Now, one’s an advanced institute where we think we’re going to get significant learnings and the second one is actually an advanced logic customer. We’ve placed our dragon in their R&D region. So we are making penetrations and those penetrations are always going to be technical driven. It’s not going to be a cost of ownership play. It has to be a differentiation play. So we’re working with a lot of different partners to work out how we can differentiate our technology in their application and obviously the goal is to solve really valuable customer problems.
Duksan Jang: Understood. And as a follow-up onto OpEx, so in Q1, I think the implied OpEx guide is roughly $60 million. And obviously it’s a little bit of an increase sequentially despite sales coming down. So how should we think about the run rate from here for the calendar 2024 and onto 2025 as well, because the 2025 at $1.3 billion, 19% of sales, that’s about $245-ish million and I think you’re kind of already at that level.
James Coogan: Yes. So as we think about OpEx going forward, we’ve talked historically, and we mentioned it in the prepared remarks today, that we are going to continue to make investments in incremental R&D. And so you’ll see that some of the increase period over period has to do with incremental investments in our research and development team here. In addition to that, we’re going to kind of continue to try to hold our SG&A expenses relatively flat. We believe we built a base here that can support the type of growth that we see coming in the future. And so we’re going to tightly manage expenses around our SG&A over the course of the year to maintain those at the, we’ll call it the exit rate of 2023. Absent, normal salary appreciation and other types of cost changes that would flow through our process, largely speaking, you’re going to see that number as a percentage of sales come down as the volumes increase over the back half of the year.
And as we move to 2025, we’ll still be very judicious in terms of making sure that we’ve got the type of efficiency that we want out of our SG&A organization while continuing to make investments in research and development.
Duksan Jang: Sounds great. Thanks.
James Coogan: Yep.
Operator: One moment for the next question. The next question comes from Mark Miller with The Benchmark Company. Your line is open. Mark, your line is now open.
Mark Miller: Thank you. Just a housekeeping issue. What was capital spending?
James Coogan: For the quarter? It was $10 million in the quarter and approximately $20 million for the full year.
Mark Miller: Okay. And your cash from operations was $65.6 million, is that correct?
James Coogan: Yes. In the quarter? Yes.
Mark Miller: Thank you.
Operator: One moment for the next question. The next question comes from David Duley with Steelhead Securities. Your line is open.
David Duley: Thanks. I was a question on gross margins. You’ve talked about revenue being flat for the year. With the second half recovery where should we think about gross margins kind of exiting 2024 or just a progression throughout the year? Just trying to kind of quantify when you talk about margins being up, how much.
Russell Low: Yes. Again, we’re not going to provide direct guidance on where the expectations are for margin over the course of the year. Right now, what we’re forecasting, given the contribution of higher CS&I volumes over the period, as well as some system mixes, we do see it being up over 2023, gross margin overall.
David Duley: Okay. And what was the reason behind the strong bookings in the quarter? I think that there were $236 million I think that was the number. Last quarter was like $198 or something like that. What were the key in markets and applications that drove the increase in bookings?
James Coogan: Yes, it’s silicon carbide in China. That’s the big driver.
David Duley: Okay, thanks.
Operator: One moment for the next question. The next question comes from Craig Ellis with B. Riley securities. Your line is open.
Craig Ellis: Thanks for taking the follow up, guys. I wanted to follow up on a messaging change that seems a little different than what we heard through last year. And it’s regarding CS&I this year and next year, it seems like there’s a more optimistic view about what upgrades and some other offerings that the company has developed can do for annual revenues in that area. Is that correct? And can you provide any color on what specifically you’re doing that is driving the growth that you’d expect in 2024 and 2025? Thank you.
Russell Low: Hey, Craig, it’s Russell. So, as you’re aware, our install base has grown really rapidly, particularly in terms of Purion and that has a very strong platform. So as we look at our CS&I aftermarket business, we’re looking to focus on contracts and we’re looking to focus on high value upgrades. So we are actively developing upgrades that add significant value for our customers so we can sell those. And at this point of the cycle, often what you see is the utilization starts to go back up. Then you see customers buying upgrades that can support increased capacity, and then they start buying machines. So this is a perfect time to be working with our customers, qualifying these upgrades, working with these upgrades, and building that part of our business out stronger.
Craig Ellis: Got it. Thanks, Russell.
Operator: This concludes today’s question-and-answer session and presentation. Thank you for your participation in today’s conference. You may now disconnect. Have a great day.
