(PLAB) 2024 Q1 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Photronics First Quarter Fiscal 2021 Earnings Conference Call. (Operator Instructions)

美好的一天，女士們先生們。謝謝你的支持。歡迎參加 Photronics 2021 財政年度第一季財報電話會議。 （操作員說明）

As a reminder, this conference is being recorded today, Wednesday, February 21, 2024. I would now like to turn the conference over to Richelle Burr, Chief Administrative Officer. Please go ahead.

謹此提醒，本次會議將於今天（2024 年 2 月 21 日星期三）進行錄製。我現在將會議交給首席行政官 Richelle Burr。請繼續。

Thank you, Lilian. Good morning, everyone. Welcome to our review of Photronics fiscal 2024 First Quarter Results. Joining me this morning are Frank Lee, our Chief Executive Officer; Chris Progler, our Chief Technology Officer; John Jordan, our Chief Financial Officer; and Eric Rivera, our Chief Accounting Officer and Corporate Controller. The press release we issued earlier this morning, together with the presentation material that accompany our remarks are available on the Investor Relations section of our web page.

謝謝你，莉蓮。大家，早安。歡迎閱讀我們對 Photronics 2024 財年第一季業績的回顧。今天早上和我一起來的是我們的執行長弗蘭克李 (Frank Lee)； Chris Progler，我們的技術長；約翰‧喬丹，我們的財務長；以及我們的首席會計官兼公司財務總監 Eric Rivera。我們今天早上早些時候發布的新聞稿以及我們的言論所附的演示材料可在我們網頁的投資者關係部分獲取。

Comments made by any participants on today's call may include forward-looking statements and include such words as anticipate, believe, estimate, expect, forecast, and in our view. These forward-looking statements are based upon a number of risks, uncertainties and other factors that are difficult to predict. Actual results may differ materially from those expressed or implied, and we assume no obligation to update any forward-looking information.

任何參與者在今天的電話會議上發表的評論可能包括前瞻性陳述，並包括「預期」、「相信」、「估計」、「期望」、「預測」和「我們認為」等字眼。這些前瞻性陳述是基於許多風險、不確定性和其他難以預測的因素。實際結果可能與明示或暗示的結果有重大差異，我們不承擔更新任何前瞻性資訊的義務。

During the course of our discussion, we will refer to certain non-GAAP financial metrics. These numbers are useful for analysts, investors and management to evaluate ongoing performance. A reconciliation of these metrics to GAAP financial results is provided in our presentation materials. At this time, I will turn the call over to Frank.

在我們的討論過程中，我們將參考某些非公認會計準則財務指標。這些數字對於分析師、投資者和管理層評估持續績效非常有用。我們的演示材料中提供了這些指標與 GAAP 財務表現的對照表。這時候，我會把電話轉給弗蘭克。

Thank you, Richelle, and good morning, everyone. We achieved sales growth compared with last year and both IC and FPD increase with high-end growth being partially offset by soft mainstream demand in both sectors. Compared with the fourth quarter, sales were down due to seasonal trends and [4] fewer days in the first quarter. Demand was weaker and sales were softer than we expected during the first month of the quarter for both IC and FPD.

謝謝你，裡歇爾，大家早安。與去年相比，我們的銷售額實現了成長，IC 和 FPD 均實現成長，其中高端成長被這兩個行業主流需求疲軟所部分抵消。與第四季相比，由於季節性趨勢和第一季[4]天數減少，銷售額有所下降。本季第一個月 IC 和 FPD 的需求疲軟，銷售也低於我們的預期。

Demand improved during the quarter, increasing our revenue run rate and giving us confidence that revenue will improve in the second quarter. Earnings improved over last year as operation leverage drove higher gross margins. Our quarter-over-quarter comparison, [low borrowing] cost gross margin to fall. Once again, our team has done were to control expenses and deliver solid margins even with lower sales compared with fourth quarter.

本季需求有所改善，提高了我們的營收運作率，並使我們有信心第二季的營收將會改善。由於營運槓桿推動毛利率上升，獲利較去年有所改善。與上一季相比，[低借貸]成本毛利率下降。我們的團隊再次所做的是控制開支並提供穩定的利潤，即使銷售額低於第四季。

The first quarter earnings were $0.42 per share on a GAAP basis and $0.48 per share on a non-GAAP basis. Operation cash flow improved from the first quarter of last year, allowing us to further strengthen our balance sheet to support our growth plans. I would now like to offer some comments on the overall market -- [loss] market and demand environment. As I stated earlier, mass demand was soft at the start of first quarter for both IC and FPD.

以 GAAP 計算，第一季每股收益為 0.42 美元；以非 GAAP 計算，每股收益為 0.48 美元。營運現金流較去年第一季有所改善，使我們能夠進一步加強資產負債表以支持我們的成長計劃。我現在想對整個市場——[損失]市場和需求環境發表一些評論。正如我之前所說，第一季初 IC 和 FPD 的大眾需求均疲軟。

Demand improved through the quarter including (inaudible) spike in orders we see ahead of Chinese New Year, which started on February 9. While still early following the holiday break, we do expect demand trends we saw prior to Chinese New Year to continue in Q2. For IC, we are seeing a growing trend in no migration from customer in Asia as they move to 28 and 22 nanometers to improve performance. The trend is driving [tape out] demand for our high-end businesses. In memory, the industry is seeing a recovery in demand.

本季需求有所改善，包括我們在2 月9 日開始的農曆新年之前看到的訂單激增（聽不清楚）。雖然假期結束後仍處於早期階段，但我們預計農曆新年之前的需求趨勢將在第二季繼續下去。對於 IC，我們看到亞洲客戶不遷移的趨勢不斷增長，因為他們轉向 28 和 22 奈米以提高性能。這一趨勢正在推動對我們高端業務的需求。記憶中，該行業正在看到需求的復甦。

Our memory exposure is with Tier 2 providers now typically high-value applications. They are seeing encouraging demand trends as well. For our [FPD], our business outlook looks good even as our overall [mainstream] industry remains soft. As a technology leader with a strong market presence in the more advanced AMOLED displays, we have a competitive advantage that keeps demand high for our display mask.

我們的記憶體暴露在二級供應商中，現在通常是高價值應用程式。他們也看到了令人鼓舞的需求趨勢。對於我們的 [FPD] 來說，儘管我們的整體 [主流] 行業仍然疲軟，但我們的業務前景看起來不錯。作為在更先進的 AMOLED 顯示器領域擁有強大市場份額的技術領導者，我們擁有競爭優勢，使我們的顯示器掩模版需求保持在較高水準。

Display for premium smartphone are continually (inaudible) new futures (inaudible) new futures and panel-maker are innovating to gain market share. This benefits us as we as have greater -- we have great relationships with large panel makers and can provide high-quality mask to help them achieve their goal. With (inaudible) momentum during the second half of the first quarter and expect our revenue to grow in the second quarter. As this happens, we will remain focused on controlling costs to increase margins and increasing cash flow to support growth investments.

高階智慧型手機的顯示器不斷（聽不清楚）新的未來（聽不清楚）新的未來，面板製造商正在創新以獲得市場份額。這使我們受益匪淺，因為我們與大型面板製造商有著良好的關係，可以提供高品質的遮罩來幫助他們實現目標。隨著第一季下半年的（聽不清楚）勢頭，預計我們的營收將在第二季成長。當這種情況發生時，我們將繼續專注於控製成本以提高利潤並增加現金流以支持成長投資。

I'm optimistic about the rest of the year, expecting the semiconductor industry should transition to the next phase of growth, leading to an increase in photomask demand during our second to third fiscal quarters. We believe our technology, strong customer relations and global presence will position us to continue to perform well.

我對今年剩餘時間持樂觀態度，預計半導體產業將過渡到下一階段的成長，從而導致我們第二至第三財季的光掩模需求增加。我們相信，我們的技術、強大的客戶關係和全球影響力將使我們能夠繼續表現出色。

Before turning the call over to John to review Q1 results, I would like to public congratulations John on his upcoming retirement. John has been an important member of our executive team since joining Photronics in 2017 and has been a great partner to me over entire time, especially during my time as CEO. He (inaudible) us through tremendous growth and geographic expansion. On behalf of the entire organization, I wish him well in retirement. John, the floor is yours.

在將電話轉給約翰查看第一季業績之前，我想公開祝賀約翰即將退休。自 2017 年加入 Photronics 以來，約翰一直是我們執行團隊的重要成員，並且一直是我的優秀合作夥伴，尤其是在我擔任執行長期間。他（聽不清楚）幫助我們實現了巨大的成長和地理擴張。我代表整個組織祝他退休後一切順利。約翰，地板是你的。

Thank you, Frank, for those kind words. I am looking forward to retirement and spending more time with my family and some favorite projects. Although I'm leaving, I'm confident in the company's continued success. The CFO role in any company is a challenging position. In our case, I believe we have met that challenge with the strong support of an excellent finance organization. Eric, our Corporate Controller, who will assume the role of interim CFO as well as our Treasurer and Treasurer and both their staff and our international CFOs and their staff.

謝謝弗蘭克的客氣話。我期待著退休並花更多的時間陪伴家人和一些最喜歡的項目。雖然我要離開，但我對公司的持續成功充滿信心。在任何公司中，財務長的角色都是一個具有挑戰性的職位。就我們而言，我相信在優秀金融組織的大力支持下，我們已經應對了這個挑戰。我們的公司財務總監 Eric）將擔任臨時財務長以及我們的財務主管和財務主管及其員工以及我們的國際財務長及其員工的角色。

The Photronics Board is demanding and supportive and the cohesiveness and commitment of the leadership team to a well-defined strategy of targeted investment and consistent execution will help ensure that success. Now turning to first quarter results.

光電子董事會要求嚴格且支持，領導團隊的凝聚力和對明確的目標投資策略和一致執行的承諾將有助於確保成功。現在轉向第一季業績。

Revenue was $216.3 million up 2% year-over-year and 5% less than last quarter. As Frank mentioned, our first quarter began slowly but gained momentum as end market demand seem to recover. The first quarter is typically the seasonally slowest quarter in our fiscal year. Slower demand at the beginning of the first quarter exacerbated the seasonal decrease and there were 4 fewer days than the previous quarter, all combining for the sequential decrease.

營收為 2.163 億美元，年增 2%，比上季減少 5%。正如弗蘭克所提到的，我們的第一季開始緩慢，但隨著終端市場需求似乎復甦，勢頭增強。第一季通常是我們財年中季節性最慢的季度。初季需求放緩加劇了季節性下降，天數比上一季減少了 4 天，所有這些因素綜合起來導致了環比下降。

First quarter IC revenue was $157.6 million, up 1% year-over-year and 4% lower sequentially. High-end revenue increase led by strong foundry logic demand in Asia and high-end revenue in the U.S. Mainstream revenue was lower due to softness in Asia, in part related to the stronger high-end demand resulting from customers' migration to the more advanced nodes.

第一季 IC 營收為 1.576 億美元，年增 1%，季減 4%。亞洲強勁的代工邏輯需求和美國的高端收入帶動高端收入成長。由於亞洲疲軟，主流收入較低，部分原因是客戶遷移到更先進的市場導致高端需求更強節點。

The long-term growth drivers remain intact as we support customers' technology road maps and investments as they expand capacity to support supply chain regionalization. FPD revenue of $58.7 million improved 8% compared with last year and was down 7% from Q4's record level. High-end FPD revenue improved year-over-year on an increase in demand for AMOLED displays used in mobile applications, although it was lower sequentially on normal seasonal softness.

隨著客戶擴大支援供應鏈區域化的能力，我們支援客戶的技術路線圖和投資，長期成長動力保持不變。 FPD 營收為 5,870 萬美元，較去年成長 8%，較第四季創紀錄水準下降 7%。由於行動應用中使用的 AMOLED 顯示器的需求增加，高端 FPD 收入同比增長，儘管由於正常的季節性疲軟而環比下降。

The mainstream FPD decline was attributable to the slow start to Q1 we alluded to before. We remain the technology leader, which gives us confidence in our ability to continue to outgrow the market as [panel] makers release innovative products to gain market share. Gross margin was 36.6%, slightly higher year-over-year and slightly lower quarter-over-quarter, consistent with changes in revenue and the effect of high operating leverage in both directions.

主流FPD的下滑歸因於我們之前提到的第一季的緩慢開局。我們仍然是技術領導者，這讓我們相信，隨著[面板]製造商發布創新產品以獲得市場份額，我們有能力繼續超越市場。毛利率為36.6%，較去年同期略高，較上季略低，與收入變動以及雙向高營運槓桿的影響一致。

Operating expenses were higher this quarter primarily related to higher employee compensation expense. The resulting operating margin was 26.6%. Net income in the quarter was $26.2 million or $0.42 per diluted share. Adjusted for the nonoperating loss, net income was $29.9 million or $0.48 per diluted share, an improvement from last year and somewhat lower than our very strong Q4 earnings.

本季營運費用較高，主要與員工薪酬費用較高有關。最終營業利益率為 26.6%。本季淨利為 2,620 萬美元，或攤薄後每股收益 0.42 美元。在調整非經營性虧損後，淨利潤為 2,990 萬美元，即每股攤薄收益 0.48 美元，比去年有所改善，但略低於我們非常強勁的第四季度收益。

We generated $41.5 million in operating cash flow, 50% higher than last year due to higher net income and effective working capital management. Our CapEx investments for growth were $43.3 million in the quarter. Our CapEx guidance for the year will remain at $140 million, primarily in both high-end and mainstream IC to address anticipated demand.

由於更高的淨利潤和有效的營運資金管理，我們產生了 4,150 萬美元的營運現金流，比去年增加了 50%。本季我們用於成長的資本支出投資為 4,330 萬美元。我們今年的資本支出指引將維持在 1.4 億美元，主要用於高端和主流 IC，以滿足預期需求。

We ended the quarter with a cash balance of $508.5 million, short-term investments of $13 million and debt of $23.4 million providing us with ample liquidity to fund investments in organic growth. Before I provide guidance, I'll remind you that our visibility is always limited as our backlog is typically only 1 to 3 weeks and demand for some of our products is inherently uneven and difficult to predict.

截至本季末，我們的現金餘額為 5.085 億美元，短期投資為 1,300 萬美元，債務為 2,340 萬美元，為我們提供充足的流動性來為有機成長投資提供資金。在提供指導之前，我要提醒您，我們的可見性始終有限，因為我們的積壓訂單通常只有 1 到 3 週，而且對我們某些產品的需求本質上是不均勻且難以預測的。

Additionally, the ASPs for high-end mask sets are high. And as this segment of the business grows, a relatively low number of high-end orders can have a significant impact on our quarterly revenue and earnings. Given those caveats, we expect second quarter revenue to be in the range of $226 million to $236 million. We believe the momentum that built during the first quarter will continue into Q2 driven by solid long-term demand drivers across our markets.

此外，高端面膜組的平均售價也很高。隨著這部分業務的成長，相對較少的高端訂單數量可能會對我們的季度收入和收益產生重大影響。考慮到這些注意事項，我們預計第二季營收將在 2.26 億美元至 2.36 億美元之間。我們相信，在整個市場堅實的長期需求驅動因素的推動下，第一季建立的勢頭將持續到第二季​​。

Our pricing environment has stabilized around the mid-30s -- mid- to high 30s percentage gross margin level. And at the midpoint of our guidance for Q2, we anticipate gross margin in the 38% range somewhat better than the margin in Q1. Based on those revenue expectations and our current operating model, we estimate non-GAAP earnings per share for the second quarter to be in the range of $0.50 to $0.58 per diluted share. After a slow start to the year, we're encouraged by strengthening demand during the quarter and into second quarter.

我們的定價環境穩定在 30 多歲左右——30 多歲中高的毛利率水準。在我們第二季指引的中點，我們預期毛利率在 38% 範圍內，略優於第一季的利潤率。根據這些收入預期和我們目前的營運模式，我們預計第二季非公認會計準則每股攤薄收益將在 0.50 美元至 0.58 美元之間。經過今年的緩慢開局後，我們對本季和第二季的需求增強感到鼓舞。

We anticipate the continuation of these trends, along with the performance of our global team to provide sequential improvement in the second quarter and continued growth through 2024. I will now turn the call over to the operator for your questions.

我們預計這些趨勢將持續下去，同時我們的全球團隊的表現將在第二季度實現連續改善，並在 2024 年之前實現持續增長。我現在將把電話轉給運營商回答您的問題。

(Operator Instructions)

（操作員說明）

Now a question coming from the line of Tom Diffely with D.A. Davidson.

現在有一個問題來自 Tom Diffely 和 D.A.戴維森。

First of all, John, it's been a pleasure working with you, and I wish you well on your retirement. And then I guess I'd like to just kind of back up here and hopefully ask a little bit about just the health of the mainstream business and how you see that playing out in terms of pricing, supply-demand, seasonality, just focused on the mainstream, if you could.

首先，約翰，很高興與您一起工作，並祝您退休後一切順利。然後我想我想回到這裡，希望能問一下主流業務的健康狀況，以及您如何看待它在定價、供需、季節性方面的表現，只是關注如果可以的話，主流。

Yes. In the mainstream sector, the season low, especially in China and Taiwan market. And in terms of pricing, they are still some -- there are some newcomers into the market in the mainstream. However, we don't see the mainstream business impact in this new compensation in area outside of China and Taiwan. So the impact on mainstream pricing, there are some pressure in the -- great China area.

是的。在主流領域，季節低迷，特別是在中國和台灣市場。在定價方面，他們仍然是一些——有一些新來者進入主流市場。然而，我們並沒有看到這項新薪酬對中國大陸和台灣以外地區的主流業務產生影響。所以對主流定價的影響，在－－大中華地區有一定的壓力。

However, our main business has been migrating to 40 and 22 -- 28-nanometer. So the portion of mainstream business in our Asia operation are not in a bigger portion. So the increase in product mix has offset measuring price pressure in terms of overall branded ASP.

然而，我們的主要業務已經遷移到40和22-28奈米。所以我們亞洲業務的主流業務所佔的比例並不大。因此，產品組合的增加抵消了衡量整體品牌平均售價的價格壓力。

Okay. So when you look at the last few years, you had the nice ramp-up in first (inaudible) demand? And then because there are supply constraints in the industry, you had nice pricing, nice margins. And then it seemed like the March got a little saturated. At this point, it feels like the pricing or the margins from the mainstream is in a kind of a stable area where if you look at over the next few quarters, it feels pretty stable for you? Or are we going back to kind of the history in mainstream when we have kind of a seasonal or yearly decline in pricing?

好的。那麼，當您回顧過去幾年時，您的首次（聽不清楚）需求有很好的成長嗎？然後，由於該行業存在供應限制，因此您可以獲得良好的定價和利潤。然後三月似乎有點飽和了。在這一點上，感覺主流產品的定價或利潤處於穩定的區域，如果你看看接下來的幾個季度，你會覺得相當穩定嗎？或者當我們的價格出現季節性或年度下降時，我們會回到主流的歷史？

Actually, the pricing I mentioned went up in 2021 and '22. So even we adjust the price a little bit right now, however, they are still much higher than before. But at this moment, the pricing of mainstream has been stabilized, and we are not trying to adjust the price because the market in high end of the mention, especially in 40-nanometer area are growing. So that consumed a lot of our capacity.

實際上，我提到的價格在 2021 年和 22 年有所上漲。所以即使我們現在稍微調整價格，但它們仍然比以前高得多。但目前主流的定價已經穩定，我們不會嘗試調整價格，因為高端市場，特別是40奈米領域正在成長。所以這消耗了我們很多的能力。

And we have no need to further adjust our price in mainstream. So going forward, we will keep our mainstream pricing stable. Of course, the premium charge at this moment disappear. However, as I mentioned, we are focusing on the branded ASP, which basically depending on the product mix.

而我們的主流價格也沒有必要進一步調整。因此，展望未來，我們將維持主流定價穩定。當然，此時的保費就消失了。然而，正如我所提到的，我們專注於品牌 ASP，這基本上取決於產品組合。

Okay. No, it sounds good. It's encouraging. Moving over to the flat panel business, you talked about some OLED strength and how that helped your advance. I'm curious, what are you seeing in the Gen 10.5 range? Is that still fairly light or fairly soft for you?

好的。不，聽起來不錯。這是令人鼓舞的。轉向平板業務，您談到了 OLED 的一些優勢以及這如何幫助您取得進步。我很好奇，您在 Gen 10.5 系列中看到了什麼？這對你來說仍然相當輕或相當軟嗎？

It's still very light. Most customers are focusing on AMOLED product and the total cap of Gen 10.5 remain very, very low. So actually, in terms of profit margin and the -- and overall, production output is more beneficial if we are focusing on AMOLED product instead of G10.5.

它仍然很輕。大多數客戶都專注於 AMOLED 產品，10.5 代的總上限仍然非常非常低。因此，實際上，就利潤率和整體而言，如果我們專注於 AMOLED 產品而不是 G10.5，產量會更有利。

Okay. Great. And I'm not sure if Chris Progler is on the line, but I did have a question -- as the -- as you start to look at many micro LEDs for flat panel displays, how that impacts the photomask market?

好的。偉大的。我不確定 Chris Progler 是否在線，但我確實有一個問題——當你開始關注許多用於平板顯示器的 Micro LED 時，這對光掩模市場有何影響？

Let's say, so the many LEDs that's just a more sophisticated backlight. There's not a big impact on those in the photomask market except for the switching layer, the transistor layer, those many LEDs let you take advantage of more advanced TFTs or transistor level. So it's driving, I think, a more sophisticated at advanced switching layer, and thanks to many LEDs although the formation of the many LEDs is not really photomask intensive.

可以說，許多 LED 只是一種更複雜的背光源。除了開關層、電晶體層之外，對光掩模市場的影響並不大，那些許多 LED 讓您可以利用更先進的 TFT 或電晶體層。因此，我認為，它正在推動更複雜的高級切換層，並且得益於許多 LED，儘管許多 LED 的形成並不是真正的光掩模密集。

For microLEDs, it started off to be a relatively simple technology to integrate that is relatively few patterning steps. What we're seeing in most of those products are in prototype or early production phase, actually, a fairly dense set of photomask and patterning requirements to build those microLEDs. They're proving to be a little harder to control than initially anticipated.

對於 microLED，它一開始是一種相對簡單的整合技術，圖案化步驟相對較少。我們看到的大多數產品都處於原型或早期生產階段，實際上，建造這些 microLED 需要相當密集的光掩模和圖案化要求。事實證明，它們比最初預期的更難控制。

So I think it's a good trend, positive trend on the microLED side for photomask, especially if it drives more applications for displays, not a game-changer by any means or a tremendous driver, but I think it's should be viewed as a positive trend for display mask making.

因此，我認為這是一個很好的趨勢，對於光掩模而言，microLED 方面是一個積極的趨勢，特別是如果它推動了更多的顯示器應用，無論如何都不會改變遊戲規則或產生巨大的推動力，但我認為這應該被視為一個積極的趨勢用於顯示器掩模製作。

All right. And since I have you on the line, any update on activity that's going on with you and EUV? I know you've been part of some consortiums. But curious if there's any what we call regular business in that space at all for you?

好的。既然我已經接聽您的電話，請問您和 EUV 正在進行的活動有什麼更新嗎？我知道你是一些財團的成員。但想知道在那個領域是否有任何我們所說的常規業務可以為您服務嗎？

Yes. So I think in '23 and '24 our EUV customer base expanded modestly. There are a couple of more companies we work with that are starting to dip their toes in the water on EUV using pilot masks and things like that. So we see the customer base expanding. We're doing a few demonstrations on running flows with EUV masks versus optical masks for one memory customer to compare with the yields might be under EUV.

是的。因此，我認為在 23 年和 24 年，我們的 EUV 客戶群略有擴大。還有幾家與我們合作的公司開始嘗試使用試點掩模等技術來開發 EUV。因此，我們看到客戶群不斷擴大。我們正在為一位記憶體客戶進行一些使用 EUV 掩模與光學掩模運行流程的演示，以與 EUV 下的產量進行比較。

So I think the customer base is starting to expand a bit. The strongest part of that business for us has been our primary customer who is an OEM. That business has been very strong, consistent with what their OEM products and the takeup in the industry. And then as far as the advanced nodes, we did strike up on new relationship on EUV, which we're (inaudible) not at liberty to talk about on this call, but it's so far been a fruitful interaction and maybe we'll have a little more to say about it over the next few calls.

所以我認為客戶群開始有所擴大。對我們來說，該業務最強大的部分是我們的主要客戶，即 OEM。該業務一直非常強勁，與他們的 OEM 產品和行業採用情況一致。然後就先進節點而言，我們確實在 EUV 上建立了新的關係，我們（聽不清）無法在這次電話會議上自由討論，但到目前為止這是一次富有成效的互動，也許我們會在接下來的幾次電話會議中，我會再多說一些。

Great. I appreciate it, Chris. And then last question for John. When you look at the capital spending of $140 million this year, how much of that is I guess, sponsored or do you have contracts to kind of guarantee a certain level of production if you're going to spend that level of money?

偉大的。我很感激，克里斯。然後是約翰的最後一個問題。當你看看今年 1.4 億美元的資本支出時，我猜其中有多少是贊助的，或者如果你打算花這個水平的錢，你是否有合約來保證一定的生產水平？

Yes. So as we've discussed, over the last several years, Tom, for every major capital investment we get, we have -- first of all, we have an investment analysis that supports at least our threshold IRR. And we drill down on the revenue line and those analyses to make sure the revenues are just not numbers on an Excel spreadsheet.

是的。因此，正如我們在過去幾年中所討論的，湯姆，對於我們獲得的每一項重大資本投資，我們首先有一項投資分析，該分析至少支持我們的門檻 IRR。我們深入研究收入線和這些分析，以確保收入不是 Excel 電子表格上的數字。

They're supported by either customer commitments or pretty good assurances that, that business is going to be there, the request from customers for us to increase capacity and not promises, but assurances of future orders to support the investments. And of course, as you've seen, our ROIC from 2017 at about 1.5% has increased to 13% to 14% over the last several years. So that strategy of supporting the investments and making sure that we've got the revenues to support them has been effective in the total turnaround in our ROIC.

他們得到了客戶承諾或很好的保證的支持，即該業務將會存在，客戶要求我們增加產能，而不是承諾，而是保證未來訂單以支持投資。當然，正如您所看到的，我們的投資回報率從 2017 年的 1.5% 左右增加到過去幾年的 13% 至 14%。因此，支持投資並確保我們有收入來支持投資的策略對於我們的投資報酬率的整體轉變是有效的。

And there are no further questions in the queue at this time. I will now turn the call over to Frank for any closing comments.

目前隊列中沒有其他問題。我現在將把電話轉給弗蘭克以徵求結束意見。

Thank you for joining us this morning. We are entering the second quarter from a strong position with demand growing across our markets and a solid financial position to support our growth investments. We have a great market position with leading share and technology.

感謝您今天早上加入我們。進入第二季度，我們處於強勢地位，整個市場的需求不斷增長，財務狀況也穩固，可以支持我們的成長投資。我們擁有領先的市場地位和領先的技術。

We expect to grow to continue growing market share and improving profit margins. I'm proud of our team's performance and confident we are on the way to another new record year in 2024. Thank you.

我們預計將繼續擴大市場份額並提高利潤率。我為我們團隊的表現感到自豪，並相信我們將在 2024 年再創新紀錄。謝謝。

Ladies and gentlemen, that concludes the conference call for today. We thank you for your participation and ask that you please disconnect your lines at this time.

女士們、先生們，今天的電話會議到此結束。我們感謝您的參與，並請您此時斷開線路。