Financial Data and Key Metrics Changes - Q2 2025 revenues were $240 million, reflecting an 18% year-over-year increase and at the upper end of expectations, but 2% lower than Q1 [16][17] - Q2 gross margin was 12.5%, a slight increase of 10 basis points from Q1, but at the lower end of expectations due to hiring challenges [17] - Operating income for Q2 was $6.1 million, with net interest expense aligned with expectations at $1.6 million [17] - EPS for the quarter was $0.03 per share, impacted by a higher-than-expected tax expense of $3.2 million [17] Business Line Data and Key Metrics Changes - The revenue upside in Q2 was primarily driven by the lower margin gas panel integration business [5] - The company faced hiring and retention challenges that limited output volumes, impacting gross margins [6][14] - Significant progress was made in qualifying new products, including a major milestone with the flow control product [10][11] Market Data and Key Metrics Changes - The customer demand environment remains steady, with expectations for modest growth in wafer fab equipment (WFE) for 2025 [7] - Year-to-date revenues were up 20% year-over-year, indicating that the company expects to outperform overall WFE growth for 2025 [7] - Demand for NAND and foundry logic remains strong, while advanced packaging has plateaued [37][39] Company Strategy and Development Direction - The company is focused on ramping internal supply to meet strong customer demand and improve gross margins [7][9] - A new product strategy is gaining traction, with ongoing qualifications and commercializations of proprietary components [12] - The company is proactively reducing costs elsewhere to secure necessary headcount in US machining operations [6] Management's Comments on Operating Environment and Future Outlook - Management expressed a more conservative view on hiring and gross margin expectations for the upcoming quarters [14] - The outlook for 2025 is slightly front-half weighted, with potential for a slower quarter in December [13] - Management remains confident in the long-term gross margin targets but emphasizes the need for improved visibility on revenue growth [14] Other Important Information - The company announced CEO succession plans, with the current CEO remaining until a successor is identified [21][22] - The company recorded exit costs of $5.7 million related to personnel and facility costs, with potential for additional charges in Q3 and Q4 [18] Q&A Session Summary Question: Can you unpack the dynamics that affected gross margins in Q2? - Management indicated that hiring challenges and turnover impacted the ability to meet production needs, which affected gross margins [28][30] Question: Where is the demand coming from for Q3? - Demand is primarily coming from foundry logic and NAND, while advanced packaging has plateaued [37][39] Question: Are there any market share issues arising from hiring and retention challenges? - Management stated that market share is affected by internal supply issues, as external purchases do not capture market share [46] Question: What are the expected tax implications from recent legislation? - Management indicated no near-term material benefits from new tax legislation due to the current tax position [74] Question: Is the target of 20% gross margin still attainable? - Management confirmed that the 20% gross margin target remains a goal, contingent on successful product qualifications and internal sourcing [78][80]