MKSI - Earnings call transcript Q3 2024

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Operator

Good day, and thank you for standing by. Welcome to the MKS Instruments Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Paretosh Misra, Vice President of Investor Relations. Please go ahead.

Paretosh Misra

everyone. morning, Good and Vice this Misra, Executive Investor and Officer. Financial Relations, Ram President McCarthy, I'm Chief and by President John joined Accounting Officer Chief President, morning Executive Chief and Lee, I'm Michelle Mayampurath, Vice Paretosh Vice of Treasurer; President Officer; and Yesterday, posted for investor to third after website released of quarter at results close, financial we our XXXX, market investor.mks.com. our the which are

Actual in MKS results remarks various future plans comprise about on a forward-looking for of our including statements. release Form differ As important a reminder, report in result may and expectations, recent as yesterday's materially factors, prospects annual and XX-K. most various those press discussed

representing represent as any views expectations only or the subsequent should as of of statements any not update today, to company's disclaims company's upon company the and the date estimates and These statements. as these to obligation today be relied

be otherwise non-GAAP, statement-related non-GAAP our regarding call, various financial the to information the we the press than release revenue Unless financial of other non-GAAP measures and reconciliation will financial results Please and section posted website gross our and measures. refer During Investor to materials margin. our for GAAP income to discussing will our all presentation a noted, Relations be measures.

also of website revenues by provides breakout investor a detailed division. Our end market and

John. turn I'll Now, call over to the

John Lee

a board, strategic to confident excited joined morning, our contributing pleased have Ram into introduce his initiatives. our new to Mayampurath, will with business, diving good Ram I'm and on is to be engaging and I'm business and leadership everyone. our Paretosh, We're already him in MKS. and add the October continue Michelle actively to and Thanks, CFO, leaders MKS execute and results share welcome results take today, I'd long-term quarter. we that financial next and during done he'll drive Ram call, the job will later remarks on this for transition as financial terrific handle MKS will our on in lead our she's and period. this to discussing instrumental some brief strategy. growth the

third strong our metrics a ranges. above financial delivered with of end the quarter key guidance all or MKS at high

margin profitability which of period semiconductor reflects a including and of broad revenues, supported demand. have our portfolio, the strength Our chemistry during gross muted our differentiated value product

margin our cost continued Additionally, our operating continued resulting strong in demonstrates profile discipline, flows. cash

leverage. have meaningful We our made also on priority, our managing highest proactively progress

During dollar and debt, quarter, Euro Loan our the we the points. by rate basis cash free by to our generation strong pay continue $XXX repriced U.S. our of over quarter. million reducing our B's, XX Term down flow actively in we interest And supported third

to actions our These prepayments bring year-to-date million. XXXX $XXX

them travels next-generation of customers, my recent to for and many of and road we the they maps, must advancements. technology challenges discussed especially key Asia as overcome meet AI-related in to with trends their execute During many the challenges prepare

As and node technologies of the this. importance recognize our more broad customers important, sizes more our critical to continue shrink of never complex, been and has grows portfolio technology

maps and came capabilities more road market to accelerate these lead that confident a even away our result, our differentiated I As their will from success. customers' conversations

Now markets. our I'll our in end performance three review

has DRAM was our X% this that increased and historically albeit remained of end by at primarily our to to we market recovers. first low the higher In semiconductor logic/foundry stable, guidance positioned range. demand and our applications. half market, sequentially levels, relatively in-quarter and revenue well revenue above related conversion Similar remain high results, when trend driven NAND

ratio selective memory transistors. logic applications, leading devices high addressing and logic fabs semiconductor gate-all-around are for for with in removal inflections both deposition broad memory in of equipment OEMs range etching a as and atomic engaged technology aspect such Our teams layer processes and

in share Additionally, to strategy our lithography, and advance we segment grow to inspection. continue metrology

related role and about that in talked memory, that quarter, important demonstrates attractive technology for high-bandwidth we stability levels. to MKS our In AI-related capabilities revenue strategic a validating last The also at highlights received expect differentiated segment with our be another world-class further with basis. recently the on quarter, in a demand, customer NAND in increasingly win photonics achieved order this market. an back-end we solutions low fourth optics application our sequential we flattish business, the a semiconductor we win to for applications. play remaining continued of the initiative design DRAM Following guidance WFE laser In the logic/foundry

development remain success. next for Overall, the solutions advancements the of technological work positions of we confident for that us been the wave innovative in well future doing have we the

Electronics to line in Equipment sequentially, variations. grew reflecting and sequentially, sales were and by Packaging. X% with down sales. driven quarter-to-quarter Revenue Turning expectations typical our chemistry

demand and AI are applications. chemistry our While PCB seeing encouraging to activity, substrates flexible advanced in smartphone solutions we order equipment applications muted, including overall in package used MLB, HDI drilling and related and for remains for

equipment chemistries our interconnect, to optimizing increasingly role chemistry expertise combined in drilling, needs central AI enables laser the the unique is era. in packaging Our in addressing which and complex

to to the the and low research electronics sciences in on and market. digits a single with packaging softness in health with markets, revenue sequential basis. and be decreased approximately defense X% end industrial expected sequentially and steady industrial by performance QX support revenues our offset the are wins These market, In in higher life in growth specialty anticipated

cash As We a and and margins packaging investments semiconductor a that specialty technologies reminder, industrial R&D the to across proprietary variety market sectors and of strong leverage multiple solutions provide our electronics incremental in markets. our and end generation. of unique applications yield consists

market QX, are industrial financial third we our with to performance in the increase conclusion, we quarter. pleased In our QX. execution specialty slightly in from and ahead to expect Looking revenue

now to quarter mid-single to strong third our fourth our half. Given low revenue half the results compared quarter outlook, we and be digits up to expect first second

a execution recovery control. signs remains across emerged our solid markets, we Although yet areas end the not can of in have our

are where markets have have flow that margins This, along debt well throughout soft. and gives operating we solid our with and innovation, continuous markets our led positioned to a end support to gross as recover. generation strong design wins me major Our been cash year confidence reduction

Now turn Ram to will and brief quarter then results let remarks, it detail. to me financial run in third Ram? provide the through more Michelle over some

Ramakumar Mayampurath

I'm capabilities let to days me excited on the to observations. early John, morning, and of a John and with company combined secular to be in share this forward and puts few you, the the good MKS team, is with very It's everyone. point, strategy team working engagement look plan. a breadth part offering Thank MKS early strategic the execution team, but leadership obviously enviable company. comments customers, an and The my execute at our I MKS initial product growth of with our technology-driven position. a of the

attractive employees, the I tremendous many growth to here their electronics of see and today's on past have of focused culture discipline advanced are and knowledge have In areas enable business great I the meet devices. few our talent, to weeks, that respect We a value chance had in the at I for execute. ability and MKS.

bench team, of a As own mosaic for with deep my have professionals finance and accounting talent. of we a

on our In good and veterans the hires a of capabilities, be maintaining discipline, with in-depth MKS. ideas cost profitability. focus and will We of driving with coming knowledge recent have quarters, my new several mix

which strategy. We in investing debt generation business management be will cash strategy, CapEx maximize continue and support will capital primarily around to our centered to to support our allocation

turn the focused ensure levels me overall are full With market We let as to on growth. that, we will to to and our returns electronics the quarter. results normal that well for cost remain our take Michelle of improving review it structure advantage financial positioned semiconductor to to over

Michelle McCarthy

Thank you, morning, Ram, everyone. and good

For semiconductor packaging the $XXX end and third electronics driven and million, reported revenue. quarter, and of sequentially better-than-expected the high guidance X% our revenue by range, MKS of up at

semiconductor first X%, both result up and revenue as was end on Consistent was half of strong we demand, above with year, executed our quarter and Third high applications. the year-over-year. $XXX sequentially in-quarter related the to The especially of expectations. DRAM logic/foundry the million,

of $XXX chemistry, by Packaging expectations. result Third end in which also seasonal revenue offset quarter-over-quarter of was above were our the led with and million, was equipment and partially sales, lower line our an This strength increase in X% Electronics by expectations. quarter high

well to as in X%, On due business. were variability a our prices primarily equipment down year-over-year basis, sales natural as palladium

pass-through, impact quarter, X% grew to revenue mostly $XXX quarter Revenue the within X% we midpoint. weakness. continuing from trend multiple of was down served guidance and a observed XX% was end industry-wide our recovery and and prior gradual chemistry sales the market, softness. of industrial a below with a minor third primarily decline throughout basis, year-over-year, just Excluding FX Industrial. specialty industrial Consistent markets Specialty the year-over-year fluctuations offsetting on palladium million, general our In sequentially due

of end Turning above quarter as on gross mix to margin operating to due margins. our up Gross well XX.X%, high third sequentially was margin product revenues. higher the guidance. of as leverage reported We

with $XXX operating quarter We continue expenses our within our to costs, prudently third of million range. guidance coming manage

We profitability near-term generation. which have cost and strong cash track balance business with market us of a cycles, our allows structure throughout in managing investing record our to

modestly third certain quarter spend. levels Looking ahead, well new we from including to costs, compensation as expenses as operating of the expect will third-party hires increase planned due timing

was prudent strong above well $XXX guidance, million, operating operating higher and our management. Third operating income gross expense an by quarter both margin of yielding XX.X%, driven sales, margin

$XX above a our the XX.X% Net EBITDA of adjusted of and expense quarter. quarter was Euribor the to million, in Third margin. with in million, slightly a rates decrease favorable million also reflecting interest was guidance our $XX $XXX high expectations end

reflecting a million generation Free revenue, lower-than-expected nearly of share, Third quarter was our $XXX net of or guidance million range, flow detailed XX% operating business. strong the tax earnings just the flow were $X.XX cash demonstrating diluted I well performance per rate. and or potential cash $XXX above the

cash continue top us see the working operating flow-through we and deleveraging. As to the accelerate strong and bottom expands line allowing line and prudently flows, capital expect higher our we costs, to manage to to

of equivalents of than the third quarter with based of ratio trailing gross on comprised closed undrawn and billion We million. the and exited cash more with cash net our quarter leverage debt million. of liquidity of facility revolving of $X.X X.Xx of a $XXX million adjusted $XXX XX-month credit EBITDA and billion our $XXX $X.X We

in prioritize to million $XXX deleveraging business. continue July, prepayment managing our B with We of while Loan Term our investment the sheet repricing. made needs the In we cash voluntary our on connection balance and

prepayment Euro-denominated our made our underscore million on another debt Loan we reduction. on voluntary October, continued in Term actions focus of B. Additionally, These $XXX

perspective entered approximately interest of with XXXX annual actions we debt our this around an of To year, impact expense rate million. run put the $XXX

the favorable have rates, to we've reduced expense rate taken our we approximately $XXX actions by over movements X/X, Euribor annual run in million, or interest year-to-date million. With and $XXX

John, to of paid our the like over I'd share dividend third we who $XX to outlook. review or $X.XX a will call quarter, turn John? Finally, the that, With per million. during back

John Lee

you, Michelle. Thank

me now quarter to turn fourth outlook. our Let

or and we plus on expect minus our market industrial million, anticipated follows: We XXX to XX%, be and of be of is our is minus or Based $XXX million. end or Revenue $XXX market, market is gross Revenue expected quarter plus revenue our basis million. or packaging million, be from product million, mix, million, $XXX quarter market semiconductor $XX plus plus as minus from points. million, $XXX or revenue minus million. to our $XX to expected from fourth $XX estimate expected is revenue outlook fourth minus margin specialty electronics plus and By $XX levels

of minus expenses minus or expect quarter plus EBITDA million. $XXX adjusted million, We $XXX $X of fourth million, plus or We $XX million. operating estimate

fourth We expect earnings rate in these bringing $X.XX, XX%. per quarter, or share approximately the Based rate discrete $X.XX. of certain on quarter plus assumptions, in full diluted X% items favorable just our a quarter tax from tax and fourth to under expect benefiting year the minus net we tax of

remained strong despite markets. execution challenges cyclical our in Our has end the

With opportunities ahead. that call We positioned the are the open capitalize are we confident that, operator, on to for please Q&A. uniquely that lie

Operator

Our of first of question Instructions] Prisco [Operator from the Matthew line comes Cantor.

Matthew Prisco

that on may start, of business, on you're dynamics? or rates, customer to early maybe patterns terms what semiconductors spare business, more some help maybe utilization into XXXX anything inform guess your view in an add ordering color seeing I else can you

John Lee

question. for Thanks the John. it's Matt,

we've have rates been great. pick to I continued DRAM think see up. Certainly, utilization HBM utilizations

and Logic then we're same remains talked certain strong. remains very seeing And So things many customers about. the that people have NAND muted. foundry,

what still I come our it's views year. And think So from over when That's many year, that's and we're they're about down customers you our the up not but XXXX, what think think the have generally seeing an necessarily telling us. opinion. I of

it up still well, So depends in will I seem on is hold that XXXX But muted think be NAND well. and holding expectation remains foundry/logic, up to as that the DRAM turns. when and well

Matthew Prisco

a your expectations and would largest does Great. then hear bit your win That's in And photonics your this helpful. And given color experienced around also photonics then pushouts change more that initiatives. litho how of by to the the your progress on subsequent little margin duration player, I new love headwind? ramp

John Lee

Right.

quarter talked photonics a win. So, yes, about last we

quarter, a This with win different we about customer. talked another photonics

So kinds longer. course, this lithography, of space, as, Certainly, the the those the the systems than in you metrology for is are well as area WFE. for times of lead in inspection much subsystems as vacuum know.

And think so quite as short long there's stuff term, our well lead effect are their as because I stuff. don't any really for times the

and needs tools. critical demands what the So longer inspection tools, are determine market term, long-term of will metrology course, for tools lithography

because with the makes the unique we we bring think toolbox, integrating our there's unique. I us kinds We to of tools point we're technologies there lots together different can share So of more gain that think technology provide. opportunity to is

term, optics well in the opportunities this share longer about market very segment the as we're in gain still initiative So growth our excited of as WFE. world-class

Operator

Our question KBCM. of of the comes next from Steve Barger line

Steve Barger

At XXX Or about through that you are points down what at basis Is swing gross can range? that the margin guidance factors at talk the looking the around the steps -- midpoint, mix? sequentially.

John Lee

Yes, Steve, question. It is thanks the mix. for

Electronics just a a as said. equipment. quarter, be driven expect little that next to revenue We higher And we -- is lot that Packaging by of and

HDI, the MLB see part and the make about and the HDI then boards. industry. related is as in substrate, So that's industry, the servicing the the package need orders the past, of AI to we on in But of talked some segments QX AI. density type that's to an it advanced PCB got equipment did MOB you you've -- And board, And of package course, highest the PCB then substrate. most of this for all to we've equipment promising put

those it so customers our start And quite for interesting some of us ordering for was to see applications.

the flow And as know, so is will than gross revenue equipment And chemistry. that margin you into QX. through equipment lower our slightly

of that's So really that it. part mix. That's really

Steve Barger

it. Got

but That's margin question Ram. So, on encouraging, good. maybe little equipment. lower a for the And a

into going a we're service still you're situation the to make market where quarters? levels, you are recovering, some sure How end versus there's next but cost just talk just are as initiatives balance coming talking that through the you share that high? levels markets uncertainty. prioritizing inventory to You're what control are go few about, Maybe about

Ramakumar Mayampurath

Yes. That's Thanks, Steve. a great question.

and always it's funded think strategic guidance long-term sure between are balance well resourced. initiatives I a meeting your and and plan quarter forecast current your making

margin done in continues generation debt cash sure immediate demonstrated And can our have continues. will focus The keeps so we strengthen maintaining going So to our my cost we make we discipline. a good progression the that that with be sheet that have and balance job management.

priorities our those focus. remain will change, So don't

John Lee

that Steve, too, are. add best really we would I we're think opportunities investing where the Yes.

to of equipment well. the service -- field not even growing service is as expanded We R&D So starved. base

very So them. we it's as in balance, certainly point, always into putting are aggressive we see to opportunities money Ram's but a

some well And as other world-class lasers X years change. the ago RF and come power optics up as as examples out and more opportunities that were recently markets

Ramakumar Mayampurath

And just said. more one add John to Yes. to thought just what

we said. P&L, CapEx We are CapEx the the business. like John or continue in not starving in in and to Both our invest

will continue. focus and So activities those

Operator

line question next Our Ricchiuti & of comes Jim Needham of from the Company.

Chris Grenga

you applications? Jim. exclusively some And for what share you demand enabling EV remind the Could from of automotive? end industrial you're revenue on a in Grenga is particular, Chris primary for type is This markets, us what standpoint on of elaborate seeing in could

John Lee

for Thanks question, Chris. the Yes.

not It's certainly a documented. we've surprise. is seen what more in muted, well and that's So automotive

this business, revenue go in both pretty decorative stable, has that this the really type And and muted even kind calipers though, automotive been Our is brake environment. into GMF the and EV. ICE of cars, things of

versus haven't out EV We broken ICE.

the components I go that that arise think all the battery with metal lot a require there's of coatings. that as into EV, such opportunities

opportunities, much perhaps chrome the things some grill. go So then front away, those are such of And as as tailwinds. the on

puts So and there's takes.

offer we the opportunity our a right think not adding part. business. slightly GMF And better for that's to now, electronics EVs even that But

electronics part business. electronics automotive, our really part the not still automotive it's It's business. categorized of for really our part So the of in

but are there pretty So down steadily. to units seems be worldwide, automotive business up our holding

Chris Grenga

exposed concerns we're semiconductor, of is WFE or indirectly, some given either business And of prospectively, offer region? to the that much any terms that about reading your and of in in in China directly can spend you sense how

John Lee

restricted sell -- We about the to Sure. that customers that October China. of equipment at $XXX OEM to had that's million most In was it XXXX, to order that affected the XXXX, publicly in directly one us ability specific our talked because risk.

numbers numbers They've of So been years out are those out X now. now. our for

just the there's we're OEMs WFE no that's ship others. as besides of China, the to five revenue normal And We're additional equipment our where indirectly. comes selling So and China, then they market to as risk selling from. well as big

at market look line to So much the not more MKS. as exposure we particular the with really in anything exposure,

Operator

from of of question Mizuho. Vijay line comes Rakesh the Next

Vijay Rakesh

of a -- big at how thinking? wondering picture thinking CHIPS Just the takes the some puts questions. on then with and of the are the Act, couple and just administration, the seasonality? how you XXXX how March When look China just with between WFE, quarter, on you the you're about And the especially restrictions new

John Lee

Yes.

in has I business to part is it. seasonality to because cycle -- product about a chemistry your our it that There consumer was little first cyclicality QX. any seasonality, sorry, think or always electronics for

it higher, in year-over-year as QX even So chemistry was higher was but well.

to chemistry is that and is you because -- a just kind We So of seasonality. just normal we little kind in about, of lot E&P moderate as bit there driven of up by as talked QX equipment. E&P expect that a But of was seasonality.

So the and those takes puts of are seasonality.

does this, bipartisan lot that certainly, treats been smarter would agreement in XXXX that, specifically respect shake a your have in terms can people With opinion terms election how say the in of And to the the question geopolitics we a have out, WFE, will of that. that. that's been States of think on I anything? the how United I was, there's change opinions

don't change restrictions. particular And we semiconductor expect so from the any

was going expect to whatever that much. we don't be that going So forward, too change to

Vijay Rakesh

[indiscernible] -- paydown sheet? Got are it. of debt in terms 'XX, And the on the then of in I you balance leveraging terms what side, planning guess, through

John Lee

certainly still #X our -- that's we'll Well, be priority. Yes.

We excess We'll do other using will delever. it if sense, and things focused flow be if whatnot, free cash market to as certainly such allows. makes repricing the

So XX to How to is next flow. markets. the before, is, said our much we've with really focus for course, delevering excess months, depend focus will on that any XX cash on the as free of

were XXXX, can very you able prepay still in packaging, with million. As main we and markets, muted market our see, to and semiconductors a electronics $XXX two for

And flow Certainly, in the so the significantly, of were -- a through free cash model. if would flow. there's to our a leverage of up lot lot that revenue go

quarter, said, Michelle cash free flow. revenue, of XX% As it this was

Operator

from line of next Sankar question the Krish Our comes Cowen. of TD

Sreekrishnan Sankarnarayanan

out I and was I'm not see in anything? of NAND there expect the see said because strength more event? NAND. in strength have a business curious, saw for trying to lag of two it begun some figure a your business. they're Or when DRAM, of other to I'm to is foundry, like beginning their is logic mentioned kind strength you you effect? of see peers that XXXX in of Have component you John, one them. do NAND you to things semi Ichor

John Lee

I we comment on Yes. can are muted. other very saying seeing. think feels Thanks comment is we're Krish. still Certainly, for on peers it what what we're We can't what seeing. question, And the

and upgrades in and increases But a require talked Some require flavors, things like come just also can To in cryo. layer it really not need upgrade chemistry or right? And count, new about a customers you different that have might power. that. with upgrade might couple of RF RF deck, smaller upgrades new changes, you significant

see want customers think NAND and right on I depends to what still their customers all muted. the do. see them pretty that But So is now, what we

we can we all about say that's see. So what

Sreekrishnan Sankarnarayanan

it. in the Got That's PCB but said mainly John. strength market seems follow-up, hasn't smartphone And drilling? was Got end Because end -- heard that like helpful. for quite it. that E&P PCB a markets, I used very question recovered. was quick flex it the right. right, it is I thought I you mainly I If hope Flex remember

the drove Ram. So E&P you I'm to hope figure trying the out to future. side? to that that more want then like And I with in to you the quarter to welcome interact what say on also strength just team, I in the for

Ramakumar Mayampurath

more Thank you, Krish. conversations. Look forward to

John Lee

up are answer Flex actually is your two both driving E&P equipment. are things To question, that Yes. there Krish, It quarter-on-quarter. the

So you're for smartphones, right there.

there bookings, increase to in that's increase in an an bookings into see in so. for turn that, And to the did we AI. for equipment in quarter revenue we and going So addition related or PCB next to chemistry saw rigid

actually it's both are that So happening.

Operator

from comes of Joseph question Stanley. line next Morgan Our the of Moore

Shane Brett

question is, This that gross XXXX? margin behalf of is idiosyncratic envisioning My headwinds Joe. first should and Shane tailwinds we for about think the how you're on

John Lee

Gross during really XXXX a different acquisition is slightly -- see profitability that Atotech by down the Yes. our in keep and margins up even cycle. helped you are the Chemistry gross has can division. certainly margins

will and particular all of them. margin last business at years, the X about that, improve Atotech improved. improved, for the PSD, of it's happy case really with MKS, That's we're So the VSD. right? the with Volume case has Under also is volume gross

And margin higher, have expect so the our that And inflationary come over talked in costs gross model. about we is this we of XXXX down if year. XX% course, that volume then, should flow-through

it used of of where kind on we be, lower much getting parts are always the the and back It's as So to supply is that But some some the PPV or chain X% materials can now. to not year-on-year. parts X% some well. pretty count balanced where point to of PPV

balance. in still it's now, right So

And a could so be that tailwind.

inflation Of up, goes it's course, a headwind. if

margin drivers going of think we things the are forward. about gross in those terms So

Shane Brett

returns, MKSI the that NAND positioned so to of Got is relative it. XXXX in eventually through when customer sort is, last cycle tools CapEx XXXX? follow-up how up My

John Lee

leadership we some certainly the Yes. most etch still RF the VNAND our position critical most with in We for -- power. believe have of the

And so RF with that our business. the that pretty confident next cycle we power will that we're up enjoy

working about I that into power think you're new and in probably be kinds that but will as as to others, next on that gets We're remain as talking certainly cycle. well the probably production, such of DC. seen Pulse when put as not to

Operator

comes Joe Our the Quatrochi Wells of Fargo. next question line of from

Joseph Quatrochi

I about I guys requirements announced you're we mix one, know located building cash production also, is over And semi-related you about, as X debt you talk the I paydown? Malaysia. kind kind capacity the flow lot of a think new think do could excess maybe semiconductor in CapEx if there wondering factory was think in of quarters China. about then a production? for we of how in free the your next

John Lee

Joe, question. Yes, that's a great

products. footprint, something we maybe and the Malaysia in photonics think towards need. types capacity in to another putting So footprint, risk targeted of want we our expansion that's that's less manufacturing semiconductor factory see. our we certainly for even and will announced And certainly that customers groundbreaking our our for It's

the doing that. So reasons we're why those are two

way think been spend. about CapEx, is CapEx in I it, terms of X% in of terms I that Joe, In X% to we've think level the always

it good But And reasons. X%, I two, towards we'll or range. past low we've year a year, next this in that the built Maybe low. for CapEx then that X% couple a very could the oscillate because still got might edge intensity X% be model up factories we but quite have. of very, it to X% between think being So

Joseph Quatrochi

you of seasonality call -- think but we terms That's the do into December, obviously helpful. there guess, And then anything in to is guided know I about guys quarter? how out March I

John Lee

usually true. March a quarter from cycle standpoint. product lower little is The consumer a That's

Atotech what that's we in we saw would uptick in QX. our like So MSD of see, an business, just part, typically

can change. could Certainly, a expectation. So some that. new that's product the change sort of release Things

It's cycle, an a and is necessarily consumer the right? cycle Equipment of I kind is think products not it's just only -- equipment. capacity difference investment cycle.

of that's will where in of it that so rigid remains a we equipment, uptick what be be not to QX. And because Flex QX in see kind also but just And equipment. seen E&P

Operator

[Operator the Instructions] of Our next Melissa line question Weathers DB. comes of from

Melissa Weathers

to with forward you, working Ram. Look

about be? other in I big give And you your preamble you win if wins? HBM. you similar think can color is, how I what a any us any talked that that Can back-end expect heard on it more for

John Lee

Thanks, HBM was lasers. Yes. about The we talked Melissa. win

And so lasers cutting -- of can not type -- each used used on dies are be news. of But That's of top to putting do you're HBM chips. other. die

precision that all makers, have opportunities you're so the edges and those those chips. are fineness laser the the and the us, of better kinds And precise to of cuts, giving yield because make can on more you going

out particular called we and -- pretty So is and customer, one it's significant, but MKS pretty big.

significant. And one just customer. So -- group, it's but for it's not laser the

So it's doing this. customers multiple

Melissa Weathers

advanced saw that are quarter like kind you But you It's second-tier guys strength foundries seeing the in is logic on main the the player of clear then strength. And there. said it. side, pretty the two Got there struggling.

impact should for how MKS? market we derisking major And you recedes that are that think So any way if that to would player, just how one dynamic? about that

John Lee

Yes.

that, not too I worried think we're about Melissa.

in I think consolidating because the XX a we've is reason industry for years. been

that were were now And OEMs, There so chip you there could argue now five. of are there dozens are there XX companies, five.

our the -- we of customers I think customers' you kinds bring I code, technology And value provide so if also margins you and as can in to ZIP the next same want that's the the gross our of And this kind our think But get we -- of in customers. will, you certainly, best bring. So are our we paid and technology all And margins customers. the see, just need value invest bring. generation. value that for those companies that can as to fair a we to want of corroboration gross that you

we've able over demonstrate So years. been XX that to

And and going to consolidation our the really the so, we what that margin. portfolio yes, be there could be determines of the but gross value industry, is whatnot throughout feel

Operator

Barger Steve of KBC. Our next line question comes from of the

Steve Barger

of how talk John, around it's or longer when you whether you're the this how this other you growth affects rates term? litho growth some market about targeting, think you, or can areas TAM photonics affects the about initiatives the or the for opportunity

John Lee

Yes.

And I removed. playbook right? ways years, WFE, think recently, so the it's really that Steve. back basis XXX There's to we've XX-XX you many business by do demonstrated only of headwinds, and got we've China, we've that over the outgrow last had that points. we can lot A could demonstrated more

somewhere else. have we to so make up it And

so we And where, than to vacuum company, I WFE. then part were the a of that lithography, was a area think contribution metrology, less inspection, as great indexed our that to

the So investment, the made couple that have that's of of where we've demonstrated WFE, to and last we even over can been outgrow that years. continue subsegment and we we

So example playbook plan outgrowing that's of the and of WFE. just the an

have I move the to -- strength And strength opportunities of that also portfolio. where having We to think leveraging are. the a the is broad really

faster areas can you're to much You because them. those move already in

Operator

Investor back Misra, closing no turn remarks. this of Vice Paretosh showing I'm for would further now questions President like Relations, to it time. I at to

Paretosh Misra

and you all please. close the call, in your us Thank today may for MKS. interest for joining Operator, you

Operator

does This the Thank you today's conclude conference. participation program. for your in

You may now disconnect.

MKS Instruments (MKSI) 7 Nov 242024 Q3 Earnings call transcript