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Looking at the full year, 2018 was Ichor's strongest year on record, revenues of $824 million increased 26% year-over-year. This reflects approximately 9% growth in our core markets of gas and chemical delivery, which outperformed the overall industry growth. But we also saw significant growth in our weldment and precision machining businesses.We delivered on our objective to further increase our gross and operating margins year-over-year with new record set on both counts, and delivered record earnings of about $3 per share. Over the last four years, we have delivered an annual growth rate of 35%, unmatched among our peers and customers in the industry and we grew our earnings per share at an annual rate of 57%. In 2018, we had our strongest profits and cash flows on record. With net income of $75 million, we generated over $16 million in operating cash flow and we also returned $90 million to our shareholders through share buybacks.

Probably the most important accomplishment during 2018 was that we exhibited strong profits and cash flows at business levels well below the peak spending environment seen in the first half of the year. I felt that we did an excellent job of adjusting to weakening business conditions as we executed a rightsizing plan in late June. We did the same in Q3 as we saw the fourth quarter demand drop. We were caught a bit off guard with the level of inventory corrections in the second half, but we have since implemented another round of rightsizing and now believe that we have the right balance of resources for the current level of business. Our operating model is holding up well, thanks to our variable manufacturing cost structure and decisive action to manage expenses in response to changes in demand. We remain confident that we will continue to make solid profits during this multi-quarter slowdown in industry spending, and we will be in a strong position to demonstrate both our financial and operational leverage as the industry recovers.

Now I want to spend some time discussing what we see in Q1. Our revenues for Q1 will be flat to down 7% from the fourth quarter, which shows we are holding up better than many of our peers and customer semiconductor businesses. We believe this is due in part to some of our market share gains starting to hit the scoreboard. It also means that inventory correction, which primarily impacted our components businesses during the second half of 2018, should be behind us by the time we exit Q1. We believe our gas and chemical delivery business is once again closely aligned with our customer's build plans.

We are now positioned to be solidly profitable at today's business levels during this period, while ensuring that we can respond quickly when demand increases, which we currently expect to occur in the second half of 2019. We will continue to have contingency plans in place for any additional softness we may experience, but I believe the brunt of the downward revisions are behind us as we bounce along the bottom.

While there's good reason to remain cautious, we also have a number of tailwinds for a second half recovery that are worth noting. These include our incremental market share gains, which will have an increasing contribution to our P&L as we move through the year, as well as our exposure to ASML, which guided to a 50% increase in sales in the second half. In addition to these factors, we anticipate we could start to see a replenishment of inventories for our component businesses in preparation for improved demand for etch and deposition process tools.

We are continuing to execute against our plans to gain incremental market share. As we entered the fourth quarter, industry analysts were anticipating about a 5% reduction in wafer fab equipment in 2019, and we sized our incremental revenue opportunity at about $100 million. Given that it's clearly evident at this point that the industry will see a much larger correction, which for process tools could be down as much as 20% this year, our opportunity will probably be $20 million to $25 million less than what we thought a quarter ago. Nevertheless, these market share gains remain a very significant growth driver for Ichor to once again outperform overall industry spending. There will be share gains in weldments, in precision machining and chemical delivery, and in gas delivery systems. I continue to be very pleased with the progress we're making against these organic opportunities.

I will give you an update on this progress, starting with the first meaningful incremental market share revenue kicking in during the first quarter. In our weldment business, we have been qualified on the first and second waves of parts with a new customer and are in process on a third. These phases of qualification represent nearly half of what we are pursuing for the year.

We have all the capacity in place to support the opportunity as we have leveraged the capability that we acquired via our Cal-Weld acquisition. In our precision machining business, the qualifications have a slightly longer cycle time than what we are experiencing on the weldment side of the business. But we are nearing the completion of the first phase this quarter, and we will see the first revenues in Q2.

In our gas delivery business, we are often asked by investors whether customers will move from an outsourced manufacturing strategy to an in-source strategy during these downturn periods. We are seeing quite the opposite as we were awarded incremental share at one of our largest customers in the fourth quarter with the first revenues getting now in the first quarter.

We will also see growth in the gas delivery systems for our third largest customer in 2019 as their products ramp. In our chemical and liquid delivery business, we have gained incremental share outside of our proprietary liquid delivery module. This revenue also will begin in late Q1. The largest growth driver, however, will still be our proprietary liquid delivery module. Sales there are still very limited today. However, the end users' technology transition is progressing very well. And we expect to see meaningful levels of LDM revenues in the second half.

Our IAN Engineering acquisition gave us a foothold in Korea where there is roughly a $2 billion equipment market. The business is expected to continue to be negatively impacted by the low levels of memory investment. But once this recovers, we will see share gains in gas delivery there.

Our engagement with our largest customer in Korea on the liquid delivery module though is continuing and we plan to be able to demonstrate the product this year, leading to another leg of growth in Korea. As you can see, we are making solid progress on our incremental revenue initiatives. While market conditions have muted the 2019 opportunity, the total opportunity is significant and will exceed $100 million, once industry returns to higher levels of WFE spending. I'll continue to update you on our progress each quarter.

To sum up, in Q4, in addition to delivering strong cash flows and profits in spite of weakening business conditions, we also made great progress in addressing the needs of our customers and we're beginning to fulfill our promise of market share gains. As we entered 2019, our strategy is unchanged. We are a semiconductor equipment company concentrating on fluid delivery technologies. We believe that through the cycle, semiconductor equipment will continue to grow faster than most other industrial businesses.

As I mentioned at the beginning of my prepared remarks, over the last four years, we have outperformed the wafer fab equipment 12% annual growth rate with our own annual growth rate of 35%. We fully expect that as we execute on our opportunities for share gains, we will continue to grow faster than the WFE market. I am confident that Ichor will emerge from this period as a stronger company with significant operating and earnings leverage.

And now, let me turn this over to Jeff to provide more detail around our fourth quarter financial performance and our guidance for the first quarter. Jeff?

Jeffrey S. Andreson -- Chief Financial Officer

Thank you, Tom. Before I begin my comments, I'd like to remind you that the P&L metrics discussed today are non-GAAP measures unless I identify the measure as GAAP-based. These measures exclude the impact of share-based compensation expense, amortization of acquired intangible assets, non-recurring charges and discrete tax items and adjustments. I'd also like to note that a schedule which summarizes GAAP and non-GAAP financial results discussed on this conference call, as well as key balance sheet and cash flow metrics and revenue by geographic region can be found on the Investors section of our website.

Fourth quarter revenues of $141 million were down 19% from the third quarter and down 23% from the fourth quarter of 2017. Our Q4 gross margin of 15.3% declined from the third quarter due primarily to the lower level of factory absorption as a result of the lower revenue volumes and product mix.

Operating expenses of $11.1 million declined slightly from the third quarter as we continue to tightly manage our expenses. Operating margin of 7.5% represented only a 230 basis points decrease from the prior quarter on a nearly 20% decline in revenue. Our interest expense in the fourth quarter was $2.6 million. Our tax rate for the quarter was 10%. The lower tax rate is primarily a result of changes in the geographic mix of profits. Q4 net income of $7.3 million was equal to 5.1% of revenue, earnings per share was $0.32.

Now, I'll review the full-year 2018 financial results. Our revenues were a record $824 million, up 26% year-over-year. Gross margin of 17.2% increased 80 basis points from 16.4% in 2017. Operating expenses increased 29% as compared to 2017 as we added the full impact of three acquisitions made in late 2017 and early 2018. Operating margin for the full year of 2018 was 11.3%, a 60 basis points increase from 2017 with operating profit increasing to a record $93.5 million, up 33% from 2017. And lastly, our earnings were a record $2.99 per share, up 21% from 2017 earnings per share of $2.48, reflecting an increased tax rate of 10.4% versus 2.8% in 2017.

Now, I'll turn to the balance sheet. Cash of $43.8 million, increased $10.8 million from the third quarter with our net debt position decreasing $1 million in the quarter. The Company generated $30.6 million in free cash flow in the fourth quarter after $2.5 million in capital purchases. During the fourth quarter, the Company repurchased $30 million of stock or approximately 1.7 million shares, bringing the total amount repurchased during the year to $90 million.

In the first quarter to date, we purchased an additional $1.6 million, bringing the total buyback since inception to $91.4 million out of the total $100 million authorized. This total reflects 4.4 million shares repurchased at an average price of $20.64 per share.

We will continue to review our capital allocation options, making the investments needed to ensure that we develop the products and put the capacity in place to support our growth objectives that Tom discussed earlier while balancing this with our projected cash flow generation and proven management of our debt level.

Day sales outstanding improved to 26 days from 34 days in the third quarter. Inventory decreased to $121 million, down 9% from the third fourth.

Now, I'll turn to our first quarter guidance. Our forecast is for revenues in the range of $131 million to $141 million. Our revenue guidance of flat to down 7%, as Tom said, is better than the majority of what our peers in the semiconductor equipment supply chain are guiding, in part due to our market share gain starting to kick in this quarter.

In early Q1, we made the decision to implement additional cost reductions across the organization. Once again, our goal is to balance the responsiveness requirements of our customers with delivering sound financial results, while ensuring we execute on our market share growth opportunities.

The Q1 operating expenses will include a modest increase related to some seasonal increases such as payroll taxes and audit and legal fees, which will normalize in the second quarter. We expect interest expense of $2.7 million, a tax rate of 12%, and a lower fully diluted share count of approximately 22.5 million weighted average shares outstanding for the first quarter. Given these assumptions, we expect our earnings per share in Q1 will be in the range of $0.23 to $0.31.

Operator, we're ready to take questions. Please open the line.

Questions and Answers:

Operator

(Operator Instructions) Our first question comes from the line of Patrick Ho from Stifel. Your question please.

Patrick Ho -- Stifel, Nicolaus -- Analyst

Thank you very much. Tom, maybe, first off, in a lot of downturns, companies like yourself see an increase in design activities as customers and OEM equipment vendors actually have more time to spend on that. One, are you seeing it? And secondly, are you seeing any leverage from your broader offering portfolio today where you're getting interest or potential demand from customers that -- or companies that aren't currently on your customer base today?

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

So, yes, in terms of your first question. We've commented on this, and Patrick, you're absolutely right. During a downturn, our customers have time not only to ask us to help them with new designs, but even maybe more importantly, to qualify parts and systems that have to go through a rigorous qualification process to fit copy exact standards of the industry, et cetera. And so we are seeing that. We're seeing it -- I refer to areas where we're seeing it with the ability to get qualifications done at a pace that is in fact quite rapid. And also, we're working on a number of different design opportunities with customers on both the gas and liquid sides of the business that I really can't specify at this point. But those things absolutely are happening.

We are seeing interest from what I would call, customers other than our big four. And a lot of this is specifically around gas delivery systems. I mentioned one in Korea during my comments, where we've been working with them very closely. And as we work with them, we'll have product ready probably toward the end of this year. So we're happy to report that all of those kinds of activities are happening. And that's one of the things that lead us to be quite bullish about our ability to continue to gain share.

Patrick Ho -- Stifel, Nicolaus -- Analyst

Great. That's helpful, Tom. Maybe as a follow-up question for Jeff. It's really encouraging to see you continue to use the cash for stock buybacks at current prices. How do you look on a going forward basis balancing that between potentially paying off some debt, reducing interest expense or some of the investments that still need to be made in for the Company?

Jeffrey S. Andreson -- Chief Financial Officer

Well, I think as you've seen is that our number one and number two is we continue to invest in some R&D, so we can continue to develop products and work with our customers. Two is, we will continue to make sure we put the capital in place for capacity, much of which we increased significantly already in 2018. And then we will look at the remaining capital allocation strategies of either a buyback or paying down debt in lieu of what we see on the horizon. And I think we're going to take a very prudent approach to it. Obviously, we've said this on prior calls that we discuss this routinely with the Board and that we'll look at what we see coming forward in light of our debt levels and any opportunities we might see in the M&A world. And so I think we've proven to be pretty prudent so far and we'll continue to do that.

Patrick Ho -- Stifel, Nicolaus -- Analyst

Great. Thank you very much, guys.

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Thanks, Patrick.

Operator

Thank you. Our next question comes from the line of Sidney Ho from Deutsche Bank, your question please.

Sidney Ho -- Deutsche Bank -- Analyst

Thanks. Thanks for taking my question. So, Tom, last quarter you said inventory at your large customers are at very low level, at least on the gas delivery side, the component side. And I think you said similar things in your prepared remarks today. But can you give us some additional color perhaps tied to some of the comments you made in terms of shipment rates, what you've seen so far this quarter versus last quarter? And for smaller companies that are outside of the top two, do you have a better feel about those smaller companies, whether inventory is still an issue for them?

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Well, as I was saying, we saw quite a bit and more on the component side, the development side, the precision machining side in terms of inventories being lower at our suppliers and therefore somewhat lower shipments on coming out of our factory. It's quite hard to articulate in terms of exactly how much is left. However, at this point, I think, Lam in particular, which has already announced, did a terrific job of lowering their inventories last quarter. They lowered them about $145 million or so. And if you do a translation, that translates into literally about -- over a quarter maybe $250 million of tools. So you got $250 million tools coming out that normally we would have shipped the parts for it. It's a big reduction. And with that, I believe that for the component sides, we're seeing some continued reductions in inventories. However, it's coming much more in line. And we can track that by looking at what our normal rate of inventory, or for that matter, shipments are between components and say gas panels. And it appears that that's coming back in sync for us. So, we're rather optimistic that by the end of this quarter, those inventory corrections could be pretty much completed.

And of course, if we see a little bit of an upturn, then we know that typically they'll rebuild some inventories, although that might not be the best overall management practice, they may well do that again, and then we'd be the beneficiaries. So we have a little more to go in terms of inventory corrections, but we believe we're a long way toward being out of the woods.

In terms of smaller players, it's actually a little bit worse, typically because they don't quite have the same degree of management systems in place. And they tend to cover for the lack of great information flows through their management systems with buffers of inventories. So, I won't mention a customer, but we have seen one where the buildups, let me just say, were substantially higher than the buildups were at Lam or Applied et cetera.

Sidney Ho -- Deutsche Bank -- Analyst

Okay, that's helpful. Also appreciate the details of the incremental revenue opportunity you talked about earlier, but what is your expectations in terms of the linearity of those incremental revenue, which is now $20 million $25 million lower than you expected. Will that be mostly back-end loaded or is it more evenly spread, and I think you talk about different components of that.

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Yes. I think, it'll be relatively -- it'll be a ramp, which means by definition it will be second half loaded. We are seeing revenue this quarter, it's pretty easy for us to calculate, although we won't be revealing that number. And we'll see that increase again in Q2, and then increase again in Q3, and then increase again in Q4. So we will be somewhat backend loaded in that for sure. And then, we'll also benefit in the back half of the year through the activities at ASML. They've had an announcement saying they were actually going to be down some -- actually quite a bit in this first quarter. And then, they see a very robust second half, which is, as you know, Sidney, the ideas of the second half are quite scattered at this point. ASML, for one thing, it'll be pretty robust for them and we'll benefit from that as well. So, we have those two tailwinds going into the second half that we're quite pleased about.

Sidney Ho -- Deutsche Bank -- Analyst

That's great. Maybe just squeeze in one last one. Not to put words in your mouth, but clearly we probably shouldn't expect first half of '19 to be better than the second half of '18, like you said last quarter?

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

No. You put words in my mouth. And the answer is, we should not expect that.

Sidney Ho -- Deutsche Bank -- Analyst

Do you expect second quarter you'll see another revenue decline before you start climbing in the second half?

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Well, we're not going to guide the second quarter right now, Sidney. I think, I referred to kind of bouncing along the bottom at this point. And I think maybe that's as far as we'll go with it.

Sidney Ho -- Deutsche Bank -- Analyst

Okay. Thank you very much.

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Yeah. Thank you.

Operator

Thank you. Our next question comes from the line of Quinn Bolton from Needham & Company. Your question please.

Quinn Bolton -- Needham & Company -- Analyst

Good morning, Tom and Jeff, Wanted to follow up on Sidney's question there about sort of thoughts about revenue going on beyond the first quarter. I know you're not guiding to the second quarter. But when I listened to your comments about the inventory correction, it should be mostly over in Q1, it would feel at that point, you'd probably start to shift more in line with consumption and you're clearly under shipping consumption in the first quarter. When I think about incremental share gains where the share gains increased each quarter, it feels like everything I hear Q2 could be up. What's wrong with that thinking? Thank you.

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Well, first of all, I mean, if you -- we've guided flat to down 7%. I think, if I recall correctly Lam guided their first quarter down around 4% or 5%. And so if you average out that to 4%, we're kind of right in sync with their build plans today. So, I don't think we're under-shipping consumption by very much this quarter. We'll have to wait and see what Applied Materials announces in a couple of weeks. So I would say that. And having said that, that would to some degree coincide with a slowing down of some of the inventory corrections.

So we'll see how that plays out and hopefully it plays out as I said where the corrections would be, in essence, kind of behind us by the end of this quarter, and maybe even sooner than that. Having said all of that, we're still cautious because we haven't seen the signs of spring yet. We haven't seen the normal things people follow, like a change or a transition in pricing for DRAMs where you see an uptick or two along the way. And then we'll all start getting really excited. So, I think, we'll kind of wait for some of those signals before getting too far ahead of ourselves on what will happen in Q2.

Quinn Bolton -- Needham & Company -- Analyst

Okay. So, it doesn't sound like you think you are under-shipping consumption here in the first quarter by any significant amount --

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

From what I've seen out of announcements from ASML and Lam, I do not think we're under-shipping by a huge amount.

Quinn Bolton -- Needham & Company -- Analyst

Okay. That's helpful. And then you had mentioned the liquid modules ramping in the second half. Is that so with the lead customer or how you're seeing that business develop beyond the lead customer?

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Well, we've been tied at the hip with the lead customer, who we thought was a wonderful customer to be tied to the hip to. And as it turned out, it was kind of a major disappointment for all of us last year, and we just went through the results for last year, it was a terrific year. But the one disappointment was that the LDM product didn't get off the blocks as we hoped it would. But I think we're all hearing much better news from that customer and what they're doing with their technology and what they're doing in their plans. They've had their earnings announcement; they've voiced some optimism about that. And so I share that optimism for the second half of this year with that LDM product. Having said that, I also referred to the fact that we are in the process now of moving into other customers. I mentioned one in Korea that has a very significant place in the clean business. We're working closely with them right now. We'll have products working in their labs through the second, third quarter, and that'll start to result in shipments as it moves along. And that's just one of the people we're working with. So, yes, this is not a unique product to one customer. This will be a product that over time will be used not only in applications like CMP but also in applications like cleaning and maybe track, and we'll open up a whole new world of customers and opportunities for us.

Quinn Bolton -- Needham & Company -- Analyst

Great. Appreciate your thoughts.

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Thank you.

Operator

Thank you. Our next question comes from the line of Karl Ackerman from Cowen & Company, your question please.

Karl Ackerman -- Cowen & Company -- Analyst

Hi, gentlemen. Jeff, I have a question for you. Looking at gross margin assumptions for March -- well, for December and then also for March, how significant is factory utilization playing into that guide versus product mix? And, I guess, at this juncture, would you consider it too premature to consolidate manufacturing sites you've acquired through M&A the last two years. I guess, any color on how you think about optimizing your fixed costs would be helpful, even as you drive toward that $75 million of incremental design wins this year.

Jeffrey S. Andreson -- Chief Financial Officer

Yes. Good question. So I think if you took the color and you ran it, you probably know that at the high end, our gross margin is fairly similar. I'd say the fixed cost has been -- is probably, versus maybe the third quarter, the biggest change that's negatively affected the gross margin. Product mix will affect it a little bit, but not as much as we're seeing in the fixed cost.

Having said that, we always look to drive efficiencies. So I would not say anything is off the table as we look at our facilities across the board. There are some potential opportunities to do some additional integration either in the businesses and/or in the facility. So we will constantly look at that as well and work on that.

And we had a lot of capacity last year, we probably didn't add as much as we thought as we were coming into the year. We modulated some of that back. So we've right sized some of that as well.

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Now one of the points, Karl, I think is important here is that as we talk about these market share wins, and this $75 million, that will be hitting the top line with very, very, very little incremental fixed costs along with it. Most of the capacity, as Jeff just said, is actually in place. There'll be a few more things to do. But beyond that, on the OpEx line, there'll be very, very, very little hiring, if you will, or increases in OpEx to support that extra bulk of dollars. And so the leverage that we like to see through those fixed cost I think will become very visible through the year. And, obviously, when we're bolting on that much more money with very, very, very little -- more in the way of fixed cost, it will be apparent to everyone.

Karl Ackerman -- Cowen & Company -- Analyst

That's helpful. I appreciate the color. Tom or Jeff, last quarter, you mentioned that in the event of a multi-quarter downturn, your customers may actually accelerate outsourcing in order to reduce their own fixed cost. It seems this outsourcing opportunity is, in fact, accelerating, given your prepared remarks on kind of weldments and the liquid delivery module. I guess, I'm curious, if there are any other opportunities you see -- I mean, those are significant in and of themselves. But I'm curious if there are any other opportunities you see to drive content gains in the second half of 2019 in other areas of your business?

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

There are, and we've occasionally spoken of them. A lot of our opportunities are really in terms of penetrating new geographies. We talked about Korea. We do have quite a bit of activity right now in terms of developing ways where we can penetrate Japan. And next to the U.S., Japan has more semiconductor capital equipment companies than anywhere else between Tokyo Electron, Dainippon Screen, Ebara and others, billions and billions and billions of dollars of semiconductor capital equipment is built in Japan. And that's not lost on us.

And so we have some, what we consider to be, excellent plans in place. We review them regularly with the Board, we're at a point where we're kind of almost ready to think about speaking about them more broadly. But for now, you can know that there's some big fish to fry out there, and we're looking at it very, very closely. And we think we have some ways and means to get at that, once again, without adding a huge amount of fixed cost to our balance sheet.

Karl Ackerman -- Cowen & Company -- Analyst

Very helpful. Thank you.

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

You're welcome.

Operator

(Operator Instructions) Our next question comes from the line of David Duley from Steelhead Securities. Your question, please.

David Duley -- Steelhead Securities -- Analyst

Yes, thanks for taking my question. I guess, first question kind of from a macro perspective. Guys, what sort of wafer fab equipment estimate are you signing up for now for 2019?

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

So, we've heard -- again, we take a lot of our cues from our customers, which only makes sense. And we see them at the point now where, I'd say, a couple of them are guiding down in the reasonably high-teens. So we're seeing a wafer fab equipment number of about 42 seems to make a great deal of sense, it may be as low as 40 right now. But that's the number where we're focusing in on on our planning and what we're thinking. And one of the reasons why we think there may be some incremental business besides the ones I've talked about, including ASML is that we think we're operating at a level now that's more akin to the high-30s instead of the low-40s. And just by mathematics, in terms of -- if we're going to get to that 41, 42 number, the second half of the year is certainly going to have to be higher than the mid-30s and actually higher into the mid range of the 40.

So that's how we're getting our cues and that's what we believe that we're planning around. It needs to be at least said with the caveat that over the last two months, that number has moved down kind of in a Chinese water torture of drip, drip, drip from about 50, down to about 48, 47, 46, now toward 41, 42. And so, there are no rules, let's say, it couldn't actually end up being lower than that at some point. But those are the numbers we work with right now.

David Duley -- Steelhead Securities -- Analyst

Okay. So, kind of math for the year might be, since you feed to those large OEMs, that business might be down, that's good(ph) high teens level and then you might add the $75 million or $80 million that you're referring to and that kind of is a good estimate for the best guess we could get for the year?

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Well, it's an estimate, but you have to be careful when you look at the large OEMs being down 18%, 19%, because the large OEMs have a very nice chunk of their business called service. And that service business tends to be rather flat or maybe even up a little bit. And so if they're going to tell you that their entire business is down 18% or 19%, that means their equipment business is going to be down 20% or more because their service business is going to be relatively flat. So you got to be a little careful with how you discern those numbers.

David Duley -- Steelhead Securities -- Analyst

Okay. That's a great point. On to the next topic, you talked about this incremental revenue I think now being sized at $75 million or $80 million, and it doesn't have a lot of fixed cost attached to it. Is there a way you might describe what the drop rate might be for the gross margin line or the operating line with that incremental revenue or how should we try to think about the profitability of that new revenue?

Jeffrey S. Andreson -- Chief Financial Officer

Yes. I think that we've talked about this in the past, Dave. But to reiterate, virtually -- when Tom talked about weldments, precision machining, like the delivery module, all of those will be accretive to our margin. Those margins are higher than the margins you're seeing today. And so think of the weldments' gross margin, say in the low 20s to the mid 20s, precision machining is probably in the low 30s, LDM is probably a little more like weldments. So the incremental margins will be slightly higher than that.

David Duley -- Steelhead Securities -- Analyst

Okay. And then, I guess, the final thing for me, just a couple of clarifications. Could you just let us know what the size of the 10% customers were in the quarter? And then going forward for the annually, what should we expect the share count to do?

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

So, one is we don't -- we'll disclose the final revenue sizing by customer in the K. So I won't do that on the call. Share count, I think what -- in Q1, it'll be 22.5, obviously in a flat share price, we don't really see that moving up hardly at all. It might tick down a little bit if we finished the buyback, but I can't make a comment on that. So, for simplicity, I'd probably just use those numbers for the year.

David Duley -- Steelhead Securities -- Analyst

Okay. And then I might have wrote this down when you were talking about the drop rate of those three businesses, you said one was low 20s, one was low 30s, could you just clarify which was which again?

Jeffrey S. Andreson -- Chief Financial Officer

Weldments was the low 20s and the precision machining will be in the low 30s.

David Duley -- Steelhead Securities -- Analyst

Thank you very much.

Operator

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Tom Rohrs for any further remarks.

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Well, thank you very much for joining us on our call this quarter. And we all look forward to updating you on our Q1 call in May. Thank you.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Duration: 43 minutes

Call participants:

Claire McAdams -- Investor Relations

Thomas Rohrs -- Executive Chairman, Chief Executive Officer and Director

Jeffrey S. Andreson -- Chief Financial Officer

Patrick Ho -- Stifel, Nicolaus -- Analyst

Sidney Ho -- Deutsche Bank -- Analyst

Quinn Bolton -- Needham & Company -- Analyst

Karl Ackerman -- Cowen & Company -- Analyst

David Duley -- Steelhead Securities -- Analyst

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