Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to the Element Solutions Q2 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

I would now like to turn the call over to Varun Gokarn, Senior Director of Strategy and Finance. ahead. go Please

Varun Gokarn

thank XXXX and participating our in Good conference you call. quarter earnings second morning for

Joining our accordance written the Gliklich; this of and is or me this CEO, Solutions Disclosure, consent conference CFO, Franklin; are Fair prohibited. any retransmission strictly Carey of Executive call. Chairman, call Any Element Dorman. or are in expressed In we with redistribution, FD, Martin Regulation webcasting Sir rebroadcast Ben without form

reflect that will and These risk could make future views cause certain on During are to slides our today's most financial that refer on performance results. at recent under current the from expectations that Please be statements the in actual and results financial assumptions call, SEC factors that to statements a risks subject future material company's we events and filings predictions. uncertainties. non-GAAP not of about forward-looking These based financial of and include and to Please measures refer expectations of Events. slides Investors has section can supplemental release comparable and materials our and U.S. earnings the supplemental release, to GAAP for information to are website GAAP. prepared accordance the found News materials also in for these with differ definitions company's been Today's earnings reconciliations & measures. our www.elementsolutionsinc.com discussion

Ben Gliklich. It is now to my pleasure CEO, Solutions' Element introduce

Ben Gliklich

see the and the our we such we in supply more and of generally sequential the we smartphone indicators third the book entered than We is declined to good market, electronic history. of morning, electronics EBITDA a and the markets XX% Varun, semi-production and believe as you are in in what recovery inputs drivers the order this joining. and recent pleased quarter. severe and Solutions Thank Thank our believe impacted year-over-year, outperformed dislocation market most to Key adjusted you, our electronics for chain Element growth results. in shipments as everyone. reported trough

this position limited the soft certain through dislocation earnings of and advantage attractive the execution, Challenging the highest took countries broader with what our non-electronics expansion to and electronics period growing potential also not were is electronics, value, significantly margin improve economy brink at significant to Europe and on conditions with so upside. the consider Nonetheless, of we did deflation We recession. economic values realization. fastest-growing from Chinese in of synergy cost subsectors ecosystem, portfolio our of in solid

points in Though the improved gross to than year-over-year basis volumes. quarter the XXX we deeper despite electronics. it believe Overall, lower margins call over was we trough expected, second can

our lower sell-through chemistries the our Smartphone suggesting These assembly for dynamics digested. circuit to in our customers semiconductor been their Our demand phone also half improvement orders. ramping continue outlook. board second Historically, drives and this last indicator has reflected mobile in than materials. see for July leading are an sell-in be in fabs. channel has quarters, that We production for been are inventories activity in a this two

our Solutions of a was we $XXX pay And deposition has electrochemical tax to manufacturing complete from productive materials. ownership agreed ahead and sales for and innovation now a or our materially also that historically benefits products transactions in an $XXX million ViaForm semiconductor agreement of completed through strategic manufactured We roughly support. market we to cash to have In improve semiconductor distribution It million quarter. June, recovery. exciting these net two buy from long-standing expected capabilities Element Entegris. estimated

and on lows, which the margin a to and demand we adjusted this and million cycle. high-value low transaction incremental be of annual company's relative we're in and EBITDA $XX off the point adjusted revenue run realize of and increase closing, product We purchase should of existing at over deep line high-quality accretive an this to risk our believe is This upside growth, with The of implies has expect of a feedback manufacturing. future. Based attractive customers reflect trough XX%. CRI from as end excited multiple, segment technology line Early potential execution been the its grow annual in assets positive given rate current price EBITDA consistently optimization million Electronics should $XX to and to our to comparable of of the and profit from commercial earnings. knowledge stream minimal contribution front the semiconductor

infrastructure the developer of Kuprion, a purchased The markets. technology active highly with addresses our packaging for together to semiconductor advanced a leading-edge world-class R&D developed portfolio, brings with associated board technology We and team application substrate support metalization. next-generation technology networks, to circuit applications industry-changing Their This differentiated emerging XG it. complex thermal copper with challenges vehicles, broad electric nano-copper a semiconductor, and who high-frequency and and adhesion for also our acquisition electronic management be in assembly should portfolio, capability including electronics electronics. IC power across

technology exceeded well Customer and to the across our qualification and pace to these each the customer given deep solutions We of and our of is engagement in Kuprion positioned presence already markets. Solutions has support commercialize bring expectations. applications relationships development our Element capability, base. and of work adoption know-how technical this

They position applications. as leading transactions participation in growth the ESI's these long-term computing propelled companies of markets, the world. an by the compelling electronics together, integral Taken high-performance automation other solutions industrial partner increase and to supporting AI, our proliferation emerging in solidify provider and

company's the hardware Our perception and electronics to have dramatically. innovating in improved importance

opportunities. periods it. this believe we an and expect unique and last market environment generate demand of we year to quarter, XXXX low We than often positioned exit such when is uncertainty As better said entered

we markets growth that profitably. positioned Our growth more core electronics returning benefit are to are and and to from

promising leading higher pipeline indicators. very towards are weight in is markets increasing these our disproportionately. portfolio profit growing and is higher These Our markets growth, commercial

Carey? you results quarter will now second business Carey take more through in detail.

Carey Dorman

We see in On quarter can second adjusted sequential you declined quarter. adjusted saw a everyone. revenue X% Thanks, EBITDA a and X, both year-over-year Ben. the currency our of constant results. summary to first improvement Good XX%. and financial relative sales declined Organic EBITDA morning, Slide

expectations quarter impacted in PCB Our demand electronics in by broader and segment year-on-year key the markets. decline the Despite continue consumer environment were deterioration X% organic a end we market. entering the Electronics to softer China outperform believe the and smartphone in sales,

double-digit X% offshore as Specialty and industrial in demand Asia growth Industrial declined in energy. offset Our organically business soft

million In by higher volume to constant Industrial margin adjusted pass-through circuitry segment prices. metal in points quarter negatively sequentially. Our of EBITDA margin year-over-year. XX margin by was basis semiconductor second declines and partially impacted offset declined margins Electronics improved X% XXX adjusted basis was $XXX EBITDA terms, adjusted applications, currency to higher and positive Adjusted XX segment EBITDA XXXX. margins currency reduced EBITDA improved the silver Solutions from points mix first from as relative QX synergy pass-through to constant sequentially in metals well and were on as ongoing Energy Lower as margins realization, pricing on points prices due a basis deflation. tailwind quarter. input modest tin benefits such

would adjusted Solutions $XX the in quarter. our in of our million Assembly business, impact the pass-through metal been second have XX% margin of EBITDA sales Excluding

organic on On net Slide additional detail segments. we share our sales X, X in

in the consumer material and Electronics For phone most had demand segment, impacts electronics mobile quarter. the our

electronics electric in power vehicles. automotive Our remains business applications resilient, particularly electronics for

and automotive reliability for by Solutions driven X% less new traction in growth is use grew business The the markets. with new high alloys driven smartphone business Assembly end by market. organically, assembly

production of XX% end organically smartphone as year. as as last declined weakness the the supply and utilization volumes Solutions PCB fabs. across weak persistent Semiconductor Circuitry organically, overall seen reflecting continued in years. at chain mobile market we from meaningfully have levels the semiconductor lower many reduced solutions saw XX% was Customers

several the are than largest reporting decline performance suppliers seeing are than from in quarter QX. data of greater boards printed Our we second XX% is better circuit

data Additionally, cloud we strong half a products that our against in XXXX. disk first comparing memory and in particularly of the storage benefited performance of period are computing

We second both and customers disk suppliers into expect half memory demand improve XXXX. from the smartphone in to and

declined quarter, global industrial construction prior from net and declined demand sales slowed Industrial and X% second as markets in year the year-over-year. organic Industrial For solutions organically in Specialty levels. X% strong

business Automotive sequentially. Our is the in stable Europe and relatively Americas

regions. participation in Chinese Our lags local chain other in OEM that supply

the benefit So we have full in not of China. recovery automotive seen

strategy actively. pursue associated their that largely EV with It chain and supply intend opportunities a we specific in is and a to large that market. have untapped We market opportunity

a has remained bright quarter the growing spot, Solutions with and rebounded to XX% take Energy activity continue organically in drilling sales production actions and effect. price as

first expect which in the quarter. a $XX win was $XX demand progress, This and addresses projects primarily million is previously reflects initiatives rate cash Mexico and in we in in at than spend we increase we for We in of QX. expect the flow comps. business related year. Slide run generated million this than capital, to which experienced half integration We We to free expectations certain Net number sheet. the this stronger to half given new X annual is and working the the business the lower for growth but large forecasted. as expected into the second throughout $XX below for expect balance rate million, CapEx less $XX flow but inventory invested now continued million a tougher modest year, cash growth build first a

the balance sheet. Turning to

increase of million at when including product floating by driven was $XXX rate the loan of was the through year transaction, leverage we The new loan the X.XX%. sequential X.Xx net at term full term ratio which end Our primarily in the plus of This issuance quarter benefit the estimated SOFR funded A. ViaForm is ViaForm line. the

fixed it euro swapped have through we maturity. into However, its XXXX X.X% January

is expect back cash level continue allocation continued Our have elevated our unique appropriate should in the believe uptick net see. but given be seen and modest below above leverage X.Xx, this ceiling second for of the We quarter we year-end. and to strong time, we the capital ratio a by this of opportunities was generation flow targeted period temporarily short to

our until structure until As term XXXX and the a on next maturities split is capital fixed fixed more loan our XXX% and reminder, over years than the B are three swap evenly XXXX. XX%

and maturities remains debt position liquidity our no have strong. We until XXXX,

And turn Ben. to I will back with it that,

Ben Gliklich

Thank Carey. you,

Our is our we but and steps in recover uncertain of reflect here The and are we does it. We've seen recovery pace the ongoing first self-help business. taking have as sit drive half technology of underway. is today, cost The incremental earnings through long-term trough power conviction not we that from beginning investment it acceleration around earnings recovery. are the should to the

for our XX% Circuitry Our it track to increases about hearing appear reflect fact. utilization in we're is July, and on month-over-month business growth orders the semiconductor

begin This to assumes gross ongoing sequential modest also continued a deflation margin For we improvement EBITDA million. XXXX, sequential the raw third of semiconductor and see pickup expect adjusted business, execution. approximately from our of material from quarter improvement actions. impact We $XXX commercial cost in should

expect year. expectation first our about business sequentially This Electronics grow half XX% entering is only second modestly than to the We over year. this half our lower

However, be $XXX to a baseline. EBITDA This updated translates an million off full growing of year million. to $XXX range lower XXXX guidance we'll adjusted

some EBITDA, year. cash free of level roughly taxes cash the lower full for on $XXX of to Given and million that expect the generate favorability partially offset CapEx adjusted we flow

and Element even programs, have potential to full in year remain that wins positioned peaks. production in come applications cost semiconductor our the computing we half, alone for the that second electrification growth and In going their recent context In beyond. the and benefit we let to evidence this business execution enthusiastic With from challenging about converting as is will I'm despite XXXX, returning. effort forward. in come in more people energy with with electronics XXXX from the and in power, and expected quarter we're new our high-end strong expect businesses half our in Electronics, for the online growth Solutions resides far business, our a program, long-term grateful expanding and below that averages, large continued confident The vehicle future their first and and for have and closing, our recovery fabs quarter is emerging commercial revenue be for units

line for questions. that, please open operator, With the

Operator

Josh UBS. with [Operator the Instructions] comes Your line question Spector of first from

ahead. go can You

Josh Spector

Yes. Hi, my question. guys. Thanks for taking

Ben Gliklich

Good morning, Josh.

Josh Spector

good So looking cadence at morning. the – hi,

books So and the XX%. looking cadence Circuitry mean, into for XQ, order up at XQ talked about I you

should back? What fact I XX%, think the sell-in further there, laid about be looking the of what XX% on. smartphone than that it's your slow margin you growth? mind with benefits, sequential out that offsets or are the layers we I up ViaForm in there has some and some less guess, are considering conservatism more been recovery that pushing and gross just

Ben Gliklich

half second of phasing Yes. question. year for in the Thanks is years. call Look, to most the in the difficult

second market that fourth continuing quarter also And units the both cost the so in smartphone in contribute has the guidance still the in will will Circuitry assumes down incremental in the market, year-over-year. it in the in the be third and semiconductor quarter half, third than And a more ramp quarter. actions

our fully not cost should disposal we potentially need we quarters. which guidance in and contemplated that We the have levers at both additional are in them use could

if think look guide accrual bonus about of the And split underlying QX, still and the called recovery. adjust in to more out XXXX compare it could position XXXX, growth adjusted we you year-over-year. currency, half the be a in a third actually quarter equal took we EBITDA you quarter When more and be for as at of third So conservative we in of of QX early weighted. the we're this could time, at fourth back important we're on quarter And more given took XXXX. that or we million to the that $XX reduction note it's showing the

Josh Spector

layering Okay. this Thanks That's you And that. into that year just continue flows helpful. versus talk And what you way a next you're and relationships. in deepen about just that to with to – year? customer acquisition, as ViaForm just can quantify what for

what so think the So rest portfolio? been that broader just And semis do to about of going far? you that or how is how electronics ESI's has

Ben Gliklich

Yes.

two So there. there questions are in

of The impact the year is first current ViaForm.

been a FX impact inventory incremental eroded headwinds, of it, the second timing million headwinds unfortunately, FX we're And Given over by call XXXX. that's and quarter. lot builds, expecting, $X in

a at the from front And leading a we edge line a longer-term opportunities increased to positive. in the has involved call, radically has Combine really XXXX reception So With the the growth of our longer-term customers increased. modest it's those of our seniority company the to some here, we've roadmap rapidly the indicator roadmaps and with improved. end on And people one. has in more and development year. to to important net very, leading perception as the about regard the that's of our have share. wallet we've said and the customer and player the of And customers The this Kuprion very has accelerated. with had those gone exchanges at customer level engagement that has very engagement been accelerated, for

Josh Spector

Okay. Thanks, Ben.

Operator

from the de Your Brun with next of question Securities. comes Kieran Mizuho line

open. is line Your

Kieran de Brun

morning. Good Hi.

Ben Gliklich

Good morning.

Kieran de Brun

am the dial that wondering first if can expectations seems weak little into industrial the of I but to half year. I in automotive particularly side, a just on during has more China ahead the have you know trending, think, bit construction segment. been the of I been

like us can of perspective seeing you perspective what would year in that you're globally that color any give helpful. back So the about an from constructive you're and half be terms and in automotive from industrial thinking how an the of

Ben Gliklich

Yes. Thanks for question. the

construction market increase a hasn't has right? weighted by is coming exposure quite Chinese in China. So equal seen construction. an And OEMs, towards both The China recovery regional The where West. soft We've business, and from OEMs, we're market has the more followed been local Europe and is in remains been that largest heavily of and more automotive Chinese on softened the in Industrial automotive, underpenetrated, the always increase basis. the in Western

offset modest a saw organic pricing decline synergy in That's and taken the so we together, by IS And quarter. second realization. been in actions

had the profit dramatic those anticipating growth in has a second dynamics that a And change in the half. business from quarter. we're second So in perspective, actually modest not

half so from deflation, forth. incremental logistics to margin improvement be We raw to and the expect some half comparable deflation with material first the second

Kieran de Brun

And just you. Thank a follow-up. then quick Great. maybe

that cost those you in little were have that into half you think the we you. You a and potential mentioned just aren't Can be you could Thank additional to year. the pull currently in pull guidance if impact the levers that bit back those should might what to of more how about levers? in dial

Ben Gliklich

Sure.

of And operating company those compensation. T&E incentive expense buckets of marketing like all their one play. are the and hallmarks then when businesses levers And the things not as at growing, are the is the variable of and So models. are

around travel in accelerate which a around are that And about cost so the half. plans modest temporary And those which and permanent order cost magnitude combining we earnings cost growth program, then things will have of so around million be will some there's of $XX savings back forth. into Think XXXX. containment the is two

Kieran de Brun

Great. Thank you.

Operator

line the comes Roberts John Credit of question Suisse. next from Our of

Your line is open.

John Roberts

Thank your of businesses. supply know there Normally might talk of whether the semiconductors? you. increasing other any upstream first of backlog I the being or assembly, between chain. and about seeing across backlogs think is improving have I parts different the the just be you would circuitry equally semiconductors one. don't Are unevenness

Ben Gliklich

Yes.

being in So we quarter. down our talked semi-business, XX% year-over-year about organically it the second

take out you which particularly the down units build, smartphones. circuitry relative outperformance If Chinese of by business, impact impact was inventory smartphone driven it to the below about of was there, local the precious is some metal which X%, in the down

So the July, expect. June. room you recovering say, we circuitry could said, would business semi The in business But circuitry business. earlier that XX% looks is as the recovery, as business, up over one be to greater in the for is

technologies, and alloys, particularly innovation share nicely legacy grow been to which half. it applications. a business, are electronics perspective A the isn't some vehicle the electrification, spot in a penetration a whole portfolio the been bright from stable its we That's expect from there huge which in in we've of really lag. back given higher reliability the automotive had resilient assembly gaining So more across that's has around is high-end business

John Roberts

Okay. you. Thank

Operator

of Capital next Bhavesh Markets. with the BMO Your line question Lodaya from comes

open. is line Your

Bhavesh Lodaya

my question. Hi. Good taking morning. Thanks for

Ben Gliklich

morning. Good

Bhavesh Lodaya

in Clearly, decent for And place you are acquisition, this noted it can nano-copper that the working can Kuprion semis earnings in you your this to technology qualifications you early innings up is comment in in the use timeline take product is of around one, technology. management a on the solutions? you something platform? today, show in towards would Maybe circuitry getting thermal offerings existing

Ben Gliklich

in has leading great of on a been new reception at is It from We're the just and north The the huge, excited all number opportunities first question. we're It's Yes. technology existing couple really, projects outstanding. Kuprion. and working really we've customers around had the even customers edge. about qualifications have industry-changing of is XX here. They're months created of been

but qualification it's And opportunities. they're big so, timelines, long revenue

is all attached EBITDA. million revenue, right? point, years outstanding earn-out of at The to this about It we multiple So to this business because of would of revenue. $XXX of get earnout, if we millions to revenue. at Xx EBITDA, expect growth. capped we've got, it And X.X it expect transaction fully the about to pay of we and this contribute million dollars make of translates margins to a which of all incremental We an that $XXX pay tens would hit

The of all verticals. electronics verticals that's is this other span new into for great and applications our thing material about the this existing

– applications got bright. and get in in die of substrate package attach. IC working ones, said. So applications got customers and each it's attach. applications And existing metallization, with areas, I very It's as is customers outlook got new It's those the in we're

Bhavesh Lodaya

Got it. a question sheet. your And then balance on

leverage higher went ViaForm Your following transaction.

reaching You're year-end. X.X by targeting

we continue the for philosophy to of this long along? what sense during priorities Just cycle? a of have as reach get as there, the you Or Do invested targets. is investing assets leverage your we to you believe you? what want draw comes next Assuming once your right you are wanted come the

Ben Gliklich

Yes.

to that's remain of the and that's moment we'll there. of and half should to from going ceiling, back going expect year, then get leverage the – where Our we're in forward what the opportunistic you priority inside at is be that

Bhavesh Lodaya

Fair enough. Thank you.

Ben Gliklich

you. Thank

Operator

of Your Kapsch comes next with Markets. question Chris from Capital Loop the line

line open. Your is

Chris Kapsch

Good Hi. morning.

the acquisitions. So these some one copper question was of a follow-up to conversation around

nodes like vitalized. technology nodes? here is – with engagement ecosystem next-generation it I'm also if curious So on that it solely for has a engagement Or been sounds the it has focused more is the direct Or play it the technology approach with a is alternative where focused commercially some board more and in display copper? interconnects suppliers materials definitively in to were of across really terms legacy your nodes?

Ben Gliklich

referring you ViaForm Kuprion, Chris... to or Are

Chris Kapsch

ViaForm, was I guess more that more next guess, I I thinking but I is Well, gen. think, Kuprion,

Ben Gliklich

of has display using where lower-end for products. the could relevant It's expensive have of it's assembly of and upside users better existing less technologies used and both. adhesion than of interesting displace management the and to business thermal products, existing are where win for given Argomax we power vendors. That's plan. we capabilities some the end lower capabilities Kuprion the current an legacy is that the electronics, legacy opportunity side and ViaForm to believe do situation some

for there's utilization three growth existing really avenues So with increasing versus customers.

at and significant earnings are is we've third those, three good wins we at contribution got all believe, translates new shot, material. competitive incremental is displacing online, Second And of to nodes which a that acquisition. coming this from

Chris Kapsch

be – Okay, color how of logic it. called fabs. you quarter. on confirm thing. the can just utilization in helpful. then into And activity PCB – just – exiting point? pronounced more that's at sort see is that that some just for is That's at with on, a this this is relevant any out deposition I'm understanding on Just case looked recovering you you got semiconductor – a my foundry your makers chip materials of as harbinger kind rates follow-up could if And improvement second fab

Ben Gliklich

Sure.

supply chain So to say, like yes, And our folks semiconductor materials applications. our as chips in towards logic flow. don't skew

chips to So the electronics that more they're into. – the for hardware made, PCBs to more need the are made being going be

July our do yes, for leading it's believe circuit indicator that's numbers. contemplated so the industry and board evident a our we and in guide And in

Chris Kapsch

Right.

any all. you. visibility, overall this that weaknesses Thank finally, if ecosystem? if materials tied that has sort really the don't around – be demand have of curious destocking then to or your know for and Or in into inventory is any activity at And build I you could visibility I'm Okay. there but not feeding just

Ben Gliklich

Sure.

at customer materials stocked level. so the our And not are

digesting have our quarters, We been stocked been goods year customer business. we've industrial the that. smartphones. two last past in has the from third Some been at And in the of that over our sell-in less level. sell-through quarter saw than customers finished And

were And to XX% they And reporting – fabs, PCB we inventory down because starting second so were believe inventories at XX%, if smartphone look much as that that's example, dynamic. quarter. be very for finished goods, they're Asia, elevated large in why right, digested. you and the the is that in numbers quarter inventory the of largely enter third is dynamic We improved

Chris Kapsch

Thank you.

Operator

Your with next line Jon question the comes from of Tanwanteng CJF Securities.

line Your opened. is

Jon Tanwanteng

morning. And my then into some good questions. business. from in more your QX. do orders trying But semi I Thank bit forecast more at some direct demand for cost maybe firm in seeing demand dig I Is cutting hand you're improvement on well. have that you a a could the looking you the and in as guess QX of I on side. wondering I the confidence pocket – was and maybe from just you more business or you the head was as Hi, ViaForm expect I'm taking into if the to accretion little your on the your XXXX indicators based that sense into get more customers? leading sequential better

Ben Gliklich

Yes.

be isn't in is fall and will to on concrete actions quarter be taken fall going knowledge Jon. to QX third basically the that's framework going fourth be with And going the more And And visibility more the guide. half. for the business, a half fourth going to our to the quarter. what's It's right? we're So, than elevator. now third comfortable conservative ramp that basically approach what's right cost a second with the a thanks slope. quarter for to second question, semi hard our we're But to going that an we've to cycle taking to and quarter, third be quarter in in So the years, all the impact the limited. It's it's short the

Jon Tanwanteng

expect do share? business, more years? have you. that with and that just to going I But sharing on me you do ViaForm you you opportunity maybe coming the understand product quickly Okay. development internal Entegris Great. in maybe in there business you other marketing just help then of you the a maybe probably wasn't Thank that help specifically know maybe doing are can And targets out grow and some to up. can can some do? foundries stuff lot new there's of that Do how the the that that you what

Ben Gliklich

Entegris to coming great partner from for increased new this which X ability happen nicely competitive over was a period. which are and us The really then XXXX growth XXXX from and for XX-year years to a fab incremental our opportunities semi months immediate come many most material, utilization. XX business The online, will should cycle. grew in is into fabs display

the market. have to bring to And so to new been – and then should and there's incremental innovation where we bear have innovating product around this technology

in competitive the and of driving earnings fab growth wins some the benefit and of new from the beyond fabs contribution be increased should should then and that, it introduction. online see XXXX, we So utilization technology coming

Jon Tanwanteng

hit there? so? today for just just then long-term before, out happen you environment that, What give seeing level, you've was of you're the needs And the us and years on put EPS update but couple you we've high I a at we're to Great. given could the wondering that Okay. next in about an goals over kind what talked to of this or

Ben Gliklich

Yes.

from business But in a XXXX. become from is seen recover that what back So XXXX can obviously, very earnings capital very behind the can rapidly. that we've And when things this from the early straight-line available. interesting is it introduced we goal in power perspective, trajectory allocation

a going participate look and were to hit If opportunities contribute three was going the years line. middle deploy to next XX incremental we're over and very thought and year, we substantial the we attractive in the have at XXXX, of to sitting goal So we should did we little the to there chance drive trough flow later. back so our months bottom recovery cyclical that cash in from margins

the though in is hope deliver, So steeper slope we little confidence or stand lost from have we our where not even ability to today. a

Jon Tanwanteng

Thanks, Ben. Great.

Operator

America. Your comes Byrne line of Bank Steve with next of the from question

Your open. line is

Rock Hoffman

Steve Hi. and just get little Rock for on and electrification. This is if assembly to to go Hoffman I see wanted back a vehicle Byrne. your I business on detail your penetration more

Ben Gliklich

Sure.

provide electronics, in and for very got and power vehicles. electric we those for we've vehicles. range speaking die-attach a reliability material high-performance for And that application to So that performance, used both world-class materials for improves package-attach

vehicle have they're engagements look with We in electric China, in this of because fanfare being that actually is you not slightly material. lower still still development relative modest using in penetration electric legacy vehicle lower the bear this are but performance another technologies the lab China Shanghai around much Our in just an and at to And When Kuprion growing market used. providers that some legacy to need. performance, emerging opened applications much the companies to acquisition still and cost, really brings strong improved of technology world. leading meet to most of product

But technology position about and understood tailwind, as about deployed. grow. that even units benefit in be disproportionately pole assembly business. as talking our other talking So electrification vehicle a businesses. And significant I'm the to and and is not better as from our we're therefore, units will the grow just I'm

Rock Hoffman

to And any if progress wonder Thanks. internal updates and cut I could to your initiatives regards on provide there. the in then growth accelerate costs. you

Ben Gliklich

Yes.

something manage all there that actions ongoing accelerate OpEx the business in this the other growth been has and then cost variable into is to nature are XXXX. unchanged. is of the So to reduce some times going The appropriate And cost. activity

but are Our all around actions one very our will none are impaired, the to talented cost strongly the therefore, And We have of is our businesses we view we that benefit margins is that's opportunistically. reduce significant that the recovery is businesses of our our retain feel costs, the over world to impaired. if inevitable. view people from

when so business the are targeted, permanent targeted And cost cost cost The ones frankly. not the temporary just and the of we're actions out formulaic, falls growing. actions are are the

Rock Hoffman

you. Thank it. Got

Operator

David comes King. next Your Instructions] [Operator question with CL from Silver

open. line Your is

David Silver

Yes. morning. you. Hi, good Thank

you other other end of a questions. line of across In very be But control discussion ViaForm addition. where X And did full other front strategic the then firstly, it with into And been last lot guess, of replicable how you to there distribution more your just years how with couple I'm the I or there where now? are of So you advanced the that board, broadly, agreements wondering kind circuit couple be, wafer the right high-value looks balance intersection. a do relationships about to, as and in your maybe might this words, attractive transactions know, portfolio. has products bring A packaging acquisition. of maybe could to these me, your like the X here regard as But like from ViaForm? the is chip, you'd don't maybe I think to convergence between point now the maybe versus

Ben Gliklich

questions. those for thanks So

we the a was around Element a So legacy the to that sold you rights XXXX. line arrangement situation had if unique ViaForm in where split and will, distribution predecessor to responsibility, product company

like where applications for there great can we footprint to teams been because help That's capabilities that with opportunities emerging commercial and we see there to and technical said, create to at. typically, them don't that provide win-wins. I have our so identified opportunities supply may direct like this bring value and leading our go commercialize to more chain and something more leverage technology looking having believe be this. that been the That we've we been have opportunities technology companies So engage

we're we and sit this assembly. packaging right, to benefiting that line from. end semiconductor, powerful, and next-generation in really convergence, that very circuit end front trend both one And regard and in capabilities markets bull's board and between very powerful have it's capabilities With we our where of capabilities in eye, electronics a nicely and

largest we And when our product the bring we're at of to P&L already. bear it in the portfolio and and so electronics breadth the fabs OEMs, our capabilities. OSAT they're stunned by And semi seeing OEMs,

And time numbers increasingly supply the that in that it's If for semiconductor unique is has of very been. Element in It's emerging. you that look long our at regard. are the it we've businesses by a said bright other outgrow business, set our just future capabilities Solutions appreciated have at than the we that a chain. it will And

David Silver

that. for appreciate it. I you Thank Okay.

little customer your not footprint a Kuprion but strong more Analyst leveraging purchase on But ago, bit your I and its global Day, acquisition. or Just you how Analyst relationships. last talked your the two Days think one about with company

working company's commercialization? but example attractive You'd words, be an here? of buyers? of technology use emerging they than other to a bring a In attractive, sense technologies skills to your gateway number around something to it complementary could kind and where an have partner to is apart. that that? got point where success then together And Kuprion for as that shopping you it assets with of work Or And greater of transaction, been in-house? while Is the the maybe made kind a were them this this for

Ben Gliklich

study us that. the Kuprion with to us. company. case because had a And work they we chose were – They work only in and it's with is chose Kuprion alternatives, Yes. to

electronics. only metallization. for that we've be of in circuit assembly potential The capability substrate capability a just needs. that IC So already. preponderance capability were at their they their got potential power us in their got this the the material all company things We that were new customers and part We've And are applications, a for most used where can die-attach capability the customers has buying for was looking right? were in emerging things board materials, are from

of it's And so investment. we for were that match, a study a perfect case type and

Operator

closing to I'd time. over are Ben this to remarks. turn at call no for further like Gliklich questions the There back

Ben Gliklich

a joining. Thank We many you forward to look of soon, for much. and great you day. Thank hope everybody very you you have to seeing

Operator

call. conference today's concludes This

disconnect. now may You

Element Solutions (ESI) 27 Jul 232023 Q2 Earnings call transcript