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, then we'll open up the call for questions. 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. And with that, I'd like to turn the call over to Jim. Jim?

Thanks, Rhonda, and thank you all for joining us today. I'm going to start by providing our thoughts on the current demand environment and why we believe 2022 will be another year of growth. I'll follow that with a high-level review of our results, including some insights on current events affecting our business and the industry. After that, I'll turn the call over to Sheri for a financial review. Then we'll open up the call for questions. Industry demand remains elevated with appetite for our products and services growing across all our end markets. Unlike historical semi market cycles, the acceleration of digital transformation in the past couple of years has dramatically increased the consumption of semiconductor content to the benefit of the entire manufacturing ecosystem. Record multiyear capital spending plans are ramping to support industry megatrends such as 5G, artificial intelligence, electrical vehicles and high-performance computing. We will continue to execute on our long-term growth strategy by innovating and investing alongside our customers gaining share and further securing our leading position as their manufacturing partner of choice for years to come. One of the primary reasons we continue to increase share with our current customers and attract new business is our relentless commitment to quality. Earlier this month, we were honored to receive the excellence and quality award from Applied Materials were consistently meeting and exceeding their expectations over the past year. I'm extremely proud of our team who successfully anticipated and delivered beyond our customers' needs. Quality isn't the only reason our business is growing under challenging circumstances, the fact that we are able to meet our customer schedules also plays a key role, as highlighted by Intel's recognition of our ability to deliver on time during the pandemic. Quality and on-time delivery were the reason Intel chose…

Thanks, Jim, and good afternoon, everyone. Thanks for joining us. In today's discussion, I will be referring to non-GAAP numbers only. The China COVID lockdown and the grounding of the China Eastern Airlines Boeing 737-800 aircraft in the quarter impacted our production and delivery schedules. As a result, total revenue for the first quarter was $564.1 million compared to $615.1 million in the prior quarter. Products division revenue was $486.8 million, compared to $533.9 million last quarter. And revenue for our services division was $77.3 million compared to $81.3 million in Q4. Total gross margin for the first quarter was 20.5% compared to 21.5% last quarter. Products gross margin was 18.2% compared to 19.1% in the prior quarter and services was 35.5% compared to 37.1% in Q4. Margins can be influenced by customer concentration, geography, product mix and volume, so there will be variances quarter-to-quarter. Operating expenses for the quarter was $54.3 million compared with $54.6 million in Q4. As a percentage of revenue, operating expense was 9.6% compared to 8.9% in the prior quarter. Total operating margin for the quarter was 10.9% compared to 12.6% in the fourth quarter. Margin from our products division was 10.2% compared to 11.8% in the prior quarter, and services margin was 15.7% compared to 17.9% in the prior quarter. The change in margin was primarily due to lower volumes coming out of our Asia facility due to the China shutdown. Based on 45.6 million shares outstanding, earnings per share for the quarter was $0.95 on net income of $43.3 million compared to $1.22 on net income of $55.5 million in the prior quarter. Our tax rate for the quarter was 16.4% compared to 15.8% last quarter. We expect our tax rate for 2022 to stay in the mid-to-high teens. Turning to the balance sheet. Our cash and cash equivalents were $367 million at the end of the first quarter compared with $466.5 million last quarter. Cash from operations was negative $67.4 million compared to $43 million in the prior quarter due to lower production, increased inventory due to China shutdown and the timing of cash collections and payments. We expect cash generation to recover in Q2. With demand still outpacing what the overall equipment industry can deliver, uncertainty around the global supply chain and COVID-related interruptions, we are widening our guidance range. We are projecting total revenue for the second quarter of 2022 between $550 million and $630 million. We expect EPS in the range of $0.84 to $1.20. And with that, I'd like to turn the call over to the operator for questions.

[Operator Instructions] The first question today comes from Quinn Bolton with Needham & Co. Please go ahead.

Wanted to ask your largest customer, Lam, on their call last week, talked about in this supply-constrained environment, trying to qualify additional subsystem and component vendors to try to navigate through the supply chain. So I'm kind of curious, what are you seeing in terms of your large customers looking for additional major module or gas panel suppliers? Do you think that's a threat? Do you think you actually benefit from that trend?

Yes, Quinn, actually, I think we benefit from that trend. We have done really well on supplying them even though we've had some issues at the very end of the quarter. We have been a very reliable supplier. So actually, they're partnering with us to find to help enable sub suppliers in that system. So I think actually it's something that's really going to help us going forward because I think we've been a very reliable supplier to them. And I think we're one of the companies that they want to partner with to buying broader solutions.

And I guess for Sheri, just looking at the gross margins down to 20.5% in the March quarter. Obviously, revenue took a step back. So I assume that there are some absorption charges as part of that step back. But as you look forward to June and perhaps into the second half of the year, what are your expectations for gross margin recovery?

Yes, Quinn. Thank you for that. Obviously, our Q1 was definitely affected by the China airline situation as well as the lockdown. We will continue to see a little bit of pressure in Q2 as well. But as we continue to move through the rest of the year, we see more acceleration of some of our revenue going out of our Malaysia site as well as shifting to some other sites that we have in the Philippines and potentially Austin. So we'll see distribution across several locations, and that will really help us get back into the ranges that you've seen previously from a gross margin perspective.

And then just last question for me. On the China Eastern Airlines ground in the 737-800, are those still grounded? Or are those now back in the air? What are you seeing on the logistics? I know COVID lockdowns are still disrupting the ability for companies to receive or make shipments. But are the airlines sort of back up and returning to normal right now? Or are they still under lockdown for the 737s?

The 737s are back up and running, and it wasn't just China Eastern. It was -- initially, it was all 737. China Eastern, obviously, is one of the major players. But as far as I'm aware, they are all back up and running. But obviously, there's a logistic kind of pile up that happened because of that, but I think it's being worked out.

The next question comes from Krish Sankar with Cowen. Please go ahead.

This is Steven calling on behalf of Krish. I guess, first maybe Jim or Sheri, if you can help us quantify just in terms of the impact in China during the March quarter. What was the rough revenue impact from some of those logistics delays and manufacturing lockdowns or local lockdowns in that region to your revenues. Can you quantify it?

Yes. We -- we anticipated that we would obviously hit our midpoint that we provided from guidance. So there is about $41 million that we did not ship out as a result of the China lockdown and grounding of the air flight. So about $41 million would have gone out if we had been able to do that between that site as well as our Singapore site that feeds from our China site.

And I guess just switching to other regions, Europe, in particular, just from a logistics standpoint, I mean I guess, just given the geopolitical situation now in Eastern Europe. Are you seeing any impact to like your delivery schedules for any customers out in Europe at this time?

Steve, no, we haven't seen anything of that sort.

The next question comes from Patrick Ho with Stifel. Please go ahead.

Jim, I know it's a very fluid situation as we speak on the supply chain and the higher input costs that all companies are dealing with. From your perspective for the June quarter, what's going to be the biggest headwind? Is it your ability to procure parts? Is it the freight and logistics cost? Just give -- if you can help in terms of a little color on what the biggest headwind you'll be facing in the June quarter.

Patrick, so I think there's two components. We don't think logistics is going to be one of them. It's going to be around COVID lockdown, the zero tolerance policy in China and being able to bring our Shanghai factory back up from 40% to 100%. And that's kind of one major area. And then the second area is, of course, around multiple supply chain constraints, as you're well aware, in multiple different areas. But I think that's the biggest variable is around our plant in China being able to continue to come back online. Now we're taking mitigating measures against that. We're moving a lot of that work to our Philippines site, our Austin site, our new Malaysian site. So we have a pretty good -- a very solid business continuity plan, BCP plan. So we're mitigating a lot of that. But I think in our assumptions, we -- we're really looking at continued improvement on the COVID situation in China.

And maybe as my follow-up question, the demand environment, as you highlighted, remains very strong out there, particularly on the equipment front. You've also shown a track record of being able to flex capacity, particularly during the pandemic when things were just as chaotic. But given that the demand environment remains really high, I guess the question I'm trying to get at is how much more capacity can you increase by flexing just -- I'm assuming you probably have very high utilization rates in your existing capacity. I guess what I'm trying to figure out is how much more could you expand if you shift some of that capacity to ones like you said in the Philippines, Malaysia or Austin?

Yes. I think as you know, we're bringing up our Malaysia facility. I think in Q4, we did single-digit millions, and now we're doing $30 million, $40 million a quarter out there, we'll be up to a much higher number. So we're ramping that one in Malaysia as quickly as possible. Part of the issue is, as we've won a lot of market share, so a lot of new products went into Malaysia, so it actually got filled up with market share wins along the way. But I think in a rough sense, there's -- within a very short period of time, we could certainly do $700 million -- $600 million, $700 million, $800 million a quarter. Obviously, what happened to us in China was in the last few weeks. I mean when the COVID restrictions came two to three weeks left in the quarter that was really difficult, as nimble as we've been, that was really difficult to manage within the quarter, and it's having some impact in our second quarter guidance. But we certainly know how to do this. And I think we're going to see some pretty strong growth through the second half of the year.

The next question comes from Christian Schwab with Craig-Hallum Capital Group. Please go ahead.

Jim, how big of a recovery do you expect in your quarterly revenue in the second half of the year, should we not have any further COVID-related factory issues in Shanghai. The WFE growth expectations for this year, as you know, are extremely strong, and you've historically have outgrown that by 10 points or more. So do we have the capability for a very meaningful ramp? And when you talked about growth expectations or growth for '22, would you expect strong double-digit revenue growth still for the year?

Yes. And I think -- and most of the analysts have estimated numbers roughly around $2.5 billion or so. So we're still pretty confident that we can through a very strong second half kind of hit the numbers that -- the goal posts that you have all put out there for us and ourselves as well.

And then as we -- given the design wins that you've talked about that's kind of ramping up in the Malaysia facilities as well as being chosen by Intel. How big can that business with Intel ramp up to on a yearly basis?

Yes. I think on a yearly basis, as maybe a difficult forecast to give. I think you've seen Intel seems to be announcing a new fab every month somewhere, and we're working with them to support that growth, and they are also working -- they're also partnering with us. So I think the Intel obviously, from announcing a new fab to holes in the ground to getting the fab up, that's a several year cycle, but we obviously want to support that valuable customer and be there for them and help them get successful on some pretty dramatic growth plans that they have. So we believe we can grow with and maybe above Intel as they go forward, it would be hard to give a projection to that. But it's definitely assuming success and moving forward with their new mega fab in Ohio, with fabs in Ireland and in Arizona, in Germany, we definitely see over the next two to three years a very strong growth for us. So I think if you look at Intel's growth and our growth, we should outpace that.

And then just my last question. You talked about the Shanghai facility being at 40% kind of capacity utilization, obviously, well shy of a 100 or approaching full capacity, whatever that number may be. Is that a return from 40% to full capacity utilization, is that an incremental $40 million a quarter? Or is it actually a bigger number than that?

That's a difficult bridge to make. So maybe I'll give you some of the background. So we're at 40% because those are the local employees that can come into the factory. And then our assumptions are that in May, we're going to be able to bring 100% of our employees back from other regions that are currently in the lockdown, and that looks pretty positive right now. As far as bridging what the revenue means, I think for the second quarter, we have our guidance around that assumption. Certainly, there is a lot more demand than what we're guiding to. And so if things pick up and do better, we would hope to overachieve and do better than the guidance that we've given for the second quarter. But I think we've put a pretty solid plan in place, given what we know today.

The next question comes from Hans Chung with D.A. Davidson. Please go ahead.

So I think earlier hear, you quantified the China-related impact about $41 million in the first quarter. How is the number for second quarter? And then also, can you comment on the demand trend from the booking and backlog perspective?

Yes. I didn't hear the second part of your question. But from a revenue perspective for the next quarter, I -- we would assume that approximately $25 million would be coming out of back into that factory at least from what we had not shipped from the previous quarter. So that's that impact. Can you repeat the second question?

Yes. Second question is can you comment on the trend in the booking or the backlog during the quarter? Like do we still see this trend continue to increase? Or kind of flat or whatever? Just any color would be helpful.

Yes, absolutely. So obviously, we've been talking about having approximately $30 million to $40 million of backlog in the last couple of quarters that we would have liked to have shipped. It didn't have enough part. So that obviously rolled forward. We're seeing that start to be sprinkled into Q2, Q3 and Q4. So as a result of that, we're going to see hopefully that revenue ship out. As Jim mentioned, we do see very high demand over the course of this year. And hopefully, we'd be able to ship more. But basically, that demand that we've seen that has rolled over from quarter-to-quarter will definitely more likely move into Q3 and Q4 forecast when we get to that point.

[Operator Instructions] Next question comes from Quinn Bolton with Needham & Co. Please go ahead.

Jim or Sheri, just, I guess, a follow-up question on Shanghai, just sort of trying to get my head around the size of that facility. Shanghai was shut down, couldn't shift the last two, three weeks, and that had a $40 million impact on the quarter. Should we be thinking that about $150 million to $200 million of revenue flows through Shanghai? And again, just trying to get some sense of how large that facility is.

Yes. So Quinn, so no, you can't extrapolate the last three weeks because I don't know why, but the industry has always been this way. Everything shipped in the last three weeks of the quarter. And so the last three weeks tend to be critical. It comes from our customers. It comes from their customers. There tends to be this last minute framing for the homework and the exam. So there tends to be a very heavily weighted effect on the last two to three weeks of a quarter. We do -- Shanghai is -- we do about $100 million or so out of Shanghai. So it's obviously one of our bigger factories, but you really can't take the impact of the last three weeks and extrapolate -- linearly extrapolate that to the impact. So I think the main point is we think we're going to -- we're pretty confident between our business continuity plans and moving production to other sites as well as the fact that things are loosening up in the area right now that we'll start to make headway on that in the second quarter. And I think by the third and fourth quarter, we'll really gain a lot of momentum. And we often get the question, is this demand perishable? That's a favorite investor question. It is not. We are fulfilling the customers. Many of the customers are affected by the same exact things. And so even if we weren't impacted, the whole ecosystem has been impacted. So we are not causing customer issues with this. So -- but we believe that the whole ecosystem will really start to come back in the second half, and we'll start to see some improvement in the second quarter.

And then my second follow-up was just on the Malaysia facility. I think you said you were doing sort of $30 million, maybe $40 million of that from that facility in the March quarter. I just want to make sure, is that a quarterly run rate. I believe in the past, you'd said that, that -- the first phase of that facility could do about $200 million a year or about $50 million a quarter. So it sounds like that's ramped pretty quickly if I've got the numbers correct.

That's correct. That is a quarterly number. And we are ramping it and we are accelerating the ramp given the demand environment and the different issues that we're facing. So we are accelerating that as fast and possible. We're really proud of that Malaysian facility. They've done an amazing job, as I've mentioned before, and we're bringing that up very quickly. And absolutely, we expect to do somewhere in the next year or so ramp that up to about $200 million a quarter -- $150 million to $200 million a quarter.

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

Well, thank you all for joining us today, and we look forward to meeting with you again next quarter.

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