All right, so we'll get right to it. I'm Matt Prisco with Cantor, and today we have the pleasure of chatting with John Lee, CEO of MKS, and Ram Mayampurath, CFO.
Perfect.
Thank you both for joining us today. Wanted to kick off with the NAND market today, given the early signs of life here and MKS's leverage to the area. First, how are you thinking about the upgrade cycle through 2025, the key drivers and the magnitude? How do we think about that cycle translating to growth for MKS's power business?
Yeah, no, thank you for that question. I think, and thanks for having us here, by the way, your Inaugural Conference. Great to be here. As you know, we've talked about our RF power market share in NAND, and this is a critical enabling subsystem that enables the high aspect ratio etch. We are the only ones who supply that in the industry today. We've talked about inventory burn-through for us for most of 2024. Most of that inventory is now burn-through. As upgrades occur, we are going to see the benefit of that. We are already starting to see some of that. We have talked about that. I think certainly the pace at which we see that happen will depend on the end users, how many convert, when they convert.
Certainly, we stay close to our customers to make sure that we're going to have the materials ready for them to do that. I think in general, it's going to be better for us this year just because our inventory has burned down.
Okay. Do you now see maybe growth roughly in line with the market in NAND? Because I assume that's a NAND comment and not just an overall.
Right. That's a NAND comment because even in 2024, most of the other inventory had burned down. We were shipping to what our customers are shipping for the rest of our broad portfolio. Really, NAND was the only headwind at that time, and now it will be just like every other product category.
Perfect. Maybe you could talk about the competitive landscape today for the power products, specifically regarding Lam highlighting conductor etch system at its Analyst Day and Pulse DC being a primary topic of discussion today.
Yeah. As many of you know, we are the strongest in dielectric etch versus conductor etch. We have had a couple of design wins in conductor etch, but still most of our revenue and market share is in dielectric etch. Pulse DC is a new way to deliver power to an etch chamber. This is something that's new, that's being adopted mostly in things like conductor etch, not yet totally adopted in high aspect ratio dielectric etch yet. We're working on that as are our other competitors. I would say this, you know, today every NAND etcher in the market is using RF power, not Pulse DC. In the future, that could happen, but right now we're all working hard to see if that is something that's going to be differentiated to be used in the market.
Okay. I think there's a view that in that Pulse DC transition, when and if it happens more meaningfully, it happens about on one of the three boxes within the system. Why one of three boxes? Why can't it proliferate across all? You said you're also working on a product offering here potentially. Where are you with customer conversations there? What has been reception, early feedback, anything like that?
Yeah. We're pretty happy with our reception to our Pulse DC solution. We're working with all our usual suspects, if you want to put it that way. You know, people know that there's only a couple of companies that can actually deliver the technology needed for the next generation power solutions. The reason there's only one box is because you have several boxes inside a plasma etch chamber. Some of those power boxes are generating the plasma, making these charged species, and some are controlling a uniformity, and some are putting the energy to have them move very quickly and rapidly into the hole. That's the bias generator, and that's what Pulse DC is targeted to, potentially replacing the RF solution that's there today.
If there is a move to Pulse DC and you see one of those boxes upgraded, does that favor your competitor on the other two boxes, or do they stick with MKS on those other two boxes and then that one could go elsewhere up for grabs ?
I think in general, you know, you do not change if you do not have to, right? You know, if the other boxes have been designed in and there is a long history of learning to integrate those in, you know, there is no reason to change if you do not have to. I think really the battle is in that Pulse DC part. As I said, today every NAND etcher is made without Pulse DC today. In the future, that could change.
Okay. I guess moving to the optical side, I believe you talked about three primary wins here to date. Can you maybe walk us through the timing, magnitude, and breadth of these ramps? What is it that is primarily driving the wins here for MKS?
Yeah. Certainly what we call this effort, world-class optics. It is an investment made by us in CapEx and process engineering to develop more sophisticated solutions for the lithography, metrology, and inspection market. We did that about five years ago. You know, just as a data point, five years ago, our revenue in this market was about $150 million. Now it is $300 million. We have started to see the numbers show up with that. Now, as we have developed capability, we are getting asked to do more sophisticated things. These are more difficult things that require that investment and innovation throughout the last several years. We are also unique in that there is no other company that has the portfolio of potential solutions that could be integrated for a lithography or a metrology or an inspection application.
We have optics, we have optical control, we have motion, we have lasers. No one company has all of that together. We think we provide a broader portfolio of solutions to our customers.
Okay. One of these wins, I believe, is for an optical system upgrade. That seems like a pretty big deal in terms of solidifying your position in this optical market, given you're kind of newer to this market, newer to playing here and really bolstering their portfolio. With that said, now that we have these three wins under our belt, we have the upgrade, is there now a snowball effect in terms of driving new wins, new designs, or are we still in the prove-it phase that MKS is a real deal here?
Yeah, I feel like we're beyond the prove-it phase. I think we've done a couple of very difficult things that are now in production, and that's the proof point. These customers are very demanding from a technical perspective. When you can meet those kinds of criteria, I think you've proven that you can do it. In terms of snowball, maybe, maybe not, but certainly we are intending to continue to invest so that we become the first choice. I think when you look at the supplier market in lithography, metrology, and inspection, there's kind of a couple of big companies like us and then a lot of smaller companies. Scale does matter because size allows you to invest during down cycles. Some of these problems that we're addressing, they take multiple years to fix, to solve, right?
You have to be able to invest through cycles. It's easier to do that when you have scale versus, you know, being a smaller company.
Is there an opportunity for consolidation there given all these smaller players and to kind of bolster your portfolio to give a greater breadth of offering?
Yeah, I think there's always possibilities there. I think, as I said, it's kind of a dumbbell, barbell kind of shape in terms of the size of companies in this market. There's a couple of big ones like us on one end, not a lot in between, and a lot of small ones. It kind of reminds me of the semiconductor equipment industry, you know, 30 years ago, right? Lots of small companies, great technology, but single point solutions. I think at some point you need the scale to be able to invest in manufacturing capability. You need the scale to invest in R&D through multiple cycles. I think potentially that's an opportunity for consolidation in the photonics optics market.
Okay. Given these wins that you're now accruing, how do we think about MKS's growth rate maybe versus the litho-inspection and metrology markets in 2025 and 2026 as these wins ramp?
Yeah.
Yeah.
Yeah. Ram, you could take that one.
Yeah. We are very happy with the growth in litho-metrology and inspection. We've seen double-digit growth in a flattish year, if you may. We are well differentiated both from the depth and the breadth of the offering we have, and we are investing in that area. Actually, we're happy to see the progress we made so far, and we're happy with the design wins we are securing now, which will give us traction in the coming years to come as well.
This outgrowth of the subsegment of WFE, litho-metrology inspection, is one of the ways we outgrow WFE over the long term, right? This is about taking share. Other areas are about just the growth of, for instance, V-NAND, right? Certain segments grow faster than others. Today, for instance, depth etch is becoming more and more important again as verticality comes to chips. Gate-all-around requires more depth etch processes, and that's been our historic strength as well.
Is there an area within that litho-inspection metrology market that you guys are greater levered to today, or are you providing a solution, optical solution that can kind of play across all markets?
Yeah, I think I would say this. The expertise in optical coatings and optical subsystems, integrating them for very difficult optical applications, that's the expertise. A lot of that's know-how, right? And then being able to fabricate the various hardware to enable you to do that. Those are really some of the differentiating areas that we have where it's not just about optical design engineers, it's about manufacturing engineers knowing how to make the optics so that the designers can actually use those differentiated capabilities. You have to have both, and if you have both, you have a differentiating portfolio versus someone who just has optical design or someone who has just the manufacturing design.
Okay. Now, I guess looking to broader semis now, any updates you can offer on customer utilization rates, spare parts, ordering patterns, really anything that helps inform your view on how 2025 dynamics play out for the business?
Yeah, maybe I'll start and Ram can take that too. I think in general, you've seen our service revenue become stronger for fab utilization. That service business is something we've focused on for the last several years, making it a separate business. We're pretty happy with that progress. I think you have some numbers there.
Yeah. Service is about 13% of our overall revenue and a very profitable part of our business. We are happy to see the growth continue in that. To your question, Matt, utilization levels are high in the fabs, and we see it in our service business. It's a good indicator to show the utilization levels when service gives us an indication of that. Going back to what John said earlier, it appears that we have burned through the inventory in the channel, and we are starting to see orders. It's off of a small base, but at least we are seeing it more real-time now.
You guys typically talk about underperforming during a downturn and outperforming during an upturn. How should we think about this dynamic as we look at 2025 and the moving parts if we are in a flat to plus mid single WFE environment? How does that change if we look to 2026 and say there's growth of 15%?
Yeah.
In that world, how do we think about MKS's growth opportunity?
Yeah, I think it's not a surprise. I think as our customers think about their future quarters, if they see a big uptick, they start ordering right away. We start seeing that overperformance. If they see flat, like it has been for the last several quarters, then we're kind of shipping to their demand. Right now, I think we would be saying we're kind of shipping to the same demand and growing at the same rate as WFE now that our inventory has been mostly burned off. I think during an upturn, a fast upturn, that's when we outperform. I think the other fact I'd say is, you know, if you took out China, because we can't sell to many of our semiconductor equipment customers, previous semiconductor equipment customers in China, we've actually outperformed WFE over the last two or three years. Yeah.
With China, that's a big headwind. We're not backing off from our overperformance over a long time, but it gives me confidence that that model still works.
Okay. In a + 15% world, how do you think about the leverage for your growth there? Because I know you give overall through cycle how you outperform WFE, but in that upturn, is there typically a rule of thumb we can use?
Yeah, I don't know if it's a rule of thumb, but you know, some data is that, you know, I think in 2021 or so, WFE grew 15%, we grew like 35%, right? It is really, and that was a ramp, right? We could be, you know, multiples times the growth rates of WFE depending on how steep that upturn comes.
Okay. Will there be a restocking of inventory at that point as well? Will that help you, or is inventory kind of at a healthy level right now that there does not need to be a restocking? How do you think about that dynamic?
Inventory levels are relative, right? Relative to where the market is. If it is a flat market, it is healthy today. In an upturn, certainly no one wants to be short of parts, right? You build a lot of inventory for that. Our customers do. They continue doing that as long as that market keeps going up. For the last upturn, that kept going up for a long time, and there was a lot of inventory built, and therefore the hangover is even longer as well. In general, I think it is a view of how steep the curve is as well as how long people think it is going to sustain. That will determine the inventory levels that our customers are comfortable with.
I think in general, though, all of us in the industry are holding a little more inventory, including ourselves, than we have in the past. A lot of it is chip inventory because of the last upturn. That was one of the constraining components for our ability to ship.
Okay. Now with all the drama and leading-edge foundry logic, how are you thinking about MKS's position within this construct, and what would it potentially mean for MKS if we were to see consolidation of these leading-edge players?
Yeah, you know, I think maybe the answer to that is going back to the fact that we address 85% of all WFE, right? No one else comes even close to that. We are shipping to the big five OEMs. Obviously, all the growth in any one cycle is coming from the leading edge, right? 3 nm build-out, 2 nm build-out. We are addressing all of that, most of that equipment, 85% of it. I think whether it is one company, three companies, whoever is building, we really do not care. We kind of care that the overall number is X. WFE is $100 billion or $110 billion or $90 billion. That is really going to set what we see.
Okay. You recently touched on advanced ozone applications for gate-all-around as an incremental opportunity for MKS. Within this broader semi bucket, are there any other notable areas that could be incremental to the growth story versus overall WFE spend outside of the power and optical that could drive kind of outperformance?
Yeah, I think gate-all-around is this new structure, as a lot of you know, and it's got a 3D component to it, and it's more sensitive. Things are smaller, and so you have to have better precision and control of the etching process, the cleaning process, and the deposition process. Because of that, there's a lot more etch depth relatively than when there wasn't gate-all-around. I think a lot of our etch and depth company customers are pretty happy that for the next little while, there's a tailwind for them. Now, if you step back, we care about depth etch. We also care about litho-metrology. You know, the reason we have a broad portfolio in WFE is because in one decade, depth etch takes off relative to litho. In other decades, the reverse, right?
We're trying to position ourselves so that we really want to be leveraged at WFE, whether that's more depth etch or less depth etch or more litho. You know, we want to make sure that we're not levered too much to one type of process step or not.
All right. In your electronics and packaging market, about 25% of overall revenues, you saw a stronger than expected uptick in equipment orders for both drilling and electrical plating a couple quarters ago, I believe still flowing through the P&L today. Will these be a headwind as they roll off, or has there been further traction that will kind of result in some sustainability here moving forward?
Yeah, we talked about maybe two quarters ago, right? We got these relatively surprised orders for chemistry equipment for advanced packaging. It was chemistry equipment tied to multi-layer board and HDI level packaging, not even the most advanced PCB industry, the IC substrates. This is tied to AI. We continued the next quarter, and we talked about that. The bookings continue to be strong. So far, they've been pretty steady, right? We haven't seen this one-time blip. We're pretty excited about the fact that, you know, we'll see how long this extends, but the best part of delivering chemistry for us is that 100% of the equipment, sorry, that we deliver, 100% of the chemistry's ours for longer term too. That's great for our chemistry business, which is the recurring part.
It's good to see the industry investing in equipment in certain parts tied to AI.
Maybe we could just dig a bit deeper into that AI opportunity specific to electronics and packaging. This used to be just substrates to now benefiting more of that MLB and HDI. What changed here? Why are these other markets all of a sudden becoming growth drivers? Has this dynamic impacted your vision for growth for the MLB and HDI markets? I think you previously talked about MLB less than 4% and HDI around 5% for the market. Is that vision now changed?
Yeah, I think those growth rates of MLB being kind of GDP, GDP plus, it's probably GDP plus now. For HDI, the middle part of the PCB industry being single digit, mid-single digit CAGR, probably a little incrementally better. Fundamentally, it's all driven by AI. MLB is washing machines and refrigerators. We don't need more of those. We have enough capacity for that. What's driving MLB and HDI now is, you know, when you make an AI chip and board, it goes through this most advanced IC substrate part, but it's still not connected to the outside world. You've got to go through the HDI and the MLB boards. Those boards are now 30-40-50 layers, right? Washing machine MLB board is four, right? AI MLB is 25, and the HDI is 15-20, right?
That's what's driving this equipment orders, these equipment orders that we see. You know, as AI becomes a more and more important part of the entire packaging industry, the PCB industry, we'll see more of the MLB growth, the HDI growth, as well as obviously the highest growth part, which is the package substrate. We think that grows at high single digit CAGR.
Can that layer growth sustain from here, or is that kind of a one-time tick up to make these boards appropriate for AI and now we're at a level that it can handle it? Or are we just going to see the AI performance improves, we're just going to keep seeing higher and higher layers?
Yeah, I think it can sustain. The idea here is, the bigger idea is I need denser interconnections. I can do that by putting more layers, connecting more layers. I can do that by making the lines and spaces smaller, or I can do that by making that board bigger, right? Kind of like semi, right? Wafers getting bigger, small lines and features, more layers, right? It's exactly the same thing. All three are actually happening. While the number of layers is growing and has grown remarkably quickly, at some point it becomes very expensive to grow it, but you know, people figure ways to, you know, thin each layer, for instance. People are making the boards bigger, and people are making lines and spaces smaller. All three have to happen.
What we care about is surface area because each layer is made one layer at a time. The chemistry's applied one layer at a time. The holes are drilled with lasers one layer at a time, then they're glued together. We think area is a big part of it and the size of the board as well. Not to be dismissed is making the lines and the holes smaller. That's harder to do. Filling smaller holes, just like in semi, is harder to do. Making smaller lines and spaces, it's harder to do. That is going to be an advantage for companies who have that technology, who have the infrastructure to continue developing that technology. You know, the 100 PhDs in Berlin doing all this, right? Of course, because it's harder to do, it's more differentiated.
You can get paid for that, and there's a moat around your solutions.
Okay. Since we're talking about the surface area, maybe it makes sense to talk chemistry for a second since you're winning as you coat that surface area. How do you view the trends today in that market, especially as you have these secular trends plus a market that's kind of not so great? Are you bouncing on the bottom here with kind of seasonal trends in chemistry, or is there some other dynamic we should be thinking of?
Yeah, so in 2024, our electronics chemistry revenue grew 12% year-over-year. The industry grew 5%, 5% or 6%. We are happy about that. We have outgrown. This is organic growth, right? A lot of it is driven by the AI applications. You are right that a big part of the market is still driven by smartphones and PCs and non-AI servers. Those markets have been muted. Our overall numbers have been relatively flattish, but the AI part is the part that is growing very fast. We are happy about, you know, our traction there. I think longer term, AI becomes a bigger and bigger part of the PCB packaging market. As a result, I think the market will continue to grow faster.
If smartphones came back and PCs came back, you know, with a refresh cycle or an AI application, that will continue to be tailwinds to the entire market.
As you maybe look towards the equipment orders, which have been doing pretty well, how does that help inform your view on chemistry sales maybe over the next 12-24 months as that equipment gets put in place? How do you think about the chemistry sales over the next year or two?
Yeah, I think we're very positive, very happy about it. That equipment that's being ordered, they're ordering it because they need it, right? They need it because, and therefore they're going to use it 100%. The chemistry there becomes an annuity, if you will. That really allows us to continue growing chemistry sales relative to the market, especially because the equipment is ours as well. Therefore the chemistry will be ours.
Now you've talked about for that laser business here, the interesting backend opportunity with the HBM win, I think you talked about maintaining momentum there last quarter. Can you talk about traction maybe beyond this initial customers or more opportunity beyond that? How do you think about just the size of this opportunity over the coming years?
Yeah, we talked about lasers, our lasers being used for HBM and dicing applications. You know, I think, you know, the size of that market will probably depend on, you know, how the HBM market goes, right? I think the reason why some of our most advanced lasers are being used is because, you know, when you're stacking eight dies of HBM on top, DRAM on top of each other for HBM, you can't have defects because now eight dies go away, right, instead of just one. You know, the dicing of the edges of those die have to be cleaner, produce less particles. That's why you need more precise lasers. I think that's a good trend. When we get to 12 layers, 12 DRAMs and 16, that'll be an even bigger challenge from a yield standpoint.
I think, you know, we're pretty happy with the progress we've had. It's been multiple customers, by the way, not just one. We have been working hard on developing new laser technologies that allow our customers to get that capability without much more power at the same cost. Some of the lasers that we're delivering now have shown to the industry that we're quite differentiated with respect to those two parameters.
As you prove to be successful with this laser product in HBM, are you seeing other market opportunities open up where people are coming to you in other advanced packaging areas or anywhere else?
Not necessarily for lasers. Lasers have been used for many kinds of micro machining. HBM is the latest, but solar has already been used using lasers. Other areas, though, for packaging of HBM is motion. Bonding wafers together with each other. You're trying to precisely, you know, locate chips on top of wafers or chips on top of chips. Precision motion becomes another area of opportunity we've talked about in the past as well.
All right, great. Maybe the last question on this topic, how should we be thinking about the ramps of the MKS ATC synergy wins? Can you offer an update on where we stand today in terms of those wins and new customer traction over the past few months?
Yeah, I think, you know, it's been about two and a half years now since we closed the acquisition. I would say there's probably, you know, a dozen synergy wins. So meaning either one group was not in it or the other group wasn't in it. Most of them have been from Atotech bringing the laser group over, but there have been some where the laser group brought Atotech into it. You know, at some point, a lot of customers have both. The synergy, though, is a different synergy. It's not that one wasn't there and one was. It's just that together we're more valuable to that customer. You know, we don't count that, right? I think more and more that's really the real synergy going forward.
Okay. And then moving to specialty industrial quick, market recently came in a bit worse than expected. No huge shock given the industrial backdrop overall. Maybe you could walk us through the moving parts here. How should we be thinking about the growth potential through the rest of the year? Are there areas of the business where you're perhaps a bit more excited about the opportunities? Any other areas which may be greater risk within today's backdrop?
Yeah, you know, as we talked about, our specialty industrial segment is made up of many different markets and different products. You know, and I think the headwinds have been from a couple of markets that aren't a surprise. The manufacturing, general industrial manufacturing, that's been down for everybody. That's been a big driver of the year-over-year decrement, about 5%, I would say. A little bit of solar too. Solar is not as good in 2024 as it was in 2023. Everything else has been puts and takes. Automotive also has been a bit down as well. We are unit-driven in automotive. We're not a, you know, we supply chemistry there. That's very much utilization dependent. Overall, it's down about 5% year-over-year, which is not a surprise driven by general industrial, a little bit of automotive, and a little bit of solar.
How do you think about the growth potential this year kind of within today's backdrop?
Yeah, I think a lot of it is going to be macro dependent, I think. Your guess is as good as mine what that's going to do this year because I thought coming in was, I had a different view than, you know, last week and certainly today. I think certainly if the macro economy picks up, that'll be good. You know, we'll just see that. If it doesn't, of course, we'll see that as well. As we've said in the past, the specialty industrial market is really a way for us to leverage the R&D we put into semi and E&P so that we can, you know, use that innovation in different markets.
Great. Deleveraging obviously remains a key focus of MKS today. How should we be thinking about the pace of the debt paydown from here? Kind of what are guardrails we should be thinking about maybe in terms of free cash flow allocation towards this goal or minimum cash balance or even a target interest rate reduction by the end of the year? I think last year you paid down $130 million, the annual reduction in interest rate expense throughout the year. Any help you can give us in the deleveraging story?
Sure. Let's, if we can, take a step back and look at the P&L for a second. The team executed very well in 2024. You know, if you think about a flat top line year, they improved gross margin by 190 basis points, kept OpEx flat, improved operating income by 180 basis points year-over-year, brought tax rate down below 15%, all while executing in the CapEx and R&D requirements. Translated a lot of that to the cash, 92% of our net earnings was free cash flow, which helped us pay down $476 million towards our debt. That's $426 million more than our mandatory payment. Also grew EPS by 49% year-over-year. It was a very strong year of execution. Our interest rates, if you look year-over-year, Q1 2024 to Q1 2025, is down 40%.
That is a combination of early paydowns and also pricing, repricing as market opportunities arise. Our leverage is 4.3 x now. Our goal is to get it to 2x-2.5x. To your question on capital allocation, outside investing in CapEx that we need for growth and business continuity and the $60 million we pay as dividend, all focus is to pay down debt and make the balance sheet stronger.
Okay. Do you still have a targeted minimum cash balance today so we can think of what portion of excess cash?
It fluctuates a little bit quarter to quarter depending on our CapEx. Sometimes, you know, it picks up speed. Our CapEx is in the 4%-5% now. It's going to stay at that level for the next 18 months or so. It used to be 3%-4%. We are investing in some large facilities in Southeast Asia in particular as we have disclosed publicly. There will be a little bit of that, but a $650 million is a decent number to keep in mind for cash balance.
That's helpful. Ram, you've been in the CFO seat for nearly five months now. On a company level, any changes to operations, targets, or strategies that have been implemented or you're planning on implementing in the, you know, not so distant future? Just kind of what's your focus over the next 12 months for MKS?
Yeah, that's a good question. There are a number of activities we are working on. John and I have discussed several ideas for improvement. The key is to continue the same pace of execution that the company has demonstrated. You know, to control what we can control, be quick in correcting costs as the top line changes, which MKS has proved to be very good at. Keep the focus on gross margin. To manage both commercial actions and operational excellence activities, which is a combination of manufacturing excellence, procurement, and design to manage your product costs, control your OpEx, and continuously drive the EPS growth. Focus on executions. Once you correct that cost structure to where it is, as top line comes back to more normal levels, you're going to see much more flow through and we can accelerate our cash generation.
It's been great to not be the CFO. It's great to have Ram on board, a really experienced CFO. He's added a lot of value in a very short period of time. The team is strong under him and he's going to be a great coach for them as well.
Very good team.
We only have a few seconds left, so I want to sneak in one more question here. China. I know you guys directed.
We've been doing for a while.
Yeah. Direct exposure at this point is relatively low. How do you think about your exposure to the region just through the OEMs? How does that track maybe this year, next year? How do you view risk? Any comment you can make on how you're managing the situation today?
Yeah, I think our exposure to semi equipment in China is very low, as you said. Our exposure to semi in China is indirect through the OEM. You can look at the big five and their percentage of China, that's kind of our exposure. It goes up and down depending on what they ship. That's a pretty simple math. I think in terms of tariffs, yes, we have a couple of factories in China. Several of them are China for China, especially the chemistry factories. Several do produce for China, but also outside of China. Many of those are shipped to customers whose factories are not in the U.S. There is really no tariff issue there. We do have a work stream of people looking at tariffs because they affect we're global.
We have lots of sites in different kinds of countries. We are looking at ways to look at where we have risk or not, and then how to mitigate it. There are many ways to mitigate it short term. There are longer ways, longer term approaches too, but those would take time. I think right now we are in a pretty good position with respect to understanding where our exposure is. Remember that the tariffs have not really all gone in yet, right? We are not doing something yet because we do not have to, but we are ready in case we have to.
Wonderful. Thank you guys both so much for chatting today. I'll end it there.
Thank you, Matt.
Thanks, Ram.
Thanks, everybody.
Thank you.