Greetings, and welcome to the Materion Third Quarter 2023 Earnings Call. At this time, all participants are on a listen-only mode, and a question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Kyle Kelleher, Manager, Investor Relations. Sir, you may begin. Good morning, and thank you for joining us on our third quarter 2023 earnings conference call. This is Kyle Kelleher, Manager, Investor Relations. Before we begin our remarks this morning, I would like to point out that we have posted materials on the company's website that we will reference as part of today's review of the quarterly results. You can also access the materials through the download feature on the earnings call webcast link. With me today is Jugal Vijayvargiya, President and Chief Executive Officer, and Shelly Chadwick, Vice President and Chief Financial Officer. Our format for today's conference call is as follows: Jugal will provide opening comments on the quarter, as well as an update on key strategic initiatives. Following Jugal, Shelly will review the detailed financial results for the quarter, in addition to discussing our expectations for the remainder of 2023. We will then open up the call for questions. Let me remind investors that any forward-looking statements made in the presentation, including those in the outlook section and during the question-and-answer portion, are based on current expectations. The company's actual performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. Those factors are listed in the earnings press release we issued this morning. Additionally, comments regarding earnings before interest, taxes, depreciation, depletion, and amortization, net income and earnings per share reflect the adjusted GAAP numbers shown in attachments four through nine in this morning's press release. The adjustments are made in the prior year period for comparative purposes and remove special items, non-cash charges, and certain discrete income tax adjustments. And now I'll turn the call over to Jugal for his comments. Thanks, Kyle, and welcome everyone. It's great to be with you today. Our record performance in the third quarter is a testament to the strength of our company, the effectiveness of our strategy, and the talent of our people. We are successfully leveraging our diverse portfolio and unique technical capabilities to capitalize on new organic growth opportunities. In addition, our global team continues to raise the bar for operational excellence, delivering for our customers and executing on our outgrowth initiatives while pursuing targeted cost improvements and driving improved performance across our plants. These strengths are offsetting the impact of softer demand conditions in the semiconductor and industrial end markets and enabling Materion to deliver in a challenging environment. The third quarter represented our 12th consecutive quarter of year-over-year earnings growth, achieving record earnings of $1.51 per share. It was also the second consecutive quarter outperforming our adjusted EBITDA margin target of 20%. Excluding the continued softness in the semiconductor market, our value-added sales were up 8%, which speaks to the substantial diversity of our portfolio and the significance of the contributions from our organic pipeline. Strength in aerospace, including the emerging space market, defense, telecom, and data center, and meaningful contributions from Precision Clad Strip, drove the differentiator performance. We continue to benefit from improved aerospace build rates and, more importantly, are increasing content per plane. In addition, we're gaining significant content in the emerging space market. For telecom and data center, increasing 5G adoption is fueling our growth in the undersea cable market. As for the semiconductor market, softness has persisted into the third quarter, pushing the recovery out beyond our previous expectations as we continue to see inventory correction in memory, logic, and communication devices. We believe the third quarter was the low point for softer semi demand and remain encouraged by some positive signs of recovery we've seen in the broader industry, as well as some modest recovery in our order rates. Our expectation is that we will start to see gradual improvement in demand in the fourth quarter, with a broader recovery next year. As we have said before, we are extremely excited about opportunities in the semiconductor market, including our expanding content per chip. We also recognize that semi cycles can lead to strong upturns, and we remain well positioned to support that volume as it returns. Leveraging our diverse portfolio, our team continues to unlock new organic growth opportunities aligned with global mega trends. One such trend is the emerging space market that is driving significant new opportunities for us. Our sales into this growing market have more than tripled in the last two years. Let me highlight a few of the exciting opportunities. To start, we recently secured a third order to supply critical materials for space propulsion systems, valued at $13 million. That brings the total amount awarded to $35 million for the past year. Our partnership with this important customer is strengthening, and we see the potential for additional orders in the coming year. We're also projecting that our ToughMet product sales into the space market will double to approximately $10 million next year. We have new customer commitments for this important material, as the high strength and corrosion resistant properties have proven to be ideal for next-generation space applications, which require robust performance in exceptionally harsh conditions. Growth in this market is also benefiting our precision optics business, which has secured approximately $8 million in new contracts across both the space and defense markets. Our optical components serve as key enabling technologies essential for space-based instrumentation and imaging across various applications. We continue to be an important supplier to critical defense programs, bringing our unique expertise and technically demanding materials. We were recently notified of a new $10 million award to supply critical materials for a space-related defense program. I'm also pleased to announce that we have received $5 million investment from the U.S. Air Force Research Laboratory that will enable us to accelerate the development of our additive manufacturing capabilities, also known as 3D printing, for beryllium and aluminum beryllium alloys. Additive manufacturing capabilities will enable significant advantages in the production and performance of optic structures, guidance systems, and thermal management applications used in defense and aerospace markets. This investment will propel us into a new phase of development that will accelerate our ability to operationalize these specialized manufacturing techniques. I'm very proud of our team's performance, and I remain confident in our ability to execute and deliver another year of record results. With the wins we've achieved through our diverse portfolio, our uniquely relevant technical capabilities, and our team's unrelenting focus on operational excellence, we are continuing to build on the earnings power of Materion. Now, let me turn the call over to Shelly to cover more details on the financials. Thanks, Jugal, and good morning, everyone. During my comments, I will reference the slides posted on our website this morning, starting on slide 10. As Jugal outlined, we delivered record earnings in the third quarter. Value-added sales, which excluded the impact of pass-through precious metal costs, were $270.5 million for the quarter, down 5% from prior year, but up sequentially. Excluding the semiconductor market softness, the remainder of the business was up approximately 8% year-on-year. This growth was driven by strong demand in the aerospace and defense, and telecom and data center end markets, along with meaningful contribution from the Precision Clad Strip business. We delivered adjusted earnings of $1.51 per share in the third quarter, a quarterly record for the company, and up 15% as compared to the prior year. Moving to slide 11, adjusted EBITDA in the quarter was $55.4 million, or 20.5% of value-added sales, up 14% from the prior year, with margin expansion of 330 basis points. This significant increase was driven by favorable pricing and mix, as well as strong operational performance, partially offset by a slight decrease in volume. Our targeted cost improvement initiatives also contributed to the step-up in earnings, outperforming our midterm EBITDA margin target of 20% for the second straight quarter. Moving to slide 12, let me review the third quarter performance by business segment. Starting with our performance materials business, value-added sales were $168.9 million, up 13% compared to prior year. Strong results in aerospace, consumer electronics, telecom and data center, and Precision Clad Strip drove this increase. EBITDA, excluding special items, was $46.5 million, or 27.5% of value-added sales, up 41% when compared to $33 million in the third quarter of 2022, with an impressive 530 basis points of margin expansion. This growth was primarily due to higher volume from our outgrowth initiatives, favorable pricing, and a strong mix, combined with benefits from our operational excellence initiatives. Moving to the outlook, we expect a strong fourth quarter led by aerospace, defense, and telecom, and data center, with continued contributions from Precision Clad Strip. Next, turning to electronic materials on slide 13. Value-added sales were $75.5 million, down 29% compared to the prior year, resulting from the slowdown in the semiconductor market, where our customers continue their inventory correction. EBITDA, excluding special items, was $13 million, or 17.2% of value-added sales in the quarter. Despite this year-over-year decline, we saw 110 basis points of margin improvement compared to prior year. This was driven by a favorable mix, plus the benefit of our targeted cost reduction initiatives, which do include some short-term actions. As we look forward to the fourth quarter, we expect incremental improvement in semiconductor sales, as well as the continued benefit from the cost improvement initiatives we've implemented. Finally, turning to the precision optics segment on slide 14, value-added sales were $26.1 million, down 7% compared to the prior year. This decrease was mainly driven by the reduced TCR filter demand, the discontinued product application, and general softening in the consumer electronics market, slightly offset by strength in defense. EBITDA, excluding special items, was $3.4 million, or 13% of value-added sales. The decrease in volume was a meaningful driver of this year-over-year decline, offset by positive mix and the benefit of our targeted cost improvement initiatives. From a sequential standpoint, we saw EBITDA growth along with 260 basis points of margin expansion. Looking out to the fourth quarter, we expect new opportunities across defense, space, and automotive to contribute to top-line growth. Moving now to cash, debt, and liquidity on slide 15. We ended the quarter with a net debt position of approximately $445 million, and $151 million of available capacity on the company's existing credit facility. Our leverage at 2x remains slightly below the midpoint of our targeted range. Lastly, let me transition to slide 16 to address the full year outlook. With accelerating contributions from our organic pipeline, our strong operational performance, and the continued benefit of our cost reduction actions, we remain confident in our ability to execute and finish out another record year. With that, we are affirming the midpoint of our prior guide at $5.80 per share, an increase of 10% from 2022. We look forward to closing 2023 on a high note, delivering another year of record results and long-term sustainable value creation for our stakeholders. This concludes our prepared remarks. We will now open the line for questions. Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question is coming from Dan Moore with CJS Securities. Your line is live. Hi, good morning. It's Pete Lucas for Dan. First one for me, how is the Clad Strip project? Good morning. Good morning. How is the Clad Strip project performing relative to your expectations, and has there been any change in timing regarding expected ramp in phase II? Yeah, let me start with the second part first here. So our timing is in line with what we have communicated before, which is that we expect to have a ramp starting at the end of 2024, low volume ramp, and then full volume production in the 2025 timeframe. Our equipment installation and validation will go on over the next year or so as we go through getting that qualified. In terms of our current program, I would say it's going really well. We are producing at our new facility. We produced at the legacy facility as well, and it's delivering to our expectations. With the top line and the bottom line contributing, you know, as we had planned, and that's reflected in our results. Very helpful. Thanks. And then looking at the various program awards you noted, I think it was on slide five of the presentation, when do you expect to begin layering in revenue for each of these awards? And do you expect to record the full amounts listed in fiscal 2024, or are those likely spread over the next one to two years? Yeah. Well, first of all, I just wanna say, I think it's just another testament to our team delivering fantastic organic growth opportunities. As you know, that we've done that over the last several years, and our team just continues to bring in new opportunities. Let me highlight on a few of those that are on this page. So first of all, the $13 million order to supply critical materials for the space propulsion systems that we expect to be in the 2024 timeframe. We announced actually a phase I and phase II of that. One was $10 million, another one was $12 million earlier, and those are being delivered to the customers, you know, as we speak. So this $13 million is another order, coming to a total of $35 million with this customer. So this opportunity is becoming a really great opportunity for us, and I would expect more orders in the new year for 2024 and perhaps 2025 timeframe. So very much looking forward to that. When I look at the precision optics contracts, the $8 million for space and defense, those I would see as multiyear contracts in the 2024-2025 timeframe. So very much looking forward to those. The ToughMet materials for space applications. As you know, ToughMet is a very, very important material for us. We have a number of applications in commercial aerospace, oil and gas, et cetera, for that material. And this material has been, and now adopted into the space applications, just based on the qualities that it offers. We have been supplying that material this year. As you can see from the chart, that's roughly about $5 million worth of sales this year, and we expect to double those into 2024. So an incremental $5 million into the 2024 timeframe. The notification that we speak of, of the $10 million of the critical materials for the defense-related applications, that we expect this year, partly, and then into next year. So we're very much looking forward to that. That just builds onto our capabilities and materials expertise that we provide for defense applications. The neat thing about this is this is a space-related application for defense. And then the $5 million investment, this is an award, an investment award that we are receiving from the U.S. Air Force Base for additive manufacturing. This will be done over a two-year time period. We've had a number of different initiatives that we've taken ourselves on additive manufacturing over the last three to four years. We've invested quite a bit of money ourselves in our facility. This award just will accelerate our development regarding beryllium and aluminum-beryllium based materials for additive manufacturing. So, we're very much looking forward to that over the next two years. So great opportunities to continue to drive organic growth for our company. Extremely helpful. Thanks. And just finish it with one housekeeping question here. What tax rate is assumed for your Q4 implied EPS guidance, and what's a good rate as we look out to fiscal 2024? Yeah, that's a great question. Thanks for asking it. You know, we saw the benefit of a reduction in our year-to-date and our effective tax rate, which we were really pleased with. On top of already strong operating results, we saw the tax rate come down by a combination of things, the first being the production credit. Our estimate of the production credit has increased slightly due to the increase in the pure beryllium-related products that we have been selling. You know, we talked a lot about a strong mix. Some of that is from our pure beryllium-related products. Those then drive the production credit, and that's tax-free. So all of that income, you know, we're able to take tax-free. In addition, we're seeing higher foreign tax credits based on the global mix of earnings. So in a sense, you know, we took our tax rate down from, call it, mid 16s to roughly 15s, and in Q4, what I've assumed is 15.5%, and we'll, you know, we'll see how the year shakes out once we have actuals. Great. Thank you. I'll jump back in the queue. Thank you. Thank you. Our next question is coming from Mike Harrison with Seaport Research Partners. Your line is live. Hi, good morning. Hey, good morning, Mike. Was wondering if we can talk a little bit about the performance materials margin and some of the sources of strength. I know in your comments you mentioned that mix was particularly strong. And then, Shelly, you just mentioned here that the production credit has increased, which I believe flows through that segment-level EBITDA line. But maybe just talk in a little more detail on the puts and takes that we should be thinking about as we look at that margin in the PM segment for Q4 and as we get into 2024. Yeah. Mike, let me start on that, and then Shelley can jump in, especially when it comes to the production credit and things. I think, you know, that business, as you know, over the last several quarters, has continued to perform well. You know, one of the things that we are continue to be very focused on for that business is value-based pricing, making sure that we're, we're, we're getting the right price, you know, for the value that we're providing to our customers. That's an important part of our initiative company-wide, but I would say particularly for that business, we continue to do that. And then certainly mix has been a very important factor as well. We continue to drive more focus on products that generate more value for us, frankly, than, you know, products that don't. And so we're making sure that we're utilizing our assets to drive the best mix possible. And that's also helped us, of course, on operational excellence. But go ahead, Shelly. Yeah, you know, just a couple other things. You know, the plants have been running really well, and so when our plants are running well, we get better operating performance, and, and that's helped the mix, and the margin as well. You know, Jugal talked about mix, and we've highlighted space and defense this quarter, and that is definitely a mix-up for us, and we'll see that, last in through the fourth quarter. And then the production credit, you know, as we just talked about, we previously said, you know, roughly $8 million for the year. Now we're looking at roughly $10 million, for the year. So you think about $3 million in each of the last two quarters of the year. So really a nice benefit, for that business. All right. And then in terms of the electronic materials business, it seems like kind of the pace of recovery here is a little bit slower than we might have hoped. Can you give us a little more color on what you're hearing from your customers in both the logic and memory side about their production rates as we get into year-end and start 2024? Yeah. Yeah, you know, as you know, Mike, we've all been waiting for this inventory correction to start to slow down so that, you know, the rates build rates can start to pick back up. But unfortunately, the inventory correction at our customers has taken a little bit longer than, I think, you know, they had all estimated. That inventory correction, of course, or the slowdown of that translates into slower orders for us. Our expectation was that maybe towards the end of Q3, we would start to see a little bit of a recovery. I think that expectation has now shifted to Q4. You know, we're starting to see, as we're listening to some of the earnings calls from our customers, some small positive incremental, you know, benefits that they're highlighting. We're also starting to hear some things from our customers directly. Some of our orders, so depending on the semiconductor types, order rates are starting to see a little bit of a uptick, maybe for Q4. So I would say, you know, it seems like Q3 is the low point, and Q4 would be a small incremental uptick for us. And I think that trend that, you know, goes in line with what the semi companies are saying as well. So that's just kind of how we see it. You know, this is. As you know, this is an extremely, extremely good business for us. You know, it's roughly a third of our company, and we're very much looking forward to the uptick. We're prepared to address the uptick. We've made sure that our workforce and our materials, you know, our inventory, everything is ready to go, you know, as the uptick starts. So, we're very much looking forward to that. Well, hopefully that comes sooner than later. Last question I have is regarding some of your, your cost actions that you've been taking this year. Just curious, are, are most of these complete, or should we think of Q4 as maybe showing some additional benefits? And I guess if you can maybe help us quantify, or better think about what portion is structural cost takeout and, and what portion is more temporary or a reduction in discretionary spend, that, that could come back next year. Thanks. Yeah, that's a great question, Mike. And y ou know, we look at it that way, too, you know, the way you're talking about it, meaning what are the permanent reductions that we're making to improve our business, long term? What are the things that are temporary to address, you know, the current actions? And what it, you know, that really breaks down into two buckets. Some of that's headcount related on the temporary side, but some of it, too, is just tightening the belt a little bit and controlling costs until we see the market, you know, pick up. So I would say, you know, it's roughly, call it 60/40 in the permanent to temporary. And, you know, of the temporary actions, you know, probably, I don't know, three quarters, one quarter in terms of the people-related versus belt-tightening, if that makes sense. Sure, that's helpful. And I guess, just to my question about Q4 and the benefits. Yeah, yeah. being greater than Q3. Yeah. So, you know, we're always looking at the organization, you know, to, to see what we can do to improve. I would say, largely, the reductions have been done, and we saw most of that impact in Q3. There'll be a little bit that comes into Q4, so I wouldn't see a meaningful step change in Q4. Perfect. Thank you very much. Thank you. Thank you. Our next question is coming from Phil Gibbs with KeyBanc. Your line is live. Hey, Phil. Hey, good morning. Good morning. Regarding Clad, phase II, when do you actually start commissioning the plant for initial trials? Yeah, I would expect that, Phil, that probably, you know, towards the end of end of Q1, we would start to do some trials and start to produce material that we can share with our customer, that, you know, they would go ahead and start to evaluate. And then, you know, in Q2, Q3, just continue to do that, as well as start to do our own low volume production just to get the equipment tested out. And then, like we've said, in Q4, you know, have some low volume production of that saleable production that we would do. And this is going into the existing facility that phase I is in? Yes. Just to. This is basically. Reiterate that, yeah. Yeah, exactly. This is in the same building, you know, same facility. You know, the great thing about it is we're able to leverage, you know, the expertise of our folks that have been working this program now for the last couple of years. Of course, you know, the workforce that is gonna be needed will be mostly new, but many of our engineering, development, supply chain, you know, overall general management, those resources will be resources that have been with the plant for the last couple of years. Okay. And then you had a lot of color and commentary on the space and defense awards, which was great, and you highlighted that well in your presentation. But just to be clear, you are saying that 2024 is going to have nicely higher value-added sales in that bucket relative to 2023 as you phase in some of these awards? Yeah, well, I think space has been an important market for us. You know, we highlighted it about a year or so ago, I think, in our calls as well. You know, I would say step one, I mean, over the last couple of years, we've tripled our sales into the space market, which is fantastic, and then I would see incremental benefits going into 2024 as well. You know, I highlighted this one very important customer, this $13 million order, for example, which I expect to be in the 2024 timeframe. And it's our expectation as we continue to work with this customer, that we will secure additional orders. Of course, those are not secured yet, but, you know, we're gonna continue to work with our customer to do that, and then we'll continue to have other materials that we can try to, you know, make sure that we get into this market. So this is a high-growth, you know, almost kind of like a mega trend type of a market for us, and one that I can tell you really across all three of our businesses, we're very, very much focused on. Thank you. Then just lastly, in terms of working capital, what are you anticipating for the fourth quarter? Thanks. Yeah, I'll take that, Phil. So, you know, one of the things that Jugal mentioned was that we're ready for the semi-upturn, and you might see in our results that inventory is up a little bit. You know, we've taken some raw material and pushed that through to WIP to be ready so that when we get customer orders, we're not starting, you know, from raw material base. So we've built a little bit of inventory there, and I expect we'll hold that through the end of the year. AR has been a bit of a bright spot, and I expect that will be a cash inflow as we finish out the year in Q4. And AP was a negative for the quarter, so I expect we'll get some of that back in Q4 as well. So, should be a slight positive, but, you know, not meaningfully bringing down inventory before the end of the year. Thank you. Thank you. Our next question is coming from David Silver with CL King. Your line is live. Yeah, good morning. Thank you. Good morning, David. Morning. Good morning. So several questions, and I’m gonna apologize in advance. The wording of these are probably alternatively gonna sound like hopelessly naive, or I don’t know, a little snide or whatever, but that’s not my intention. But first with performance materials, I mean it seems like there’s been, you know, not just good results this year, but an accelerating book of business or, you know, successful contract wins. Couple of angles on this, but firstly, do you have, you know, a traditional backlog figure for performance materials? And maybe how is it looking now compared to, let’s say, maybe the beginning of the year or a year ago, however you typically track it. And then, you know, again, a naive question warning, but what would you attribute your seemingly greater success in these new contract wins, particularly, I guess, aerospace and defense? You know, you've always had a commanding position, let's say, in beryllium, in this area. So has there been a shift maybe in your value proposition or the way you go to market? But what would you say, you know, is the mix of factors that's leading to the, you know, the record performance, but that's really the symptom of, of the cause, which is you're becoming a preferred, you know, supplier for these high value opportunities? So, long-winded question, but maybe just the mix of factors that are at play here and how... You know, and I'll just stop there. But, yeah, the mix of factors you would cite. Thank you. Yeah. Well, first of all, I think our performance materials segment, like you have indicated, you know, has done really, really well. Not only just in the last year, but I think, you know, if you look back five, six years and what the, what the business has done in terms of the growth, the top line growth that the business has achieved, as well as the bottom line performance, you know, the business has done quite well. You know, when you think about, when you think about, I think, the parts about the new business, so let's just talk about that first, you know, because that, that you, you highlighted, you know, what's different. I would say, I think our team is doing a really, really good job of getting the marketing of our materials out. You know, the great performance, I think, of the materials that we have, the materials science expertise that we have. So our technical sales, our business development efforts that we have, I think, across these markets, particularly, I would say, the growth markets. So like, for example, space. I mean, so just you know, we're highlighting space today, so I'll talk about that, but of course, that's, by the way, this applies to all the markets. But, you know, understanding our materials, getting our materials out there, helping the customers understand the value of our materials, and then providing, you know, great value propositions at the end of the day. And I think the team has just done a wonderful job of that. And that I think, you know, has helped tremendously. So, you know, our teams have been focused on understanding what the needs are for the customers and then finding the right solutions, you know, for those needs. And they've just done a fantastic job of that. Which, by the way, kind of leads directly, you know, to your question on the backlog. You know, we do look at backlog. It's one of the metrics that we look at, but we look at many different metrics, as you could imagine, you know, from a growth perspective. There's always puts and takes on backlogs. Some of the markets are down, like industrial, you know, which we know. Space is a market that's up. There's also a backlog. A key component in backlog is lead times. If you go back to kind of the 2021, 2022 timeframes, I mean, our lead times for some of our materials were extremely long as we were ramping up after the COVID year of 2020, getting the workforce in. You know, our lead times have improved significantly, which has, as you can imagine, a negative impact on backlog, but that doesn't mean that our business is actually declining. I mean, as you've seen, you know, our sales are up. So, you know, we look at a number of different metrics. I mean, backlog is one of the metrics that we look at. But in general, I mean the teams have been driving more new opportunities in really all the markets, using our superior materials. Okay, thank you. My next question would be on electronic materials, and you have commented on, you know, the lingering, I guess, customer inventory issues. I, you know, I was hoping you could maybe talk about it from a somewhat broader perspective. So, you know, currently, you've been spending some discretionary capital to build out your capabilities in that area in Milwaukee, pardon me, and in Newton. And, you know, I think you had some expectations for, you know, the demand levels for when the, that new capability, you know, is available. And I'm just wondering if you could maybe give us your current thinking about, you know, the transition period here, right? The, maybe the sluggish, customer demand, which has persisted a little bit longer maybe than initially thought. But then you also have, you know, these new capabilities coming up. So is it the case where, you know, there might be a little bit of a gap when those new units turn on? Or is it the kind of case where the products and services that the newer capabilities are designed to serve are really, you know, maybe next generation or not the market, end markets or the applications don't necessarily overlap with where the softness is now? So, long-winded question, but maybe how do you think about this current phase of softer demand in the context of, you know, the longer-term growth projections that you're operating the business under? Thank you. Yeah. So if you look at, you know, our two facilities that you mentioned, where we're adding these new capabilities, both in Milwaukee and Newton, you know, our expectation to get the additional volume in place was gonna be the second half of 2024. By the time, you know, the facilities and the equipment was procured, and then we did installation and got the production going. So I think the timing is actually gonna work out just perfect, because as the recovery starts to happen here, a little bit in Q4, but then into the first half of next year, and then a much greater recovery in the back half of 2024 and then into 2025, I think we're gonna be extremely well positioned to be able to deliver, you know, the emerging ALD products that our customers are needing for memory applications, in particular, out of our Milwaukee facility, and then the logic and memory products out of our Newton facility. So I think the slowdown has actually, in some respects, you can say, helped us to put our capacities in place. Because what was happening in 2021 and 2022 is we were running all of our plants basically full, and at the same time, we were trying to figure out how to put these additional capacities in place. The slowdown has given us the opportunity to, A, allocate the resources in the right way to put the capacities in place in Milwaukee and Newton, so that we can have them ready in the back half of 2024 and into 2025, you know, as the recovery is gonna come in. So in some respects, David, it's interesting. The slowdown, I think has helped us to make sure we're getting the capacity in the right way, but and the timing of that, I don't think is impacted at all, because it actually lines up with the recovery timing of the semi cycle. Sorry. Thank you for that. That was great color. One more maybe from a resources or budgeting perspective, but, you know, I always think a lot of companies, you know, October is when a lot of companies, you know, do the budgeting for the coming year or two. And, you know, on this call and the previous ones, I mean, you've outlined a number of kind of incremental new initiatives. Today was space and defense. A little bit earlier, of course, there was the multi-step expansion in electronic materials, and I did notice a new project in precision optics. So, you know, if I was a betting man, I would say that, you know, the $95 million CapEx for this year, you know, would have to rise for next year. And then, you know, even beyond just CapEx, I'm thinking of, you know, R&D resources, you know, technical selling, which you cited as a, you know, an aspect of your success in performance materials. But just in terms of overall resourcing, you know, what, what are you thinking about for, let's say, 2024 and 2025? So dollars, you know, people, I guess R&D, technological expertise. What, what, what's on tap for the next year or two, as you're planning out things now? Yeah. Well, first of all, you're right on the timing. We are starting to think about that and starting to put that together. And as you know, you know, we'll be talking about that to you and to everybody in mid February when we come out with our guide and our plan for 2024. So I'm very much looking forward to that because I think it's gonna be another exciting year for us along with 2025 and so on. So all these opportunities that you've indicated, you know, we expect to play out in 2024, 2025, 2026 timeframe. You know, with regard to our investments, I mean, we've never been shy to invest, as you know. This is a fantastic opportunity for us to continue to invest in our business, and we've done that over the last several years, and we're gonna continue to do that, whether it's R&D resources, whether it's CapEx resources or any type of M&A, you know, that may come up, that fits exactly the way we would like, you know, in our business. So we're gonna continue to look at that. You know, even when you look at, for example, R&D this year, even though the markets are significantly slower, I mean, we're not slowing down on R&D. We are still investing in R&D, and it's our expectation that we'll continue to do that, and we'll continue to do that on the CapEx side as well. I'm very much looking forward to sharing with you guys, you know, our plans as we put them together. Okay, great. I'll get back in the queue. Thank you very much. Thank you, David. Thank you. Our next question is coming from Dave Storms with Stonegate Capital Markets. Your line is live. Good morning. Morning! Morning, Dave. Morning. So, just wanted to touch on one of your end markets. I know telecom is, you know, probably one of your smallest end markets, but it, it just seems to keep growing. I was wondering if you could just talk to us a little bit about what your customer acquisition, environment looks like here, and, you know, if there's gonna be any meaningful impact from that going forward. Yeah. Well, telecom and data center, you're right. It is one of the smaller markets, but it is a market that has, you know, nine consecutive quarters of growth. And we're very much looking forward to, you know, continued growth in this area. You know, as you know, bandwidth requirements continue to increase, you know, data center requirements, cloud services requirements continue to increase, and that's where this end market, you know, for us is very important, and then we continue to supply material to this. So we expect these areas to continue to increase over the next three to five to seven years, and I think we're very well positioned with our materials. You know, the undersea cable market is a key area for us, where we provide beryllium-based materials, and I think it's gonna continue to be a strong market for us. That's very helpful. And then just one more for me, if I could. What are you seeing on the labor front? There's been a lot in the news about the UAW labor negotiations. It sounds like your shops are running well now, but if you needed to scale up at any point, you know, what is your confidence that you could get more labor in the door if you needed it? Well, I think our team has done a fantastic job getting labor into our factories, you know, in the 2021 timeframe as the ramp-up happened, and I would expect that they're gonna do, you know, a really good job again, you know, in 2024 as the semi recovery happens. I think one of the things that we've stayed focused on is making sure we're retaining as much of the labor as possible, so that we can support the uptick in the 2024 timeframe. Then, of course, if there's additional workforce that's needed, you know, we'll rely on our HR department to bring in the folks, just like they did in 2021 and 2022. So I'm very confident that we're gonna be able to support any type of an uptick. That's very helpful. Thank you for taking my questions, and good luck in the fourth quarter. Thanks, Dave. Thanks. Thank you. We have reached the end of our question and answer session, so I will now turn the call back over to Kyle Kelleher for his closing remarks. Thank you. This concludes our third quarter 2023 earnings call. A recorded playback of this call will be available on the company's website, materion.com. I'd like to thank you for participating on this call and your interest in Materion. I will be available for any follow-up questions. My number is 216-383-4931. Thank you again. Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.