ENTG - Earnings call transcript Q2 2022

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Operator

Good day, everyone, and welcome to Entegris' Q2 2022 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 and 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 Loy, Bertrand and our CFO. our Greg call the On Graves, CEO;

Bertrand, few acquisition. the hand is I I'd Before to there to related to CMC like over mention a items

the because our of First, results, the results Materials Entegris not legacy include and the quarter results. we QX do transaction include second of reported only CMC today timing close of that

historical However, With provide details the fiscal I'll to CMC update modeling, And quarter Bertrand. our you save before and context, that, that an for integration September platform. Analyst basis help hand Analyst you sure for of will some only will consolidated divisions providing should outlook we the your virtual Meeting. company. on pro where closes, and sales also the the call can the because seen the the Meeting timing XXXX I'm and quarter to note, additional third the of sales. assist be and combined To full will CMC recast and on over on a have on Investor we we the overall XX, year forma and the date for understand provide financial in third four Materials financials EBITDA and brief On guidance the comments for combined for providing make are some Materials’ Bertrand the

Bertrand Loy

to Bill, Thank you, all. and good morning

get Before welcome are want from our the team. say excited we I how CMC started, Materials new Entegris to I to colleagues to

our turn results. to let's Now

quarter, and the were once strong. During growth operational very our sales again execution second

However, meaningfully impact our foreign bottom-line on exchange had a negative performance.

quarter, range. teams. the demand EPS significant strong for year-on-year. up sales all was divisions, by were solutions execution below EBITDA For the driven and slightly XX%. were and XX% products across margins guidance Non-GAAP quarter, continued supply $X Growth our chain great our our three by was for

negative the in been more Greg foreign EPS our color provide of quarter. the have exchange, shortly. Excluding exchange impact would approximately the foreign higher on impact will $X.XX second

the related customers, was our and and was filtration were aggregate me a activity to environment benefit make a industry quarter sales the CapEx construction fluid in strong in filtration, continued to performance. year-to-date. in XX% Entegris products, advanced grew strong at comments of gas year-to-date. second CapEx-driven purification XX% also to particularly outperformance importance strategic deposition the in Growth strong including up few advanced aggregate, market handling, Let and product nodes, strong during increasing products very where in we from quarter, FOUPs unit-driven and significant which the levels led the elevated This to new edge our our greater additional the fab robust industry. semiconductor In with enjoy projects, over per fab activity including wafer. particular, Growth content quarter. saw we which, several chemistries, selective we of In lines materials on liquid

up was CMC comments XX%. was and treatment quarter, Materials in XX% exited year-on-year up business, the total the for high-level revenue increased results wood slurries In sales revenue on year-on-year and Materials up very revenue fiscal particular, for some CMC quarter. sequentially from third excluding pad X% approximately to on XX% Moving revenue

plans about our Materials, with see end-to-end promise the validated They very CMC suite impact the on post value are of will close. customers We and solutions been in combination our and combination with excited and in the discussions have has of also device performance our this development the expanded In process Advanced are positive including now we a developing has of being have leadership diligently our connection times. fourth operating since that and executive the completion division, Entegris with the been The have Solutions, model, a team. new Planarization established transaction, integration executed. QX we adding

impacted and has integration the communicated notified. everyone We detailed structure already plans organizational been our have by internally

team going Materials, and driving focus synergies CMC the As on revenue and completing of be will and paying our a management cost debt. forward the integration down as rapidly and an effectively organization,

the for time. specifically candidates CMC's time have strategic pertains of remain it to appropriate focused update portfolio decisions, the of parts a of the on portfolio we'll As spent combined identifying to including deal platform, sale. to various this at post-close we analyzing and potential assess their long-term great fit We respective you businesses

forward growth combined greater our in upcoming company our for CMC integration Analyst Meeting strategy to detail for discussing September the We also look on plans in and XX. our

and is demand tracking to our Now excellent supply with by driven and previous for chain XXXX, line the strong our expectations very for solutions transitioning by products execution Entegris teams. the outlook continued in full our for legacy year, our business

of we of grow a legacy it half into pro combined We company calendar And of CMC's EBITDA of the exceed second also to Putting wood the CMC business treatment year. continue forma XXXX. XXXX. forma the expect XX% to the basis, on we $X the be approximately expect revenue in together XX% calendar for and of revenue combined the excess billion in calendar excluding will business, in all company pro Materials positive momentum expect

the becoming architectures critical as dimensions calling to these miniaturization the expanding of in continue to semiconductor core dynamics market. capabilities well maps a we we both as introduction And two this, road of secular plays conviction complex road operate of high We the are wafer. the out, for because have the per content material of device on semiconductor On technology This positive, of customers' the further directly maps. purity. of growth strength the have degree more leading materials are top our are critical to a science the these some rapidly to quickly And laid most Entegris' of enablers crossroads Entegris trends at and as wafer.

their most our prospects suite of technology are road ever than combination, and comprehensive and better helping addition of now across the while we applications With materials With the support the the Wrapping electronic offers fab are this customers' to maps industry's in growth it ecosystem. solution. the our rest positioned a Entegris we faster for portfolio them semiconductor solutions, with achieve the year-to-date CMC's of most to address challenges ambitious for our year. pleased demanding and strong time process up, environment

be our pragmatic, we environment. of revenue ahead, to to and XX% of should platform be to continue will developments monitoring closely ready as even with now adjustments our Looking macro the make more industry regardless prove unit-driven, And needed. approximately resilient

and around for to in thank Finally, confidence newly I Entegris again focus the thank a teams for world And they Entegris. incredible the our and trust commitment. our their to once want place expanded customers take moment

call Greg. turn Greg? me to let the Now

Greg Graves

and Thank good everyone. you, Bertrand, morning,

many items, CFO, our Bertrand discuss which I'll sell impact on FX have said, this a muted a I as results reasonably detail currencies and insignificant. it's but large more has say, impact our underlying more expenses. move go major In in FX to usually is going on rarely P&L my close we QX. we Before impact results, had discussing because an the as financial from fair I FX match forward. is because years the between mentioned in in to expect as there our through the abnormally we been impact QX This

growth revenue, margin were margin negatively costing FX Our when over up gross last in $XXX record gross of lower-than-expected up the up GAAP amortization expenses integration Adjusted is two-month costs. between XX% sequentially. was significantly Year-over-year and $XXX the perspective, guidance, a X million. currencies, was the a FX. points. foreign when was XX% expenses dramatic particularly QX income in a was year-on-year several and rate is exchange in sales impacted assets built approximately a our were sold. there from And million driver income XX% some there approximately up GAAP because up of was second lag QX. $XXX and revenue, is which operating operating the both deal of our in non-GAAP included were sequentially. XX% FX below yen. sequentially. XX% GAAP the and and items sales from was and quarter guidance. million, above dominant Non-GAAP or operating by million the non-GAAP a of of were was million, $XX impact margin EBITDA million operating X% and product in months, and of $XXX generally impacted intangible Non-GAAP up negative XX% year-on-year gross QX or it with year-over-year decline Japanese $XXX million QX slightly slightly XX% of from $XXX

expense FX line, the below $XX the in line, Looking also expense QX. resulting impacted in a income million other

per GAAP each year-over-year was expense rate balance in and entity non-GAAP sequentially. on other gross impact $X income month in and rate during down $X.XX share. of to share impact The to was on the QX related tax non-GAAP reflects QX. QX, EPS and the XX% The total. are XX%. the tax revaluation X% a EPS foreign was valued and up FX XX% sheets Our approximately Non-GAAP $X.XX negative of this $X.XX EPS per was loss the GAAP line. estimated $X.XX was diluted margin

Based in next next the rate portion of quarters initial rate amount The years. two that on loans bonds, our down over mix January the mitigate ramps on variable zero interest to and acquisition. rate million, the rate secured of average and structure million I three $X.XX unsecured expected to unsecured plus XXXX. approximately to is the X.X X.X billion be times notes, notes, loan, times, on existing leverage term under for hedge post beginning fixed two portion net billion. totaling This and will billion capital including to effectively equates is close points billion estimated performance, now transaction our the gross a just of This we a debt $X.X Including and totaled X.XX% close X%. on just announced total billion. of rate $XXX to to synergies. risk of of SOFR $XXX wanted XXX the our basis consists the of debt X.XX% interest floating billion of new fix $X.X the comment term-loan, $XXX points Before move the billion debt, XXX-day I To unsecured divisional $X.X $X.X used investment-grade on have which plus $X.X SOFR The loan. we XXX basis is of a leverage million, $X.X our the the hedged notes debt net and under gross the is

very Bertrand in your discuss our per As meeting. help at deleveraging, quarter our we approximately you on expect we starting we'll interest of structure and million more capital are To expense focused said, in further upcoming on $XX analyst modeling, QX.

sequentially. QX sequentially. FX sequentially. filtration by surface primarily X% advanced deposition for Growth purification. SCEM our performance margin The and were of MC primarily to gas all sales sales was million $XXX major margin. increase were year-on-year offset sales by and gross $XXX up sequentially. liquid down versus for XX% driven by impact growth for year-over-year solid down margin and impact high Adjusted fab handling quarter, the up fluid and quarter sequentially. negative gross for was by XX% operating strong the Turning operating lines quarter was and AMH for management, SCEM sequentially. million including XX% was up and up cost gas decline in margin was Adjusted the the flat up MC, margin. was impact level FX year-over-year XX% XX% across which decline million strongest margin. was of X% investments, The on in products that Year-on-year year-on-year of driven MC division, year-on-year materials sales Adjusted year on were FX was last QX from measurement year wafer the the for from filtration, benefited solutions. and including AMH last gross and handling and primarily operating was QX and for solutions. of driven CapEx $XXX product million. margin Year-on-year XX% preparation driven growth for on The margin $XXX year-on-year for XX%, approximately the by was primarily

in the new We spend facility continue of $XXX expect million Taiwan. to Entegris CapEx our for for stand-alone, to approximately which in is full for half year

watermark high on to As previously spending expect be foreseeable capital future. stated, as for to XXXX relates stand-alone we Entegris the it the

flow $XXX operations was flow free $X Second cash quarter million million. from and cash was

and flow focused to be second inventory forward, the improve expect management Moving will in of on very we XXXX. half cash

$XX paid dividends. in quarterly During QX, we million

QX our company. for Now combined outlook for the

expect $X billion. $X.XX We from range sales to billion to

margin We as our be semiconductor closing, strong expect position the addition ecosystem. will to very to of FX the In quality the strengthen with the approximately their impact, pleased leading are execution supplier excluding CMC The EBITDA and companies Materials growth trusted XX%. our momentum. and we of

We our are platform, Operator, we'll team. to actively very and and colleagues unlock balance once on open of sheet. potential now the the welcome the to quickly on would the like integrating CMC up deleveraging questions. again, efficiently new Entegris work And we to I focused will new for full

Operator

go from Hari first Please our take ahead. we'll Goldman with And Instructions] [Operator you. Sachs. question Thank Toshiya

Toshiya Hari

Thanks the may. two I Hi. so taking question. questions, if for I had morning. Good much

the The of side more portfolio. CMC your first one, Bertrand, on legacy is

couple a quarter. shared of to the data terms how businesses of slurry the the in see was It in You grew encouraging points business individual accelerate. second

Can side? In talk of for growth. give when XX% drivers growth about on that assuming the you some year CMC I year-over-year side kind what there? growth. year-over-year are you legacy growth pro-forma you terms full growth, of the And rates Similarly, outlook, the called out pad you XX% of think

Bertrand Loy

Yes.

thank Toshiya, the So for question. you

their Materials QX pleased So again, I quarters. the of think, platform with the performance CMC in fiscal

second the legacy which more half – CMC perspective, platform much year X%, up year Entegris X% Going versus of to be line now expect behave year the half platform to the of the would expect to the of pretty the legacy in tune to to how first calendar of I CMC we would as the the well. Materials in a is with

interesting platform, continue wins advanced QED platform, do of applications. actually to which uptake also and the of well metrology part expect pad well steady on some to memory the momentum we performance that And precision and from interesting the pleased is year. see with the some momentum in back business, of and used advanced the business in So logic to in end methods we'd expect very the equipment pretty slurry polishing and also the as

performance steady and end the expect would the platform I legacy legacy as well. overall, in across platform back the So year the CMC of Entegris

Toshiya Hari

be combined But that cost you not If would the be FX I a focus you're second in side. your impact for one the around that for thinking Greg you guidance noted expect provide to of Bertrand. And curious great? muted you're you'd about how more pricing on will providing the the perhaps be if FX, to you and margin, you to that bridge, can about puts implying gross to Entegris kind margin company Thank muted then gross balance or the QX. a where But inflation, think more forward? if Thank going you Great. the margin takes is in how products you. for of you on gross QX? appreciate are for were thinking QX. you're for on stand-alone moment, I

Greg Graves

Yes.

So margins let the me about generally. talk

benefit first all, to So strategic increases. of we from continue pricing

I do you'll expect increased the stable the and recall, we quarters. I were The a to across-the-board in where them, issue, only currencies are certainly see but I are increases but relates As certainly high. they're from we've few – – relatively inputs, price it that. expect mean, obviously, prices mean, chain-related actually their last freight to we dollar those issues, has not do – say currency but assuming own would supply saw mean, past to I peak. we're benefited a stay assuming actually they increases increases they we still from costs didn't but from come weeks, through stable, in stay where weakened several our abating. – an they've They've improvement the margin bit we as there in bit

margin. think If a talk number, about an would takes in stand-alone would I XX%. and puts probably I company, on basis for combined were some about XX%. approximately of specifically got about the And about a we something approximate guiding think Entegris, you've non-GAAP so the And the I number when

Toshiya Hari

much. you helpful. Very Thank so

Operator

question ahead. Deutsche go Bank. And we'll next Please take from our Ho with Sidney

Sidney Ho

are Great. percentage most XXXX. to Last my will about based you of be for on your or that organic you know about of CMP similar about points X Thanks have taking wafer to question. a expecting, if business able And seems starts it talked organic have track. as your follow-up investors outperformance outperformance talked X slowdown the details quarter, market I Day, percentage Bertrand, And you that I on in at points Analyst be comments, terms outperformance on, If we maintain the when further to will in the expand as CapEx or business, potential here? look does terms even talk question. your of And at XXXX I think business? profile you in that which does a

Bertrand Loy

Yes.

a of So Sidney. here, questions lot

maybe parts that So slurries have and with Day at say around premise that same September me answering and we the to would But just for some think that exists specifically the last the of scheduled portfolio, CMC maybe Materials pad. XX. Analyst I one, the start level, I for highest defer let just the question

increasing CMC. We're road of specific technology some behind put continue to try and the customers As for an to Entegris maps content numbers to both legacy statements. going our we progress, those opportunity see legacy

performance correct. back the so the what on tuned year you're legacy of stay far and Entegris year, that. to for this So balance But the expect we

reason wafer. softening of we true We we in production to end a back are the nodes level even as very intact the industry. if expect is that it we advanced some the a remain the of true It per logic, of the greater And memory. in where is outperformance see the content to is wafer but seeing have transition steady of well year

about in that would acceleration towards remember sector, maybe an where fact, in a the So when the most greater memory trailing expect, nodes. migration edge content have of wafer. the is place the advanced on that I there talk per And of weakening will take nodes we weakening more

So XXXX, very outperformance for attractive expect sure. net-net, in would I a

Sidney Ho

for businesses nanometer and more the expect How receive that I helpful. China is what And some question follow-up get think you development for specifically, Government to the will past, headwind U.S. did equipment in remember Thanks. do about these requirements in correctly? that to That's production. OEMs Okay. the Maybe products I licensing for a business? of new the have a of which your a sub-XX business, license most impacted notification if – from my much of your most? be got you related

Bertrand Loy

Yes.

So not letter. such received we a have

as that not some materials we the have So equipment received company, makers letter a received. have

restrictions those the impact impact or and would down their whether So be an not slow with in growth could China. would their be business indirect

what be too it's term. impact to So I short us to indirect think for us really early speculate could the on

new and would consumable of first And actually a our the from I guess of well. demand parts term; in that the to in lot would benefit think expect world. then the down memory road, U.S. from offering fabs and to sell my fab be other elsewhere. those longer to we be serviced commissioned would these global Korea, I in as have to some constructions for is expect investments expect new will the new And of I to Japan,

business overall XX% that of our revenue. OEM about remember is our So

every a of exposure has memory different to China. So in equipment degree maker

is this sharing can we It's not really that numbers. over business any XX,XXX with So you customer sales and restriction the from numbers to see But products, significant overly sell resilient. resilient as about the I'm China. run we I'm concerned on I'll model particular because you, remember concentration, you don't have let very our

Sidney Ho

Thank you.

Operator

with And go Scarnati our ahead. next question comes Citi. from Amanda Please

Amanda Scarnati

Hi. Good morning.

able been these The timing talk about shift new demand to We've I I know how online. on hearing on semi based your being new in outperform coming some you some designs. impacts just about Can first outlook, question side. of the that have the you talked sort is been designs on of there's that of some environment

are of next you looking what things So the over like for couple quarters?

Bertrand Loy

Yes.

the record our demand Amanda, expected I we is if because So levels CapEx would think activity I And to do growing through – expected to say, to importance the I want remain what it, of certainly, XXXX. remain products demand for strong is customers. the for pretty of and our chip at summarize

today, So share that's additional higher have the at the that with that headline. is demand than data point still we guidance. I our And unconstrained an will you Entegris, is

be if to the a balance we carry our of the little slows down So bit, industry year. able momentum should through even the

Amanda Scarnati

where acquisition. been how CMC you little Great. the structure for last Does I Greg, you their working include that the question this Can could on that bit the has The forward? benefit sort next of and expected be know XX% prior some expenses quarter. EBITDA CMC just to internal of improvements and is baseline on done mentioned, about be over to the I going about expectation looks? side, sort to have that they've quarter? things that Or is operating of talk any their the of is a the

Greg Graves

Yes.

longer-term as benefit It mean, from they does of Day their what very to also about wouldn't operating on said, small I talk operating Like XX. Analyst think September color the program already includes include September. that provide I necessarily where So a that baseline we've the model we we'll synergies some at had reduced future expect that's something going realized. that be our costs. forward. the set I It in on I amount forward more we'll

Amanda Scarnati

you. Thank

Operator

question We'll Please with Patrick from ahead. Stifel. our go Ho next take

Patrick Ho

environment off, know a you've near-term noted lot the first demand times healthy people and of wafer Thank see several about still deal. of were Bertrand, the I now you a you and talking resiliency and environment of get congrats closing a and and very obviously, little and different you lot much the that on a on quarter more the the very the different kind maybe how through starts, potential products manage bit your model resilient through of of diversification these this you offer cycles? that the continues strengthens year. Can and to give color only markets of ability further your to given how rest

Bertrand Loy

Thank Patrick. obviously year. this I look, the the very you for with mean, we're question, Yes, pleased, performance

essentially is penetration rate reason for same those the we as the industry incredible mentioning seeing mentioned at that we Entegris a we that products. are the last quarter. last the number growing years twice have of We products that few the are And the with They are over of legacy for introduced the and keep platform. new the ones I

for advanced in increasingly into to fabs. So upstream optimum liquid in filters, are nodes the reach advanced also chemistries lanes which the customers of our essential yields the used and advanced of all coming

share So expanding. market our has been our has SAM been expanding,

market We point. for the that in are been well division. don't growth AMH is as for platform we with close carriers memory, XX%. seeing those introducing. It's of new Very XX% probably obviously we're in share new in nodes that talk particular a progress we've this fabs our year-to-date and rate at again, in materials, in particular, new the is excess of a about, And deposition performance chemistries. probably number that chemistries And our the platform those wafer advanced selective-edge of enough but to the momentum pleased, new great seeing great materials for

are would true lines, be for of CapEx, obviously, products product industry a excess traction number far and for our fantastic the indication same which fluid of, handling in loops. becoming an gain increasingly market sub-fab and of share like the the the chemical marketplace. that's So standard an industry older And in

the in they know, have to long-term that levels achieve purity increasingly as most into and handling translates for is obviously solutions, and of chipsets. of you are the greater trying higher fleet their We which, customers levels cleanest, important of as yields purity resistant our greater process, reliability

degree the we to years a those customers. have we increasingly our trends what that for say, That and come. And So that wafer, per momentum are greater we into drives performance. and conviction just important our high opportunity is offering, content to again, more is translates success of becoming really the that our as of like of expect beginning, to Entegris

Patrick Ho

That's Thanks again. for Great. it me.

Bertrand Loy

you. Thank

Operator

Please next De Brun Our comes with Kieran question Mizuho. from go ahead.

Kieran De Brun

Good should the environment can within if a second maybe and and year that in saw morning. you little manage to half control of more think continues costs we if touch XXXX? microcontamination on the the cost just additional the to about I you be wondering the was your into management ability how Hi. challenging bit

Greg Graves

from that. Yes, we mean Greg. was anything sound the calculated, they related a FX. make result, And to to of the think downturn. it – structure we're to at in we're their like within was operating the for that impact with balance where had I take relative the just when I'll of XX% structure I concerned leverage offset I P&L this growth; is lower meaningful MC, the as leverage because want – cost it driving a about they had essentially I cost don't the a like model function revenue. as looked the a those overall, –

overall. manage And to soften. I – from We've will here, – move downturns. structure but funding – through ability I just question around comment structure, would the this cost industry don't were always management mean cost the I through is growth. forward to team as is variability in I the this mean, And So I that is been cost highlight we if is – the that's a on that significant management been

forward. structure so knowing cost move just as the credit of to And ask we us I'd for how manage you give kind that

Kieran De Brun

you impact kind up during terms how so, were saw quick or lost think the quarter. of one demand back do of – Is impact that there lockdowns meaningful of you. if you in year? the that second any one Absolutely. the the there China half And Thank just business? of in of the any in any about And making kind

Bertrand Loy

beginning the the I sorry; question. of didn't I'm hear

Kieran De Brun

quarter Were in to there Sorry. business? due the any the on China second your lockdowns in impacts

Bertrand Loy

The lockdowns. I'm sorry. Yes. Yes.

the glad quarter two in at few and So China, with in me our expectations within the were the team it work lockdown. opportunity I'm deliver results situation to able gives actually, you're asking turn our to after a question essentially around weeks of the essentially who of that line a an end commend because months

immaterial the So performance at is performance, really of result great the our net to and the end day, in QX.

Kieran De Brun

Thank Great. you.

Operator

We'll next Please Markets. from with go KeyBanc Capital take our Yefremov ahead. question Alexi

Alexi Yefremov

is to of everyone. you comment nodes. Good picked migration wanted something about about one acceleration last talking trend over advanced And nodes. Bertrand, that just the with that, while? on morning kind commenting new been back delays of you've a that this the for Thanks. Or Are come up to months? to of your your to few you was related talking customers I general about largest

this Or you're that prepared this too about? about is is talk So just future not maybe into not the that you're worried yet? far something to

Bertrand Loy

that all, first really on doesn't Well, success any customer. specific of depend remember one our

a to seen have definition going last from the is we and X-nanometer customer our really two migration the about three talk XX-nanometer fab And our now per to leading to really actually edge and forward base. And or the leading when We broad of beyond. expanding wafer you've of nodes, right? edge content production

again, it's steady So increase. just a

we're fab of to chemistries see very adoption instance. have now used for that mentioning, XXX nodes, at in as deposition which that's materials, was selective running were the not with where of we're for we most same positive majority terms those new continuing edge their and well wins more players migration And layers, advanced logic. new seeing at the I of XXX so And higher, and capacity in the memory to

really we increase itself. steady again, compounding that's that and seeing are So

our customer. any a It's a flagging node particular business. not positive very I’m secular any just will trend So that particular tailwind be for or

Alexi Yefremov

evolved comment, made your last, And I why Is comment? having guess, this how just months? over on the you positive say, it clarify let's seen are the incrementally few this, more to you

Bertrand Loy

many seen unusual. think we've nothing that is now a I this there trend for and is so many, years really

ago. I two, by think off what And which our that's years pace the accelerate cadence in are than architectures newer by is to ten technology more very maps or today a transitions. if the even desire challenging node large, of nodes it us. road was unusual greater of five today introducing customers, or those of the degree to at they And aggressiveness obviously the is years for migrating the month industry positive ago is is what and much the

Alexi Yefremov

follow-up a XX% expect of as Is quarter to FX a follow-up, an XXXX. on FX for quarter seeing less and headwind? Greg same in for you do improve the the fourth third quarter? margin And guidance headwind And of quick that for third

Greg Graves

said, Our is assumption said, we'd equal I is stable. is be will that our the impact the assumption if of favor. two relatively is both QX. be or currency QX that three expect currencies currencies QX – should in I stable, come as very if and in currency modest a impact FX as QX. and actually last I And it our have will mean, weeks, in in And have

Alexi Yefremov

Thanks lot. a

Operator

Please Harrison from Research with comes Partners. Seaport And question next our Mike go ahead.

Mike Harrison

on expansion? morning. us you give you good risk can an Taiwan? on And wondering in Hi I update comment the about if geopolitical Taiwan was concerned facility how might maybe be

Bertrand Loy

considering that to be our responsive think obviously to the supplier invest. thought expecting benefits The than greater investment. that first advance largest materials, the that I When Remember that's means the to to we a the is think in construction don't on customer, investing to the comes it half when been decision is the customer investment. the strategic this qualifications made risk of begin as XXXX. risk produced the chains. that we geopolitical so to we've and schedule. to be major to and in deposition is Taiwan. of In drums product any to it help see are And lines partner. products moment mean, and will half of going this as local customers move. we couple development mean, number particular Look, about expect and high-purity first of Taiwan ago that roadmap rationale supply be And a their second maker important to invest very decision semiconductor effective was I look, and for And our risk, a well to lot more liquid filters, returns customer from the site today to so a the products year really of we're close I tools the I behind years we new the be site this largely very its in the of manufacturing expanded from

of we lot situation expect the So monitoring have China, I – mean, lot make would ongoing but Taiwan we are but don't think again, I the the and given a pain to I – news, anecdotes, I think of news. of obviously, types of those to points continue

Mike Harrison

pipeline CMC exited fit there pipeline you. confirm at but wood or Can evaluating would that appear the chemicals currently the in you you were business, treatment to they your changes potential underway with business have you business? whether business. there's Obviously, materials the And process semiconductor also a that you divest core portfolio as a not is to look materials. chemicals mentioned Thank

Bertrand Loy

Yes.

confirm can I Materials, lot the what that's CMC I we're can looking overall of legacy is, portfolio what a at say. So and

for the it elaborate. I individual information share the time more to will comes But not decisions, now me think that when time to with when we portfolio it's right. you is

Mike Harrison

much. Thanks very

Bertrand Loy

Thank you.

Operator

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

David Silver

Bertrand, you. to I of your consolidation was in Hi, pace you reactions materials. on, guess, share if thank I accelerating thoughts might customers' the your industry electronic wondering

don't share level, a the in So if underway a year about a pace supplier quite the mean, And customers just the for difficulties last I size points the of up key I side are the what of and that while maybe the with – picked diversification maybe gaining the suppliers. know, pace with the now to customers property of proper pluses maybe managing, of or consolidation both stronger targets high sure. could over protecting a I have or have, seems really industry has accelerating? been be thinking But quite you bit as on supplier, at mean, consolidation the dealing larger, to so. seems but for intellectual the your just your

Bertrand Loy

most our quickly of first importance a we all the of combination. all, of would well seeing, very not duty. sharing their growing No, road And success they of still materials customers are you question. answer this with realizing been by is of what great of companies realized space maps. materials material this that are start And they have call And very technology supportive the that is the to are of equipped means our that Yet, the it fragmented. to also customers

expecting is infrastructures in in of acceptable are do they of you you support order U.S., I our And in and are Our here them a financial Taiwan can be to the in forward. customers expecting that's very also materials in supportive in us what going consolidation which call, yield all obviously, customers to the They're this able R&D our to make more that's important understand, Korea. that significant so lot to spend returns, And and scale. space. need this but on us think in investments to also why we and

post-CMP the portfolios of Materials, In CMC see polishing addition, very They to between the specifically while of two cleans. promise the the complementary solutions materials and combination deposition highly accelerate Entegris being right developing they see development to of able and the the companies. the new

and greater on-wafer translate will solution. performance, time lower defectivity into shorter that of All to

like a to what standpoint. So is from not customer's

them customers, what with development on programs. super obviously new are that's hearing from excited and to So working start we we're

David Silver

such on suppliers appreciated. – be industry or one sufficient thoughts particular, specifically perspective, increased from a was bill is fab program. that Thank development wave thoughts And coming Thanks legislation, domestic think to starting the yourselves, to chips handle on really the new key I'm that of the what in topic could recently might from passed maybe the your you. But in hoping a you mean, constructive not you demand the for that's the developing I of be Any for rundown And act. large-scale share chip that. whole on. network domestic so? your There the potentially other or as in XXXX looking the for would I is bill

Bertrand Loy

Sure. obviously of the the we Well, all, very encouraged first passage of are by bill.

source it's of It's industry. it great new the I semiconductor U.S. great for be for think think the And I the thousands job creation. will U.S. of

business of be So And will provide number a built many a of new to of opportunities the we expect, fabs Entegris. as course, that, new excited. a for be of which in result to U.S., then lot reasons

the what Specifically, Entegris, make would to some bill did aids. of all, language eligible for it were contain pleased those that financial means first we of materials companies that

that in capacity to context, we of best were locate on investments are So we some planning that the where new assessing doing.

is us they to or we should passage But not investments, our whether force ourselves been look of have going pause in and If investments. some onshoring at made mostly you Asia. to bill recent the upcoming those be the of ask

discussion with are we the That's have time discussion the the also the that's when internally. will So policymakers having right. we is

David Silver

appreciate much. Thank I the color. you very all

Bertrand Loy

Thank you.

Operator

Paretosh from go Please comes Berenberg. Misra ahead. question next Our with

Paretosh Misra

Thanks. And good morning.

had I electronics had also KMG. acquired other CMC from bunch they of So an business chemicals a high-purity products, and that think, chemicals

exposure the Specialty So or versus SCM, Chemicals geographic business products, cetera? my of used your question is, how pricing, or is or that where et in different similar they process are segment, in terms

Bertrand Loy

no there so really portfolios. our overlap Yes, between chemical was

would types these it so not If the you products developing in was which high-purity be CMC electronic of legacy and selling. Materials, business Entegris and at chemicals like acids, the of look products sulfuric legacy IPA, ammonia, of

I And So know of exposure, Materials, in opportunities lot very was that lines. in actually of and CMC America North lot there a less terms in you complementary a for product think Europe Asia. in of activity, so geographical

Paretosh Misra

business what business? most growth side you Got but curious, CapEx expect it. in what And your of rate then know is you driven, just the of seeing year? units just, of this I are the sort And

Bertrand Loy

think was growing handling fluid systems as mentioned lines. digit that the have MSI handling mentioning, filtration assumptions the we remarks, the lines would our as I well. a So product as about are a we're was which performance the have year. lot have extremely well I market our our CapEx-driven footnote, CapEx at mentioning I And our up you with the share year prepared I purification And the we been in that full gas as mentioning product in XX%. I business, to food from strategic was for mid-single well. using of XX% up But doing been year-to-date. as for close guidance to gas wafer around strong

overall of of growth. our business, all far across CapEx-driven in performance strong again, CapEx industry So excess the

Paretosh Misra

for Thanks Great. the color.

Bertrand Loy

you. Thank

Operator

We'll take question Please our with Timothy UBS. Arcuri next from ahead. go

Timothy Arcuri

had I up sequentially. two. question I had I a AMH think AMH. lot. is Greg, a Thank on XX%

be I to think flat. mostly it was expected

the of June, that's the your So and obviously piece that was in CapEx-driven of most upside business.

be going up WFE the So AMH, flatline And going now be being up it's companies mean, the issues to are supply because being if there? you're is I talking all kind like of about question what up I to like talking CapEx I of year. this I WFE And XX%. up mean XX% is, about all happened more but the know maybe XX%, XX%. chain

building AMH of So is customers in if of that? Thanks. component your tie wondering just can you I'm inventory? there kind some

Greg Graves

the our I building right, I would side concern say, mean, about to customers inventory. Yes, no outperform significantly even the is are CapEx AMH of And you going market.

products market how where mean, it into our – think depending wafer I strong really to got of or lot momentum boils XX%, the good rarely on makers the with positions on it, the measure product a well construction the I in as share go then our mean, momentum fabs, fab fluid side. handling with we've we've FOUP as I we handling that new equipment on down things lose got food tremendous fluid really handling of XX% specifically new side opportunity. a you And is

very executed frankly well. has business just that So

Timothy Arcuri

Yes, Yes. seems like it it.

what's and going So question net keep you're is the worst the targets. floating deleveraging I and on target? I second the of than floating. my What's X.Xx debt more Greg, right now. And the half is timing at if the up? mean, mean, around just case then rates

the just walk what you target can what through and us the... is So

Greg Graves

Yes.

me So first. piece second the let take

it rate hedge the about we as a actually week, the of amount hedged over It's years. earlier we that which have $X.X we've – – have flexibility down term over XX% instrument, this continue steps steps the a that that that. floating down repay. loan XX% the next steps three have of and to so hedged But hedged billion is of down time, of to about over We

a quarters, in little X% XX% of rate what bit as we year, our inch be up next into said as that. next hedged on but we with like, will we're expect two about capped said, So have we're the to that I the mid-fives

was really we important table. the it off the rate felt risk take uncertainty the just take So to like interest to given

we've that. done So

changed As we it relates haven't view. to leverage our really targets,

like priority is view leverage want gross towards the quickly our toward can. one the continuing we to than that down for Our of as – But number three. one which moving four changed, be number our we down is said, And forward. inside move towards that gross somewhere I priority will and of around – as we inside Deleveraging to in three deleveraging business, get a two move number the is as our four leverage other long-term goal be long-term will invest to target hasn't capital times.

Timothy Arcuri

Cool Greg. Thank you.

Operator

any back turn Seymour That concludes this today's will or question-and-answer time, remarks. to Bill closing I additional conference the for session. At

Bill Seymour

you Thank very much.

virtual but a.m. Again, we reminder, please it details Meeting said few you questions. have XX, have a We'll XX for and any reach very on our And quickly. out day. the be call, more at that sending good in out regard, if pretty on that thank much, times September Eastern. you starting a is a Analyst scheduled Just

Operator

Thank participation. your call. you today's concludes this And for

disconnect. You now may

Entegris (ENTG) 2 Aug 222022 Q2 Earnings call transcript