbide opportunity. I think over the last week, we had multiple announcements, be it simply here from players in Europe, also from U. S. Players. And all those customers are currently in the decision process, which tools to make or preparing the decision process. So that decision process is running throughout the Q4, the Q1 of next year. We are part of that. In some cases, we have already been selected. Some other cases are open. And I think unlike the LED opportunity a couple of years ago, those this will translate into orders in stages. So typically, in the power electronics, a customer orders 1 or 2 tools, qualifies the tools, gain first experience, then orders a second batch, let's say, of a larger single digit number of tools and then only build at the factory as the real order volume from customer is coming. So we do not expect to see at some point orders of the whatever many tens or even hundreds of tools, but we would rather expect orders to come in bunches in investment ways of our customers. And I think we will see that picking up and beginning throughout the year of 2020 and then be a multiyear opportunity 2021, 2022, 2023 as the overall silicon carbide market is expected to raise. I think we all know the market analysts from Automotive who cited that, how that market is going to grow. So if you look at your order expectation, I'm not asking for guidance here, but for 2020, clearly, two areas which should be, at least on paper today, materially higher than this year would be silicon carbide. And if you get the Apeva order, then that would be also increased year on year. Would that be a fair representation? Absolutely correct. Okay. And then on the OLED side, there is this I think has been delayed to a certain extent through the course of this year because initially the order was expected earlier in the year. And you've said that it's because there is this iterative process going on with the customer where some OLED panels are being produced, etcetera. What is the confidence that it can happen in the first half of next year? What I'm trying to get at is, are you getting a feeling looking at the kind of changes that you asked, etcetera, that we are sort of reaching the end of that process? Or is this something where you don't really have visibility when the end is because the customer may keep on tweaking the requirements for quite a long a lot more time to come? Very good questions from the outside. Yes, it's true. We have delayed on the OLED project with respect to the initial schedule. And second, it is exactly as you have outlined. We do expect to reach the end of this qualification process. There is and we have a clear view that this is going to happen towards the first half of twenty twenty. And it's not going to be the opposite, which is a, let me call it, dragging on forever. Okay. Because the delay is also costing you in terms of you are continuing to spend a significant amount on R and D on this project as it drags on, right? That is absolutely correct. Okay. Just a small last question. How many new OLED platforms? Is it one platform across 3 d sensing specialty, etcetera, that you're going to launch next year? Or is it different platforms for each of them? Sanand, you meant mocvide, right? Sorry, MOCVD, I'm so sorry. Yes. It's basically we have a platform concept. So, we have a high degree of synergies in between the different applications. But basically, we want to have a new product for all the key markets we're addressing, meaning for lasers, including indium phosphide, including VCSEL market, but also for micro LED, both for gallium nitride and I mean, blue and green and for red for gallium arsenide as well as for power electronics. So this is based pretty much on material system. So we have a high degree of synergy, although I'm speaking now a lot of applications, there's a high degree of synergies amongst those platforms. But basically, we address all markets we are currently leading. And I think the motivation is very clear. We want to stay ahead of the market. Understood. Thank you very much. Thank you. The next question for today comes from Uwe Schopp, who's calling from Deutsche Bank. Over to you. Yes. Good afternoon, gentlemen. Two questions also from my side. Firstly, on the export licenses and then secondly, a follow-up on OLED. Firstly, regarding the export licenses, I guess the big question is how concerned should we be really? The reason I'm asking is obviously, I mean, your tools or some of them have been dual use for ages. But in the past, this was never mentioned as a big issue as far as I can remember. So I was wondering what has changed here. Is that has that to do with the big Chinese customer that is kind of in the newspaper every day? Or is something else in the making? And yes, do you expect this to be resolved in Q4? Secondly, on OLED, just on the numbers, how much was the impact from removing OLED from the guidance, particularly on orders, I guess, or maybe even on revenue? And then maybe also following on Jananand's question, how should we imagine the process with your customer? Are you working with the customer and at the same point in time tell him that by 30th June next year, we need an order or otherwise the project will be dying? Because I remember we have been here before a few quarters ago where you basically already said, okay, this will be the last time we will be delayed and now it keeps on trading on. Thank you. Yes. I think, Ashok, let me start with the export license. I mean, you're perfectly right. Our products are dual use, and we require export license to most of the countries we serve. I think the only exception is the European Union, U. S. And Japan, all other countries we require export license. I think what we're currently seeing is that the process seem to take longer to get an export license, more or less like a general theme. And we heard from other players in the market that they have similar observations. With that, we do not think it is a fundamental issue. It's more a timing issue. But in general, every customer is an individual case and will be decided by the authorities on an individual basis. So it is in general very difficult to comment because also we do not have the visibility in-depth, yes? But in general, I would say it is that's our understanding, it's a timing issue. And that would be mostly related to China, I would guess? Well, we see this, as I mentioned, for every country. I mean, certainly, the process of checking out customers, particularly if you have new customers from China is typically longer than you have an old established customer from other Asian countries like a big company from Korea. So you can imagine it's a different process. Thank you. Let me come to your 2 questions on the OLED side. So your first question was how big the impact on the guidance was. So the impact on the guidance was about, let me say, a few tens of 1,000,000 that we took out by now moving the OLED order from 2019 to 2020. And the second question I got is, is this a never ending story, yes? The OLED, so the answer to that is, it clearly has taken us longer than we had expected. It's right now a correction on that one. But we now clearly see light at the end of the tunnel, yes, and we plan how to get there. I would say, no, it's not an another ending story, but we have a viewpoint where we want to end with it, yes, or where we come out of the tunnel in a positive way. That's very clear. Thank you. Thank you. The next question comes from Faisal Kaes, who's calling from Bankhaus Lampe. Over to you. Yes. Hi. Thank you. Just I'm not sure if I got that correct with the export licenses. I mean, is it specific to 1 product group or is it in general? No, it has not to do with the product. It is related to the customer. So and its application. So what the authority is checking whether the application of the customer has a what is the use case? What is really the end product doing? And which type of application are you talking about? Maybe I'm missing something, but As I mentioned, because it is basically going through various applications, that makes us believe it is a timing issue. It's not that we're seeing it is a specific application, which is affected. Let me add to what Bernd has said. We do need we do not need an export license for Europe, the U. S. And Japan. For all other countries, we do need an export license for our MOCVD product. That is, for example, for MOCVD going to Korea or going to Taiwan, we do need that, And it is normal process to apply for that and then it's the question how fast are the authorities to grant that. Yes? And in the process, the authorities are checking what is the end user doing with the tool. That's the whole thing, the standard process. Okay. And assuming that would have been on time, what was the impact then in Q3? I would say the impact in Q3 would be maybe a handful customers. Revenue wise? I mean you know our ASPs, I think you can calculate. And then on the OLED, I think I didn't catch the exact number. Did you say EUR 10,000,000 or the OLED order? I said a few EUR 10,000,000, more than EUR 110,000,000. EUR 10,000,000. Okay. So basically, your base business was doing, in terms of order entry, not bad if you strip that out and then you still can deliver on the low end of your guidance. Can you tell which parts of the business were doing in Q3 better a split of the order backlog for Q3 for the different business areas? Yes. Thank you very much. We actually fully concur with your statement that our CMOS CVD business is doing actually quite well, given now that the OLED was a significant contribution which has been taken out. And then coming to the second part of your question, It was about roughly about onethree or so on power. And we see the power fraction increasing due to the drivers, the larger megatrend drivers that we discussed earlier already in this call. About 20%, 30% from the LED microLED area. So again, there quite strong momentum. And a continuous large fraction, of course, the majority of the total from the laser area, be it lasers for the telecom data com, be it lasers for the 3 d sensing or lasers even for high energy welding, metal working or metal cutting application, very diverse field, yes? So a very healthy mix across different and uncorrelated segments. Okay. And then on silicon carbide, I mean, you have these 5 customers. I think you mentioned in the call or in your presentation that you onboarded more customers. Still, if you look at your top 5 customers, etcetera, what are we talking about in terms of a potential project size that could come through over the next 3 to 5 years, let's say? What is the potential? Have you ever made the calculation for that? So let me first comment on the number of customers. You just mentioned the number of 5. There's actually quite a bit more than 5 customers that we have on board by now for our new tool. I don't speak for all the legacy customers that ever over the last decade we have for silicon carbide. For our new tool, it's clearly more than 5 customers that we have on board, which shows we are really getting nice and healthy traction. With respect to the size of the market or the potential, I think in the near term, it can be on the order of market size, speaking 40, 50, 60 tools per year. But once again, this will heavily depend on the exact schedule of our customers to build up their factory. In the power electronics industry, that's typically done step by step rather than setting up, let's say, one big factory with 100 or 202 wheels and then dying up or digging up the idle capacity for a couple of years, yes? But that gives you an idea about the potential. So it can be very healthy and very substantial fraction of our revenue going forward, and that's what we expect. A brief follow-up. You mentioned in this different phases before. I guess for the top five customers, let's say, I think you are beyond this first initial step, 1, 2, 2 to test the process, etcetera, would that be fair to assume that most of your top customers are already have done this process? And next step would be rather production tools for real production? So the customers are in different stages. So we do have 1st of our customers who are completing now the device qualification and moving to the next step, as you were just indicating in your question. We have other customers who, so to say, at this moment, as we speak, get the first tool installed in their factory being hooked up to the gases and power electronic and power electricity and so on and get started with that. And we have other customers who have made the decision and placed the PO to say the piece of paper with a signature just arrived, yes? And others, as I just mentioned, who are in the decision process and make the decision throughout Q4 and Q1, meaning within the next 6 months. So it varies really across the board, yes? And that's very much simply the stage in which the different players of the industry are making their factory buildups, which of course is not perfectly synchronized to the quarter. But I would say overall, you can see the very big momentum and it's unusual that an investment wave in the power electronics industry over so many players of such an order of magnitude is being so well synchronized within a small number of quarters, yes? Okay. And then on your outlook, if I look at your or let's say this way, in your Q4 expectations for sales and order entry, what are the expectations for the different business areas? Which parts are going to drive Q4 in your view? Similar to Q3, but exact details, I can only tell you in our next quarterly call. And then final one. I was wondering on your EBIT outlook. On a €10,000,000 sales drop, your gross margin improved. And now for Q4, you're expecting roughly €75,000,000 sales. We know that the LED product mix, the LED business, which is lower margin, will have a smaller impact. But you kind of guide decline in your Q4 margin. I was wondering what's the background for this? The dollar at $1.20. And we also can we have the next question here please with clarify more questions in the 1 on 1 call if you like. Thanks. Thank you. The next question comes from Charlotte Friedrich, who's calling from Berenberg. Over to you. Hello. Thank you for taking my question. The first one would be kind of tagging along from the previous question around order intake in the Q4. You guide for roughly EUR 70,000,000, which is a material increase from last quarter. Is there any sort of big particular order in there? Or is this across sort of the end markets that we would normally expect for the Q4 now? It's across the end markets and different customers. It's not one single big order. Okay. Perfect. And in terms of sort of recent commentary from big players such as AMS, we're more optimistic about demand and also the progress that we've seen with microLED, how would you say has your outlook on those end markets changed? Is there more positive sentiment from your customers? Or how do you see that? I think for MicroLED, let me describe the situation that in the let's say, in the last 12 months, the customer activities and projects have been very much focused on the technical feasibility of the microLED device, which has now been moving to the manufacturing feasibility. So it's clearly a step up in terms of the development of the microLED devices. And we see this also clearly in discussions with customers. Despite having talking about one R and D tool, now talking about smaller amounts smaller multiple amount of tools in order to test productivity and production capability for microLED. AMS, mainly, I guess, you're targeting more to the 3 d sensing application. Currently, I mentioned in my speech briefly that we're still seeing that right now the market has still some overcapacity and the demand for end products needs to further raise that customers need additional capacity. But we are quite confident that this business will regain into order intake in the course of next year. Okay. And then if we look at your order guidance and we strip out OLED, that is obviously one big factor. Would you also say that any of your end markets remained behind your expectations and that you came down a little bit? Or would you say excluding the OLED order, your expectations regarding order intake were pretty much satisfied? I mean more would always be better. That's clear, yes. So we are not satisfied with the 220, that's upfront. But it's no particularly market that is particularly weak, yes? So we do see the momentum across the market. And well noted, nevertheless, as we all know, that the VCSEL market is currently, as Brent was just saying, digesting some capacity, yes? But we knew that upfront. Okay. And final question would be around the export licenses. I appreciate you don't necessarily have a lot of visibility on the timing here, but sort of very roughly, is it something where we should expect the orders that didn't come or sort of the sales that didn't come in Q3, would they come in Q4? Or is this something that would rather slip into Q1, Q2? As I mentioned, it's very difficult to say. We are hopeful that we can clarify the situation because of this year, But we can't give a guarantee. No, no, I understand. Thank you very much. The next question will be from Jurgen Wagner, who's calling from MainFirst Bank. Please go ahead. Yes. Good afternoon. Thank you for taking my question. Actually, as a follow-up to a previous question that you mentioned 3 d sensing still has overcapacity. And in your current order book, how much is still related to 3 d or XL production? And you mentioned also you expect the market to come back next year. Yes, when would you expect this market for you to become more competitive? Why you so far enjoyed more or less a very strong market position? Thank you. Talking about the 3 d sensing, I think we still have some orders in the backlog, but it is not obviously, it's not very big. This is clearly, clearly a high I would say, a high 1 digit €1,000,000 number. Talking about the competitive landscape here, I mean, I mentioned about our new product initiatives. And one of the motivation here definitely is that we stay ahead of the game and coming in with products which allows our customers to produce at lower costs because that's what we're expecting. Our customers will get more and more pressure to reduce cost also on these high end devices like VCSEL. And we have to enable them to do so. And with that, we started already maybe one and a half year ago to develop a new platform based on the current technology, which allows our customer and enables our customer to offer these products for these end markets at lower cost. And with that, we hope that even gives the opportunity to further increase the market opportunity by lowering the cost. So in terms of competitive situation, we believe that the new products will be clearly, clearly ahead of our current product, which is leading. And with that, I think competition should be similar. So you would expect when the market comes back to gain a similar share than you had before? That's our expectation, yes. Okay. Thank you. And the last question for today comes from Marta Schalmann, who's calling from Warburg Research. Over to you. Good afternoon. The first one is again on the Q4 order levels. How strong is your confidence or visibility you have into your pipeline going then into 2020? Obviously, Carbide will be at one point in time the clear driver, additional driver. But would you say that maybe in an elevated level around the €70,000,000 give or take would be kind of a base expectation then for Q1 next year already? Or is it too early to really kind of see a more sustained recovery? I would not want to comment yet on the 2020, yes? So we put full focus on our 4th quarter right now. We clearly expect, as the numbers, as you can see, a further recovery towards the 4th quarter. And I think then in the next quarter, we'll then discuss the full year 2020. But the driver is really like Felix has mentioned. You mentioned silica carbide clearly is one of the growth drivers. But also microLED, we see definitely as an opportunity going forward. Now going into the, let's say, in the next step of product development. Okay. With respect to microLED, what do you see and which products are customers actually putting most of it and potentially still some smaller displays like in watches, etcetera? Or are 1st players already starting to target larger displays, high resolution displays like smartphones, etcetera? I think the markets and the application you can basically see in 2 trends. One is the camp you mentioned. It is more for variables, small displays like watches, etcetera. And the opposite camp, so to say, is large displays. So large high end TV applications. And I'm very confident that you will see big progress in product announcements at the next CES in January in Las Vegas. Yes, okay. Then on your tool renewal, so to speak, new platform, what's the focus point? Is it throughput capacity? Is it quality? Is it production efficiency? You mentioned to lower production costs clearly, but what are the driving sectors here and where do you see or put most effort in? It's mostly yield and throughput. Yield is becoming dominantly important or really important for as a cost driver. And what really drives the yield levels up is the automation because the automation leads to lower defect defect loads. Instead of a manual handling, you have automated handling and that significantly reduces the defects caused by human being. And secondly, it is certainly the process in the chamber itself. The further always can be improved and improved and improved. This is And throughput, it is mainly, of course, automation helps you in throughput, but also where we take specific attention to is to reduce the maintenance cycle. So to reduce the cost of the maintenance, but also the time. And with that, I think the throughput can significantly increase. Okay. And what do you see then because of that kind of an increase in ASPs as well, maybe kind of 30% increase in throughput and 15% increase in ASPs, something like that along these lines? That certainly is our target. In particular, I mean, the automation adds a significant added value to the tool, and we are confident with customers. And we're seeing this with our automated tools today, like in silicon carbide, the new tool, but also in gallium nitride, we're getting higher ASPs because the added automation has a significant value to the customer. Yes, okay. Good. Thanks. Thank you. This concludes the question and answer session. Let me now hand back over to Mr. Guido Picket for the concluding remarks. Thank you very much. Thanks to all of you for attending. I hope to see some of you on the road soon, and we are also happy to do follow-up calls. Our next earnings call will be on February 24 for the 29 full year results. Thank you,