MKSI - Earnings call transcript Q4 2024

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Operator

Thank you for standing by, and welcome to the MKS Instruments Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Paretosh Misra, Vice President, Investor Relations. Please go ahead, sir.

Paretosh Misra

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

various any statements about Form Actual important prospects subsequent the and for a forward-looking statements. disclaims results As in upon differ release These and today result including representing to yesterday's and any a expectations report MKS not company update these and most obligation factors, represent XX-K. of only plans as of reminder, those as discussed in or of future statements. date the expectations, Mergers recent as may remarks company's on materially press estimates the today relied comprise annual be company's to should as views our

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

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

turn I'll over call the Now to John.

John Lee

and Paretosh, everyone. Thanks, good morning,

per cash by a take environment. operating I'd $X.X managed to gross of in results, and $XXX our a million. expansion to improved year-over-year expenses in free I point Before We flow basis a XXX a quarterly XX% flat revenue Despite which challenging achieved effectively, like earnings year increased review by we our moment discuss impressive execution roughly share billion of margin. XXXX, was

loan actions million upsized several facility our leverage took term manage of on offering, billion to This $XXX an convertible our $X.X significantly opportunistic term repricing refinancing included reduce voluntary and interest prepayments our our proactively of expense. and we an note and Additionally, loans.

while including in also and steps for world-class era. innovations We new initiatives, optics, maintaining the took in and strategic and in R&D packaging systems AI technology solutions investments chemistry laser these advanced areas such lasers as delivering

operations new We factory and in broke ground site on future our and the also in Tech Thailand and center. purchased expanded Romania, for upgraded supercenter chemistry our Malaysia, in factory a

thank muted capacity across our and These resiliency XXXX, acknowledge to We're manufacturing of to delivered I investments and our MKS footprint. specialty teams our electronics customers proud work our accomplishments for our across end packaging to support want success. I markets. to results unique despite who add these in engagement and their also that in we their semiconductor, solutions want and deliver enable industrial as markets

more modules cycles. traditional Law Moore's lithography, like metrology market. inspection and us position for MKS is and wins are increasing portfolios allow innovation deepest and uniquely production solve the areas broadest of solutions in to through more in complex environment that pressure design this optical XXXX, our enabling a and the to one Entering These customers' challenges placing on most with strong product challenges. MKS

next-generation believe technological well back-end and and trends that for innovations impact accelerate. have semiconductors advanced sets our Lasers across demonstrate examples multi-let these foundational substrates up the equipment industry AI servers. a chemistry enabler electronics, we for position These applications as on and as for our us

double-digit semiconductor the share packaging electronics growth our a QX X% more our revenue, in with both let's quarter per year-over-year, end guidance fourth ranges. note midpoint in was margin and driven diluted on ended above earnings results detail. and and Revenue our of Now XXXX up discuss gross We markets. strong by

principal term progress make We loans in prepayment repricing XXXX. our another January including million of our voluntary leverage good successful $XXX managing proactively to and continue a

Combined with the rate over our in year. rate interest environment, a have the reduced $XXX XXXX prior by expense and in annual we actions improvement similar interest we run million took slight compared to

markets. X of end our increased the X% semiconductor revenue with our our Starting at sequentially, above end in market, Looking guidance performance our high range.

Similar to trend picked from higher primarily better-than-anticipated remains for product at NAND throughout levels. by the logic to in-quarter mainly was low the driven seen this our demand vacuum and historically trends XXXX early offerings. year, up and applications related DRAM revenue has foundry

layer as recovers. customers We market and are when positioned for greenfield both well higher new potential counts move activity that upgrade to investments

semiconductor gas another create when design continue are We positions great for that assemblies advance investment win and reactive a achieving to nodes design wins for including metrology with leading our optical we customer. of supplying leading in opportunities solutions for a us inspection recovers, lithography, pace healthy Additionally,

maintained quarter. orders related our also momentum the back-end our more during high-bandwidth the We to with leaders in applications for memory,

quarter, well our with the recovery DRAM at first gains low, continued to basis. the have expect momentum. design strong to year the than strengthen outperform believe higher with positioned Overall, The logic along a ability continued market flattish a our remaining levels. are is on We NAND and ago. wins, revenue low demand to In we're our business investments it foundry remains as invest we our confidence sequential while growth. in demonstrates making, guidance in demand be stability in we laser years semiconductor we for The and over

XX% enabling saw guidance. increased Turning and to was for electronics above electronic the by for applications. our increase AI high and chemistry driven Packaging. more substrates momentum play The key in in critical devices. of manufacturing We equipment products end our sales. sequential the orders Revenue and equipment advanced increasingly technologies specifically, package and role continued advanced of sequentially the grew interconnect HDI solutions the MLB, complex packaging as to becomes our and and This shows related

pass-through, of increased palladium over the chemistry in Sales fourth X% quarter year. Excluding the impact of the FX and prior

in PCB full XXXX. year, the up the finished XX% industry outperformed For and Chemistry sales significantly

and primarily due with on basis, sequential Year. associated revenue to seasonality Lunar down QX, New to we packaging electronics ahead X% to the Looking from a our be expect market

of the guidance range. specialty our X% sequentially industrial our end was In revenue market, and decreased lower at

sciences and the research were saw broader life softness and we across While defense end the steady, markets industrial and market. health

our consists market a of industrial across markets. of specialty end variety a As applications multiple reminder,

expect the well our to business Year position. strength finishing I our QX, we industrial metal the market softness profitability, of enters our specialty New and of decline to we the full due in robust ahead MKS shoots green revenue to delivered and related XXXX, industrial QX emerging in Lunar solid few Looking in Overall, general quarter from X% earlier. executed and business. to a mentioned a team financial financial performance in mainly impacts, especially market areas our improving year fourth and key with in XXXX

our dynamic industry in with during coupled the efforts, we culture reflected received accolades the year. are Their

For the second U.S. consecutive year, we named to were the

as Companies Work and America's as Report our XXXX. by companies well named & News as in Best Statista X of for to industry World Newsweek most responsible for

run Now it the more to guidance first Ram quarter and results to let turn financial through me Ram? over in detail.

Ramakumar Mayampurath

and John, morning, you, Thank good everyone.

backdrop growth and execution the on the our I'm few past we will and the continuity. costs in couple focus while coming into of with maintain especially As my managing I role, of years. business impressed a months discipline the quarters, for necessary to industry make we In long-term dive MKS light investments over that [indiscernible] demand of the now level deeper am

a looking about coming but talk let a will QX full the detail. me at how quarters in I more moment, our little we performance and first, in review are year

range X% million, MKS and fourth and and our up guidance revenue sequentially quarter, the by the $XXX electronics The year-over-year. mainly reported of For better-than-expected was packaging above and revenue. driven result was midpoint of semiconductor X%

sequentially where semiconductor up and as quarter end result as the to inventory our of our have $XXX applications levels continued especially execute strong relative Fourth year-over-year. The in-quarter above high XX% was our related revenue was normalization at customers. seen DRAM team to logic a we X% of foundry demand million, on and expectation

are low Packaging Fourth through the off are end good & of expectations. some quarter bouncing was is evidence inventory that XX% burning at customers. also of base, a our but an we revenue increase million, and above we making Electronics excess quarter-over-quarter progress seeing $XXX in NAND high very

trend was softness. year-over-year excluding chemistry equipment declines were from performance drilling sales, chemistry, in in led sales a drilling and Chemistry industry-wide by a chemistry of higher the pass-through, partially normal flexible by gradual basis, seasonal chemistry. a PCB and On up equipment This the offset result X%, equipment. flexible recovery stronger were up palladium by continuing XX%, driven sales impact

softness in chemistry down In year industry markets, our softness within markets. business. our industrial Revenue of to results The decline $XXX also market. finishing X% X% midpoint sequentially from due metal million, basis, the a strong revenue largely across industrial equipment was quarter to below fourth benefited and due year-over-year primarily the broader guidance was sales prior the specialty general

Turning to margin margin gross in guidance. to of fourth the quarter fourth the was our and reported Gross down equipment consistent quarter midpoint and of our XX.X%, sequentially higher which We mix is margin. gross due with expectations. above

manage prudently balancing generation. cost, investing to near-term our with business our continue We profitability cash in and

was income our our quarter higher was $XX Fourth profit. than expense above interest of plan nonoperating Fourth quarter EBITDA million expenses and as expectations, $XX million our our XX.X% margin $XXX operating a by approximately million line a pension guidance $XXX guidance million and guidance. above midpoint expenses. million were of guidance, lower range. costs was a gross within of million $XXX $X year-to-date margin. an driven yielding with operating Net our yielding Adjusted XX.X% of reclassification to result mostly expenses was other operating and interest in of Net otherwise also of interest the nearly

was tax the just lower earnings items favorable quarter reflecting of X%, detailed. our rate quarter above lower I Fourth year, and $X.XX strong in due was operating fourth per certain were the The income guidance, discrete quarter. $XXX to million which performance or tax net guidance our effective midpoint than

capital the in was the quarter, $XX slightly $XXX We quarter, For or X% of revenues. fourth revenue. cash of recorded expenditures XX% million free of above million flow

for XX-month to of X% the We revenues and of gross CapEx billion cash quarter liquidity of based EBITDA with on with equivalents We of million. our facility of We quarter expect and to comprised $X.X the future. credit trailing approximately undrawn of and average $XXX million. our closed foreseeable exited adjusted of the $XXX $XXX billion ratio X% on debt revolving net million of cash leverage X.Xx $X.X

priority continue We remains sheet, our after which prioritize top our business. balance in investing deleveraging our to

spreads expense on in we loan, a mentioned, reducing repriced additional term prepayments term interest total In Based voluntary our points our approximately $XXX an these John annual million of current $XXX prepayment. another of run rates, recent credit As loan. $XX by interest on voluntary of principal rate XXXX, reduce million actions XX million. of made we will by January made effect combined XXXX, the the basis and our

capital on continue higher As progress us environment our continued bottom we on working stronger to the see line flows, deleveraging. demand to to focus prudently good improves, margins, expect gross and flow and through alongside to the allowing make managing cash

quarter, fourth $XX the $X.XX during per or share a Finally, dividend we million. paid of

year and logic X% year-over-year X% levels. DRAM Moving foundry revenue excluding and remained to year-over-year. was while of and Semiconductor up low impact full down at totaled in XXXX NAND optics billion, exchange. stability growth $X.X in the revenue up We experienced world-class X% results, foreign applications, $X.X continued million,

exchange by sales excluding were in palladium, foreign impact market, revenue sales Total pass-through. pass-through, industrial the Electronics FX billion, chemistry vanadium sales increased year-over-year, in $X.X was $XXX up palladium declined and Packaging strength the excluding year-over-year. driven the year-over-year, year-over-year of XX% up XXXX, down of excluding revenue softness X% by & and the was impact Industrial primarily foreign Specialty driven and million X%, of in exchange impact X% chemistry. X%

points mix gross year-over-year, up as well efficiencies. operating product year margin was as Full basis XXX by XX.X%, driven

gross to value up operating manage basis was as our truly XXX higher a disciplined measures successfully coupled portfolio, taken efficiently. addition year XX.X% of primarily have In margin differentiated our expense management. cost year-over-year, result points we operating capturing with of margin, to Full through material also product labor and

increase operating XXX We points of million an an flow. flow of cash year-over-year. flow generated $XXX XX.X% $XXX of the year. cash flow over of prior free cash million, conversion cash million improved Free improvement was million Full basis year-over-year. to year Turning $XXX $XXX

a challenging the We strength the generation our in on -- in our underlying are margins execution our in and pleased despite environment of markets. cash the business with demand end

me now first turn quarter Let to outlook.

from albeit view expect We that and provided the is year $XX rate $XXX is market, be of run a at follows: our first as to plus Revenue the slightly minus stable, than outlook $XX million minus $XXX is what revenue with million, million. relatively market quarter or million, a saw guidance expected semiconductor or last with consistent consistent we quarter plus market higher By end our ago. we our

million. electronics on product $XX specialty million. mix, or points. levels including be industrial our market $X XX.X% million Lunar chemistry $XX is we be to and expected in minus plus Based estimate expected from million light minus or and margins sales anticipated lower first packaging quarter from $X gross Revenue and revenue is the and of basis our plus market of to million New or to the plus revenue minus XXX $XXX Year,

$XXX remain to at and minus million, million $XXX $X EBITDA quarter estimate plus range million, adjusted We or we invest minus million. in as our $XXX to continue OpEx we expect a of expect of or expenses first of million spending to this plus We people infrastructure. million, quarter $XX operating $XXX

expect of We the in rate first XX% tax quarter. approximately

earnings year, diluted tax Based plus minus the assumptions, quarter expect on our For these to net share first per we in rate $X.XX XX% expect of range the $X.XX. XX%. of or we be to

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

positioned We over call concluding are are to I that, on back confident to remarks. for ahead. uniquely that With John opportunities turn will the that the lie we capitalize

John Lee

that's to with Ram. leveraged I'm businesses in very product our you, delivered up Thank performance capture wrap by broad in opportunities We saying we and deep I'll And across engagement managed customers. strong deep pleased maintain margins environment. costs We and portfolio our XXXX. the enjoy the our a on made we to well, tough progress our thanks with demand agenda. our deleveraging

and design positioned our fronts: comes advanced traction in well which and NAND incremental optics on order activity when we're from both win and are AI the in in packaging an portfolio world-class and equipment it increasing in multiple chemistry order chemistry design forward, improvement Going for era. benefiting continued complexity win

ready You from business also invest incrementally return we're growth. in and capture opportunities continuity Rob exciting to we that growth will heard ensure markets both when to to

for. profit maintaining eventful course, product while know an Of that a we'll focus forward prudent us We're cash that ahead. investors year and and generation the do looking on to

that, With open the operator, for call Q&A. please

Operator

from Instructions] [Operator Cowen. first of TD today from Krish for comes question Our Sankar the line

Sreekrishnan Sankarnarayanan

I couple had them. a of

customers when how they semi-cap inventory think I'm mentioned purchasing you you your curious components levels John, today of where NAND much anticipate burned. of And a one, First versus component are start those do your some kind land again at how is upturn? they being before? would ahead your

John Lee

yes, great Is a it's question.

So We've some lot starting we're we certainly new a inventory past being We shoots that orders that. off. for there. talked have of see see about the seen burned and happen, to in some green of

So it's already happening.

that progress. happy with we're So

just of It's off level. low that still it's a

used to shoots, So but where good it level green at progress, be. certainly not the

Sreekrishnan Sankarnarayanan

remain even around the June So revenue should what just seeing, seeing is levels your it these are fair quarter? to customers given assume you're what in

John Lee

I upgrade or know, say starting depend as this NAND, we're not coming out we're whether you new will occurs that, Well, greenfield. for would orders business these but to beyond because see there's how on in much a guiding

So that happen, part revenue our they if those drive would of up.

we're if so a that and happens. And in position when good

Sreekrishnan Sankarnarayanan

And just for a Ram. then quick follow-up

the rest it that stepping to from like $XXX of bit for run is year. I and rate mean kind $XXX normalize million year? up of million Is see in should the You last quite -- OpEx. mentioned a it's the because

John Lee

Yes.

focused spending. So very of all, we on disciplined me are OpEx that our to and first say

XXXX, to year. some in build opportunities long-term the less having we we OpEx business. the our are additional efficiencies slightly investment. why see to some And that's and was to compared XXXX in growth Our within In step-up invest flat previous to

the Over to up. term, XX% the margins, line long a which operating we as remain incremental committed see picks we'll top

Operator

And our line Peter from of Pang the next JPMorgan. question comes from

Unknown Analyst

your on Just semiconductor segment.

for WFE. customers your of a talking about mid-single-digit and growth Some payers are

just and for given you that wins, thinking your of design of market your you performance guess end about year? relative level I are versus the So backs the how some that some dynamics

John Lee

to WFE the term been we've Well, as outperform over know, basis long through by XXX you cycles. points able

wins seen really So activities the we've really design we're positioned helpful. are that well

another Our gain lever to for focus on share world-class optics relatively. us is

most be growth of right, if kind You're our will said WFE customers of we enjoying have that that as mid-single-digit and growth and peers of certainly in happens, level well.

underperform. As you more we outperform know, are pulling during a upturn, our a downturn, strong because we lot customers in and a

are And And where car. at overall, that's cycle. we that as basis we XXX the look points through the above still long-term

Unknown Analyst

quarters. looks the been when kind that special you over would And it. to declining industrial, Any last idea your kind business and of it's of like few bottom on start that business of think steady Got then recover?

John Lee

we the Peter, of of Yes. on kinds it's And said made call, different as markets. several up

general called that industrial And is seeing is which that a out weakness, so surprise. the we area not is

I be think of wouldn't And data that market. is down X% that entire segment though, if organically, you our read all -- for a the the surprise. year-over-year only even

it's along best be visibility And it's think So can up guidance is because it bottom. lumpy the made gave. several of bouncing different And our I we the markets.

think I how we slightly and right see down So it now. steady is

Operator

Deutsche line next And from Weathers of our comes Melissa from Bank. the question

Melissa Weathers

I greenfield about MKS talk higher about the upgrade the happen think we're seeing in year? fit do Can greenfield upgrades where wanted how versus this go have dynamics in upgrades? Or side. to NAND narrative? content to does when that spending versus Do you back in capacity, you you

John Lee

Yes.

portfolio the from a it's lot power what is on XXX know, us layers, said RF of those the going I've and is upgrades, it of tools. for to greenfield layers certainly power, in a MKS as broad power. the brand-new that you tools. requires With needed. XXX RF most And is depends upgrade benefit And as So there's the certainly, has around before, a if

And see talked so product there. we're as starting off lines inventory that's some pulls that certain on where about, of and the to particular we of some burn

Melissa Weathers

then around logic it. volumes are Got pretty expecting And leading piece, healthy all some going still semi State edge on the throughout on spending on the side, to year. this year, the we're ramp the nodes.

what how talk kind think content MKS' can logic that trend So with continuing is nodes? business? you impact all-around you story have about that ramp Or about piece through Do this we any of year? the should on the to of

John Lee

to we call that advanced earnings the contribute things of applications enabling around. we advanced thing for lots are is out There logic One play on gate called in and Yes. capability. ozone this all

so portfolio. a And we broad have

playing are we we as So product of particular lines well. that particular in advanced have growth. But that node growth that areas enable

Operator

the our of And Company. comes from line Jim and Needham next from Ricchiuti question

James Ricchiuti

Besides NAND, some subset which shoots are or signs green other recovery, areas pointed seeing markets you of out? you as

John Lee

increase are we in chemistry outpaced the we XX% We believe is way. organically. it see year-over-year the the that to see of be by in grew chemistry we and Well, industry, world, advanced starting that though packaging. PCD recover an Even some lumpy, quarter-on-quarter, can far do

I applications We as packaging. that to equipment other green out equipment HDI these continue saw this say, for for that advanced call for would NAND, up AI. MLB chemistry pick shoots and the the you of is a and couple And ago besides is up. orders quarters ticked

James Ricchiuti

as help whether give for the that to at year? you looking packaging and the how to remind some grown business, how over quarter Got can maybe it. much it of have want that us to might as you and sense again advanced just John, us characterize the would E&P us you

John Lee

Yes.

the really and about for that I part. enabling packaging for number HDI. about used IC the and and PCB talk X/X the of drive we're really servers advanced us to the and like layers think was AI in What's to chips the substrate That's servers things is non-AI market. complexity AI The starting good and that of of of see of packaged, because what is one being growth PCs. number surprising we for MLD

driven servers the equipment market, the market. IC and substrates and mostly substrates And is equipment we've really about market. Package is by of the is is market Those substrate talked we the the still the X/X HDI about, But part ramping. of XX% is MLB driven IC of of remains, AI orders XX%, great. talked are so HDI are X/X customers that MLB. that's -- And X/X the for the as entire

XX% that's because servers. other is of so muted relatively the non-AI PCs And the driven market still by and

Operator

Bank question from line our from comes Arya America Securities. And the Vivek of next of

Michael Mani

Michael dynamics related start on any margins This greater for as other mix. takes through the to To maybe equipment into like we on is contribution there? are to segment Arya. it seems Mani the we gross Should higher dipping Appreciate any But go and gross expect color. year? what they're the that's Vivek puts help margins, chemistry quarter. for from this

Ramakumar Mayampurath

I'll Michael, take that.

First was XXX to in a the are margin operational gross with of XX%. XX% very points, the lot gross excellence in improved We all, seen place. year-over-year. we due by very, to of margins our we basis and happy improvements that And programs actions have commercial

help programs and What operational seeing excellence of continue will quarters. procurement in concentration gross will equipment our that those QX. continue, includes QX of a and in is saw to we're coming Most in higher we excellence the which manufacturing margin savings

to reason mix. of why margin This we New lower continue, mix reducing chemistry and QX. slightly our with our is That in combined the gross going impact Year, the are the will impact That, Lunar that our guiding is

actions your to And the So will mix to influence seasonal. margin gross is control that the the we continue. question,

John Lee

for or packaging for where And because we component shut down our do Yes. a is of And it our consumer business. are a Lunar to week Year I'd add so, occur seasonal many revenue chemistry have going Michael, customers doesn't products forward. to, that to New

of our proportion returns. that's expect so that cyclicality And revenue kind we normal happens of if chemistry the

a for And so margin. gross tailwind that's

Michael Mani

for your follow-up, to ask pipeline. just Great. then I wanted the about win my And design

these these all, acquisitions. does you generate pipeline and when you're it based to revenues to of Atotech, able And win expect basis [ of from convert? the your on ] synergies grown? with Has design most do look kind how a So revenue from Electro-Scientific customer

And this any company to finally could it we initially and were more within XXXX, areas anticipated. maybe further it year, like areas land then the didn't maybe was -- surprised there were is we any later 'XX. win, something in there where that, pipeline than that was help out was to other on competitive but expect more that see Is that competitive

John Lee

engagement still on Yes. to customers are as No, that many chemistry have well and this portfolio provide, with systems great we we as able chemistry laser the systems. meaning

and that that the So engagement strong. wins that design remains from come

that the have we've design We multiple past. talked about wins in

To your point, it does up. take X or X, that X years, depending to revenue on the customer show for

PCs to them levered they're not volume. that Your But other once then once well. win AI question may whatnot, and most about be the and they headwinds be customer to think grow be would successful Thank design levered is I so and win were maybe that design would not there as any of returns, market headwinds as and a you adding you they that win expect certainly we much, not and you. maybe to

Operator

the line next from question our Capital Steve Barger comes KeyBanc of Markets. And from

Steve Barger

new healthy comment been your pace those those wins about are assemblies, that Or of John, design you from a for refresh? are a before? coming haven't for on programs product optical

Ramakumar Mayampurath

both, Yes, Steve.

Some already it. but an the upgrade, it's generation of we're next are program on,

things no one's including some ever that are And done, our new literally customers.

what asked you do not actually Number exciting you're delivered. upgrade one, losing both. So it's to to being already share, you're

competitors portfolio actually therefore, things stickier that. and and we're and of fewer more much asked Number our and more do two, fewer that to require more are can more our being do complex and

of Steve. combination a both, it's So

Steve Barger

would to RFQs to of the initial cycle conversion or pace process? the characterize the from how starts seeing change you as wins you Or Are move forward? process rate that that

John Lee

I into -- they Well, before for design think years market. is the designs the world-class multiple for go optics, timing those

that no are over pace time continue capability you in investments where of say because So I the the no it matter made we to would optics. change of in cycle. average on we world-class in are more because really has seeing

long difficult cycle. things design do, to continue cycles, So and through they it's really

Steve Barger

different packaging difference there I just look is is proliferation? of trend a -- Got across beyond it. optical then demand, And advanced the there as meaningful [indiscernible] at variations an packaging like you demand broader guess progression

Ramakumar Mayampurath

Well, new point, love, your and technology, means new which packaging, area, very it's dynamic is opportunities. evolving because we quickly, to that a right,

think But in talking to the I important. And and to point, and we're about layers what MKS all the LTR the are really, chemistry equipment your that. that's XX below below [indiscernible] and that. moving drilling that

used layers that XX. XX And was that to be so and before XX

area Atotech exciting for together an road MKS really faster. map putting makes that's why us. a enabling sense thought to And that's So go we with of that lot

Operator

Our from of next question comes from Toshiya the Sachs. Hari Goldman line

Toshiya Hari

John, around that. customers in on that's indirect recent having this recent curious quantify any have to for how there's obviously negative some to guys, restrictions I'm export take a the and your 'XX. a you couple impact should of spoken be revenue if way an know calendar hit I most of but from the restrictions? In

Ramakumar Mayampurath

start. can I Yes,

this don't impact what's in at So material see reflects best place today. We guidance any view based point. our No. our on

fluid, the know, situation we quite is it you closely. evaluating and As are

John Lee

Or end at Toshi, you were came that the I the you asking restrictions of out year? think best about ask the [indiscernible]

Toshiya Hari

of year, end the restrictions. the the BIS At

John Lee

up KLA, as yes, see from will we for our Obviously, what China if has that. we Rob as And down, everybody numbers. is Well, low. revenue because I with direct customers. this to come are, said, very very, market our their the some sales we Lam, our semiconductor goes read, see yes. is view would But new Yes, of you best say

of numbers our right impacted now. of revenue that -- out those out XXXX, our numbers October is are that numbers us occurred were and in The

still impacts indirect order same on So as it's it our impact what the customers.

Toshiya Hari

Got for it. Ram. That's helpful. And then follow-up, as maybe one my

on on a months are very couple guys focused of company with I'm the curious, know been now. So you balance you've down the for sheet. I paying debt

been working strategy? potentially really if to able company, that kind how forward? share tax operations capital, that of identify can and sort improve helpful. would Anything you curious able been you've the be to you've any with identify of guys about you us, that going But think the of to opportunities improve If

Ramakumar Mayampurath

$XXX script, the our basis good you million Strong as was flow cash On XXX where flow improvement cash link from a and certainly. Yes, John to year-over-year. increase million were generation revenue $XXX going, his P&L in free year-over-year. itself, mentioned points

and repayment, start actions margin from P&L focus maintain keep the So working our going. the on debt growth continue profitability will on the and continued be now we to are

Free cash our net non-GAAP about of is earnings. flow XX%

bridge the we translate good, cash is to into very So flow. that that see need and

prepayment the well. think and of We continue in I debt opportunities those to company look continue. executing at saw And in that is you terms repricing January, our will of P&L,

do programs, then Prepayment to has help allocation in after are priority strategy capital will We with flow we our #X constantly our to that continue changed. looking we repayment. operational invest drive at is cash business. and of debt not which debt excellence the And

Operator

next our from Brett of Stanley. Morgan from comes the And line Shane question

Shane Brett

So think within XX continue than balance is days how worth inventory inventory time here? is, much is reason why orders should anything quarter-over-quarter. we going to expectations? semi increasing seems with higher like forward? can there data I'm your you The that And come targets lead about semi, noting Is sheet down I'm longer trying asking what understand for your to your on how just support

John Lee

Yes.

a burning would there's normal. time on to made capital And to terms So for if it as we working know, ramp, that progress ahead happy as down, And rates. Shane. the leaner getting we large as prepare starts normalized I we're think you inventory, some with of obviously, a use we're

happened than certain have strategic we historic at a had and in keep the elected higher with shortages. that's have we we that the ramp last think components little given what to of past because I inventory But

decreasing a progress is it. little we're in happy we've higher, the Inventory So with but made

Operator

line question from Rakesh Mizuho. next Our of the comes then Vijay from

Vijay Rakesh

Yes. John Ram. and

would tailwind in packaging. say, person AI [indiscernible] mentioned you side, I like person if exposure XXXX. to Can suppose the you growing know I in is? you what I the for And mentioned market as you how you like that what pretty AI the small. substrate But is the through the is mix walk a you talk that or just On do see

John Lee

Vijay. Yes, Yes.

orders It's AI. the device XX%, out HDI. levered harder other substrate MLB So like big We that talked those driven part, are to the is markets with to it's say certain IC kind of it's easy that submarkets about X see -- which XX% break a and little types. because by are being we respect to in to

remember XX% the every that over of we by is chips. step making of And would a driven also semiconductor in say semiconductors, I have AI of semiconductors. process lot

by processes. So understand that XX% is driven we address certainly and of you packaging progress, semiconductor by AI is processes, XX% Law do of progress Moore's Moore's semiconductor packaging Law. driven

as So as levered we AI company, much we have -- Law. to as as Moore's we're to always much have always as as a

answer best up, breaking for for us to otherwise our difficult because So do. pretty it you it's that's

Vijay Rakesh

the you any Got thoughts from Are down it. And as and deleveraging that? look target? faster -- you a cash to it are at you them then, better time the pulling on or ForEx prepayments. at around Any Xx Ram, better in? look longer-term free flow driving your you the Or

Ramakumar Mayampurath

Yes.

$XXX are million when Let help down X.Xx. In we asking. our close focused including just alone repaid just $XX last brought cost to accelerate a help are we structure. $XXX from not million, current with to to that did very And year can expectations that you're that much go drive on line, our given point what to sales, That from all mandatory. year back get million, the a number has top the little we we

said that plan levels, which acceptable exactly what said you and get we down the to So net. have to is Xx the focus

our That's focus.

that I As level. to to But don't to rest our down timing, focus get now. assured, predict for is want that it

Operator

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

Joseph Quatrochi

the the business semi within during I optics business. like the growth second you think about in your in the that talked call, past, quarter

think in given So growth those you of some curious do XXXX how the I about outlook And the that about for for in did customers? opportunity how was XXXX.

John Lee

We've John. we as revenue about it's Joe, and that period, time Yes, you talked optics, over a longer optics world-class know. about talked

rate. of Going $XXX $XXX million level from million kind the to the run

over last inspection outgrown WFE, or X. we've year lithography, actually So segment the X, of the metrology that and

the subsegment us we're that that continue overall. Certainly, cycles immune design not but So in and any that and will that we give really subsegment strong a wins really us to as in to WFE 'XX it's certainly WFE of was talked outperform year. about confidence it lead to we earlier, year, good will

Joseph Quatrochi

to maybe repricing thought, a would I expense number, bit quarter-over-quarter as in little have the think given you're be prepayment up And a interest then would guiding just but a I but more I guess, net be housekeeping, January? it's slightly follow-up, that I down know and

Ramakumar Mayampurath

is QX out, is The $XX you guidance. is Did are because is reduction reason the you got guided. QX what main in so we the clarified we not in close right? Yes. included our million, of X to full said -- interest there if things. points January We QX, prepayment was the million -- our impact $XXX and in impact basis XX take which pension that we reclass guys that of The very in of

X% is Our our if look guidance rates dropped XX% X.X%, compared which 'XX at we have to versus quarter-over-quarter, QX by 'XX. is you QX to QX interest

have look interest and to have a what repayments. at additional our impact we you today, done what So that's to the opportunities down model our today, look for bring accelerate rate done good we we for to to and of continue also will

Operator

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

Paretosh Misra

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

Operator

ladies Certainly. Thank conclude your in program. conference. participation does the you, for today's gentlemen, This and

You may now day. Good disconnect.

MKS Instruments (MKSI) 13 Feb 252024 Q4 Earnings call transcript