CMC Materials, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the CMC materials fourth quarter fiscal 2020 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to one of your speakers for today, Colleen Mumford, Vice President of Communication and Marketing. Please go ahead.

Colleen Mumford Great. Thanks, Carol, and good morning, everyone. With me today are David Lee, President and CEO, and Scott Beamer, Vice President and CFO. Last night, we reported results for our fourth quarter and full fiscal year 2020, which ended September 30, 2020. Whether you're joining us online or over the phone, we encourage you to review the investor slide presentation we've made available under the quarterly results section of the Investor Relations Center on our website, cmcmaterials.com. A webcast of today's conference call and the script of this morning's prepared comments will also be available on our website shortly after this live conference call. You may request any of the information by calling our Investor Relations Office at 630-499-2600. Please remember that our discussions today may include forward-looking statements that involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from these forward-looking statements. These risk factors are discussed in our SEC filings, including our Form 10-Q for the quarter ended June 30, 2020, and Form 10-K for the fiscal year ended September 30, 2020, which we expect to file by November 27, 2020. We assume no obligation to update any of this full or booking information. Also, our remarks this morning reference certain non-GAAP financial measures. Our earnings release and slide presentation include a reconciliation of each GAAP financial measure to the nearest comparable GAAP financial measure. Additionally, data reflects rounded values throughout this discussion and in the accompanying slide presentation. I will now turn the call over to Dave.

Thanks, Colleen. Good morning, everyone. Last night, we announced results for our fourth quarter and full fiscal year 2020. Before discussing our record results, I'd like to again express my gratitude and appreciation to our teams globally for their efforts to keep our employees safe during this challenging environment and highlight that our ability to innovate, manufacture, and deliver solutions as well as support our customers has not been meaningfully impacted by COVID-19 to date. I'm also excited to report results for the first time as CMC Materials, following our company name change and rebranding on October 1st. As we celebrate our 20th year of being a public company, Our new corporate brand identity unifies our heritage Cabot Microelectronics and KMG businesses and reinforces our commitment to technology leadership and supplying high quality, high value specialty materials that help enable our customers most advanced technologies and resolve operating challenges. Our new name pays homage to our proud heritage including our focus on electronic materials to support the semiconductor industry, which remains unchanged. Turning to our fourth quarter and full year results, we are pleased with our performance and strong growth in CMP slurries and electronic chemicals this quarter. Our total company revenue for the quarter was down slightly compared to the prior year, primarily due to lower demand in our pipeline performance products, which continue to experience softer industry conditions due to the impact of the pandemic. Moving on to full year results, we delivered record revenue, record net income, and record adjusted EBITDA for our company. This is our fifth consecutive year of revenue growth, with revenue increasing 8% compared to the prior year, again demonstrating our strong execution and the resiliency of our businesses within this challenging environment. I believe one of the hallmarks of our business continues to be its robustness, resilience, and best-in-class profitability across various environments and industry cycles. Revenue was up 2% versus pro forma results last year, which assumed we owned the CAMG businesses for the full fiscal year of 2019. This increase was driven by strong demand in CMP slurries and higher prices in our wood treatment business, which more than offset lower CMP pads and pipeline performance revenue. CMP slurries revenue benefited from continued strong customer demand for advanced solutions in foundry and advanced logic and stabilized demand in memory, supported by the transition to work-from-home and e-learning environments, as well as technology migration by our most advanced customers. We won new advanced node positions for our tungsten and advanced dielectric slurries, and also made progress in expanding our positions in legacy applications. Electronic chemicals revenue also benefited from customer node transition, but the growth was offset by some weakness in legacy applications, primarily due to reduced demand from customers with higher exposure to automotive and industrial sectors. Our pads business experienced headwinds this year, but these were partially offset by new customer wins, including pad and slurry consumable sets that we expect to ramp up over the next several years. We continue to be excited about the growth prospects for this product area in the future, given our recent wins and active pipeline of new opportunities. Our performance materials segment was negatively impacted by an unprecedented drop in oil demand and transport, which significantly affected demand for drag reducing agents, or DRAs, in the second half of the fiscal year but was offset by higher revenue in our wood treatment business, primarily due to higher selling prices. Full year adjusted EBITDA of $358 million was up 7% from the prior year, and adjusted EBITDA margin also improved by 32%, primarily due to operating efficiencies and synergies from the KMG acquisition. We are proud of this continued strong level of achievement, which again demonstrates our best-in-class profitability amongst our specialty materials peers. Now let me provide some additional thoughts on industry conditions and outlook. Looking into fiscal year 2021, we expect demand from Foundry and Logic customers to remain strong and demand from Memory customers to continue to recover as a result of technology transitions and growth in emerging applications such as 5G and high-performance computing, as well as improvement in demand for automotive and industrial sectors. As a result, for the first quarter of fiscal 2021, we expect revenue for our electronic materials segment to be approximately flat to up low single digits compared to this quarter's results. Beyond this quarter, we believe we are extremely well positioned to grow with the industry given our positions in advanced logic, boundary, and memory. Turning to performance materials, revenue in DRAs dropped in the second half of fiscal 2020 as a result of lower demand for crude oil and gasoline due to the pandemic. which in turn negatively impacted the volume of our products needed by our pipeline customers. During the quarter, we saw an improvement in demand for DRAs in July, but did not see further increases in August and September, as had been expected when we provided details on fourth quarter outlook during the last earnings call. We believe that industry demand will stabilize and gradually recover as global economies open following lockdowns. The situation remains uncertain, and we are closely monitoring the demand environment for any changes related to the pandemic. While there is still some uncertainty and risks for the oil and gas sector, current analysts' expectations point to a gradual recovery in crude oil demand through calendar 2021 and global oil demand returning to pre-pandemic levels in calendar 2022, which should translate into higher DRA consumption. In addition, our team is focused on winning new business opportunities with both existing and new customers. Finally, we expect continued strong and stable performance from our wood treatment business this year as we work closely with our customers on our planned transition and exit around the end of calendar 2021. Based on this outlook, we currently expect performance materials revenue to be approximately flat sequentially in the first quarter. Given these expectations for a stable to improving operating environment in both our electronic materials and performance materials segments, and dependent on macroeconomic factors, we currently expect total company revenue to be approximately flat to up low single digits in the first quarter of fiscal 2021. In summary, we are proud of our results this year given the unprecedented macroeconomic environment and believe they represent the continued resilience and strength of our overall portfolio. Looking ahead, we are excited about long-term growth opportunities for our company, given the favorable trends in the semiconductor industry driven by new technologies. In addition, we expect continued adoption of DRAs in both the U.S. and internationally to drive stabilized growth for our performance materials segment. We believe we're well positioned for growth in fiscal 2021 and beyond, driven by our innovative and broad product portfolio, technology leadership, and operational and quality excellence. With that, I'll turn the call over to Scott to provide more details on our financial results.