Ichor (ICHR) Q4 2025 Earnings Call Transcript

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Date

Feb. 9, 2026 at 4:30 p.m. ET

Call participants

• Chief Executive Officer — Phil Barros
• Chief Financial Officer — Greg Swyt

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Takeaways

• Total revenue -- $223.6 million for the quarter, modestly down sequentially from Q3, but above the midpoint of guidance.
• Annual revenue -- $948 million, representing a 12% year-over-year increase, with primary strength in etch and deposition, offset by weaker EUV and trailing edge demand.
• Gross margin -- 11.7% for the quarter, exceeding the midpoint of guidance by 70 basis points due to improved execution, despite lower volumes and unfavorable product mix.
• Operating expenses -- $23.4 million in the quarter, slightly below forecast.
• Operating income -- $2.7 million for the quarter.
• Net interest expense -- $1.7 million, in line with internal expectations.
• Non-GAAP net income tax expense -- $400,000, slightly lower than anticipated.
• Non-GAAP EPS -- $0.01 per share, reaching the upper end of expectations.
• Cash and equivalents -- $98.3 million at quarter-end, up $6 million sequentially.
• Free cash flow -- $6 million in the quarter, with positive working capital movement contributing $9 million, and $3 million in capital expenditures.
• Days sales outstanding (DSOs) -- 29 days, slightly improved from Q3.
• Inventory turns -- 3.3 times, unchanged from prior quarter.
• Total debt outstanding -- $123 million at year-end, down $6 million from $129 million the prior year.
• Net debt coverage ratio -- 1.7 times as of the reporting period.
• Q1 revenue guidance -- $240 million to $260 million, with the midpoint representing double-digit sequential growth from the current quarter’s trough.
• Q1 gross margin guidance -- 12% to 13%, with expectations of improvement as the year progresses.
• Q1 operating expense guidance -- Approximately $24 million, reflecting seasonality in payroll and audit fees.
• Q1 net interest expense guidance -- Expected at $1.7 million; full-year estimate of approximately $7 million.
• Q1 EPS guidance -- $0.08 to $0.16, based on 35.1 million diluted shares outstanding.
• 2026 OpEx forecast -- Annual operating expense expected to increase about 5% compared to the previous year.
• Effective tax rate guidance -- 20%-25% due to changes in geographic profit mix and the expiration of Singapore pioneer status.
• Facility expansion -- Malaysia manufacturing center began operations last month, and Mexico machining expansion is expected to complete later this year, positioning both as high-volume sites for Ichor Holdings (NASDAQ:ICHR) products.
• Commercial space revenue -- The company’s fifth largest customer is now outside the semiconductor industry, and management aims to grow this customer to 10% of revenues in the medium term (currently sub-5%).
• Gross profit dollar outlook -- Management expects gross profit dollars to grow about twice as fast as revenue starting in Q2, anticipating material margin expansion by midyear.
• Content penetration objective -- By year-end, Ichor-branded products are targeted to account for up to 75% of the content within supplied systems, supporting a shift from integration to proprietary products.
• Inventory transition -- The company is reallocating machining assets and prepositioning inventory to meet rising customer demand; temporary capacity reductions during transition are not expected to limit customer support.
• Product mix outlook -- First-half growth is expected to be driven by gas panels, with greater component supply and mix improvement driving gross margin gains in the second half.
• Capital expenditure outlook -- CapEx for 2025 was approximately $36 million (~4% of revenue), with 2026 expected to moderate to about 3% of revenue as the Malaysia buildout concludes.
• Restructuring charges -- $10 million was taken in Q4 as part of U.S. facility realignment, with the majority of restructuring actions now complete, and only modest further activities anticipated.
• Demand visibility -- Management reports “very solid” visibility six months forward, with second-half demand viewed as notably robust versus typical years.
• Market share focus -- Share gains targeted in commercial space, machining, components, and gas panels, as platform share is further balanced during the ramp cycle.

Summary

Ichor Holdings (NASDAQ:ICHR) reported sequentially lower quarterly revenues but emphasized a rapid demand recovery and a projected return to consecutive quarterly growth. Management reinforced the strategic importance of global manufacturing expansion in Malaysia and Mexico to support capacity requirements, and anticipated a shift toward proprietary content, targeting 75% content penetration in customer systems by year-end. Higher-margin component mix and operational leverage from relocated assets are expected to drive gross profit dollar growth at roughly double the revenue growth rate beginning in Q2, with incremental improvements in gross margin planned throughout 2026. A significant commercial space customer is now among the top five revenue contributors, with leadership intent on scaling that customer’s contribution substantially. A large portion of capital investments for 2025 centered on the Malaysian facility, while 2026 capital expenditures are forecasted to normalize as equipment deployment stabilizes.

• CEO Barros said, "Every week, we get an updated forecast, and every week, we're seeing strengthening demand," highlighting ongoing confidence in the demand ramp.
• Management clarified that short-term manufacturing transitions, including temporary capacity reductions, are already included in current margin and revenue guidance.
• Gross margin improvement is projected to be driven by volume leverage in the first half, and increased contribution from the components business and non-semiconductor segment in the second half.
• Company executives stated that inventory levels at top customers are aligning with replenishment needs, supporting management’s view of sustainable order strength.
• The sunsetting of Singapore pioneer status is expected to materially impact the effective tax rate, increasing it to the 20%-25% range.

Industry glossary

• Gate-all-around (GAA) architecture: A semiconductor transistor design that allows for greater control over current flow and improved device scaling, critical for advanced chip nodes.
• Etch and deposition: Key capital equipment processes used in semiconductor manufacturing for material removal (etch) and layered material addition (deposition) on silicon wafers.
• EUV: Extreme ultraviolet lithography; an advanced lithography technology used for producing finer semiconductor features.
• WFE: Wafer fabrication equipment; total capital equipment spend for semiconductor manufacturing.
• Gas panel: A subsystem in semiconductor capital equipment responsible for delivering, controlling, and mixing process gases during wafer fabrication.
• Angstrom era: Industry term for the next generation of semiconductor technology with features measured at the angstrom scale (one-tenth of a nanometer).
• DSOs: Days sales outstanding; measures the average number of days it takes to collect payment after a sale.

Full Conference Call Transcript

Phil Barros: Thank you, Claire, and welcome, everyone, to our Q4 earnings call. As we enter 2026, there's a lot to be excited about. Ichor Holdings, Ltd. is entering its next phase of growth with increased momentum and a clear strategy. Since we last spoke in November and again during our January webcast, customer demand in our primary served markets has continued to strengthen. Our current visibility is that we are now operating in a sustained demand ramp, driven by fundamental technology transitions and strategic capacity additions across our core markets. We're seeing increased adoption of gate-all-around architectures, accelerating growth in high bandwidth memory, and rising capital intensity in advanced logic and advanced packaging.

These transitions increase etch and deposition intensity, and this is the segment of the market where Ichor Holdings, Ltd. is most highly levered. Our objective is to win share through this cycle, and being highly responsive to our customer demand is a core aspect of meeting that objective. Ensuring adequate supply and supporting our customers' strong ramp has been my number one focus since taking over as CEO. As a result, we are ramping labor headcount in our integration business and prepositioning inventory to enable us to address our customers' accelerating demand with strong, predictable execution. In addition, our recent design wins in commercial space are beginning to translate into meaningful revenue.

We expect these design wins to convert into revenue growth that could outpace semiconductor growth this year. Based on current visibility, we see every quarter in 2026 as a growth quarter for Ichor Holdings, Ltd. Turning to our results, as provided on January release, Q4 came in largely as expected. Revenue was $224 million, above the midpoint of outlook. We finished fiscal 2025 with $948 million in revenue, up 12% year over year. This solid year-over-year growth was driven primarily by strength in etch and deposition and was partially offset by the softening build rates of EUV as well as decreased demand in certain trailing edge markets.

Our commercial space business grew significantly in 2025, while still a small portion of our overall revenues, it has grown to the point where our fifth largest customer is now outside the semiconductor industry. Looking forward, expect growth in nearly every application with nearly every customer as we progress through 2026. Our outlook has further strengthened since entering the year, and our guidance today is for first-quarter revenues in the range of $240 million to $260 million. At the midpoint, this equates to double-digit growth from our Q4 trough. Based on current visibility, we expect sequential growth every quarter this year, leading to what we expect to be a strong growth year for Ichor Holdings, Ltd.

During our January webcast, I introduced our key strategic initiatives for 2026, and I will now review the progress being made. First is our global footprint realignment. Over the past few quarters, our investments have been focused on expanding our Mexico machining capacity and building out our new manufacturing center in Malaysia, which is our largest facility in Ichor Holdings, Ltd.'s history. The Mexico expansion will be complete later this year, and Malaysia just began operation last month. These locations will be our high-volume manufacturing centers for Ichor-branded products and will give us the capacity needed to meet the demand ramp we are now seeing.

To enable this transition, we are in the process of relocating a portion of our machining assets to these critical sites, which will temporarily reduce our capacity for these components. While these transitions are important, they will not gate our ability to support our customer demand. The realignment of our global footprint touches all three of our strategic focus areas for 2026 and is aimed at strengthening our supply resiliency, ensuring business continuity, and bringing us closer to our customers. This realignment is also a key driver for us achieving our cost targets for Ichor-branded products. It will also structurally eliminate the primary sources of margin and rent challenges we faced in 2025.

Beginning Q2, we expect gross profit dollars will grow around twice the rate of revenues as we move through the year. We expect our global footprint realignment to begin driving meaningful margin improvement by midyear. This translates into significant earning leverage expected in the quarters ahead. Before closing, I want to touch on our product strategy in creating a differentiated Ichor Holdings, Ltd. 2026 is a milestone year for Ichor Holdings, Ltd. By year-end, we expect to have products in place to enable us to reach our long-stated objective of having Ichor-branded products capable of supporting up to 75% of the content within the systems we make.

Reaching this capability reflects our continued transition from an integration company to a product company and ultimately a key technology enabler for our industry. This level of vertical integration gives us the tools and technologies required to support our customers as they move into the Angstrom era, where they are adding and removing material one molecule at a time. As our customers enter this era, our goal is for Ichor Holdings, Ltd. to outperform by delivering technology, products, and execution required at this level of precision. With that, I will now hand over to Greg.

Greg Swyt: Thanks, Phil. To begin, I would like to emphasize that the P&L metrics discussed today are non-GAAP measures. These measures exclude the impact of share-based compensation, amortization of acquired intangible assets, nonrecurring charges, and discrete tax items and adjustments. There is a useful financial supplement available on the investor section of our website that summarizes our GAAP and non-GAAP financial results as well as a summary of the balance sheet and cash flow information for the last several quarters. Fourth-quarter revenues were $223.6 million, above the midpoint of guidance, but modestly down from Q3. We believe Q4 represents the trough period during this cycle, with the recent softening in certain end markets and applications already showing signs of recovery.

Gross margin for the quarter of 11.7% was 70 basis points above the midpoint of guidance, reflecting modestly better execution against the lower revenue volumes and unfavorable product mix during the quarter. Operating expenses for Q4 were slightly lower than forecast, at $23.4 million, and operating income was $2.7 million. As expected, our net interest expense for the quarter was $1.7 million, while our non-GAAP net income tax expense was slightly lower than forecast at $400,000. Our resulting earnings for the quarter were at the upper end of our expectations at $0.01 per share. Turning to the balance sheet, our cash and equivalents totaled $98.3 million at the end of the quarter, a $6 million increase from Q3.

Working capital improvements generated $9 million of positive cash flow, and after $3 million of capital expenditures, free cash flow for the quarter was $6 million. DSOs for the quarter were slightly better than Q3 at 29 days, and inventory turns remained constant at 3.3. Our year-end balance of total debt outstanding was $123 million, down from $129 million a year ago. Our net debt coverage ratio currently stands at 1.7. Now I will discuss our guidance for 2026. As Phil mentioned, our revenue outlook has strengthened year to date. With anticipated revenues in the range of $240 million to $260 million, we expect gross margins to be in the range of 12% to 13%.

Q1 operating expenses are projected to be approximately $24 million, reflecting the seasonal impact of payroll adjustments, audit fees, and other variable compensation costs. We expect the strong revenue ramp ahead for 2026 will be supported by a relatively consistent OpEx run rate of $24 million, which for the full year equates to an increase of about 5% compared to fiscal 2025. Net interest expense for Q1 is expected to be approximately $1.7 million, and we expect this level to be relatively consistent throughout 2026. For modeling purposes, net interest expense for 2026 should be approximately $7 million. We expect to record a Q1 tax expense of approximately $1.1 million.

As you update your models for 2026, our assumed effective tax rate is currently expected to be in the range of 20% to 25%. The increase in our anticipated non-GAAP effective tax rate is attributed to the geographic distribution of our profits this year and the sunsetting of our Singapore pioneer status in early 2026. Finally, our EPS range for Q1 of $0.08 to $0.16 reflects our expectation for 35.1 million diluted shares outstanding. Operator, we are now ready for questions. Please open the line.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. To remove yourself from the question queue, press the pound key. In the interest of time, we ask that participants limit themselves to one question and one follow-up. One moment while we poll for questions. Our first question is from Brian Chin with Stifel.

Brian Chin: Hi, great. Thanks for letting us ask a couple of questions and good afternoon. Maybe, Phil, the first question relative to the update you gave last month on Q1 revenue, your new midpoint is about $10 million higher. Can you firstly discuss sort of what has improved, I guess, since then? And also, when you think about the full year, if WFE forecasts for the industry are coalescing around 15% to 20% growth, let's say, how do you expect to grow relative to that benchmark?

Phil Barros: Okay. Let me answer your first question first. In terms of what we're seeing in the first quarter versus what we saw first week, let me just put it this way. Every week, we get an updated forecast, and every week, we're seeing strengthening demand. So we are becoming more and more bullish on the market as we move through the year. And I would say that we're seeing a lot of movement, so that's why we're not gonna, you know, guide for the whole entire year. But I would say that your range of around 15% to 20% is kind of where we're coalescing as well.

We think we're well set up to be in that range, if not outperform.

Brian Chin: Okay. That's really helpful then. In terms of gross margins, you also published some slides last month that are very helpful, sort of crosswalk to potential 15% gross margin, sometimes second half at a $250 million plus revenue level. You're kind of there sooner, right? Point about the cycle strengthening. In terms of capitalizing on some of those attributes that get you from 11% gross margins to 15%, what's sort of embedded in that initial Q1 guide? And how quickly do you take down some of those other parts of it, including, I think it was like 160 basis points from production levels. You're kinda there already, and then you have some others from the insourcing and other items.

Phil Barros: Yeah. As I kinda talked about during the prepared remarks, there's a couple things that we're doing there. I would call our short term or transient at this point. First things first is removing some of our capacity from one site to another. In particular, removing stuff from one of our machining facilities to another machining facility to really set us up for long-term success. I would say that's gonna be in place before we exit the first half of the year. So that's gonna be a major benefit as we exit that. As you can imagine, that also brings down some of our capacity for our internal supply.

So that's a short-term, once again, hit that we would or headwind that we would see in the first half of the year. Once again, we expect that to be flushed through the system as we exit the first half of the year. Hope that answers your question.

Brian Chin: Got it. So you still think that 15% second half is sort of a good target and sort of a linear progression or maybe kind of incremental in 2Q and then sort of a pickup second half?

Phil Barros: Yeah. That's how I would model it.

Operator: Thank you. Our next question is from Craig Ellis with B. Riley Securities.

Craig Ellis: Yes. Thanks for taking the question and congratulations on the nice print and the solid guide team. Phil, I wanted to start just by going back to your comments on sequential growth through the year. We've heard some companies express that the year will still be significantly back half weighted. As you look at sequential growth, can you talk about what your half-on-half expectations are? And then inside of the growth view that you have, we wanted to see a much higher mix of components and other higher margin products. Do you see an opportunity for that to start to kick in at some point during the year, or will things be much more gas panel oriented this year?

Phil Barros: Yeah. I would say that the first half is gonna be heavy gas panel related. And as we move into the second half of the year, a lot of our growth in our gross margin is gonna come from increased component supply. So that's actually one of the major drivers of that first half versus second half margin profile. In terms of revenue, I would still say it's second half weighted. But we are seeing a lot of movement into the first half and a lot of momentum into the first half. I wouldn't call that pull ahead. What I would call that is just additional demand pulling forward.

Craig Ellis: That's helpful. And then can you just go further on the Malaysia business relocation? Given the strength of demand that you're seeing, can you just provide some points that investors can look to that would give comfort that wouldn't have any adverse impact on either revenue execution or COGS and expense execution?

Phil Barros: Yeah. I'd actually say that part of our headwind in the first half is because we did turn on the facility. So you could think of that as a headwind in the first half. So that's baked into our Q1 guide. What I would say is that's a facility that's two miles away from our current facility, which is, I would say, our second largest facility today. So it's not too far away from our current facility that builds essentially every weldment for every factory that we have. So it's a strong factory for our business. What I would say is what we're moving to Malaysia is additional capacity. Right?

As we move through '26 and into '27, we believe that we're gonna see a continued ramp. And we're gonna need additional machining capacity in particular and capacity within our components business. And that's a lot of what we're putting into that facility. That's where last year, we spent a lot of our CapEx. It was in standing up that particular facility. I would say that the headwinds are baked into Q1. And we really see the tailwinds in 2027.

Craig Ellis: That's helpful. Thank you, Tom. Good luck.

Operator: Our next question is from Krish Sankar with TD.

Krish Sankar: Hi, thanks for taking my question and congrats on the really strong results. Phil, the first question I had for you on the March guidance, really impressive growth, almost 12% sequentially. Is there a way to dissect it both by technology? Is it coming from Depo, Rich, or Little, and also by end markets? Like NAND or DRAM or foundry. Any color on March would be helpful. And then I have a follow-up.

Phil Barros: Yeah. I would say that a majority of it's coming from Depenet. So that's the vast majority of the growth we're seeing this quarter. We are seeing a slight increase in our non-semi business. I would say that EUV is pretty well flat quarter over quarter. But we do expect that to start picking up later this year, kind of late in the year. In terms of mix of technologies, I would say it's pretty—it's—I think the short answer to that is yes, because everything's growing at this point.

And that's the reason a lot of people are calling this a super cycle is we're seeing every segment of our market grow, and grow significantly, and that's really what's driving, you know, the positive trajectory as we go into '26.

Krish Sankar: Got it. Got it. And then on the gross margin comments, if I heard it right, you kind of said that gross profit dollars should grow at two times the rate of revenue growth. And it's also more second half weighted. How much of it is really like the gross margin growth is coming from revenue leverage versus insourcing?

Greg Swyt: Yeah. Hey, Chris. It's Greg. So, you know, the revenue growth—the margin growth is coming through actually a combination of the overall first half is, as Phil said, you know, really the machine deployment that's hindering a little bit of our first half margin profile. And so that'll start to ramp as those tools come online in the second half. So you can call that incremental volume leverage, getting those tools up and running and getting the leverage out of that. And then the second thing is increasing our machining and components mix strengthening. As those tools come online and we're delivering those products.

And then finally, our non-semi business is also, as we're going into the year, that's strengthening, and that will also bring some flow through in the second half of, on the non-semi business.

Phil Barros: Yep. So let me just add one more thing on that, Greg. Don't mind? Yeah. What I would say is in my prepared remarks, I talked about systematically eliminating some of the margin challenges we faced last year. What I mean by that and just to be quite frank is in order to meet our cost targets on our products, getting these into the new factories, once again, these are factories that in particular, in Mexico has already stood up, is running pretty high volumes. We're building out and finishing out the build-out there. Very high confidence level that's gonna come through. So little risk there. Little to no risk there.

I would say Malaysia is a little higher risk in terms of qualifications, but that's, once again, that's more to get volume out than it is anything else.

Krish Sankar: Got it. Got it. Thanks, Sung. Thanks, Greg.

Operator: Our next question is from Charles Shi with Needham and Company.

Charles Shi: Maybe the first one, so you talked about the view is sustained—the ramp of the business. Wonder if you can characterize your current demand visibility, how far out it is right now. As of today. I recall you to say you have pretty good view about within that the next six-month window. Is it further out that you see anything for 2027 at this point? Thank you.

Phil Barros: Yeah. What I would say is, typically, our six-month window is pretty hard. In terms of we know what customers are gonna—those are gonna go to and what that demand profile looks like. So you're exactly right. Six months out is very solid. And what I would say is that with our current visibility, if you look at what our Q3 and Q4 outlook looks like in terms of what our customers are telling us, what they're slotting in inside their demand windows, at this point in time, it's very solid in the second half compared to what you would normally see walking into the year.

So that's why, you know, we have a lot of confidence in the second half of the year. And then, obviously, you hear it from our customers directly. They're talking about what they're seeing in 2027. I would say that our view on 2027 is very similar to what they say.

Operator: Thank you. Our next question is from Linda Amwali with D. A. Davidson.

Linda Amwali: Hi, guys. Thank you for letting us ask questions. My first question was a follow-up on the litho business. I think you said that you were expecting like, flattish quarter over quarter and then to pick up later in the year. I want to assume that the challenges given the inventory actions that your customer have been resolved, and maybe some of the end market demand trajectory that wasn't favorable is not favorable, or what has this been changing that business?

Phil Barros: Yes. I'd say two things. First is we have seen that customer as they guided that they're gonna be starting to see a pickup in orders. And so we expect to see a similar level of pickup in orders. What I would say is that they do have a level of inventory that they need to digest. Based on our current visibility, we think they will digest that by roughly Q3 this year. Which would show some uptick in Q4. There's still a little bit of unknown there, so I would caution that a bit.

But with that said, I do believe based on their feedback and what they've told us and what they're guiding, that they do expect to see growth in the second half of this year, entering into next year.

Linda Amwali: Okay. Got it. And then, going back on the broader industry demand, DRAM and NAND prices seem to be surging. Are you looking at this as mostly driven by capacity shifts toward AI applications, or are there any other drivers that you guys can call out?

Phil Barros: Yeah. I would say AI applications are definitely the drivers. Obviously, there's a lack of capacity in the DRAM and NAND, and that's driving a lot of demand profile we're seeing. We also see foundry and logic also being strong this year. So we're seeing, like I said before, really across the board, every one of the major aspects of our market. Strong and continue to strengthen.

Linda Amwali: Got it. Thank you for your time.

Operator: Our next question is from Dave Dooley with Steelhead Securities.

Dave Dooley: Yes. Thank you for taking my questions and congratulations on a nice quarter and outlook. I guess the first question I have is—and you've kind of addressed this, but I was wondering about the inventory levels at your two biggest customers and you know, what the situation with that is. And, typically, at the beginning of cycles, I think you might grow a bit faster than your two big customers just because they start to replenish inventory. And I was wondering if that's what you see unfolding during '26 and '27.

Phil Barros: Yeah. The way I would put it is our revenue forecast or what we're forecasting is starting to match what they're saying, which is a good indication that inventory levels are coming down. And inventory levels need to be replenished. And that's kind of what we're seeing in terms of customer demand and what they're pointing towards us. Remember, the bulk of our business, which are gas panels, there's not a whole lot of inventory that's held on those systems. I would say that the one exception would be that EUV customer where it's a non-configurable system, it's the same every time. So they can build up an inventory level, which they can hold on to.

What I would say is we're starting to match what our customers are saying, which is a good indication to me that the inventory has really burnt through in terms of the last cycle.

Dave Dooley: Okay. And then, I think you mentioned in your prepared remarks, I think in the press release, that you expected to gain share in '26 and '27. Was wondering if you might help us understand what areas that you will gain share in.

Phil Barros: Yeah. So I think I mentioned it during my January webcast, but one of the major focuses—a little difference between me and the past—is it's really good about driving growth within the business. And when I say we want to drive growth within the business, it's in all aspects of what we do. But in particular, where I want to spend a lot of our efforts in terms of growing share is first and foremost in our commercial space business. Our non-semi business, the machining aspect of that we've been chasing around for a while. On top of that, what I would add is all of our componentry. And then I also want to gain share in gas panel.

So it's really across the board. And what I would say is our customers really divvy out share based on platform. I want to get a little more balanced in terms of what platforms we're on. So there's a little bit of work to do there as well. But I would say across the board, during a ramp cycle is really where, you know, share can be won and lost. And I believe we're preparing ourselves to win some share during this cycle.

Dave Dooley: Great. Thank you.

Operator: Our next question is from Christian Schwab with Craig Hallum.

Christian Schwab: Thanks for taking my question. Congrats. Most of them have already been asked. I just have one. The growth trajectory at WFE is expected to remain robust again in '27. Do you think that from a component standpoint that you can operate near previous targets, say, you know, 18% to 20% gross margins? Or will it take a little bit more time to get there?

Phil Barros: Yeah. I don't want to throw out a timeline for the 18% to 20% at this point. It's a little early to guide that. But what I would say is with the current trajectory of '27, I think we can get back to some historical levels in terms of revenue. And I would anticipate with the components kicking in and things of that sort that we should see significant earnings leverage as we move forward through 2027. Like I said, I don't want to at this point in time and this far away from the next year, guide what we think in terms of gross margins are gonna be at that point.

Christian Schwab: That's great. Thank you. No other questions.

Operator: Our next question is from Edward Yang with Oppenheimer and Company.

Edward Yang: Hey, Phil, thanks for the time and congrats on the quarter. You mentioned commercial space as a growth opportunity. And could you just remind us what percentage of your business is that and how the margin might compare versus corporate?

Phil Barros: Yeah. I wouldn't want to call it the margins because that gives a little too much away. So I won't comment on that, but it is accretive to our general margin profile. What I would say is that they're a sub-5% customer today. Our goal in the kind of medium term is to turn them into a 10% customer. Obviously, with what we're seeing in terms of the semi ramp, that's gonna raise the bar for that. So it's gonna be a little harder for the team to meet that, but that's still the goal. But that is our goal, and I would call them medium term in terms of what we want to do with that particular customer.

Edward Yang: Okay. Great. And, given the growth outlook, you know, how are you thinking about CapEx, CapEx and 2025 as a percentage of revenue when absolute dollars was up year over year. Do you expect that to grow from these levels or moderate back to norms? And related to that, you have taken some restructuring actions, significant restructuring actions, the last couple of quarters. Are we past any sort of additional accruals for restructuring at this point?

Greg Swyt: Hey, Ed. It's Greg. I'll take those. On the CapEx front, you know, we did about a little close to 4% this year or '25. So about $36 million. And a lot of that investment was in our new facility in Malaysia. Shifting to '26, we will be moderating it down and moving towards a more manageable rate of around 3% of revenue, but that requires, you know, more on the equipment to be deployed now to the facility in Malaysia. And then we're rebalancing some machining equipment within North America as we execute on that realignment of the North America machining facilities. And so it'll moderate down to about 3% in '26.

And that'll give you an indication of what we think we should spend there. And then on the restructuring, yeah, we did take about $10 million in Q4. And that was still obviously a heavy lift for the full year. But the majority of that effort is now complete. We still expect to see some activities as we wind down these facilities that we're realigning in the US, but it won't be at the magnitude that we saw in the full year nor in Q4.

Edward Yang: Thank you.

Operator: Thank you. There are no further questions at this time. I'd like to hand the call back over to Phil Barros for any closing comments.

Phil Barros: Yes. Thank you, operator, and thank you, everyone, for joining our call today. In closing, I wish to convey our confidence in the new Ichor Holdings, Ltd. and our expectations to deliver strong earnings leverage through this cycle. I look forward to our next update at our Q1 call in May. In the meantime, please reach out to Claire to arrange any follow-up meetings that you may have. With that, I conclude today's call.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

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