CMC Materials, Inc.

Good morning, ladies and gentlemen. This is the conferencing operator. Today's conference call is scheduled to begin momentarily. Until then, your lines will again remain on music hold. And thank you for your patience. Oh, my God. THE END today and thank you for standing by. Welcome to the CMC materials third quarter fiscal 2021 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 your speaker today, Colleen Mumford, Vice President, Communications and Marketing. Thank you. Please go ahead.

Thank you, Tabitha, and good morning. With me today are David Lee, President and CEO, and Scott Beamer, Vice President and CFO. Last night, we reported results for our third quarter fiscal year 2021, which ended June 30th, 2021. We encourage you to review the slides and remarks document we've made available in 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 remarks and question and answer session will 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 FCC filings, including our Form 10-K for the fiscal year ended September 30th, 2020, and our Form 10-Q for the quarter ended June 30th, 2021, which we expect to file by August 9th, 2021. We assume no obligation to update any of this forward-looking information. Also, our remarks this morning reference certain non-GAAP financial measures. Our earnings release and slide presentation include a reconciliation of each non-GAAP financial measure to the nearest comparable GAAP financial measure. Additionally, data reflects rounded values throughout this discussion and in the accompanying slides and remarks documents. I will now turn the call over to Dave for opening comments, followed by a question and answer session.

Thanks, Colleen. Good morning, everyone. As announced last night, we reported results for the third quarter of fiscal 2021, representing the third quarter of consecutive record revenue. Topline growth of 13% was driven by broad-based strength across our electronic materials segments, which we believe continues our track record of outpacing growth in the sectors in which we participate, and improvement in our performance materials segment, which is beginning to recover from the impacts of the pandemic. Despite robust year-over-year sales growth, profitability was lower than expected. We revised our full-year adjusted EBITDA guidance to $355 to $365 million primarily due to two main drivers. First, higher costs for raw materials and freight and logistics are impacting margins for both our segments. In response, we are addressing these challenges and executing with plans underway to help mitigate these headwinds. Second, although total revenue from China increased 46% year over year in the quarter, variable order patterns from certain Chinese customers have led to lower than expected revenue from our C&P slurry business and is negatively impacting total profitability. We believe these order patterns will normalize by the end of the fiscal year 2021 and forecast that China will remain a strong growth opportunity in fiscal 2022. In our core business, electronic materials, we expect sustained semiconductor industry's health as the overall demand for our product offerings remains strong. We see strong demand from memory, foundry, and logic customers with many fabs running at full utilization. In addition, we are encouraged by significant announced investments by our customers to increase capacity which will drive further growth and opportunities for our consumable-based business. We continue to strengthen our participation rates in all electronic materials businesses by investing in innovation and quality and supply chain excellence. Despite some near-term profitability pressures, we remain excited about the strategic direction of our business. We are actively managing the challenging raw material and tight supply chain environments and mitigating the impact on our profitability. Our growth outlook remains attractive as we continue to strengthen our core electronic materials businesses through organic and inorganic investments. Furthermore, As application nodes advance and increasing device complexity result in greater challenges for customers, the demand for our consumable solutions is expected to become even more pronounced. With our unique portfolio, scale, business systems, and talented team, we are excited about the future growth of our business. With that, I'll turn the call over to the operator as we prepare to take your questions.