ENTG - Earnings call transcript Q1 2021

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Operator

Good day everyone, and welcome to Entegris First Quarter 2021 Earnings Release Call. Today's call is being recorded. At this time, I'd like to turn the call over for opening remarks and introductions over to Bill Seymour, VP of Investor Relations. Please go ahead, sir.

Bill Seymour

Good morning, everyone. the for announced of first we XXXX. today, financial our results quarter Earlier

I'd listeners forward-looking involve to today we those actual like Before begin, materially differ remind risks uncertainties, some from statements. results could of in will forward-looking that These number statements the a projected and and statements. include comments our

to that we our by the On SEC. report and annual Regulation Additional these and risks recent disclaimer the G. the information on this as and refer with uncertainties quarterly information most non-GAAP we reports slide regarding Please presentation. defined filed financial measures SEC refer is will contained in the to have subsequent the in also call,

on our entegris.com. page website a at our IR can news in You find as reconciliation of table well today's release, as

are On call hand I'll Loy, the With and our the CFO. our Greg today Bertrand call Graves, that, over Bertrand. to CEO;

Bertrand Loy

all. and everyone and you, hope is morning environment. present I the healthy to staying in Thank good Bill safe

first our to XX% quarter grew Turning performance. Sales year-on-year.

growth overall was benefited conditions, points and we improved and from as transitions divisions, XXX several up over quarter. products no strong XX% accelerating year-over-year. strong as we XX% sequentially across and from up Our non-GAAP for solutions. Gross the year-on-year, industry our expected, and margin EBITDA all basis fourth Adjusted up demand three was was EPS was

bit up especially Sales up deposition on continued materials QX our memory specialty year-on-year color revenue in to little and advanced a leading-edge more from to benefit we coatings. customers a product accelerated From liquid sequentially. were and provide standpoint, me demand Let performance. for XX% filtration, solutions,

in per higher wafer you devices. count new As the layer Entegris is rapidly memory content increasing recall,

planned, storage for are our our high-purity as stronger of than team Aramus sales distribution and In which being ramped successfully capacity. COVID-XX vaccine recorded new the addition, used bags, the

freight some be environment, capacity, a in the did what very strong of growth challenges we constraints areas particularly supply and in as face sales chain While industry U.S. dynamic was labor in locations. as overall, well proved to certain

second and progressed That them solutions situations, bodes well our our driven quarter and XG we look these for managing very we products we the for aggressively outlook More global at the levels, ease and year. Entegris are strong is full the be has to bolstered which book digitalization, our record as high to And robust a year. and to very the improved healthy, expect industry by strong. continues ahead We and order the said, balance semi accelerated us, The demand for and as specifically for GDP of significantly. looks outlook chip performance demand, year, computing. very by overall market the through

significant in addition, our increases have In we recently plans year. customers the for seen CapEx

the the mix full we previous of on CapEx market unit be expect this as set XX%. to market our full compared now to sales XX% of year result, and our expect to our XX% for up XXXX, up backdrop strong. for the to now X%. will to outperform to for very XX% Given XX% demand solution as expect And growth expectations the our be I continues up to our from expectations And X% said, XXXX to XX% year based compared range a previous we to

$X.XX expectation previous year our to through model exceed target compared we with our to of XXXX Finally, non-GAAP greater EPS $X.XX. be line EPS EBITDA now expect flow non-GAAP the in full and than to expect

to new secular this, accelerating materials from are for the top importance Looking very leading-edge, purity and semiconductor higher we growing benefiting long-term we growth. proportion provide the at wafers chip process market, fundamentals On base device a ahead, of are industry of about of of very architectures. the further the produced attractive demand a optimistic and at Entegris, materials great

is expect resilient, these wafer, our and trends the of increasing and of to driven business a expanding Entegris this market result differentiated in by unit that model. all and content team's served per highly execution will We supported key continue rapidly strength our

to the place trust for the moment incredible want world a confidence to and thank around take Entegris you our I in for teams Finally, work. customers they Entegris their thank and

Now, let to the me call turn Greg. Greg?

Gregory Graves

and everyone. Thank Bertrand you, morning, good

down up QX XX% sales were Our sequentially. in $XXX slightly million, year-over-year and

of slightly gross Moving expected in were the both were performance. our XX.X%, margin, The non-GAAP biggest overall onto and GAAP of weak following above gross gross improvement margin factory SCEM's drivers margin, XX.X%. the guidance QX better and increase

in on XX.X% a gross both basis be expect margin non-GAAP GAAP and We QX. to approximately

margin QX integration million, which was $XXX included to other XXXX. We of non-GAAP $XX intangible in XX.X% GAAP items million and throughout year expenses gross $XXX our were from amortization operating and the million of rest also the approximately continue for expenses in all range. guidance improve and of of expect will operating to continue be Non-GAAP costs. QX were assets, above slightly

expenses million approximately to million operating in to GAAP expect QX. $XXX be We $XXX

We expect our and line income million. million XX% of operating was was or of also revenue our expectations year-on-year with line to and in $XXX and be was approximately $XXX non-GAAP million approximately Non-GAAP expectations. $XXX operating million QX EBITDA $XXX with million. expenses income $XXX sequentially. revenue, in Adjusted GAAP up was operating XX% both to or

Moving to operating below line. the

same line, QX $X to from expense QX move QX negative a positive million that currencies other other in expense, us in during income resulted the going $X million in the in impacted at favorably QX. income Looking in negative

Our rate was for non-GAAP XX% XX% was and GAAP tax tax our quarter. rate the

our approximately be be approximately tax will GAAP XX%. we non-GAAP QX, For our XX% and will expect rate tax rate

down impact item excluding XX% approximately been income the currency year-over-year was negative mentioned. higher XX%. in $X.XX per and year I up other share. QX expect full per sequentially. GAAP expense GAAP diluted was tax EPS $X.XX we $X.XX rate approximately have non-GAAP QX both EPS XXXX, and our will Non-GAAP of the would the EPS on slightly be line For share just

to slightly worth the of was the I drove all operating million sales in mentioned. benefit of in best the QX from primarily of increase almost in in the million versus growth XX%, gases, for for SCEM and improvement across increase down XX% basis last was XX% chemistries, year-over-year operating gross the year-over-year filtration solid sales its points were had Adjusted was growth operating XX%, year-over-year impact income and million as and gas division. be deposition and slightly up that margin AMH sales for coatings. were The margin catch-up Turning sequentially. Adjusted specialty the for related performance QX sequential year year-over-year high-purity mostly quarter costs points expected. up increase advanced the was margin of to increasing of sequentially. can was gas down primarily acquisition. advanced operating were year-on-year. the seeing the QX. down our management. AMH $XXX up royalty attributed sequential up slightly was decline sequentially. The up year-over-year driven the XXX sequentially $XXX and higher just it's was XXX XX% sales up MC filtration and year It's year-over-year WFE by growth by volume for significantly noting over XX% our and SCEM slightly materials, up purification spending from platforms, sequentially. The and sales Adjusted basis margin X% The driven to GMTI Liquid quarter, by and Precision sales sales $XXX of for margin industry. the cleaning by occurred driven The in strong MC margin major down last QX sales sequentially. bags product and for Aramus Gudeng years,

flow and flow cash operations free quarter First million. $XX was from million was cash $XX

to compensation first primarily that CapEx million. made payment As has the typically variable during year. QX flow a of the the lowest for reminder, was cash the the quarter is $XX year, due

million we strategy Given facility. expansions, spend approximately of QX the expect million our million the our and our and CapEx year, our investment the now during initial of in Taiwan used we shares. capacity bags our for investments $XX announced introductions, the of These quarterly new with up million $XXX $XX $XX repurchased phase global capital Consistent expectation. previously Aramus we allocation are our dividend demand product in from strong including for previous this in to environment, support approximately

that XXXX at in advantage announced of and took priced market favorable notes recently of interest unsecured probably in we debt rate due a senior an X.XXX%. You $XXX saw million of

notes a due effectively the the and in will three We payoff X.XXX% points. This on use existing our years proceeds basis XXX as to as small lowers the draw XXXX. well due credit by million, and $XXX rate a facility date the extends revolving cash hand on

impact to one-time GAAP the expecting QX, the a we are As debt, $XX And $XX with refinancing, to QX. million in notes primarily now that in existing basis changes the will million a for approximately ongoing of interest be expense costs, premium our the related an call million are result EPS on of levels. starting per to recent quarters we expecting from reduction $X

our for Now outlook. QX

We million $XXX million. to range $XXX expect sales to from

our the to be In EPS QX highest our we'll per $X.XX is and to $X.XX GAAP validating share. open products to be expect it's solutions EPS We to offering market. for been, look to another Operator, strong forward strength And of record we now importance of and year the ever up the questions. share per $X.XX and $X.XX summary, non-GAAP the for and demand a

Operator

Toshiya from of Instructions] Thank Sachs. would Hari ahead. Please our question Goldman first you. We go [Operator take

Toshiya Hari

the Bertrand, sorry revised wafer for XX%. Thank your growth can be by terms for morning. you XX% your XX% segment, the the X% about that up I market taking and Thanks year, outlook thinking you're little the XX% outlook own more X% if business, to color between my in from if missed would CapEx questions, the how to for can up helpful. versus congrats on you this, differentiate bit of strong provide And -- how to a but you you're Good Can starts? you to up and for industry about outlook. you. thinking XXXX

Bertrand Loy

to Happy do that, Sure. Toshiya.

And guidance to So, what's grow we terms are the CapEx I'm in well, for of question least, the gives outperformance -- Entegris. organic, a here, industry points in again, our about to for low-XXs. year. we And front, expect decide then industry expect and numbers behind that about first assumption, the on back for CapEx need the be you WFE, all to blend of we the four of CapEx XX% to And your about up XX% the not of talking year. Those at five will, And expect the in increase to just industry. the and we for all. to again, CapEx, low-teens

made very Analyst Day. commitments line in during our recent we the with So that much

Toshiya Hari

there the year? Is how can additional then, color the for segments, And that full any are thinking you Bertrand? you about provide

Bertrand Loy

think you a we saw first, terms going a A XD in outperformance, trends for we and that it's year Well, from as what last are expect selectivity drive XX% compared is lot Nanofilms that going to Memory big the at in opportunity edge layers to to know, and we segment. this see produced to XXX NAND, to particularly and of to year. conformity important as more, we becomes of expect wafers XXX Entegris. QX. the produced XX% is more be at benefits the more be wafers the continuation continue and of about of as [ph], layers only

advanced liquid of big as lines. lines driver our for will going our will that materials. And, microcontamination benefit us, benefit So, It a course, benefit product well. will our it be coating that's product and specialty to deposition

Toshiya Hari

revenue we about That's are And from through as what meaningful challenges these assuming and in those in as in related QX? easing Great. you. and talked remarks, of expectations I'm perhaps to there quick and challenges challenges, persist a some you those supply in the super QX You impact the and about expect prepared these How freight terms Bertrand, half? you but in of should year, Thank were QX some headwinds talked some to of your labor. follow-up, brought was QX? and your some helpful. then back progressed

Bertrand Loy

Yeah.

and limitations, various constraints I constraints. very capacity in said chain the different we all saw on last remarks, shortages we experienced that cited the types prepared supply then I that own freight. three my in focused was, QX. And one very, we the and As One was experienced, managing of our

ease we QX, situations out So, I those to side, supply in the on think, QX. expect

to situation those that better and into them up. our then mitigate get a As all to -- actually the been the to taken capacity capacity then have we account economies add of of coming annual the again, that it number guidance. own various our add of trade hopefully and revised year. will as relates in QX plans But additional constraints have And capacity, is balance the would -- open a initiatives in general to start more or into

Toshiya Hari

Thank you. Congrats again.

Operator

you. Thank

question comes Please ahead. Sidney Ho next Bank. Our go of Deutsche from

Sidney Ho

question taking for my margin. Thanks Great. question. is My first on

gross quarter, second can still for that, the higher? to -- at suggested gross margin get the first of basis side, quarter, gets quarter-over-quarter. won't I go there, XXX will look XX.X% improvement full And especially You that operating kind started But if margin SCEM, given year. get the margin for nice points related it why

Looking forward, you help to get to XX% XX%? can key are of what us your the understand target drivers to

Gregory Graves

little guess all, So, through so the XX.X%. XX.X%, on of Sidney, in we a XX.X% the QX, margin, first had half I a gross first over quarter

bit little full margins it get in We over of about an brings QX, to half back to To the for XX%. XX%. a of expect implies so that year, XX.X% XX.X% us average

assumptions -- so to gross those And it that are margin. as relates our

some on average we're mix. typical mix. counting we to volume. We're -- not than counting product on better related see We're improvements So product counting

those didn't part assumptions question, -- the of I starting gross I but the So, your You get the are point. second the you that? our heard margin. repeat said could And primary then, XX%, on

Sidney Ho

Related do you there? do operating XX% QX. for drivers key margins XX%? improvement to again, how How get get to to SCEM, the to that XX% -- roughly good the from Yeah. are in What range, we

Gregory Graves

Yeah.

business. things. it's see I margin got So, in there improvement continued they've really gross three we'll -- mean, that

in much ER&D SG&A. to We expect -- investment and of made manage to their continue see their they've them

talked specialty there be the our pretty gross helpful expect -- that about then, on volumes leverage be we'd in year. move would should throughout as we've well. improved That margin. So, to consistently be business And improving significant materials/graphite as we the

Sidney Ho

visibility the year you at quarter, kind Okay. relate XQ second That's what same this you out seeing? to second But to point the supply demand if to years, there? think half be in ask wafer we're compared beyond when improve, the year helpful. able given given follow-up of especially see much have differently, shortages the past question in forecast your time shortage, Thank to revenue Maybe earlier variability semiconductor shortage full the do a in maybe a And do questions you you'll continues of is to answered. kind of you.

Bertrand Loy

we good record at say would our right visibility And the book mentioned actually order that earlier. So, is Sidney, now. pretty is I levels, as

most guidance. us gives into constraints the rest the good and all on short-term, about the talked -- really level I'm of really equipment and of that. getting resolving, a And about for that we working it's that's of the QX it's we really very about comfort that year. So what reflected current We -- talking and the infrastructure. focused on full we're out capacity about the obviously I year mean,

upgrade hiring backend in half objectives challenge intend Taiwan to sites, starting at have That's a provide going XxXX to that two site, And to additional here we year obviously, including relief in platform. U.S. particular in go later if beyond of been of we investments, of important it's new mostly QX. come beyond liquid and to most benefits growth in the that's that the new we shifts, -- then then the obviously online. XXXX. for is So, training sometime our well really staffing new going number a filtration our next you the seeing in start the because are But we're equipment second of the year, of two, number going and go But and the in

years very have aggressive objectives growth come. many to We for

capacity very focused long-term. short-term, are on we So, mid-term and the

Sidney Ho

you Thank very Great. much.

Operator

you. Thank

Seaport Mike go from of Harrison Please Our next question Global ahead. Securities. comes

Mike Harrison

good morning. Hi,

Bertrand Loy

morning. Good

Mike Harrison

had gas more mentioned driven. quarter best was Control, In in equipment It like years. business Microcontamination that you your filtration sounds the that

leading being driving number can maybe So, of as sales gas is then the that in equipment some business. you, consumable for a indicator one, within the talk what sales the maybe talk And you about filtration strength business? think the about about sustainability

Bertrand Loy

assessment So, is Mike, your correct.

what And WFE a we from for And the to all continue filtration demand implications that those quarters had we benefit of levels actually long-term is now beyond from a few are just the a for at comes that per that, will to where wafer. fabs not have of a the new to in of current memory most to but continue really spending. levels of business higher capacity it's the going and fab expect quarter processes, most advanced gas Our again, increased new that lot XXXX year. least come. logic the running level record come all and be of that's to when excited many we is, to much in When about construction, online, in it balance Entegris going so the line processes of comes product and years of new of content those

what with excited pleased CapEx those more prospects as short-term obviously, product So, new about in long-term the it online. fabs increase the for our but some lines, of means and come

Mike Harrison

give XX% And the in acquisition. have All so I of looked revenue that then high there. within twenties right. the number believe GTMI what the of growth, impact the material AMH the would Aramus growth in that and you you like a handling you strength organic advanced us showed sense business Can showed? But you versus in the business, mentioned

Bertrand Loy

Yeah.

I of the say life mean, exclude would would the timing I versus of business, that question, last AMH Is is mean, these inorganic of So, QX the I year. you modest if for the relatively in the acquisitions, it high teens impact that some remember, given and science be Mike?

Mike Harrison

one. maybe answers it. just That last one Yes. And

about by overrun? can number color on what $X you a -- expense provide any that operating the overshot Anything drove You million.

Gregory Graves

little could than when more spending spent I within point reason. particular. anything I ER&D something that, thing initially I in would say ER&D a some honestly, to more we on it as not we're probably of referred one in I bit our really and to that. mean, and the good -- investments not earlier about as if within it's divisions, feel that's I anticipated, long Mike,

Mike Harrison

All very right. Thanks much.

Operator

Thank you.

of question ahead. next go Our Kapsch comes Markets. Capital Loop from Chris Please

Chris Kapsch

Good you. morning. Thank Yeah.

And are the beyond sort instances those wondering demand? demand growth to backlogs of are in levels, sense industry your reflecting any the words, characterize record both So, question. also, and just your to order of this you and characterize I'm in response In remarks where true orders demand market stocks, is another relative end best if any instances could you there desperately that are your buffer above at expectations. market revised to where there trying outsized this formal some build just is or is conditions? other just customers --

Bertrand Loy

I seeing end what we're really market So, is think true demand.

there products high that been we've level chips. a is chips for think, And comes of demand of our the from really utilizations demand seeing I fab high advanced for for mainstream and the level argue particular, low safety of across uncomfortably running our safety segments. many low and are customers, that most very Today, advanced cases levels some stocks. with levels in I would of in stocks, of fab

get So, as levels products. solutions desire drivers, that some by pent-up our demand is our a to as for of I stocks of for of the well our based is on think some safety normal that more there to solid again customers back demand actual

Chris Kapsch

And your it ongoing on, made Thanks. shift I memory just was some about for expectations And think I think into in that's the architecture fabs you sales enough. there memory you follow-up of to then also comment terms XX%. up, the Fair year. the or mentioned,

that's direction or is sort if of color -- market, across it a utilization fab the that board trajectory So, rates business, on reflective the be just that Thanks. of strength, current it the of the happening. cadence already of and wondering and is reflected would the Any helpful. shift in end memory just

Bertrand Loy

not if at fab in versus change especially there utilization, So, QX. you look of was really lot XD NAND, QX a

we rate the that earlier. presented And type was our And it's that architectures higher adoption have to of higher layer expected mentioning architectures, And that where wafer. was this Analyst new the materials new the we migration as we coming saw from Day. just of of benefit per we've content is that as you for and developed count say during I so, a devices, recent the lot the know I of would that developed, accelerating those we've chemistries as the

will to would more to expect to And layers So, this in and be layers beyond XXX XXXX, increased But we it's migration us if wafer. XXXX. beneficial again, you we that have a where trend conversion yet XXXX, go beyond per opportunities more XXX we year. expect

Chris Kapsch

Helpful. you. Thank

Operator

you. Thank

Please ahead. Our comes Ho of Patrick from Stifel. next go question

Patrick Ho

in Can very investor for foundry/logic much advanced outlook congrats we of you the the on and intensity remind transition seen side, for opportunities materials you to Control need currently ongoing myself the business you've the year. off as nanowire Thank to maybe capital of increases continued whether and first terms nice could on that you end? step Bertrand, the Microcontamination industry traditionally just and materials on note. some around your are the that see included next in the up gate all

Bertrand Loy

Yeah.

been So, the we've and you're memory, a are us we opportunities of you about on course, reminding and have lot we right. that -- Patrick, great front logic also talking

year new be opportunities start will in selective I introduced they architectures. quantified new metals, opportunities The all those chemistries with around and for are also and think edge that real. high mentioned be we gate opportunities to materials, and November we those last will K

logic, years large that think comes few transitioning to new in be exciting I next half customer node second the when see So, to node. of equally will XXXX, this it transition we some And will the year, a in logic.

drive So new of of adoption and those more advanced will materials are as that well. some -- actually those situation solutions that

half the us, memory for story. is of year So, more first a I would of the say that

of will memory and be advanced The both second the year half logic.

Patrick Ho

going the of loss? of labor. question Greg, and rest XXXX OpEx How in in maybe terms helpful. quarter, OpEx that going of Great. labor much to the the in is up my June follow-up as is terms for impact And on didn't bringing additional content That's you slightly mention

Gregory Graves

increases the help cost SG&A. OpEx, modest see labor talking primarily sales and of additional us when in primarily our for about talk in labor, the increases ER&D we we products. to meet about some investments we're When adding So, demands in and

Patrick Ho

Thank very much. you Great.

Operator

Thank you.

Our Scarnati next ahead. go of Citi. Amanda from question Please comes

Amanda Scarnati

talk and I that reports was talk scope there U.S. was to to looked any of quarter, bit Entegris some good news Earlier in there. just little of the discussion that Can any Hi, about want China potentially you morning. like, the able if SMIC what with the about gain to a licenses. or licenses in additional expanding restrictions government sales ongoing there's terms seeing? that you're just

Bertrand Loy

So -- Amanda, first. good morning,

start new broader tension remain the area going semiconductor early question with is speaking, I of the your engaged of to me think of likely it's its Let days integrity right And particular and the a as generally course, first. importance accept the And strategic the of think with administration -- is, need important, administration. very broad the part in as it's to in I Biden now. mean, that especially nations. whole U.S. of industry, I between we but that the two because industry

licenses and approve those of can are all else of as year. the call, our guidance we rules. all for we QX the review of and the back and earnings for into are monitoring some some been complying our in that question, applying licenses. share it licenses And approval But the have giving with like that, with our are and first guidance going review, products, is export time of scenarios. beginning you our -- since to everybody and What So, focused approval. -- U.S. very that made the different existing that's discussed received some now, under there we we've I factored of administration been your annual for still But to awaiting to on we us, the means are part previous right

Amanda Scarnati

you that you're shortages, easing do that of is licenses that of of for? been you've or of the bit And fact maybe that an the just foundry sort the many more a it little creates products there's already fact sales, broad given think Great. one semiconductors is -- that message larger material [ph] -- so

Bertrand Loy

that how of that granting licenses. approval I on would And we're pleased that insight we're think still decision that licenses. approval, the until administration. into our balance making the am making will those Look, won't of have received know to we again, licenses the pending we good I hopeful I we I hear that is but specific get on progress, and the from don't just approval many on administration have say are

Amanda Scarnati

Thank Great. you.

Operator

Thank you.

go question from comes next Our CL of David King. Silver Please ahead.

David Silver

Hi. you. maybe Aramus the Yeah. I about little could a if bit wondering talk we line. just Thank was product

moving a of back have XXXX. you something Day, there's called product things Aramus for out full of So, of a going then couple account as X% but parts here, on Investor company I growth was the think that since to changed. in number And a

your targets. growth raised You've

called you've a capacity I out. completed believe that expansion. You've

that wondering, update -- series, time expectations you. for Aramus of Thank some this on you one expansion plan the maybe growth us And then secondarily, a the year? the could for was current now? capacity there just if capacity expansion, I'm final is So, the is or

Bertrand Loy

Yeah.

this for us, a really for and story great turning point obviously technology. was a indeed is XXXX particular it then So,

[ph] Our strategy reason really supply and unique we perform therapies cellular unique involving has the wanted adores freestyle always gene chains high-purity biologics. And to target been they and emerging well. bags is processing, where very Aramus have to requirements target that very really,

when leachables makes fact, them the have the matter and then are didn't solutions they in resistant lower break. bag are leak now. other and They the any can than and best -- cleanest do that They gotten not of right realization that believe more extractables the they As all market lower They available, are with just frozen. do us in a the market. bag bags not they we

closer the $XX now So, backdrop, this a to million. that for is in with XXXX as projection platform

obviously clear, strategy we So CapEx And plan supporting guidance really And spoke. just support campaigns. bit year. global well COVID-XX in included develop invested the capacity $XX to about investments to than vaccination adding go year. a they in are the the the the invest be gave as that's last all way, beyond The We million the we biotech By Greg to of why when are needs those of more this last you. is customers needs We reason the million little that numbers $XX those therapies the of future. capacity. about here

David Silver

I supply for Okay. maybe -- of general you about Thank in in your particular had question that. and global kind footprint. another chain

and low a at and wafer as with customers is running rates, utilization guess, their to points evolve. they talked supplier number safety meet fab uncomfortably trusted you've I So, you've stocks. job, high And needs of your extremely cited a about of your as some

whether -- are I some in demand current in and other guess, another business areas. you're those customers see taking currently? budget, it's or unusually the tactical opportunity that environment support enhanced that of you to So, the what steps -- your the exploit Thanks. CapEx extended robust I mean, the

Bertrand Loy

Yes. It's great a question.

we to right evolving at answer and all which sure I capacity up expectations. earlier. meet think, to as it term the make focused customer's coming levels year, already ensure online have we at pace and to then our the this at very we that And I and have Entegris said, to enough attempted I now very, that increasingly demand for live products of is backend longer enough to are capacity

but only And on then be may will year. balanced capacity most would be There Asia-Pacific, basis. Taiwanese example but it's Taiwanese our and do. So, lead about the of being trying And the now all made, that that term, longer potential in development about capabilities trying a manufacturing lot today, equipment during them locally. for ground, a course, expanding then future. be will we new global in will change and the really focus trying can our the backend are footprint. have of that just of at reduce of learning the generally -- support to of lot have which when it capacity, do of we're investments in online long-term. speaking, least again, a just what coming staffing production is the a a that that in completed reduce our XX% then number our capacity to on unlocking we're side that, short-term times be we of do so is already the XXXX, to on semiconductors start Once phase. of of global our our are customer largest is expect then And investment cycles to we to to we're -- customers closer We're in trying not better discussions of the good what that we the will add greater made then on And to mid-term about where close

David Silver

you not be Okay. bottom Greg, assuming, could sure call Can the pennies. one U.S. may negative weak key, can you be by whatever. relationship relationships, months. this quarter But dollar, we that so if -- there? of that Korea, what what's but couple maybe one the foreign missed or over or think Taiwan just remind key line track a translation I as you. then negative guess, I you next may let the And last for versus that maybe you mix, this And I maybe me few I and out maybe item -- then, the out -- effect -- a Greg. Thank called currency if could line but currency apologize I'm the relationships

Gregory Graves

Yeah.

comment, So, generally. let me

in but perspective a manufacturing and selling believe to continue multiple down operating to natural relatively have both a line, P&L OpEx from also we we the we're we're in multiple because hedge, -- currencies. have So, currencies,

the I do of to expenses, balance good it's foreign the perfect the commented the script income reevaluation just with has Below really but the what operating operating like hedge. I a at our sheet other line, of in subsidiary. on said not pretty hedge, line, a So, it's

do not had how it expense Korean some too they what is functional impact. So, -- currencies And with quarter, revenue nothing it's it's the key because the the in it it's do the our to relates are not to of won, structure. to has the dollar, simple and -- that that involved the Euro currency subsidiary are most actually recent Japanese entity. say versus or our yen the the And it's

And great I through so, in mean, something, walk detail. it's it you can I

something to in do said, it Although, it with call, the really, that other that I has like on functional I but this are of wouldn't denominated do to assets revaluation the want than currency.

David Silver

Okay.

you out. and So, correct? the calling is that dollar won, a were versus Is the what weaker yen

Gregory Graves

have look the direction yen, it. moved versus opposite in Weaker -- for -- it and back that dollar versus I'd won But at in the the QX the won sure, in the to QX. go movement in the won moved

in QX negative a … So, we impact and had in benefit a

David Silver

Okay.

Gregory Graves

and impact QX had a negative QX, me. benefit a excuse in in We

David Silver

Got it.

Okay. Thank much. very you

Operator

Thank you.

Paretosh Berenberg. ahead. question go of from final Our Misra comes Please

Paretosh Misra

your across if Thank get business, Just question. add is one much to product or materials, three trying taking others. gases, you. categories the and growth similar at thanks SCEM In for chemicals and categories, Good than deposition growth contrast you sense all rates three a the up rates? could on cleaning provide growing any morning the faster

Bertrand Loy

it So, got Paretosh. first, I you mean, right,

for fastest levels. to and mid-teens But that the of of last a recovery business a introduced gives growing be so very very have you all I material combination we coatings about And still growth is is XX%, those very, within -- going in that and think of low at products, graphite the And slow fast. a product one of selective deposition has roughly, going is tale all which bit division. the really big those is that SPI Think that also then, little performing And year then, because edge SCEM then in advanced the contributed includes we a forward. this units mode. -- materials specialty growth. cities business growing of are the growing two a significant

Paretosh Misra

M&A attractive And Microcontamination you that the be to my Microcontamination color, outside on there might landscape that in then Thanks comment wondering I Bertrand. for was Are opportunities semiconductor business. follow-up, could the in if you?

Bertrand Loy

venture Well, the that way applications. for find absolutely there we we look existing to of if acquisition, correct for you opportunities And you strategic rationale the to us adjacent capabilities supplement those the tuck-ins. that us Anow, best into the at Anow believe to some are and beyond is have internally

it to are admit was and that a few one have a to important development areas current also puzzle. is alternatives a Anow relatively very and fact It's I work Anow, that well. the to I at other the very right. join to been cross-pollinization and piece pandemic comes terms must the continue China look you of are the see to it teams quickly. of in So, expecting as travel of start we the headwind little going When limitations bit to U.S. healthy focus the that of hope M&A. business I development between the But based can is comes when teams. But that to

occasions. in The have discussed number other a materials being of we area as

Paretosh Misra

you. That's it, Thank I had. Bertrand. Appreciate all

Bertrand Loy

Sure.

Operator

Thank conference and you. for gentlemen, today's Ladies question-and-answer today's you Thank participation. That session. concludes call. concludes your this

may now disconnect. You

Entegris (ENTG) 27 Apr 212021 Q1 Earnings call transcript