ICHR Ichor

Claire McAdams Investor Relations
Jeff Andreson CEO
Larry Sparks CFO
Quinn Bolton Needham and Company
Sidney Ho Deutsche Bank
Tom Diffely D.A. Davidson
Mitch Steves RBC Capital Markets
Patrick Ho Stifel
Carlin Lynch B. Riley FBR
Call transcript
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Good day, ladies and gentlemen. And welcome to the Ichor Systems' First Quarter 2020 Earnings Conference Call. At this time, all parties are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time [Operator instructions].

As a reminder, this conference is being recorded.

to Relations host for like Claire today's now Investor McAdams, Ichor. would introduce for your conference, I Please go ahead.

Claire McAdams

Thank you, first call. today's you for Jessie. Good afternoon, quarter and XXXX thank joining conference

the listen press both about that forward-looking the at those ongoing number laws. statements industry of the and earnings These please meaning contain our COVID-XX the impact our federal risks read conference call, of of subject you as As operations are pandemic made you to the those are with our those to within with in forward-looking this results SEC. include in recognize including statements. and release large, on securities the on Report statements, which a file of many for our cause from subsequent described risks filings could These and spelled actual out uncertainties, year Annual differ such described materially XXXX XX-K beyond on release, Form SEC control in uncertainties which fiscal the those our and and to press earnings and

As in COVID-XX turmoil pandemic forward noted create statements. you that our and to uncertainty filings, the aforementioned looking significant volatility, industry, to in provider continues limiting ability longer-term remind our we’d these

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

be certain will financial this measures during call. we Additionally, providing non-GAAP conference

Our Web their to most posted supplement site release of earnings IR non-GAAP press measures. financial measures comparable and to each reconciliation our the financial financial these provide a GAAP

we I'll open After quarter over Andreson. then results our call business now their our and to the Jeff review our and line provide and will with prepared a CFO. second and are On Sparks, first with update questions. Larry will Andreson, CEO an and today the quarter results our details me turn call Jeff? of Jeff the outlook begin for of Jeff guidance. Larry will on remarks, our additional

Jeff Andreson

QX on your the are healthy I all call earnings safe. you, to hope and families Thank call. that and today Welcome our Claire. of you

had impacted were operations. experience pandemic shutdowns, by our sites effected operations each of our being quarter, first of Malaysian locations most with California We COVID-XX temporarily the the and During several global our requirements. our shelter-in-place notably full by

spite manufacturing revenue period of employees of strategies of also efforts to flexible our enabled our achieve exceptional chain. growth majority of worldwide last supply year. organic of challenges, growth compared quarter-on-quarter semiconductor of sales same the the us million XX% Total of In and to strong peers vast these our the the represents industry-leading $XXX equipment XX% ahead in

performance achieve are revenue of COVID-XX to We proud immensely globally of the associated obstacles this growth in level our light pandemic. their QX of the for teams with

provide update regarding Before COVID-XX pandemic I like with growth the initiatives, on to detail I'd move to impact an of you strategic our the on Ichor. more

and families. Our remains business our of the first priority partners workforce their and safety

our health public all of each with complying in are We place directives sites. for

We procedures plans may employees, potential each to procedures that protect spacing, design have quickly any the our have in and face. includes cleaning exposures of well implemented as site as to additional we temperature react safety to monitoring

Additionally, home. their working who all perform remotely can are jobs employees from

payroll. our on is for of employees values care treat employees our our It to to all respect. kept our with integral we shutdowns, and of them an periods During part all

approach first saved cost. have will believe the long-term would furloughs in of benefits outweigh quarter, we money the While us near-term our the always

continuing and Our of delivery to initiatives. is our support our output our maximize growth customers second while strategic to drive priority requirements,

we closely supply light that chain. with to our in in both working shipment customers support are capacity ensure plans challenges We of and their

first ability for some Those weeks, associated pandemic backlog. key with the the to and were suppliers delaying In three four that of base at now. China ship February, mainly the Texas, the of shortly with end initial our during Oregon Malaysia our supply by orders sites following in shelter our suppliers our several in affecting quarter mid-March, thereafter place and are well as closed recovered operating Minnesota. California we in of The impacts had similar were to announced largely our operations and requirements

period weeks, customers. to a shutdown of this essentially components to weldments certain and ability our about For two our provide

More their chain, prolonged a WFE the shelter manufacturing practices in there. critical we Malaysia to as have very Malaysia recently, and Singapore factories. their expanded experienced in has country the in in particular well. a most place pleased are worldwide disruption facility is supply

their approved factory continue that to to level to as we news for will to customers committed free the spacing next was expect the suppliers factories, and requirements. readjust the just Malaysia full operation, to and be recently near resume is new great several be we to prefer Our be capacity Malaysia. in close It our we operation COVID weeks,

by now In are each designated countries that us been we follow. protocols IT to operate, the in operate. critical essential we supporting of That have which we the said, business required been spacing impacted industry, an infrastructure allows which capacity have our levels somewhat to the being

March and are very situation April in May. improve seeing while So the challenging, were early we here

chain supply Our strong. is

supply they flowing. closely working kept these supporting challenging have with our them times. parts base during are and We In return,

I the we been built to position supporting of and executing in to everyone continuity strong business COVID-XX doing through plans an these challenges strong to the order inventory dedication address for a continue level navigate And support as to uncertainties. demand thank from have and customers. want Ichor their our excellent and the pandemic. company our We to to has job commitment

the changed the quarter. last has are today. demand much Now strong I'd In in over discuss to general, operating semiconductor the for environment the of demand and like remains course we not equipment

and across in by of investment continued of increased from and levels logic strong of our a largest each of our customers We modest foundry all businesses, memory are degree and demand driven spending. seeing recovery

are distancing result manufacturing a stretching which social output the experiencing However, many the is primarily lead limitations, in industry of requirements, as times.

we expect the roll will the quarter in steady following seeing second any improvements backlog and are unfilled quarter. We those constraints into exiting

will discuss quarter has objectives review revenues the company's challenges, of quarter ever since I by quarter, growth making against the fastest Before in for progress organically quarterly history, XX% we’re the that ramp current revenue second on second of spite In the our three executed year. the the outlook growing for our XXXX. I the the team

opportunities across share Given base and XX% the on work we was our in share delivery, and industry XX% precision to in to are execute continue we that weldments improvement least our market customer In to we believe base. customers markets. within our on machining, customer period, between was our In of result with direct and over with gas the footprint largest growth a increase at same our continuing served underlying revenue increased our additional half and qualifications growing this of Asia.

gains of some the on We are track so our growth in far contributing this revenue year quarter. our to plans first with with these

Another especially factor our customers, driving specifically chemical those opportunity of and revenue area Liquid customers penetrating this with our Korea, Japan proprietary several business in with largest new with Asia. XXXX actively we and in OEM customers. is In for growth potential delivery new The Delivery the in be success in will in discussion and Module. are

shipments OEM of lithography region first position starting all are call, reported EUV OEM in finally, our I the for the and in continued to factors with from in new the for customers, these both will And ramp of and will XXXX. XXXX. last are meaningful industry we XXXX. in expected revenue growth, growth we enable a of in year-over-year other to we potential Korean As we outperforming quarter, beta shipped which from the unit benefiting this believe us us XXXX with Each first achieve discussion on contribution overall

continue good and are our and our to strides with strategy there and started to IP continuing generation panel. for work we progress Further, making on to our the increase Ichor. make on content next gas are We Delivery Module Liquid engineering

to this expect have of We development proprietary operating progress in as are drive and expansion area delivery in and increase the as to and year. towards continue the delivered IP order served proprietary the units to our invest our the markets, this well are in Ichor of for of making good engineering model gas profitability. levels our share beta products to drive first solution our content to cornerstones increased longer-term of strategy These this of

will Larry, Before revenues. our I over to turn second outlook quarter the share for I the call

revenues expect to $XXX million. range of million $XXX the We in

and high-end expanded the guidance, have We changing improvements, the of XXXX is the The range we our than uncertainties twice level are the period half anticipated XX% no wide, operating be weldment group. that we first growth Ichor's overall of given our incorporating manufacturing additional will revenue range from still last same our restrictions on with recovery our range while year, remain midpoint seeing capacity. the the dynamic a of level peer of of a approximately in quicker At are the of as of up and however, environment. over sites

did of growth highest quarter stride job and a managing the To we've the our made pandemic summarize, in great third the through of as initiatives. company's financial result performance good deliver the encountered delivered a revenue to the solid history, against team strategic challenges

demand believe provide and call now Larry drivers operate turn I'll remain Larry? over to continue We the intact. to performance the environment in our an a financial on to the and update strong that growth long-term outlook.

Larry Sparks

Jeff. Thanks

as investors and our for schedule expenses, for amortization These the of and such of discussed as individual the like results, non-GAAP would impact are exclude GAAP line non-GAAP and acquired section intangible of I R&D this measure expense, non-GAAP very measures our share-based is call. the remind metrics financial summarizing unless There P&L items SG&A the Web that today assets, discrete during First, and identify in items site adjustments. you charges based. non-recurring the compensation to reference I GAAP helpful measures a operating tax including

million, the strength spite of created and in revenue the quarter straight same This sequential from period for year. these in mentioned, quarter. fourth continued the Jeff first demand. and last from of challenging up quarter a revenue increase As was first quarter the growth reflects an our fourth company In $XXX customer the XX% pandemic of operational XX% was COVID-XX challenges, environment

margin unchanged Gross for from quarter XX.X% the QX. was

improved higher had margin of we utilization, in approximately QX. of factory strength the basis forecast improvement XXX On gross in sequential revenue points and

resulting disruption had the However, to our quarter. from the completely expected operations on increase in offsetting the margin, COVID-XX pandemic negative a the impact

or place Most on was our of of The ship a operations indirect direct pandemic factory affected multiple quarter. had output the and and negative of result absorption perspective. These shelter during from impact impact the mix shutdowns to of orders the were locations. temporary margin factory higher overhead we in in the able disruptions gross and a cost both products

smaller was sales our For example, a our margin significantly higher quarter the and weldment constrained and in of portion business represented expectations.

factory the ensuring to expedited number related the of higher freight, customer while changing a COVID-XX impact In We negative additional required and increase production the cleaning, To COVID-XX PPE safety costs to similar to basis we XXX had our overtime health managing and quarter. least deployment pandemic total, disruptions change of direct expand point incur expect increase second and our also in us incurred workforce support gross and operations the at our a and margin workflows, impact on premiums. priorities. employee customers, shift

Operating the G&A slightly than $XX.X the due coming other to and operating lower expenses forecast. guidance. margin we and primarily million quarter million, $XX came operating we of profit end impact of forecast trend the legal impact negative due at COVID-XX the to gross original expenses higher in $X in and expenses in forecast operating approximately was on not resulted at Together, The of above expenses million operating for our significant, expenses versus COVID-XX revenue lower higher the expect low seasonal, quarters. to

EPS per of on of the $X.XX impacts low of to reported $X.XX original the $X.XX share end QX EPS guidance with range. equates our guided This versus revenue at our

in expense quarter to our $X.X the the tax and declined interest as XX.X%. rate quarter about Our million, for expected first was

over tax XX%. QX the last to from same in of the range doubling quarter up continues from more period of years for couple and income the rate Net to was XX% next planning million, year. the than for XX% Our be $XX

of year the generated ended quarter at the end. turn million cash I $XX P&L. balance of cash $XX from We million $XX to will with million the We compared Now approximately to sheet.

operating payables. negative increases working However, support $XX significant inventory ramp resulting flow The revenue working million. by primary increased the $XX lower were in of and volumes to in in in capital million the quarter, in capital cash

by couple revolver $X of on Inventory turns were million our net to improvement an offset ended million, remained the debt Day from of term $X sales outstanding with XX compared loan. an increase $XXX our of $X last We days, million, of with increase total year X.X. the reduction at end quarters. million a quarter in

available. balance revolver million of Our out million was $XXX $XX

adequate to projected on COVID-XX long-term in our In are we company business and ensuring focused laser the liquidity growth. cash situation the environment, current support

highly bank line us flexibility. we revolving facilities. Our confident covenants remain gives credit our we governing are will significant And credit within all

much we times month to comfortable continue revenue sustained X EBITDA September levels below We long levels XXXX, the outlook. feel current our higher during during our downturn. given Even We debt recent industry very quarter lowest calculation. forecast capitalization we ended and revenue XX with remained period, coverage than contractual which our five the

Now second I lower $XXX $X.XX our will slightly million gross similar quarter million, turn $XXX per as earnings the share and revenue operating of of reflects QX guidance guidance expenses. to $X.XX margin our With guidance. to range in to levels

and shares $XX.X We similar expenses are and forecasting QX rate to outstanding. million interest tax

great the this will behind the confidence, margin us expect related quarter. headwind it with is we gross to to too COVID-XX say of after While majority early be

margin goal drive component And gross IP incremental reduction accretion historical our is and in of margin increasing XXs. within markets content programs, the to within low cost our share through remains through products. gross the flow higher Our margin proprietary growing greater our longer-term

Please Operator, line. take open to ready we are questions. the


you. Thank

conducting We question-and-answer [Operator will a session Instructions]. be now

Our of Please first your Quinn from the with Bolton comes question and line of question. Needham proceed Company.

Quinn Bolton

I nice actions off challenging on last guess export in able Hey China. some take impact, had regulations the environment. license commerce guys, of changing for if where wanted mean a the and they're revenue start a to at what and in with military to that's Monday performance requirements congratulations recent department any been look for military the you've new use if that might those business? users end Wondering I

Jeff Andreson

some say, some up last headlines in had customers. licenses haven't the on would seen virtual from we were China be good days. to many Many, there's take the provide years our feel from on a have And shipped the of I I in any that the But but ago, going time, everything any eye a it. given getting close to into the come limitations haven't so might this. come gotten we license would a there. it this don't feeling semiconductor of whether industry. keeping effect required general, We're license for few really

unfortunately, licensing. that So of better will they're of OEM the ones one probably actually do our the it's asked customers as

Quinn Bolton

Understood, the topic it's been I asked over because week… last

Jeff Andreson


Quinn Bolton

guys the is sort revenue you over Inventory last business, followed. few obviously the big onto quarters. Moving had of a ramp

reflective wondering into think is kind half we you about can second how year, anything is you're inventory may about Just read of thinking or inventory that there higher how half as higher the sort inventory given the the come And you balance? what you're of the as the thinking June second balance of of hold, quarter?

Jeff Andreson

light to demand would tell very I inventory is environment inbound that of what constrain very, is the in We Well, strong. opted you still of challenges. overly not the some

the inventory sure we well. As we have through and make turn it want as challenges, can get to those we in

say we on down likely quarter, out range. probably come at stayed look maybe number, where slightly, pretty flat healthy. it'll the inventory would depending next we turn Our I as pretty in

down we'll to but And strong so as go manage into a still some QX environment see it levels, relatively as we demand well. we

Quinn Bolton

to the increased given seen activity your supplier look just customers some some world? of last from then during and suppliers, up downturns, we've driven COVID base. I to of wondering your the effect periods of supplier the tighten if may from that you're the any seeing Obviously, think supply And try of base, was to me. I uncertainty question the some customers tighten especially around

Jeff Andreson

you think? reduce, tighten I By mean

Quinn Bolton

yourself? larger folks like kind reduce number suppliers of Yes, consolidate to of the the

Jeff Andreson

Yes, kind given has you the I think that industry of the global actually and would miraculous global this it’s been able what to I of accomplish, tell the chain. nature supply

like ramp seeing that that you of bigger, not challenged smaller industry bigger would more players I'm and So, as and to gets become things tell I some happen. the that. the

So, pretty to have addressing it entire we than that re-jigger a ability is the companies I I'd function in more kind of done well the of global say ramp chain. in most reported just, the grow situation. supply of to it's mean


you. Thank

question with your with Bank. from Sidney Deutsche Please next Ho Our comes proceed question.

Sidney Ho

can what there The been help and quantify you QX first no revenue QX, if were one is, supply constraints? would us for maybe have

Jeff Andreson

we would two headwinds But think than the with our of I you beginning probably spacing range hear then I base been industry shutdowns our weeks we they’re you’ll certainly higher and as everybody probably have QX, of towards impacted have end because our everyone of kind when of the look customers QX, we mainly couple and I requirements think at say And large out supply think the China's upper underlying of is with the operations. revenue into had there. from the not would customers. the have look realign run the adjust too, at been that with a guidance we ending industry, in of had reflow revenue I the is to demand for in obviously provided, because

working So factories everybody their over adjust. to is

Sidney Ho

can will your factories about to of regain whatnot. to comments related can this impact? or And parts share get out think based when relate in Malaysia talk shares? your you just this you those on open, simply back? comment, get of some you of you can market that shipping and kind expectation competitors’ Is Would your that be have sounds your start like you QX, you when those quantify that, to able lost Kind or you because

Jeff Andreson

do have our comment think was in small. made fairly haven't any duplicate one that's of competitors we lost by weldments about gas but They gains. share I we We know market Well, there think share delivery. a

the that's overlap that point since additional we're just also due has we've correct us not to just inference that market you about what put I'd in our product this seen the the lines. from can and XXX% won growth as outgrowing and we don't the gains year that see industry came share out some is maybe really last we year largely revenue as think you a year share ago, well. market talked significantly effect XXX% that I year-over-year gains that when compare our with So we it

Sidney Ho

you you this share talk today now? you would in my Maybe past, rank these range more you how question XXXX? progress talked last year, opportunities Can as revenue your calendar about the a and have for us about of opportunities gain expectation aggregate in maybe what well. do be these opportunities have gave And order is, some these appropriate

Larry Sparks

think scorecard. we component quarter-by-quarter delivery, chemical in I going to in degree the looking the that late that said we're then really you and businesses and customers with our of the in try call, of the for is our side LDM distribution U. on What Sidney, initial may tell and here in outside and the weldments There we're machining. precision to the on last success weren't I may opportunities in impact would of the we expanding do the in on S. the U. at we some gas geographically obviously, is start working year around opportunity have that additional some qualifying S.


Thank you.

of Karl your proceed Cowen. next the question. Our question from line Ackerman Please with comes with

Unidentified Analyst

for different your please. in kind your This it say put to guess do have few near-term. months then have with way. up With of you the I follow comparability out do is in a gives different many here companies you Sam And And the I on confidence the How play next guide? in What semi-cap guidance customers? exposures that reluctant other Karl. visibility to a the

Jeff Andreson

for that can twice look where and than our supply come we bit wide. big range. set our of at I us. we think anticipating. its range think online operationally, do. a is recovery. were we where I'd from a challenge as We've could But now, end quite recovery Malaysia we being right as able think is think comfortable we of say, today typically we're I nearly it our comfortable we're and do faster the top of widened a I what chain at back we're what with It's you pretty is to

we've spacing that in levels pre-COVID employees now we near or putting completely, operate place now the to kind back And be approved they're there. bringing been to pre-COVID should protocols of capacity on, of we're back our all and

with a And but of where put the so in, If which other going I to with places comfortable predict a providing doesn't range something feel happen, happens now. that, think lot restrictions is can't future. we're we

Unidentified Analyst

on to given expecting should about ramp talked how then gross year of we I impressive already, has rest them the call through revenue thinking bit a about the linearity up your And the we how we’re to Thank but be rest long margins been to-date? think the of your beyond But the catch June possibly of seen and you. the demand how trend year, cost speaking course. not COVID-XX take it through you've positively here, with through could considered? labor structure

Larry Sparks

XXX Well, to think kind contribute I improvement of range when before said should in XXX we were projecting what of We around we the from point growth XXX. the margin. a that basis said midpoint

depend addition still overall volume of that to the sort can and we to strength I QX. would think capacity to normal back flow on kind kind confident we as it through lot are a where get at in demand of that mentioned what least of in to expect see then the that of that and and we customer more will leverage kind beyond of we and and demand, of execute factories, see Jeff we're as

done cost of also, customer just which QX, get those the then QX how And depending much we're to there's kind timing how some happen upon we dynamic. we and in quickly have, may that programs changing of responding or can

our and back. beyond basis the in XXX machining of we get weldment to of precision try go mix road will higher least increase down we And as we to and mentioned points So model. as closer we amount expect the to areas, before, then that get the at products


Thank you.

proceed Diffely comes with question next your question. Our D.A. with Tom Davidson. Please from

Tom Diffely

When $XXX further. at or one what get to from back $XXX going Are range. to step XXX couple be margin to minus ago? the similar million the the you plus years million as sorry, you was margin XX taking Larry, well So back it

Larry Sparks

I would slightly be close get we the at we're we'll if that as end under say this but that. that level, probably year revenue still of to very towards and

I that have lot point. where definitely mix product we at to we that's If that the of I on the in think areas a that we precision continue to depend of and expect going range to of the can the capture we in weldment machining, think it's share expect to be.

Jeff Andreson

try of We’re the machine. increase, and and our driving to obviously, mix our precision weldment

I good share got wave others of and working that gains a on think we've in we're initial space. market

go So be Larry that our kind have as be the we'll kick continuing said, year, as will we helpful to programs through cost as in. well. And reduction of

Tom Diffely

And weaker then that at just a hit quarter, in was little was subject, was a more facility on than why the weldment the that rest? it the

Jeff Andreson

allowed the to we majority California people When and shut get facility of a you up shutdown our takes list. one is I smaller locally, we of Malaysia. we is up were in in better before bring weeks here Malaysia bring a essential Then we well for closed definition, about about was that then and obviously, And or Yes, before of have County industries production were for facilities, were mean, largest our a even part of labor. added it that then large Alameda while at to facility the week have three weldment back. the the weldment in to the three as Portland. vast we kind XX% the kind down, of

as down were for better they part of two well. So weeks the

there. So you that for almost straight lose do stream revenue weeks two

and of panels Malaysia they But combination a weldments the that we make is gas vast sell externally. we internally it that use the majority internally for And in of that Malaysia, is weldments used.

bring very And critical point, they're it's a that up at coming Malaysia had is curve to been and us. why that out effect quickly. come so to which back, the job. been notified good is for since only mean, on They're week they've back so, a I operations capacity everything two doing

Tom Diffely

then Yes, home or have I be little capacity that? social a factories. know the look to you your it that do Has finally, tough empty And you sort at weld can inside the at of when of distancing kind enough reduced sometimes.

Jeff Andreson

where would the impactful capacity degree. us, gas spacing panels answer the think the they have the It requirements the because our are there all of seeing sites more integration and yes. machining machining impact doing where room an out other there's the where in like not were is areas little there's CNCs. operations But really little the space space assembled, to Q&A of things is weldments as on as and gets that I our clean we're the say, are look So, limits clean in not you're some at the necessarily and a and final you I constrained. actual a rooms and

just And job of next is to we ways. few we really the see into. that work guide enough those creative team doing have I good do range they can. think and that revenue out capacity eke around all a to to try that quarter operations in created capacities we've for trying certainly bottlenecks. We So We're the a the


you. Thank

Our Markets. line with question. the Mitch Steves comes proceed of Please from RBC Capital next your question with

Mitch Steves

just had kind one on demand of is first the The side. I

pretty that's you XX seeing guys it just over this months disruption was continue? of terms there you going of that demand So that news environment months giving Q-over-Q realized cyclical XX I or are that to or orders think, going let's say now. flat But down how first the it's relatively call year. year all next in guess, type visibility what very the about confidence is demand you forward But last give the question as we're of I think my guys kind given what given very, we’re so? here, demand you have confidence potential do we is in. I good, disruption, guys guiding for just

Jeff Andreson

expect the certainly I months. get this we strong. strength customers our I that predict the them fairly difficult and logic as still by in from think first And is very this XX memory what some Well, at you this input recovery half. on point. remaining global foundry a is out do as the side. of in through we've It's the that could happen don't to tell from We driven demand seen economy some will come the is message that we

the if don't impact do be want trickle industry itself. there's one semiconductor it this. But to effect to that some it, first to be may obviously I an and down go So, going the have to

just said But going secular a now, things there's kind technology of that, right taking lot having on transition of XG. to

been of of has that I the downside. and upside infrastructure think the an to kind all work-from-home

where you is see now and like right the may are think of strong obviously but phones hand it I well. very PCs some eventually, that as things in

So, foot wish I one the and predict the could brake we operate brake with the the gas near quickly. the fairly and We applied on one I foot company future.

that the rightsize think see in last quickly if we the infrastructure I to you can able need fairly to cycle be. were

and and say So react that is as you've that there we monitor strong. -- them situation our demand. customers the heard we'll the from still right we'll the fairly it see it, now signal But remains is

Mitch Steves

kind do companies benefit of fabs that fab fill the built, and not that guess wouldn't is probably And makes new just does just the I And versus one States one? then in to guys very really going an if matter So in of fabs Would if XX% the one was guys trying is is the surprised new this a it’s build curious had it sense? to on I a had to manufacturers fabs it plus versus U. other know or bring to I are idea if year I building old a be United follow close going on mind them or that think you last beneficial you the couple is incentivize. incentivize to S. you that filling then just ASML year, is semiconductor and start the just built or ups, one so here. last if you to old be you just that? thought

Jeff Andreson

It a year very revenue was in year. last getting there low

tools the And question numbers large we're but different enough ASML department about them this in fill fab given parts they'll of up a growing other end to all for you us. some customers there's the and licensing, say, fill the year, that tools make But the building they the business shift them they'll what location is us. this new can't in outgrow, to need more of XX%. they node and beneficial So fabs, technology to the may fill in they whereas the fast do get like just where S. slightly the unless address Greenfield would they technology would of fabs with whether stuff I grow because node. and around up get Greenfield be on U. impact commerce is beneficial with -- to probably to magnitude just then we

would probably, a happen that be should if So, it net in benefit.


you. Thank

comes question from question. Stifel. Please proceed next Our with your Patrick Ho with

Patrick Ho

Maybe for margin terms COVID-XX. gross with of you, Jeff or the specifically impact Larry, in

in like the You lot prepared a said utilization, and of at of it was things it manufacturing based on that XXX shutdowns basis least the quarter and march nature. remarks, points sounds the on

still that June Is back for As bigger that biggest basis you in are kind of the of manufacturing variable impacts point gets look those XXX chain, normal impact. XXX logistics and to maybe June impact more the that the quarter basis point as operations? at or quarter point supply

Larry Sparks

Patrick, Yes, question. sort of think the you I answered

We're to the costs had end change of work the significantly we factories seeing socially we're shift also, -- obviously around when will that freight our back you the see and quarter. think to of people up, freight, higher distance logistics, sort of quarter coverage. as most impact bring a we've as last I and opposed

things. more have late which and on shift the we other So premiums shifts, have people

of little rates hourly think getting kind up people pay you'll average end on will as we production a see want higher So, where be. that it bit to to I up we

to think with or direct with ended mentioned, number we figure needed or of to as them shutdown shelter-in-place impaired a a I of do. factories we the Jeff good the the shutdown, lot trying out March orders, what significantly

said, understand what Jeff we now. to as think do I

moving We kind will where around have further away they We've looking optimize normally cleanings and at around be. kind equipment factory would also distance that the of from extra operations inside for costs of output some operations folks. and

put composition bit as of is we of of different significant and little in impact energy what a inside happened a force them the how a I think inside end on going similar there's and margin when our but factory where they at amount result structure labor we So, and the to That is work. QX.

Patrick Ho

And machining. Jeff in precision up it's maybe you've and my question, as revenues about weldments share gains about talked follow your evident obviously in growth the in year-to-year

are as Have you in at for their the right customers and and gains? timing evaluations the of making qualification track? And near-term sure your focused just get of any largest and on I'm believe current that out that yourself XXXX environment. what the now looking seen Do are you potentially situation the focus evaluations into does on customers these on push just the products. is, the still Given is everyone it share the that changes

Jeff Andreson

in continuity going think pieces, two and you probably qualified, that supply I'd I So, of this go if I quickly are I think get those a really mean, Patrick. there something to now. split is have

So, your if you something, generally that with vendors with they you need or us. to qualify ensure work to customers would change

New product qualifications, slow. seen have them I not

I largely their about I the the industry think talked think, operational maintaining how and of handled this, I of development. they're kind R&D has as aspects

Delivery the have out to we data So a and hope gas Module of Liquid couple betas, next have end the the generation of by there. panel obviously we year

all as of progressing still this of light are in well those think quite well. I


Thank you.

proceed question Our with Please Craig next B. from Riley your question. Ellis FBR. with comes

Carlin Lynch

Craig. on This is for Carlin Lynch

the wanted point jump on to followup. gross and the Just margin ask

and impact year has guys Looking that was what quarter last impact, a how quick of beyond kind you impact revenues had it wondering I the business plastics ramp? the were And from about talked division. then of COVID-XX through I thinking you as about up. the kind follow

Larry Sparks

question Your plastics? was around

Carlin Lynch

Yes, kind revenues through of margin back. right just come year impact the the as

Larry Sparks

not plastics do doing expect a have it that we're some effect. of and scaling Well, probably aspects certain to going still but But to second there. now growing we start aspects We business are right the will activity with improve, it's that. half be are certain that, margin that

Carlin Lynch

then And in OpEx the just point.

quarter, that R&D there qualifications. but second the the are of come given What puts and is mentioned down kind the projects the all OpEx to slightly through in customer and You takes year. new going

Thanks. Just any color there great? would be

Larry Sparks

we think kind mean, module and programs. the of to those that quarters execution liquid next efforts. I we've a prioritize I gas been the of couple now, Well, generation panel doing for on continue especially the delivery development in

no we think intention change to short activity. of kind that that I have

G&A communicated that around million probably spending I the of hold range other the the kind time. to level that we will last of R&D adjust we're sure overall We levels is preserved. that making And kind to and trying think spending $XX lower

those it to I we'll to. no If R&D and change make do strategy. investments, we where sales G&A think and on adjust So prioritize have we in to have in if

Jeff Andreson

of year. and is Yes, kind until I to next end would by I we're we of SOX add mean, that the don't this say generally add we starting year light, A I the compliant example to. OpEx we have when perfect OpEx become have year of

in When our acquisition in the year. development growth this funded kind we acquired there. new of that it rest the get that's So flow the last unit, this we R&D the of And money the year we programs. what costs do is around control of of then year impact full largely of

up softening to half, a second as So we levers have the said a that's why reason well. another pull Having that, if bit. in that it's we on any see few


Thank you.

no at have additional this questions time. We

Andreson So, Mr. back concluding I'd any like additional to over comments. the floor pass for to

Jeff Andreson

are we next joining times. call for hosted look on this meantime, earnings May early be and Web the like Thank these our and IR via I'd late in our We you Cowen to scheduled Stifel that you will us suppliers again by on virtual in our concludes the customers to call. In forward webcast through employees, our quarter. tech in on in participate which to August. updating we Operator, site. for their early challenging support June, conferences manage available as thank call our


and Ladies at your include gentlemen, may you this for you. teleconference. once time. Thank your lines today's We does and disconnect this participation thank again you