Advanced Energy Industries Inc (AEIS) 2023 Q1 法說會逐字稿

Greetings, and welcome to the Advanced Energy First Quarter 2023 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.

大家好，歡迎來到 Advanced Energy 2023 年第一季度財報電話會議。 （操作員說明）提醒一下，正在錄製此會議。

It is now my pleasure to introduce your host, Edwin Mok, Vice President of Strategic Marketing and Investor Relations. Thank you, sir. You may begin.

現在我很高興向您介紹主持人，戰略營銷和投資者關係副總裁 Edwin Mok。謝謝你，先生。你可以開始了。

Thank you, operator. Good afternoon, everyone. Welcome to Advanced Energy Q1 2023 Earnings Conference Call. With me today are Steve Kelley, our President and CEO; and Paul Oldham, our Executive Vice President and CFO.

謝謝你，運營商。大家下午好。歡迎來到 Advanced Energy 2023 年第一季度收益電話會議。今天和我在一起的是我們的總裁兼首席執行官 Steve Kelley；和我們的執行副總裁兼首席財務官 Paul Oldham。

Before I begin, I'd like to mention that we will be participating in several investor conferences in the coming months. If you have not seen our earnings press release and presentation, you can find them on our website at ir.advancedenergy.com.

在開始之前，我想提一下，我們將在未來幾個月內參加幾個投資者會議。如果您還沒有看到我們的收益新聞稿和演示文稿，您可以在我們的網站 ir.advancedenergy.com 上找到它們。

Let me remind you that today's call contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially and are not guarantees of future performance. Information concerning these risks can be found in our SEC filings. All forward-looking statements are based on management's estimates as of today, May 3, 2023, and the company assumes no obligation to update them. Any targets beyond the current quarter presented today should not be interpreted as guidance.

讓我提醒您，今天的電話會議包含前瞻性陳述，這些陳述存在風險和不確定性，可能導致實際結果出現重大差異，並且不是對未來業績的保證。有關這些風險的信息可以在我們提交給美國證券交易委員會的文件中找到。所有前瞻性陳述均基於管理層截至 2023 年 5 月 3 日的估計，公司不承擔更新這些陳述的義務。今天提出的當前季度以外的任何目標都不應被解釋為指導。

On today's call, our financial results are presented on a non-GAAP financial basis, unless otherwise specified. Excluded from non-GAAP results are stock compensation, amortization, acquisition-related costs, facility expansion and related costs, restructuring charges and unrealized foreign exchange gains or losses. A detailed reconciliation between GAAP and non-GAAP measures can be found in today's press release.

在今天的電話會議上，除非另有說明，否則我們的財務業績是在非 GAAP 財務基礎上呈現的。非 GAAP 業績不包括股票薪酬、攤銷、收購相關成本、設施擴張和相關成本、重組費用和未實現的外匯損益。可以在今天的新聞稿中找到 GAAP 和非 GAAP 措施之間的詳細對賬。

With that, let me pass the call to our President and CEO, Steve Kelley.

有了這個，讓我把電話轉給我們的總裁兼首席執行官史蒂夫凱利。

Thanks, Edwin. Good afternoon, everyone. Thanks for joining the call. First quarter revenue and earnings per share exceeded our guidance. Strength in the industrial medical market as well as improved component supply drove year-on-year revenue growth of 7%. Our operations team executed well, quickly turning critical components into revenue late in the quarter.

謝謝，埃德溫。大家下午好。感謝您加入電話會議。第一季度的收入和每股收益超出了我們的指導。工業醫療市場的強勁增長以及組件供應的改善推動收入同比增長 7%。我們的運營團隊執行良好，在本季度末迅速將關鍵組件轉化為收入。

Moving forward, we believe that 2023 will be a pivotal year for the company. The easing of supply chain bottlenecks means that our customers are now squarely focused on new product development and product differentiation. The timing is perfect for us. Since we have recently launched a number of innovative new products with highly differentiated capabilities.

展望未來，我們相信 2023 年將是公司的關鍵一年。供應鏈瓶頸的緩解意味著我們的客戶現在正專注於新產品開發和產品差異化。時機對我們來說是完美的。由於我們最近推出了一些具有高度差異化能力的創新新產品。

We are expecting a record number of design wins in 2023, laying a strong foundation for profitable revenue growth. We believe that technology leadership, coupled with superior operational performance is the recipe for success in our business.

我們預計 2023 年的設計獲勝數量將創歷史新高，為盈利性收入增長奠定堅實的基礎。我們相信，領先的技術加上卓越的運營績效是我們業務成功的秘訣。

Over the past 18 months, we have made substantial strides for its best-in-class operational performance, particularly in the semiconductor space. We see further room for improvement and are taking advantage of the 2023 market environment to focus on operational efficiency.

在過去的 18 個月裡，我們在一流的運營績效方面取得了長足的進步，尤其是在半導體領域。我們看到了進一步改進的空間，並正在利用 2023 年的市場環境專注於運營效率。

We are accelerating the consolidation of our factory footprint, which will improve productivity and lower fixed costs. As part of that consolidation plan, we will expand our factory in Mexicali, where we expect a quadruple output over the next 2 to 3 years. Our enhanced capabilities in North America will complement our strong factory network in Southeast Asia.

我們正在加速整合我們的工廠足跡，這將提高生產率並降低固定成本。作為該整合計劃的一部分，我們將擴建我們在墨西卡利的工廠，我們預計未來 2 到 3 年這裡的產量將翻兩番。我們在北美增強的能力將補充我們在東南亞強大的工廠網絡。

Now I'd like to provide an update on the supply chain. The overall supply situation continues to improve. However, shortages of power MOSFETs and certain older node ICs continue to constrain shipments into many of our markets. We expect these constraints to be largely resolved by the end of the year, allowing us to clear most of the remaining overdue backlog. This is a high priority for the company since resolving the remaining constraints will drive higher revenue, reduce inventory and improve customer satisfaction.

現在我想提供有關供應鏈的最新信息。總體供給形勢繼續向好。然而，功率 MOSFET 和某些舊節點 IC 的短缺繼續限制我們許多市場的出貨量。我們預計這些制約因素將在年底前得到基本解決，從而使我們能夠清理大部分剩餘的逾期積壓。這對公司來說是一個高度優先事項，因為解決剩餘的限制將帶來更高的收入、減少庫存並提高客戶滿意度。

I'll now provide more detail for each of our markets. As expected, first quarter semiconductor revenue declined sequentially. Record service revenue offset some of the weakness in the broader market. On the product revenue side, there were 2 bright spots. The first was ion implant applications, where demand for Advanced Energy's high-voltage systems is extremely robust. The second was ramping design wins in the etch and deposition areas.

我現在將為我們的每個市場提供更多詳細信息。正如預期的那樣，第一季度半導體收入環比下降。創紀錄的服務收入抵消了大盤的一些疲軟。產品營收方面，有2個亮點。首先是離子注入應用，其中對 Advanced Energy 的高壓系統的需求極其強勁。第二個是增加蝕刻和沈積區域的設計勝利。

In addition, we began shipping beta units of 2 new plasma power products to our customers. We believe that these highly differentiated platform products offer best-in-class power control to our customers who are developing next-generation plasma etch and deposition systems.

此外，我們開始向客戶運送 2 種新型等離子電源產品的測試版。我們相信，這些高度差異化的平台產品可為正在開發下一代等離子蝕刻和沈積系統的客戶提供一流的功率控制。

We expect to close design wins for these new products in the coming year. These wins should drive meaningful market share gains over the course of this decade. We plan to formally launch these new platform products at SEMICON West, where we will provide more details on their impressive capabilities.

我們希望在來年完成這些新產品的設計中標。在這十年中，這些勝利應該會推動有意義的市場份額增長。我們計劃在 SEMICON West 上正式推出這些新平台產品，屆時我們將提供有關其令人印象深刻的功能的更多詳細信息。

Moving on to Industrial and Medical. First quarter revenue grew 48% year-on-year to $123 million, a new record for the company. The upside was driven by improved component availability and solid demand. In the industrial space, demand in thin film manufacturing applications was very strong. In the first quarter, we also secured industrial design wins in test and measurement, manufacturing equipment and 3D printing applications. In medical, we won designs in electrosurgery, life science, imaging and laser applications.

繼續工業和醫療。第一季度收入同比增長 48% 至 1.23 億美元，創下公司的新紀錄。上行是由改善的組件可用性和穩定的需求推動的。在工業領域，薄膜製造應用的需求非常強勁。第一季度，我們還在測試和測量、製造設備和 3D 打印應用方面贏得了工業設計。在醫療領域，我們贏得了電外科、生命科學、成像和激光應用領域的設計。

We are also benefiting from new cross-selling opportunities made possible by last year's acquisition of SL Power. Many SL Power customers are now evaluating and designing in medical products from other parts of our portfolio and vice versa.

我們還受益於去年收購 SL Power 所帶來的新的交叉銷售機會。許多 SL Power 客戶現在正在評估和設計我們產品組合其他部分的醫療產品，反之亦然。

We continue to invest heavily in dedicated engineering and customer-facing resources for the industrial and medical market. We believe that Advanced Energy provides a unique bundle of technology, financial strength, operational expertise, [stain] power and technical support, which will drive share gains in this broad market.

我們繼續大力投資工業和醫療市場的專用工程和麵向客戶的資源。我們相信 Advanced Energy 提供了獨特的技術組合、財務實力、運營專業知識、[染色] 力量和技術支持，這將推動這一廣闊市場的份額增長。

In data center computing, first quarter revenue declined to $60 million, mainly due to component shortages. We also saw reduced demand from some hyperscale customers.

在數據中心計算方面，第一季度收入下降至 6000 萬美元，主要原因是組件短缺。我們還看到一些超大規模客戶的需求減少。

Moving forward, we believe that there is upside in this market as the component shortages are resolved. In addition, we are continuing to focus our engineering team on high-value opportunities.

展望未來，我們認為隨著組件短缺問題的解決，該市場存在上行空間。此外，我們將繼續讓我們的工程團隊專注於高價值機會。

In telecom and networking revenue grew sequentially and year-on-year to $8 million, largely due to improved component availability.

電信和網絡收入環比增長，同比增長至 800 萬美元，這主要是由於組件可用性的提高。

Now let me summarize the quarter and our outlook. The first quarter results validate the benefits of our diversification strategy as we performed above expectations despite the semiconductor market correction. We executed well and delivered upside to our financial targets.

現在讓我總結一下本季度和我們的展望。第一季度業績證實了我們多元化戰略的好處，因為儘管半導體市場出現調整，我們的業績仍高於預期。我們執行得很好，實現了我們的財務目標。

At the same time, we are taking actions to control our costs and accelerate the consolidation of our manufacturing footprint. For the full year, we believe that our semiconductor business will perform better than the market due to several pockets of strength. Outside of semiconductor, component shortages are still gating our revenue. But we expect that most shortages will be resolved by the end of this year. Therefore, we remain confident that our aggregate revenue in markets outside of semiconductor will be stable year-on-year.

與此同時，我們正在採取措施控製成本並加速整合我們的製造足跡。對於全年，我們相信我們的半導體業務將由於多項優勢而表現優於市場。在半導體之外，元件短缺仍在限制我們的收入。但我們預計大多數短缺問題將在今年年底前得到解決。因此，我們仍然相信我們在半導體以外市場的總收入將同比穩定。

Looking beyond this year, we are encouraged by the strong customer interest in our new products. We believe that technology leadership, coupled with solid operational performance, will drive strong customer engagement levels with Advanced Energy. Ultimately, these engagements will drive long-term profitable growth and increased value for shareholders.

展望今年，客戶對我們新產品的濃厚興趣令我們深受鼓舞。我們相信，技術領先地位與穩健的運營績效相結合，將推動 Advanced Energy 的強大客戶參與度。最終，這些參與將推動長期盈利增長並為股東增加價值。

Paul will now provide more detailed financial information.

保羅現在將提供更詳細的財務信息。

Thank you, Steve. Good afternoon, everyone. First quarter revenue of $425 million and EPS of $1.24, both exceeded the midpoint of our guidance, reflecting solid operational execution. Revenue grew 7% year-over-year and 3% organically with record revenue in the industrial and medical market, partially offsetting the anticipated weakness in semiconductor.

謝謝你，史蒂夫。大家下午好。第一季度收入為 4.25 億美元，每股收益為 1.24 美元，均超過了我們指引的中點，反映出穩健的運營執行力。收入同比增長 7%，有機增長 3%，工業和醫療市場收入創歷史新高，部分抵消了半導體的預期疲軟。

Our backlog exiting the quarter was $756 million, down 14% from $875 million at the end of the fourth quarter. The sequential decline was driven primarily by customers reducing orders or out quarter deliveries as we improved our lead times. As we further resolve critical part issues, we continue to expect our backlog will normalize to a level of $400 million to $500 million over the next few quarters.

本季度末我們的積壓訂單為 7.56 億美元，比第四季度末的 8.75 億美元下降 14%。環比下降主要是由於我們縮短了交貨時間，導致客戶減少訂單或季度交貨。隨著我們進一步解決關鍵零件問題，我們繼續預計我們的積壓訂單將在未來幾個季度正常化到 4 億至 5 億美元的水平。

Now let's review our financial results in more detail. Revenue in the semiconductor market was $194 million, down 4% year-over-year and 16% sequentially. The sequential decline was slightly better than our guidance as we delivered record revenue in our service business, executed to meet higher demand for ion implant applications and completed restocking of customer inventories back to targeted levels.

現在讓我們更詳細地回顧一下我們的財務結果。半導體市場收入為 1.94 億美元，同比下降 4%，環比下降 16%。連續下降略好於我們的指導，因為我們在服務業務中實現了創紀錄的收入，為滿足對離子注入應用的更高需求而執行，並完成了客戶庫存的補充，回到了目標水平。

Revenue in the industrial and medical market was a record $123 million, up 48% year-over-year and up 3% from last quarter. Excluding the SL Power acquisition, organic revenue grew 31% from last year and 8% sequentially. We delivered a record quarter despite continued constraints of select components for this market.

工業和醫療市場的收入達到創紀錄的 1.23 億美元，同比增長 48%，比上一季度增長 3%。不包括對 SL Power 的收購，有機收入比去年增長 31%，環比增長 8%。儘管該市場的精選組件持續受限，但我們交付了創紀錄的季度業績。

Data center computing revenue was down 22% year-over-year and 37% sequentially to $60 million. Although we saw lower demand from some hyperscale customers, revenue was primarily impacted by supply chain challenges as we saw backlog actually increased in the quarter for these products. As a result, we expect revenue to increase from this trough level over the next few quarters as parts availability improves.

數據中心計算收入同比下降 22%，環比下降 37% 至 6000 萬美元。儘管我們看到一些超大規模客戶的需求下降，但收入主要受到供應鏈挑戰的影響，因為我們看到這些產品的積壓實際上在本季度有所增加。因此，隨著零件可用性的提高，我們預計未來幾個季度的收入將從這個低谷水平增加。

Telecom and networking revenue was up 36% year-over-year and 8% sequentially to $48 million. It was 1 of the strongest quarters in recent history as we were able to secure more parts to meet demand.

電信和網絡收入同比增長 36%，環比增長 8% 至 4800 萬美元。這是最近歷史上最強勁的季度之一，因為我們能夠獲得更多零件來滿足需求。

First quarter gross margin was 36.8%, up 20 basis points from last year and last quarter. Gross margin remained relatively flat sequentially despite the impact of lower volume as a result of modest reduction in material premiums, favorable mix, and initial actions we are taking to optimize our factory footprint and reduce costs.

第一季度毛利率為 36.8%，比去年同期和上季度提高 20 個基點。儘管由於材料溢價的適度減少、有利的組合以及我們正在採取的優化工廠足跡和降低成本的初步行動而導致銷量下降，但毛利率仍相對持平。

While we expect higher material costs to continue to negatively impact our results, we're encouraged by early signs of loosening in the supply chain. As a result, we continue to expect gradual improvement in gross margin towards the end of the year as premiums abate and historical costs flow through our inventory.

雖然我們預計更高的材料成本將繼續對我們的業績產生負面影響，但我們對供應鏈鬆動的早期跡象感到鼓舞。因此，隨著保費減少和歷史成本流經我們的存貨，我們繼續預計毛利率將在年底前逐步改善。

Operating expenses were $99.7 million, down slightly from last quarter on reduced SG&A, partially offset by higher R&D investments driven by new product and platform launches expected this year. Operating margin for the quarter was 13.4%. Depreciation was $9.5 million, and our adjusted EBITDA was $66 million.

由於 SG&A 減少，營業費用為 9970 萬美元，較上一季度略有下降，部分被今年預計推出的新產品和平台推動的更高研發投資所抵消。本季度的營業利潤率為 13.4%。折舊為 950 萬美元，調整後的 EBITDA 為 6600 萬美元。

Non-GAAP other income was a positive $500,000 due to higher net interest income, partially offset by foreign exchange losses. Going forward, we expect our non-GAAP other income to be about breakeven as we continue to benefit from higher interest earnings in the current environment and our low-cost debt structure.

由於淨利息收入增加，非 GAAP 其他收入為正 500,000 美元，部分被外匯損失所抵消。展望未來，我們預計我們的非 GAAP 其他收入將接近盈虧平衡，因為我們將繼續受益於當前環境下更高的利息收入和我們的低成本債務結構。

Last quarter we initiated our 2023 restructuring plan to optimize our manufacturing operations and achieve other targeted reductions consistent with the current environment.

上個季度，我們啟動了 2023 年重組計劃，以優化我們的製造業務並實現與當前環境相一致的其他目標削減。

During the first quarter, we completed the closure of our Shenzhen facility, reduced our total headcount in operations by over 800 people, announced plans to close an additional factory in China and initiated further actions across the company. As a result, we recognized a further $1 million in restructuring costs in Q1 and expect to incur an additional $3 million to $5 million over the remainder of 2023.

第一季度，我們完成了深圳工廠的關閉，將運營總人數減少了 800 多人，宣布計劃關閉在中國的另一家工廠，並在全公司範圍內啟動了進一步行動。因此，我們在第一季度確認了 100 萬美元的重組成本，並預計在 2023 年剩餘時間內將額外產生 300 萬至 500 萬美元。

Rounding out the P&L, our non-GAAP tax rate was 18.1%. For 2023, we are modeling our GAAP and non-GAAP tax rate to remain in the 18% to 19% range. As a result, first quarter EPS was $1.24, which was flat from last year and down from $1.70 in the previous quarter.

四捨五入的損益表，我們的非 GAAP 稅率為 18.1%。對於 2023 年，我們將我們的 GAAP 和非 GAAP 稅率建模為保持在 18% 至 19% 的範圍內。因此，第一季度每股收益為 1.24 美元，與去年持平，低於上一季度的 1.70 美元。

Turning now to the balance sheet. Total cash and marketable securities at the end of the first quarter were $462 million with net cash of $93 million. Cash flow from continuing operations was $32 million compared to $10 million last year.

現在轉向資產負債表。第一季度末現金和有價證券總額為 4.62 億美元，淨現金為 9300 萬美元。來自持續經營業務的現金流為 3200 萬美元，而去年為 1000 萬美元。

Inventory increased $26 million or 7% sequentially on higher raw materials as a result of lower revenue and increased finished goods on timing of customer shipments. We expect these finished goods to largely ship through in the second quarter. As a result, inventory days were 135 and turns decreased from 3.3 in Q4 to 2.7 in Q1. We saw a corresponding increase in DPO, which increased to 62 days. DSO was also up slightly to 62 days on timing of customer shipments late in the quarter.

由於收入減少和客戶發貨時間增加的成品，原材料增加導致庫存增加 2600 萬美元或 7%。我們預計這些製成品將在第二季度大量出貨。結果，庫存天數為 135 天，周轉天數從第四季度的 3.3 天減少到第一季度的 2.7 天。我們看到 DPO 相應增加，增加到 62 天。本季度末客戶發貨時間的 DSO 也略微增加至 62 天。

During the first quarter, we invested $16 million in CapEx, slightly below our expectation for 2023 of approximately 4% of sales. We also made debt principal payments of $5 million and paid $3.8 million in dividends.

第一季度，我們在資本支出上投資了 1600 萬美元，略低於我們對 2023 年銷售額約 4% 的預期。我們還支付了 500 萬美元的債務本金並支付了 380 萬美元的股息。

Turning now to our guidance. The demand environment continues to be mixed across our markets. As we noted last quarter, we expect our semiconductor revenue to decline again in the second quarter in the mid-teens sequentially. At the same time, we expect Q2 semi revenues to be the trough for the year with second half revenue being flat to up versus the first half.

現在轉向我們的指導。我們市場的需求環境繼續喜憂參半。正如我們上個季度所指出的那樣，我們預計我們的半導體收入將在第二季度再次下降，連續下降 15% 左右。與此同時，我們預計第二季度半收入將是今年的低谷，下半年收入與上半年持平。

In our other markets, we expect revenue in aggregate to grow sequentially in Q2 as we secure additional critical components. As a result, we are forecasting our second quarter revenue to be approximately $410 million, plus or minus $20 million.

在我們的其他市場，我們預計第二季度總收入將連續增長，因為我們獲得了更多的關鍵組件。因此，我們預測第二季度收入約為 4.1 億美元，上下浮動 2000 萬美元。

We expect gross margin in Q2 to be in the low 36% range on anticipated mix and lower volumes, partially offset by a modest improvement in material cost premiums. We expect gross margins to remain at or above this level in the second half of the year.

我們預計第二季度的毛利率將處於 36% 的較低範圍內，原因是預期的組合和較低的銷量，部分被材料成本溢價的適度改善所抵消。我們預計下半年毛利率將保持在或高於該水平。

As we stated last quarter, we expect Q2 operating expenses to increase $2 million to $3 million sequentially due to annual salary changes, inflation and continued R&D investment. However, we anticipate OpEx to moderate slightly in the second half of the year as we see the benefits of our actions to control spending while maintaining investment in critical R&D and growth initiatives. As a result, we expect Q2 non-GAAP earnings per share to be $1 plus or minus $0.25.

正如我們上個季度所述，由於年薪變化、通貨膨脹和持續的研發投資，我們預計第二季度的運營費用將增加 200 萬至 300 萬美元。然而，我們預計今年下半年的運營支出將略有放緩，因為我們看到了控制支出行動的好處，同時保持對關鍵研發和增長計劃的投資。因此，我們預計第二季度非 GAAP 每股收益為 1 美元上下 0.25 美元。

Before I open it up for questions, I want to highlight a few important points. First, our diversification strategy is working. Record revenue in our industrial and medical market and solid demand across most of our non-semi markets partially offset the anticipated weakness in the semiconductor market. As a result, we were able to deliver year-on-year revenue growth for the first quarter.

在開始提問之前，我想強調幾個要點。首先，我們的多元化戰略正在奏效。我們的工業和醫療市場創紀錄的收入以及我們大多數非半導體市場的強勁需求部分抵消了半導體市場的預期疲軟。因此，我們能夠在第一季度實現收入同比增長。

Second, as component availability gradually improves, we are well positioned to improve gross margins as we exit the year, enabling more meaningful leverage in our model in 2024. Lastly, we believe our strong cadence of new products will lead to more business for Advanced Energy over time enabling us to grow share and exit the downturn stronger. As a result, we continue to believe we are well positioned to perform better than our markets this year, deliver results substantially better than in previous cycles and to gain share and grow earnings as the markets improve.

其次，隨著組件可用性的逐漸提高，我們有能力在今年結束時提高毛利率，從而在 2024 年為我們的模型提供更有意義的槓桿作用。最後，我們相信我們強勁的新產品節奏將為 Advanced Energy 帶來更多業務隨著時間的推移，使我們能夠擴大份額並以更強勁的勢頭走出低迷期。因此，我們仍然相信，我們有能力在今年表現好於我們的市場，取得比以往週期更好的業績，並隨著市場的改善而獲得份額和增長收益。

With that, let's take your questions. Operator?

有了這個，讓我們回答你的問題。操作員？

(Operator Instructions) Our first question comes from Quinn Bolton with Needham & Company. Our first question is from Quinn Bolton with Needham & Company.

（操作員說明）我們的第一個問題來自 Needham & Company 的 Quinn Bolton。我們的第一個問題來自 Needham & Company 的 Quinn Bolton。

Can you hear me now?

你能聽到我嗎？

Yes, we can hear you.

是的，我們能聽到你的聲音。

Yes. Okay. Sorry, I was on mute. I just wanted to say congratulations on the nice results. Wanted to start with the industrial and medical business, which looks like it's very strong, especially on a year-over-year basis.

是的。好的。對不起，我是靜音的。我只想對取得的好成績表示祝賀。想從工業和醫療業務開始，這看起來非常強大，尤其是在同比基礎上。

Can you just give us some more color about some of the drivers for that business both in the near term and based on your current backlog, how sustainable do you think this industrial demand will be this year?

您能否在短期內以及根據您當前的積壓工作，給我們更多關於該業務的一些驅動因素的顏色，您認為今年這種工業需求的可持續性如何？

Yes. Thanks, Quinn. This is Steve. Yes, we're very enthusiastic about the industrial, medical part of our business. We started really focusing on industrial, medical to the past 1.5 years. So we've put a lot of new engineers in place to develop products faster.

是的。謝謝，奎因。這是史蒂夫。是的，我們非常熱衷於我們業務的工業和醫療部分。在過去的 1.5 年裡，我們開始真正關注工業、醫療。因此，我們安排了很多新工程師來更快地開發產品。

We also -- we organized our sales force to call them more industrial medical accounts directly. So we're seeing the results of that and record design win activity. And also we're seeing quite a bit of cross-selling activity in the medical space based on our purchase of SL Power about 1 year ago.

我們還——我們組織了我們的銷售團隊，直接稱呼他們為更多的工業醫療客戶。所以我們看到了結果並記錄了設計獲勝活動。而且，基於大約 1 年前我們購買 SL Power，我們在醫療領域看到了相當多的交叉銷售活動。

I think the nice thing about I&M, Industrial and Medical, is that it's very broad-based. So even though 1 segment may be down, another part of that market could be up. So it tends to be pretty stable. Right now, we have a significant industrial medical backlog, which is overdue. So we believe over the next couple of quarters, we'll be able to ship more of that overdue backlog based on increased [development] part. So we're very optimistic about that part of our business in 2023.

我認為 I&M、工業和醫療的好處在於它的基礎非常廣泛。因此，即使一個細分市場可能下跌，該市場的另一部分也可能上漲。所以它往往非常穩定。現在，我們有大量的工業醫療積壓，已經過期了。因此，我們相信在接下來的幾個季度中，我們將能夠根據增加的 [development] 部分運送更多逾期積壓的訂單。因此，我們對 2023 年的這部分業務非常樂觀。

Excellent. And then for Paul, I guess, just a question on the material cost headwinds to gross margin. Are they still in the sort of 250 to 300 basis point range? Is that the right kind of headwind to be thinking about?

出色的。然後對於保羅，我想，只是一個關於材料成本對毛利率不利的問題。它們是否仍處於 250 至 300 個基點的範圍內？這是要考慮的正確逆風嗎？

Yes, Quinn. I think the -- certainly, we've seen a little bit of improvement on that front. When we look at it this quarter, it's probably in the 150 to 200 basis points, if you look at the absolute number. Now part of that is captured in inventory, so it will flow through -- part of that lower numbers capture inventory, so it will flow through over the next quarter or so. But it seems to be early signs as it seems to be coming down.

是的，奎因。我認為 - 當然，我們在這方面已經看到了一些改進。當我們在本季度查看它時，如果您查看絕對數字，它可能在 150 到 200 個基點之間。現在，其中一部分被存貨捕獲，因此它將流過——較低數量的一部分捕獲存貨，因此它將在下個季度左右流經。但這似乎是早期跡象，因為它似乎正在下降。

Our best view continues to be what we said last quarter is that we expect that these costs will continue to abate over the course of the quarter. And we should be able to exit the year hopefully at a place where we're seeing most of these costs working their way out of our P&L.

我們最好的看法仍然是我們上個季度所說的，我們預計這些成本將在本季度繼續減少。我們應該能夠在我們看到大部分這些成本從我們的損益表中消失的地方滿懷希望地退出這一年。

Our next question comes from Krish Sankar with TV Cowen.

我們的下一個問題來自 TV Cowen 的 Krish Sankar。

I had a couple of them. First 1 is actually a 2-part question, both for you, Steve and Paul. Number first part is you spoke about semi revenues dropping in Q2 and then improving. I'm just kind of curious what gives you the confidence?

我有幾個。 First 1 實際上是一個由兩部分組成的問題，分別針對您、Steve 和 Paul。數字第一部分是你談到第二季度半收入下降然後有所改善。我只是有點好奇是什麼給了你信心？

And the second part of the question is, last quarter, if I remember, there's probably $85 million to $90 million from backlog that got removed because of the China export fund flow, but some of your customers talk about shipping back to some of the lagging edge memory Chinese customers. So I'm kind of curious how to think about how much of that backlog comes back into your backlog? And is that part of the reason why you feel comfortable about the second half revenue improving? And then I have a follow-up.

問題的第二部分是，上個季度，如果我記得的話，由於中國出口資金流動，可能有 8500 萬到 9000 萬美元的積壓訂單被移除，但你的一些客戶談論運回一些落後的國家edge memory中國客戶。所以我很好奇如何考慮有多少積壓工作會返回到您的積壓工作中？這是否是您對下半年收入增長感到滿意的部分原因？然後我有一個後續行動。

Chris, this is Steve. I assume we're talking just about the semiconductor part of our backlog. Is that correct?

克里斯，這是史蒂夫。我假設我們只是在談論我們積壓的半導體部分。那是對的嗎？

Yes. Yes.

是的。是的。

Okay. Yes. So we do believe the second half will be stronger than second quarter. And so we're bullish on that because we've seen the backlog increase. And I think part of that increase is due to some of the clarifications that our customers have received about shipping into China. So we've seen some strengthening in the backlog in the second half.

好的。是的。所以我們確實相信下半年會比第二季度更強勁。所以我們看好這一點，因為我們已經看到積壓增加。我認為部分增長是由於我們的客戶收到了關於運送到中國的一些說明。因此，我們看到下半年積壓的訂單有所增加。

I think the other part of it is we do see our continuing pockets of strength will be benefiting us in the second half as well as in the first half. We talked about our service business. The other 1 that's very exciting for us is the high-voltage business. As the demand for ion implant applications is very strong, and that's being led by the expansions in capacity for silicon carbide and other power type processes.

我認為它的另一部分是我們確實看到我們持續的力量將在下半年和上半年使我們受益。我們談到了我們的服務業務。另一個讓我們非常興奮的是高壓業務。由於對離子注入應用的需求非常強勁，而這種需求是由碳化矽和其他功率類型工藝的產能擴張帶動的。

Yes. Krish, I think the other factor is, we expect Q2 as kind of our trough because we've completed basically the sell-in of inventory to our customers, which has helped us, frankly, the last 2 quarters kind of buffer the lower market conditions. So we think that's largely washed through.

是的。 Krish，我認為另一個因素是，我們預計第二季度將是我們的低谷，因為我們基本上已經完成了向客戶出售庫存，坦率地說，這幫助我們過去兩個季度緩衝了較低的市場狀況。所以我們認為這在很大程度上已經被沖走了。

As we look at the second half, our customers are talking about stronger trailing edge and them selling into China, which we believe will benefit us as well.

展望下半年，我們的客戶正在談論更強的後緣，他們將產品銷往中國，我們相信這也將使我們受益。

Got it. Is there a way to quantify how much of the $85 million to $90 million backlog that got removed because of China gets back in?

知道了。有沒有一種方法可以量化因中國而被移除的 8500 萬至 9000 萬美元的積壓訂單中有多少重新進入？

Yes, we haven't quantified that publicly at this point. What we've put in the backlog at this point, I'd say, is quite limited, where we have direct line of sight to customers that we have a verification process in place to ensure that nothing is going to any leading-edge applications. So it's pretty limited at this point. And I suspect it will kind of drop in a little bit over time as we're able to make sure we have good visibility to where product is going.

是的，我們目前還沒有公開量化這一點。我想說，目前我們在積壓中的內容非常有限，我們可以直接看到客戶，我們有一個驗證流程來確保任何前沿應用程序都不會.所以在這一點上它非常有限。而且我懷疑隨著時間的推移它會有點下降，因為我們能夠確保我們對產品的去向有很好的了解。

Got it. Got it. And then just as a follow-up on supply chain. You kind of mentioned that there's still constraints on the MOSFET and power IC, and it should probably abate by the end of the year. I'm kind of curious, like we've kind of been like 2 years or a little more 2 years into this thing. And it doesn't seem like your customers are having the issue of component constraints, but you're still having it.

知道了。知道了。然後作為供應鏈的後續行動。你有點提到 MOSFET 和功率 IC 仍然存在限制，它可能會在今年年底之前減少。我有點好奇，好像我們已經有 2 年或 2 年多一點的時間來研究這件事了。並且您的客戶似乎沒有組件限制問題，但您仍然遇到它。

I'm just curious, like, is that specific to just those few semiconductor devices and that is impacting? And does it mean that you have to figure out whether they ship it to semi customers, I&M customers, hyperscalers? Or is there something else that's going on that in general because it seems like semi industry is going through a cyclical downturn, I'm just kind of curious and people are overbuilding capacity. Yet here we are 2 years later talking about supply constrain.

我只是好奇，比如，這是否僅針對那少數半導體設備並且正在產生影響？這是否意味著您必須弄清楚他們是否將其運送給半客戶、I&M 客戶、超大規模客戶？或者一般來說還有其他事情正在發生，因為看起來半工業正在經歷週期性低迷，我只是有點好奇，人們正在過度建設產能。然而，兩年後我們在這裡談論供應限制。

Yes. I think, Krish, it's a legitimate complaint. We wonder the same thing sometimes. But quite frankly, the list has narrowed considerably over the past 2 years. So it's a much more compact list. However, all it takes is 1 missing power MOSFET or 1 missing power IC, and we can't ship the box. So we continue to compete with other industrial customers and automotive customers for this trailing edge capacity.

是的。我認為，Krish，這是一個合理的投訴。我們有時想知道同樣的事情。但坦率地說，在過去的兩年裡，這個名單已經大大縮小了。所以這是一個更緊湊的列表。但是，只要缺少 1 個功率 MOSFET 或 1 個功率 IC，我們就無法發貨。因此，我們繼續與其他工業客戶和汽車客戶爭奪這種後緣能力。

But based on what we're experiencing now, what we see in the second half, we think that will be over most of these issues by the end of this year.

但根據我們現在所經歷的，我們在下半年看到的，我們認為到今年年底將解決大部分問題。

Our next question comes from Steve Barger with KeyBanc.

我們的下一個問題來自 KeyBanc 的 Steve Barger。

Steve, I know driving strong customer engagement is a priority for the year. And I think you're focused on small- and medium-sized customers because of the growth rate. First, how are you measuring engagement? Is it just having a dialogue? Is it based on actual sales conversion? What metric are you managing to there to drive that?

史蒂夫，我知道推動強大的客戶參與度是今年的首要任務。而且我認為由於增長率，您專注於中小型客戶。首先，您如何衡量參與度？只是對話嗎？是根據實際的銷售轉化？你在那裡管理什麼指標來推動它？

Yes. Good question, Steve. And I think about that in 2 ways. One is customer pull for new products. And with our large semiconductor customers, like I say, they're fully engaged with the 2 new platforms I discussed earlier in the call. These are technology-leading products and the customer pull is equal to the supplier push, which is always nice to see. I think in the larger markets, what I've seen is with our increased rate of new product launches, we see a lot of excitement in the field around the world actually. And we measure that every month in our design win funnel.

是的。問得好，史蒂夫。我從兩個方面考慮這一點。一是新產品的客戶拉動。就像我說的那樣，對於我們的大型半導體客戶，他們完全參與了我在電話會議之前討論過的兩個新平台。這些都是技術領先的產品，客戶拉動等於供應商推動，這總是很高興看到。我認為在更大的市場中，我看到的是我們新產品發布率的提高，實際上我們在世界各地看到了很多令人興奮的事情。我們每個月都會在我們的設計獲勝漏斗中衡量這一點。

And so we basically look at all the opportunities that are out there that we're trying to close. And right now, our closure rate is approaching 40%, which is pretty good in my experience. So the number is high and the closure rate is excellent. So that's how I measure customer engagement.

因此，我們基本上會查看我們正在努力關閉的所有機會。現在，我們的關閉率接近 40%，根據我的經驗，這已經相當不錯了。所以數量高，關閉率非常好。這就是我衡量客戶參與度的方式。

And when you think about that 40% closure rate, how -- like is the pool of potential touch points growing every quarter so that, that 40% part of the pie is on a growing pie on a consistent basis?

當您考慮 40% 的關閉率時，潛在接觸點的數量每個季度都在增長，以至於 40% 的餡餅始終在不斷增長的餡餅上？

Yes. It's a growing part because in the past, we have not focused on industrial medical accounts. So just in the past 1.5 years, I think we've done some significant things. Probably the most significant thing is goaling half our sales force on industrial, medical design wins and revenue. And so they're very [incented] to go after new opportunities at small- and medium-sized accounts.

是的。這是一個不斷增長的部分，因為在過去，我們沒有專注於工業醫療賬戶。所以就在過去的 1.5 年裡，我認為我們做了一些重要的事情。可能最重要的事情是將我們一半的銷售人員定位在工業、醫療設計勝利和收入上。因此，他們非常 [incented] 去尋找中小型客戶的新機會。

And it's a really great investment for us because generally speaking, these design wins, although they're smaller, they tend to last a long time and they tend to be sole sourced. And so it's a nice market for us, and it's 1 of the 3 markets we really focus in on semiconductor, industrial and medical.

這對我們來說是一筆非常大的投資，因為一般來說，這些設計的勝利，雖然規模較小，但往往會持續很長時間，而且往往是獨家採購的。所以這對我們來說是一個很好的市場，它是我們真正專注於半導體、工業和醫療的三個市場之一。

Yes. And just 1 follow-up on that. Given the size of the industrial and medical opportunity and your focus on it, how are you thinking about organic growth for that segment on a normalized basis? I mean, through cycles, can it be a double-digit grower on a regular basis? And over time, can it catch up to semi equipment in terms of size?

是的。並且只有 1 個後續跟進。鑑於工業和醫療機會的規模以及您對它的關注，您如何看待該領域在正常基礎上的有機增長？我的意思是，通過週期，它可以定期成為兩位數的增長者嗎？隨著時間的推移，它能否在尺寸方面趕上半設備？

We haven't articulated the specific growth metrics, Steve, but I've got very high hopes of business. We think it is an excellent business to be in, and it buffers us during the semiconductor downturns, which will continue to happen moving forward. We're seeing some of the benefits of that strategy this year. So I anticipate the industrial and medical business will continue to grow. We have a lot of room to grow in that space and with a little focus in energy, I don't see a problem doing that.

我們還沒有闡明具體的增長指標，史蒂夫，但我對業務抱有很高的期望。我們認為這是一項出色的業務，它在半導體低迷期間為我們提供緩衝，這種低迷將繼續發生。今年我們看到了該戰略的一些好處。因此，我預計工業和醫療業務將繼續增長。我們在那個領域有很大的發展空間，並且稍微關注能源，我認為這樣做沒有問題。

(Operator Instructions) We have reached the end of our question-and-answer session. This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.

（操作員說明）我們的問答環節已經結束。今天的會議到此結束。感謝您的參與。此時您可以斷開線路。