Shelly Chadwick: Hey, Phil, I’ll take that one. So, as we mentioned, the majority of that issue was in performance materials and really what we saw, there was some yield challenges coming out of an early production process that impacts many of our downstream product lines in performance materials. That started really early ish in the quarter, if you would, and we started to see that we weren’t going to be able to service all of the demand, all of the orders that we had on the books, which is when we re-evaluated and then came out with a bit of the early caution. That is getting better. The issues are being addressed. I think the team got together quickly to make sure that we could get those yields back up to be able to service the full order book.
There were a couple of other items. We had some delays at an outside tolling partner that were an impact, and then some small yield challenges in precision optics. So we just had a few things that kind of fell under the bucket of operational challenges that we think we’ve got addressed, but they were big enough to talk about.
Jugal Vijayvargiya: Yeah. And Phil, I would add that as we look at our Q2 and as we’ve indicated, we expect Q2 to be a step up, a significant step up, step up from Q1. Getting those operational challenges behind us is core to that and based on how we have been running here in the month of April and how we expect to run the rest of the quarter, I would expect that we’ve made a marked improvement in those operational challenges.
Operator: Thank you. Your next question is coming from Daniel Moore from CJS Securities. Daniel, your line is live. Please go ahead.
Daniel Moore: Thank you, Jugal. Thank you, Shelley. Good morning. Jugal, in the prepared remarks, you mentioned the start of the recovery in semi. Maybe just elaborate on conversations, dialogues with customers, your confidence that demand should continue to improve sequentially beyond Q2 for the next few quarters.
Jugal Vijayvargiya: Yes. Well, as you know, this market has been a very challenged market, not only for us, but for the entire industry. Right. And there have been some starts and stops in thinking when is the bottom? We do believe, based on orders and based on conversation with our customers, that Q1 was the low point for us. We see improvements going into Q2. We see improvements here in the first few weeks of first few weeks of the quarter as well as, I think what we see for the next couple of months as well. Our discussions with the customers as well as, I think what we hear externally continues to indicate that logic and memory in particular, is starting to lead the recovery and I think it will continue to lead the recovery in Q3 and Q4.
There are some challenges on the power side. Those challenges being, frankly, the EV, the slowing growth of the EV. I think that’s going to take a little bit more time for the power side. But logic and memory, I think are making — are starting to make more of a recovery. When I look at our order backlog, our order backlog has continued to improve over the last couple of months. We see probably from about three months ago to where we are today, approximately, I’m going to say, double digit order backlog improvement for the semi business, which gives us confidence not only for Q2, but I think it gives us confidence for the back half of the year. So I would say if I look at the last few quarters, it’s the first time that I can sense a little bit more data that gives us confidence for the recovery to start to happen here in Q2, with Q1 being a low point and then continuing in Q3 and Q4.
Daniel Moore: Very helpful and just pulling on that string as we think about ’25 and beyond and I guess it’s probably more into ’26, but the build rates expected for a lot of the fabs that are expected to come online. Just talk about your confidence. When do you expect a more meaningful inflection in that sort of core end market as far as when we might see the uptick to longer term, high single digit type growth?
Jugal Vijayvargiya: Yeah. So I think when you look at the build rates in terms of the fabs and some of the investments that are being made, we certainly saw some of the investment slowdown commentary over the last 12 months, 18 months, as the overall market started to become more challenged. However, what we are seeing now, I think is starting to have some more positive discussions around the investments. We’re seeing some of the investments in the US, for example, some of the government investments coming into play, some recent announcements at large, at large companies with the aid the government is providing. I think we’re starting to see kind of almost starting back up of the investment activity in Asia as well. So the investments are happening, but perhaps a slight delay, right, from what they were talking about maybe two years ago.
So probably a one to two year delay, but the investments are clearly getting back on track. When I look at the levels that we had in the ’22 timeframe; that was really the peak of the semi side. The thought was that those levels will start to come into play probably in the back half of ’25, perhaps now they, perhaps on those peaks would be maybe the front half of ’26. So a slight delay, a couple of quarter delay from some of the overall recovery that’s happened. But I do continue to see over the next 24 months to 36 months, I think a steady improvement and recovery in the semi market again led by logic and memory, but then followed by the other areas as well.
Daniel Moore: Perfect. And then last for me and I’ll jump back; the incremental capacity that you would have from shifting production from the legacy facility to the new clad strip facility, is that something that you can think about actively selling to alternative potential customers or is it more likely to be shuttered? Thanks.
