Q4 2024 Ichor Holdings Ltd Earnings Call
Good day, ladies and gentlemen, and welcome to I-Corps' fourth quarter and fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode.
Later, we will conduct a question and answer session and instructions will be given at that time.
If you require operator assistance during the conference, please press star zero.
As a reminder, this call is being recorded.
I would now like to introduce your host.
for today's conference, Claire McAdams, Investor Relations for I-Corps.
Please go ahead
Thank you, operator. Good afternoon, and thank you for joining today's fourth quarter and fiscal year 2024 conference call.
As you read our earnings press release, and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of the federal securities laws.
These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, and which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in our earnings press release, those described in our annual report on Form 10-K for fiscal year 2023, and those described in subsequent filings with the SEC.
You should consider all forward-looking statements in light of those and other risks and uncertainties.
Additionally, we will be providing certain non-GAAP financial measures during this conference call. Our earnings press release and the financial supplement posted to our IR website each provide a reconciliation of these non-GAAP financial measures to their most comparable GAAP financial measures.
On the call with me today are Jeff Andreson, our CEO, and Greg Swyt, our CFO. Jeff will begin with an update on our business, and then Greg will provide additional details about our results and guidance. After the prepared remarks, we will open the line for questions.
I'll now turn over the call to Jeff Andreson. Jeff?
Thank you, Claire, and welcome, everyone, to our Q4 earnings call. Thanks for joining us today.
On today's call, I will briefly recap our year-end results, provide an update on our current outlook, and review our progress qualifying our proprietary products.
I'll also discuss some of the gross margin headwinds that impacted our Q4 results and our margin expansion strategies ahead for 2025.
On the top line, our growth accelerated in Q4, with $233 million in revenue exceeding our expectations going into the quarter.
Revenues were up 10% sequentially after roughly six straight quarters of revenues hovering at the $200 million level.
As a result, the year ended modestly stronger than expected, with 10% growth in the second half and total revenues of $849 million, a 5% from 2023.
Customer demand continued to strengthen throughout the fourth quarter.
Requiring our weekly build rates to ramp significantly.
to levels that began to require additional resources.
We believe this higher level of demand is indicative of a strong year ahead for our primary applications of EDGE and CVD, with broad-based demand strength continuing from both the advanced logic and DRAM markets and the beginning of a recovery in NAND technology investments.
With Q4 revenues finally indicating the inflection point for more meaningful growth ahead after a prolonged downturn in etch and deposition,
We added significant machining resources in Q4 to address the increase in demand for both our build-to-print and our internally developed machine products.
Additionally, in preparation for increasing proprietary content, as we cut these components into our gas panel builds, we are building stocking levels to support our gas panel integration sites.
These resources are critical to support not only the top-line growth for our business,
But also, the increasing component content that we can supply internally, an important part of our gross margin expansion story.
The gross margin headwinds in Q4 reflect the higher direct labor costs, which were not fully absorbed within the quarter, largely due to a longer-than-expected training process.
We expect the residual impact of these higher labor costs to carry somewhat into the first quarter, but as Greg will discuss in his remarks, the vast majority of the labor and inventory charges that impacted Q4 gross margin were unique to the fourth quarter.
So as we look ahead to 2025,
Speaker Change: You may recall that our visibility for growth and an inflection point in our revenue run rate improved significantly between our Q2 and Q3 earnings calls.
While the debate over WFE growth in 2025 intensified,
Speaker Change: We were talking about the beginning of an upgrade investment cycle for NAND.
Speaker Change: We were talking about an increase in etch and deposition intensity.
Speaker Change: Boosted in large part by the additional process steps required by advanced logic devices migrating to gate all-around architectures.
Speaker Change: We also talked about how the expected slowdown in WFE spending in China was a favorable makeshift.
Speaker Change: Setting up a strong environment for the US OEMs to outperform overall WFE.
Speaker Change: And while the evolving WFE demand environment did, in fact, result in lower quarterly build rates for our litho and silicon carbide businesses as we move through 2024,
Speaker Change: We also talked about how our participation in advanced packaging and high bandwidth memory through our chemical delivery business has largely offset these pockets of weakening demand.
As we indicated by webcast in January,
Speaker Change: We believe this inflection point in our revenues is not a one or two quarter phenomenon.
We are investing appropriately for the growth ahead.
Speaker Change: In fact, demand has continued to strengthen quarter to date, and we are very pleased today to be raising the high end of the range of our revenue forecast for Q1.
Speaker Change: As we have gained clarity into the various margin impacts for Q1, we can also increase our gross margin outlook for the quarter, and even more importantly, for the full year.
Speaker Change: We expect continued gross margin improvement throughout 2025, given our visibility for continued strong customer demand and increasing content from proprietary components.
of 25% to 30% or more.
Speaker Change: Enabling us to deliver gross margins in the 15-16% range by Q2
Speaker Change: and exceeding 16% for 2025, even on modest revenue gains beyond Q1.
Speaker Change: Which brings me to an update on our progress qualifying both our proprietary components for our existing gas panels, as well as our next generation gas panel.
Speaker Change: We have made steady progress in closing additional component qualifications over the past quarter and will be cutting these components into our manufacturing pipeline in Q1.
Speaker Change: We expect growth in our new products this year will be a key driver for margin expansion for I-Corps in 2025.
Speaker Change: I'll start with our new component products. We are very pleased to announce today that our high-purity valves were qualified at a second customer during Q4, and we are currently progressing through qualification at a third customer.
Speaker Change: We continue to make progress qualifying our proprietary fittings, which are components used in our weldment business.
Speaker Change: With our two largest customers already qualified, we are in the final stages of our third qualification.
Speaker Change: All three of our process tool customers have already qualified our substrates used in our gas panels.
Speaker Change: These are all critical components used in the existing gas panels that we assemble as well as our next generation gas panel.
Speaker Change: These components will continue to ramp in volume as we cut them into our manufacturing pipeline.
Now moving to our next generation gas panel.
Speaker Change: As discussed last quarter, we delivered more than 50 of our next generation gas panels during 2024.
Speaker Change: We achieved initial customer or OEM qualifications on four applications last year, and many of the next generation panels that we have delivered in 2024
Speaker Change: are part of a qualification process with the end-device manufacturer, which are continuing into 2025.
Speaker Change: The timing of these qualifications is being worked between our customer and their customer.
Speaker Change: And in 2025, we expect additional qualifications to follow. We are also now engaged on two additional applications beyond the four we discussed previously.
Speaker Change: The key takeaway as it relates to our proprietary content strategy is that we expect to supply an increasing proportion of our bill of materials with internally developed products.
Speaker Change: Whether they are passive components that we no longer have to purchase for build-to-print gas panels, all the way up to our fully proprietary next-generation gas panel.
Speaker Change: While these internally developed and manufactured products have required a meaningful investment by I-Corps, most of the incremental R&D investments are behind us.
Speaker Change: And our labor force is now in place to address higher levels of customer demand and accelerate our gross margin expansion strategies as we move through 2025.
To summarize, our expectations of industry spending dynamics
Speaker Change: The mixed shifts of investment priorities in the coming year are, on a whole, very positive for I-Corps' business.
Speaker Change: And regardless of the magnitude of WFE growth expected for 2025, we are confident in our ability to outperform the growth in WFE this year.
Speaker Change: Likewise, we are confident in our ability to demonstrate strong flow-through and deliver continued expansion of our gross margin profile as we enjoy a more robust customer demand environment.
Speaker Change: while steadily incorporating an increasing share of proprietary products into our production flow.
Speaker Change: With that, I'll turn it over to Greg to recap our Q4 results and provide further details around our financial outlook.
Thanks, Jeff.
Speaker Change: To begin, I would like to emphasize that the P&L metrics discussed today are non-GAAP measures.
Speaker Change: These measures exclude the impact of share-based compensation, amortization of acquired intangible assets, non-recurring charges, and discrete tax items and adjustments.
Speaker Change: There is a useful financial supplement available in the Investor section of our website that summarizes our GAAP and non-GAAP financial results, as well as a summary of the balance sheet and cash flow information for the last several quarters.
Speaker Change: Fourth quarter revenues were $233 million, aligning with the upper end of guidance.
Speaker Change: This represents a 10% increase from the previous quarter and a 15% increase year-over-year.
Speaker Change: Gross margin declined to 12%, which was lower than our expectations by about 300 basis points.
Speaker Change: This decline was primarily due to the higher level of direct manufacturing labor costs we added during the quarter to support the higher demand level in the back half of the fourth quarter and the first quarter of 2025 that we were not able to fully absorb within the quarter.
Additionally, we experienced higher than...
Speaker Change: anticipated inventory charges associated with our year-end physical inventory procedures as well as unfavorable product mix with the majority of the current revenue upside taking place in our built-to-print gas panel integration business.
Speaker Change: Operating expenses for Q4 were slightly below forecast at $22.3 million.
Speaker Change: Net interest expense was $1.7 million, while non-GAAP net income tax expense exceeded our forecast at $900,000. The resulting net income per share was $0.08.
Now turning to the balance sheet.
Speaker Change: Cash and equivalents at the end of the quarter totaled $109 million, an $8 million decrease from Q3.
Speaker Change: After $4.4 million of capital expenditures, pre-cash flow for the quarter was a use of $6.9 million.
Speaker Change: DSOs for the quarter were slightly lower than Q3 at 34 days and inventory turns increased from 3.1 to 3.4.
Speaker Change: We reduced debt by $1.9 million during Q4, bringing our year-end balance of total debt outstanding to $129 million, down from $250 million a year ago.
Speaker Change: Our net debt coverage ratio has declined to 1.6 times, down from 3.4 times a year ago.
Speaker Change: Now let us discuss our guidance for the first quarter of 2025.
Speaker Change: At the midpoint of the range, or $245 million in revenue,
Speaker Change: And 14.5% gross margin, this equates to roughly 25% flow-through from our Q3 baseline.
Speaker Change: less about 1.5 million dollars of residual impacts ramping and training of our incremental machining headcount
Speaker Change: Once these incremental cost headwinds are behind us, we anticipate returning the gross margins above 15% by the second quarter and flow through in the 25-30% range.
Speaker Change: Q1 operating expenses are projected to be approximately $23.5 million, reflecting the seasonal impact of payroll taxes resetting, audit fees, and other variable compensation costs.
Speaker Change: Given that we expect to remain at similar levels beyond Q1,
Speaker Change: Today we are also lowering our expected OPEX increase for the full year to an anticipated 5 to 7 percent compared to fiscal 2024.
Speaker Change: Net interest expense for Q1 is expected to be approximately $1.6 million and we expect this level to be relatively consistent through 2025 given recent announcements around a slowing of rate decreases this year.
Speaker Change: For modeling purposes, net interest expense for 2025 should be approximately $6 million.
Speaker Change: Our expected non-GAAP effective tax rate for 2025 is projected to be approximately 12.5%.
Speaker Change: For Q1 specifically, our EPS range of $0.20 to $0.32 reflects our expectation for $34.4 million in diluted shares outstanding.
Speaker Change: Operator, we are ready to take questions. Please open the line.
Andreson, Claire McAdams, Greg Swyt
Thank you. We will now be conducting a Q&A session.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please, while we poll for questions.
Andreson, Claire McAdams, Greg Swyt
Andreson, Claire McAdams, Greg Swyt
Speaker Change: Thank you. Our first question comes from the line of Craig Ellis with B. Riley Securities. Please proceed.
Speaker Change: Yeah, thanks for taking the questions and congratulations on the momentum that you're seeing in the business guys I'll start with Greg and then move on with one for Jeff. So Greg
Give
Speaker Change: If gross margins in calendar 25 are going to be above
Speaker Change: a benefit from the new product progress that's being made, Valves.
Speaker Change: gas panels, et cetera, volume versus the absence of some of the headwinds that might have been in play in 2024, like the inventory charges and some of the volume-related cost ramp-ups.
Hi, Greg.
Okay, so
Speaker Change: Let's see if I can get to all your points there.
Yes, quite a bit
To get to the
Speaker Change: You know, we said the 16% by the end of the year for the full year, you know, the headwinds will go away, as we said, those will exit.
Q-Tip
Speaker Change: So those won't materialize as we get through Q2. The internal branded products, right, that's going to continue on the 25 to 30% improvement on the flow-through.
from an incremental standpoint.
Speaker Change: Then, you know, as we get into the second half, as we, you know, get stronger, that will benefit as well. So the tailwinds will go away.
That will benefit us exiting.
The headwind, sorry. Tail headwinds, Q2.
Speaker Change: The internal brand and products will continue to benefit through the rest of the year and then as we...
Speaker Change: get through the second half, we expect those to be in the 15 to 16% and stronger in Q4.
Speaker Change: And Craig, I would tell you, similar to what we've talked about in the past, I'd say, you know, obviously some of the excursions that we have won't repeat.
Thank you.
Speaker Change: core business, excluding some of the new stuff. And so that is how we'll do it. And obviously, you'll see these margins accrete as we go through the year because of this and how they layer in.
Speaker Change: That's helpful. Yeah, so I would just infer from that that that we've got
Speaker Change: maybe 45% of the benefit on products, 35% on volume, and 20% from the absence of some of the headwinds we had last year. That's real helpful, guys. And then the second question was for you, Jeff. It's great to see
Speaker Change: some confidence in demand being shown by just the build intensity quarter to date and what you're doing with the high end of the range. As you look at calendar 25 for I-Corps and think about the growth in the business, how would you force rank
Andreson, Claire McAdams, Greg Swyt
Speaker Change: I think that's a good question, Craig. I mean, obviously, I think...
Speaker Change: We see Foundry Logic remaining pretty strong. I think, you know, you've heard TSMC's outlook, things like that. We don't see that going.
Speaker Change: Backwards, I think with gait all around, I think that might see some increased derailment.
Speaker Change: Our view today is it's going to stay pretty steady and strong. So really, maybe the inflection that we're seeing to some degree is really wrapped around some of the NAND increases that we're seeing in the beginning of the year, for sure.
Speaker Change: Yeah, and that would track with some of the things we heard last week, too.
Yeah.
Speaker Change: Okay, guys, that's really helpful. Thank you very much. I'll get back in the queue. Thank you.
Thank you.
Speaker Change: Thank you. Our next question comes from the line Brian Chin with Stiefel. Please proceed.
Brian Chin: Hi there. Good afternoon. Thanks for letting us ask a few questions.
Brian Chin: Yeah, maybe firstly in terms of it sounds like you're Jeff you're talking about at the moment revenue levels kind of staying
at sort of the Q1 level, maybe through the
balance of the year, and so
Speaker Change: One I want to clarify that's sort of the impression you're giving because and then kind of secondly You did pull forward those direct labor costs which sort of suggests that you expect Business, maybe even to pick up and so are you being sort of conservative in terms of that stabilization?
Speaker Change: Outlook and is what you're really doing kind of putting more and higher levels of responsiveness into the business by prepping some of these costs now.
Speaker Change: Obviously, I think the way to think about it is demand strengthened in the quarter.
Speaker Change: We needed to add resources because we see this staying pretty sustained in the first half with a modest, I would say, at this stage, you know, our view of the second half is up modestly. So we're comfortable adding the resources in.
Speaker Change: I don't think the thing that you guys can see is we talk about internal supply. That's a whole other demand driver that I would tell you is outgrowing.
Speaker Change: The rest of the revenue in the company as we start to cut these things in so that is largely where a lot of these resources needed to get into as we completed some of the qualifications, you know, we needed to get in front of inventory builds and some of the demand for that. So,
Speaker Change: So I don't know if I answered your question entirely, but I think for us we see, you know, we're not guiding Q2, but we see a pretty similar today to Q1 with a modest increase in the second half.
Speaker Change: This ties into the internal sourcing for some of the qualifications on existing gas panels.
Speaker Change: Yeah, certainly from a resource perspective, a fair bit of it.
actually, you know, and
You know, in the second half...
Speaker Change: Like we talked about, we see Foundry Logic pretty strong through the year, DRAM.
Andreson, Claire McAdams, Greg Swyt
Speaker Change: been pretty muted since the first half of 24. We see that starting to materialize again towards the second half. So there's other things and share gains we've earned this year that will help us in the back half of the year.
Speaker Change: Okay, and this is a little tricky, but if you did see upside materialized from etch and deposition, and let's say it's on more legacy gas panel designs.
Speaker Change: How are you thinking about that impact on sort of the sequential gross margin progression through the year or do you you think some of these some of your other margin initiatives can sort of help to balance that out as well as maybe seeing improvement in machine component business as well?
Andreson, Claire McAdams, Greg Swyt
Speaker Change: Yeah, what I would tell you is that if our mix...
Speaker Change: goes heavier to gas panels, which I think is your question, if there's more upside to that than some of the other stuff.
Speaker Change: It would have a bit of a muting on the percentage of gross margin, having said that, we're starting to get to the stage where we've got kind of, you know, we're utilizing our overheads and all that much more efficiently because we do have capacity in place that can support numbers well above this.
Speaker Change: right from the 22 timeframe that we were marching towards. So I don't think it'll be as big of an issue as we've seen this year, because we were still trying to qualify. We hadn't got our internal supply really going too strongly.
Speaker Change: And now, as we turn this corner, I'm pretty happy with where we've gotten to on that. So that should help us add a tailwind to the margin that would offset any of those product mix issues.
Okay, great. Thank you.
Yep.
Andreson, Claire McAdams, Greg Swyt
Speaker Change: Thank you. Our next question comes from the line of Charles C. with Needham and Company. Please proceed.
Charles.
Andreson, Claire McAdams, Greg Swyt
Charles, your line may be unmuted on your end.
Andreson, Claire McAdams, Greg Swyt
Speaker Change: All right, I think we may have lost Charles here. I'll go on to the next question.
Speaker Change: Our next question comes from the line of Chris Sankar with TD Cowan. Please proceed.
Chris Sankar: Hi, thanks for taking my question. I told them, first one, Jeff, you know, last quarter you were very bullish on NAND recovering. Kind of curious how to think about your NAND shipments in December versus September. How do you think about it in March versus December and the cadence for the rest of the year?
I would tell you that
Chris Sankar: Well one is it wasn't a huge part of our of our revenue, you know, obviously we're starting off a pretty low day, but it was a pretty healthy uptick in the fourth quarter, a reasonably similar level into the first quarter, which I would expect would probably continue into the
Chris Sankar: I would tell you that visibility for us now has probably, you know, gone from three months really strong to four, four, maybe five. So that's kind of how I would call it at this stage, given our visibility.
Chris Sankar: Got it, got it. Okay, that's helpful. And then, you know, when I look at your European semi-cap customers, obviously you have two large ones. One is the little, one is the EPI. I'm kind of curious on the EPI customer in Europe, how are you seeing the revenue strength? Because I remember that I was one of the fastest growing. Do you think they could be a third largest or a ten person plus customer this year? Or do you think it's still small?
Andreson, Claire McAdams, Greg Swyt
Chris Sankar: I think they're not not going to crest 10%. I would tell you that they've done a terrific job. We've we've expanded our share beyond
Chris Sankar: Abby, which has helped us kind of grow market share in that particular customer. And so, but I don't think it'll press, but we do see it growing nicely.
Um...
and 2025 from 2024.
Speaker Change: Can you just say, last year to this year, what is exactly, how many basis points improvement in gross margin is coming from the proprietary gas panels?
Andreson, Claire McAdams, Greg Swyt
Andreson, Claire McAdams, Greg Swyt
Andreson, Claire McAdams, Greg Swyt
Speaker Change: and just not having some of these excursions that we incurred in 2024. But I would say it's probably one of the largest of our accretion activities that we have year over year.
All right, thanks for that. Thanks, Jeff. Thanks, Greg.
You bet.
Please proceed.
Yeah, good afternoon. Thank you for a few questions.
Speaker Change: So Jeff, you know, most people now expect the WFE market to grow kind of mid-single digits this year.
Speaker Change: You're large OEM customers because you're more etch and depth related.
Speaker Change: growing above that. At this point, can you say whether or not you believe you'll grow faster than your OEN customers?
Speaker Change: I would say, um, there, there, obviously we think Devin actually, as you indicated, is going to outgrow total WFE. And I think as we look at our customers.
Speaker Change: Based on what you guys see, I won't talk specifically other than some of the analyst estimates is that they will outgrow it. And we think we can outgrow that just a bit more.
Speaker Change: So yeah, OK, no, it's helpful. And then when people are talking about the NAND market, how NAND is recovering this year, that's great news. But you maybe put it into perspective where NAND is versus the other markets, and how maybe over the next couple of years, there's quite a bit more growth than just this year left in NAND.
Speaker Change: I guess when we look at what we're doing as a company, we're kind of seeing it go from
Speaker Change: five-ish percent of our revenue to about seven percent of our revenue
which is actually...
Speaker Change: Sizable as their revenue grows too, but it's still not getting to the size of what we think DRAM will be and certainly not Foundry Logic But you know we think for the last couple of years. We've been you know memory has been about 25% DRAM and NAND We see that getting larger this year
is a percentage of our revenue, certainly.
And then maybe a quick one for Greg as well.
Speaker Change: When you look at the cost that you've layered in, the extra employees you've layered in over the last couple of months, and right now you have revenue maybe going up to $255 in the first quarter, what is the revenue capabilities of your current infrastructure?
So, so.
Speaker Change: How much revenue, with your current installed base of both employees and physical footprint, how much revenue could you process at this point without meaningful additions?
Speaker Change: Yeah, from a facility point of view, clean rooms, all that capacity is well north of 400.
Speaker Change: And today we try and mirror our headcount being added as close to the demand profile. What you guys see is external revenue. We have a view of what we're cutting in in components and stuff that adds to that. But we're still, I would say,
well below that four four hundred plus
Speaker Change: So it's really people dependent. Right now I would say once we add the bulk of the resources that we're seeing in Q1, and if we have a modest back half, it will be very little incremental people. We can probably do it with overtime and things like that.
Speaker Change: Maybe one last quick question. Do you have any components that you've processed flying around in space right now?
Speaker Change: Yes, of course. We do, obviously. We have some business with SpaceX.
Speaker Change: Most of what we build for them goes up and doesn't come back.
All right. Thank you, guys.
You bet. Thanks for asking.
Thanks for watching!
Speaker Change: Thank you. Our next question comes from the line of Christian Schwab with the Craig Hallam Group. Please proceed.
Christian Schwab: Most of my questions have been answered. I just have a question on gross margins clarity.
Christian Schwab: Did you guys talk about gross margins being greater than 16% as you exited the year? Or did you say that gross margin would be greater than 16% for calendar 25? I don't know if I heard that right. I think we've kind of...
Christian Schwab: All, so exiting the year on a run rate north of 16%, Christian, and then full year at that 16%.
Well, you're at 16%.
Christian Schwab: And then what do you think, you know, you know, optimal gross margins with increased proprietary products are, you know, as maybe if we look to 26, if let's say WFP goes up again, you know, how good could gross margins get?
Well, what I would tell you is...
Christian Schwab: that our model today is 19 to 20, and I think, you know, in general, the direction we're getting in communications.
that 26 will be a stronger year than
Christian Schwab: 2025 from a growth perspective. I would certainly think given where we're at Cutting in certainly our passive products are really making good progress
Christian Schwab: Even with those, I think we can get pretty close to that in 2026, if the quarterly run rates kind of get up over maybe 300 at least. Because we need to have that to absorb some of our infrastructure.
Andreson, Claire McAdams, Greg Swyt
Great. No other questions. Thank you.
You bet, Christian.
Speaker Change: Thank you. Our next question comes from the line of Edward Yang with Oppenheimer. Please proceed.
Edward Yang: Hi Jeff. Hi Greg. Thanks for taking my question. Just on your new products progress, the gas panel deliveries that you had in 24, I think you had specified at 50. Was that consistent with your expectation? I think last quarter you're targeting something around 55.
Edward Yang: Yeah, I said more than 50, so yeah, it was pretty much aligned. You always get a few movements here and there, but...
Edward Yang: We came in just about where we thought we would be and so we got most of these
Edward Yang: customers now. And so at that stage, our customers are managing that process. And unfortunately, we haven't had any close yet. But we're optimistic that those will happen in the early part of 2025, certainly in the first half.
Speaker Change: Okay so were these all still for qualifying or did you have any commercial shipments?
Speaker Change: I would say that as we're shipping to their customer evaluations, we would call them commercial shipments.
Speaker Change: I mean they're designed, they're putting them on a tool. Maybe the first half of those or less or something were probably what you would call kind of evaluations at our customers that are putting them onto their tools for the first time. But once they make it to a customer, we kind of treat them like a commercial shipment.
Speaker Change: And I would tell you that that is a much smaller component of our internally supplied
Speaker Change: components. That's a bigger number. So, we're still in the early innings of the fully integrated new gas box.
Speaker Change: Got it, and you commented on this in the January presentation, but do you still see no incremental impact from the export controls, and do you have any preliminary thoughts on tariffs?
Thanks for watching!
Andreson, Claire McAdams, Greg Swyt
Speaker Change: Yeah, I was glad to see him delayed for 30 days on tariffs. The rules were, just to be clear, the rules were very, to me, ambiguous.
Speaker Change: Most of Mexico is where we would have felt that we have very little That we procure out of China anymore. So any inbound tariffs from China are de minimis for us It's mostly around Mexico
Speaker Change: Most of what we build there comes from the US. We were not very clear yet.
Speaker Change: on what that is going to be. Having said that, I don't know where that will end up. I'm sure the rules will start to get more clarified. But it certainly moves into our cost plus gas box business. It gets passed forward.
Okay, and then
Speaker Change: The other question was the China export. I think all that's been baked into our Visibility that we have there's no been no other downtake Obviously some some customers have talked about the overall impact of their business, which has already been incorporated in any outlook. We provide
Thank you for having me.
Thanks a lot.
All right.
Speaker Change: Thank you. There are no further questions at this time. I'd like to pass the call back over to Jeff Andreson for closing remarks.
Speaker Change: I want to thank you for joining us on our call this afternoon.
Jeff Andreson: I'd like to thank our employees, suppliers, customers, and investors for their ongoing dedication and support. We look forward to our next quarterly update in early May for our Q1 earnings call. In the meantime, feel free to reach out to Claire directly if you'd like to follow up with us.
Andreson, Claire McAdams, Greg Swyt
Jeff Andreson: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Thank you.
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Andreson, Claire McAdams, Greg Swyt
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