across our key markets remains exceptionally strong with many customers providing forecasts that extend well into the future this increasing visibility is translating into robust order momentum and today a significant portion of our anticipated 2027 revenue is already represented in backlog to capitalize on these opportunities we remain intensely focused on executing our manufacturing ramp and investing ahead of expected revenue. During 2027, we plan to more than double capacity in advanced packaging and silicon photonics. These investments include expanding manufacturing capacity through a combination of internal production and strategic outsourcing partnerships, adding and training personnel, and expanding our supply chain to support customer demand. While we view these investments as critical to capturing significant long-term growth opportunity, they will have a near-term impact. On a full-year 2026 basis, we expect approximately $10 million of incremental operating expenses and a gross margin impact of roughly 75 basis points associated with these growth initiatives. Given the strength of our order momentum, improve customer visibility, and actions we are taking to support future growth, we are updating our full year 2026 non-GAAP outlook. We now expect full year revenue to be between $780 and $810 million. Gross margin is expected to be between 40 and 42 percent. Operating expenses are expected to range between $15 to $225 million. We expect non-GAAP diluted earnings per share of $1.36 to $1.61, based on approximately 67 million shares. Overall, we are entering this next phase of growth from a position of strength. The combination of increasing customer visibility, strong order momentum, and expanding opportunities tied to AI infrastructure gives us confidence in our long-term outlook. We believe VICO is uniquely positioned to capitalize on these opportunities, deliver sustainable, profitable growth, and create a substantial value for shareholders. I would now like to turn the call over to the operator for Q&A.

Thank you. We will now be conducting a question and answer session. As a reminder, given the pending merger with Excellus, VICO management will not be addressing questions related to the transaction. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Dennis Bidath-Dinlin with Neidenham & Company, LLC. Please proceed with your question.

Great. Thank you for the opportunity. So it looks like your 2026 annual revenue guidance was listed by about $25 million, but the non-gas EPS outlook was lowered. And from what looks like gross margin mix and higher op-ex, can we assume that the gross margin impact is from the $200 million order for the advanced packaging? And in terms of the OPEX increase, can you tell us more about what kind of investments you'll be making there?

Yeah, sure, Dennis. So the $200 million order in advanced packaging is principally for delivery in 2027. So that's not having an impact on the gross margins for this year and the gross margin going forward for the rest of this year. So what we did highlight in our prepared remarks here is that we are investing ahead of that increased business that we're expecting in advanced packaging as well as increased business in the silicon photonics that we highlighted those orders earlier in the year so we're we're adding you know costs and we're adding cost to be able to increase our manufacturing capacity that we highlighted in our prepared remarks is you know more than doubling you know the capacity and that's you know both by increasing our internal manufacturing capability here on the East Coast where we manufacture some of those products as well as expanding partnerships with contract manufacturers in Southeast Asia so the one-time you know set up costs to get the capacity in place and to bring the contract manufacturers on board, the hiring of additional and training of additional employees to meet those customer demands, to build the tools, install the tools, and the like there. So that's on the one end. On the other end, we're also increasing our OPEX. We said it's about a $10 million increase in the second half of the year to support those activities and about a 75 basis points impact on the full year, really what the impact was to bringing down the gross margin percentage of the year compared to what was previously forecasted and increase our operating expenses compared to what was previously forecasted.

That's really helpful. And then for my second question, with the industry in an upcycle, you have both these optical networking orders, shipping, the data storage-related revenue coming in, and now the advanced packaging systems as well. Could you maybe give us like a recap or an update on when these will begin shipping, like how the revenue ramp profile will look, and if there were any changes from prior expectations for some of these programs?

Yeah, Dennis, I would say most of this is really hitting, really starting to ramp, beginning a little bit in the end of the fourth quarter of 26 but hitting in starting in q1 and then probably getting more up to speed in q2 of 27 so it's really uh ramping uh the majority of it is in 27 for both for all those for silicon photonics ramp uh as well as advanced packaging coming online in that time frame great and uh one more if i may um i think you mentioned that customers are providing outbooks you know well into the future um you know how far would you say on average uh they're giving you visibility right now and has this visibility increased over the last three months i would say our visibility has been increasing uh we have very strong much stronger visibility i would say that historically we've had into 2027 at this point, midway through 2026. And customers are actually sharing forecasts out beyond 27, kind of some long-range forecasts that they wouldn't normally be sharing.

That's it for me. Thank you very much.

Thanks, Dennis. Thank you, Dennis.

At this time, we have no further questions, and I would like to turn the call over to Bill Miller for closing remarks.

Thank you. Vico delivered another strong quarter, exceeding expectations and continuing to build momentum across the business. We remain well-positioned to capitalize on AI investments, which are driving strong customer engagement and increased visibility into 2027. At the same time, we continue to make steady progress toward completing our merger with Excellus, reinforcing our confidence in the significant potential value creation. We remain focused on our execution, and we're excited about the opportunities ahead. Thank you for our shareholders and our Vico United team for continued support and commitment. Have a great evening.

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