CCMP - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Cabot Microelectronics First Quarter Fiscal 2020 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker, Ms. Colleen Mumford, Vice President of Communications and Marketing. Please go ahead, ma’am.

Colleen Mumford

morning. Good are and and CFO. today Beamer, and Li, President Vice David me CEO; President Scott With

XXXX. cabotcmp.com. us Last section Quarterly first we presentation XXXX, Center XX, that quarter Relations we encourage of of you're night, reported the our available on fiscal the which results you to we’ve ended Investor investor the made or Results over online for review our Whether website, phone, joining slide December the under

the and website script this webcast live of call A be our conference comments prepared on conference also shortly of will today’s morning’s this call. available after

You by calling may our XXX-XXX-XXXX. the at office request any of Investor information Relations

These could our number to differ cause that no discussions that in risk statements. including XXXX. include XX-K may for materially involve SEC from remember these September to of forward-looking fiscal and forward-looking a uncertainties our forward-looking obligation We statements this update that Form actual filings, XX, Please factors year of risks, information. results today factors ended discussed the assume other our are any

including remarks measures, certain this reference adjusted and non-GAAP morning forma financial our pro Also, results. adjusted

nearest earnings GAAP each non-GAAP the reconciliation and financial slide of Our measure to measure. presentation a financial release includes comparable

which pro in forma We Microelectronics also provided supplemental results this compares quarterly as KMG during information year. the last release, Chemicals current owned Cabot if comparable period

and discussion slide Additionally, this rounded in the accompanying data throughout value reflects presentation.

is Asia. joining I will from who call now us Dave, the to turn over

David Li

Thanks Colleen.

the last Last quarterly XXXX. achieving is revenue our compared XX% which night, We set same quarter year. announced we $XXX results record period for for to another first fiscal million of higher

was by or slurries drag exceeded in strong which our a revenue increased agents sequentially sales quarter by of previously provided reducing and guidance driven First CMP DRAs. and increase X%

were products from broad as U.S. customers sales stabilization from came performance ongoing and our demand we We both in pipeline results demand semiconductor customers. memory the and continued and recovery in improved higher foundry saw sector and our in reflect international industry based the DRA and believe our logic

well best-in-class we believe delivering is We and flow also record our as continued strong well our of cash our free as strength execution. of operational discipline profitability of continued as a the reflection business model as track which

me materials thoughts Starting utilization for in memory stated seen outlook. continued we provide conditions demand in resulted turn Now and should our products. Growing to our on drive industry some increased chip with let memory higher additional lower in should lead demand as and stabilization inventories demand from electronic customers. has which have for

improved continued pricing of additional NAND has optimism chip us indications and recent DRAM memory addition, given of In recovery.

We also trend we to ramp up saw continue devices expect as as consumer support demand strength this such and their foundry XG advanced technology. to customers from logic technology XXXX as would these quarter fiscal well emerging new of as in through trends nodes customers and production this

Lastly, forecasts in we higher driven and are U.S. automotive IoT from legacy logic customers demand expectations also seeing infrastructure, encouraging Europe markets. from by and

our a second single to quarter number materials results. of and expect we approximately flat we had seasonally our we signals is our first New been ahead, the and seeing Year industry to compared our up electronic revenue to what for from be digits customers Looking analysts, quarter prior soft with in Lunar saw historically based second quarter the while the fiscal first quarter positive low fiscal on strong

increases the U.S. trend XXXX in to Materials continued oil production primarily Permian segment, for the beyond. are Performance in region and continue this and expect the we through In seeing

demand infrastructure takeaway building additional are which for products. translate customers see should capacity and internationally pipeline American North to adoption of Our additional increasing we improve DRAs into our

business. DRA underway addition to for important business capacity growth support add that and will significant for exciting investments future an targeted our be this already is Our

up be expect sequentially single driven we forward, digits to by continued low Materials segment demand. in in our strength Looking revenue DRA second from quarter the Performance

closely would ensure given I and we are the novel to best position are related this support teams in challenging situation working coronavirus to note closely to around the are following and uncertain the that them environment. world customers we and the Lastly, with our

are results quarter semiconductor an driven strong We leading-edge which were most participation by we record environment. believe proud continued technologies of our and execution and the in improving this challenging demand

build in continue Looking quarter and driving to results forward, expect our this businesses and profitability from best-in-class XXXX. strong we performance from upon our

the With call to on financial that, our over to turn provide results. more Scott I will details

Scott Beamer

and Dave, Thanks everyone. hello,

along results. our some My X our higher reported website comments will quarterly adjusted both with comparisons slide and I start release. on will generally on P&L follow presentation level we press last Slide provides posted the night for which

was of the Performance revenue declines quarter weeks growth XX% essentially Electronic our When segment. record did business results, Materials company compared we last same increased six year revenue a that $XXX the in with and as in the for the Materials million of prior the own KMG we segment flat in First quarter year. was offset the not include

the a offset have Adjusted due mix certain net the unfavorable zero year. prior remaining favorable by gross to up versus manufacturing product of out a reverse throughout fiscal the as quarters volume are slurries and cost, full to impact manufacturing margin lower. slightly which impact These likely year for was was will costs was mostly

lower EBITDA to declined Synergies expenses adjusted year-over-year. approximately million and by professional expenses improved $X approximately expenses were SG&A Overall, million flat partially by fees. adjusted synergies P&L. $X revenue, the from operating reduced operating mostly the million incremental $X with offset primarily approximately our Even delivered higher by

remind excluding XX.X% of certain have been was cost, fiscal would the of margin EBITDA continues EBITDA EBITDA the expectation margin full-year of to long-term everyone like closer impact to while XXXX that EBITDA the Adjusted fiscal short-term would to believe or be revenue, that I be adjusted manufacturing XX.X%. of timing XXXX however million $XX our continues XX%. estimate we to an appropriate our margin

such quarter our to margin of as increases. first in typically merit lower terms compared costs second fiscal EBITDA our our Also, additional to quarter is due

was with forma pro per net quarter. year. or million net net a the $X.XX income in the in income Adjusted last adjusted Our flat $XX income the share million first $XX quarter was diluted reported compared

that Overall, tax and mix net of costs lower expenses, normalized of SG&A level level offset quantity year being items expenses the prior year. options unfavorable and These rate a product our were rate the and acquisition from an exercised lower from after returning tax abnormally to an interest higher low related expense. The the in benefited timing income certain increased prior during benefited period. stock by manufacturing a of

in pro $X.XX shares due EPS prior diluted per same adjusted EPS a lower forma $X.XX, last year primarily the a quarter higher outstanding. a EPS Diluted number was X.X% to - share than was adjusted of

Electronic X. year. pro which Now our contributed and revenue driven reported X% demand forma revenue by compared discuss memory revenue last year-over-year of a are decline declined softer million or from $XX XX% results revenue let's quarterly to and shown customers. on business a revenue which in CMP approximately primarily comparisons the segment materials Slide difficult X% slurries by

of certain from foundry memory decrease robust approximately out in growth demand a also and several demand period as certain logic chemicals a Electronic from revenue customers as declined years pro due to versus pads customers. pads Europe well reported U.S. phasing revenue X% lower of same revenue of applications after legacy forma lower last in XX% of as at last the result CMP year in year the from the legacy

believe of have applications. continue customer emerging we of business ahead or line to and our opportunities a to legacy Looking we with plane that strong both product adoption gain next pipeline in

record internationally by million business. partially or difficult approximately $X Moving The for materials, and both in the to our in DRAs primarily level in growing was increase revenue forma XX% driven comparisons to increased a revenue offset year was domestically performance by the quarter. pro but QED the over demand prior

Slide X adjusted and shows segment. EBITDA by revenue

corporate adding our As of costs assigning a better costs corporate more the by to true allocations segments reminder, directly reflect we the the for updated some businesses. within into the methodology

result, a segments costs corporate during costs while unallocated the increased quarter. As corporate to allocated declined the

Materials $XX is Materials the versus the the and due adjusted million last weeks around of was due in of from pipeline to the segment reported decline change change was of additional XX% million in year year EBITDA performance the to revenue weeks of Performance by revenue partially revenue allocations. Electronic Chemicals XX% adjusted Electronic and prior XX% approximately an lower $XX in EBITDA that six revenue, increase a revenue. additional segment the of was delivered six which slurries XX% offset allocations CMP

flow quarter Now $XXX with sheet million was quarter, We our flow operations flow total cash a generated million provides the capital on $XX cash please million were as million refer the some $XX free which We of to Slide result and of $XX of expenditures $XX hand and ended highlights. million. and our debt. from balance in X cash cash

X, forward-looking Finally, expectations. some on slide we provided

compared expect of quarter. fiscal For company our be flat total revenue low-single currently second to the digits first approximately to quarter fiscal we XXXX, to

We expect be to Materials revenue revenue low-single Materials to low-single Electronic be approximately to in digits up up Performance in and digits. flat

month. up there expectation softer on Year This New products a any due demand being our not our even Electronic though days typically flat single potential approximately the to shorter quarter the low impact to on of quarter because segment Within as guidance second February the Materials is and revenue the does coronavirus. digits our first shipping Lunar than is are total for fewer include

$XXX to expect million be in $XXX EBITDA million. fiscal range full-year continue For to the the of XXXX, to we

expect full-year of quarter, top refinancing XXXX. million $XX of the remain $X at We last XX.X% expense million. After our delivered XXXX by expect margin margin reducing interest the in to to the range EBITDA we at or our our debt and be fiscal than between better EBITDA fiscal end our now million slightly $XX we end successfully

particularly million the to growth year. is our the between at deployment of in in meeting likely and We we and committed $XXX believe program. capital upper all stated end capital pipeline range our spending future million that invest in business, that To opportunities support to businesses be $XXX the to products remain plan in expenditures of objectives we our this

the XXXX. to our our two deleveraging of We net by target meet continue end times of to expect debt-to-EBITDA fiscal

performance we believe strength with we continue and to according priorities and sustainability and those our delivered demand quarter closing, of We KMG are in believe flow. free shows an to businesses. uneven businesses We environment track record our then both businesses. the consistent to making cash our appropriate acquired our convert of strong the stated legacy and CMC the In this growth the support future earnings into deployed our investments positive earnings the cash

I’ll Now, call the prepare we take to back questions. your to the turn as operator

Operator

question Our from comes Toshiya Goldman Hari Instructions] with first Sachs. [Operator

Toshiya Hari

comments I’m but is you appreciate uncertainty just Congrats demand the I Dave, and taking made reported was first have results reconcile on coronavirus you you of then maintaining well you’re both the that on I logic one side helpful can first and fact so, positive all the the around foundry on EBITDA that, on quick quarter up? some my your I your will with customers, the and the as the that signals if guess, guide. that your to full year - and side for follow guide thanks year question. strong and a fiscal speak the I as memory to trying full from

Scott Beamer

second We're flat just Scott. quarter that yet company. I first - the revenue feel front which is guide terms this Dave piece lower we a as in second think We of margin optimistic that is optimistic From quarter. the as think reminding that's think quarter the I the single-digits EBITDA expectation realistic provide. to the - of about said. like we’re our to footed as that And a but is everyone low we Toshiya, seasonally for

lower I that's adjusted it's speak And of as and that than this to can these quarter go that's artificially million the to about quarter think provide on frame performance, we're later. other costs metric $XX reported We've going that the second running that $XX XX.X%. of a at that so we details the in higher that in to - delivered if be first just manufacturing of were a to for previously we higher think saying million is I first metric helpful metric everybody. But quarter that more the way because slightly back we EBITDA

year. the And then of we half expect a stronger second

So, revenue the QX we I feel think I positive a in is optimistic guidance. think that’s

some decided on now really we’ve EBITDA right now. pretty You’re I providing with that We optimism. wide and a year that think that range full We're think right to maintain that’s consistent right.

David Li

a Yes, bit the a get add and what would is that and through narrow mentioned, there results. we've done traditionally just we as Scott obviously I so we'll year what range we've then Toshiya - recorded to on for out with put EBITDA the

right. will strong. the items that sort think industry first onetime unwind but very The related some manufacturing perspective, we was you're quarter There itself, was from of

We're seeing flat that was sequentially. we're feeling confident our with and guide customers - again optimistic reflected from from what our up in to

Toshiya Hari

the And in then as you sorry first if I my the guys headwind question. The and it. quarter, second would follow year, we kind across manufacturing that should the the that? first quarters? quick cost missed quarter, quantify assume or three would spread on a that remainder And up QX in did remaining that the mostly the But of I'm of Scott in be tailwind be

Scott Beamer

background say related an around way it’s us it up provide a just evolve here. of it’s this the to number quarter and we’ll transparency to to for nuance the about degree pick our would to the - that’s continuing prepared quantified but cost. I and comments, million Yes, accounting and we first cost $X really It’s and in Toshiya

the margin of no geography within are across costs there is P&L. so the All issue

the units opposed within produced we your as as or there to that cost more passing so our when the they’re what the They’re is produced, to units of the all related actually related are we period more margin, but it time transparency of inventory. impacts costs cost, group provide to - - a around

up in say be nuance income it’s this [ph] an pick I that more. a but little So will accounting it again, sold phased with adds and would quarter,

the rolls and of more QX year. QX phased in off towards It’s throughout as and QX the less it rest

a to QX. full impact total no in impact year been so positive full between yes, year, a to QX on less P&L, and QX geography but for of the phasing the a headwind no in speak the headwind QX this in So and

David Li

because for just happens based to Toshiya kick to just remarks QX year. lower is think increases merit in then, time it that’s a And little to historically Scott one his remind I the prepared on in the so us, of be mentioned

Toshiya Hari

basis. your electronic It my was flat on quickly forma relatively little then, on a in second bit maybe And the quarter question, chemicals pro business. down a

a high business? capacity support business potentially this talked single-digit are to customer has You I growing disproportionately this guys large by exposed to client for think about XX% American North year that and manufacturing wafer their

you. Should in in business we there acceleration of XXXX kind calendar you that? or significant expect a are this for to Thank offsets

David Li

Europe. in also as in we’re where really you position we're have thanks. as We're And a electronic excited also we about chemicals Southeast Asia strong Yes America mentioned well. strong North strong in

American Obviously comments it's not So seeing just also from North America. forecasts particular and we're those bullish North kind that customer. of

Europe some are of from well I think we're optimistic also legacy about because we more applications. as picking up see the there things that

optimistic longer we're be the overall not really a long-term trajectory about positive really say But really, term we’re about. really growth of the this of business It growth might quarter-to-quarter but I and strong the confident growth business.

Operator

question with next Citi. Scarnati Amanda from Our comes

Amanda Scarnati

by weakness was talk products products in due to some you I question the are quarters in lift we the and going that space? off this to or loss to business new be next Cabot should couple of of foundries. loss mentioned first legacy about you part the I current at is see pads the if replaced of Can - those of have incumbent revenue a have the was business. expect just believe if on in the that the Scott, of complete a I the quarter products to of

David Li

a so where situation out we're Yes with was, pads. some Scott thanks, Amanda legacy we phasing customers what mentioned have foundry

this lower lower those customer NexPlanar memory slurry demand we phenomenon quarter. quarter a where from products. for demand we which saw also kind also expect unique with We this saw to replace But was a of our in a

improvements they're combination just haven't of recovered as demand. productivity overall They we at full as well think running and that and lower not a So fully was utilization.

optimistic forward. and future a So just this of We've primary would mentioned, wins but this was opportunities that slurry down number be was pipeline effect us Scott pads and pads. entire about of have and chain quarter been the to had not continue going a of supply see the strong the also trajectory quarter. reason pads we we growth why that

growth to is continue So be to for going company. our this a engine

Amanda Scarnati

hearing effect. to And then the business, on business does DRA volatility is declining in that business, been the the prices oil How DRA helped business? DRA when coronavirus we've that due oil side there does well do that increasing that of are or the impact part prices does or better generally

David Li

grow. very primarily of in so the growth we've are the oil DRA we're strongly - we in participating seen what very pricing demand through and a Yes seen variety U.S. environments to continues is And that's Permian. what different is we've the that again strong

the So that's U.S. I as infrastructure much of on of well think we'd the its say internationally. function of the And it's of a agnostic in environment. more out sort pricing the as of oil build going

we output. some transportation We're of see of uncertainty the winning - there existing business So But in strong DRAs. continue virus there's think terms oil also to oil, growth to again that with be going from in is we overall customers. in

DRA we're about growth our So excited really in and future. the see business continued

Operator

comes Loop Our Capital Chris Kapsch question with Markets. from next

Chris Kapsch

gross bad a and that above Materials - are sharply. and I'm think given average down average I were a But assumption. the below that carries So a that's maybe margins pad good basis margins the about is on if December strong had year-over-year DRA you the had commentary you basis than the quarter on Electronic and favorable was mix very an in I look a question product the growth so corporate is - segment maybe EBITDA business your less at not business which the the quarter that adjusted assuming the margins the not about higher that rate then,

that Any was North mix perhaps the business to I'm on in America. going reconcile be growth appreciated. around that details was there pronounced just the maybe HPPC trying just would with what’s helpful, it’s So there

David Li

Chris, you’re segment Yes. that Performance - our assessment think right profitable. more I growing in faster your first, Materials is and that

Electronic versus which that the Materials in in year and materials then down dynamic has I have to total prior of our mix the versus we slide our on we think significant perspective. was - a our pretty down was within slurries show that prior slurries company a on impact

in our that’s we down it stabilization example, it of was optimism Sequentially, return. the prior year negative on for up, X% of impact revenue we're slurries terms total earnings part about has a as was in reflect being slurries company impact slide of but was in that comparing from down to down the the - the memory which

Chris Kapsch

extrapolating just down from then most pronounced is in So memory the it that slurry like the comment, sounds market. products probably addressing

David Li

right. That’s Correct.

Chris Kapsch

year-over-year your for Yes. in the year? the it the in growth XX% you business And other quarter, question with Do the for that had your year-over-year down negative the pads. achieve the for What’s expect flat was pad guidance year? then, the revenues you I given assumption full in to expect first full

Scott Beamer

decline We it obviously several product is that us we’ve last haven’t specifically. It’s grown see yet. the as business full for for an from What we the we this we provided And we’ve a area a for dynamics I haven’t guidance in where subject growth strong important line potential years. seen pads and there. same of the first - memory time, recovery, to a the especially is some think pads also seen

well new so, takes for demand as that up wins some ramp we’d And up. to happens, in pads. when those pick time It also expect to also

one those haven’t that focused for lines of provided company on we although drive think in I product growth future. annual guidance we’re to pads, an it’s our So, the for

Operator

Seaport Mike Securities. next comes from Harrison question with Our Global

Mike Harrison

update if that in cadence wondering your you us be to the investments You elevated expected fiscal had call last can some growth maybe on mentioned you give the an during higher hit Was XXXX. P&L of those in growth Did investments. timing the any such see the maybe of later some or it’ll QX? it year? we in spending of hit times Or is that as of

Scott Beamer

mentioned We range that $XXX to and we $XX which be And Mike. P&L, would expect million. high we are trending be that spent in close quarter. the of the at gave to impact end No to that million the we that we provided

capacity excited to is market in and what is have grow and and with the of going we is we that that business very businesses organically for about expansion and as in track be we’re very the Our priority Things the about and projects well excited you progress pipeline believe one performance project to and we’re with our deploying continue know really we’re businesses the our to does optimistic profitable in excited we’re number existing are a all participating and big of us. pleased project. we’re growing of on cash progressing for We’re our

Mike Harrison

talk particularly seeing, you And the about dynamics tungsten then, was if that within competitive wondering slurries. can you’re

changes entering You entrants about you’ve had new potentially some that market. in slurries tungsten seen recently? people talking Any or

David Li

the really environment. its Mike, Yes. Dave. Thanks Yeah. competitive in has question. for Nothing changed the

if about others, feel there memory think surprising to in like I segment position We feel but really given good to the innovate of the the that into continue area. others our especially success, we to get trying is environment. not changes talked we have competitive no and really our

good about really positions in So tungsten. we feel our

Mike Harrison

could And player owners the or in and me you sale Electronics hands with comment on question you another view new of Maybe a is if combined a them concern as bit last thoughts any the out they maybe about it is the potential Thank you. and little end business? how competitor can a of up talk that for Imaging there? the DuPont then,

David Li

has closely hands, right. first So business yeah, know business not that following we and we’re changed time obviously that that that the well. It’s

on business I Dupont. I think to pad Dow it I we So and their feel demonstrated last the several, grow focus what went going years. expect business we've the think And through those business then several strongly our if transitions. would Haas ability to throughout changes. pad our But out think forward really I obviously now that Rodel, they've in and started Rohm That's and kept

it's closely. watching So something we're

on sort pads dynamic business Dupont space. specific see business the been in just several has I the especially times. of think we and since that have competitive continued that really again changed a within going the hands the changing it's consolidation don't that But acquisitions

Operator

Silver David C.L. from comes question next with King. Our

David Silver

So I few have a questions.

a to little odd. wondering fourth am in charge took or kind the income and write-down about admit treatment broadly first I model, first cost fiscal guess of my is wondering And still the The going what one couple from and there wood asset scratching Scott was there XXXX a to actual, just I that line. sold talked But of quarter on one modeling perspective more were goods I I the know are of impairment wood the the quarter on business. statement head. my am of big But if a changes for of operating I of business I treatment is effect the mean my quarter results. my I am your in upfront you just business XXXX the be just disparities comparing fourth some

or were you some fixed SG&A for In been couple of is costs or removed some of How, way discuss other things. in there but words there that maybe quarters to other there the were have qualitatively any that? past in

David Li

Sure, David.

charge yes, not we quarter First, fixed that last assets. not was write of down took assets, tangible, intangible a the

our at books scenarios one by calendar time. end the reduces that the is we announced a that's exit the our business when of to of action we on initially and the by or indefinitely, So on business end to there of potential the was take valuation certain the business as on fiscal put a would strategic the XXXX value run the expected plans books we once that that

charge assets. a was non-cash quarter related onetime fixed last So to not that any

there's financials that So change in the going that. in or first structural to anything business forward no the quarter after

David Silver

no So your… at you're can't just saying modeling I'm I good -

David Li

No…

David Silver

Okay.

David Li

glad it. I'm raise not. I'm you

would anything right. if and business that some a just previous Performance to I in Now like the further we've said the we The business business. previously, wood mean, dimensions area within it's you're DRA. slower today have adding something Materials growth It's comment listen, than say I I'm about given

the rest - to The segment to We're profitability business. and with continue the going run it. is it optimize we consistent the of continues

the business. our and with to and working sure is the contributing supply our ensure cash is customers running business that get to ongoing and But priority to it’s make earnings in contributing is our best possible. operations the we and Our to - flow work to company. we're in outcome to customers the it’s meantime with continue within our The

David Silver

about wondering morning. and it last night Just this

there I about the business. Second question pads comment highlighted, would good picking - up But, then be questions things. And am end then on is David’s business legacy two but some many about of that on it. business. In One the you about pad David’s new some that are about sets, our comments takeaways right. some nature just the of I’m wins. the competitive perspective wondering of words, And if pad preference indicative from about a industry are in for other wins shift

or had swing And be different in if you’ve the power interested metals. different whatnot industry towards materials then, of be newer material, that any wins I’d deposition also a or would way indicative of shift in the

point legacy Thank you you. would trends might away? business characterize new addition or pads the some take business? of key one in how pairing some then of two What wins business your loss qualitatively, might we be So and the development the this the some with of at

David Li

Thanks, David.

So legacy we I one We saw if into for each in wins in really memory, saw go nodes the and logic in detail, nodes. wins, base. pads and foundry broad advanced and

real So from customers benefits our just that base I solutions. are think pads. finding on proposition of our validates it and broad a And value

across proving set unique also that asked of that still legacy there advanced use are consumable that’s nodes. the are together, seen we're and is the think the if customers You introductions early out we slurry getting have you but more more are the and with advanced kind pad Yeah, been in about really more and bringing technology together, and pad both developed - and performance they’ve together stages. wins where we’ve to board slurry because both I the

David Silver

new other maybe - analogous, versus Thank a for so towards or for - that that is be business say to slurry commentary you current or business tungsten just are or last your business a for automobiles of question strength the IoT materials dielectric than emerge? would would expectations on color the once mimics starting last newer maybe you’ve or think ask mix your talked book there to be and book-of-business again but the traditional just you. terms might of your new again tilt then, And anticipating areas I in somewhat that would other representative mean, would metals you you’re in about, the say your again, materials within your other or XG

David Li

Yes.

with lot starting is a activity the think with build-out. I obviously of excitement and just XG, there XG

requiring and advanced I think most types technology today new chips. in with very stations technologies. devices, not strong - technologies devices. that’s We’ve necessarily of positions new bay enable consumer like XG that Obviously, that of the that Our - is legacy most

I confident very advanced think a and everyone going quarter foundry. those advanced more handset later have in that’s think or was what drove this that fact logic and our growth advanced technologies. some is and in sooner XG positions logic excited And in to the advanced going of new memory, about take growth and we I that’s and to enabled is are technologies

strong foundry well by into that push and strong quarter as this quarter, driven was was last Logic advanced it technology. and really

to the technology as our there. advance feel technology good you’d leader and position it really the when as continues about expect we we So like

technology from nodes. and those equal and the of covers advanced of So contribution actually legacy sort XG spectrum

David Silver

of fact Right. a you you connect Yes. and my wording for it. the appreciate thank in my question wasn’t precise dots asking for I Thank In was question, you that. couple me. for I But to of that.

Operator

from G.Research. Rosemarie question Our Morbelli next with comes

Rosemarie Morbelli

the pipelines. a anything material. talk mentioned was you are Growth - growth the use didn't wondering can just DRAs have of little to I pipelines, I you And see beginning in the more bit the, performance if old the you about bit also but of DRAs, as new you and specialty lubricants. about little could a mention

you So could talk segment? bit a that little about

David Li

Yes, Rosemarie. sure

piece services obviously So the that we're much we really the what's pipeline But solutions that to And growing to smaller It's is yes, we portion portion. those DRA of strongest. also the the consider the dealings sort the critical providing around of been providing critical that versus and business are DRA a valves. operators.

a portion there portion of bit into stable it there's called episodic there's when sort or be it of more we the there's where more an little field to upgrade. tends That be out of - that's business to needs more get that's a issue and an a

have going good we strong drive they that's we growth our really don't as feel - to been. not about have feel there. but like that's very the necessarily we are DRAs going We So solutions, like positions drive think to

Rosemarie Morbelli

the M&A selling for in regarding And selling particular or on the - progress any following company? that, applications? making segment that of lubricants could And any are touch it other segment also there potential - are you if you on industrial those up

David Li

area, there interesting we That's at Yes. an question. acquisitions. we’re We're do but solutions pipeline this looking to opportunities portfolio. through strengthen Obviously, think the opportunities into always newer strengthen to are

and able being pleased would So widen we've opportunities been the we're those to that aperture looking we as with others. at any

assessing to of that to and best value the opportunities just course, to in technology focused larger in there's company we're about we're range pipeline they strengthen bolt-ons a ones on of strengthen always number our the kind stakeholders. and what terms can provide we going position, of think the think I our is the small that ones of from our opportunity and of terms be

M&A and pretty assessing always point. good we're So this the it at looks pipeline, opportunities

Rosemarie Morbelli

mostly mentioned Electronic - large And the Materials at when as ones category? you in looking well would large ones be

David Li

our a preference customers the define be channel. something different building us know asking it energy products our to and we've think That’s That of in always well. where our preference can Yes. more our obviously we that we XX% space very support. for because I lot would are Material. And that and resources said business is we’ve really Electronic time in What and is spent up of

it natural. our at that risk. outside If further faster rate to would an The space, that’s the very has be of would that our then it’s to So the compensate growing probably be core to competencies electronic primary and something materials additional complementary be even focus.

Rosemarie Morbelli

terms you a address cash quantities it in And selling flow with can us your you - and spend it? me large of once you profile very out balance generates update that? hit you also sheet has either to the margin it. your of going walking back my which Can do Penta, as memory serves strong once If where right, something business or to of will

David Li

know business following you know I it Rosemarie, Yes, well that very years. for many

that You know is business is profitable. that a

build dynamics doesn’t just would beyond our to XXXX. the that last a growth a just transition it’s slow terms have about be sustain sustain mentioned of of grower. for. not required of Scott the more the it that of the end plans looking talked we’re in It’s kind the to decision And quarter, it As needed that’s what to business we

And there's there get update of So, still and sort normally plenty business, have to as business we transition. customers with that through and we'll give it material continue on we to of those the can transition working our mentioned we work now if to we’re any wind out change operate wanted continues the that so of everyone right to course - time down. communication that that to Scott

Rosemarie Morbelli

And lastly, you, David. thank

Colleen Mumford

okay. Rosemarie, And Yeah.

the some left more and five the more call. We line about have questions - we on have actually minutes we in have

if back queue we time. would had okay we be put So it you in and

Rosemarie Morbelli

Absolutely.

Operator

[Operator Instructions].

question from with Krish next Cowen. Our Sankar comes

Krish Sankar

just I for one David. a had quick

One they stack to and from oxide nitrate memory floating layer going to to be your tungsten. of poly go moved the like replacement NAND and replaced gate gate looks with customers might are XXX

from it a incremental your So point I'm be Cabot? kind would curious of would detriment or opportunity a for vantage neutral David that be

David Li

Yes.

or course we're of they're to in to position just say strong above in There's different technology really I CMP. that we're able trying I those get are integration and customers layer get electrics very sure I've customers us working every think we seen with make dye we're XXXx strong that technology. some to that done beneficial very it scheme tungsten, is incremental planning cases achieve our also within exciting closely to because in CMP tolerances that working really, of an with in the have to closely ways kind scheme them. variety and that's to of about integration a they're

that and see positive definitely we a is So playing to our strength.

Operator

follow And G.Research. from up Rosemarie we do Morbelli with have our

Rosemarie Morbelli

any question Well, you for This not holding properly, impact. heard phone regarding I is I If consideration a long. for so into the just Coronavirus. taking are apologize quick

is an during five extra days. waiting to extra to about This What is my that is year you have the you see usually shutdown is an So the there four in Year two New that extra Do potentially understanding week develops? it numbers? what your Lunar and weeks. are is, else week and

David Li

be region certainly Yes. and to growth in future. it's us and that's continue China's important the for Thanks it's and a think us going region obviously, Rosemarie mind on something everyone's for an to I

world, dedicated and In terms foremost, a manufacture our you a service situation of developing in virus, and China might the around don't We and really teams it's we're safety the team. in have especially great where we as China. but customer on imagine focused and of first sales health

So but do trying our everything fortunately, we're can to customer. we we're not affected to in support way, that

Interestingly, as what developing we continuing that monitor are China of and Year. customers produce come the they it's New we've the still out in situation even is Lunar heard obviously to as

this but of It's continue any there and So challenging situation, to a out again, I go make it like environment. even predictions. the under sort dynamic customers don't want to operate seems

Operator

like remarks. queue would in to time. for I'm call closing over management turn further I this at Speakers, the now any to back the questions showing no

Colleen Mumford

great questions interest Thank for is you your for That in and your time all the Cabot you. Thank morning. Great. and we Microelectronics this day. have have a

Operator

today's you for this participation. concludes gentlemen, conference Thank and call. Ladies your

disconnect. now may You

CMC Materials (CCMP) 6 Feb 202020 Q1 Earnings call transcript