ICHR Ichor

Claire McAdams Investor Relations Counsel
Thomas Rohrs Executive Chairman & CEO
Jeffrey Andreson CFO
J. Ho Stifel, Nicolaus & Company
Karl Ackerman Cowen and Company
Sidney Ho Deutsche Bank
Edwun Mok Needham & Company
Call transcript
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Good day, ladies and gentlemen, and welcome to the Ichor Systems Second Quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Claire McAdams, Investor Relations Counsel for Ichor. Please go ahead.

Claire McAdams

you. Thank afternoon. thank for today's Ichor's replay after conclude and will call, website for we available be telephonically this you afternoon, conference joining which shortly Good and on

could and are number As These These are as subsequent with which call, you many forward-looking cause for XX-K our press annual those SEC the with recognize - the in statements statements actual such both results our filings of to subject and uncertainties, which differ contain described SEC. that earnings of federal filed the meaning Form read press earnings of please risks spelled you fiscal to and materially the those from year risks our release, statements. in this control our on include those and XXXX, listen beyond conference described forward-looking within a they and which in to release uncertainties securities report laws. been out have

consider all You of other uncertainties. forward-looking and light should and risks statements in those

financial will certain measures and a non-GAAP call, during conference release this press comparable earnings our of providing we most GAAP their these non-GAAP reconciliation be to financial financial measures Additionally, measures. contains

their prepared turn will to financials quarter now second Rohrs. call we and outlook XXXX. for Chairman call go our CEO, remarks, the with the Tom and Tom Jeff will After quarter the over are a business, then Ichor's me Financial review today questions. the Rohrs; with On third and line the open over Officer, begin Tom I'll and for Chief Tom? will Andreson. Jeff of the of

Thomas Rohrs

second Claire. Good you, afternoon, Thank our welcome to quarter call. conference and

that year strong those operational and first of results are half right evidence of quarter serve the strategy the target. efforts excellence second and on certainly as our Our

of the revenue with our million line period was up from last same down XX% X.X% QX from in and Our year. forecast, $XXX

is This the XX% half XXXX. half $XXX first million, of industry-leading revenues totaled performance. up first from Our

Our and to $X.XX $X excuse quarter period - of earnings of higher me, essentially the XX% is same per first year. flat record than share our last

half And gross by For per have of first XXXX. points over first of year-over-year, first the grown we operating maintained completed XX%. have repurchases earnings compared our and to even XXX completing half share the which from half margins We QX We've cash XXXX, the stock basis quarter. QX shortly. discuss $XX since Jeff million after $XX our the balances levels entire of second during will million program, increased

successfully achieving We goal the outgrowing industry. our are of of the rest

not equipment four performance, outgrown excellent our about years, customers fab last market. WFE and quarter, cap our Last issues growth much the telling our revenue a have in are was we spending, where wafer every of our growth it story. the Despite just market pretty doing I that a is of we Over ago. supplier thought that the the was job good of have one investors I time past meeting over explaining investors semi that But market. suppliers, constantly months three lot and a such believe spent pneumonia." OEMs that. will as the true. beyond in cliché with cliché a this catch cold, catch a Ichor, longer downturn about no the old it year goes why still says, worried Syndicate of Many "If is analysts the then are

incremental all why to need downturns QX, going really report and understand so there I'm no is will on quarter. I I have be drivers everyone Then in happening growth progress last industry discuss the us look like been provide what's a of them. afraid for discussing revenue now So can to since what

you stock through three excuse prudent value. me, and investment. understand increase great deploying to company are hopefully is great way, strategic of why tell will a and these M&A Ichor shareholder to Each I help capital and - Lastly, we repurchases a including you a include that aspects in will

our outlook. First, QX regarding

the decline sequential semiconductor expected outlooks decline we've our the with largest customer seen consistent WFE the two by is heard relevant same in in and pretty all to second weeks. component quarter revenue key the It's compared suppliers. much Our the last

in a same else may caught There's extent to or less think or they've catched the cold to exaggerated of and cold, we've So that's fact, we've drive it. towards people that caught caused have outsourcing, and that due pneumonia. corrections no impact the anything inventory

half of then that's second webcast more capacity investment little in the the be started is conference what pushouts they in I exactly percolate if down said As June, will community, our expected, news we through a to memory during happening. And than are the after customers too.

which We also we can variable align indicated quickly which and better revenue bone, cost the trough will to said, manufacturing highly half quarter, reduce are of the midpoint That model outlook. expected XX%, action given have a QX rebound be visibility a we biased take means that this close At drop the QX, XXth structure point, to for actions around QX first spending. marketing once variable profitability for QX. while to to refrained are precision Morgan half sales Materials is the second key be in time by share we and cost R&D towards margin. in to XX% structure, Back up will exactly qualifications, the QX costs, With about are what XX%, memory higher-margin QX per old share we and gross that less our be take deliver $X.XX headcount the about were during the very have to stronger our to share QX, expected cutting the quarter, a cost This the have facing we our and operating slightly is to to still a guidance, that looks us resources. $X.XX from relevant will down weldment a $X.XX and end - margins At rather the per time more with to earnings lead products a as earnings of machining in China in have my strategic Therefore, management. than gain key to QX. proliferation than players not the about being XXXX us we though, allows about about is is the tariffs, cutting cut days, will explained strategy Applied was product other manufacturing in comments through Jim downturn me in me industry doing. we factor if market our expense good This to for that interject than the of in XXXX. few than

tariffs, becoming clear great half and is all that uncertainty still a a of effects much Chinese as doubt tariff. as there is While deal of could of face about imports the it XX%

sales. therefore, not thanks our ability you've are have builds that of any our purchase business are the not significant to concerned that always significant do profit but these on We parts areas that cutting tariff about a us, cycle, most we fact the spending China is make As for with despite know, of be not will downturn can We understand charges us build when that impact we We'll so strategic an precision now U.S.-based a we manufacturing and one if supplier now demonstrate sell demonstrate as industry parts, we this do faced operations. to model. concerns the China. it significant will business marketing The to have And seen you the semiconductor excellent of but our key in investors and is these have. QX necessary. the shorter a backdrop, the the any or mitigated. that who do for outlook should fab of talent, consolidated less products painful. in direct opportunity is downturn actually our Therefore, our be into of we wafer of much operating customers pause resilience manufacture our much we near-term engineering, With

the comes now downturn, talk into to the time the after in and So starting is fourth about let's quarter better return XXXX. QX what which

$X.X the Importantly, straight stage the from year couple in growth and range, strong execution expanding in market to low the gas single-digit wafer emerging pushouts market a the expectations growth for reported wafer months, in machining; faster why to our XXXX. for believe share industry of our quarter, our achieving finally, business; XXXX share the share footprint weldments; equipment share footprint over Last we report sets increased and overall through the precision areas for will M&A. fab and growth These double-digits a in in of our achieving expanding in of our given you Talon Delivery include of and last potentially continued market our will Liquid these six and and a panel I objectives continue revenue moderation incremental South and we explained incremental on Korea; growth by market spending, foothold business the market. our progress overall expanding give we Today, of grow acquisitions machining, markets for can continue initiatives. precision Innovations. In served by in the equipment why industry I and to than fab weldments Cal-Weld footprint outperform reasons we reiterate billion

they each acquired one served customer. we basically Before these companies,

We our four with leveraging our our customers. relationships of large expand have other strong served share significant opportunities to these by markets

gains revenues of share year achieve We accelerating to qualifications quarter, XXXX. expected end first last both began precision at initial this expect in We the and weldments and market into machining. now with

happening. is So this

much of for and established have structure. of additional capacity our built agreements Malaysia, is new We qualifications these new in an market which parts Moreover, customer being business. ultracompetitive cost our has share

of now have which we in our South Engineering, will Next, recent acquisition leverage. through Korea, we beachhead IAN a

well Korean incremental subsidiaries for machining provide XXXX. as OEMs, will driver capabilities equipment be and Korean precision will the weldments of as revenue to We suppliers other the an which

But will Korea, multiple award certainly Liquid other further in beginning in share. market the growth XXXX to million U.S. our expand to means and last begun opportunity already provides fab well this increased one Modules, We Outside equipment suppliers, during $X.X billion gashouse market IAN, XXXX. our CVD and furthermore, solution primarily opportunity. wet additional which in share proprietary we Delivery just company, increase a Delivery is our We our term, are of our clean has gas to substantial to WONIK track see working OEMs to to geographic add equipment processes opportunities closely $XXX with working fastest-growing SEMES the bring kick won expansion. in This is through reach to $X Liquid expand we new Korea with IPS, for IAN the share have incremental our wafer we in the which billion have panel as the SEMES, Long beyond. market in we growth business, year, and with market Liquid now OEM have segment. with revenue of foothold also acquisition. Delivery and a our a and additional to overall as in

engaged are strategies customer addition We market of OEMs in with our markets, expand equipment in in to particularly Japan. share

deck eager products. positions we are Delivery panel billion have market should to such opportunities. slide We in new these processes, markets Liquid and through the can footprint who source XXXX. market our the revenue through be our expanded total, processing - $X.X track. that geographical of have there, served our to IR a quarter, in that incremental Last wet In our propriety in $X significant to opportunity summarizes gas products from we OEMs market wet bring a be all leveraged These of acquisitions, our significant CMP, some billion and as a clean our beginning largest sizable introduced

of have alone, year million quantified stage As and will and progressing outperformance and next revenue we well these. growth at additional from incremental all beyond. least This these of quarter, said we with for $XXX last the set are an initiatives, XXXX we for

our and Finally, we to acquisitions, our which earnings. accretive to fit continue strategy are pursue additional

Cal-Weld, We IAN. continue our now use has Ajax very been and strategy with that Talon plastics, Innovations will to successful

space, revenue strengths with within the that we'll fluid work our customers, will of do a accretive. for platform deals growing additional that market give We will in list are growth, stay of and dynamics us our buy will companies semiconductor strategic we we

investors. our points key which are business, summary, I in the about understood hope well by all here now are of So our

First, that much know They now there yesterday. as to downturns performance more QX is proving we fear in in is our financial shallower, shorter profitable little are downturns the than them. and of

solid making executing incremental growth drivers. progress revenue are we Second, our in

Japan. in we landing have address in precision and in Korea, We and expanding wins into in OEMs customers and are putting Delivery, pieces place design are new we penetrating machining, we are with to customers Liquid weldments

investments we to commitment deploy Third, on M&A to organic by are following our returning and as our through through well as shareholders. cash capital

shares. our We have through X.X returned stock count year's million by million repurchases, $XX this reducing share

fab wafer the industries have equipment Finally, earlier, annual XX%. XXXX, have as outgrown versus XX% I growth we said the since with industries'

industry, at times in we to we in wafer fab again single will do equipment that grow could the in grow with XXXX. will We XXXX, and digits the outgrow so continue to rate, several

against that the peers and aware unpatched strong to and outgrowing initiatives Ichor growth industry, of our gain margins, industry all the revenues You're - has an nearly confidence revenue at unmatched our with customers. year and your one been operating outperforming beyond incremental and in hope for another earnings gross We growth, growth executing rate, expanding drivers strategic XXXX. of multiple every

is view quarter ever. financial and and than operational stronger during will third we Our demonstrate our emerge this resiliency

our about there will and look second XXXX. Our accelerating current turn for strength visibility for with to third more Jeff? financial over QX, Jeff detail better quarter as we from it to guidance performance and quarter. is our I that, the revenue our into And provide

Jeffrey Andreson

Tom. Thanks,

and my a which region today are impact Investors and These metrics measures amortization added non-GAAP the measures schedule, I compensation of and revenue key we've I'd like call, discrete as nonrecurring charges as to well the I share-based tangible the on financial this begin section remind to note discussed conference unless geographic as acquired of and measures Before by tax and discussed P&L that GAAP sheet and assets, exclude website. like items metrics results expense, non-GAAP our identify comments, you, GAAP-based. adjustments. I'd balance flow cash the to also summarizes of

over million quarter the up quarter were the first X.X% and Second from XXXX. of XX% quarter revenues second $XXX of down

second quarter revenue IAN included recent Engineering. Our from most acquisition, $X approximately of million our revenue

QX of revenue as expected lower Our the from gross declined margin quarter mix. to and due XX.X% the first product level

of included quarter to approximately driven our well gross acquisition XXX were of second in the of $XX.X as of Innovations X% and IAN expenses of by Cal-Weld approximately acquisitions the Operating accretive $XXX,XXX basis XXXX, points, improved improvements related to other and compared our Engineering. margin as As million, products. Talon contribution mainly revenue, our

basis of margin second operating quarter and points near from Our record, XX.X% our slightly first model. XXX increased long-term the from decreased the of XXXX but remained quarter

expense Our quarter the $X.X second interest was million. in

similar a per $X.X million year. have to in this quarter, $X.X expense rates interest as of QX, risen range million Beyond LIBOR the

Our revenue now the authorization. level have the the $XX balance I'll of was for U.S. purchased and the of of In flow million, the share. as essentially the cash growth flow continued expect the total expected about full strong rate, entities, Capital we tax price by rate discussed to $XX.XX $XX.X comments. of Tom adjustment his million. for Earnings result support the Since same we flat sheet. rate million market repurchase million for profits expenditures prior XXXX. shares, million opportunities for was and to third completed to was company to The a amount last lower $XX.X we million, beginning of the period in $X.XX now at the average $XX.X increased of X.X%, to share per of The add in $X.XX free totaled end XX% very is which our the repurchased an year-ago remaining compared approximately the year-to-date share cash benefited approximately which quarter in was included generation now $XX contribution with $XX X.X to million second the our and a capacity to had EPS over of $X.X QX that per the We earlier share. overall million same first the period. repurchased $X.XX quarter, quarter as approximately tax the bringing of from repurchase reduction we $X.XX gives million share million Net year. the quarter. XX.X% to $XX income Cash per the shares X.X at quarter. quarter, total, turn in

additional of to up We million operational and to achieve future financial $X payments $X be milestones. also certain to IAN Engineering, paid million if an with used they purchase

products second We in the ensure With our EBITDA. Tom XX with quarter's flow to put and our strategy, management support balancing QX, a comfortable is this XX the decreased ratio generation. in review the as of develop objectives managing levels. debt to we've sales while capital level decrease In outstanding that our growth from and XX versus decreased acquisition EBITDA place from quarter, made of prudent and the discussed days. the capacity $XXX options, Inventory generated our balancing in $XXX.X days the good down million, our will we inventory last earlier, needed million, our cash to that $XXX progress a million allocation was continue XX% first of debt very accretive of Day total debt-to-EBITDA X.X. investments to $XX.X months, million, revenue X.X%, we our of

Now guidance. I'll turn to quarter the third

forecast $XXX of million. range the Our is for revenues $XXX million in to

levels, Given and gross modest our $X.XX. share mix earnings to of margin the lower assumes range rate operating in and the reduced This will these a in fully count. share effective lower expenses, diluted tax volume, to due revenue $X.XX decline a revenue be per lower a product

our from At QX is revenue revenues XXXX sequential midpoint second - from of the quarter guidance, peers the of will with XX% be third our and QX the and of our down customers. decline quarter up Our X% last consistent of the year.

Engineering. $X about includes associated with guidance revenue IAN million Our

like began in we highly can of completed have and We that quickly July. seeing it cost business third rightsizing of shifts, to the a in adjust the maintaining we're in early June We market variable our late manufacturing strategy a structure, so quarter.

of to side working market impact support U.S. and invest needed in to rate, opportunities fourth share the to level share Our about XX we contribution higher of in results, goal while in a achieve have growth are we business the quarter an the tax approximately this was the machining front organization profit market are our basis moderation QX on We to the XX the negative given on sound our will in gross the financial of growth business weldment the at us. XX.X% the expecting. to support basis, purposely maintained of to well deliver we now the support in margins of resources level to appropriate The continue points. resource year, size stronger ongoing as and be

cash Our approximately XXXX. X% will we tax rate in be

share in the XX.X open We Operator, quarter. take expect our Please the ready third be million to shares diluted are count to fully questions. line. we


[Operator Instructions].

Your line first the Ho of question Patrick Stifel. comes from from

J. Ho

first that to that circumstances businesses as there operating flow businesses moves made the given while Talon, for meet have off, capacity the given kind kind a been into has obviously Maybe of one How only target? current for the acquired, your Cal-Weld you about adjust you've to we manufacturing we're system the and you the do model how the gas pause, of talked flexing adjust throughout yours look especially like just changing trends, demand to for capacity these delivery do in quarter a your and the new get you that you their cycles?

Thomas Rohrs

in our in this of did share they and to capacity and one hitting we're And the doing that opportunity a referred already I line I of we is, both Cal-Weld models. for incremental quarter, we and was as we at early to a XXXX And thanks result, different that thought this for And operating cut a now in did is of it. the beginning qualifications have of point, both few back we Talon, amounts in refer degree. question, did and maybe we bottom think QX it see that was as incremental Cal-Weld Talon, this, did market reason how and some and us front for more lesser The in that while when and in year. revenue good we revenue. those it's that even had see the last while board, - this, dealt Jeff And to of we with that effect. make adjustments to QX see both we bought a and Patrick, very significant somewhat a robust we're Cal-Weld a mentioned, At as across areas, Talon. middle I also to

cut bottom share panel the in line for opportunity and we gas back of there we because part see not the as as did So market entities, incremental largely both we in those much going is forward. did

J. Ho

other adoption Great. that's And the That's of in the given follow-up least, other a noted strong primarily the behavior been been question, customers' gotten machining, from in the as they those in changed welding these What's customer interest were maybe helpful. your offerings? prepared or, the and what's some as that's that precision at the customers getting the variable centric? one you variable additional because, interested very remarks, customers you're

Thomas Rohrs

relationships the Yes. of keeping relationships. as about and is customers. there, $XXX And team excellent operating held in to it they're around million $XXX Cal-Weld across standalone bit business they number really two, one good put Talon take and/or when some during in do And to relationships our then of before to had the board by high-quality they the things have previous companies, will they as very, to up remember with What's they customers. say, QX, start just ramped built ramp, on-time that's business into delivery, with these other our in were from able the And is and by working and chosen for advantage million. very our both a a that I sites. customer particular been What about QX reputation teams, and having kinds little other up went - you that, issues had to able number go we've very is one, we've happened a with individual been particular as one-to-one long-term that of were to and doing of we

business, XXX% but up up ramping were we we As close a basis. ramp got on QX, not their on-time in to we only them did

for their easier part a people wanting lot take it basically makes other capabilities. in also that So to


comes question the Karl Cowen. Your line of Ackerman from from next

Karl Ackerman

I then of first you're as perhaps, model for we a higher we in outlook now Jeff, two questions. or integration in to and, be and your are through first higher financial had going Tom objectives about I where your that of that? think appreciate year could with secondarily, all Talon quarter? Cal-Weld all, the ago, XXXX, given the your December OpEx given how of think in flexibility September. relative we that well your should still the the And commentary half beyond September shipments But should

Thomas Rohrs

Well, let me answer the first part.

So of operating in standpoint organizations, you can about essence, as terms of to kind a integrating activity, in day-to-day from as of XXX% people they're in close any be. integrated

by - line. by and functional customer. organize we by give backdrop So organize to We just We by have that, We organize function. a little geography. don't a organization. don't don't We you of product organize

operations function, a We a engineering and have an sales function, marketing an function. function, finance

integrate their we and with then shouldn't Key old, engineering systems. still key side when key to the of key And old, a will so people. do The take say a cetera. some that systems rather them our et integrated at as work The building about Officer, of COO. et legacy that, The have well more company, of company, area on are think But the we cetera. during organizationally, actual Technology but essence, And I with will if looking of it quite CFO. ERP that's of work point. after But buy they're say people And some for EDP, standalone we, systems, their this that et business. will each overall, cetera. and to our product. at their And would operation finance we at We no running some a our and cetera, still it, where than in work I people the if you and for longer run the ask is in beginning addressing, we operationally terms Chief you for people really something customers work now easy integrate. et the they they're makes look

Jeffrey Andreson


the guidance. operating that the to in there's the drop on One pretty take expenses answer so think, we QX, really ongoing, made QX significant earnings will QX, and it and specific controlled. QX really, you keep providing hard some And We're from not implied But for this I'll per comments when reduction. another share, those a see is maybe drop that very OpEx have I tightly really working we're in way. you'll

expect the what we hold go would that in would like as and is maybe not So Other normal beyond you say as as QX of where than the that, it as you tight that. anything possible we to I and going flat get, the sometimes, them end increase things we're got into year.

Thomas Rohrs

You had said you another, Karl.

Karl Ackerman


indigenous As a product your two Korean enables at of your vocal portfolio South acquisition sell been follow-up, IAN equipment pretty on the you've how you to existing providers.

two XX% companies bookings at year? run to revenue these revenue be, perhaps, wins of combined design As your rate would could lead you these customers translate conclude into for you next XXXX, your in

Thomas Rohrs

are I couple No, There why. of see that. a reasons don't

all to Having One said because And than business to rest else. quite the going a of faster a not they're anywhere having is terrific a, that, a started ASML lot and this, business year. growing. get bigger; XX% business, close there as growing they're and, along, and our significant I we're supplier said of this b, also to is year the our

so matter And a math. of just it's

if If XX%. and to small you XX% a doubling a get years percentage, be is the or every every quite XX% even to year going by if take other to few you it's year, start person at you're out growing

not year, XX%. be they next no, So will


[Operator Instructions].

the question comes next from Deutsche Ho of Your Bank. Sidney from line

Sidney Ho

rate surprise products panels your now. as you relative well the between by do QX talk on revenue a delivery Just chemical what guidance, Can growth that and be - your shouldn't in decline on really according going about you expect your your faster the business, and gas plan. comment than your products? of proceeding welding the others? chemical specifically, machining And delivery of I'm that's Are any interested as ramp your to transition whether them grow to big

Thomas Rohrs

out out was At both by due make we're to doing want of and year, are revenue QX, pieces individual to terms in obviously, we the break as and And never the by all of from we're if our our a growth the the business that to a business break rates did that at going ones just quarter. point QX in individual quarter, that part say, of I didn't growth pieces big not were because, I was, to either. did it relatively beginning to going not out opposed of Sidney, of Talon people this quarter, new, core revenue business core per we terms acquisitions. they the to break And in going that were the point, I growing. to fact, flat that think Cal-Weld and as

So don't that as we we out for have. But of point revenue any make the rule, lines I did what terms product of particular we're that one break doing time. in a at

Sidney Ho

whether in Maybe supply chain? the what customers you fair. do that position you better And That's agree to the QX? talk in seem not kind with there is your is that's Tom, Okay. expect to too visibility comfortable inventory a you in exiting how or this elsewhere customer QX mentioned key in about my you follow-up trough. And that is you a that QX. Are of will is chain the your supply quarter, magnitude of - the recovery get much for

Thomas Rohrs

kind yes. And going in very about we're though. I clear, and was it I'm QX. as as think to it Again, it. in feelings I my about guide comfortable to So bit of about said terms prepared went a my far remarks, quite of not going I've

in think us upturn terms my where in I we're from clear we of are. QX seeing statements quite an

part is. it your let's second So as What leave the question? that of was

Sidney Ho

chain? in do inventory the supply you that there's was, still That not comfortable how get

Jeffrey Andreson

orders understanding. things know, specifically the and number there's is and Sidney, case because, relationships our are not OEMs more obviously, Well, it's this I'll us, to to many the site, worried we something around, their chain fact, speak of the the almost In more such if that first I the in way have requirements we a in now. a the orders literally would if products merging where place you the the would orders. the the XX%, wait of different inventory And actually down the went products in affecting was the during actually the less that. Obviously, be us the literally that always period with between it done other for are that's suppliers, that in the the and out orders, them as of lot are merge and Ichor, the just-in-time where be we part that relationships people time XX% old trust, be said, new customer in come of send investors, customers again, with XX% area analysts supply down any would at lot integrated. would merge - down would on That when be would or of of And right will. think call and our - OEM shipment, - the I use you quarters, would or inventory time words, lieu - XX% new days, as placing suppliers predicted why they inventory customers inventory go of before the because as much that they there's to constantly about during

that think much prove are kind not a order we certainly our to seeing I of good the what of just downturns customers and we magnitude with about way, very we're point. of way opportunity get expect any this that a have any And to happy weird really be So in very, aligned larger. talking been to is what very

Jeffrey Andreson

our I as Sidney, was see how could confident very, industry you would seeing. revenue think, as well, you we, it's is aligned our the in much very Jeff. what are with that what I - guidance, and asked

from where well. hopefully, yours And comes too. that's as will, confidence our So

Sidney Ho

question true. maybe can I on capacity up on one squeeze If the question. more earlier That's in following an side

You expansion us kind mentioned And capital plan remind what support you executed? you there's - adjustments the can some capacity of when your plans? they recently. Can when to you fully is current revenue

Jeffrey Andreson

on entered even maybe as - that to we of year. somewhere year about we going I Never between the Yes. talking CapEx X.X% we this X% and think started this revenue spend were

very was Market that need - was us, as capacity at I not think the us said come all of about said, all but said we bring just about opportunities that, being that Tom million. I share We market the in are They the once. will to handle. we're I gain don't with - front we'll programs prudent $XXX allow we're stopping it also, those same we them. And on online think that range could share. increases

So it's a pretty large chunk.


of Your next question Mok the Needham. Edwin comes line from from

Edwun Mok

kind any weldment. understand, So Is this about today some talk that of growth wanted year [indiscernible] Tom opportunity? [indiscernible] growth to of machining, precision,

Thomas Rohrs

thinking thought would in I maybe in we Anyway, mentioned we're of little year. at the about back. quarter optimistic let quarter go which We're my this anything, me good Edwin, remarks, this it, machining and is sign. that, about now some phenomenon regard XXXX a talked getting might always if I ago, more be of it some little the to I all a When point, precision a see fourth bit with a Well, of weldments.

Edwun Mok

as that's to clarify revenue to you number And can XXXX. potentially fair? that then that drivers [indiscernible] you capture Is ramp incremental - just expected the these that in X believe you

Jeffrey Andreson


have think $XXX of opportunity. we with million that I the consistent very kind been

to We haven't a we've it's broke this as been happen grow. year. incremental begin that but consistent next little for against year, all point But And talking that those Tom's of to about then slow probably bit very is then drivers. going will up and

Edwun Mok

between four not answer you million it going out question, $XXX to which my is guess, the break I you're for Jeff, opportunity. next that how opportunity that

Jeffrey Andreson


Edwun Mok


you in your first it about about in quarter, think less what first model? for talk that business margin can long-term and this was Is I that. you quarter trend, obviously, improve second your even to term, Or the way the Can expect down was well, quarter margins? kind helpful. a fourth it so as little quarter That's because about of the the we of slowdown bit. Right. would Is mean, and Okay. Cal-Weld that recover I quarter and think, than quarter? to the targets margin longer the this think in margin XX% of how operating actually,

Jeffrey Andreson


way I margin flows if talked a gross the you - last obviously, think it we you'll you And it, at was and is, quarter about through about look should have XX%. the incremental above you what XX% model. that that those. about But Tom think see margin

on fixed give incremental because our south panel gas So going QX structure to and versus weldments incremental their side, margin whatever be XX%, carry number, because number, mix margin business. of I'm and for revenue depending it our of you into you the the you'll model precision machining the will cost north a component - an that but see exact not higher just of XX%

initiatives of the - So And you'll I to think all the see margins operational - like we're to model. with leverage continuing recover. to those this in we're we more any drive next going going hopefully excess increase, to drive remember, But some to incremental our Tom said, also into period we're resources they'll And lever up. in carrying that would period. it's expect

made So as - to prudent very I've comments going well. and the then We're on very, OpEx. already be there


Tom [Operator are turn I'll questions to further over the at no Instructions]. time. back Rohrs. this There call

Thomas Rohrs

call to for this joining Thank updating quarter, quarter our us November. you for third we in look all forward Great, call on you. Ed. Thank our you and


conference today's That call. concludes

disconnect. now may You