Good day, ladies and gentlemen, and welcome to Ichor's First Quarter 2025 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 anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to introduce your hosts for today's call, Claire McAdams and Investor Relations for Ichor. Please go ahead. Thank you, operators. Good afternoon, and thank you for joining today's first quarter 2025 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 2024, 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 Q1 earnings call. Thanks for joining us today. First quarter revenues came in right around the midpoint of our expectations, reflecting that the overall customer demand environment has remained relatively consistent since our last earnings call. To date, there has been little change to the expectation that 2025 will be a modest growth year for wafer fab equipment, or WFE, and our Q1 revenues were up 5% sequentially from Q4 and grew 21% over the same period last year. Given our visibility today, we continue to expect our revenue growth this year will outperform overall WFE growth in 2025. On the gross margin side, first of all, let me say that we fully acknowledge that our track record guiding expected improvements in gross margin has been impacted by excursions one too many times at this point. In evaluating our results for the first quarter, we too found it challenging to fully understand why our increasing momentum in integrating internally sourced components has not resulted in more meaningful improvements to our gross margin profile. The best way to capture the lower-than-expected flow-through in our Q1 gross margin performance is best summed up as growing pain. Once our internal supply is fully up to speed, we will see the benefits of the new product wins through the P&L. Our strategy is working, the qualifications are continuing, and the impact will materialize as we progress forward. In Q1, our strategy did not materialize into the margin flow-through we anticipated, essentially because we ended up purchasing far more external supply than we had forecast. Why did that happen? As internally sourced products become a more significant portion of our bill of materials, we must improve our processes for the management of the inventory levels needed prior to inserting these components into our manufacturing pipeline. In the first quarter, the impact of the slower inventory build in the fourth quarter, combined with other machine components ramping at the same time, resulted in the need to buy more external supply in order to fulfill our gas panel deliveries in the early part of the quarter. Why this resulted in low 20s% gross margin flow-through, well below expectations, is because our strategy is to share a portion of the component cost savings with our customers, and therefore, when we purchased more external supply instead of using our own components, the expected flow-through did not materialize. This impact accounts for about two-thirds of our gross margin miss in Q1. Most of the remainder of the gross margin impacts came in our non-Semi business, where we were awarded a new contract in the commercial space market that began shipments in the quarter. As we moved from pilot to production, it was determined that a redesign of some aspect of the part was required, and this resulted in a push-out of revenue as well as incurring higher costs than expected with these initial deliveries. Lastly, during the quarter, we made the decision to exit our refurbishment business in Scotland. As the demand for product we were licensed to refurbish declined to a level too low to sustain the operation, exiting this business had a slight impact on both revenue and gross margin in Q1. As we look ahead, we have identified what has made an accurate prediction of our gross margin such a challenge over the last several quarters, and as we build in the processes that better gauge both the pricing and the cost sides of the equation, we are confident you will see a longer-term trend developing in how we demonstrate progress towards our gross margin targets. This brings me to an update on our progress in qualifying our proprietary products, which are chiefly comprised of certain components used in our existing gas panel business as well as our next-generation gas panel. We achieved a significant number of new component qualifications in 2024, and we expect these qualifications to convert into more meaningful internal supply within our gas panel business as we progress through 2025. As stated previously, the increased use of our proprietary internally sourced components is a key driver to our strategies for gross margin expansion. While 2024 marked a successful year for qualification, our work continued. As stated before, three of our major process tool customers have already qualified our substrates, which are incorporated into our gas panel. Today, we are pleased to announce a fourth customer will incorporate our substrates into their next-generation products as they transition to surface mount technology. This same customer will also be incorporating our valve products upon successful qualification later this year. Last quarter, we announced the second customer qualification for our valve product line. We expect to complete valve qualifications for a third customer this summer, as well as the fourth substrate customer just missed, anticipated by year-end. For fittings, we announced two customer qualifications in 2024, and a third customer qualification remains in the final stages today. We likewise are progressing on a fourth qualification for our fittings product line used in our weldment business, which we expect to achieve later in the second half. The key takeaway of our component qualification progress is that by the end of 2025, we expect to have all four of our largest customers qualified on all three of our major product families: valves, fittings, and substrates, which will mark a significant milestone for our business. Additionally, we have several exciting new products under development scheduled for later release this year, enabling us to expand our share of the addressable market of our components. Now, I'd like to discuss the outlook we are providing today, given the complexities of recent tariff announcements. In general, today we are affected by the steel and aluminum Section 232 tariffs for certain inbound material to the U.S. Our Mexico machining business falls under the U.SMCA exemption as of today. We are working with our suppliers and customers to mitigate and/or pass on the costs of these tariffs, but there could be some transitory impacts on our gross margin as we work through the processes and customer discussions to incorporate the additional costs of tariffs and their relative impact on total supply chain costs. The final decisions on the Semiconductor export controls and tariffs are expected to be issued early this summer. Obviously, there is a large range of outcomes, but we will not speculate on the outcome today. As we look at our revenue guidance for the second quarter of between $225 million and $245 million, this is about $10 million lower than what our visibility dictated a quarter ago. The lower forecast is not attributable to one particular change in demand, but rather several small factors. For example, one customer forecast was recently affected when a domestic device manufacturer began to slow their WFE purchases in advance of understanding the broader implications of various tariff policies. At the same time, the delivery timelines within lithography and advanced packaging have seen some shifting to the right, while silicon carbide applications have weakened further. This appears to be affecting each of our OEM customers differently, depending on customer and end market exposure, and there's absolutely no question that our primary markets of leading-edge foundry and high bandwidth memory, as well as technology upgrades for NAND, continue to move forward on schedule. We have not further handicapped our Q2 revenue guidance to account for additional adverse demand impact that could result from the tariff policy, other than what our customers have already incorporated into our visibility. Our visibility is somewhat shorter in duration than where we were on our last earnings call, meaning at this time we have a good feel for the first half, but less confidence in exactly how the second half will shake out. At this time, we think our business in 2025 should be relatively even-weighted first half to second half, but I will remind everyone that this is the visibility we have today. Before turning the call over to Greg, a few last comments about gross margin. First, I want to provide a bit more context as to the level of proprietary content we expect to achieve this year. As a reminder, prior to stepping up our R&D investment in launching our new product, about 90% of the bill of materials for our gas panels was sourced externally. In 2024, we were able to shrink that by about 5%. In 2025, we believe we can make further progress towards reducing external supply down to approximately 75% of the bill of materials. This is meaningful progress, but there is still much more progress to be made. The most leverage will eventually come from increasing penetration of our next-generation gas panel, which has roughly 30% external parts and 70% internal. These gas panels incorporate our proprietary flow control technology. Many of the next-generation gas panels delivered to date are currently undergoing qualification with end device manufacturers. These qualifications are particularly important as they represent the first end user qualifications for our proprietary flow control technology, which constitutes the largest portion of our bill of materials and carries the longest qualification cycle, another critical milestone for Ichor. It is not realistic to think that we will be able to move 100% of our gas panels to the Ichor proprietary version, but we expect to continue to make incremental progress. The most immediate and significant impact we should see to our gross margin profile will be as we move from the roughly 15% proprietary content in 2024 towards around the 25% level in 2025. In Q1, we did not achieve the flow-through we anticipated due to purchasing far more external supply than forecast, but as our processes improve and we work through these growing pains, we still expect to show incremental improvements to gross margin through each quarter of the year, even on similar revenue levels. In February, we were confident that our gross margins for the full year would exceed 60%. Today, we are backing off that absolute number, which is currently prudent in response to the tariff uncertainties as well as the impact of the Q1 miss. With that said, we currently expect our second half gross margin will be in the 15-16% range. With that, I'll turn it over to Greg to recap our Q1 results and provide further details around our financial outlook. Greg? Thanks, Jeff. To begin, I would like to emphasize that the P&L metrics discussed today are non-GAAP measures. These measures exclude the impact of share-based compensation, amortization of acquired intangible assets, non-recurring charges, and discrete tax items and adjustments. There is a useful financial supplement available on 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. First quarter revenues were $244.5 million, near the midpoint of guidance and up 5% from Q4. The gross margin for the quarter was 12.4%, an increase of 40 basis points from Q4, but below our forecast of 14.5%. As Jeff discussed, the gross margins were negatively affected by several factors, primarily the slower transition from externally supplied products to our internally manufactured products, as well as higher costs associated with the redesign efforts of our commercial space contract and the decision to exit our refurbishment business in Scotland. Operating expenses came in at $23.7 million, in line with our expectations. Operating income for Q1 was $6.6 million. Our net interest expense was $1.6 million, and our non-GAAP net income tax expense was below our forecast at $600,000. The resulting EPS was $0.12 per share. Turning to the balance sheet, our cash and equivalents totaled $109 million at the end of the quarter, up slightly from year-end. We generated $19 million in cash flow from operations, and after deducting $18.5 million in capital expenditures, our free cash flow was $500,000. Our planned CapEx investments for 2025 are expected to be above our historical average of 2% of revenue as we execute our global expansion of our machining and non-Semi business capabilities. We estimate our 2025 CapEx will be closer to 4% of revenue and be front-half weighted. Our total debt at quarter-end was $127 million, and our net debt coverage ratio has now improved to just 1.5 times, well below any potential threshold for covenants. Now, I'll discuss our guidance for the second quarter of 2025. With anticipated revenues in the range of $225-$245 million, we expect our Q2 gross margins will improve to a range of 12.5%-14%. We expect Q2 operating expenses to be approximately $23.5 million, or roughly flat to Q1. We expect our OpEx run rate will moderate somewhat in the second half of the year, leading us to expect our year-over-year increase in operating expenses to be somewhat lower than communicated previously, and in the range of a 4%-6% increase compared to 2024. Net interest expense for Q2 is expected to be approximately $1.5 million. For modeling purposes, you should model net interest expense for the full year of 2025 to be approximately $6 million. We expect to record a tax expense in Q2 of $800,000. For the full year, we are forecasting a non-GAAP effective tax rate of 12.5%. Finally, our EPS guidance range for Q2 of $0.10-$0.22 reflects a share count of 34.4 million shares. Operator, we are ready to take questions. Please open the line. Thank you. We will now be conducting a question-and-answer session. 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 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the Star keys. One moment while we poll for questions. Our first question comes from Brian Chin with Stifel. Please proceed with your question. Good afternoon. Yeah, let me just, I guess, ask a few questions. Maybe the first one on the change in the revenue outlook for the year. Understanding kind of what you said, Jeff, about a couple of different factors sort of adding up there. If you try to isolate this on the four buckets of NAND, DRAM, Advanced Logic, and Mature Semi, which of these do you think is incrementally more cautious relative to your thinking 90 days ago for Q2 and maybe even second half visibility? Yeah, I would actually think of it a little bit differently, and I'll come back to the segments, but I think the way you guys should think about this is etch and deposition for us are generally the same kind of outlook as we came in. I would say we're softer in our lithography business today, but more than half of this is coming out of our decision to exit Scotland. Softer non-Semi business that we see not ramping as fast in the first half, which affects the whole year, and then silicon carbide. That is much, much softer, almost to the point where most of it has shifted into 2026. From a Dep and etch, it is stable. If you kind of look at the flat half over half, it is really about $30 million. I would say more than half of that is kind of what I would call kind of outside of our core Dep and etch business. It has largely stayed the same, but like we said, we have these pockets that have softened up. If that helps. What I would tell you from a segment point of view is we see the same visibility from what we can tell that the NAND investment is continuing, the DRAM is drawn around AI and others, and Foundry Logic is relatively stable, maybe with the exception of one North America OEM that is kind of rationalizing their CapEx. Got it. Okay. And then maybe sort of weave in one question follow-up around gross margins and then the tariff, which is, I know, not fully quantifiable at this moment, but in terms of the execution in Q1 on the gross margin internalization of some of those components, out of 100%, out of what you expected to execute, what percent did you actually execute on in terms of the internal sourcing? I know we're months into the second quarter, but how much progress have you already seen here to start the quarter to give you confidence that it's sort of back on a better trajectory? Yeah. I would say I'm just trying to think. I mean, the shortfall, some of it started last quarter and materialized into this quarter. By the early part of the quarter, we knew we would have to buy some external supply because we could not get caught up versus what we exited last quarter we were trying to. I would probably say we got, believe it or not, maybe 75% or 80% of what we wanted out of there of the new stuff. Weldments, fine. That has been 10% of the gas box, and that did not have any hiccups in the quarter. I think we still see some external purchases into our second quarter, which we have incorporated into our outlook. I think that the headcount we need to kind of ramp this and doing it is starting to turn the corner, and we have much better alignment between. Keep in mind, some of these parts that we manufacture, these are tens of thousands of parts of precision machine parts. We had some disconnect between what we were able to get out of the factory and what we needed to buy. I think from a confidence, I think there is still a little bit of a headwind that we've incorporated into the next quarter. We kind of talked about the second half of the year being in that 15-16. You're starting to see the flow-through, even on flat revenue levels, increasing against. As you guys said on the call, I think the strategy is working. We're still kind of growing things and executing to get all of this aligned through our factories. We have three large integration sites for. Got it. I'd just close out. I imagine when you have to sort of resource or increase a source to some of your suppliers, maybe it's not in the best terms in terms of that short window. But it sounds like overall, the qualifications and the cuttings are kind of progressing as you expected just sort of your ability to catch up in an efficient way with that. Yeah, Brian, that's a good point. I mean, I'd almost say that they came out of the gate a little stronger than we were ready for. I think they're progressing even as well as we thought and maybe a little bit better, so. All right. Thank you. Thank you. Our next question comes from the line of Krish Sankar with TD Cowen. Please proceed with your question. Yeah. I'll tackle the question. I have two of them, Jeff. First one, just to clarify the gross margin missing, you mentioned growing pains. Are you seeing any of your customers trying to push down the tariff cost onto their suppliers like you, or that has not been a factor yet? I would say we're fortunate enough in my earlier comments that our factory in Mexico is exempt through the U.SMCA exemption. I'd say the 90-day exemption for Semiconductors and CapEx has gotten most of ours covered. I think the area that we're most exposed at today is the Section 232, which is really around steel. It really is our weldment business that ships back to the U.S. We are still working on that process to push that through pricing and things like that. Like we said, we might see some transitory. We are hoping that we can get all of this stuff worked out between our customers and ourselves. I think our customers truly understand what's happened here. I think there's a pretty good collaboration at this point to help them and help us through this. I think it's moving in the right direction. Gotcha. For some of your other customers, can you ship stuff from your Malaysia facility to mitigate the effect of tariffs, or does it not work that way because a lot of your big customers are in the U.S., or do you also have facilities overseas? Yeah. All of our customers have facilities overseas. I would say we have kind of a natural hedge that we could affect. Depending on how the tariffs work out and pass-throughs, the cost of building in the U.S. versus Malaysia, they might be closer than you think between tariffs and no tariffs. Until there are kind of final agreements country by country, obviously, we have one large customer that manufactures almost all of their systems now offshore. We can support them fully. Then one customer that probably builds, I will not say what percentage, but a very large proportion that we service out of Singapore. I think our fourth-largest customer is largely a Singapore-based operation too. A little bit less of an impact for them. Got it. Got it. Final question, Jeff, I understand there are so many moving parts, the tariff and the macro, but it kind of impacts second half and the first half, which is still a pretty healthy growth, nearer a year of like 13% versus WFE for the full year. In the past, I remember your visibility has been about four to five months. I'm just kind of curious, if we look into that, is it fair to assume where is the strength for you in calendar Q2 and your conviction on calendar Q3 coming from? Is it NAND upgrades? Is it leading edge? Any color on that? Yeah. I mean, obviously, we don't get all the sales through, but I would say NAND's still pretty strong. I'd say, obviously, we can see DRAM strength. I'd say we could see that into the third quarter. I'd say our lithography business is probably troughing in the second quarter. That'll kind of start, we believe, kind of start growing in the second half. Obviously, we have four large customers with kind of different outlooks. What I would tell you is we're very closely mirrored to all of our process tool customers and what they're seeing out there. We do build ahead of when they revenue and things like that. Yeah, we still see the strength in Q2 around the depth and etch side, which is really driven by the investments in Foundry Logic, NAND upgrades, and DRAM. Thanks a lot, Jeff. Thank you. You bet, Chris. Thank you. Our next question comes from Charles Shi with Needham & Company. Please proceed with your question. Hi. Good afternoon, Jeff, Greg. Obviously, I think that you will get this question a lot if you haven't. Your largest customer is guiding to a softer second half of the year. Obviously, we don't know if they just want to be conservative or that's the true outlook that they are seeing. It sounds like you're now, I mean, anticipating maybe second half will be slattish half over half. What do you think would be the disconnect between what you see and what your largest customer is publicly guiding everyone to in terms of the second half? Thank you. Yeah. It is a good question. I mean, we did anticipate that we might get this. I would tell you that we are pretty mirrored with our customers, and our customers all have different trajectories, front half, second half. What I would tell you is we believe the second quarter is the low point for us in our EUV and lithography products. That offsets. Semi will get stronger in the second half. We have natural kind of offsets for anything that they see in forecasts. I will not comment specifically what we see from them, obviously. I would tell you we do not see any significant disconnect, front half to back half, from what our customers are talking about in the marketplace as well. The other thing I might point out, Charles, is that, and I do not know the exact percentages, but our largest customer and our second-largest customer are within a few percentage points. Okay? We have two really pretty large customers. Yeah. Got it. Got it. I got your point about the second and not being too far behind the number one. Yeah. Jeff, maybe another question. I do want to come back to one thing you said regarding the purchase of externally sourced components. Was this something that really caught you off guard? Something really surprised you that your customer ended up they wanted more external stuff? Because I thought that this is something, well, your customer has to qualify it, even maybe your customer's customer needs to qualify it, that the conclusion was made a long time ago. Why this is happening and if any additional color you can provide us. Because we do want to know whether this is a temporary setback or maybe we have to think this is going to be very we need to think about different rates of adoption for your internally sourced components. Thank you. Yeah. Actually, Charles, I think it's a good question, and hopefully, I can help add a lot of clarity here. One is I think the demand for our products and qualifications is in line, if not a little stronger. Our challenge is lining that up with making sure that it gets delivered on time to our integration sites. That is where we had the challenges. It is not from a demand point of view. It is really from the supply point of view. We do not have customers saying, "Do not buy our stuff." Once we are qualified, we can go fully and cut it in and use our supply. We can also use external supply, obviously, because we had to do that to fill in our gaps. We do not have anyone dictating to us what we can or cannot use at this stage. These are passive parts. Once they are qualified, we can use them across our product line. That is not the problem. The problem was getting our supply up quick enough to cut in in advance of when we made the decision at a pricing level. We share some of the benefits of insourcing with our customers and maintain a lot of the margin accretion internally. That had an effect as well because we did not get our profit on the parts that we built, and/or we did not get to absorb our factory overhead as well. That is the two primary pieces of the gross margins. Got it. Maybe, Jeff, if I may, can I squeeze in one quick question? Maybe this is a clarification. On the press release, you put the footnote to the non-GAAP-to-GAAP reconciliation for your operating—maybe it is not operating. It is total expenses about $1.5 million. The footnote says it represents severance costs associated with the global reduction in force programs. I think I heard you only talking about exiting Scotland, but the footnote sounds like it is not a restructuring just around Scotland, but somewhere else as well. If you can clarify, that would be great. Thank you. Hey, Charles. This is Greg. I will take that. Obviously, we mentioned that we had made a decision to exit Scotland. That was the majority of that $1.5 million severance cost that we took for those individuals impacted. That was the majority of it. We did have some smaller reductions in the quarter, but Scotland was by far the majority of that charge as we planned for those individuals to exit. Thank you, Greg. Thank you. Thank you, Jeff. Thanks, Charles. Thank you. Our next question comes from Craig Ellis with B. Riley Securities. Please proceed with your question. Yeah. Thanks for taking the question. At the risk of beating a dead horse, I'll start with gross margins. Jeff, you've provided a lot of color. I think what I'm missing as I just listened to a pretty full discussion of what's going on is where exactly the issue arose? Is it the company's inability to forecast the amount of supply it needs and get that on site so that it can do some initial work? Is it with the initial work? The second part of the question is what new monitoring steps have been put in place and how quickly or how regularly are things being monitored so that you on your dashboard have optics into what's going on and can confidently steer gross margins to guidance going forward? Good question, Craig. The simple answer is yes. As we were forecasting this business, we had the demand forecasted pretty clearly. The supply inbound and coming out of machining operations is often complicated. We had other products at ramp that we had cut in front of other products. By the time we realized it, we had to make the decision to buy some external because two-thirds of our business is still the gas panel integration business. We can't risk deliveries there. Yeah, we kind of didn't get our—I call it the gazantos and the gazaltos lined up. This quarter, what I would tell you is the level of detail of which I'm digging in and others on my team are digging in or trying to ensure alignment to demand. We're just going to go deeper into the organization. It doesn't get to us. I mean, we could have done a better job of forecasting. Is the bottom line. We probably could have predicted some of this, which would have probably manifested in a similar result, but giving you guys some visibility to it. When I talked about quarter two, Craig, we also said there's still some headwinds that we're working through. They're much less significant. The front half of the year has got a more muted gross margin. For the full year, obviously, we won't get to the 16% we talked about on the last call just because you can't make up for lost time and the margin stack. Just looking at revenues, Jeff, we've got a range for the current quarter. Can you just frame up what's different from the low end to the high end of the range in terms of what you can see today? What would it take for revenues to come in at the low end? What would need to happen for revenues to come in at the high end? Thank you. Yeah. The low end, I think, is things just start to shift to the right for whatever reason. Demand horizons start to shift. Customers want to push things out. Today, I'd say, holding pretty well. To get to the high end, it's just customers really shifting from quarter three probably into quarter two and starting to pull some stuff in a little bit. Then we get a tremendous amount of demand moving between quarters in every quarter. We try and range that kind of up 10, down 10. I would say we're probably not going to get any significant new tariff news until early Q3, but that could have an effect, which we have not incorporated. Got it. If I could sneak one in for Greg. Greg, you gave some clear color on 2Q OpEx. As we look at the back half of the year, should we expect it to be fairly steady, or how do things trend? Thank you. Hi, Greg. I think we said we would moderate it. We said last time we were saying 5-7%. So 4-6%. It will be down slightly, but not materially in the second half as we've had some front-end loaded costs in Q1, Q2. You can moderate it down a little bit, but not significantly. Thanks, guys. Thanks, Greg. Our next question comes from Tom Difley with D.A. Davidson. Please proceed with your question. Yes. Good afternoon. Thank you. Jeff, I was curious, has your view of the required manpower or the actual yields of the internal source changed at all? Has your long-term view of the incremental margins from this project changed at all? I'll answer the easy question. The incremental margin in the long run has not changed. I think we still have to get down what I'd call the learning curve. I think the resources, the machinists are coming along pretty well. Keep in mind, we also need assembly people and things like that. A lot of this is centralized around our Minnesota operations. The headcount is coming in pretty well. That helps us offset some of the higher-cost external resources that we use to start this ramp. Is the long-term plan to regionalize this where you do this in every region, or is it going to be a global operation? We will. I think if you look, our CapEx was pretty healthy in Q1. That's all largely around our kind of global expansion for what we see coming, which the largest piece is going to be a machining operation in Malaysia. We are going to globalize it and build certain things in certain places. That strategy may, in fact, actually help a little bit if tariffs stick around permanently and things like that. That facility is kind of a 2026 startup. Okay. Great. Just as a follow-up, Greg, maybe is there some way you can quantify the steel aluminum tariff impact on you? To quantify it, Tom, we've looked at what we think is going to be. Right now, it's about 15% of our inbound. It's really coming from Malaysia. Yeah. U.S. U.S. inbound, right? Malaysia is kind of the largest piece of it. The steel side right now is—let's see. What did we say? Yeah. The 232 tariff, that's the steel, right? It's not significant, Tom, at this point, because we've worked through ways to mitigate that through finding suppliers or diverting it to our not coming into the U.S. Also, remember, Mexico is exempt from that at this point. Yeah. Our largest weldment facility is Malaysia, which dwarfs any of the capabilities in volume that we have in the U.S. The U.S. does, I would call, more sophisticated weldment sub-assemblies. We have to work—that's the one that's getting us. 232 does not allow duty drawback, either for our customers or for us if we do it. That's the one that is the biggest obstacle. Okay. No, that's helpful. Appreciate the time. Thanks, Tom. Our next question comes from Edward Yang with Oppenheimer & Company. Please proceed with your question. Thank you. Thanks for the time. Jeff, you mentioned the core depth and edge outlook has not changed. What's your level of confidence that stays strong? You had a large OEM and process control postpone their analyst day, and are there any historical parallels that you could draw on in terms of the current environment relative to the past that could kind of guide you in terms of forecasting? It's not COVID. That went the other direction. I think the uncertainty and the fact that people are being a little careful is really around the geopolitical uncertainty of what's going to happen once they make a final determination for Semiconductors and Semiconductor capital equipment and then the supply chain below it. I mean, you'd have to ask the other company why they push something now. Today, all I can do is tell you what I'm seeing. We do not see a demand erosion beyond the pockets that I talked about earlier in the call. We still have a clear message that 2026 is going to be a pretty strong year. Do not stop planning for that. We all have to wait out the final export control and tariff situation before we can make any final determinations on if that is going to lead to some level of demand reduction. Right now, I think most of us are just dealing with what we can see in front of us. By early summer, I think we will start to hear the next wave around Semiconductors and whether they are going to continue to be exempt. Remember, they are exempt in the one area we were really worried outside of the U.S., China. China is still allowing the flow of equipment. Got it. Maybe a longer-term question, but with all this tariff and logistics uncertainty, are your customers more open to outsourcing components and sub-assemblies? I think the way I would think about that is we have a global footprint. We have some flexibility that can work with them. You have to go one step deeper, Ed, which is where's the sourcing of the steel coming into the U.S.? That's what's getting us is not everything is U.S. Our non-Semi business, our IMG business we talk about, they do not buy anything outside of the U.S. We buy most of our base materials in the U.S. It's really the tubing and weldments that we're getting affected on. Those have some ability to flex around over time, but you would have to have a clear vision before you start making those moves. Okay. Thank you. Thanks, Ed. Our next question comes from Christian Schwab with Craig-Hallum. Please proceed with your question. Thanks. Guys, it was not clear to me the size of the Scotland operations on an annual basis. Can you give us an idea of what the average annual revenue of the Scotland operation was in 2023 and 2024? Yeah. I would say I do not have it on the top of my head, but I would say 2023 was probably $20 million-ish, a little lighter in 2024, got tremendously lighter towards the end of 2024. In Q1, the demand just dissipated. They did some legacy tool refurbishments under a license. That license expired. They were not able to backfill in another business. I would say on the full year, somewhere close to $10 million kind of came out of our horizon. Right. It was not clear to me. You gave a lot of numbers around gross margins, but let's just start with where you started with 90% external components. What does that percentage need to go down to to drive your aspirational gross margin target of 19-20%? I think by the end of 2025, we'll be at about 25% internal, 75% external. We'd have to get some proportion of the flow controller in there. To tell you the truth, I'd probably be guessing, Christian, exactly how much. To get there, we would have to have some reasonable level of either the full gas panel, the new gas panel, and/or whether the flow control. The next generation is really going to be backwards compatible, and that's probably going to be a faster move. I don't know. If I was to guess, $40 million or $50 million of that probably gets us pretty close to the 19%. Okay. Great. No other questions. Yeah. On the On the passive parts today. Thank you. Great . Thank you. With that, there are no further questions at this time. I would now like to turn the floor back to Jeff Andreson for closing remarks. I want to thank you for joining us on our call this quarter. I'd like to thank our employees, suppliers, customers, and investors for their ongoing dedication and support. Later this month, we will be participating in the B. Riley Conference in Los Angeles, the Craig-Hallum Conference in Minneapolis, and the TD Cowen Conference in New York. After that, we will look forward to our next quarterly update in early August for our Q2 earnings call. In the meantime, please feel free to reach out to Claire directly if you'd like a follow-up with us. Thank you. Thank you. With that, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.