Thank you, operator. Good afternoon, and thank you for joining today's second quarter 2025 conference call. As you read our earnings press release and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control and which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in our earnings press release, those described in our annual report on Form 10-K for fiscal year 2024 and those described in subsequent filings with the SEC. You should consider all forward-looking statements in light of those and other risks and uncertainties. Additionally, we will be providing certain non-GAAP financial measures during this conference call. Our earnings press release and the financial supplement posted to our IR website, each provide a reconciliation of these non-GAAP financial measures to their most comparable GAAP financial measures. On the call with me today are Jeff Andreson, our CEO; and Greg Swyt, our CFO. Jeff will begin with an update on our business, and then Greg will provide additional details about our results and guidance. Jeff will make a few additional remarks before opening the line for questions. I'll now turn over the call to Jeff Andreson. Jeff?

Thank you, Claire, and welcome, everyone, to our Q2 earnings call. Thanks for joining us today. This afternoon, along with our second quarter earnings release, we announced our CEO succession plans, which I will further discuss towards the end of our prepared remarks. Second quarter revenues of $240 million came in at the upper end of our expectations, reflecting a modest acceleration of customer demand into the first half of the year. With the Q2 revenue upside, driven primarily by our lower-margin gas panel integration business, Q2 gross margin of 12.5% was at the lower end of our expectations for the quarter. That being said, through most of the second quarter, we were on track to achieve the midpoint of gross margin guidance, and if not for the hiring challenges we experienced starting halfway through the quarter, which limited our output of machine components, today we would have been announcing Q2 gross margins of over 13%. We continue to face hiring and retention challenges, which has continued to impact our output volumes in the third quarter to date. And ramping internal supply is a key enabler of the strong gross margin flow-through. Therefore, as we focus on securing the necessary headcount in our U.S. machining operation, we are proactively reducing costs elsewhere in the organization. As we reflect on the customer demand environment, industry and peer reports continue to indicate that 2025 will be a modest growth year for wafer fab equipment or WFE, and with our first half revenues up 20% year-over-year, we continue to expect our revenue growth this year will outperform overall WFE growth for 2025. So while revenue growth outperformance versus the industry is an expected highlight of our financial performance this year, the most critical operational priority for Ichor in 2025 is bringing our internal component supply fully up to speed in order to meet strong customer demand and increasing momentum in qualifying our proprietary component products. This is what we absolutely must accomplish in order to see the benefits of the new product wins through the P&L via strong flow-through and gross margin expansion. Our new product strategy is taking hold and gaining traction with continued new customer qualifications. As we successfully ramp our internal supply, we are confident that our strategies will materialize in stronger gross margins as we progress forward. In order to track our progress, here are some key benchmarks to look for from us over the next few quarters. The first is building momentum in our top line. Year-to-date, further expansion of our revenue scale beyond the current $240 million run rate has been stalled by a slowing EUV build, reduced investments by a major U.S. semiconductor manufacturer, and the continued lack of demand for additional capacity in some of our nontraditional markets, such as silicon carbide. In order to see our structural improvements to gross margin materialize, we need the additional tailwind of revenue momentum above the $250 million run rate, which is what we had planned for in the second half of 2025 as we entered the year. The next sign of progress will be continued qualifications of our new products by the end device manufacturers. And finally, progress will continue as we provide updates that we have scaled our internal supply to sufficient levels and that our output is aligned with our customer needs and cost targets. Turning to our momentum qualifying additional proprietary components with our key customers. In Q2, we made meaningful progress across multiple fronts, qualification, commercialization, and market expansion. Most notably, we achieved a major milestone with the successful qualification of our flow control product at a key end user. This marks our first end-user qualification for this product line, which serves as a strong validation of its performance in high-demand production environments. We believe this success lays the foundation for broader adoption and additional end customer qualifications. We also reached an important inflection point with our valve product line. During the quarter, we secured a third customer qualification, and we're actively working toward a fourth. That said, we are intentionally pacing the fourth qualification to align with our internal capacity ramp. This ensures that we can support volume demands without compromising quality or delivery commitments. Importantly, we began shipping valves in production volumes this quarter, a key milestone in scaling commercial success and realizing the margin benefits of internal sourcing. In parallel, we are making steady technical and operational progress on two new proprietary component products, which are designed to expand our addressable markets for both flow control and valves. These next-generation offerings will allow us to serve a broader range of applications and customer needs, further increasing our value across the semiconductor supply chain. As we move into the second half of the year, we remain focused on expanding manufacturing capacity and aligning production to meet our targeted product margins. For Q3 specifically, with our current visibility, our revenue guidance remains in the same range as we provided for Q2, a quarter ago. The customer demand environment has remained relatively steady since May, and our full year outlook is largely unchanged. The key differences between how we are looking at 2025 now compared to a quarter ago are: first, the Q2 revenue pull-in now indicates 2025 is likely to be a slightly front half weighted year. While the second half customer demand environment hasn't changed materially, I would also add that the accelerations of demand leading to a stronger second quarter have now slowed a bit in advance of an expected slower quarter in December for etch and deposition. Additionally, we are marginally less confident about a few areas of potential upside materializing within this calendar year. Next and more meaningful to our outlook, we are taking a more conservative view of our expected hiring ramp and guiding gross margin. And for the third quarter, we are providing a similar range of expectations as we did for Q2. While we remain wholly confident that our strategy will materialize in steady progress towards our longer-term gross margin targets, we need to have improved visibility toward a more meaningful and sustainable top line sequential growth in addition to achieving our product cost targets before we will significantly raise the bar on our expectations for gross margin expansion. While we currently expect to deliver sequential improvements to our gross margin for the fourth quarter, even on similar revenue levels, at this time, we will refrain from guiding significantly stronger gross margins until we deliver the expected gross margin performance for Q3.

Thanks, Jeff. 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 Investors 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. Second quarter revenues were $240.3 million at the upper end of guidance, up 18% year-over-year and 2% lower than Q1. Gross margin for the quarter was 12.5%, an increase of 10 basis points from Q1, but at the low end of expectations, largely due to hiring challenges limiting our ability to achieve the expected ramp of our machines components. With operating expenses roughly flat to Q1 at $23.8 million, operating income for Q2 was $6.1 million. Our net interest expense was aligned with our expectations at $1.6 million. However, our non-GAAP net income tax expense of $3.2 million came in well above forecast due primarily to the acceleration of the Pillar Two tax into Q2. For the full year, our estimated income tax is currently $5.6 million compared to the $6 million estimate as of May. Therefore, while the full year tax estimate is largely unchanged, the acceleration into Q2 impacted EPS by $0.07. The resulting EPS for the quarter was $0.03 per share. In our GAAP results, you may note that year-to-date in 2025, we have been executing towards various strategies to consolidate and align our global operations capacity with our customers' largest global production and supply chain centers. Between Q1 and Q2, we recorded charges of $5.7 million for exit costs related to personnel, fixed assets, and facility-related costs. We anticipate there may be additional charges in Q3 and Q4 as we complete the analysis. Turning to the balance sheet. Our cash and cash equivalents totaled $92 million at the end of the quarter, down $17 million from Q1, reflecting working capital investments as well as $7 million in capital expenditures. Our planned CapEx investments for 2025 are still expected to total about 4% of revenue. Our total debt at quarter end was $126 million, and our net debt coverage ratio was 1.5x, well below any potential threshold for covenants. Now I will discuss our guidance for the third quarter of 2025. With anticipated revenues in the range of $225 million to $245 million, we expect our Q3 gross margins to be between 12.5% and 13.5%. We expect Q3 operating expenses to be approximately $23.7 million, and we expect Q4 OpEx to be at a similar level. Net interest expense for Q3 and Q4 are expected to be approximately $1.6 million per quarter. We expect to record a tax expense in both Q3 and Q4 of approximately $900,000, reflecting our current forecast for a non-GAAP tax expense of $5.6 million for the full year. Finally, our EPS guidance range for Q3 of $0.06 to $0.18 reflects a share count of 34.4 million shares. I will now turn the call back over to Jeff.

Thanks, Greg. Before turning the call over to Q&A, I'd like to say a few words about the CEO succession plan we announced today. I joined the company in late 2017 as CFO. And after first becoming the company's President, I took over as CEO just as the COVID shutdowns were beginning to roll out in early 2020. There's no question that the operational challenges of the past five years have been greater than at any period in recent memory, and I am immensely proud of our successes winning multiple new product qualifications after embarking on Ichor's first-ever branded product development strategy. During the same period, we have integrated five acquisitions and successfully completed the recapitalization of our balance sheet. I love this company, and I strongly believe that we have many opportunities to transform the company's profit generation as we continue to bring our branded products to market. I also believe that the time has come to begin the search for a new leader who can drive Ichor to new levels of success. Ichor is a strong leader in the industry, enjoying tremendous customer partnerships and an amazing team of employees around the globe. This strong foundation will be attractive to the next leader of Ichor. And in order to ensure a seamless transition, the Board and I have entered into a transition agreement where I will remain CEO until my successor is identified and then continue as a strategic adviser to the company and our new CEO to assist in the leadership succession process. We have an excellent Board of Directors, and I have full confidence that they will find an outstanding new leader for the company. Operator, we are now ready for questions. Please open the line.

Our first question comes from Brian Chin with Stifel.

I guess firstly, Jeff, definitely wish you all the best. It sounds like you'll be continuing on these calls. But as you wind your time down here, I just want to thank you for that. Maybe to start with gross margins. Can you unpack the dynamic that occurred? It sounds like mid-quarter in Q2 that took you off that trajectory, maybe that could have taken you towards the midpoint or so of the gross margin guide, but maybe kind of unpack what happened there in terms of the hiring and maybe some turnover? And then tied into that, I guess, is how that relates to sort of the uptick in OpEx sequentially above plan.

At the beginning of the quarter, we were successfully attracting new hires. However, these positions are quite specialized, primarily in our U.S. operation in Minnesota, where many employees are required to work in a clean room for post-machining tasks. While we managed to staff up with machinists and had a significant volume of machine parts, we faced challenges in completing all production. A number of employees were off shift and we experienced some turnover that counteracted our hiring efforts. By the middle of the quarter, we realized we hadn't brought in enough personnel. This issue persisted through the end of the quarter, resulting in very few new hires. We have adjusted our hiring strategies for off shifts and shift differentials, and entering this quarter, the situation has improved slightly, although we are still not where we had aimed to be a quarter ago. The initial hiring went well, but we struggled with retention once employees were required to wear their clean room suits.

Got it. And that sort of the kind of the spike up in the OpEx and sort of coming back down in Q3?

The increase in operating expenses was somewhat unusual due to higher healthcare costs than we anticipated at the start of the year, but everything else was largely in line with expectations. This increase is not directly tied to the hiring in Minnesota. If we had maintained the hiring pace from the first eight months without turnover, we would have likely announced results better than our midpoint guidance. Therefore, we've adopted a more conservative hiring approach this quarter, which is why we project a gross margin of around 13%.

Our next question comes from Krish Sankar with TD Cowen.

Jeff, same here, good luck and we're definitely going to miss you and your insights. I have two questions. One is on demand. Just kind of curious, into Q3, where are you seeing the demand coming in from? If you have the visibility? Is it coming from NAND? Is it China? I understand you already said that EUV is lower and probably Intel WFE is lower. But I'm just kind of curious where do you see the incremental demand coming from? And then I have a follow-up.

Yes. I think when you say incremental or the strength of demand into the second half is what you probably or I think foundry logic is still strong, high bandwidth memory. We can see it. I'd say maybe the advanced packaging has plateaued and then I think the NAND is continuing. We can clearly see that NAND investment is continuing into the back half. I mean when you look at us pulling about $5 million forward, it's slightly down in the back half. And probably the biggest changes really have probably been around, again, a little bit of a reduction in our litho business, which is well understood and build volumes are down. And then I would say, a large U.S. OEM that continues to push out some of their CapEx investments here in the U.S. And I'd say everything else kind of held its own.

Got it. Got it. And then on the gross margin side, I'm just kind of curious because this quarter, I understand the machining employment is an issue, last quarter sort of proprietary content. I understand some of this is probably your own execution versus what you can manage. But bigger picture, is there any other issues you see on gross margin? In other words, are your big semi-cap customers trying to put more pricing pressure on you compared to in the past, given that their customer base is consolidating? Or has any of that filtered down? Or do you think this is all manageable? And just like as you termed it last quarter growing pains?

I would say our inability to execute and get the ramp to meet the customer demand that we have in front of us is hitting us both in the profitability we could get with the revenue numbers that we were projecting as well as, as we talked about on the last call, we're still buying some externally that we're eventually going to make. Those two will move the needle fastest. I would say pricing pressure is always there. It hasn't really changed very much over the last year or so. So it's always something you try and work on with your customers to reduce their costs and stuff. I would say from a tariff perspective, that's getting passed on. It's a lot better understood now. And so I think that is well understood by our customers as something that will be passed on.

Our next question comes from Craig Ellis with B. Riley Securities.

And Jeff, I'll echo the sentiment of the other two analysts just expressing thanks for all the help over the years and wishing you the best as you evolve to the new role at some future time. Yes, you're welcome. I wanted to just go back to the last line of inquiry because it sounds like there may be some issues just impacting your ability to deliver product at the time that you'd like. And so the question is, are there any market share issues that you've seen arise either as a result of some of the things that surfaced in 1Q or any of the hiring or retention-related issues that you're seeing in 2Q?

Well, I'd say from a market share perspective, it's largely you would think about it the internal supply. When you're still buying some externally, we're not capturing that market share until we get the operation ramped up. And so that's where we're seeing it. I would say kind of what we would call on our external revenue, we're not seeing any shifts there.

Got it. I wanted to revisit the demand perspective and note that we may experience a slight decline in the second half compared to the first half. I had heard from another major front-end company that the wafer fabrication equipment market this year is developing towards a more favorable outlook, potentially resulting in 10% growth for wafer fabrication equipment compared to 5%. I’m trying to understand the gap between these two perspectives and was hoping you could provide some clarification.

I don't know that we disagree with them. I think we've always kind of thought it was going to be around 5% or better. I think the wildcard seems to be China again as a strength, which will benefit as our customers sell to end users and things like that. But our growth year-over-year is still outpacing that level of WFE. So I don't know that it's materially changed. We'll tell you there's a wide range of expectations out there. Some are higher than kind of the 5% to 10% that have been discussed on prior calls.

Our next question comes from Charles Shi with Needham & Co.

Jeff, I've really enjoyed our discussions during the calls and various meetings over the past few years, and I appreciate that. I have a question about the outlook for the remainder of the year. It seems you're indicating some conservatism compared to 90 days ago. One thing you mentioned that stood out to me was the potential upside for the fiscal year that you thought could happen but now seems unlikely. It sounds like this is primarily related to revenue. Could you share what specific upsides you were anticipating earlier this year that you're no longer seeing?

Yes, that's a good question. We've noticed some softening. We anticipated that build rates in our EUV business would start to increase in the fourth quarter, but that hasn’t happened yet. We’ve also observed some of the U.S. OEM sales being pushed out of fiscal year '25. These are likely the two main factors contributing to about a $5 million reduction in our outlook compared to a quarter ago. So, considering a total of around $950 or $960 million, that's a relatively small adjustment. There may still be developments in the fourth quarter, and we’ll provide an update during the next conference call. However, those are the primary changes we've observed since the last call.

Got it. So there was some increase from litho, dep, and etch, but that's not really the case at the moment. Jeff, you mentioned that you expect the second half to be slightly lighter than the first half. I would have agreed with you before Lam reported, but now Lam has given a strong Q3 guidance and they don't see the second half as being lighter. Looking at AMAT and your other customers, it seems that nearly all of them aren't expecting the second half to be lighter either. How do you reconcile these differing views? Do you have any insights on this?

Yes, it's a relatively small change compared to what we observed last time. A significant part of this is related to the timing of our shipments. We send out our products about a month before revenue can be recognized. We experienced a strong finish to the quarter, which is why we saw an increase of $5 million. If that hadn't occurred, the situation would mainly relate to timing, and we'd be fairly balanced. Additionally, our customers have varying profiles in terms of earnings and revenue, which means each one differs slightly. Overall, I believe we align well with what we observe from each customer and what they've communicated.

Maybe the last question. I think you didn't really bring it up this time. It's about tariffs, especially the steel and aluminum-related tariffs. Are you seeing any impact or any change in your view on the degree or magnitude of the impact?

Yes. It's Section 232 is what you're talking about, it's 50%. The original 232 has got duty drawbacks. So we work with our customers and we pass it on and then they are able to draw it back for whatever leaves the U.S. The second wave that started in, I think, April, you can't do duty drawback. And that's where we're seeing it and passing on to the customers. I would say the regulations are much more clear now. It's not 100% of the value that comes in. It's just driven by weight and the percentage that's non-U.S. sourced metals. And so we've done a lot of work in that area. And so we're working to reduce the impact across our supply chain and customers. So it hasn't changed, but I think we have clear views on how to manage it.

Our next question comes from Tom Diffely with D.A. Davidson.

Jeff, curious, the issues that you're seeing with both the hiring and the retention, is this a new issue? Or is this something you battle constantly?

I would say we have ramped our machining operation in Minnesota in the past. I mean you go back 7 or 8 years, we've had different cycles, and this has been a little bit more challenging because we were chasing machinists. Now we have what we would call post-machining operations. So a lot more assembly work and things like that, where you're in the clean room and they're off shifts. So we run 24x7. So they've been a little more challenging than the last two ramps, I would say.

Is it just a matter of, I guess, finding the people who are willing to do the job specifically? Or is it higher wages? Or what are the options here?

Well, wages we can measure and adjust for, and we do that annually and then we'll look at it during the year if we see any kind of compression in skilled workforce a little bit, but not a whole lot there. I would say it's the off shifts and it's the clean room and a bunny suit and all that stuff. And so we've done a better job at ensuring they understand what that's really like before they take the jobs and move into it.

Our next question comes from Christian Schwab with Craig-Hallum.

Jeff, good luck on whatever is next. A year ago, we talked about this tremendous movement into sourcing internally and driving 20%, maybe 20% plus type of gross margins. Is that something that you guys still feel is an opportunity set? Obviously, with a smoother manufacturing, but also higher revenue would save the business. We have a good WFE in the future, we get to $300 million a quarter, plus or minus, is 20% gross margin still the target? Or do you think that maybe that was too optimistic when you said it before?

I believe achieving this goal is possible. We need to focus on two key areas. First, the passive components, where we've been securing qualifications for valves, substrates, and fittings. These improvements will help us, but we need to reach a certain level with our flow controllers. We have recently qualified one of our first fully integrated Ichor content gas boxes with our customers. As that product enters production, which has an unclear timeline, it will help elevate us in the flow controller market. We don't need to sell $100 million worth to see an impact, as these will be our highest margin products with significant intellectual property. Therefore, while I hesitate to call it a target, achieving 20% gross margin remains our goal for the company.

Our next question comes from Edward Yang with Oppenheimer.

Jeff, just wanted to wish you all the best. Really appreciated learning from you. You'll be missed. My question, you mentioned advanced packaging plateaued in response to an earlier question. I just wanted to unpack that a little bit more. Is that end market driven? Or are you seeing market share shifts between your customers?

No. I think the significant factor is the growth in advanced packaging plating tools. Both this segment and the cleaning tools we support have seen substantial growth over the past two years, though we are beginning to see a slowdown now as capacity comes online in these areas. We don’t believe there is any kind of shift in market share at this moment. Our market share is definitely not as large as it is for gas panels.

Our next question comes from Brian Chin with Stifel.

I would like to clarify something regarding the earlier point. It seems you suggested that for the December quarter, it may align with some of your customer patterns, indicating that December could see lower figures compared to September and that spending in the second half might decline slightly from the first half. Are we discussing a mid-single-digit decline on a half-on-half basis?

Yes. I would say it's low single digits, around $5 million off of approximately $480 million. That's about 1%. It's very close to flat if we have a similar quarter. You might consider that it's just timing.

Got it. I missed some of that, but it sounds like you said like a 1% decline in December quarter, something...

I would say that that's probably in the timing of just when our customers are building things versus us.

Got it. I also wanted to touch on the flow control qualification. That is an important milestone in relation to our in-sourcing strategy. You mentioned customers' customers; can you provide some insight into that in terms of logic or DRAM application?

Well, what would I say, and I think we've not said who the customer is, but we have said that these are almost all targeted on advanced logic opportunities.

We have reached the end of our Q&A session, and I would now like to turn the floor back over to Jeff for closing comments.

I want to thank you for joining us on our call this quarter. I'd like to thank our employees, suppliers, customers, and investors for their ongoing dedication and support. Our upcoming Q3 investor conferences include Oppenheimer's Virtual Conference next week followed by the Needham Semiconductor Conference, Jefferies in Chicago; and finally, B. Riley's Tech Conference in New York. After that, we look forward to our next quarterly update in early November for our Q3 earnings call. In the meantime, please feel free to reach out to Claire directly if you would like to follow up with us. Operator, that concludes our call.

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