Jim Ricchiuti

Jim Ricchiuti followed up on the 2026 growth outlook, asking for clarification on the Microfabrication business's expected performance (flat to down) and how that implies strong growth for the aerospace and defense (A&D) segment. He also inquired about the Longmont, Colorado facility expansion, specifically how the doubling of manufacturing capacity translates to revenue potential and the timing of this investment.

Answer

Joe Corso, nLIGHT's CFO, confirmed the interpretation regarding A&D growth, noting that Microfabrication revenue (typically $8 million-$12 million per quarter) has the least visibility and China's contribution has precipitously declined. He emphasized that A&D growth is crucial to maintain overall positive fiscal 2026 revenue. Regarding the Longmont expansion, Joe Corso stated it's driven by anticipation of a strong market over the next couple of years, positioning nLIGHT to simultaneously build multiple beam-combined lasers, though a specific revenue translation is difficult. Scott Keeney, nLIGHT's Chairman and CEO, added that the investment is well-received by the Department of War and is actively being built out to meet explicit requirements.

Jim Ricchiuti from Needham & Company sought clarification on nLIGHT's 2026 growth expectations, particularly how the microfabrication business, which had a decent 2025, might perform (flat to down) and its implications for the A&D segment's growth rate, suggesting it could be 'reasonably strong' rather than just double-digit. He also asked about the revenue potential and timing of the new Longmont, Colorado manufacturing facility, questioning if it addresses intermediate or longer-term opportunities.

Answer

CFO Joe Corso confirmed Jim Ricchiuti's interpretation, noting microfabrication has the least visibility, typically ranging $8-$12 million quarterly, with China's contribution significantly reduced. He explained that microfabrication's performance (flat or down) would influence the required A&D growth to achieve overall positive revenue for fiscal 2026. Joe Corso stated the Longmont expansion is driven by anticipated strong market demand over the next couple of years, enabling simultaneous production of multiple beam-combined lasers, though a direct revenue translation is difficult. CEO Scott Keeney added that the investment aligns with explicit Department of War priorities, with active build-out and positive reception from key DoW personnel.

Jim Ricchiuti asked about the primary organic growth opportunities for Montrose Environmental, specifically how end-market trends translate into growth for particular business lines. He also inquired about the drivers behind the improvement in cross-selling and the reported PFAS revenues and growth rate for 2025.

Answer

Vijay Manthripragada, President and CEO, highlighted strong growth in the water technology business, core testing (field and lab-based), and environmental consulting. He cited increased demand from mining clients in Australia, Canadian infrastructure build-out, and rising industrial activity in the U.S. He attributed cross-selling improvements to execution, leveraging the emergency response business as a cross-sell engine for testing and remediation, and investments in commercial infrastructure and talent. Regarding PFAS, he stated it remains 10-15% of the business with expected double-digit growth in 2026, clarifying that the water technology business addresses a broader family of contaminants, including PFAS, such as in landfill leachate treatment.

Jim Ricchiuti asked for the PFAS revenues in 2025 and its growth rate, noting Montrose Environmental's optimistic outlook on the PFAS side of the business.

Answer

President and Chief Executive Officer Vijay Manthripragada stated that PFAS remains about 10%-15% of the business, with double-digit growth expected into 2026. He clarified that the water technology business addresses a broader family of contaminants, including PFAS, and is seeing growth in areas like landfill leachate treatment where multiple contaminants are removed.

Jim Ricchiuti asked if pausing M&A creates a risk of lost opportunities, whether the election outcome reinforces this decision, and for details on the significance of the U.S. Army Corps of Engineers contract.

Answer

President and CEO Vijay Manthripragada responded that there is 'absolutely no risk' of losing key acquisition targets. He noted that while the M&A pause was decided independently of the election, it is a prudent move in the current environment. Regarding the Army contract, he explained that it validates the company's integrated strategy and that milestones will be shared as the contract progresses.

Jim Ricchiuti inquired about the expected revenue distribution for CECO's standalone business in 2026, specifically the split between the first half and second half of the year, given the current backlog and project timing.

Answer

Todd Gleason, CEO of CECO Environmental, indicated that revenue distribution would likely be weighted more towards the second half of 2026, with Q4 typically being the largest quarter. He estimated at least 55% of revenue would fall in the second half, driven by larger power-related projects converting from backlog to revenue.

Jim Ricchiuti of Needham & Company asked for insights into the revenue distribution for CECO's standalone 2026 full-year guidance, specifically regarding the weighting between the first half and second half of the year. He also inquired about Thermon's competitive landscape and their market share position in their larger addressable markets. Additionally, Mr. Ricchiuti asked about CECO's organic growth rate for the fourth quarter.

Answer

CEO Todd Gleason indicated that revenue would be slightly more weighted towards the second half, likely at least 55%, as larger jobs booked recently begin converting to revenue. He noted that Q1 is typically smaller, with Q2 ramping up, and Q4 usually being the largest quarter. He also highlighted the tight backlog with firm deadlines for power-related projects. Regarding Thermon, Mr. Gleason stated they are a leader, typically a top two or three player in its key markets, competing with smaller private companies and large privately owned organizations in the heat tracing space. He confirmed CECO's organic growth rate for Q4 was a little over 25%, specifically around 26%.

Jim Ricchiuti sought clarification on the sequential decline in Q3 gross margin, specifically the impact of a project closeout, and asked if the assumed lower gross margin for 2026 is primarily a function of project mix.

Answer

CFO Peter Johansson indicated that a specific project closeout contributed 30-50 basis points to the Q3 gross margin reduction. CEO Todd Gleason added that Q3 is historically CECO's softest quarter for gross margins due to seasonal factors and modest inflation. For 2026, Peter Johansson clarified that if gross margins are lower, it would primarily be due to a mix shift towards large power and water jobs, which have lower gross margins but contribute positively to EBITDA margins due to minimal associated G&A.

Jim Ricchiuti sought clarification on the Q3 gross margin decline, specifically the impact of a project closeout and seasonal factors, and asked if the assumed lower gross margin for 2026 was primarily a function of project mix.

Answer

Peter Johansson (CFO) quantified the project closeout impact at 30-50 basis points. Todd Gleason (CEO) added that Q3 is historically CECO's softest gross margin quarter due to seasonal dynamics and modest inflation. Peter Johansson (CFO) and Todd Gleason (CEO) confirmed that any potentially lower gross margins in 2026 would be due to a mix shift towards larger power and water jobs, which have lower gross but higher EBITDA margins, rather than changes in pricing or inflation.

Jim Ricchiuti asked about the 20%+ growth in the electronics and packaging business in 2025, seeking to understand how much was driven by capacity additions and the anticipated tailwind for this segment in 2026. He also questioned the nature of the recovery in PCB drilling equipment compared to previous cycles.

Answer

John Lee, President and Chief Executive Officer, clarified that chemistry sales grew 11% (utilization-dependent), with the remaining growth from chemistry equipment and flex drilling capacity additions. He noted strong, consistent bookings for chemistry equipment, which are leading indicators for future high-gross margin chemistry revenue. Lee characterized the PCB drilling recovery as a 'normal cycle' rather than a 'super cycle,' driven by strong market share and new devices like foldable phones.

Jim Ricchiuti asked about the 20%+ growth in the electronics and packaging business in 2025, seeking to understand how much was due to capacity additions and the anticipated tailwind for this segment in 2026. He also asked for a characterization of the recovery in PCB drilling equipment compared to previous cycles.

Answer

President and CEO John Lee clarified that while electronics and packaging grew 20%, chemistry sales grew about 11% (utilization-dependent), with the remaining growth from capacity additions in chemistry equipment and flex drilling equipment. He highlighted strong bookings in chemistry equipment as a leading indicator for future chemistry revenue. Regarding PCB drilling equipment, he described the current recovery as a 'normal cycle' rather than a 'super cycle,' driven by new devices like foldable phones, with MKS maintaining strong market share.

Jim Ricchiuti inquired about Zebra Technologies' assumptions for large project business in 2026, including visibility and the drivers of refresh cycles. He also asked about the expected growth rate for the RFID business this year and whether activity is primarily coming from emerging areas like food or traditional sectors such as logistics and retail.

Answer

CEO Bill Burns stated that Zebra assumes a similar level of refresh activity in 2026 as in 2025, driven by new applications, processing power, AI features, OS obsolescence, and technology transitions, with customers extending use cases. He noted that large TNL customer discussions are progressing earlier for multi-year deployments likely starting in 2027. For RFID, Bill Burns projected high double-digit growth in 2026, continuing strong performance. He highlighted broad-based opportunities across the supply chain, including retail (apparel, broader merchandise, fresh food), transportation and logistics (parcel), manufacturing, government, quick-serve restaurants, and healthcare, emphasizing that growth is not driven by just one industry.

Jim Ricchiuti of Needham & Company inquired about Zebra Technologies' assumptions for large project business in 2026, including visibility and whether discussions are occurring earlier. He also asked about the assumed growth rate for the RFID business this year and whether activity is primarily driven by emerging areas like food or traditional sectors such as logistics and retail.

Answer

Bill Burns, Chief Executive Officer, stated that Zebra Technologies assumes a similar level of refresh activity for large projects in 2026 as in 2025, driven by factors like new applications, higher processing power, AI features, OS obsolescence, and technology transitions. He noted that while retail refresh cycles have normalized, T&L customers refresh at a slower pace, but discussions for multi-year deployments are progressing earlier, with likely starts in 2027. For RFID, Burns projected high double-digit growth in 2026, continuing strong performance from previous years. He highlighted broad-based opportunities across the supply chain, including retail (apparel, broader merchandise, fresh food), T&L (parcel), manufacturing, government, quick-serve restaurants, and healthcare, indicating growth is not driven by just one industry.

Jim Ricchiuti asked about gross margins in the data center business, specifically if further improvement is expected with continued rapid growth or if mix will be a significant factor. He also inquired about the revenue contribution of new products like eVoS and NavX in 2025 and their role in potential semiconductor upside for 2026. Finally, he asked about the activity level of the M&A pipeline.

Answer

CFO Paul Oldham stated that while mix plays a factor, it's less significant than historically. He noted that data center margins are approaching the corporate average, and new products and manufacturing efficiency can largely offset any mix impact, maintaining confidence in the overall gross margin goals. Mr. Oldham confirmed that eVoS and NavX contributed double-digit millions in revenue in 2025, primarily in qualification and early production, with higher revenues expected in 2026 as sub-2nm process nodes ramp. CEO Steve Kelley added that as customers recognize the benefits of these new technologies, they are being considered for non-leading-edge processes, driving future share gains. Mr. Kelley characterized the M&A pipeline as active, citing the successful Airity acquisition and optimism for industrial medical opportunities as the market normalizes.

Jim Ricchiuti asked about the trajectory of gross margins in the data center business with its rapid growth and the impact of mix. He also inquired about the revenue contribution of new products like eVoS and NavX in 2025 and their role in potential 2026 semi upside. Finally, he asked about the M&A pipeline activity.

Answer

Paul Oldham (EVP and CFO) stated that data center margins are approaching the corporate average, and new products and manufacturing efficiency are expected to offset mix headwinds. He confirmed double-digit millions revenue for new products in 2025. Steve Kelley (CEO) added that these new products are expected to drive future share gains beyond 2026. Steve Kelley also characterized the M&A pipeline as active, with optimism for industrial/medical opportunities.

Jim Ricchiuti asked about the decision to provide full-year growth targets, which is not standard practice, questioning if it reflects better visibility into opportunities or increased confidence in the ongoing changes. He also inquired about the nature of investments required for the strategic changes, specifically if additional investments are anticipated or if it's a reallocation of resources. Finally, he asked for the network gross margin for the quarter.

Answer

Dan Schumacher, Chief Financial Officer, stated that providing full-year guidance was intended to be helpful to investors, given the 11% year-over-year growth in Q4 and the transformational changes underway, rather than indicating better full-year visibility. He confirmed that investments would primarily be a reallocation of resources, with costs being eliminated in some areas and reinvested in others to drive transformational change and growth, without expecting margin expansion for the full year. Mr. Schumacher reported the network gross margin for the quarter was 30.3%.

Jim Ricchiuti from Needham & Company asked if the decision to provide full-year 2026 growth targets was due to improved market visibility or increased confidence in the company's transformational changes. He also inquired about the investment strategy for these changes, specifically if it would involve additional spending or a reallocation of resources, and requested the network gross margin for the quarter.

Answer

CFO Dan Schumacher clarified that the full-year 2026 GAAP revenue growth target of 6%-8% was shared due to the strong 11% year-over-year growth in Q4 2025 and the ongoing transformational changes, providing helpful guidance to investors despite not having better full-year visibility. He stated that investments would primarily be a reallocation of resources, with efforts to eliminate costs in some areas and reinvest in others to drive transformational change and growth, without expecting margin expansion for the full year. Schumacher confirmed the network gross margin for the quarter was 30.3%.

Jim Ricchiuti asked for an update on the progress of the Mexico site and the pipeline for securing additional locations in the region. He also inquired whether Fox Robotics sells to Symbotic's large customer and if their engagements are primarily pilots.

Answer

CEO Rick Cohen reported good progress on the Mexico site, with installation expected within the next 12 months, and sees significant opportunities for multiple sites in Mexico and other Central/South American countries. He confirmed that Fox Robotics does sell to Symbotic's large customer, primarily through pilots, and also has other customers (e.g., CPG manufacturers) who are not currently Symbotic customers, which presents an opportunity for expansion.

Jim Ricchiuti asked for an update on the progress of the Mexico site and the pipeline for additional locations in the region. He also sought clarification on Fox Robotics' customer base, specifically if they sell to Symbotic's large customer and if their engagements are primarily pilots.

Answer

CEO Rick Cohen reported that the Mexico site is progressing well, with installation imminent within the next 12 months, and significant opportunities for multiple sites in Mexico and other Central/South American countries. He confirmed that Fox Robotics does sell to Symbotic's large customer, and their engagements are mostly pilots. Mr. Cohen highlighted Fox's broader customer base, including CPG manufacturers, as an opportunity to introduce Symbotic's solutions and build credibility.

Jim Ricchiuti with Needham & Company inquired about TTM Technologies' progress in expanding data center capacity in China and the ramp-up of new capacity at the Syracuse facility. He also asked for clarification on the drivers of gross margin improvement and the specific impact of headwinds from Penang.

Answer

President and CEO Edwin Roks confirmed good progress on capacity expansion in both China and the U.S., stating that current investments support the 15%-20% growth target for the next three years. He noted that Syracuse is on track for first revenues in the second half of the year. EVP and CFO Dan Bailey explained that Q4 gross margin improvement was primarily due to favorable product mix in data center computing, networking, and A&D, despite a 180 basis point headwind from Penang, which is expected to improve throughout the year. Roks added that Penang's revenues doubled quarter-over-quarter and yields are improving.

Jim Ricchiuti inquired about TTM Technologies' capacity expansion for data centers in China and the progress of the Syracuse Diamond facility ramp-up. He also asked for clarification on the drivers behind the improved gross margins and the specific headwind from the Penang facility.

Answer

President and CEO Edwin Roks confirmed excellent progress on capacity expansion in both China and the U.S., stating that capacity is not an issue for the projected 15%-20% growth. He noted that Syracuse Diamond is on track for first revenues in the second half of the year. EVP and CFO Dan Bailey added that Q4 gross margin improvement was primarily due to favorable product mix in data center computing, networking, and aerospace & defense, along with improved operational execution, despite a 180 basis point headwind from Penang. Edwin Roks further elaborated on Penang's revenue doubling and yield improvements.

Jim Ricchiuti asked about the tone of demand in various business areas beyond Semi-Cap, specifically inquiring if confidence had increased in sectors like Medical, AC&C, and Industrial compared to three months prior. He also questioned how gross margins might evolve with accelerating top-line growth versus the potential for OpEx leverage.

Answer

David Moezidis, President, and Jeff Benck, CEO, responded that there were no overall surprises, with Medical having turned a corner, AC&C showing strong Q4 momentum continuing into the first half, Semi-Cap picking up, and Industrial remaining steady. Regarding margins, Bryan Schumaker, CFO, and Jeff Benck, CEO, expressed confidence in maintaining gross margins around 10.2% even with slight revenue dips, emphasizing that the greater opportunity for leverage lies in operating margin as SG&A does not need to grow at the same rate as revenue, with Semi-Cap recovery being beneficial despite AC&C's lower margins.

Jim Ricchiuti asked about Benchmark's increased confidence in demand across business sectors beyond Semi-Cap, specifically inquiring about areas where the tone of demand has changed over the last three months. He also questioned the outlook for gross margins with accelerating top-line growth and the potential for greater operating expense leverage.

Answer

President David Moezidis noted consistent performance, with Medical turning a corner, AC&C showing strong Q4 momentum, Semi picking up, and Industrial gradually improving. Regarding margins, David highlighted Q4 gross margin at 10.6% and Q1 guidance midpoint at 10.2%, emphasizing that operating margin leverage is the greater opportunity as revenue accelerates. CEO Jeff Benck added that Semi-Cap recovery helps, but overall scale in the model means SG&A does not need to grow at the same rate as revenue.

Jim Ricchiuti asked about the impact of pricing actions on hardware growth, specifically how much additional benefit could be expected in Q3 versus Q2. He also inquired about the nature and variability of larger projects within the door locking device business.

Answer

Andrew Vuono, CFO, clarified that the product pricing adjustments were effective at the beginning of Q2 2026 and were fully baked in for the balance of the fiscal year, meaning no significant additional benefit from these specific actions is expected in Q3 beyond what was seen in Q2. Kevin Buchel, President and COO, noted that the door locking business saw strength from various school and prototype projects, but emphasized that these were not so large as to create difficult year-over-year comparisons for future quarters.

Jim Ricchiuti from Needham & Company asked for quantification of the equipment sales pull-forward, elaboration on sell-through statistics, and the specific impact of tariffs on equipment gross margins during the quarter.

Answer

President and COO Kevin Buchel stated that sell-through stats were strong across the board in June and that distributor ordering activity remains healthy. CFO Andrew Bono addressed the margin question, clarifying that there was limited benefit from price increases in Q4. He quantified the negative tariff impact on COGS at approximately $1 million for the quarter, noting that the company expects to see a lift in margins in Q1 as new pricing is fully effective. Chairman and CEO Dick Soloway added that the company is focused on releasing additional recurring revenue products.

Jim Ricchiuti inquired about Teledyne's order numbers and book-to-bill ratios across its main segments for the recent quarter and full year. He also asked for the full-year sales from the unmanned business in 2025 and its projected growth in 2026.

Answer

Robert Mehrabian (Executive Chairman) reported a Q4 book-to-bill of 1.07, with instrumentation at 1, digital imaging at 1.06, aerospace and defense at 1.25, and engineered systems under 1. The full-year book-to-bill was 1.08. He stated that the combined unmanned businesses generated about $500 million in revenue in 2025, with an expectation to grow to approximately $550 million in 2026.

Chris Grenga, on for Jim Ricchiuti, asked for details on the first fleet customer for the Castrol circular oil offering, the sales funnel for similar deals, and whether the company is evaluating other geographic expansions for the semiconductor vertical.

Answer

Co-CEO Michael Battles explained the Castrol partnership involves collecting used oil and selling back a premium, low-carbon product, noting the sales pipeline is strong despite long lead times for large fleets. Co-CEO Eric Gerstenberg confirmed they are actively evaluating other geographies for semiconductor-related expansion beyond Phoenix, driven by strong customer relationships and market growth.

Focused on the drivers behind the better-than-expected gross margins, the potential for further margin improvement, and the specific end markets and geographies (particularly China) experiencing demand weakness.

Answer

Executives attributed the gross margin beat to accelerated variable cost productivity, supply chain localization savings, logistics efficiencies, and a favorable product mix towards software. They indicated they are in the "middle innings" of realizing supply chain savings, suggesting more benefits are to come. They identified China as the primary region experiencing weakness across both manufacturing and construction and do not see a material improvement in demand, though year-over-year comparisons will ease in the second half.