ENTG - Earnings call transcript Q2 2021

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Operator

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

Bill Seymour

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

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

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

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

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

Bertrand Loy

all. and you, morning to Thank good Bill,

with the are done our recognizing by second pleased and manufacturing to start performance, quarter and teams. supply phenomenal We very chain I job our by want

During year-on-year sequentially. and XX% the sales XX% quarter, grew

across sales three nicely, to Our solutions. strong the for for record experienced income and from on and increasing all industry improved was divisions demand products benefited as We flow-through and EBITDA strong a and growth margins robust our we conditions operating leading quarter.

In addition, non-GAAP XX% EPS year-over-year XX% was up sequentially. and

year-to-date. bit advanced unit-driven is is areas on to like revenue our XX% filtration materials color performance. solutions, up little liquid strategic product our XX% more the benefit from continue which year-to-date provide standpoint, growing a especially up and which a we Let demand me From for deposition in leading

a and in lines especially our handling, obviously purification Another XX% candling, following trend product highlight the which, Growth was product the quarter CapEx. the industry aggregate, first gas the driven grew of which wafer robust fluid the are lines in strong in CapEx- was of half.

sales then COVID-XX high used structural also It characteristics pleased that women expect is planned. approximately am high Aramus’ stronger that, worth worldwide, bags, We reach increasing quarter, which additional underrepresented of share and specifically use year. sales unique vaccines Aramus during that biologics. recorded our of very we addition, this funds are to for are bag, also purity will high which interest $X now Aramus in noting other individuals purity for In to I made million $XX the of the the non-COVID contribution and integrity, STEM Entegris Foundation, million communities. scholarships an to the

awarded for The first round year. school the these scholarships were upcoming of

this XX%, of organic year, that the achieved we of the production half first and supply growth the have approximately constraints various an Entegris During and industry faced. impressive chain considering

and and job Our have supply great been results. instrumental these chain manufacturing delivering done in have teams amazing an

battle while. report is every forward. that will a progress. I for said, constrained that a and about have be note, However, we day we solid environment, am quarter, That in three addressing, and we made this been main execution remain On outlined last issues going confident pleased we've industry to likely our

some of locations. in our labor first The US constraints area was manufacturing

QX, During schedule. work count a adding that most to by we and by of many to XX/X our able alleviate pressure were operations of production moving head

which capacity ease to last area will addition, and The to in lines. expect to year. certain constraints production these expect as online capacity through we second progress freight half we In new of and we component equipment to product availability, bring QX, additional this critical relates the bring industry

areas segments phones, and demand industry has our for outlook like the year, auto. trends IoT improving driven memory high-performance improved logic, mobile semi at across again. the the in full and increasingly looks The mainstream market Looking Entegris strong and computing, by

compared XX% book CapEx is at unit expect our XXXX, solutions record to we order approximately full-year expectation good for to to very a up our of the mix set previous market based our the on continues will be and now XX%. up For XX% be Demand level.

sales As range the to we growth compared the from for all a and expect expectation market to up XX% full-year result, to now XXXX to expect XX% to of our outperform previous XX%. XX%

is our Day we XXXX $X.XX, expect approach which $X.XX, communicated be the EPS line in in flow-through Finally, to EBITDA expect the non-GAAP to model, greater full-year than of target EPS our last exceed Analyst with year. now and target XXXX to we which starting

digitalization, to long-term Positive few. demand computing the of semiconductor the become a very driven are trends fundamentals secular XG accelerated market ahead, further name encouraging. high-performance just Looking and evident by have increasingly

transitions addition, more purity of much And Entegris expanding wafer. is complex. for more memory years, chip per our the this of the XX% will pace the over unique set we capabilities news great past translate This of and served be built materials enablers the and unit across cycles, nature, Entegris an business recent in quickened be our or will in new In to because has architecture have around content market node it case model And all revenue, is we be as to increasing rapidly becoming architectures. proven into recurring with and the expect decade. process driven for resilient logic both materials of key our this device has

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

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

Gregory Graves

be what to and environment. Thank the I continues a want good Entegris delivering a the broader great everyone. you, Bertrand dynamic quarter team for of also work to morning, recognize record in

sales XX% the guidance margin offset year-over-year was line in gross XX.X%. both up essentially sequentially. million, were Our as and with mix. XX% Gross non-GAAP $XXX and were volumes of our margin negative up slightly QX impact GAAP higher in were by

intangible as XXXX. sequentially. million non-GAAP and sales, lower referenced. a items guidance for basis $XX assets, amortization the operating in margin We made and was QX, QX approximately be of GAAP we million QX non-GAAP OpEx gross were approximately to margin and and of of contribution all a on year-over-year to of $XXX from included both gross GAAP for previously be Entegris expect Non-GAAP and included million. expect to will continue expenses XX% operating other in XX.X% above OpEx the quarter the range, Bertrand that were Foundation percentage integration, discretionary but costs. expenses $XXX million $X our both in

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

million. and $XXX XX% operating exceeded to year-on-year EBITDA Adjusted significant QX $XXX and non-GAAP approximately to million the both $XXX expenses operating revenue, or expect revenue. Non-GAAP GAAP $XXX income up We million. of sequentially. of million was income XX% $XXX be million was approximately was

the tax our was for GAAP the below or line, XX% XX% rate to Moving was operating and rate non-GAAP tax quarter.

rates to approximately For our QX, XX%. and non-GAAP GAAP expect we be tax both

For the our diluted per EPS both EPS was non-GAAP full of The GAAP XX% we $X.XX non-GAAP to XXXX, GAAP and rate tax per continue QX sequentially. up XX%. share XX% year share. to and was $X.XX approximately expect be year-over-year

our AMH and microcontamination. to advanced for spending, of by evident up operating QX noting for SCEM year from XXX and of last quarter, was up for well sales sale up very year-over-year QX strong AMH some gas growth and the division, with sequentially. margin fluid $XXX million for gases, and products. margin for was XX% in MC for million very intellectual to this to was XX% was lines MC and of XX% up by and in million filtration a property. strong especially It's deposition has Adjusted product of and QX sequentially. $XXX of sequentially. performed up were were sales sales far liquid year $XXX XX% The benefit sales capital related materials, XX% X% that Turning advanced greatest quarter. has MC specialty in handling the coatings. XX% up performance XX% the margin operating Growth volume versus industry noncore was primarily Adjusted the so all exposure were across SCEM wafer last driven this and up sequentially. increase for handling year operating worth from basis sales points higher primarily

As and high the The increase continue Adjusted was of be strong. sales for higher by XX%, driven AMH primarily our to was purity Aramus sequentially. Bertrand operating margin volume. margin up year-over-year both referenced, sales bags very significantly

cash $XX $XX million was was CapEx flow free million. operations $XX from million. quarter cash and was flow for Second the quarter

our approximately to CapEx used approximately million $XXX of Consistent this shares. capital allocation repurchased our million in We we and spend our expect QX, during continue year. quarterly for dividend with $XX to XX we strategy, million

for QX outlook. Now, our

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

environment. The and EPS in more execute of non-GAAP share per $X.XX outlook $X.XX be positive become very In midst has summary, be to We this GAAP even share. expect year supply $X.XX $X.XX EPS beyond. dynamic a chain to for the to we continue to to per well incrementally industry and

top-line solution we Our more our business industry critical to demonstrate is outperformance. now by unit-driven increasingly set we’ll open And, in model. evidenced maps, up our leverage finally, continue the questions. for Operator, road to as

Operator

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

Toshiya Hari

for much thanks and guess, quick Hi, Bertrand, two I Greg. I on guys. And so for questions had, taking clarification Good morning, question. congrats the one and results. the strong

QX, First of revenue all, very the in obviously, strong of was it beat in terms big a beat.

us was above context But above like end, the beyond company's the you've sometimes many of feel of the your in expected. end. toward I come history, Within high what and this high

you kind for beat better follow-up. between And the how got to XX% So, revenue your a if was year, about I XX you. forecast Thank wafer or it operations in significant of QX? market XX%. from conservatism internally? differentiate versus And It supply in the full and be quick you're this What could was raising you’re then, would hindsight drove helpful thinking better then, %to starts. CapEx

Bertrand Loy

morning, Good Yes. Toshiya. Sure.

with retrospect. short question your that a saw we that probably we QX. I and we expected into Let mean, the indeed for very answer going too products board. demand your in question guidance QX bit QX I across just me were our to on mean, strong our and in the is start conservative

to on for flip supply supply increase issues teams done at of secure QX a we supply and that result a plans were all in And have capacity very real point the forecast of our we probably balance of confirmed. our fabs manufacturing at here. have preliminary QX, our the to chain being we surprise no my And full really firmed mountains But the lines, moving as So, year. job bit on of think remarks, capacity a phenomenal clear results for I that, through quarter, exceeding the and in question too expectations, little side severe QX, and QX right, output our and showed QX. in continued has that conservative comes experienced as in in it mentioned is that. your to it I strengthen and When the to the guidance, industry annual operate second our are customers expecting up the this to all also the in

the to the us for WFA. excess is and now, the for right blend And CapEx year of XX% had XX% you opposed to again, of XX%. is get up to that CapEx a And, about question, So industry said wafer CapEx way follow-up slightly in as really full starts is you full Toshiya?

Toshiya Hari

guess big you. this accelerating to EUV. Yeah, the seem companies to logic as three momentum to be US be terms The of -- I technology. its seems relates to there point the around be DRAM it company I big in technology. seems onboard at strong here very in All of do. adoption Clearly, efforts. Thank

as that noncore is, if And are my helpful I super it SEM. in expectations clock of kind what sort in as rewind benefited would quick for going forward your and you've your So, seen relates you business last foundry be what clarification question to then, ecosystem, can about EUV it selling that's space the how Greg, the the you relates EUV and talked speak of one guess, IP to to

If impact quantify the be Thank from positive you. from would that perspective, the quarter you can helpful. a that EBITDA in

Bertrand Loy

Yeah.

So, the broadly technology. very, Toshiya, adoption very on EUV, we indeed excited of see this to are

process. complexity. greater really thriving for an more materials the architectures. enabling the our is greater solution the final to finer process set used that’s need this know, the advanced features, chemistry and the The purity on you is And and features very technology and in As the complex

And will much to logic, across, it's I from. to going features the so, and for all memory great maps and, benefit know, a that content technology road Entegris with ambitious wafer create conditions of Entegris per see which finer more think, is you greater we

impact a news And of to about and I this and, positive little so, go to great breakthrough a EUV -- and more Greg. which the us. bit ahead, think, I’ll cleaning to IP, so, year talk certainly, is XXXX again, Greg relates that's for set turn a it for chemistries some very of

Gregory Graves

Yeah. acquired actually the on acquired to we the that part to We we as the some that but an retained that when IP relates And, the chemistries a really cleaning we exclusive transaction. basis. for IP IP, view ATMI it's absolute -- right it Toshiya, that -- are we not meeting of as use

So, it division. a in -- another It the it it to benefited showed as in credit a SG&A credit we That as believe mandated, it sold low-single-digit millions. up participant. -- up was -- show SCEM the not a line, as accounting industry or in and our

Toshiya Hari

Thank Helpful. much. you so

Operator

go Deutsche to Ho move Sidney next now We'll Bank. Please from our question from ahead.

is Your line open.

Sidney Ho

can perhaps, test second do that But time? remarks, you but first a you expect a quantify to you the missed good you there you half? constraint think Thanks come quarter. some was Bertrand, the for in impact this chance do prepared the in do on of what any for will from revenue and the taking a congratulations that competitor later and, your back those revenue is what to at the go addressed they my questions supply on or

Bertrand Loy

Yeah.

the I So, that the a And our really that, constraints well. that supply is as facing. competitors issue mean, you let’s ecosystem just know, includes is challenge say entire

on. for really very, solution what need this real possible. capacity us for and customers focused been our very and us. increase our want And that's is that the from we we've as So as is quickly And what customers our really

be supply most to know, not were alleviated expect delta limitation be I some QX. quantifying expect going QX, we will true between as and additional of demand. is that constrained It in the supply QX. we I I that get and into would You into supply

possible. teams So, minimum focused that are very to reducing on the again, the gap

as us. the is will of exceeding fair say ask is So now if to the you again demand left. at tell I into question me end going gap that and for the it's QX, right year, in and QX again, a there But supply of

Sidney Ho

ask the slide in I'll in I that SEC question it's disclose Great. is My in you again noticed region deck Okay. don't filings. I revenue anymore. second question know by three months. your

well has domestic So just guys split customers that you as sense curious versus versus multinationals, can signs how And China may up your be mainstream? some Thanks. revenue And memory any on double a building that your into give foundry and between been? us see click revenue you buffer the as that stocks? versus do

Bertrand Loy

Yeah.

regions sequential So, if and you record think about the year-on-year regions, first growth revenue as well. of had growth all, with

export we early were on was XX% first of mean, of customers an very remember a half in right? specifically think number getting to I a on last comparison, a as all big year, factors. year we had number the China, licenses last quarter the lot you release our then function pending that been the the products. that this a had get year required first, pleased significant hold, to QX our say I necessary and growth, on it's we've we year. in A And in on China, And recall, different a slowdown of licenses. easy to able exceeding of approval -- of been in US-made had the shipments hold I'm

two, a been consumption two China that again China consumable years obviously lot that last of driving So, coming the three of has And the capacity driving are been those the over our important a lot products. revenue. there's then And one in investment been online. -- new is factors greater has so and of last

Sidney Ho

Great. Thank you.

Operator

Stifel. ahead. our question Patrick We’ll Ho to go now Please from from move

Patrick Ho

qualitatively, getting you given have? does visibility still that industry very Are products? and of chain environment, outlook. give of supply in than on that guidance the as terms I quarter guess, you you are mentioned you you constraints today, of to your seeing help maybe know as supply the typically What’s longer Bertrand, quarters, first would? how want that of the CapEx-driven that both I demand issues the nice well there. future over you unit- you and some don't And like, but some “alleviating” the of in some congrats much Thank we're strong your visibility dynamics

Bertrand Loy

visibility good think that would the very visibility commented we the on last Patrick, better So, I say the normal. quarters, couple and and in than I remains of probably

and important of as that's well. supplies. procurement we obviously making will which right to to focused is the as we that's And level making decisions our very So, has secure on decisions, be make unlock as access it chain really operators. mostly were team we very, we've make what been in on capacity focused as capacity and can. about that we planning sure then, training and talked And the new that hiring with about that partners, we do really to been intending supply working QX was And how closely we internally new and much and sure as we very continue

we've purity benefit we good lines and also new for exiting think going new our a expecting liquid made in lot we and quarter. that’s year. started cleaning to of filtration drum are help much online, get are the QX capacity our product as I AMH QX, greater on progress to we liquid to levers surface we the And filters Q, we than to the and coming half counting second membrane of that’s with get line, in capacity going division. new our capacity in QX a number of on with equipment high treatment new And coming are

well. additions, of short-term investment additions, plans this capacity talked then, with capacity longer-term our in as very focused capacity So, midterm we course, about we are big Taiwan on

many it's have strategy degree our term focused of you growth in short for that. very to we And come. a because said, high but also confidence on years very, we're So, as

Patrick Ho

question, of some gave good And follow-up you opportunities progressing also gate-all-around EUV. nature. on towards Great. as my description a of That’s formats helpful. forward industry the The that on or is

about yesterday. Does and incremental you your there on for that How gate-all-around, architecture? because Microcontamination provide start for talked you with are as is quite SECM that of your both of impetus another working customers it see opportunities Control? large Group do that intensive. One materials some the the you opportunities see the What customers

Bertrand Loy

engineered will industry -- new Patrick. on very are think what question about on, we very customers. with map. by on are today your requiring we that be is highly that excited are not right road used architectures the I and I we our very, see you the mean, developing Those materials focused

know, you As doors, dimensions, be you to at, know, all and that's terms require in gate, process. features of purity will structures going or much greater levels around the of throughout atomic introduced levels

So, again, road about wafer of excited for map to and about extremely, bullish our Entegris of it prospects years come. us per and to be for reasons what mean lot the and a in the will you terms content the know,

Patrick Ho

Thank Great. you.

Operator

We’ll Amanda next now Citi. from Scarnati our Please question move to from go ahead.

Amanda Scarnati

morning. Good Hi.

question first seeing of be that there Are the the might do constraints progressing that component said sourcing of you you year. the board. any throughout end to issues chain know, you seeing I is rest year? Are this with specific the any across or issues supply expect you The tight chemical the easing hearing specific nicely that that more sort increasingly on the getting is you have We've of towards been materials? be,

Bertrand Loy

to again, think a again, very fairly good control remain we of of in capacity a manufacturing our Amanda. control simply we initiatives question. will do. promising be one what able are because, they that's to cautious in partners making can chain increase and that It’s have outlook why that various of internally that our I we I our think, Yeah, reason And -- to have take we lot own less control that's the want supply but something And, But, not directly. we commitments. our a the on

to And, So, ease many year, to that but as will progress think going the on. we for I reasons way our very be across the that’s any trying I throughout a we reality can. was I the we’re are think that is that think, to partners believe again, as saying, that us there that’s ecosystem. I And help we’re obviously something focused situation supply in

Amanda Scarnati

to division, the the any related, in it Great. Is are or all a Then as million that generation reach bag year. Aramus of of you see backseat? to $XX outside COVID mentioned you you about revenue that COVID this follow-up expect starting

Bertrand Loy

would is expect generate a I Amanda, lot pipeline different opportunities. we to opportunity The mostly say that to that revenue will be So, more in the related. is non-COVID-related slightly with starting COVID have however, the a XXXX news, shape good

for statement opportunities transition I in with investment XX capacity will take the would in say of probably out capacity, this you the if a months. context the filled new And be opportunities So years. to I next that related XX COVID- would recent in non-COVID then expect that the to smooth

Amanda Scarnati

Great. Thank you.

Operator

to And CL our I next from Please from ahead. go King. question move Silver David

David Silver

Thank duration by that, of XXXX, over the shortage conditions to kind last for Yeah. coming to people the there's full-out time wondering relieve planning perspective, we you. for Bertrand, from planning stories production end be chip remarks, Hi. And long some additions operating question what third the first quarter for be either the now was about are you broader opening is well on believe I say being or your of amongst the Thank do that the maybe or the beyond conditions number to detail your capacity obviously going you. you might constraints limited talk “shortage” How I had various did would I sold-out chipmakers? From a a if question by customers. capacity conditions mean, would a on mean, a year? maybe, perspective, of bottlenecks. constraints. of the But that of industry, -- in then I new for able into in -- some that. firstly kind industry maybe conditions about your in be you yourselves be my you or

Bertrand Loy

Yes.

probably spend discussing to time a We try answer. good in succinct I'm really are going those them. lot questions, could broad be my questions. to of So,

to new new impacting we impacting equipment and going qualify our QX, improvement pieces those it focused think I drum And those was that's think new And production of them, good what continuing our of output our or hire as as lines. comes as work that capacity with we're I all a will filtration customers into be to centers plans, I XX/X schedules. working to we're train high cited a saying, very aggressively move a to output. purity liquid on operators, to of impacting initiatives of get I our when have to few I visibility, new mentioning, positively work our -- lot on And we capacity. most positively our When was comes a have visibility. nice positive impact it

For new expect beyond think lot really line. that, we that. all positive balance indications industry. mean, never year we far of are another think on extends of about said the XXXX, it for a the I it year, think to capacity Having I should when I be come that

to fab we those statements. our at run Entegris per I have more content quantify not expect wafers will We edge wafer. where customers higher the leading

customers, January-February We and are when will that for our we for from the But good for year today, report expect the we XXXX and another in guide for based to what always be next on we as we do do, frame Entegris. hearing we sit year, time earnings industry as and the year. will

David Silver

overly year-over-year on the It's recede of wanted But guess. I that segment. segment some that about balance was focus kind and certainly Aramus contribution products targeted has you. midpoint, guidance, more, up But or maybe other CapEx-driven of a lumpy that the lumpiness I'm the In question segment. potentially is growth. sequentially slightly. your potentially or follow anticipated AMH the your in are your due with to to some element, continue, to I don’t your the just going I I'm smallest broad AMH year? wondering more that And other to handling of I you've shown will segment, handling And wafer one. but then, this there, growth be in some portion lumpy. the the more secular kind third your elements of going consider maybe And there's quarter strongest revenues the the Okay. Thank from may there. wafer up case be your contribution -- words, that is at where on for But of know,

Bertrand Loy

the maybe as I performance can remember most of in is mentioned, one to add terms AMH, then But that. that can CapEx. that revenue of exposure Greg to has start, you and this the the division

about fabs, and But, our particularly generation So, within for you as a would for them, which handling course, fluid in producing lines CapEx-driven in shipping XXX-millimeter the older even product of impact the our RMS benefiting business, context our some talked platforms unit-driven that products. like biologic. so we solutions, very And, AMH, of diameter, at smaller business we've growth in for right FOUP, expect, more positive are saw was strength very, high wafer strong sensing levels control. frankly, bag also now. And that's a is

the CapEx on you to annual to industry which performance impact don't know anything bags. the I positive basis, is think and Greg, level bottom again, want strength And I because would that the I RMS up AMH, So, the in the line, -- of of performance I an on expect then, if of actually that add if the mostly that? think, XX% you for year-to-date, there's

Gregory Graves

cost part slightly, to, business say, areas that early he EUV as mentioned has you up of broad-based know, to We Yeah. David, overall in team the spend. No. guidance. would where done highest has leverage, had quite -- well, asked because And Bertrand lower The much well our be executed mentioned business it's goods the operating the divisions, relative it probably well. also similar some I expect about also EUV. performed you the to relates guidance. would business call just that business it other the at as ER&D both the has and as profitability, two got on well. -- fixed lower with leverage And of that line, our cost -- the sold then, the a but a to relatively they've a

those leverage in recent so, -- like margins that you're in see we and seeing XX% that quarter. the you can the most range And operating saw

David Silver

very good it. Very much. and Appreciate thanks

Operator

next now Misra Paretosh question from go to our We’ll move from ahead. Berenberg. Please

Paretosh Misra

for Thanks driver be in which the and talk memory the second in half of any versus that you that good this logic about morning. expectation think, the year? or terms you half? do will first growth Can of half you bigger your growth the And in have any you these, of color second saw the in

Bertrand Loy

Yeah.

the the you Paretosh, we're seeing if produced and old you being about the And logic fabs at full lot I know, think are right now. obviously a XX-nanometer -- at capacity really mean, wafers then, so, more running And below. foundry,

know, new the particular materials So, to us. there expect of good chemistries that that's, that filtration conditions at pickup that's in customers and to well. rate revenue will going be capacity actually is prep you the growing we that and because set the and create liquid for come surface in deposition a that's is online, in and to growth would the back-end as leading-edge expected favorable a in mid-teens, increase Year-to-date, year in for of

would the I good an but of think acceleration back end expect the performance that year. again, in So, year-to-date, I

Paretosh Misra

bit with margins basis? tailwind And Got this little a quarter or it useful. SCEM was you for your in on mix a it. year-over-year more business, sequential regard just can a or a on then -- provide Thanks. to color the basis a That’s and mix

Bertrand Loy

you me… to you take want that, want Do Do Greg?

Gregory Graves

Sure, it. Yeah. I’ll take

the sale, recent mentioned the slightly several It we've quarter. I mix mix margin operating from been on significant a basis a in say which with impact margin benefit mean, an was for that not positive. the was consistent the business, SCEM generally the So did But prepared most I'd remarks factor. was what point I've had IP within seeing.

Paretosh Misra

percentage Thanks. last if it. filtration products? chemicals Got just their also you it. then your Got products Do channels? And your those is to quantify question And filtration yes, them business. help companies to through as way could on sales sell any my what you of to go purify microcontamination other

Bertrand Loy

yes. So, short is yes, answer the

our because IPA been know, but We in the has also different up is in us opportunities purity stringent. be bulk semiconductors. obviously, just types our segment selling and the that for a and required and a broad segments. increasingly This to of disclose chemistries very Examples we intend for you in has is chemicals of market of centers, We not or market chemical process would importance sorts becoming of for liquid of to fast those of all are opened don't array filters bulk manufacturers. high-purity that increasingly photoresists disclose drums. but growing manufacturing And statements growing products is also, used degree more don't

to intend today. for big of really say a that this down don't would that I is I area you for break But So, certainly us. growth

Paretosh Misra

for Thanks had. all that. Bertrand. I Thank Thanks, you. That's

Operator

Chris onto Markets. go Loop Kapsch next We’ll Capital now from question from Please move our ahead.

Chris Kapsch

I might… Good team you your Hi. and on kudos Yeah. morning execution. was to hoping and you

Bertrand Loy

you. Thank

Chris Kapsch

the effective Aramus …be able in to say, -- excuse of further see second the being year characterize your the me, do product in guess or next more half if to continued the consumables? into this let's And equipment outperformance bags the outperformance pronounced lines industry, year. or excluding into you relative maybe I

Bertrand Loy

if nice contributing that X% and you, comment. the I product growth the about soft for So, line, say think thank of you year-to-date. it's Aramus would Chris, a

X stronger annual of or will full it contribute think on a basis. I growth an points

I some of citing deposition the growing about clues unit-driven. about remarks in in I at starts the my think preliminary twice wafer at So, materials particular I filters or of in XX% outperformance also fact, -- XX% XX%, is, is growing gave liquid mentioning rest mostly And which the think it's rate our year-to-date. you

lines. we lot have in Recall two R&D invested past where product those So, a over very areas are the that again, years. important

see results our us cases. seeing many in frankly are and expectations was exceeding results that to it we are for the important So,

Chris Kapsch

the That's you on on follow-up helpful. of gave actually, I'm that on XX% growth. the And was if deposition granular that you logic versus about in memory. terms get metric materials, more could curious advanced

I think up you said are advanced logic mid-teens. sales

was deeper So, this a foundry this it those XD migration much. the to ramping within architectures with that maybe function of -- But was more very advanced or answer. pronounced most deposition, memory layers? really was of you the in it NAND Thank in in strong sector is in the logic part the in growth

Bertrand Loy

layers, some memory been lot transition going and them And that have steps are been layers of XXX it year, customers actually our into a story. has of this now to XXX all So, taking to a have of layers. Remember to XXXX. to transitioned XXX-plus them mostly transitioning

have number w business. we those new saw opening well. chemistries are driving transitions, materials with of up. We a So, etching SEM our the selective those opportunities for And deposition been trends opportunities saw new that for as

year. expect widely this So, role in those other as next would molecules are logic years I new some to a it’s of play logic adopted in memory mostly architectures. the bigger more

it's think SEM to be memory more going a and with of event XXXX. growth XXXX-XXXX to I in continuing XXXX drive

Chris Kapsch

color. helpful Thank you. That's very

Operator

ahead. UBS. question We’ll now next Timothy our from go move from Arcuri Please to

Timothy Arcuri

heard a signs Bertrand, inventory and to I your know just for lot. of you two happening. you, think all this I first happening them have or not if products customers I'm stockpiling do customers? see is know at of wondering second the more can during of I any that we've handicap -- you're Thanks talking the whether quarter. of time, sort you questions. you

Bertrand Loy

So, we're we obviously, something at are in Tim, constantly a especially very constrained, a paying fair close time that at especially something capacity ramps question, we and to. attention very, so, looking the very are [indiscernible] when it's

telling. fab -- demand electronics. an you to think, mean, I hiring be I you really products little all that level bit our a very by very, China members do driven right it's I are think just -- that about find in may aside, for our time. teams, for reasons there of on hard think don't of but, I you, putting anecdote give strong know will the I the But get that mean, and new of hard China a really activity it's We've I them I the we but, of lot now. PC it's we've to been know.

at finished of customers, many in inventory to claim materials, levels. be products. running raw If their they normal they what to any for below of low know, you you their be, And, inventory our one levels cases, talk very, their very for are would the Entegris for products,

this a I risk, really that, is, So, of inventory lot this a that in know, is not don't think excess think I I think and don't right is the now, there there any. channels. is you

normal levels. below are we think I

Timothy Arcuri

Got it. it. Got

drop-through I that. past but had drop-through. I Greg, mean, at in look Okay. gross margins I the basically, Thank the know, three I June a I if a wrong for in years, great, really know, and much guess, know, line you've you gross you. margin -- the question and, me you hasn't on, more you came changed for that gross guess, And, did Thank over you, XX% get you period. don't done revenue great, the job you you over margin know, margins,

can some change the But margin, wondering, you've I see better? I the drop-through you So, due to know, well bit just And, I'm and, know, capacity. in a make addition we mix. wafer also, what help as know, in, think, you know, been should to you leading-edge, would should that gross investing

better it you know, So, can and, you drop-through Thanks. forward? should get going just talk about the

Gregory Graves

Yeah.

XX%, by of capacity margin the as say the first capability. that I look know, sort primarily the the volumes spending up all, prepared We’ll upward could business. but and were our watched mean, I a been longer think where of in slightly impact XX% expect time. let you're in a watched With always negative mix I I I I we margins that. the a term several Yes. has type we marks, would margins? you it we XXs. we’ve of over above the say years, But they I customers business trends, term pretty I if where But as recent I going this really, itself mean, this margins would see going I bias. So, are higher emanates said, the continue and don’t wish in you're to business us on to are. add I I margin -- significantly mean, is and mean, said offset you to our long maybe of the where have capital gross set think mean, are mean, and over do to the differently, long I've What highlighting quarter, period think I’ve is last of add most I we to regard an think I as can our in do MC

Timothy Arcuri

you. Thank Okay. Great.

Operator

Partners. Please We’ll our take final question Research from Seaport go ahead. from now Mike Harrison

Michael Harrison

Good morning. Hi.

in tightness this in inflationary outstripping So, and about we're that and now, right view a Bertrand, we demand and talked demand your we've bit little the supply environment. is supply broadly

seeing tight the all as you're So, are component result inflation environment? growth that is increasing you supply to either at this pricing demand a of seeing your response a as in of revenue or

Bertrand Loy

steadily our margins. pricing we trends So, I to mitigate negative think obviously strategies to potentially all want watching to are or our mitigation look, of But to and our value greater road the the second to we to of mentioning the we're those our just think we map. a continue customer margins details factors adjust going our into I strategies continue don't as to go of that ago, expect line, to is we are improve, punch strategies that function this a contributing was and Greg on call. that’s really

now, lot So, moving a said. of you pieces obviously, as right

have that, our looks a you of margin will and on there last Then it's it record XX%, target, we to in impact number. that that did focused your very right. reduced believe performance. you bottom terms Day I that All know to think are XX% I margin don't the Investor when XX% the the a actually longer-term number. on had negative line XX% in AMH like lasting We any segment, fall,

potential AMH think that maybe we margin segment? should of how about the sustainability So, or long-term

Gregory Graves

longer good good of a at you right points I mean, -- has point operating about think laid many it commit stronger the the the than strong we I you the business metrics mean, term? change the back mean, think in we're mean, the to to environment the a as proven flex And able would term? which range be that leverage. margins November. I operating I be QX, I above longer margin, if where revenue longer-term point sort that XX% Mike, is really Do talked we've in to at laid targets now I execution, out, a are XX% November. very which on. much -- you we we're business, at strong these targets down I prepared mean, make that But in all look in we're our our all I out industry sustain out. at of should levels, to

thought many would we’re at cases, we point. out be in So, of this where we have would ahead

Michael Harrison

relatively number All right. The a unallocated looked question you. expense for maybe million. north high, And then, $XX Greg, of

give I second on think what be some should that we number the double-digit What you can it's in it's drove unallocated half? for in modeling expense time. guidance a been and some first time

Gregory Graves

unallocated don't in recent what had put quarter was it and don't $X costs number. our referred higher the be Honestly, performance that I drove it business. to. model Bertrand most in higher really So, focus driven we've to trends the million compensation as together, contribution related I -- plans overall What's a would when on that the we

percentage generally, a would an hold below So, but growth I I goal -- number. SG&A sales don't to is well on it's basis. say, SG&A growth our And

Michael Harrison

Thanks right. very All much.

Operator

no today's are for so Thank and you disconnect. may this questions, more call. Ladies participation, now you your concludes and gentlemen, there

Bertrand Loy

Thank you.

Entegris (ENTG) 27 Jul 212021 Q2 Earnings call transcript