Thank you for standing by, and welcome to the MKS Instruments Fourth Quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Paretosh Misra, Vice President, Investor Relations. Please go ahead, sir. Good morning, everyone. I'm Paretosh Misra, Vice President of Investor Relations, and I'm joined this morning by John Lee, President and Chief Executive Officer, and Ram Mayampurath, Executive Vice President, Chief Financial Officer, and Treasurer. Yesterday, after market close, we released our financial results for the fourth quarter and full year 2024, which are posted to our investor website at investor.mks.com. As a reminder, various remarks about future expectations, plans, and prospects for MKS comprise forward-looking statements. Actual results may differ materially as a result of various important factors, including those discussed in yesterday's press release and in our most recent annual report on Form 10-K. These statements represent the company's expectations only as of today and should not be relied upon as representing the company's estimates or views as of any dates subsequent to today, and the company disclaims any obligation to update these statements. During the call, we will be discussing various non-GAAP financial measures. Unless otherwise noted, all income statement-related financial measures will be non-GAAP other than revenue. Please refer to our press release and the presentation materials posted to the Investor Relations sections of our website for information regarding our non-GAAP financial results and a reconciliation to our GAAP measures. Our investor website also provides a detailed breakout of revenues by end market and division. Now, I'll turn the call over to John. Thanks, Paretosh, and good morning, everyone. Before I discuss our quarterly results, I'd like to take a moment to review 2024, which was a year of impressive execution in a challenging environment. Despite roughly flat year-over-year revenue of $3.6 billion, we achieved a 190 basis point expansion in gross margin. We managed our operating expenses effectively, increased earnings per share by 49%, and improved free cash flow by $178 million. Additionally, we took several actions to proactively manage our leverage and significantly reduce our interest expense. This included an upsized $1.4 billion convertible note offering, voluntary prepayments of $426 million on our term loan facility, and an opportunistic refinancing and repricing of our term loans. We took these steps while also maintaining investments in R&D and strategic initiatives, including delivering technology innovations in areas such as World-Class Optics, lasers and laser systems, and new chemistry solutions for advanced packaging in the AI era. We also upgraded and expanded our operations in Romania, broke ground on our new Super Center factory in Malaysia, and purchased a site in Thailand for a future chemistry factory and tech center. These investments add capacity and resiliency to our manufacturing footprint. We're proud of our accomplishments in 2024, and I want to acknowledge our teams across MKS who delivered these results despite muted end markets. I also want to thank our customers across our Semiconductor, electronics, packaging, and Specialty Industrial markets for their support and engagement as we work to deliver unique solutions that enable their success. Entering 2025, MKS is in a strong position with one of the broadest and deepest product portfolios that uniquely allow us to solve our customers' most complex challenges. These challenges are placing increasing pressure on traditional Moore's Law innovation cycles. MKS is enabling solutions to this More-than-Moore environment through design and production wins in areas like optical modules for the lithography, metrology, and inspection market, lasers for next-generation back-end applications, and chemistry equipment for multi-layer substrates for advanced AI servers. These examples demonstrate the impact that technological innovations have on our industry, and we believe our position as a foundational enabler across Semiconductors and electronics sets us up well as these trends accelerate. Now, let's discuss our fourth quarter results in more detail. We ended 2024 on a strong note with revenue, gross margin, and earnings per diluted share above the midpoint of our Q4 guidance ranges. Revenue was up 5% year-over-year, driven by double-digit growth in both our Electronics and Packaging and Semiconductor end markets. We continue to make good progress proactively managing our leverage, including another successful repricing of our term loans and a $100 million voluntary principal prepayment in January 2025. Combined with similar actions we took in 2024 and a slight improvement in the interest rate environment, we have reduced our annual interest expense run rate by over $130 million compared to the prior year. Looking at our performance in our three end markets, starting with our Semiconductor market, revenue increased 6% sequentially above the high end of our guidance range. Similar to the trends seen throughout the year, this higher revenue trend was mainly driven by better-than-anticipated in quarter demand, primarily related to DRAM and logic foundry applications for our vacuum product offerings. NAND has picked up from early 2024 but remains at historically low levels. We are well-positioned for both upgrade activity as customers move to higher layer counts and potential new greenfield investments when that market recovers. We are achieving a healthy pace of design wins that create great opportunities for us when Semiconductor investment recovers, including reactive gas solutions for leading-edge nodes. Additionally, we continue to advance our positions in lithography, metrology, and inspection with another design win supplying optical assemblies for a leading customer. We also maintain our momentum in the back-end applications related to high bandwidth memory with more orders for our lasers during the quarter. We have continued to invest in our laser business over the years, and we believe we are well-positioned for strong growth. In the first quarter, we expect Semiconductor revenue to be flattish on a sequential basis. The guidance demonstrates continued stability in DRAM and foundry logic demand, with NAND remaining at low levels. Overall, while demand remains low, it is higher than a year ago. Investments we're making, along with our design wins, strengthen our confidence in our ability to outperform as the market recovery gains momentum. Turning to Electronics and Packaging, revenue grew 10% sequentially and above the high end of our guidance. The sequential increase was driven by increased equipment sales. We saw continued momentum in orders for our chemistry and equipment solutions for advanced MLB, HDI, and package substrates related to AI applications. This shows the key role our products and technologies play as advanced packaging, and specifically the interconnect, becomes more critical in enabling the manufacturing of increasingly complex electronic devices. Excluding the impact of FX and palladium pass-through, sales of chemistry increased 9% in the fourth quarter over the prior year. For the full year, chemistry sales finished up 12% and significantly outperformed the PCB industry in 2024. Looking ahead to Q1, we expect revenue from our Electronics and Packaging market to be down 4% on a sequential basis, primarily due to seasonality associated with the Lunar New Year. In our Specialty Industrial market, revenues decreased 2% sequentially and was at the lower end of our guidance range. While the Life and Health Sciences and Research and Defense end markets were steady, we saw softness across the broader industrial market. As a reminder, our Specialty Industrial market consists of a variety of applications across multiple end markets. Looking ahead to Q1, we expect revenue in our Specialty Industrial market to decline 6% from Q4, mainly due to softness in the industrial market and Lunar New Year impacts, especially related to our General Metal Finishing business. Overall, we executed well and delivered solid financial performance in the fourth quarter and full year 2024. With green shoots emerging in a few key areas of our business and improving profitability, MKS enters 2025 in a robust financial position. I mentioned the strength of our team earlier. Their efforts, coupled with our dynamic culture, are reflected in the industry accolades we received during the year. For the second consecutive year, we were named to U.S. News & World Report's Best Companies to Work for in our industry, as well as named by Newsweek and Statista as one of America's Most Responsible Companies for 2025. Now, let me turn it over to Ram to run through the financial results and first quarter guidance in more detail. Ram? Thank you, John, and good morning, everyone. As I've had a few months now to dive deeper into my role, I'm impressed with the level of execution that MKS delivers, especially in light of the industry demand backdrop of the past couple of years. In the coming quarters, we will maintain our focus and discipline on managing costs while we make the necessary investments for long-term growth and business continuity. I will talk a little more about how we are looking at the coming quarters in a moment, but first, let me review our Q4 and full year performance in detail. For the fourth quarter, MKS reported revenue of $935 million, up 4% sequentially and 5% year-over-year. The result was above the midpoint of our guidance range and was driven mainly by better-than-expected Semiconductor and Electronics and Packaging revenue. Fourth quarter Semiconductor revenue was $400 million, up 6% sequentially and 10% year-over-year. The result was above the high end of our expectation as our team continued to execute on strong in-quarter demand, especially as related to DRAM and logic foundry applications, where we have seen relative normalization of inventory levels at our customers. NAND is bouncing off very low base, but we are seeing evidence that we are making good progress in burning through excess inventory at some customers. Fourth quarter Electronics and Packaging revenue was $254 million, an increase of 10% quarter- over- quarter, and also above the high end of our expectations. This result was led by higher flexible PCB drilling and chemistry equipment sales, partially offset by normal seasonal declines in chemistry. On a year-over-year basis, sales were up 13%, driven by stronger performance in chemistry, flexible drilling equipment, and chemistry equipment. Chemistry sales were up 9%, excluding the impact of FX and palladium pass-through, continuing a gradual recovery trend from the industry-wide softness. In our specialty industry markets, fourth quarter revenue was $281 million, a decline of 2% sequentially and below our guidance midpoint, largely due to softness across the broader industrial markets. Revenue was down 8% year-over-year basis, also primarily due to softness in the industrial market. The prior year result benefited from strong chemistry equipment sales within the General Metal Finishing business. Turning to gross margin, we reported fourth quarter gross margin of 47.2%, which was above the midpoint of our guidance. Gross margin was down sequentially due to higher equipment mix in the fourth quarter and consistent with our expectations. We continue to prudently manage our costs, balancing investing in our business with near-term profitability and cash generation. Fourth quarter operating expenses were $242 million and within our guidance range. Fourth quarter operating income was nearly $200 million, yielding an operating margin of 21.3% and above our guidance, driven mostly by higher gross profit. Adjusted EBITDA was $237 million and also above the midpoint of our expectations, yielding a 25.3% margin. Net interest expenses was $45 million, lower than our guidance of $48 million as a result of a year-to-date reclassification of approximately $3 million of pension plan interest costs to other non-operating expenses. Net interest expenses was otherwise in line with our guidance. The fourth quarter effective tax rate was 4%, which was lower than our guidance due to certain favorable discrete items in the quarter. Fourth quarter net earnings were $146 million, or $2.15 per share, above the midpoint of our guidance, reflecting strong operating performance and lower income taxes, I just detailed. For the fourth quarter, free cash flow was $125 million, or 13% of revenue. We recorded capital expenditures of $51 million in the quarter, slightly above 5% of revenues. We expect CapEx to average 4%-5% of revenues for the foreseeable future. We closed the quarter with approximately $1.4 billion of liquidity, comprised of cash and cash equivalents of $714 million, and our undrawn revolving credit facility of $675 million. We exited the quarter with gross debt of $4.6 billion and net leverage ratio of 4.3x, based on our trailing 12-month adjusted EBITDA of $914 million. We continue to prioritize deleveraging our balance sheet, which remains our top priority after investing in our business. As John mentioned, in 2024, we made a total of $426 million of voluntary prepayments on our term loan. In January 2025, we repriced our term loan, reducing credit spreads by an additional 25 basis points, and made another $100 million of voluntary principal prepayment. Based on the current interest rates, the combined effect of these recent actions will reduce our annual interest expense run rate by approximately $15 million. As the demand environment improves, alongside our continued focus on prudently managing working capital and gross margins, we expect to see stronger flow through to the bottom line and higher cash flows, allowing us to continue to make good progress on deleveraging. Finally, during the fourth quarter, we paid a dividend of $0.22 per share, or $15 million. Moving to full year 2024 results, revenue was $3.6 billion, down 1% year-over-year. Semiconductor revenue totaled $1.5 billion, up 1% year-over-year and up 2%, excluding the impact of foreign exchange. We experienced growth in world-class optics and continued stability in DRAM and Logic Foundry applications, while NAND remained at low levels. Electronics and packaging revenue was $922 million in 2024, up 1% year-over-year, excluding the impact of FX and palladium. Sales were up 7%, driven by strength in chemistry. Total chemistry sales increased 12% year-over-year, excluding the impact of foreign exchange and palladium pass-through. Specialty industrial revenue was $1.2 billion, down 5% year-over-year, primarily driven by softness in the industrial market. Excluding the impact of foreign exchange and palladium pass-through, sales declined 3% year-over-year. Full year gross margin was 47.6%, up 190 basis points year-over-year, driven by product mix as well as operating efficiencies. In addition to successfully capturing value through our truly differentiated product portfolio, we have also taken measures to manage our material and labor costs efficiently. Full year operating margin of 21.3% was up 180 basis points year-over-year, primarily as a result of higher gross margin coupled with disciplined operating expense management. Turning to cash flow, we generated operating cash flow of $528 million, an improvement of $209 million year-over-year. Full year free cash flow was $410 million, an increase of $178 million year-over-year. Free cash flow conversion of 11.4% improved 500 basis points over the prior year. We are pleased with our execution on the margins and the strength in the underlying cash generation in our business, despite a challenging demand environment in our end markets. Let me now turn to first quarter outlook. We expect revenue of $910 million, ± $40 million, consistent with the guidance we provided last quarter and consistent with our view that the market is relatively stable, albeit at a slightly higher run rate than what we saw a year ago. By end market, our first quarter outlook is as follows. Revenue from our Semiconductor market is expected to be $400 million, ± $15 million. Revenue from our Electronics and Packaging market is expected to be $245 million, ± $10 million. And revenue from our Specialty Industrial market is expected to be $265 million, ± $15 million. Based on anticipated revenue levels and product mix, including lower chemistry sales in the light of the Lunar New Year, we estimate first quarter gross margins of 46.5%, plus or minus 100 basis points. We expect first quarter operating expenses of $255 million, ± $5 million. We expect our OpEx spending to remain at this range of $250-$260 million a quarter as we continue to invest in people and infrastructure. We estimate adjusted EBITDA of $217 million, ± $23 million. We expect tax rate of approximately 22% in the first quarter. For the year, we expect our tax rate to be in the range of 19%-21%. Based on these assumptions, we expect first quarter net earnings per diluted share of $1.40, ± $0.27. Our execution has remained strong despite the cyclical challenges in our end markets. We are confident that we are uniquely positioned to capitalize on the opportunities that lie ahead. With that, I will turn the call back over to John for concluding remarks. Thank you, Ram. I'll wrap up by saying I'm very pleased with the performance we delivered in 2024. We've leveraged our broad and deep product portfolio to capture opportunities across our businesses in a tough demand environment, and that's thanks to the deep engagement we enjoy with our customers. We've managed our costs well, maintained strong margins, and made progress on our deleveraging agenda. Going forward, we're well positioned on multiple fronts: improvement in NAND when it comes, continued order and design win traction in our world-class optics portfolio, and incremental design win and order activity in both chemistry and chemistry equipment, which are benefiting from increasing complexity for advanced packaging in the AI era. You also heard from Ram that we will invest incrementally both in growth and business continuity to ensure we're ready to capture exciting opportunities when markets return to growth. Of course, we'll do that while maintaining the prudent focus on profit and cash generation that investors know us for. We're looking forward to an eventful year ahead. With that, Operator, please open the call for Q&A. Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. And our first question for today comes from the line of Krish Sankar from TD Cowen. Your question, please. Yeah, hi. Thanks for taking my question. I had a couple of them. First one, John, you mentioned how some of your NAND component inventory at your semi-cap customers is being burnt. I'm kind of curious, where do you think those levels are today versus before, and how much ahead would they start purchasing your components again when they anticipate a NAND upturn? Yeah, good morning, Chris. Yeah, that's a great question. So we have seen green shoots there. We've talked in the past about a lot of our inventory being burned off. We're starting to see some of that happen, and we're starting to see some new orders for that. So it's already happening. So we're happy with that progress. It's just that it's still off of a low level. So good progress, green shoots, but certainly not at the level where it used to be. So is it fair to assume, just given what your customers are seeing, what you're seeing, semi revenue should remain around these levels into even the June quarter? We're not guiding out beyond that, as you know. But I would say this: because we're starting to see these orders coming in for NAND, it will depend on how much upgrade business occurs or whether there's a new greenfield. Certainly, if those happen, they would drive that part of our revenue up, and so we're in a good position if and when that happens. And then just a quick follow-up for Ram. You kind of mentioned $250-$260 million in OpEx. Is that the run rate used for the rest of the year? I mean, and should it normalize? Because it seems like it's stepping up quite a bit from last year. Yeah. Hi, good morning, Chris. So first of all, I'll just say that we are very disciplined and focused on our OpEx spending. Our OpEx in 2024 was flat to slightly less compared to the previous year. In 2025, we see some opportunities to invest in long-term growth and to build some efficiencies within our business. And that's why we are having the additional step-up investment. Over the long term, we remain committed to a 40% incremental operating margins, which we'll see as the top line picks up. Got it. Thanks, John. Thanks, Ram. Thanks, Chris. Thank you. And our next question comes from the line of Peter Peng from JPMorgan. Your question, please. Hey, guys. Thanks for taking my question. Just on your Semiconductor segment, some of your customers and peers are talking about a mid-single-digit growth for WFE. So against that backdrop, just given some of the end market dynamics and some of your design wins, how are you thinking about your relative performance versus that level for the year? Yeah, good morning, Peter. Well, as you know, we've been able to outperform WFE over the long term by 200 basis points through cycles. So we're really well positioned. The design wins activities that we've seen are really helpful. Our focus on world-class optics is another lever for us to gain share relatively. You're right. Most of our peers and customers have said kind of mid-single-digit growth in WFE. And if that happens, we certainly will be enjoying that level of growth as well. As you know, during a strong upturn, we outperform because our customers are pulling a lot more. And then downturn, we underperform. And overall, we look through the cycle, and that's where we are still at that 200 basis points above the long-term CAGR. Got it. Okay. And then on your Specialty Industrial, that business looks like it's kind of been steady declining over the last few quarters. Any idea of when you think that business would kind of bottom and start to recover? Yeah, and as we said on the call, Peter, it's made up of several different kinds of markets, and so we called out that general industrial is the area that is seeing weakness, which is not a surprise. I think if you read all the PMI data, that wouldn't be a surprise, and even organically, though, it's only down 3% year-over-year for the entire segment of our market. So it's bouncing along the bottom, and I think our best visibility is the guidance we gave, and it can be lumpy because it's made up of several different markets, so I think steady and slightly down is how we see it right now. Thank you. Thank you, Peter. Thank you. And our next question comes from the line of Melissa Weathers from Deutsche Bank. Your question, please. Hi there. Thank you for letting me ask a question. I wanted to go back to the NAND side. Can you talk about when we're seeing the spending happen in upgrades versus greenfield capacity, where does MKS fit in that narrative? Do you have higher content in greenfield versus upgrades, or how do we think about the upgrade dynamics this year? Yeah, good morning, Melissa. Yes. So certainly, a greenfield requires brand new tools, and as you know, MKS has a broad portfolio around those tools. With upgrades, most of the benefit for us is in the power, the RF power, and as I've said before, it depends on what the upgrade is, and if it's going from 100 layers to 200 layers, there's certainly a lot of RF power that is needed, and so that's where we're starting to see some of the inventory burn off, as we talked about, and some of the pulls on certain particular product lines there. Got it. Thank you, and then still on the semi side, but on the logic piece, this year, we're expecting some pretty healthy spending on the leading-edge nodes. Gate-all-around volumes are going to ramp throughout the year, so can you talk about what the impact of that trend is on MKS's business? Do you have any kind of content story with gate-all-around nodes, or how should we think about that logic piece continuing to ramp through this year? Yeah. There are lots of things that we play in and contribute to enabling this advanced logic capability. One thing we called out in the earnings call is advanced ozone applications for gate-all-around. And so we have a broad portfolio, so we are playing in that advanced node growth, but we have particular areas of product lines that enable that particular growth as well. Thank you. Thank you. Thank you. And our next question comes from the line of Jim Ricchiuti from Needham & Company. Your question, please. Hi, good morning. Hey, John, besides NAND, which other areas, markets, or subsectors are you seeing some signs of recovery, green shoots, as you pointed out? Yeah, good morning, Jim. Well, we are starting to see some of that chemistry recover in advanced packaging. Even though quarter on quarter can be lumpy, we did see year-over-year an increase in the PCB chemistry world, and we grew 12% organically. We believe that far outpaces the industry, by the way. And the other green shoots that I would call out besides NAND, as you say, is the chemistry equipment for advanced packaging. We saw these orders pick up a couple of quarters ago. They continue to pick up. And this is for MLB and HDI applications for AI. Got it. Hey, John, looking at that EMP business, can you help us and maybe remind us again how much of that you would characterize as advanced packaging and whether you want to give it to us for the quarter and just some sense as to how that might have grown over the year? Yeah. I think what we used to talk about for advanced packaging was really the IC substrate part, the one that is really enabling for things like AI servers and non-AI servers and PCs. That's about a third of the PCB market. What's surprising and good for us is that because of the number of layers and the complexity of the number of chips being packaged, we're starting to see AI drive growth in MLB and HDI. And so MLB is a third of the market. HDI is a third of the market, and IC substrates are a third of the market. And the equipment that we talked about, the equipment orders are driven mostly by HDI and MLB. Package substrates remain the part for the AI servers, which is great. Those customers are really ramping. But as we've talked about, that's still 10%, 15% of the entire IC substrate market. And so the other 85% of the market is still relatively muted because that's driven by PCs and non-AI servers. Got it. Thank you. Thanks, Jim. Thank you. And our next question comes from the line of Vivek Arya from Bank of America Securities. Your question, please. Hi, this is Michael Mani on for Vivek Arya. Thanks so much for taking our questions. To start, maybe on gross margins, it seems like they're dipping into this quarter. I think that's related to higher equipment mix. But what are the puts and takes for gross margins as we go through the year? Should we expect the greater contribution from chemistry to help any other segment dynamics there? Appreciate any color. Thank you. Yeah. Hi, Michael. I'll take that. First of all, we're very, very happy with the improvements we have seen in gross margin year over year. We improved our gross margins by 190 basis points, 2023 to 2024. And a lot of that was due to the commercial actions and operational excellence programs in place. Most of those operational excellence programs will continue, which includes manufacturing excellence and procurement savings, and will continue to help our gross margin in the coming quarters. What we are seeing in Q1 is a higher concentration of equipment that we saw in Q4. That is going to continue, and that will impact our mix. That, combined with the impact of the Lunar New Year, reducing our chemistry mix, is the reason why we are guiding our gross margin slightly lower in Q1. So to your question, the actions that we control to influence the gross margin will continue. And the mix is seasonal. Yeah. Now, that too, Michael. It is seasonal, the chemistry revenue for packaging, because we do have a consumer products component to our business. And Lunar New Year, where many of our customers are shut down for a week or so, doesn't occur going forward. And so we kind of expect, if normal cyclicality happens, that the proportion of our revenue that's chemistry returns. And so that's a tailwind for gross margin. Great. Thank you. And then for my follow-up, I just wanted to ask about your design win pipeline. So with Atotech, Electro Scientific, and all, how does your design win pipeline look based off the synergies you were able to generate from a customer revenue basis from these acquisitions? Has it grown? And when do you expect most of these revenues to kind of convert? Is that something we could see later this year? Is it more further out in 2026, 2027? And then finally on that, were there any areas within that pipeline where maybe the company was surprised at how competitive it was, like areas that maybe it didn't expect to land the win, but it was more competitive than they initially anticipated? Thank you. Yeah. No, we still have great engagement with many customers on this portfolio that we are able to provide, meaning laser systems as well as the chemistry and chemistry systems. So that engagement and the design wins that come from that remain strong. We have multiple design wins that we've talked about in the past. To your point, it does take one or two, three years, depending on the customer, for that revenue to show up. Your other question about were there any headwinds and whatnot, I think most of the headwinds would be you win a design, and then maybe that customer is not levered to AI, and they may not grow as much. Maybe they're levered to PCs, and so they would certainly not be adding volume. But once you win that design win and once that market returns, we expect them to be successful as well. Great. Thank you. Thank you. Thank you. And our next question comes from the line of Steve Barger from KeyBanc Capital Markets. Your question, please. Thanks, John, for your comment about a healthy pace of design wins for optical assemblies, are those coming from a product refresh, or are those new programs that you haven't been on before? Yeah, both, Steve. Some are a program we're already on, but it's an upgrade, the next generation of it. And some are literally new things that no one's ever done, including our customers. So it's exciting to do both. Number one, you're not losing share. You're actually being asked to upgrade what you already delivered. Number two, we're being asked to do things that are more and more complex, require more and more of our portfolio, and therefore much stickier, and fewer and fewer of our competitors can actually do that. So it's a combination of both, Steve. Are you seeing the pace of RFQs or the conversion rate from that initial process to wins change as the cycle starts to move forward? Or how would you characterize that process? I think for world-class optics, the timing for designs is multiple years before they go into the market. Really no change because that pace has to continue no matter where you are in the cycle. I would say we are seeing more of it on average over time because of the investments we made in capability in world -class optics. It's really long design cycles, difficult things to do, and they continue through cycle. Got it. And then as you look at the progression of advanced packaging demand, is there a meaningful difference across different variations like CoWoS-S versus CoWoS-L? I guess, is there an optical demand trend beyond just broader packaging proliferation? Well, packaging, to your point, is evolving quickly, and it's a very dynamic area, which we love, right, because that means new technology, new opportunities. I think, to your point, CoWoS-S is moving to L, to R, and all that. And that's important. But really, what we're talking about at MKS are the 50 layers below that, and the chemistry and the drilling and the equipment below that. And so that 50 layers used to be 40, and before that was 30. So that's an exciting area for us. And that's really why we thought putting Atotech together with MKS makes a lot of sense, enabling that roadmap to go faster. Understood. Thanks. Thanks, Steve. Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. Our next question comes from the line of Toshiya Hari from Goldman Sachs. Your question, please. Hi, good morning. Thank you so much for taking the question. John, a couple of your customers have spoken to the recent export restrictions and how that's having an impact on revenue in calendar 2025. I know most of this should be indirect for you guys, but I'm curious if there's a way to quantify any negative hit from the recent restrictions, in some ways, obviously. Yeah, maybe I'll let Ram take that. Yeah, I can start. So our guidance reflects our best view at this point. We don't see any material impact based on what's in place today. Now, as you know, the situation is quite fluid, and we are evaluating it closely. Toshiya, I think you were asking about the BIS restrictions that came out at the end of the year, or you're asking about tariffs? At the end of the year, the BIS restrictions. Yeah, yeah. Well, yeah, as you read, KLA, Lam, everybody's come up with some new numbers. And we are, as Ram said, this is our best view because of what we see from our customers. Obviously, if their revenue goes down, we will see that. But I would say our direct sales to China for the Semiconductor market is very, very low. The numbers that impacted us occurred in October of 2022, and those numbers are out of our numbers right now. That revenue is out of our numbers right now. So it's still indirect impact on the same order as what it impacts our customers. Got it. That's helpful. And then as my follow-up, maybe one for Ram. So you've been with the company for a couple of months now. I'm curious. I know you guys are very focused on paying down debt on the balance sheet, but curious if you've been able to identify any opportunities to sort of improve the operations of the company, how you guys think about working capital, tax strategy, anything that you've been able to kind of identify and potentially improve going forward. If you can share that with us, that would be really helpful. Thank you. Yeah, certainly. On cash flow itself, where you were going, as John mentioned in his script, $410 million increased from $178 million year over year. Strong free cash flow generation and a good link to the P&L. 11.4% of revenue was 500 basis points improvement year- over- year. So on debt repayment, our continued focus will be start from the P&L, maintain and continue the actions we are working on now to keep the margin growth and profitability going. Free cash flow is about 92% of our non-GAAP net earnings. So that bridge is very good, and we need to see that translate into the cash flow. We continue to look at repricing and prepayment of our debt, as you saw in January. Those opportunities will continue. And in terms of P&L, I think the company is executing well. We are constantly looking at operational excellence programs, which we will continue to do, and then drive that cash flow to help with the debt repayment. Our capital allocation strategy has not changed. Prepayment of debt is our number one priority after we invest in the business. Thank you very much. Thank you. And our next question comes from the line of Shane Brett from Morgan Stanley. Your question, please. Thank you for taking my question. So your balance sheet inventory was down 20 days quarter to quarter. Is there anything worth noting here, and how should we think about your targets on days of inventory going forward? The reason why I'm asking this is that with what seems like within lead time orders increasing for semi, I'm just trying to understand how much longer can you support semi continue to come higher than your expectations. Thank you. Yeah. So now we're happy with the progress we made on inventory, Shane. And I think as it starts burning down, we're getting to a leaner, normalized turn rates. And as you know, if there's a large ramp, obviously, we would use some working capital to prepare ahead of time for that. That's normal. But I think we have a little higher inventory than we have in the historic past, and that's because of certain strategic components that we have elected to keep, given what happened at the last ramp with shortages. So inventory is a little higher, but we're happy with the progress we made in decreasing it. Does that answer your questions? Yep. Thank you very much. Thank you. And our next question then comes from the line of Vijay Rakesh from Mizuho. Your question, please. Yeah. Hey, John and Ram. Just on the AI side, you mentioned the tailwind in packaging. Can you talk to what percent is that AI mix as a percent of your total revenues, and how do you see that, let's say, growing in 2025? I know you mentioned as a percent of the substrate market is pretty small, but if you work through, just for you, what the exposure is? Yeah, Vijay, yeah. So it's easy to say in certain submarkets, like the IC substrate part, which we talked about being kind of 10%-15%, is driven by AI. It's harder to break that out with respect to MLB and HDI. We see the tool orders because those are big markets that are levered to other device types. I would say also, remember that AI is driven by Semiconductors, a lot of Semiconductors. And we have over 85% of every step in the process for making Semiconductor chips. So if you do understand, certainly, that AI is driven by Moore's Law. Moore's Law is driven by Semiconductor progress and packaging progress. We address 85% of Semiconductor processes, 70% of packaging processes. So as a company, we're levered to AI as much as we always have been to Moore's Law. So that's our best answer for you because otherwise, breaking it up is pretty difficult for us to do. Got it. And then, Ram, as you look at better free cash flow and driving faster or better prepayments, any thoughts on the deleveraging from the 4X down to the 2X year longer-term target? Any timeline on that? Are you pulling it in? How do you look at that? Thanks. Yeah. Let's just go back to last year just to drive the point home that we were very focused on what you're asking. In a year when we did not get much help from sales, we repaid close to $500 million, $476 million, including the $50 million mandatory. That alone has brought our number down to 4.3 times, and all expectations are that with a little help from top line, we can accelerate that given our current cost structure, so the plan and the focus is exactly what you said, to get that down to acceptable levels, which we have said two times net. That's our focus. As for timing, I don't want to predict that now, but rest assured, our focus is to get it down to that level. Thanks. Thanks, Vijay. Thank you. And as a reminder, ladies and gentlemen, if you do have a question, please press star one one on your telephone. Our next question comes from the line of Joe Quatrochi from Wells Fargo. Your question, please. Yeah. Thanks for taking the questions. I think in the past, during the December quarter call, you talked about the growth in your optics business, within the semis business. I was curious how that did in 2024, and how do you think about the opportunity for growth in 2025, given the outlook for some of those customers? Yeah, Joe, good morning. It's John. We've talked about world- class optics, and we've talked about that revenue over a longer time period, as you know, going from kind of the $150 million to the $300 million level run rates. So over the last year or two, we've actually outgrown that segment of WFE, the lithography metrology inspection segment. So 2024 was a good year, strong year. Certainly, we're not immune to any cycles in that subsegment of WFE. But as we talked about earlier, it's really the design wins that really give us confidence that we will continue this effort, and it will lead us to outperform, certainly in that subsegment and WFE overall. Thanks. And this is a follow-up, maybe a little bit more housekeeping, but I think you're guiding interest expense to be up slightly quarter to quarter. I know it's a net number, but I would have thought, I guess, that would be down given the repricing and prepayment in January. Yeah. The main reason is because of there were two things. We clarified the pension reclass impact in Q4, right? Did you get that? So if you take that out, our interest in Q4 is $48 million, which is very close to what we guided. The full impact of the $100 million prepayment and the 25 basis points of reduction that we got in January has not included in our Q1 guidance. Our Q1 guidance is $49.5 million, which is, if you look at quarter over quarter, we have dropped our interest rates by 40% compared to Q1 2024 versus Q1 2025. So that's a good model for you to look at what we have done today, the impact of what we have done today, and we will continue to look for additional opportunities to bring our interest rate down and also to accelerate our prepayments. Okay. Thank you. Thanks, Joe. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Paretosh Misra for any further remarks. Thank you all for joining us today and for your interest in MKS. Operator, you may close the call, please. Certainly. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.