ATC - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to Atotech's Second Quarter 2021 Earnings Conference Call. Today's speakers are Geoff Wild, Atotech's Chief Executive Officer; Peter Frauenknecht, Atotech's Chief Financial Officer; and Sarah Spray, the Head of Investor Relations. After the speaker’s remarks, there will be a question-and-answer period. [Operator Instructions] As a reminder, this conference call is being recorded and your participation implies your consent to our recording this call.

If you do not agree with these terms please disconnect now. you. Thank like call now to turn to would over the Ms. I Spray. ahead. go Please

Sarah Spray

only. a statements as aspects our any I be anticipated our those the over you the of come not contain of be to website. we limit will you, ask to any and publicly questions six revise certain our information XXXX reconciliations everyone Second XX-F Geoff. replay materials, their everyone, differ Good when transaction. that, could update questions undertake months. statements Earnings risks. our measures are between which obligation to I'd webcast you this our factors law. in to A Thank Atotech results morning, we and cause Atotech's Please like referring thank will by note no except for or presentation on that relating and list to of in your analysis Katherine. turn provides inherently included comments website required to to on forward-looking are call, the at available filing by today end forward-looking available our our that Please uncertainties for that joining from the quarter that that, in of Call. second MKS Q&A And subject IFRS to taking with note this We for forward-looking We of statement. everyone remind adjusted will non-IFRS call are Quarter and Atotech that any to be to guided caution We

Geoff Wild

results. public XXXX our as to Good second Sarah. you, of pleased an quarter and a welcome are call. In second we present set morning, to conference excellent quarter Thank our company, everyone,

for as second our of recovery remember, we tempering electronics see our now organic chemistry. trough X% pandemic the our by in is the effect begun further a that especially to trends into half. from secular for into recover continue we rates rest the last the as you demand quarter, of most experienced will strong Therefore, XXXX pandemic. As we was the in lockdowns. those and second the millimeter primarily to the at XG the year, growth QX when of result the QX China high global move the driven of XXXX results participate, Thus, growth packaging. outlook QX the second well we experienced we advanced quarter In which perspective, from already quarter, you from very semiconductor as as a well for you will and is had by wave, year, a by This particular QX consider as as affected look

in and Some future. of these the than stronger growth expected believe we drivers they us QX, will support were into well

be For expected meant that home-driven to strong trends we Asia. the of of particularly of previously XXXX, quarter the to variant that Delta arrival had abate would demand computer in example, second start COVID-XX from the work but in the continues work-from-home

greater products. server for demand In never-ending therefore, our and more addition, search data and customers' to for the demand computer our continue drive capacity volumes

chemistry. the of the quarter Metal as pandemic, a In revenues. two growth supportive as rebound in always, segment in General a is levels of Finishing our review chemistry are level electronics high revenue. organic clearly very trough visible revenue which record equipment future later, XXXX these will for the result equipment quarter from of sales saw last Peter in as the of Now into sustainable order deep we experienced XX% demand year, first translated equipment in the And

helped strong ahead us presence typical production overall our market. differentiated offering well-known semiconductor below remains China shortages, to trends to of Although grow the worldwide due the and auto in

Our in cash adjusted strong business strong adjusted a XX% returning to EBITDA model our conversion a us provided of operations record operating EBITDA. rate to inherent very with flow increase growth from million a generated coupled million. revenue adjusted free We $XX with leverage result in the of $XXX from

As demand, segments. quarter net we past given in for EBITDA are a structure. leverage times our is on demand so of both result a in X.X we to meet we Electronics sustainability-related plating positioned decades In on and the the ended surge focus solutions. this well capital well and sustainable of Atotech towards investment of our GMF products our track quarter, uniquely with targeted this experienced

for Covertron example, two customers. customers with now with a in qualification and is decorative up XX currently plating, For pretreatment process our and running further

to world's PFAS-free with Our industry. our to solutions customer in first the differentiator pleased we the that, our activities. of optimization, digitalization suppressant close, and consumption Fumalock are revolutionary meet energy footprint redefine software solution, The which offering partner first goals. overall very update our it to high-end hardware with innovative an with reduce of to an and a and enable help announce signed of further plating a mist I'd to combination have will I'm addition IIOT is implement contract and integrated unique their industry is a environmental climate-related position like on we the to our patent-pending

Atotech, their to portfolio percentage from broad footprint the a of activities. relatively is our in offering the leader environmental products customers products, reducing our of, small of a terms with tangible revenues of is Although sustainability today benefits

Now remiss didn't Peter, before MKS presentation the with the mention I to over if acquisition agreement, I I'd hand be Instruments.

process merger MKS, semiconductors. of power our advanced to of XXXX. the the billion. leader of is Atotech the focus value for leader global the is of X, of strong and MKS As complementary solutions $X.X and monitor, regulatory have -- technology global reached of control fourth a is control to and instruments, The is of equity systems approval Similar agreement July with the critical close quarter underway they total an electronics that to measure, parameters Atotech, are processes for advanced in especially for process transaction manufacturing on customer a a key join markets. solutions Board and expected

MKS, will expect review provide it innovation questions groundbreaking And questions. acquisition Peter that note Sarah that for hand solutions. financial our to Officer, MKS can't to as we a we pertaining joining continued And We Frauenknecht, opportunities for our today. with after address now and collaboration, take to over will Chief I'd additional like of with Financial results which please the mentioned,

would you limit quarterly subject we if grateful, questions to please, our could your So Peter? of please the be results.

Peter Frauenknecht

continue markets. very of ahead achieved grow end we QX, Thank our excited review you, record our everyone. Good Geoff. as to I'm results morning and financial to

Slide X. on start Let's

XX%, which key affected at last of address the $X slides. second price by was of trends, our revenue year's well million, growth. will drivers rise FX later contributed which year million. the revenue were the revenue prior in quarters sales seen heavily The quarter, continued by the total positively a and the principal large are X% an our impacted growth remain Geoff including chemistry organic line For behind rates of tailwind increase and top To shutdowns, recovery an while equipment I result pass-throughs. degree, two high and highlighted, GMF, the from dollar X% our COVID-related to of $XXX US XX% for Palladium secular $XX benefit plant million a a palladium as as which growth our segments detail the weaker our to strong from over a on

was XXXX, our we the equipment effect Looking as business from product increased profitability, well palladium our the that inherent basis leverage as the the the see our points elevated XX% of first margin model, prices. to higher EBITDA the as freight quarter noting, It's our into and XXX chain Similar margin XXXX, our and of can gross you disruption the in despite compared the to by sales adjusted of quarter adjusted from affected material adding margin. also XX% in leads supply pass-through quality our expenses of operating industry by second inflation. to higher worth negative high mix QX dilution EBITDA

gross the in X% to impact anticipated on we our as able were sales. to May, below we keep margin However, of

abate, be pass will ahead share, third XXXX, the continue Diluted efficiency second freight these earnings we persistent effects, procurement begin for raw although Looking our anticipate cost increases material per to to counter was on on to we will will the and To costs the work costs continue customers. elevated. to quarter $X.XX higher that to quarter.

the You the of quarters pandemic can see the most of $X.XX the quarter of XXXX. loss analyzing second affected the effect COVID-XX profound in recovery the by versus in

As announced publishing May, in an EPS. adjusted we're now

pro second forma year had quarter for the here, book Carlyle. of the EBITDA period taken adjusted the the the the leverage. the value, stemming by can from have of shares the adjusted our same with rebound based expense, too effect the on EPS And elimination operating see as the adjustments share. of strong XXXX addition number XXXX. adjusted The was is of EPS We we prior you acquisition of the increase in our as same amortization and $X.XX associated for per in with

detailed You the adjustments in explanation appendix this of will slides presentation. of find a the

view Going forward, earnings we will capacity. of we which present adjustments, our an believe same accurate apply the

slide to Electronics for a into X Let's look results. deeper go the

impact growth to million favorable revenue revenue chemistry Electronics very was in and of in semiconductor-related for by quarter, as year-over-year. This the increased X% continued $XXX an the strong quarter as second in Our XX% X% growth performance in businesses. of sustained Electronics high-performance growth underpinned a well be X% organic the Organic of translation. FX from market included smartphone PCB strong total palladium and with in in result benefit the growth the XX%,

seasonality. patent been unfold. mind please May, the As Work-from-home some typical this see in third mentioned quarter a and in keep to into are shifts fourth it saw created quarter. laptops and well-known the in XXXX anticipated that stronger said, in pleased its launch product growth we for shifted OEM That demand has

the with outstanding full XXX%. for stems lower rates for the a we effect we another equipment base may The in demand we smartphone sales organic demand transition first up outlined of what previously, from half compared manufacturers the revenue As to the XG quarter, to this enjoyed high have reported cause Electronic with quarter mathematically, sources growth XXXX. the lap computing.

organic the $XX are to year driven Electronics $XX lean the in over is points, the by robust and generated adjusted product XX million next-generation in Margin demand. primarily prior a by pass-through. volume palladium or from the period, demand meet the XX% quarter, structure. quarter, seek growth, offset partially as manufacturers and volume and the of which of consumer in reflection EBITDA organic high Our cost was improvement strong XX.X% PCB machines high effects basis sales up million our equipment a growth OEMs mix

from palladium the grew now. revenue organically revenue to low perspective, rose organic X% million X $XXX From chemistry of equipment an total a and XX% XX% grew impact tailwind and GMF growth comprised from slide to XX%, revenues mix Moving quarter, in a a XX% positive of FX. base. from second XX%

this is the said, of Geoff of heavily the annualization affected partly COVID-XX a reflection pandemic. As by rebound the quarters

producers automobile due capacity also full below We intact. high-end applications that is to the demand but than and were are the observed environment still operating stronger shortage, expected. construction Automotive semiconductor

So into the we possibly strong sustainability-focused XXXX. being and experiencing meantime, In outside the for solutions. demand demand wins promising even out that our believe is also simply pushed auto market are project we

interest earlier up -- for have we in seen increase As Geoff our products. in sustainability-related an touched earlier,

our preparation worth investment. this many development rests As opportunity meet that and on noting it's of years CFO, to

more nearly cumulative For over spend on $XX Covertron example, has been for million a spread the the system than R&D decade.

a disruptions adjusted back path look the strong was higher the worth offset in million recovery XX.X%. of the $XX to by we're the we the quarter chain freight The GMF mentioned EBITDA margin margins. to margin hit leverage, now adjusted is and result that to The adjusted earnings, growth our adjusted the effects and similar the operating noting in material as partially and reflects As expenses to normalized well-known of XX.X% supply inflation. EBITDA thanks higher it's EBITDA on

seasonality with of of efficient cash debt rate flow Let's greater our to service million a long-term well cash working our of line [ph] coming XX% The with CapEx more capital in now have of XX%. adjusted move a working was flow generated our typical was which in the cash before with X% strong capital returning free as conversion of second that majority as half efficient we of management the at second Please the targets strong X. $XX to flow function We slide quarter note than revenue. also to CapEx year. revenues the in our

expectations. So aligned revenue spend although a the internal our as guidance, than was of full percentage lower our we're with year fully

a and at million of had result end, a quarter $XXX credit facility million cash revolving $XXX As available. we of

when supporting a and are future proceeding to of planned financial repatriation a our sheet So growth. in level comes liquidity holding flexibility, as total, particularly million. Cash balance $XXX for efficiency at investing it

a were affected end XXXX further COVID. well X.X due quarters Our way This our That our also net quarter our supported by cash net improvement the of the times, the structure first which capital times of said, expected targeted and improve our versus the times at significant by the flows, our by our leverage we'll to to of improved leverage. to X.X leverage times is should to end we cash on taking XXXX. level net partially annualization be XXXX of of generation X X

on Moving to X. slide

the to In revenue. once QX beginning support raised again performance XXXX, our that to raise and having range our in expected range to we it of XX% demand the guidance a us trends expected of our underlying yet for pleased XX% Turning And our range. XX% we to total allow again growth May, are guidance. of that raising XX%. to I'm strong

$XXX to the electronics forecast range as in in chemistry, lap mentioned revenue extremely moved I $XXX a million, the our GMF EBITDA the the reflects Coming and earnings into fourth percentage and organic to strong million half key now year the mind for quarters percentage XX% growth to of indicator previous This chemistry as keep start increased between year X% of midpoint year, XX%. growth and point quarter to earlier, to some a adjusted of for operational take one the more to As our to to at additional compared our performance approximately please discipline of in This an potential our chemistry points confidence guidance adding from million X% for up XXXX. second guidance. revenue the our revenue three that moving the cost we we to allows expectations the XX% particularly well in million of full full growth, full represents We the expectations for $XXX XX% a organic high-end of to to $XXX range our growth. growth improvements.

as assumptions noted underlying slide. Our our guidance for same, the are on the

Our year XXXX. CapEx at our guidance expectations. remains in to in X.X% X% of total with unchanged full We're approximately sales line

and our facility, New digitalization major are investments on Our focused Mexican initiatives customer-specific projects.

May, the expenses to confirm, based the our in anticipated million costs year. capital we for refinancing include that refinancing onetime interest you our activities. This to to new communicated for interest on the we normalized Therefore, and is As not And $XX activities. guidance $XX range for does already related is our expense anticipated million structure. be between

adjusted income which unchanged rate, XX% should be at tax income our includes Finally XX% our of withholding and to around profit. operating taxes,

growth high for expecting With recovery range. third Session in the Looking EBITDA operator. organic in we can forward to floor effects in of and total keeping questions, think single-digit we growth, the Question-and-Answer growth of open the confident adjusted feel I and quarter XXXX, pandemic the revenue mind that,

Operator

And Spector question Thank our Josh with first Instructions] you. from comes UBS. [Operator

is Your open. line

Josh Spector

guys. Spector. is Hey This Josh

change curious, sequential you on just change but, I So, was sales $X million. up Electronics, metals EBITDA assume up could granularity is if only portion the a that, and so decent $X some of provide EBITDA chemistry around in were sales million.

at much all about heard the costs to-date. haven't decreasing across space we sequentially So

Electronics? the So driver curious EBITDA sequentially of what was increase for the in

Peter Frauenknecht

Josh thanks.

just take me Let this first. question

all, growth First mix and profit our pricing nicely effects. we good of into stability, maintained converted

cost and In materialize. the run very continue to didn't cost expected addition, a structure we increases lean initially

to And to words, other initially able expenses. had continue we were we cost had much the drive haven't planned. measures, just we in So travel

Josh Spector

with in yeah. additional thinking chemistry Electronics, or when could guess, unique, And And you that that. your to go providers that. clear just common, that for get new win drives conversation, specifically the you just have broadly that's I you something of that ancillary your that often to generally, helpful. -- application? to plus develops? other when Is on Okay. spec you're on No asking characterize in combination strategy, been trying just that's not but further are strategy or driving pretty involved you guys how thinking, Thanks business just equipment about, equipment how kind MKSI into MKSI, comment I'm the

Geoff Wild

Thanks. Yes.

like, But some lower and of have of plating lot in wastewater fine the very lot customers areas think semiconductor been A equipment. those leading meet is the a the I the in by areas in to costs. usually sales Asia. plating our is the at semiconductor end, that reduction is have in there advanced that our gives the driven Uniplate to generic competition it packaging. for been customer One have which inherent two Uniplate And treatment been particularly are predominantly of environmental its a sales Those sales chemistry space like factors. at enables the requirements advantages use of packaging. the advanced line secondly, and and and edge

there share the hope suppliers have which come So is high that Josh. mix, at why market compete, and other equipment have end equipment of clarifies I that part very high is opportunity that we there we -- for a is very percentage to and market. chemistry of in and at less of

Josh Spector

Thank Yes. you.

Operator

from of Bank America. Byrne question with Steve next Our comes

Your line open. is

Steve Byrne

expecting the versus the the that trends I'd be perhaps exterior to on world increase hear Yes, in of of here? ICE from your metallic to here. price interior expect the the you view depends to and what And that of trend really on thank you. vehicle to that auto EV. curious vehicle on or a Is you're decrease region go coatings from use where

that? appreciate would Thank we that on comment you. could you If

Geoff Wild

satin good to use provide the finishes the end chrome Thank like of a which because higher coatings luxurious finish of attractive the the of market see of at you. more In automobile. metallic things general, we

better So, we that market. of do at the end

needs electronic also hybrid are seeing EV the as We move coatings metallic more vehicles. where areas in from light-weighting vehicle into we

been surface more that XX% and we're as and the driven components electronic have about as we're fasteners in plastic content ICE increases now -- involved might metal In chemistry on coated expecting number as additive the EV that metal that's becoming of versus connectors the to example general, For and that light-weighting past well plastic components, components and are due the with. by finishing well.

at the increased of So good there trend end the a particularly general premium is metalization towards market.

Steve Byrne

Geoff And legacy it contain the suppressant. What more mist be your wastewater? generate do specifically does in these unit -- your by I maybe about products PFAS-free this revenues suppressants. that you would the mentioned have begs question it mist your PFAS? from is customer operation they're that used And

Geoff Wild

to is very materials on suppressants meet Fumalock well therefore we're of to I received regulations. a give really Persistent our equipment for PFAS-free are customers containing new Stockholm percentage Pollutants that track clear, -- move now treatment upcoming none sales convention for so can't responsible as to customers derived all auxiliary I'm not where way The helping short-term for world's Organic mist seek precise on customer range the they of solution the the you treatment really handle the strictly the we're of the currently base on being to the and to PFAS materials. we're text by And the to move one But of to the eliminate some which I mist with regulations, is suppressant. minute required. at these the just and in But be pleased that adhered first mentioned able very time. been materials have we we've wastewater

Steve Byrne

you. Thank

Operator

comes Capital with Our Markets. Arun RBC next question from Viswanathan

open. is line Your

Arun Viswanathan

get guess to little here. bit my Thanks Great. a taking markets for on I just more wanted question. the I

there. some of segment the and had So automotive your guys GMF and of kind was due obviously, some to exposure automotive? that Electronics similarly in a Was drove there's was the And maybe -- performance. of pretty it similarly you below expectations? robust And -- quarter that that in

COVID if about demand Did you the that front? demand. on talked so, You else? but anything would highlight little know And what just But cost. talked about the bit thinking better? materialize about I you a

Peter Frauenknecht

and that chip We But that think growth a automotive we in I nice is the smartphones. of better shown in saw in later quarter. in contributed rebound expected, we we the nicely performance don't look regions. performing rates start again, markets I rates. many the all When strong very performance So Geoff saw Why it's we China well. And to have this initially was also growth. on? Arun Electronics, can markets of great We see outside saw was GMF strongly. the business to very good second And also good see at all and growth that continue broad-based a automotive we because growth very grow the encouraging around than

even the from as that work that see the services rates continue fourth the China. to their though, demand that the quarter and good cloud cycle cycle OEMs know, ending see quarter in a of quarter to moved cycle good also computing demand. of we you We in home-driven, by growth one first laptops key smartphone all drives And and moved and

So the all in quarter. a we in which broad-based it's benefited growth second all,

Geoff Wild

I'd think on only I starting XG to drivers that millimeter good seeing penetration, we're penetration. wave add

expected, their their of next better and as supply us we than seen of in through launch which by a into has growth year. the the well upgrades has manufacturers than second expected for outlook half for smartphone of better quarter You've ahead outlook which the first major come anticipated given chain some the

Arun Viswanathan

the that. as more does it's Thanks on next year you guys. unique to well? equipment give Great. wanted you you seeing into your orders also And Thanks. And business, for get that then, to thoughts just visibility -- somewhat just Are there?

Geoff Wild

chain supply on think I strong on still shortages We now. nicely. and -- The loaded some dealing -- fully much components with managing that equipment. We're factories well, stock quite as are our Yes. some pretty

of -- up. good the we've the are Our I and to think much order a China visibility And year. got the out, end pretty first factories the to book half in both second first half next Germany full of and --

to mostly and business Electronics, packaging are well. in GMF driven well inquiries interesting for starting then the by HDI. should driven as some see which But believe by next mostly as recover we we it's year semiconductor So

Arun Viswanathan

Thanks.

Operator

you. Thank

with question next Our comes from Bank. Deutsche David Begleiter

Your open. line is

David Begleiter

morning. Peter, like the be you. at QX good year-over-year? it at to guidance low-end, down on the comment Thank would And somewhat just Thanks cause, Geoff year-over-year. and range? What looking it can wide be looks and down could QX you factors

Peter Frauenknecht

Yeah.

think quarter we good the as have they the the I continue see side, and are the quarter. the OEMs Dave very strong strong chain I Electronics if a in one demand. with not that, automotive trends. we the slightly of you continue we to marketing estimations at third key pretty believe the for declining see driving quarter automotive the look how going stable fourth that, firms, factors trend various started the key the the or for visibility be. quarter. we market market we the And quarter market quarter, there And cycle where a probably still the smartphone n XXXX fourth We rather is said, sure market, market shortages their outperform are despite fourth in fourth to was supply fact a top but

the to comps automotive very, market Electronics see difficult, in fourth well fourth and particularly lot quarter with performing last getting continue in the the year. market But quarter smartphone in also returns growth We the very the Electronics the are more again. XXXX, a

factors. various what So put focus. we perform definitely see into at that on we And the we level, dependent that's are again, growth our that but rates

David Begleiter

for ahead now, in on, you of line for or the behind quarter right And your line first and the top half are just or EBITDA growth forecast QX? commenting

Peter Frauenknecht

that Well, guidance we as the improved our here I you full guided saw year. for

rate wins. for able growth growth And our well, were growth the trends. So strong over year. as just full our year for were project see see of confirmation a we We the going guidance cautious to were calls we with just our into of and well -- last the as the guidance mentioned what rate. quite that equipment we strong we able organic increase as confirmation we increase a to We chemistry

we think I the are more all-in-all to able optimistic just So, we're view a year. confirm for

David Begleiter

Thank you.

Geoff Wild

Thank you.

Operator

with comes Our next question Pitzer John from Suisse. Credit

open. is Your line

John Pitzer

Yes, this I an and letting the the but basis full the growth missed expectation morning year parse out as good for pricing you about Peter think Congratulations can strong thinking results. questions. total how you if of second FX on on help Thanks ask half your me for us about impacts? kind I guys. you're palladium organic apologize

Peter Frauenknecht

as we think of and similarly year. that for applied full FX the I June rates the

change also any use we applied June please numbers rates for FX might the of as But again, total So, forecast. impact year. or rest the the just again them

rates, growth growth see business. for the rates good our we continue On to

getting mentioned I the more before as However, comps difficult. are

of -- to half second The the the business. XXXX year in our China returned growth June

returned as see quarter comps that the that before the there. saw changed in But you So, market we mentioned automotive also the strongly I fourth last year.

needs that of All to be taken account. into

strong very So, business. performance to a our see we continue of

we demand And latest also all technologies to for strong in the all continue demand on continued smartphones good in demand see of see and automotive. areas. We our other

John Pitzer

and of you think share bit as is the answer of the is And question this think you the on curious much you any much structural wondering CHIPS as comment gain do this how I How mean do I Geoff a kind impact see cyclically or the sustainability. your on as follow-up business guess expect I'd Act. electronics behalf? not to I'm could to motivated? my you then of if be And just little from whether you for prospects equipment

to you that going time. I future And to think expect have that back-end see sustain kind Are But seeing yet? sense as is the semiconductor. get migrate capacity front-end that to you you're growth that that here? lot perhaps capacity in geographies of people that I of some helping a over see something in view could the into different

Geoff Wild

Yes.

new being also as packaging. of of the but of during requirements. from by driven traditional have fan-out China. sustainability driven advanced with customers. wafer-level driven some to being quarter type We the of move started some had Southeast very some some Asia areas good the equipment orders We other areas addition It's see It's some outside applications. It's by capacity by like being I mentioned

So, smartphone growing add share these thus as talking and is manufacturers, other it. for by by those starting those our about anticipation that at we're and in market because areas areas starting always smartphone has for smartphone back-end flow are leading driven But now of requirements expansion some that and the packaging. the comes of that like tighter into penetration we're seeing you're as also requirements capacity with see as plating well trends been to was in helping of XG manufacturers. well good front-end equipment see to customers packaging to pleased that which demand the also China that chemistry I'm

John Pitzer

Thank much. you very

Geoff Wild

Thank you.

Operator

next with comes Ben question Baird. Our from Kallo

Your is line open.

Ben Kallo

Could you sustainable recycling talk well? in about solutions you're doing congratulations. there? battery And through and as momentum Hey, the anything the

Geoff Wild

Thank you, obviously, seeing our sustainable from interest, increasing solutions, customers. On we're Ben.

have help broad with range any reducing can equipment customers recycling of We a our wastewater that auxiliary emissions. with and

are customers more or know we've moving as VI about now at GMF involved trivalent solutions going both or although our evaluating tailwind also business of using in you got customer recycling research strong which safer a past acid the are And That's healthy today, has solutions number demand. advantages from future. Peter either in our solutions. materials have driven into and XX We from decade we've for the that finishing chrome mentioned, away in for your to I core moving in a for and area we chemistry into provides battery batteries as of R&D some surface five actively may designed different in spent major we this this into equipment think the projects area. XX% things alternatives. go competencies we that a the latter involved ongoing not is Electronics. it today we in chromic towards And R&D sustainable much to Around like for out this commented both will by it's fact for in point, have look business our On have because true fertile Chrome and a that

at R&D to So battery recycling. it's talk on at really stage nothing moment with about the

Ben Kallo

you. Thank

Operator

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

Your line is open.

David Silver

was trend quarter One revenue thing geography. the I sequential noticed Yeah. during the by

I sequential be about on declines of particular, was were Europe there think underlying Europe in I positive think but business curious and I strongly, both there Americas. the up effect trends. given just certainly was the Asia currency a And top So would in

mind wouldn't you. sequential on of Thank you declines the if maybe revenue So commenting Asia? outside

Peter Frauenknecht

as we growth -- We growth see and in in as were continue were the country-focused their just not There mind both as to to customers able was topics. as again I see Overall, as rates in recovery as production Europe regions. keep said, grow. up we we supply prevented continue overall, to specific all But continue rates Please their that planned. strong issues as chain ramp to US. factory well anticipated the in some

the customers in shortages. some to regions. all rates additional one So overall, had But order growth we week and shutdowns with holidays cope semiconductor to to in two continue see

David Silver

follow-up tiny to just wondering automotive maybe on market. bit. comments on maybe And the Okay. a could somewhat your end more if you just I was elaborate

half COVID it was you. various were of earlier was So was availability second to schedules? the the sources production developing facing this see do from your when you a various perspective, of how industry the I shipping also your and to and normal see others. year, Thank more when that couple port another. were the I return one, from of you the perspective? I mean downtime, mean, there shortage a do taking of But is cited you year, a Logistics look that producers chip of how mean number impediments

Geoff Wild

COVID to mentioned We more are effects as customers shortage the returning not pronounced to it mean, now. is see according chip so still significant. our Peter I normal. The

us with still expect returned for our and to customers normal. logistics out even ourselves to and XXXX. pushed customers we have be have The biting mostly production into for might We

certain seeing theirs. materials, some not shortages are though, just shortages but chip and raw of affecting materials that plastic production, and customers both for our We raw are

with But seeing are we has a we're business there going far think, pattern. GMF the So, I been mixed expected forward. the still -- disruptions so those you outperforming in confident And of market than the that quarter. Generally mentioned. still stronger we're

David Silver

appreciate Great. Thank Okay. very I that. you, much.

Peter Frauenknecht

you. Thank

Operator

from Jefferies. question we Laurence you. have And Alexander Thank a with

is line open. Your

Laurence Alexander

us how of Can through volume, much that XXXX? price/mix flowing when also, just we normalization margins for there. incremental the And think into a on give much because tailwind you how kind effects, Hi just sense comes is of it a should of how about -- sort back?

Peter Frauenknecht

back levels. our Well, business XXXX GMF, if in I to you look we're think at

a you XXXX So, I we ourselves think show levels. growth if compare slight to

to But by you the recovery levels XXXX. think look I So quite on nicely. to is the market if to going probably modeled HIS, they be XXXX back

of the growth years. automotive in be So rates good market and recovery the over we the market a next of continued there might benefit where

growing rate. and years. think again, last nice strong very say. probably years, I over -- that's this the what over our as experienced In the in a or growth we for three continuously continue two also we're quarter-by-quarter expectation will next can good show Electronics, So And I

conversion. was second The on question

Sarah Spray

margin. Incremental

Peter Frauenknecht

Incremental margin.

Laurence Alexander

when recoveries I the topline So the industry of back, comes effect, sounds that multiplier volume? like incremental on but it the there's guess, no what's automotive margin

Peter Frauenknecht

strong we to similar the have increase healthy on margins. a chemistry any other sales market have margin to the think margin I gain. side, Particularly segments, all very we a very quality, convert

we're I with we expect the margin So corresponding improvement of we the well positioned. recovery well automotive with think And and GMF. a market that, see for nice increases, sales as the

Laurence Alexander

Thank you.

Peter Frauenknecht

you. Thank

Operator

another Silke And from with Kueck have question JPMorgan. we

Your line open. is

Silke Kueck

How morning. you? are Good

Geoff Wild

Hi Silke. are you? How Good.

Silke Kueck

mostly was was the say Did equipment the the that comment half for And your booked you next for like or through first both? business that of or business business meant for Electronics GMF year?

Geoff Wild

business, which meant built in-house. It for more was mostly is Electronics the

But, now half that much yes, capacity XXXX. first up of capacity for pretty through said GMF. additional We we on the have are booked I

Peter Frauenknecht

Typically, first volume we But it's the the time. the the we half lead can year. up a that breaks volume to have that up don't lead -- half the second It in and of next mean XXXX. good we to up see it's second much typical time -- visibility the doesn't just of

Silke Kueck

Okay. That's how helpful. versus regions? of is sourced from much China other secondly, And palladium your

Geoff Wild

from from within the our depending that source and on can source main tell three we varies for demand South the it you and Africa Russia and China the regions from that I operations.

So we source from all three.

Silke Kueck

of Okay. like or cost don't? hedging to Do you do you the manage any type

Peter Frauenknecht

do don't we hedging. No,

very a directly the us efficient of price have customers. the our to cost for the we pass as We eliminate pass-through purchase on

Silke Kueck

I you Mexico to an completed can projects plant wondering like update capital was like some XXXX. that to shift be centers. in just whether remain lastly, was a And There give to tech Okay. on was

you whether Just update give spend for what can CapEx wondering is the projects to stand. as an and where those

Peter Frauenknecht

Yes.

and on So moving Carretero. in for as expenditure are our again, beginning mentioned is as projects. digitalization provide to I are geared to us to mentioned which all progressing we from is customers. City is well. the A IIOT The Mexico value, factory previously the is big of year. to next this as end by the able we away project think, Geoff of a text planned finalize capital just completing This for track of year key focus us I key we are that planned our

We internal chemistry Here we external. as immediately to for well customer-oriented And part invest. as is which projects, other the invest capabilities for us the help gain contracts.

half of is we're And second I -- bit as planned. said being little year-loaded. that All a

second to continue are half being of lot to of sales. X.X% going the completed in of by are of year. be And projects X% we So to that range a the we see the

Silke Kueck

Okay. Thanks.

Geoff Wild

there's operator no I And questions. more think

continuous very key everybody record supportive your our questions, end and in in quarter. that's for and the technology from interest just led much So points another like quarter call thank the yet Atotech. to one, call products markets attention investment, for the your I'd in today's if case, to Summarizing and on made the we've your as

to lean further conversion our growth for and providing operating by into I'd resilience strong Atotech model leverage year. to financial structure like growth. over inherent we've strength the In presented invest demonstrated supply ability chain the Despite closing, flexibility the the cost of and of flow revenue profits disruptions, last Our allows thank and and all cash business members the of the challenges our team worldwide. pandemic swings cyclical and

Our has of virtual. we focus not wavered or meeting on the whether and were needs anticipating our customers on-premises

Just looking for stronger MKS event of very With we the prepared listening. end future much to previous believe and including are all as better downturns, family that, forward. the we meet and an emerging the you in call are I thank which being to part we'll

Operator

participating. call. conference today's concludes Thank for you This

You may now great day. Everyone have disconnect. a

Atotech (ATC) 11 Aug 212021 Q2 Earnings call transcript