Ultra Clean Holdings Inc (UCTT) 2022 Q4 法說會逐字稿

Good day, and welcome to the Ultra Clean Fourth Quarter and Full Year 2022 Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Rhonda Bennetto, Investor Relations. Please go ahead.

美好的一天，歡迎參加 Ultra Clean 2022 年第四季和全年電話會議。 （操作員說明）請注意，正在記錄此事件。我現在想將會議交給投資者關係部門的朗達·貝內托 (Rhonda Bennetto)。請繼續。

Thank you, operator. Good afternoon, everyone, and thank you for joining us. With me today are Jim Scholhamer, Chief Executive Officer; and Sheri Savage, Chief Financial Officer. Jim will begin with some prepared remarks about the business, and Sheri will follow with the financial review, and then we'll open up the call for questions.

謝謝你，接線生。大家下午好，感謝您加入我們。今天與我在一起的有執行長 Jim Scholhamer；和財務長 Sheri Savage。吉姆將首先對業務進行一些準備好的評論，謝裡將進行財務審查，然後我們將開始提問。

Today's call contains forward-looking statements that are subject to risks and uncertainties. For more information, please refer to the Risk Factors section in our SEC filings. All forward-looking statements are based on estimates, projections and assumptions as of today, and we assume no obligation to update them after this call. Discussion of our financial results will be presented on a non-GAAP basis. A reconciliation of GAAP to non-GAAP can be found in today's press release posted on our website.

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。欲了解更多信息，請參閱我們向 SEC 提交的文件中的風險因素部分。所有前瞻性陳述均基於截至今天的估計、預測和假設，我們不承擔在本次電話會議後更新這些陳述的義務。我們的財務業績討論將在非公認會計原則的基礎上進行。 GAAP 與非 GAAP 的調整可以在我們網站上今天發布的新聞稿中找到。

And with that, I'd like to turn the call over to Jim. Jim?

說到這裡，我想把電話轉給吉姆。吉姆？

Thank you, Rhonda, and good afternoon, everyone. Thank you for joining us for our fourth quarter and full year 2022 conference call and webcast. First, I'm going to highlight a few financial results that Sheri will expand on in her commentary. I'll follow this with an overview of what we are seeing in the semiconductor market in the near term and summarize our plans as we play a more critical, meaningful role in the value chain.

謝謝朗達，大家下午好。感謝您參加我們的 2022 年第四季和全年電話會議和網路廣播。首先，我將重點介紹 Sheri 將在評論中詳細闡述的一些財務結果。接下來，我將概述我們近期在半導體市場中看到的情況，並總結我們的計劃，因為我們在價值鏈中發揮更關鍵、更有意義的作用。

Solid execution from our global teams in 2022 resulted in a record year for UCT with revenue growing 13% year-over-year and operating income reaching a new high of $260 million. Looking back on this extraordinary 3-year industry ramp, UCT's annual revenue grew almost 123% and earnings per share surged 243%. That's a compound annual growth rate of 31% for revenue and 51% for earnings per share compared to the industry CAGR of 22% in the same period.

2022 年，我們全球團隊的穩健執行為 UCT 帶來了創紀錄的一年，營收年增 13%，營業收入達到 2.6 億美元的新高。回顧這三年非凡的產業成長，UCT 的年收入成長近 123%，每股收益飆升 243%。營收複合年增長率為 31%，每股收益複合年增長率為 51%，而同期產業複合年增長率為 22%。

Late in the fourth quarter, it became apparent that the industry was headed into a downturn as our customers quickly pushed out and canceled orders in a rapid response to their customers doing the same. Reductions in end market demand have been felt throughout the value chain and has prompted suppliers and service providers like UCT to make immediate adjustments to the near-term production, operations and financial forecasts.

在第四季度末，很明顯，該行業正陷入低迷，因為我們的客戶迅速推出並取消訂單，以快速回應他們的客戶所做的相同的事情。整個價值鏈都感受到了終端市場需求的減少，並促使 UCT 等供應商和服務提供者立即調整近期生產、營運和財務預測。

Because our customers and their customers are taking actions to bring surplus inventory into balance as quickly as possible, we believe the major step down of orders are reflected in our Q4 results and Q1 forecast. We expect the order stream to stabilize around these new levels. We have not changed our optimistic view that the fundamental drivers of our industry will propel significant growth over the long term. Not surprisingly, after 3 consecutive years of record WFE growth accelerated by pandemic-related demand for technology, we have entered a correction period.

由於我們的客戶及其客戶正在採取行動，盡快使過剩庫存達到平衡，因此我們相信訂單的大幅下降反映在我們第四季度的業績和第一季的預測中。我們預計訂單流將穩定在這些新水平附近。我們沒有改變我們的樂觀看法，即我們行業的根本驅動力將推動長期的顯著成長。毫不奇怪，在因疫情相關的技術需求而連續三年創紀錄的 WFE 增長之後，我們進入了調整期。

Every semiconductor cycle has its own unique characteristics. In this one, in addition to supply, demand and inventory imbalances, today, the industry is also grappling with lingering effects from the pandemic inflationary pressures, unsettling geopolitical events and notable macroeconomic influences such as trade wars and export restrictions. All of these factors combined, supported by what we've recently heard from IDMs and OEMs and our internal marketing intelligence, we believe weakness may continue through 2023.

每個半導體週期都有其獨特的特性。目前，除了供需和庫存失衡外，該行業還面臨著大流行性通膨壓力、令人不安的地緣政治事件以及貿易戰和出口限制等顯著宏觀經濟影響的揮之不去的影響。所有這些因素綜合起來，加上我們最近從 IDM 和 OEM 那裡聽到的消息以及我們的內部行銷情報，我們認為疲軟的情況可能會持續到 2023 年。

While the lower equipment investment will primarily impact our Products business, there are pockets of opportunities we will be capitalizing on. We will be ramping products in markets like lithography, which are anticipated to grow in 2023 and while not yet at the level to offset declines in other segments of WFE in 2023, over time, our position in this space will continue to expand as a percentage of our revenue. In our Services Group where revenue is more closely tied to wafer starts, we see a decline in business, but at this point, it is less than what we expect for WFE.

雖然設備投資減少將主要影響我們的產品業務，但我們仍將利用一些機會。我們將在光刻等市場增加產品，預計這些市場將在 2023 年實現成長，雖然尚未達到抵消 2023 年 WFE 其他領域下降的水平，但隨著時間的推移，我們在這一領域的地位將繼續擴大我們的收入。在我們的服務集團中，收入與晶圓開工的關係更為密切，我們看到業務有所下降，但目前的情況低於我們對 WFE 的預期。

While we hope that a recovery begins to materialize sooner, we are restructuring our business to maintain flexibility and optimize profitability, just like we did during the 2018-2019 downturn that lasted 5 quarters. We are taking immediate action within our variable cost model, including sharp reductions in overtime, a significant decrease of temporary workers and utilization of normal attrition.

雖然我們希望復甦早日開始實現，但我們正在重組業務，以保持靈活性並優化盈利能力，就像我們在 2018-2019 年持續 5 個季度的低迷期間所做的那樣。我們正在可變成本模式下立即採取行動，包括大幅減少加班時間、大幅減少臨時工以及利用正常損耗。

To prepare for the next ramp and support our growth strategy, we are consolidating our footprint and making improvements within our supply chain to enhance cost and delivery performance, among many other actions. We are balancing our cost reduction activities with key strategic investment programs, such as proliferating our single ERP solution, ramping Malaysia, adding fluid solutions machining capabilities and expanding capacity at some of our service sites to support new chip fabs in the U.S. in 2024 and beyond.

為了準備下一個成長並支持我們的成長策略，我們正在鞏固我們的足跡，並在我們的供應鏈中進行改進，以提高成本和交付績效，以及許多其他行動。我們正在平衡降低成本活動與關鍵戰略投資計劃，例如擴大我們的單一ERP 解決方案、擴大馬來西亞規模、增加流體解決方案加工能力以及擴大我們一些服務站點的產能，以支援2024 年及以後在美國新建晶片工廠。

UCT has a proven playbook to successfully manage through industry cycles and emerge a much stronger, more profitable company each time. While our focus over the past few years was primarily on meeting demand, today, we are taking the opportunity to transform our business processes and global operational footprint so we have the services, products and capacity to scale quickly and efficiently to meet customer demand when the industry rebounds because the industry always rebounds.

UCT 擁有一套行之有效的策略，可以成功地管理整個行業週期，並每次都成為更強大、利潤更高的公司。雖然過去幾年我們的重點主要是滿足需求，但今天，我們正在藉此機會轉變我們的業務流程和全球營運足跡，以便我們擁有快速有效地擴展的服務、產品和能力，以滿足客戶的需求。行業反彈，因為行業總是反彈。

In summary, while the chip industry is notoriously cyclical and experiences fluctuations, we view current business conditions as an opportunity to improve our bottom line in the next up cycle, while ensuring that we protect our revenues and optimize our capabilities to secure long-term growth. By working closely with our customers today, we are increasing our strategic relevance within this value chain and expect to continue to outperform the market on an average over the long term. I would like to thank our employees and our shareholders for their continued support, and I look forward to updating you on our next call.

總而言之，雖然晶片產業具有明顯的周期性並經歷波動，但我們將當前的業務狀況視為在下一個上升週期中提高利潤的機會，同時確保我們保護我們的收入並優化我們的能力以確保長期成長。透過今天與客戶的密切合作，我們正在提高我們在該價值鏈中的策略相關性，並期望在長期內繼續跑贏市場。我要感謝我們的員工和股東的持續支持，我期待在下次電話會議上向您通報最新情況。

With that, I'll turn the call over to Sheri.

這樣，我會將電話轉給 Sheri。

Thanks, Jim, and good afternoon, everyone. Thanks for joining us. In today's discussion, I will be referring to non-GAAP numbers only. As Jim noted, 2022 was a record year of UCT for revenue and operating income. During the year, we paid down our debt by $40 million and spent $12.1 million repurchasing shares and prudently invested in projects to support our long-term growth strategy.

謝謝吉姆，大家下午好。感謝您加入我們。在今天的討論中，我將僅提及非 GAAP 數字。正如 Jim 指出的那樣，2022 年是 UCT 收入和營業收入創紀錄的一年。年內，我們償還了 4,000 萬美元的債務，並花費 1,210 萬美元回購股票，並審慎投資項目，以支持我們的長期成長策略。

Total revenue for the fourth quarter came in at $566.4 million compared to $635 million in the prior quarter. Products division revenue was $499.5 million compared to $556.3 million last quarter. And revenue from our Services division was $66.9 million compared to $78.7 million in Q3. The strong demand we saw in the first 3 quarters of 2022 led to a record revenue of $2.4 billion for the year, up 13% from the prior year. Products generated revenue of $2.1 billion, up 15% year-over-year, and Services contributed $299.6 million, flat with the previous year.

第四季總營收為 5.664 億美元，上一季為 6.35 億美元。產品部門營收為 4.995 億美元，上季為 5.563 億美元。我們服務部門的收入為 6,690 萬美元，而第三季為 7,870 萬美元。 2022 年前 3 季的強勁需求導致全年營收達到創紀錄的 24 億美元，比上年成長 13%。產品收入為 21 億美元，年增 15%，服務收入為 2.996 億美元，與上年持平。

Total gross margin for the fourth quarter was 19.5% compared to 20.6% last quarter. Product gross margin was 17.7% compared to 18.3% in the prior quarter, and Services was 33.5% compared to 36.9% in Q3. Margins can be influenced by fluctuations in volume, mix in manufacturing region as well as material and transportation costs. So there will be variances quarter to quarter. Total gross margin for the year was 20.2% compared to 21.4% last year.

第四季總毛利率為 19.5%，上一季為 20.6%。產品毛利率為 17.7%，上一季為 18.3%；服務毛利率為 33.5%，上一季為 36.9%。利潤率可能受到產量波動、製造區域的混合以及材料和運輸成本的影響。所以每季都會有差異。本年度的總毛利率為 20.2%，去年為 21.4%。

Operating expense for the quarter was $53.8 million compared with $56.5 million in Q3. As a percentage of revenue, operating expense was 9.5% compared to 8.9% in the prior quarter. For the year, operating expense as a percentage of revenue was 9.3% compared to 9.2% in the prior year. Total operating margin for the quarter was 10% compared to 11.7% in the third quarter.

本季營運費用為 5,380 萬美元，而第三季為 5,650 萬美元。營運費用佔收入的百分比為 9.5%，而上一季為 8.9%。今年營運費用佔收入的比例為 9.3%，而上年度為 9.2%。本季的總營業利潤率為 10%，而第三季為 11.7%。

Margin from our Product division was 9.9% compared to 10.8% in the prior quarter and Services margin was 11.3% compared to 18.2% in the prior quarter. The reduction in margins was mainly due to decreased efficiencies for both divisions on lower volume. For the full year, operating margin came in at 11% compared to 12.2% in the prior year. Based on 45.7 million shares outstanding, earnings per share for the quarter was $0.93 on net income of $42.6 million compared to $1.06 on net income of $48.6 million in the prior quarter.

我們的產品部門利潤率為 9.9%，上一季為 10.8%；服務部門利潤率為 11.3%，上一季為 18.2%。利潤率下降的主要原因是兩個部門的產量下降導致效率下降。全年營業利益率為 11%，而前一年為 12.2%。基於 4,570 萬股已發行股票，本季每股收益為 0.93 美元，淨利潤為 4,260 萬美元，而上一季淨利潤為 4,860 萬美元，每股收益為 1.06 美元。

For the full year, earnings per share were $3.98 on net income of $181.9 million compared to $4.20 on net income of $186.1 million in 2021. Our tax rate for the quarter was 13.7% compared to 17.9% last quarter. For the full year, our tax rate was 15.9%. We expect our tax rate for 2023 to stay in the mid- to high teens.

全年每股收益為 3.98 美元，淨利潤為 1.819 億美元，而 2021 年淨利潤為 1.861 億美元，每股收益為 4.20 美元。全年稅率為 15.9%。我們預計 2023 年的稅率將維持在中高點。

Turning to the balance sheet. Our cash and cash equivalents were $358.8 million at the end of the fourth quarter compared with $453.5 million last quarter. Cash from operations was an outflow of $38.8 million compared with an inflow of $71.7 million in the prior quarter due to lower shipment volume and timing of cash collections and payments. For the full year, cash flow from operations was $47.2 million compared to $211.6 million in the prior year.

轉向資產負債表。截至第四季末，我們的現金和現金等價物為 3.588 億美元，而上季末為 4.535 億美元。由於出貨量和現金收付時間減少，營運現金流出 3,880 萬美元，而上一季流入 7,170 萬美元。全年營運現金流為 4,720 萬美元，上一年為 2.116 億美元。

In the fourth quarter, we made an additional debt payment of $13.4 million, bringing our total debt payments for the year to $40 million. In the third quarter, the Board initiated a 3-year $150 million share repurchase program. In the fourth quarter, we repurchased 343,000 shares at a total cost of $12.1 million. Subsequent to year-end, we repurchased an additional 389,000 shares at an aggregate cost of $12.9 million, leaving $125 million remaining on our 3-year purchase program.

第四季度，我們額外支付了 1,340 萬美元的債務，使全年債務支付總額達到 4,000 萬美元。第三季度，董事會啟動了為期三年、價值 1.5 億美元的股票回購計畫。第四季度，我們回購了 343,000 股股票，總成本為 1,210 萬美元。年底後，我們額外回購了 389,000 股股票，總成本為 1,290 萬美元，三年期購買計畫還剩 1.25 億美元。

Given the current global macroeconomic and geopolitical uncertainty, we are keeping our guidance range wide and including a negative adjustment of $30 million related to a cybersecurity event recently announced by one of our suppliers. We expect this revenue to flow into the second quarter. We project total revenue for the first quarter of 2023 between $395 million and $445 million. We expect EPS in the range of $0.12 to $0.32.

鑑於當前全球宏觀經濟和地緣政治的不確定性，我們將維持較寬的指導範圍，其中包括與我們的一家供應商最近宣布的網路安全事件相關的 3000 萬美元的負面調整。我們預計該收入將流入第二季。我們預計 2023 年第一季的總營收將在 3.95 億至 4.45 億美元之間。我們預計每股收益在 0.12 美元至 0.32 美元之間。

And with that, I'd like to turn the call over to the operator for questions.

因此，我想將電話轉給接線員詢問問題。

(Operator Instructions)

（操作員說明）

And the first question will be from Quinn Bolton from Needham & Company.

第一個問題將由來自 Needham & Company 的 Quinn Bolton 提出。

Congratulations on a record 2022. I know the environment changed, but great to see those results. I guess, Jim, I wanted to ask your thoughts. In your script, you talked about the majority of the step-down in orders you think has taken place in Q4 of '22 and this quarter here in '23 and you talked about seeing or expecting orders to sort of stabilize.

恭喜 2022 年創紀錄。我想，吉姆，我想問你的想法。在您的腳本中，您談到了您認為的大部分訂單下降發生在 22 年第四季度和 23 年本季度，並且您談到看到或預計訂單會趨於穩定。

And so as you look out to 2023, how do you see the revenue profile for the year? I know you've got that $30 million that comes out of Q1 and likely gets captured in Q2. But should we be thinking about -- it feels like the first quarter level without that $30 million impact would be close to $450 million at the midpoint. Is that kind of the revenue level you see where things are stabilizing? Or do you see a different level?

展望 2023 年，您如何看待這一年的收入狀況？我知道第一季的 3000 萬美元可能會在第二季被收回。但我們是否應該考慮一下——如果沒有 3000 萬美元的影響，第一季的水平中點將接近 4.5 億美元。您看到的收入水準是否趨於穩定？或者你看到了不同的水平？

Quinn, no, I think you have it exactly right. Yes, that's true. It would have been around $450 million it would have been what we would have been projecting. And yes, I think we see it stabilizing at that level or maybe slightly higher and being bouncing around roughly those numbers throughout the year. We're obviously hopeful that the second half could be more positive as some of our customers and peers have commented that they're looking to see if there's something improves in the second half. But our assumption at this time is, yes, bouncing around the number that you put out there and some recovery in the second quarter, assuming that the supplier that's impacting us and many people right now is able to recover as well. So yes, that's exactly the right way to think about it.

奎因，不，我認為你說得完全正確。是的，這是真的。我們預計的金額約為 4.5 億美元。是的，我認為我們看到它穩定在這個水平或可能略高，並且全年大約在這些數字附近波動。我們顯然希望下半年能夠更加積極，因為我們的一些客戶和同行評論說，他們希望看看下半年是否有一些改進。但我們目前的假設是，是的，圍繞您公佈的數字進行反彈，並在第二季度出現一些復甦，假設現在影響我們和許多人的供應商也能夠恢復。所以是的，這正是正確的思考方式。

Perfect. You mentioned, Jim, the number of actions you're taking to streamline operations now, including sort of reduced overtime, getting rid of some of the variable employee costs. But where do you see OpEx sort of shaking out in the near term as you take those actions? And then you also mentioned facility consolidation. Is this downturn giving you the opportunity to bring more business into Malaysia from some of the other sites around the world?

完美的。吉姆，您提到您現在為簡化營運而採取的行動數量，包括減少加班時間，消除一些可變的員工成本。但是，當您採取這些行動時，您認為短期內營運支出會在哪些方面出現波動？然後您也提到了設施整合。這次經濟低迷是否讓您有機會將更多業務從世界各地的其他網站引入馬來西亞？

Yes, I think there are several parts to that, Quinn. Yes, we've been through multiple of these cycles. And so taking down the variable cost, especially in the COGS area, we're pretty experienced at that. And I think you'll see us sustain higher gross margins through this cycle than we have in the past also with our broader company portfolio that we've assembled since the last downturn.

是的，我認為這有幾個部分，奎因。是的，我們已經經歷過多個這樣的週期。因此，在降低變動成本方面，尤其是在銷貨成本領域，我們在這方面非常有經驗。我認為你會看到我們在這個週期中保持比過去更高的毛利率，而且我們自上次經濟低迷以來組建了更廣泛的公司投資組合。

So on the OpEx side, there are a few headwinds, I'll let Sheri talk about that in a second. Those take a while to really move down. And some of the consolidation actions, of course, those are consolidating where you have 2 sites relatively to close proximity or business has moved from one region to another and a site is kind of unbalanced as a result of the last surge of the industry where we rebalance that and consolidate those sites. Those actions take roughly a year to put in place before you start seeing the benefit of those. We won't see a lot of that impact of those longer-term cost reductions until next year. But those will obviously help us become leaner and hit better numbers in the next upturn, just like we did in the last one. But Sheri, maybe you can talk about some of the other specifics?

因此，在營運支出方面，存在一些不利因素，我將讓 Sheri 稍後討論這一點。這些需要一段時間才能真正下降。當然，一些整合行動正在整合，即您擁有兩個相對接近的站點，或者業務已從一個地區轉移到另一個地區，並且由於我們所在行業的最後一次激增，一個站點有點不平衡。這些網站。這些行動大約需要一年的時間才能實施，然後您才能開始看到它們的好處。直到明年，我們才會看到這些長期成本削減的巨大影響。但這些顯然將幫助我們變得更精簡，並在下一次經濟好轉時達到更好的數字，就像我們在上一次經濟復甦中所做的那樣。但是 Sheri，也許你可以談談其他一些細節？

Yes. So we came in at 9.5% for Q4. We will see that go up in Q1 and partially in next year as we move through it. But we do have quite a few reduction initiatives in place, especially surrounding controllable spending within OpEx whether that be travel or other discretionary spending as well as looking at our headcount and obviously, looking at footprint does play into that as well. So we are continuing to look at that quite heavily and see that cost hopefully come down as we move through the year as well.

是的。因此，我們第四季的成長率為 9.5%。隨著我們的進展，我們將看到第一季和明年的部分成長。但我們確實採取了相當多的削減舉措，特別是圍繞營運支出內的可控支出，無論是差旅還是其他可自由支配的支出，以及考慮我們的員工人數，顯然，考慮足跡也確實發揮了作用。因此，我們將繼續密切關注這個問題，並希望隨著今年的進展，成本也會下降。

Sure. Should we be thinking maybe OpEx somewhere between, say, 10% and 11% of sales? Or do you think it could go even higher just given the magnitude of the quarterly change in revenue in March?

當然。我們是否應該考慮營運支出可能介於銷售額的 10% 到 11% 之間？或者考慮到三月收入季度變化的幅度，您是否認為它可能會更高？

Yes. We've seen it I think in the past when we've gone through downturns anywhere between 10% and 12%. So I would assume that it would be around that -- within that range depending upon the revenue level. So obviously, Q1 has come down some as a result of this cyberattack along with just the industry coming down. So I anticipate that it's going to be probably a little higher as a percentage of revenue for Q1. But as we move through the year, I think it will come up to a more normalized range.

是的。我認為過去當我們經歷 10% 到 12% 之間的衰退時，我們已經看到過這種情況。所以我認為它會圍繞這個範圍 - 在這個範圍內，這取決於收入水平。顯然，由於這次網路攻擊，第一季的業績出現了一些下滑，整個產業也隨之下滑。因此，我預計它佔第一季收入的百分比可能會稍高一些。但隨著今年的進展，我認為它會達到一個更正常化的範圍。

The next question is from Krish Sankar from Cowen.

下一個問題來自 Cowen 的 Krish Sankar。

This is Steven calling behalf of Krish. I guess, Jim or Sheri, just a quick question first on Q4 and some of the impact from, I guess, production limitations in China that you guys previously highlighted. I guess relative to that $60 million delta between what you reported for Q4 and your original guidance midpoint, how much of an impact that production restrictions have? And how is that situation here in Q1 so far?

這是史蒂文代表克里什的電話。我想，Jim 或 Sheri，首先是關於第四季度的一個簡短問題，以及你們之前強調的中國生產限制的一些影響。我想相對於您報告的第四季度數據與最初指導中點之間的 6000 萬美元增量，生產限制的影響有多大？到目前為止，第一季的情況如何？

Yes. In Q4, the major impact was actually the industry downturn and a lot of canceled and delayed orders. The COVID impact turned out to be much smaller than we first feared. I think it was roughly $8 million or $5 million. And that factory is up and operating normally right now. What was the second part of your question on that?

是的。第四季度，主要影響實際上是行業低迷以及大量取消和延遲的訂單。事實證明，新冠疫情的影響比我們最初擔心的要小得多。我認為大約是 800 萬或 500 萬美元。該工廠目前已建成並正常運作。你的問題的第二部分是什麼？

Yes. Is there any -- I guess your answer is, I guess, there's no follow-on impact here in Q1. Is that correct?

是的。我想你的答案是，我想，第一季沒有後續影響。那是對的嗎？

No. The only unexpected impact in Q1 was one of the key suppliers for the industry and the issue that they're having with the cyberattack. Those components are used in multiple areas of the tools by many of us. .

不會。我們許多人在工具的多個領域都使用這些組件。 。

All right. Got it. My follow-up question is regarding sort of your, I guess, your memory exposure. I think in your slide deck, you show your exposure on a revenue basis from your largest customer is holding steady around 40% in Q4 relative to Q3.

好的。知道了。我的後續問題是關於你的，我想，你的記憶暴露。我認為在您的幻燈片中，您顯示了您最大客戶的收入基礎上的曝光率在第四季度相對於第三季度穩定在 40% 左右。

Just kind of wondering, just given some of the talk in the industry over the past couple of weeks about memory makers or suppliers potentially not cutting CapEx significantly this year as originally expected, I guess, how do you see that, if any, at this time flowing through to your outlook for the second half of the year?

只是有點想知道，考慮到過去幾週業內有關內存製造商或供應商可能不會像最初預期的那樣大幅削減資本支出的一些討論，我想，您對此有何看法（如果有的話）時間流向你對下半年的展望嗎？

Yes. It's hard to predict what impacts. I think obviously, we're seeing Samsung looking to spend a little bit through the cycle more than some of the other memory or foundry makers as well. So it's really hard to say if that's going to -- what that's going to look like or if there are any further cuts from the memory makers. So I think that's why we're taking the view of not expecting a recovery in the second half of the year, but obviously, a pleasant -- positive surprise is possible.

是的。很難預測會產生什麼影響。我認為顯然，我們看到三星希望在整個週期中比其他一些記憶體或代工製造商花費更多的錢。因此，很難說這是否會是什麼樣子，或者記憶體製造商會進一步削減開支。因此，我認為這就是為什麼我們認為下半年不會出現復甦，但顯然，令人愉快的積極驚喜是可能的。

And the next question is from Christian Schwab from Craig-Hallum Capital Group.

下一個問題來自 Craig-Hallum Capital Group 的 Christian Schwab。

Great. Jim, after you take the variable cost of COGS out, I'm just wondering, do we -- what your utilization rate of labor is? And then more importantly as we look to the eventual recovery at a $450 million run rate business quarterly, plus or minus, what is your utilization rate then on tools and facilities?

偉大的。吉姆，在你去掉銷貨成本的變動成本後，我只是想知道，你的勞動利用率是多少？更重要的是，當我們期待最終以每季 4.5 億美元的運行率恢復業務時，無論是正負，您的工具和設施的利用率是多少？

Yes. The utilization on labor with some time lag, we tend to keep up not at 100% but pretty close so even through the down cycles. When we're not able to achieve it through normal means of overtime, we carry a large temporary workforce, sometimes up to 35%, 40% during the upturn. So when we're not able to meet those utilizations and we utilize other things like shutdowns, which we're doing in this quarter and other methods as well. So we keep the labor utilization very high. So we expect to be able to keep the gross margins up.

是的。勞動力利用率雖然有一定的滯後性，但往往不會保持在 100%，但相當接近，因此即使在下行週期中也是如此。當我們無法透過正常的加班方式實現這一目標時，我們會僱用大量臨時勞動力，有時在經濟復甦期間高達 35%、40%。因此，當我們無法滿足這些利用率時，我們會利用其他方法，例如關閉，我們在本季度正在這樣做以及其他方法。所以我們的勞動利用率維持在很高的水準。因此，我們預計能夠保持毛利率上升。

Obviously, the footprint and the tools and some costs and COGS is harder to cover. I couldn't give you an exact number on the utilization, but I think if you assume we were 100% utilized at the 630 number, do the math on the number, which is 65% of that, I think you'd be somewhere roughly around there. We were not 100% utilized in the Malaysian footprint, but we were 100% utilized in the workforce there. So maybe put it at around 60% or so.

顯然，佔地面積、工具以及一些成本和銷貨成本更難覆蓋。我無法給你一個關於利用率的準確數字，但我想如果你假設我們在630 這個數字上的利用率是100%，那麼對這個數字進行數學計算，即65%，我認為你會在某個地方大約在那裡。我們在馬來西亞的足跡並未 100% 得到利用，但我們在那裡的勞動力得到 100% 的利用。所以也許把它定在 60% 左右。

Okay. No, that's great. And then can you just remind us on the product mix, the end markets that you serve, can you -- between memory mature, advanced logic where the vast majority of your shipments to your 2 leading customers end up being utilized by end customers' fabs. Does that make sense?

好的。不，那太好了。然後，您能否提醒我們有關產品組合、您所服務的終端市場，在成熟的記憶體和先進的邏輯之間，您向2 個主要客戶發貨的絕大多數最終都被最終客戶的晶圓廠使用。那有意義嗎？

Yes. It's actually hard for us to track on a running basis is when we ship a tool to our customers, again, that same tool can go or the same module can go to any application. So it's not something I can really forecast. But I think you'd expect it to follow exactly where the capital is being spent right now. So memory is clearly going to be down as more of the tools are going to foundry and Samsung as well. So I think you'll see a shift that way. But I couldn't give you a new pie chart on memory versus logic foundry at this point. But definitely, it's going to be moving towards less memory as you would expect.

是的。實際上，我們很難在運行的基礎上進行跟踪，即當我們向客戶提供工具時，同樣的工具可以運行，或者相同的模組可以運行到任何應用程式。所以這不是我能真正預測的事情。但我認為你會期望它能準確地遵循目前資本的支出方向。因此，隨著越來越多的工具轉向代工廠和三星，記憶體顯然會下降。所以我認為你會看到這樣的轉變。但目前我無法為您提供有關內存與邏輯鑄造廠的新餅圖。但毫無疑問，正如您所期望的那樣，它會朝著更少的記憶體方向發展。

Great. And then should we assume that gross margins improve sequentially in Q2 and then they kind of flat line at those type of levels given labor will be fixed quickly. And then is that the way we should be thinking about that?

偉大的。然後我們是否應該假設第二季度的毛利率連續改善，然後在考慮到勞動力將很快得到修復的情況下，它們在這種水平上呈持平。那我們應該這樣思考嗎？

Yes. I would assume that it would be able to level out at the Q2 level. And then hopefully, depending upon what happens in the second half, we would see it stay around that range as we move through the rest of the year.

是的。我認為它能夠在第二季度水平趨於平穩。然後希望，根據下半年發生的情況，我們會看到它在今年剩餘時間內保持在這個範圍內。

Great. And then my last question is remind us, if you could, what lead times were prepandemic or [pre] strong 3 years however you want to do it. What they were during the strong 3 years and what you expect them to be on the backside of this?

偉大的。然後我的最後一個問題是提醒我們，如果可以的話，無論您想做什麼，大流行前或強3年的交貨時間是多少。他們在這三年的強勁表現中表現如何？

Are you talking about tool lead times from our customers to theirs?

您是在談論從我們的客戶到他們的工具交貨時間嗎？

Yes, lead times to customers.

是的，交付給客戶的時間。

From us to our customers?

從我們到我們的客戶？

Yes.

是的。

Okay. Yes. depending on what part of our portfolio you're looking at, the fluid solutions, the former Ham-Let, those lead times are relatively -- have been relatively short, and a lot of that is vendor managed inventory. If you're talking about some of the other, like, let's call it, integrated module piece of our business that was stretching out to 2 to 3 months in many cases and sometimes even longer during the upturn. And obviously, they're a lot faster now or, in some cases, immediately ready for shipment should the customers require them.

好的。是的。取決於您所關注的是我們產品組合的哪一部分，流體解決方案，以前的 Ham-Let，這些交貨時間相對較短，其中許多是供應商管理的庫存。如果你談論的是其他一些，例如我們業務的整合模組部分，在許多情況下會延長到 2 到 3 個月，有時在經濟好轉期間甚至會更長。顯然，它們現在的速度要快得多，或者在某些情況下，如果客戶需要，它們可以立即準備好發貨。

Fair. Okay. So as far as since the lead times are relatively short, kind of what you implied, your visibility of when how many [other] quarters of digestion at these type of levels, last cycle, I think you suggested it was 5 quarters. Really, it will be determined by the dialogue and the direction that we hear from AMAT and Lam. Is that fair?

公平的。好的。因此，由於交貨時間相對較短，就像您所暗示的那樣，您對上一個週期在這些類型的水平上消化多少[其他]季度的可見性，我認為您建議是 5 個季度。實際上，這將取決於我們從 AMAT 和 Lam 那裡聽到的對話和方向。這樣公平嗎？

Yes. For years leading up to this last upcycle where the demand is outstripping the supply for everyone in the industry, we were -- that's when we were seeing a very unusual 4-quarter bookings that was pretty easy to forecast. We're more back in the normal state where we can see one quarter out relatively clearly except for certain force majeure events like we've been experiencing like COVID and cyber. So I think we're back to kind of seeing one quarter out and with a little bit even more blurriness because, frankly, we have to keep track of. Typically, there's not much inventory between us and our customers.

是的。在最後一個升級週期之前的幾年裡，行業中每個人的需求都超過了供應，就在那時，我們看到了非常不尋常的第四季度預訂量，這是很容易預測的。我們已經回到了正常狀態，我們可以相對清楚地看到四分之一的情況，除了某些不可抗力事件，例如我們經歷過的新冠病毒和網路事件。所以我認為我們又回到了四分之一的情況，而且更加模糊，因為坦白說，我們必須追蹤。通常，我們和客戶之間沒有太多庫存。

But as the orders fall off pretty sharply at the end of 2022 and further into the first quarter, some inventory builds up between us and our customers, which is not a typical state. So we also have to try to figure out what -- even when we look at end demand and what's going on there, we have to also try to piece together what will actually (inaudible) order book for us.

但隨著 2022 年底和第一季的訂單大幅下降，我們和客戶之間累積了一些庫存，這不是典型的狀態。因此，我們還必須嘗試弄清楚，即使我們考慮最終需求以及在那裡發生的情況，我們也必須嘗試拼湊出實際（聽不清楚）的訂單。

Yes. And then just a follow-up on that. It will be my last question. Do you have an idea of how much aggregate dollar amount of inventory is sitting between you and the customer that historically is not there?

是的。然後是後續行動。這將是我的最後一個問題。您是否知道您和客戶之間有多少歷史上不存在的庫存？

No. We don't -- again, many of the things that we make we don't own 100% share of that modules. Sometimes we're 50% or 60% or 70% share. So we don't know what they're holding of the same type of thing that we make that maybe a competitor made as well. So all we know is that the warehouses of many of our customers are very full to the point where we even -- in the case here or there, we may have to even hold on to something for them.

不，我們不——再說一遍，我們製造的許多東西我們並不擁有該模組 100% 的份額。有時我們擁有 50%、60% 或 70% 的份額。因此，我們不知道他們持有我們生產的同類產品，而這些產品可能也是競爭對手生產的。所以我們所知道的是，我們許多客戶的倉庫都非常滿，以至於我們甚至——在某些情況下，我們甚至可能不得不為他們保留一些東西。

So it's pretty big right now, and that's why you might see when they report less (inaudible) drops in revenue, there's a couple of factors there. One is they're working through their deferred revenue for things that they've already shipped, and two is because they do have a lot in their inventory right now. But I think that will burn off at some point. But I think we're pretty confident. When we put all those different pieces together, the headwinds and the tailwinds, the numbers that I think Quinn was talking about make a lot of sense.

所以現在規模相當大，這就是為什麼當他們報告收入下降較少（聽不清楚）時，你可能會看到，有幾個因素。一是他們正在處理已經發貨的東西的遞延收入，二是因為他們現在確實有很多庫存。但我認為這會在某個時候消失。但我認為我們非常有信心。當我們將所有這些不同的部分（逆風和順風）放在一起時，我認為奎因談論的數字很有意義。

and the next question is a follow-up question from Quinn Bolton from Needham & Company.

下一個問題是來自 Needham & Company 的 Quinn Bolton 的後續問題。

Sheri, just a quick follow-up for you. If we're thinking about revenue down roughly 25% or about $600 million year-on-year, and I'm getting to that $1.8 billion just by annualized -- or yes, annualizing the $450 million your quarterly run rate we've been sort of speaking about. Can you give us some sense, what do you see the incremental margin fall through on that lower revenue is? I mean should we be modeling like a 25% incremental margin? Or is there a better figure to be thinking about just as we think through the gross margin trend for the year?

Sheri，我只是為您做一個快速跟進。如果我們考慮收​​入同比下降約 25% 或約 6 億美元，而我僅通過年化即可獲得 18 億美元 - 或者是的，將我們的季度運行率年化 4.5 億美元有點像在談論。您能否告訴我們一些訊息，您認為收入下降導致增量利潤率下降的情況如何？我的意思是我們應該建模為 25% 的增量利潤嗎？或者，當我們思考今年的毛利率趨勢時，是否有更好的數字值得考慮？

Yes. I think -- I mean, the gross margin I don't see major decline in gross margin. I mean there's going to be a point or 2, but it's not as much as what we've seen in previous downturns. But I think -- first off, I think the mix might be a little bit different, but also, we've done a very good job of making sure that we can shift certain assemblies to lower-cost regions as well as bringing our direct labor down very quickly. So that one is not as much of an impact. I think obviously making adjustments to OpEx is harder because there's more fixed cost there, but we see that as, like I mentioned before, leveling out to some degree. And obviously, we want to make sure that we're ready for the next upturn is the key thing for all those categories.

是的。我認為——我的意思是，我認為毛利率不會大幅下降。我的意思是，會有一兩個點，但沒有我們在之前的經濟低迷時期看到的那麼多。但我認為，首先，我認為這種組合可能有點不同，而且，我們做得非常好，確保我們可以將某些組件轉移到成本較低的地區，並將我們的直接勞動力下降得很快。因此，這一影響並不那麼大。我認為顯然對營運支出進行調整更加困難，因為那裡有更多的固定成本，但我們認為，就像我之前提到的那樣，在某種程度上趨於平穩。顯然，我們希望確保為下一次經濟好轉做好準備，這是所有這些類別的關鍵。

Got it. So a trough gross margin in the 17.5% range feels like a decent place to be?

知道了。那麼 17.5% 的毛利率低谷感覺像是一個不錯的地方嗎？

Yes, I think that's probably a low point probably.

是的，我認為這可能是個低點。

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Scholhamer for any closing remarks.

女士們先生們，我們的問答環節到此結束。我想將會議轉回由 Scholhamer 先生發表閉幕詞。

Thank you, everyone, for joining us today, and we look forward to speaking with you at our next earnings conference next quarter. Thank you.

感謝大家今天加入我們，我們期待在下個季度的下一次收益會議上與您交談。謝謝。

And thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

謝謝你。會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。