ICHR - Earnings call 3 2020 | Ichor Holdings, Ltd.

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Operator

Good day, ladies and gentlemen, and welcome to Ichor's Third Quarter 2020 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 for Ichor. Claire, the floor is yours.

Claire McAdams

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

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

in aforementioned longer-term uncertainty COVID-XX significant remind continues we limiting pandemic those filings, you create the our ability statements. that to to forward-looking industry, our provide in noted As

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

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

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

Larry open CEO; quarter details their Andreson, results quarter with the for our and fourth remarks, Larry guidance. On and review an business line today additional our of questions. results our we our prepared outlook, and on a CFO. and provide third me Jeff are will After will and then update the call Sparks, our Jeff begin with will of

now over Jeff? Jeff the call turn Andreson. I'll to

Jeffrey Andreson

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

and both the XX earnings $XXX quarter. million, in earnings of second revenue of and margin Today, up basis with XX% QX sequential the guidance. quarter QX points grew of quarter X% basis margin we reported were results midpoint over Gross straight share increased coming from per revenue growth. above another strong operating XX sixth and Revenues points, our increased

flow $XX We for a the free cash flow cash also quarter quarter. strong with had million of third

WFE the strong XXXX. of Our and results to demonstrate industry to over the months over as stated XXXX. grow the or revenues. continues and for to up is continued earnings Year-to-date wafer year end XXXX, and from growth equipment, of than X faster first quarter revenues we third XXXX, our execution be XXX% outgrow in XX% up up of our XX% EPS around are near fab market, full be the expected The global with objectives,

at increase we of to earnings be and also overall QX of guidance, the for growth, and QX double the growth a the our approximately And our see At rate of XX%, midpoint per growth. and guidance, EPS revenue the our year Xx expect continue the seventh about our strong increases customers. anticipate will our this sequential share. from We be industry margin gross revenue will full revenue margin, consecutive growth, of of year we in operating continued quarter demand levels midpoint sequential

COVID-XX. keep Ichor and our and amazed to caused employees our want year operating be to together to continue as working such challenges they for and levels higher such who deliver I sales chain for the in their closely a by are incredible I as record business XXXX. at employees the performance we supply our by contributions partners partners strong navigate thank

control about how like to would talk strategies our the outperform industry Larry prepared to to to flow close XXXX. In with free we to focus deliver the as into drive line leverage momentum to outgrowing on significant operating move cash growth. expenses, improvement, I continue our bottom will primarily continued we continued are margin along market strategies my remarks today, of and gross and

the of operating regarding on environment. our impact First, COVID

and significant capabilities we safely largely constraints appropriate have chain this our supply continuing people year, to take but from earlier the recovered experienced and to globally. operations actions protect operational remain Our business maintain all and vigilant

While see Larry which his our impacts we by revenues still in COVID-related gross unfavorable are not constraints, remarks. discuss margin, currently hampered will some on

environment. demand the to Turning

continue we stronger levels end of second anticipated customer strong is we year. Just consistent demand August. the the half, as of on through during with as indicated call each in our X fiscal XXXX sequential forecast we QX months to of ago quarter in in This with revenue August, the see a increases for

strong Importantly, our XX% largest for visibility the of demand into expectations XXXX. of are to currently levels growth customers indicate our in to WFE range. each continues from current X% Industry

over their year result mix improved Our ramp including spending and in the several memory strength a gains, and revenue outperformance this relative [Technical of factors, is in etch of XXXX XXXX continued of market EUVs the and Difficulty]. deposition share

on the market relates rate year's to million it top from $XXX are we gains, As gains, run market and growing are which in last growth the of exited benefiting market with share continuing XXXX. XXXX at

this growth year -- We delivery, to add and outperformance and gas -- revenue during precision our have have XXXX. share incremental also in share we machining market gain weldments gains

we outpacing of deposition, This we calendar this this beginning customers, evident WFE expenses and factor the which a X recovery estimates the the are spending. memory within for which due in sales growth year the system year. have segments area is new outgrowing delivery these WFE semiconductor largest in our markets overall also both etch by believe where overall of WFE of to fluid the greatest are In opportunity, are

to the EUV overall both In EUV, our growth of spending. unit ramp systems of with being revenue continues outpacing growth expected lithography reflect area shipment XXXX the steady in and XXXX, delivered

industry in being have XXXX the the outgrow outperformance the and in XXXX, strategies believe beyond. continue With drivers for to place we to these in primary we

will There process to in DRAM key X- well logic and gases for step technology go market increase and in growing Same with to and, layers from the for First take fluid deposition also as XZ, require in critical XY by as investing devices. the a alpha X-nanometer as that, from and intensity. XX is more the logic fluid etch that more we XXX and tools, beta; there X-, is number for is our capital strategy is then them the process, both the NAND, each to complex used In foremost technology transitions focus beyond advancements At an underway. which layers X in semiconductor technology XXX-layer driven more delivery on transitions X to and to the industry for precise of delivery. is geometries and DRAM.

the impact advanced Ichor defects faster as each for require deliberate is DRAM. and requiring precise In is these system, magnified, as processes. more more and become it these case, that delivery more relates etch takeaway of key logic complex, of control technology to particularly rates geometries The fluid the per nodes content

increased that and each is EUV increase with opportunity steady system all as on deposition, across continue these for rate to each gas those we expect our far sales What we Beyond shipments increases driving run device have the delivery EUV so transitions is our well types X year. witnessed as and to etch key in tools. foreseeable future content EUV for technology etch, deposition of

number and geographic share increased in a of initiatives We are market our by our of overall customer Asia. of levels served driving to penetration footprint also achieving expand

and in for While the Japan delivery for market served our with with customers the market largest is is customers, U.S. gas South chemical deliveries served largest Korea.

in XXXX. in We in these -- continue our customer the with evaluating in in early are of we of module. Both Asia with are chemical should actively the early stages to the stages And largest in engagement. is that liquid work discussions in Japan, revenues starting first delivery well Korean position OEMs for several us and strategies of that are our delivery

Which our of made a new the outsourcing to incremental and and progress machining share delivery, on work additional XXXX. in qualifications continue are closely we our our precision leverage review market but we're these that contributing in in against are with in gas customer continuing for gains subassemblies our year. footprint. of see products good share making new we our brings global qualifying progress to in objectives to to Gas gaining panels the qualification weldments me incremental as business customers Each

our served increased the operating leverage engineering Finally, to to make our to on progress products well profitability. strategy to levels share longer-term and IP of as portfolio we develop expansion of towards drive continue drive markets as model to capabilities new proprietary of our our

delivered making invest and continue we our in this next our delivery We initial area X progress months. to next-generation beta to have expect the good in X and units solution, gas of to are proprietary the development in

industry on done revenue of job has and operational with XXXX, a to about revenue track team record deliver a sequential our at XX% the are we and QX versus the of indicates In quarter for summary, growing far the earnings growth growth. above twice through rate The well managing growth year. midpoint continued outpacing challenges phenomenal last of revenue growth year-over-year guidance of expectation our fourth QX of year

our we While revenue more around still range supply clarity to chain operational continue we expected as and wider than gain capabilities. tighten pre-COVID the levels,

incremental as look in We margin year expected margin in growth towards are driving improvements gross operating continued ahead also XXXX. another and we

discussion our business continued target environment, brings focused details steadfastly a progress to are Larry's performance our We which healthy of our Larry? financial meaningful to outlook. us on further and on making model very in

Larry Sparks

Thanks, Jeff.

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

$XXX were XX% million, Third the QX from from year. last up period quarter revenues and same X% up

of sites. result, additional of to levels quarter of a reported sixth the revenue continued demand no have growth. operational excellent as challenging our We straight came strong on guidance And sequential of and environment. execution challenges, our COVID-related due restrictions In we experienced customer we above in in these a manufacturing spite midpoint revenue

quarter from was We in basis also up per margin, gross achieved XX.X%, XX for earnings points margin the operating QX. share. sequential and Gross margin growth

continue by QX QX face impacted in points and XX We in points margin about COVID-XX- basis about QX. by gross basis XXX to headwinds, both and which

freight heightened While normalized the costs workforce. global since the ensuring have with material health our and we associated half, of costs largely and first safety face higher still sourcing the

point basis reduction our environment margin continue order programs in our a gross to improvements We improvement incremental quarter. a the and gross in progress further customer in on make expect fourth ongoing about drive to XX demand margins healthy cost to continued for

R&D Operating in to $XX.X a timing expected lower little slightly first half we expenses spending QX. a in from primarily the came of run shift certain than program our at million, due rate into down

Operating the income was by rate unfavorable a over operating operating XX% foreign our margin improved the income exchange and line the forecast. quarter points and XX higher basis end partially sequential QX. offset was The and was bottom versus up in income XX% increase tax expectations in at higher of at impacts

Our the rate a forecast. XX%. versus reflects mix is year-to-date in increase of higher XX% due primarily XX.X% expectations of catch-up effective of XXXX our tax in U.S. which our a around quarter our profits to closer tax prior is third The to rate, for

next Our planning to to tax years couple over in the be of of rate XX%. XX% range for the continues

as of growth as the our growth. for midpoint earnings double about well our exchange $X.XX the we has share. EPS impacted the above rate of $X.XX rate continued Year-to-date by revenue in reported rate unfavorable tax the third Nonetheless, earnings share higher per quarter, guidance. in The per to

the sheet. will I Now turn balance to

with flow QX over As reported to million flow free cash QX. $XX contributing of of strong in cash the $XX expected, our cash a we quarter increase generation balance million in

expectation Our cash free is to QX. flow generation in continue positive

to with quarter. $XX million of compared the $XX last million quarter cash ended We

We paydown of Our $XX million from debt from quarterly the term million debt. reflecting of operations. generated cash cash P&L down flow of our from $XXX approximately QX, in $XX million $X.X balance is million the and

turns inventory sales Days X.X. days, slightly essentially were unchanged QX to while outstanding from at XX increased

around to of increase mentioned reflects a an and incremental expenses points in improvement margin program gross about operating $X.XX to range quarter compared I turn our $XXX our to midpoint The million is XX higher compensation the will QX guidance EPS With to to earlier. and to range primarily basis variable $XXX revenue R&D $XXX,XXX $X.XX million, of in Now fourth guidance the expenses share. earnings due of per guidance.

We are about forecasting be million QX our ongoing for tax interest XX.X%. expense per quarter, and $X to of rate

shares outstanding million assuming approximately fourth quarter. XX.X are for the We diluted

to rapidly margin with as in level continued dynamic additional the some constraints future. XXXX. we foreseeable place, gross anticipate are and of in said, margin COVID-related we changing and being operating restrictions for Given headwinds we That a that sequential into in move face expect we environment improvements gross

key drive in leverage revenue gross Our target flow-through operational objective financial continued is combining our outperformance increases with model. strong and to margin toward by

products. continue to proprietary cost reduction to our content our gross higher component share IP drive expect margin within markets through incremental within increasing programs, higher-margin We our growing of and

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

Operator

Our Ellis first Securities. Craig question with from comes Riley B.

Craig Ellis

and up Jeff, nice by of on on Congratulations your outlook, just But following results the some comments guys. the environment. start on I to current wanted

and for the half year, in on wondering 'XX. see beyond fourth if calendar as us ball the accurate look got you you when you it ago pretty can any months commentary X like you early seems what quarter was the the crystal second out, I'm of it provide the So

Jeffrey Andreson

That's and quarter obviously, your enter the a question, we see too half a Yes, strong have, to into continued would least I today outlook XXXX. next I it's as early demand thank on good what moving but of see seeing the say, we do first environment we're at you through guidance, that the kind in specific and give based words. a mean we year. -- for we strong

Craig Ellis

through weighted? margin gross of their higher do to talking And cost were some of about 'XX? the calendar increased up those share think Larry, gains calendar quotient to more in IP ongoing gross reduction, helpful. you year? about wrapped Can the go margin be impact market degree how the help understand us going half to 'XX: Or then, drive can your That's which back play at them half and and then that sales. things you Are weighted some you comments first as potential we in than just

Larry Sparks

reductions, of some just the about, think some quarter-by-quarter, savings talked continue the of savings. activities. clearly material areas things cost reduction operating we've I programs are cost There logistic general

will half. up those first the in show So

plastics Union structure and last kind with cost facility in the our also business We mentioned time shutdown City of there. our our rightsizing

We first the expect that of see benefit. we'll in some that year half of next

we machining longer bit little machining weldments particular, Those continue to We gain precision take have precision share those a -- qualification areas. the do in and in a in cycle. longer as

to those So go year. we'd the throughout expect

working And a the about the that see longer margin, a see Difficulty] of after years to the I around particularly other IP, thing meaningful the proprietary But to the year think and last and a of beta that that's follow next you'll some play, talked of in some in we're multiyear [Technical half gross play. sites penetration second with things. Jeff's that.

Craig Ellis

I If it. sneak... Got can just

Jeffrey Andreson

for gross obvious to say see very, I on this to we do continue What improving going was just focused reasons. is margin. very we're But

drive to back to in up. place plans continue have this We

Craig Ellis

in first to Yes. there margin with up in with expect be would the fringe Difficulty] FICA of here. expense as half I just would question, question beyond If costs aware follow that, calendar quarter. anything Good. we the companies is maybe And Larry. quarter facing and should we But [Technical back expense? operating the think fourth beyond the I gross nice could progress just be an most certainly

Larry Sparks

Smaller effect things. few a there's think I of insurance.

imagine of can in giving sizable industry the us environment, sort outlook. this insurance you pretty As some increased is

The is on our other thing programs. R&D

you're compliant. and both expecting external we'll auditors. more months be the couple I'm aware, some the think cost beta We in there. some drives probably investments year, to have would we over us our bit customers, next with charge inside That be to would But have and SOX that also more then units will that, yes. company expect sizing of that in expect general, a R&D for these penetrate be they and we we -- next as I of As spending to the here, we that. of little other certify

Craig Ellis

up will. and work course, the good keep Of they good Guys, the operations.

Jeffrey Andreson

Thanks.

Larry Sparks

Thanks.

Operator

from is Sidney Deutsche Bank. question next Our with Ho

Sidney Ho

questions. X have I

solid look at other it's the chain, midpoint in But if have at guidance. The quarter, first it supply bit the is, -- I a suppliers of third your a they is look little some more upside of kind I if one to quarter. the

your So caught you expectations? how your the my versus your the inventory demand more the up and quarter steady-state question the quarter profile? you Did of would see reflects with slowdown? here main have a describe is, that anything suggest do in part revenue would of linearity now really think you And some customers latter

Jeffrey Andreson

and all companies to out try I answer recovery. QX into degrees I'll Jeff. came One were of various it. QX, as is, of think we at It's

linear, you the but What and tell perfectly I as say with softening we've strong for a end outlook when and of to more pretty is the we it's would -- it's of you continued I'd that not quarter little we upside, more hard at profile say, than environment any more So was, bit quarter slightly a sure, judge the demand QX. the and that. linear have we -- it's still the into so didn't go linear seen,

demand good. is very still the So environment

Sidney Ho

great. Okay. That's

Jeffrey Andreson

was The inventory. last question part of the around

side to we very would X the inventory Those say the the And build. their much there's any they weeks of way so customized to it. of customers are gas and somewhere products, not in business, probably deliver generally once cycle around I delivery with X

the the small little that it's we're of So X. a very And the build but inventory amount inventory say very, small would component of on business, still. very seeing between very I side

Sidney Ho

of customers. Do Japan? meaningful contribution us walk to countries? to through for new revenue Okay. were and half? follow-up then of it gain in qualifications just You ramp talking in How for both what's Can is Is profile. But see particularly happening Is opportunities, you one X say your in going I'm my some when do about have question first be share versus on Great. XXXX half the number be Is early kind multiple it Korea? a it in these, these XXXX second you the you trying customers? say, to going you Japan? to Japan. think Maybe Korea of in customer,

Jeffrey Andreson

there longest. we Yes. working what see on I We're in it'll be on if that, would can Korea the we've evaluation I a customer good And that claims based of say would in an think since the been business. meaningful first particular in has that process I fairly midst in fact their be today, win the that a position, tool. -- position the on

I'd words, say bit. other very are a meetings. in But do in Japan, COVID it's a our bit can't tight starting little slower. partner to still In Japan. relax restrictions face-to-face that's

X hope -- the It's get that XXXX. dialogue those clarity. half that several of and the just out discussions But with to So but or a probably I'd difficult But a continued. certainly tool. just we and X little little more us has second Japanese first a earliest, there. have position say beta say we'd OEMs, of designs we will I more get in Japan one beta then give would And ongoing a

Operator

is Cowen and with Sankar next from Our Krish question Co.

Sreekrishnan Sankarnarayanan

Jeff, couple them. of had a I

X have you when the peers, underperformed up I of First down. one outperformed too, some guys is, look and last when when your is and at WFE years, is WFE you over

XX%, up be X% to it fair in any say that WFE true looking to it said assume guidance, will X% for be is could year, Without XX%. up that let's is WFE could next you to You environment? outperform that

Jeffrey Andreson

put place. Yes. if me, you mean -- ask in that would we be have strategies I

the on have this Some will next going affect year year. gains of share we

long-term have We in plans place.

recovery. particularly see expect because that I again memory would going we outperform yes, could year, a WFE we're to So next

very so on get have and can well operation, into as etch and pretty starting And on what the we us so memory the is memory -- dep see as a based we good good momentum for visibility customers. our see centric, building And very We're side. and Korea. we that's Korean to

XD in as good DRAM. we in So NAND have investments positions those very increase

share a the So and effect customers a by on and recovery we're that. other of actually programs gains and well doing be as from driven as in memory that again, etch. dep just it'll our bit what And little are has interested

Sreekrishnan Sankarnarayanan

That's it. very helpful. Got

it year $X hopefully. could a So next it looks revenue billion be like year,

left questions at similar I a for prior if have of kind Q, saying when it X arguably, for I'm revenue look there's any your But One you're is, I guidance, not to you. getting still the compare you such levels. to memory. other runway [indiscernible] But and thing. long

XXXX over is north can in back there going basis, much a you now like last then incremental running improving, a of quantify how has quarterly a or has million on you you're to any part the I've way help there driving? so EUV got revenues X market way above-market Is So of like quantify gain got been like the at $XXX you've early what follow-up. how can much driven share when years? And growth

Jeffrey Andreson

Yes. $XXX I XXXX we rate a but wouldn't gains. about say I'll did quantify with share it exited we that in million say specifically, run

that's now If in we $XX pushed market is you what was, XX%, P&L million. up then to the think through about say, million, $XXX and equivalent XXXX the

big a chunk forward. the that's growth going of So

We have share gains.

pretty this -- that transparent. have quantified is year. say going been haven't has customer effect a full And I very into next year. would a EUV We That'll

just the revenues you possibly know has content our to and of probably a increased So little bit EUV, as that the and guys well. higher have generation along from ramp generation side grown as

business XXXX a So next the in qualifications can our meaningful is another function as Asia think few of mean of next side step revenue I well. into yes, chemical we're of is positioned. kind with I -- kind have the that

Sreekrishnan Sankarnarayanan

is side, then opportunity dollar And can it. a a can is? your Got it. you quantify on final way a what the per EUV just -- Jeff. you there system way Is question, Got EUV there

Jeffrey Andreson

It's It's significantly for We to competitive very unit. that the a larger tool. obviously can, specific but we don't reasons. do

gas it's panel. so typical a multiples of And

So -- but we generally don't quantify that.

Operator

with Bolton And Needham from question Co. our comes & Quinn next

Quinn Bolton

gain opportunity. Great. I follow-up had share the of a on kind

see are the that the take on company? the of sit and You've to parts be the Or you still longer, the share proving sounds to like out a you ahead going precision to those said opportunity little as a you case. thought better was wondering, business? parts machining the think do here now revenue traction that's side gains you is But today, and of starting it bit precision machining for while

Jeffrey Andreson

share XXXX not today gotten we've business. some we be our of cycle as in qualifications multiple that are machining the go can we forward. speak deep are includes our out of gains No. precision -- as insignificant. There They're we that call that side the million dollar wins

So a probably, impact but -- of earliest those QX, -- is late will be late they'll XXXX be largely XXXX. XXXX kind versus

capabilities so the share we basically for market the we've drive and weldment well And all -- incremental continue that the business, of leveraging operational gains, on pretty which the on opportunities for it's just again done this year. our come market then side in up,

Quinn Bolton

get revenue XXXX for And order in in that think it, just -- I'm that of sure I'm is is WFE accelerating the machining do is not going opportunity magnitude, opportunity with then? line you or precision but to growing you to that just size

Jeffrey Andreson

Oh, it outpace should WFE.

guys on. of positions, win our is again, gas. in as they'll we these you As machining precision the flow it's -- And generally layer know,

pretty sticky it's So demand.

win time, stays by long, it's it for tool. with a and you So very you it, once customized long process

where get we too. Larry of that the margin strategy just the accretion, talked the and -- could that's that's the that about. outgrow mix overall that want to part no, growth industry, We So of

Quinn Bolton

Great.

and business. strength already Second you're side in question, some customers obviously, I seen think the seeing have it your of -- the sounds NAND

of run appear levels quarterly of comments not 'XX, a healthy more first as the half stable now rate pretty 'XX? the in the 'XX -- think it sort Your you've visibility of for just into into half look versus first wondering, do to to sort level the of sort quarter of like at be you got reached to where that, continue good of half? a state you steady the the sort that's sound be fourth steady of continue memory of XXXX. at first the growing momentum Does will current but a the But

Jeffrey Andreson

Yes.

good is I of I go the before, that growth pretty Korean into application, from think positive slight similar we've out XXXX. positive growth very say, as we're In XXXX that of what to on And that centric. a operation, our in based just would NAND see half XXXX. of business and side we we've first seeing as seen we particular, said

that to spending again So that's first pretty we going year quarter good both that DRAM quarter we good as well. investments region into in visibility. the of see And do next fourth start, have particular where see, the and in

close in stabilize, can the think I the not year. you've I seen peak, and strong pricing good, environment that the we'll in triggers memory So usually year And next recovery memory. I think to probably a enough see pick Whether it.

kind who to have You'd of ask our customers are close enough.

Quinn Bolton

strong one flow. of quarters. It couple last cash for has over the Got it. Larry. pretty been last it. And then Larry, Got

in now How about down that little as $XX you debt I up How hopefully, COVID paying the opportunity given uncertainty that think least, project head cash we with Do stabilizing? on cash we it at about balance aggressive into you're nearly should to you go cash you that perhaps or keep cash, just get Do sounds think again on 'XX? thinking sheet should is bit sitting more in we like million the fund the be fourth M&A? the and a cash? quarter. think of to

Larry Sparks

in in think keeping well, shelf. flexibility our general, we put the keeping I we're --

our We revolver. have on flexibility some

being, rate borrowing the is it thought in on for to hold and our general, is in think interest the to on down the that I time X% overall. range

in focus then But be We ready sort and we comfortable to debt to now do good we if I there's we're some QX. keeping fact want an maintain see where with just cash pretty and to to pretty execute can some And our on that we state. again at are opportunities we're position, So generate M&A cash execution. we the it flexibility. different. if operational now, been we we're on on our flow position, do point, think of excess able And want continue think something I look we've that steady that and comfortable might with to

Operator

Mitch Our next is from Markets. question Steves RBC Capital with

Mitch Steves

I a But line had first. to margin I the gross few. start wanted on

guide, like sort about kind XX%-plus. a to margins you're gross the XX you're this, your improvement like to are at looking up Just But million December. on revenue, I at $XXX mean, talking range prior from basis of points when the September

there. So helpful. I'm that to Any impact see if going COVID, basis XXX start improvements of you're just includes implied million a $XX.X some if would from guide be curious to information point sort

Larry Sparks

million, the about we to hire shift COVID we've our point headwind $XX.X and PPE strategies -- We're a have still XX the other we more people. have Now basis talked changing to and between obviously -- due around things.

I a until a have change that'll or think, So in there. protocol continue, around things to the significant do we distancing and vaccine social there's

a that's at continue we of situation And So the COVID still least headwind. to through the of XXXX. beginning changes, that until sort expect

customer. The in impacted before, our other changed a we that talked in things amount our one mix. us, have of fair #X had we've And share that gained panels that's we've about gas these is

dollar of in gas As a clearly perspective. share, in margin. on are little And panels a perspective bit the on that you below general headwind not our an a absolute know, percentage corporate that's but average

growth, talked also in north of but between a bit for on we go there, little We headwind get now. revenue us having the quarter. does for brick-and-mortar to $XXX of And until of sort capacity We've lot it XXXX a margins. million per ready and a we're added create about historically capabilities of

well. we've And the working little is that improve we're that talked and on rightsizing I products the think working cost as will then business, finally, other a plastics and bit thing structure some the about on

Mitch Steves

over ASML to that XXXX, you got 'XX. guys up. and EUV the They've some comments Understood. made kind stated ramping there already And about turning units to pushed then of

will percentage to of Or such as to a that don't that at revenue? for a going year? ASML continue you to rate you curious I'm how has like So it, a, scale of the is single know that been Is kind high mid I -- ramp improve next ASML improve a think become always to to there. customer. bigger going as the call customer DRAM is of what

Jeffrey Andreson

Jeff. Yes. It's

So probably they the go they're transparent. cycle. ASML, say before deliver. in and about early X qualification Mitch, to I'd we build one But the pretty can in mind, keep build in months We with cycle thing

second for see customer, So obviously, growth be is what next but half. going pretty can't much the building into the we addressing in we're year. specific, I the half steady front

of going is so steady if have for But mainly ASML guidance, is at it would them grower. million, a outlook, than it it customer, you to around you the of big it a think today number -- bigger is $XXX significantly And to become just as get XX% to pretty look a cross. our take -- that's so forward midpoint because as for

So to lot. they'd a have grow quite

Mitch Steves

terms in to versus side. side, just terms Okay. DRAM for kind the than mean can't there. I one to debate there's shoots, it, higher of starting in like its And that call whatever side then NAND of on level, DRAM the you'd much improving see then NAND a you're last some of this. just demand been clear And green it

DRAM what you guys maybe going like. us like in is think terms market, guys looks scale growth NAND, to understand terms just 'XX of you or for So look what of end of in can revenue help you

Jeffrey Andreson

Yes.

just versus of visibility get there. Korea to We applications be in of DRAM we the to not we NAND. panels we about So because get so more all don't that clear, ship, an the we're perfect for see ask have gas the operations to one magnitude

I'm one XD But full probably up for not So NAND to we picking it and both the in the DRAM do up see year. region. next best investments picking in that year call

Operator

is question from Davidson. Diffely with next Tom D.A. Our

Franco Granda Penaherrera

on have a Tom I of questions. today. is few behalf This Franco

talked to that gaining the I sort want your you DRAM in of progress kind I perhaps on on give of past, on side. delivery the you the topic expressed know traction Asia. start about, the particularly you've an desire gain Can liquid update that with to So module your last in effort? exposure us more DRAM, this on

Jeffrey Andreson

specific, all application, I across more But not different a application delivery It maybe if go of -- little liquid wet not be misunderstood, -- sure inferred So -- not, a or that it's address so you it's any chemistry the can not is applications. can it but if I'm yes, I sure. per just DRAM se. to

U.S. one through Today, customer large today the we're qualified one of in customers our on OEM

beta we're manufacturer. I the pretty OEMs the the in Japan, in a partner happy with largest with the we're probably having Japan I'm And on process the have early in fourth We as again, our through said call, there. But largest kind in Korea third clean engagement in or of of innings. some level with of

Franco Granda Penaherrera

And have one helpful. then for Okay. I No, Larry. that's

do then XXXX, to? on was should any guess we push your R&D the the regarding looking investment? think about you have on pushout. out I details you're when that, how R&D what talked about And You into

Larry Sparks

in in the the Well, new and just in when pushout general, timing some wasn't we're nothing R&D. It's there some bringing some I there's consultants materials. a think engineering specific -- program of of programs,

nothing it's product. specific a specific around So

the piece I expect about look growth. I rate which doing, it's would OpEx at to think think be about going what our into the at that. of growth overall, R&D XXXX, revenue R&D, run the that expect we OpEx sort least of is -- half to half you And and been that of we if

I products, our help new ready into to new these we're drive make market we penetrate to up think investments drive the we be successfully the to going need margins. as products to

R&D you So be the it not grower is necessarily lion's growth percentage that think but probably can to model. biggest within the revenue of of share, going XX% getting

Operator

with Stifel. is Our from next question Ho Patrick

Patrick Ho

see business mix same, gas products saw and aside at systems? September a of of shifting at precision the to to Are as rate? of Obviously, Jeff, can the you talk going little your machining? the you going the continues delivery from strong. mix business quarter. quarter? of going percentages weldments That's look So I the other in some of the delivery bit mix the about same maybe to little they is increase guess, But the be probably back the system. increasing Or to December to just of the demand you number gas more you're a

Jeffrey Andreson

Yes.

it's I'll might give Patrick, that good think, a it but question shot. a I take X parts to answer,

million So we're to this year, given do, you guidance. around going at if our say, QX look $XXX

million was share $XXX has or market know the grown. plus so last XXXs. we've gains, about market peak of low layered on Our We the in

market side one share the gas bigger panel of business of that the is kind So of the chunks was gain. -- of

last -- the growth out I of quarter So our were performance with and the side the pleased both say that or we so, and over but machining would we got weldments of business. of precision the out

gas mix that going we're that market, to so give our see improve and plan. you for margin but of piece the part very, far. gross big on we've kind side, the the done of the our of that to the numbers, won strategy now side specific I accretion well -- very and now of component is part business. last So we've outgrow It's can't very, the been

Much in and and much weldment months, longer qualifications, you can side. the faster whereas months obviously, for months precision do measured machining on

those see come call So precision something weldment it, with In now. parts family bigger of we and you're ongoing those chunks. wins so happening, do trying or like maybe qualify will I'd pretty a machining, to that,

the in at progress we're where businesses. like I those So both of

Patrick Ho

as of follow-up Jeff. this in time. just Great. us industry that, long have a been And a maybe X The to

business, it step a C ways B it I Are of parts have guess, components and just step machining I that qualification then, or step-by-step this for is get usually to parts qualified time. precision qualified? to take first to of side to Or business? you the you other longer kind said goes the get you the there and multiple, then on "qualify" that With guess,

Jeffrey Andreson

No.

to qualified them, now call differently. can manufacturer. in I part them for, parts some of family get the manufacturing there's similar But do have might the process, they're we're qualifications any of If very significant provided You changes you are doing families.

many part many, So there'll numbers. be

Patrick Ho

Larry. But I guess, have your a from given Has customers themselves in bit of the leading your talked environment turns uncertainty of impacted building some the inventory still for question pretty end? for that of your inventory Inventory about, of me as final as And procurement demand market. the Great. kind stable. little well on

Larry Sparks

I think No. don't so.

We're growth. think at think I Jeff of I seeing, turns. a we as mentioned, were inventory not ton X.X

a talk it. So it, about but we're lot may seeing people not of

range, turns kind little I our we any a change within more. think in haven't stay seen though, general, behavior. of it want material -- grow to And we bit in but

Jeffrey Andreson

mean their inventory demand the to customers in I there's a still about environment. feeling -- we're where are holding good build -- still side. the pretty while Yes. not the all -- we're we're on customer we're that good just And ability inventory the at,

consignment-level building are our We inventory.

was some there. of there growth And went inventory though down, even so actual -- our

process So supporting and for good we've pretty becoming them. more as inventory our within needs of manufacturing well customers' put for done a we efficient job as our really the site on

Operator

the end back turn Ladies session, question-and-answer reached of to and have gentlemen, to and we closing Jeff like I'd the Andreson call the for remarks.

Jeffrey Andreson

suppliers are our here but XXXX. strong on to we concludes look CEO Operator, a Davidson, this challenging updating well strong the by to call. again execution quarter. scheduled in like operationally -- February. next Virtual in We with D.A. us participate conferences meantime, as and growth RBC, UBS that as I'd Stifel, Summit early earnings In joining during support for customers you our Thank you and very their call hosted QX. our and on to virtual thank employees, for forward this call environment, our but in in

Operator

you. This Thank conference. right. All concludes today's

Thank disconnect your You at everyone, time. lines this may you, your participation. for

Ichor (ICHR) 2 Nov 202020 Q3 Earnings call transcript