Financial Data and Key Metrics Changes - Product sales for Q4 2025 were $7.6 million, a decrease of 1.6% compared to Q4 2024, with domestic sales growing 8.7% to $7 million [12][13] - Full-year product sales for 2025 totaled $27.6 million, reflecting a growth of 4.3% compared to 2024 [14] - A non-cash impairment write-down of approximately $2.9 million is expected due to the shift in strategy regarding Re-Tain [15] Business Line Data and Key Metrics Changes - The First Defense product line saw a significant growth of 41.3% in Q4 2025 compared to Q4 2024, indicating strong demand [5] - There is a noted shift towards the Tri-Shield product within the First Defense suite, reflecting a migration from Dual-Force products [14] Market Data and Key Metrics Changes - Domestic sales showed an increase of 8.7%, while international sales declined by 52.6% in Q4 2025, primarily due to order timing in Canada [13][14] - The total addressable market for First Defense is estimated to be approximately $900 million worldwide, driven by increased calf values and the need for early-life calf health solutions [8] Company Strategy and Development Direction - The company is shifting its strategic focus to prioritize First Defense, pausing investments in Re-Tain due to regulatory challenges and a high confidence in First Defense's growth potential [6][7] - Plans include expanding the sales team by 50% and creating two new U.S. sales territories to drive growth in First Defense [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future sales and profit growth potential of First Defense, emphasizing the importance of operational excellence and capacity expansion [17][18] - The company is optimistic about the ongoing investigational studies for Re-Tain, which are expected to provide valuable data for future partnerships [41] Other Important Information - The company is repurposing manufacturing assets from Re-Tain to support First Defense, which is expected to enhance production capacity without significant additional capital [6][11] - A write-down of approximately $600,000 is planned for inventory deemed unsuitable for requirements [16] Q&A Session Summary Question: Impact of regional pathogens on foreign sales development - Management acknowledged the complexity of international sales and the need for experienced personnel to navigate product requirements and market strategies [22] Question: Explanation for contract manufacturer's failure to comply with FDA requirements - Management declined to provide details but confirmed that the Incomplete Letter from the FDA was solely due to issues with the contract manufacturer [24][25] Question: Timeline for securing a strategic partner for Re-Tain - Management expressed confidence in the product's capabilities and indicated that they would seek partnerships after completing investigational studies in 2026 [28][41] Question: Clarity on the self-imposed milk discard period for Re-Tain - Management clarified that the discard period is necessary to avoid impacting cheese production, but it is still less than competitors' requirements [47][48] Question: Explanation for exceeding sales expectations - Management attributed the sales exceeding expectations to effective management practices and a strong commercial team, despite complexities from previous backorder situations [54][55]

Financial Data and Key Metrics Changes - The company reported product sales for Q4 2025 at $7.6 million, a decrease of 1.6% compared to Q4 2024, primarily due to a previous backorder situation that inflated sales in the prior year [12][13] - Domestic sales grew by 8.7% year-over-year to $7 million, while international sales declined by 52.6% due to order timing in Canada [13][14] - Full-year product sales for 2025 totaled $27.6 million, reflecting a 4.3% increase compared to 2024 [14] Business Line Data and Key Metrics Changes - The First Defense product line saw significant growth, with Tri-Shield experiencing a 41.3% increase in Q4 2025 compared to Q4 2024, indicating a shift from Dual-Force products [5][14] - The company is focusing on increasing manufacturing output for First Defense, achieving over a 15% increase in lyophilization output in 2025, with expectations for similar growth in 2026 [9][18] Market Data and Key Metrics Changes - The newborn calf market has evolved, with calf values increasing significantly, leading to a greater economic emphasis on early-life calf health and survival [8] - The total addressable market for scour protection is estimated at approximately $900 million worldwide, indicating substantial growth potential for First Defense products [8] Company Strategy and Development Direction - The company is shifting its strategic focus to First Defense, pausing investments in Re-Tain due to an Incomplete Letter from the FDA, which has delayed the product's approval process [6][7] - The strategy includes expanding the sales team by 50% and creating two new U.S. sales territories to drive growth in First Defense [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of First Defense, citing the need for increased focus and execution to capitalize on market opportunities [6][9] - The company plans to complete investigational studies for Re-Tain to prepare for potential partnerships, emphasizing that manufacturing in-house is not the best use of resources [11][41] Other Important Information - A non-cash impairment write-down of approximately $2.9 million is expected due to the shift in strategy regarding Re-Tain [15] - An estimated write-down of $600,000 for inventory deemed unsuitable for requirements has been planned [16] Q&A Session Summary Question: Impact of regional pathogens on foreign sales development - Management acknowledged the complexity of international sales and the need for experienced personnel to navigate product requirements and market strategies [21][22] Question: Explanation for contract manufacturer's failure to comply with FDA requirements - Management declined to provide details but confirmed that the Incomplete Letter was solely due to issues with the contract manufacturer [24][25] Question: Timeline for securing a strategic partner for Re-Tain - Management expressed confidence in the product's capabilities and indicated that they would seek partners after completing investigational studies in 2026 [28][41] Question: Clarity on the self-imposed milk discard period for Re-Tain - Management clarified that the discard period is necessary to prevent impact on cheese manufacturing processes, although it is less than competitors [46][48] Question: Explanation for exceeding sales expectations - Management attributed the sales exceeding expectations to effective management practices and a strong commercial team, despite complexities from previous backorder situations [52][55]

Financial Data and Key Metrics Changes - The company reported product sales for Q4 2025 at $7.6 million, a decrease of 1.6% compared to Q4 2024, with domestic sales growing 8.7% to $7 million [11][12] - Full-year product sales for 2025 totaled $27.6 million, reflecting a 4.3% increase compared to 2024 [12] - The company experienced a significant decline in international sales, particularly in Canada, which dropped 52.6% year-over-year in Q4 [12] Business Line Data and Key Metrics Changes - The First Defense product line saw a notable shift towards Tri-Shield, indicating a migration from Dual-Force products and attracting new dairy and beef customers [12] - Manufacturing output for the key bottleneck process, lyophilization, increased by more than 15% in 2025, with expectations for similar growth in 2026 [8][17] Market Data and Key Metrics Changes - The newborn calf market has evolved, with calf values increasing significantly, now worth approximately $1,300 on day one of life compared to roughly $200 in 2003, raising the economic stakes for early-life calf health [7] - The total addressable market for scour protection is estimated to be around $900 million worldwide [7] Company Strategy and Development Direction - The company is shifting its strategic focus to First Defense, pausing investment in Re-Tain due to an Incomplete Letter from the FDA regarding its new animal drug application [4][6] - The strategy includes expanding the sales team by 50% and creating two new U.S. sales territories to drive growth [16] - The company aims to repurpose manufacturing assets from Re-Tain to support First Defense, enhancing operational efficiency [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed high confidence in the future sales and profit growth potential of the First Defense business, justifying the strategic shift [5][6] - The company is focused on operational excellence to ensure consistent supply and quality of products, with plans to optimize manufacturing processes [16][17] Other Important Information - A non-cash impairment write-down of approximately $2.9 million is expected due to the shift in strategy regarding Re-Tain [14] - An estimated write-down of $600,000 was taken for inventory deemed unsuitable for requirements [15] Q&A Session Summary Question: Impact of regional pathogens on foreign sales development - Management acknowledged the complexity of international sales and the need for expertise in launching products in different markets, highlighting the importance of hiring experienced personnel [20] Question: Explanation for contract manufacturer's failure to comply with FDA requirements - Management declined to provide details but confirmed that the Incomplete Letter was solely due to issues with the contract manufacturer [22][23] Question: Realism of securing a strategic partner for Re-Tain - Management expressed confidence in the product's capabilities and the need to find the best go-to-market strategy post-investigational studies [27] Question: Timeline for hiring new sales team members - Management confirmed that hiring processes for new sales team members are underway, with expectations to complete them within the current quarter [31] Question: Future cash needs and potential share dilution - Management indicated that various funding options are available, including operating cash flow, loans, and capital raises, but declined to comment on specific plans [33] Question: Clarity on self-imposed milk discard period for Re-Tain - Management explained that the discard period is necessary to avoid impacting cheese manufacturing processes, but it remains less than competitors' requirements [44][45] Question: Explanation for exceeding sales expectations - Management attributed the sales exceeding expectations to effective management practices and a strong commercial team, despite complexities from previous backorder situations [49][50]

Financial Data and Key Metrics Changes - Revenue for Q1 was $706 million, in line with expectations, with an aggregate gross margin of 15% reflecting lower production rates and deliveries compared to Q4 [15][18] - Operating income was $61 million, approximately 9% of revenue, with diluted EPS at $1.14 and EBITDA for the quarter at $98 million, or 14% of revenue [15][18] - Liquidity reached over $895 million, the highest in 20 quarters, consisting of more than $300 million in cash and $535 million in available borrowing capacity [16] Business Line Data and Key Metrics Changes - Global orders for approximately 3,700 railcars valued at roughly $550 million were received, with a backlog of approximately 16,300 units valued at about $2.2 billion [11][12] - The leasing and fleet management business showed high utilization at nearly 98%, with strong retention and improving economics on renewals [13][14] - The size of the fleet remained stable, with capital recycled through opportunistic asset sales in a strong secondary market [14] Market Data and Key Metrics Changes - Customers in North America and Europe are cautious about capital investments due to current freight volumes and trade policy considerations, impacting the timing of new railcar orders [6][7] - Market conditions in Europe remain complex, affecting performance due to operational inefficiencies, while Brazil's economic conditions are stable with consistent customer engagement [8] Company Strategy and Development Direction - The company is focused on aligning manufacturing with current demand levels while investing in efficiency and cost discipline [8][9] - Capital allocation priorities include maintaining balance sheet strength, returning capital to shareholders, and deploying capital where returns are strongest [9][17] - The company reiterated its Fiscal 2026 guidance, projecting new railcar deliveries of 17,500-20,500 units and revenue between $2.7-$3.2 billion [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market conditions and positioning for long-term value creation, emphasizing the importance of execution [5][10] - The company noted that while trade and tariff policies influence customer decisions, they do not change the long-term fundamentals of the railcar replacement cycle [7][39] - Management highlighted the need for discipline and teamwork in the current environment, recognizing employee commitment and flexibility [10] Other Important Information - The company announced a dividend of $0.32 per share, marking the 47th consecutive quarterly dividend [17] - The methodology for allocating syndication activity was changed, reflecting syndication in the manufacturing segment instead of leasing and fleet management, with no impact on consolidated results [16] Q&A Session Summary Question: Visibility into second half delivery growth - Management indicated good visibility into the second half, with opportunities for year-over-year growth expected as production ramps up [22] Question: Impact of Venezuela on manufacturing - Management stated there are no expected impacts from Venezuela on their business, as there is no overlap with operations in Brazil [23] Question: Customer ordering behavior and delivery expectations - Management noted an increase in order activity towards the end of Q3 and into Q1, with December showing unusually high deliveries [25] Question: Lease rates and renewal expectations - Lease rates for specialty cars have remained stable, with double-digit increases seen in renewals [28][30] Question: Tariff impacts on business - Management indicated tariffs have been neutral to financial performance but have created uncertainty affecting customer capital commitments [37][39] Question: Engagement in USMCA review - Management expressed strong support for USMCA, emphasizing the importance of the free flow of rail cars across borders for the economy [45][46]

Financial Data and Key Metrics Changes - The company reported consolidated net sales of $154.4 million, a 1% increase compared to the previous year [4] - Gross margin improved to 56.2%, up 150 basis points sequentially from the fourth quarter and 140 basis points year-over-year [6][34] - Operating income declined 7% to $23.3 million, while net income fell 8% to $17.5 million [28] - Diluted earnings per share were $1.28, reflecting an 8% decrease from the previous year [28] Business Line Data and Key Metrics Changes - Maintenance products accounted for approximately 96% of total net sales, with net sales reaching $148.9 million, a 2% year-over-year increase [4] - Sales of WD-40 Multi-Use Product decreased 1% to $118 million, while WD-40 Specialist products saw an 18% increase to $22.5 million [12][15] - Home care and cleaning product sales declined 18%, reflecting a strategic shift towards higher margin maintenance products [8] Market Data and Key Metrics Changes - Sales in the Americas increased 4% to $71.9 million, with maintenance product sales up 5% [7] - OMEA segment net sales were $58.7 million, a 5% increase, driven by a 27% increase in WD-40 Specialist sales [9] - Asia Pacific sales decreased 10% to $23.9 million, with WD-40 Multi-Use Product sales down 12% [10] Company Strategy and Development Direction - The company is focused on its 4x4 strategic framework, emphasizing maintenance products, geographic expansion, premiumization, and digital commerce [4][14] - The Must-Win Battles include accelerating revenue growth in maintenance products and driving WD-40 Specialist growth [11][15] - The company aims to capture approximately $1.4 billion in growth potential for its flagship WD-40 Multi-Use Product [13] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong rebound later in the fiscal year, despite a slower start [5][31] - The company anticipates solid growth across all three trade blocs in the second quarter [6][35] - Management highlighted the importance of promotional activities and customer order patterns in driving future performance [31] Other Important Information - The company reaffirmed its fiscal year 2026 guidance, expecting net sales between $630 million and $655 million, representing a growth of 5% to 9% [32] - A quarterly cash dividend of $1.02 per share was approved, reflecting an increase of more than 8% over the prior quarter [29] - The company repurchased approximately 39,500 shares at a total cost of $7.8 million during the first quarter [29] Q&A Session Summary Question: What indicators point to strong results? - Management indicated confidence based on scheduled promotional activities and expected recovery in Asia-Pac markets [37][38] Question: Is the guidance more bullish than originally given? - Management confirmed that they feel confident in reaching the mid to high end of the guidance range due to locked-in promotional activities [37] Question: What steps are being taken to reduce supply chain costs? - The company is implementing new sourcing strategies and optimizing distribution networks to reduce costs [41][42]

Financial Data and Key Metrics Changes - Total revenue decreased by 3% to $18.4 million, with adjusted EBITDA at $3.5 million and adjusted EPS at $0.13, aligning with internal expectations [4][8] - Total gross margin improved to 59%, with software gross margin at 84% and services gross margin at 36%, compared to 54%, 75%, and 26% respectively in the prior period [10][11] - The company ended the quarter with $35.7 million in cash and short-term investments, maintaining a strong capital position with no debt [11] Business Line Data and Key Metrics Changes - Software revenue decreased by 17%, contributing 48% to total revenue, while services revenue increased by 16%, contributing 52% [8] - Discovery products accounted for 15% of software revenue, development products for 81%, and clinical ops products for 4% [8] - Services revenue from development, including biosimulation services, represented 71% of services revenue, while commercialization services accounted for 29% [9] Market Data and Key Metrics Changes - The company reported an 88% renewal rate for the quarter, with an average revenue per client of $97,000 [8] - The ending backlog for services increased by 18% to $20.4 million from $17.3 million last year, indicating a healthy pipeline of projects [9] Company Strategy and Development Direction - The company aims to advance towards an integrated product ecosystem combining validated science, cloud-scale performance, and AI-driven modeling [5][6] - Strategic acquisitions and ongoing investment in science are key to broadening the company's reach and impact in the market [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted positive trends in the macro environment, including improved biotech funding and reduced tariff threats, which are expected to positively impact client budgets [4][16] - There is optimism regarding increased spending from clients, with a backlog of projects ready to be initiated [17] Other Important Information - The company maintains its guidance for fiscal year 2026, projecting total revenue between $79-$82 million and adjusted EBITDA margin between 26%-30% [11] - The company is focused on enhancing AI capabilities within its product offerings, which is expected to contribute to pricing flexibility and license renewals [62] Q&A Session Summary Question: Can you provide more details on the positive commentary regarding Most Favored Nations and lower tariff risks? - Management indicated that stabilization in pricing agreements and reduced tariff discussions have positively impacted client budget preparations, leading to increased contract activity [16][17] Question: What is the expected mix cadence for software in the remaining quarters? - Management confirmed no change in guidance for software service mix, with expectations for stronger performance in the second and third quarters due to seasonal renewals [24][25] Question: Did consolidation in large pharma impact software renewals in the first quarter? - Management noted that while consolidation is a headwind, there was no significant impact on the first quarter results, and the outlook remains stable [27][28] Question: How is the integration of AI going with the core platform? - Initial AI features have received favorable responses, and the company plans to monetize these advancements through pricing adjustments and new modules [62] Question: What is the outlook for commercialization services? - The medical communications segment, which is part of the Pro-ficiency acquisition, showed strong growth and is expected to continue performing well in fiscal year 2026 [52][54]

Financial Data and Key Metrics Changes - Revenue for Q1 was $706 million, in line with expectations, with an aggregate gross margin of 15% reflecting lower production rates and deliveries compared to Q4 [15][18] - Operating income was $61 million, approximately 9% of revenue, with diluted EPS at $1.14 and EBITDA for the quarter at $98 million, or 14% of revenue [15][18] - Liquidity reached over $895 million, the highest in 20 quarters, consisting of more than $300 million in cash and $535 million in available borrowing capacity [16] Business Line Data and Key Metrics Changes - Global orders for approximately 3,700 railcars valued at roughly $550 million were received, with a backlog of approximately 16,300 units valued at about $2.2 billion [11][12] - The leasing and fleet management business showed high utilization at nearly 98%, with strong retention and improving economics on renewals [13][14] - The size of the fleet remained stable, with capital recycled through opportunistic asset sales in a strong secondary market [14] Market Data and Key Metrics Changes - Customers in North America and Europe are cautious about capital investments due to current freight volumes and trade policy considerations, impacting the timing of new railcar orders [6][7] - Market conditions in Europe remain complex, with performance affected by operational inefficiencies during restructuring initiatives [8] - Brazil's economic conditions remain stable, with consistent performance and customer engagement [8] Company Strategy and Development Direction - The company is focused on aligning manufacturing with current demand while investing in efficiency and cost discipline [8][9] - Capital allocation priorities include maintaining balance sheet strength, returning capital to shareholders, and deploying capital where returns are strongest [9][17] - The company reiterated its Fiscal 2026 guidance, projecting new railcar deliveries of 17,500-20,500 units and revenue between $2.7-$3.2 billion [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market conditions and emphasized the importance of execution in securing high-quality orders despite intense competition [7][10] - The company remains engaged with customers and industry stakeholders, adapting to evolving market conditions while focusing on operational excellence [8][10] - Management acknowledged that trade and tariff policies influence customer decisions but do not alter the long-term fundamentals of the railcar replacement cycle [7][38] Other Important Information - The company declared a dividend of $0.32 per share, marking the 47th consecutive quarterly dividend [17] - The methodology for allocating syndication activity was changed, reflecting syndication in the manufacturing segment instead of leasing and fleet management, with no impact on consolidated results [16] Q&A Session Summary Question: Visibility into second half delivery growth - Management indicated good visibility into the second half, expecting year-over-year growth as production ramps up [22] Question: Impact of Venezuela on manufacturing - Management stated there are no expected impacts from Venezuela on their business [23] Question: Customer ordering behavior and delivery expectations - Management noted an increase in order activity and diverse deliveries, with expectations for sequential growth in deliveries [25][26] Question: Lease rates and renewal rates - Lease rates for specialty cars have remained stable, with double-digit increases in renewal rates year-over-year [28][30] Question: Tariff impacts on business - Management indicated tariffs have been neutral to financial performance but create uncertainty affecting customer capital commitments [37][39] Question: Engagement in USMCA - Management expressed strong support for USMCA, emphasizing the importance of free flow of rail cars across borders [45][46] Question: Production cadence and visibility - Management confirmed that order inquiries are translating into orders, with plans to ramp production in the back half of the year [49][50] Question: EPS guidance and asset sales - Management clarified that the EPS guidance remains unchanged despite opportunistic gains from asset sales [58][63]

Financial Data and Key Metrics Changes - The company reported consolidated net sales of $154.4 million, a 1% increase compared to the previous year [4] - Gross margin improved to 56.2%, up 150 basis points sequentially from the fourth quarter and 140 basis points year-over-year [7][30] - Operating income declined 7% to $23.3 million, while net income fell 8% to $17.5 million [30] - Diluted earnings per share were $1.28, reflecting an 8% decrease from the previous year [30] Business Line Data and Key Metrics Changes - Maintenance products accounted for approximately 96% of total net sales, reaching $148.9 million, a 2% year-over-year increase [4] - Sales in the Americas increased by 4% to $71.9 million, with maintenance products growing by 5% [8] - Sales of WD-40 Specialist products rose 18% to $22.5 million [16] - Home care and cleaning product sales declined 18%, reflecting a strategic shift towards higher-margin maintenance products [9] Market Data and Key Metrics Changes - Sales in Asia Pacific decreased by 10% to $23.9 million, with WD-40 Multi-Use Product sales down 12% [11] - In EIMEA, net sales were $58.7 million, a 5% increase, driven by a 27% increase in WD-40 Specialist sales [10] - Sales in India increased by $1.4 million, while sales in China grew by 8% [14] Company Strategy and Development Direction - The company is focused on its 4x4 strategic framework, emphasizing maintenance products and geographic expansion [4][13] - The Must-Win Battles include accelerating revenue growth in maintenance products, premiumization, and driving WD-40 Specialist growth [15] - The company aims to capture approximately $1.4 billion in growth potential for its flagship WD-40 Multi-Use Product [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong rebound later in the fiscal year, despite a slower start [6][34] - The company anticipates solid growth across all three trade blocs in the second quarter [7][37] - Management highlighted the importance of promotional activities and customer order patterns in driving future performance [21][42] Other Important Information - The company reaffirmed its fiscal year 2026 guidance, expecting net sales between $630 million and $655 million [34] - A quarterly cash dividend of $1.02 per share was approved, reflecting an increase of over 8% from the previous quarter [31] - The company repurchased approximately 39,500 shares at a total cost of $7.8 million during the first quarter [31] Q&A Session Summary Question: What indicators point to strong results? - Management indicated confidence in achieving mid to high end of guidance due to scheduled promotional activities [40][41] Question: Are there signs of recovery in Asia distributor markets? - Management confirmed early signs of recovery in Asia distributor markets, with expectations for stronger results in the second quarter [44] Question: Can you elaborate on supply chain cost reduction efforts? - Management discussed new sourcing strategies and structural changes to reduce costs, particularly in can and specialty chemical sourcing [53][54] Question: Is the guidance for gross margins sustainable? - Management expressed confidence in maintaining gross margins above 55%, while acknowledging external risks [61][62]

Financial Data and Key Metrics Changes - Revenue for Q2 2026 was $9.9 million, down 27% from $13.5 million in the prior year period, primarily due to lower shipments of wafer packs [26][27] - Non-GAAP gross margin for Q2 was 29.8%, compared to 45.3% a year ago, reflecting lower sales volume and a less favorable product mix [27] - Non-GAAP net loss for the quarter was $1.3 million, or negative $0.04 per diluted share, compared to net income of $0.7 million, or $0.02 per diluted share in Q2 2025 [28] Business Line Data and Key Metrics Changes - Wafer-level burn-in engagements expanded with significant progress in production installations across AI processors, flash memory, and silicon photonics [5][7] - Package-part burn-in systems saw increased demand, with orders totaling more than $5.5 million in the fiscal third quarter to date, exceeding total orders for the entire second quarter [17][18] - Contact revenues, including wafer packs and burn-in systems, totaled $3.4 million, representing 35% of total revenue, down from 64% in the prior year [27] Market Data and Key Metrics Changes - The company expects bookings in the second half of fiscal 2026 to be between $60 million and $80 million, primarily driven by AI processors [5][23] - Increased visibility across multiple end markets, including AI, silicon photonics, and gallium nitride, is expected to drive significant revenue growth in fiscal 2027 [6][22] - The semiconductor market is experiencing a shift towards reliability testing, with growing demand for advanced wafer-level and package-level burn-in systems [21] Company Strategy and Development Direction - The company is focusing on expanding into key markets such as AI processors, gallium nitride power semiconductors, and silicon photonics, diversifying its customer base and total addressable market [22] - A strategic partnership with ISE Labs was announced to deliver advanced wafer-level test and burn-in services for next-generation high-performance computing and AI applications [7][8] - The company is reinstating financial guidance for fiscal 2026, expecting revenue between $25 million and $30 million for the second half of the fiscal year [23][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook due to increased visibility across multiple end markets and the expected strong bookings for AI-related products [6][22] - The company is taking a conservative approach to estimating the size of the AI market but acknowledges the potential for significant revenue growth in the coming years [36][39] - Management highlighted the importance of reliability testing in the semiconductor industry, driven by the increasing performance and safety requirements of devices [21] Other Important Information - The company ended the quarter with $31 million in cash, up from $24.7 million at the end of Q1, primarily due to proceeds from an equity program [29] - The company has received additional bookings of $6.5 million in the first six weeks of Q3, increasing effective backlog to $18.3 million [25][29] Q&A Session Summary Question: Is the potential booking strength of $60-$80 million in the second half of the fiscal year almost entirely on the AI accelerator processor line? - Management confirmed that the bulk of the bookings is across wafer-level and package-part burn-in for AI processors, with some contributions from silicon carbide and silicon photonics [34] Question: Do you see the AI business expanding meaningfully in the multi-year timeframe including 2027 and 2028? - Management believes the AI business could be measured in hundreds of millions of dollars in a few years, with significant demand for wafer-level burn-in systems [36] Question: What is the anticipated capacity for manufacturing wafer-level systems? - Management indicated that they could potentially manufacture over 20 systems a month if needed, exceeding current forecasts [41] Question: Is the delay in wafer-level benchmarks due to customer changes or new parameters? - Management acknowledged that the delay was partly due to misunderstandings regarding wafer-level testing requirements, but they remain optimistic about progress [50][51] Question: Will customers initially use package-part burn-in and then switch to wafer-level burn-in? - Management indicated that while some customers may start with package-part burn-in, they are likely to transition to wafer-level burn-in as it proves more efficient [80]

Financial Data and Key Metrics Changes - Revenue for Q2 FY2026 was $9.9 million, down 27% from $13.5 million in the prior year period, primarily due to lower shipments of WaferPaks [26][27] - Bookings in Q2 FY2026 were $6.2 million, compared to $11.4 million in Q1 FY2026, with a backlog of $11.8 million at the end of the quarter [25][26] - Non-GAAP gross margin for Q2 was 29.8%, down from 45.3% a year ago, reflecting lower sales volume and a less favorable product mix [27] - Non-GAAP net loss for the quarter was $1.3 million, or negative $0.04 per diluted share, compared to net income of $0.7 million, or $0.02 per diluted share in Q2 FY2025 [28] Business Line Data and Key Metrics Changes - Wafer-level burn-in engagements expanded with significant progress in production installations across AI processors, flash memory, and silicon photonics [5][7] - Packaged part burn-in systems saw increased demand, with over $5.5 million in orders received for Sonoma systems in Q3 FY2026 to date, exceeding total orders for Q2 [17][25] - The company secured key new device wins for the Sonoma system, expected to drive additional capacity at test houses [17][18] Market Data and Key Metrics Changes - The company anticipates bookings in the second half of FY2026 to be between $60 million and $80 million, primarily driven by AI processors [5][23] - The silicon carbide market is expected to contribute minimally to bookings, while silicon photonics and gallium nitride are also expected to play a role [66] - The demand for semiconductor test and burn-in solutions is driven by the growth in AI and data center infrastructure, with a significant emphasis on reliability testing [21][22] Company Strategy and Development Direction - The company is focusing on expanding into key markets such as AI processors, gallium nitride power semiconductors, and silicon photonics, diversifying its customer base and total addressable market [22] - The strategic partnership with ISE Labs aims to deliver advanced wafer-level test and burn-in services for next-generation high-performance computing and AI applications [8] - The company is reinstating financial guidance for FY2026, expecting revenue between $25 million and $30 million for the second half of the fiscal year [23][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook due to increased visibility across multiple end markets and reinstated financial guidance for FY2026 [6][22] - The company noted that the semiconductor industry is experiencing a fundamental shift towards reliability testing, driven by the increasing complexity of next-generation devices [21] - Management highlighted the potential for substantial revenue growth in FY2027, driven by strong bookings and demand for AI-related products [5][23] Other Important Information - The company ended Q2 FY2026 with $31 million in cash, up from $24.7 million at the end of Q1, primarily due to proceeds from an equity program [29] - The company is participating in several investor conferences to enhance investor relations and visibility [30] Q&A Session Summary Question: What is the potential booking strength of $60-$80 million in the second half of this fiscal year? - Management indicated that the bulk of bookings would come from wafer-level and package part burn-in for AI processors, with minimal contributions from silicon carbide [34] Question: Can the AI processor business expand meaningfully in the coming years? - Management believes the AI business could be measured in hundreds of millions of dollars in a few years, with significant demand for wafer-level burn-in systems [36] Question: What is the expected capacity for manufacturing wafer-level systems? - Management stated that they could potentially manufacture over 20 systems a month if required, indicating strong production capabilities [41] Question: Is there a potential for cannibalization between package and wafer-level burn-in? - Management acknowledged that while there may be some cannibalization, both package and wafer-level burn-in will coexist for a long time, with customers evaluating both options [60][79]