CMC Materials, Inc.

Good day, ladies and gentlemen, and welcome to the CMC Materials' fourth quarter fiscal 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touch-tone telephone. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Colleen Mumford, Vice President, Communications and Marketing. Thank you. Please go ahead.

Thank you, Blue. 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 fourth quarter fiscal year 2021, which ended September 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 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, 2021, and Form 10-K for the fiscal year ended September 30, 2021, which we expect to file by November 12, 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 document. 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 fiscal year 2021 representing our fifth consecutive year of record revenue. Top line growth of 7% was driven by broad-based strength across our electronic materials segments. Driving performance in our electronic materials segment was C&P slurries, which grew 14% year over year, which we believe continues our track record of growth above the sector as we continue to gain positions in advanced technologies. We are also guiding for sequential growth in our electronic materials segment as we see continued strong demand for our solutions. In our performance materials segments, our pipeline and industrial materials business increased year over year, but continues to be negatively impacted by the ongoing COVID-19 pandemic. The macroeconomic backdrop remains challenging and difficult to forecast, but we remain focused on executing on our strategic initiatives. which include winning new customer positions and product innovation through our R&D efforts. From a profitability perspective, while our first half adjusted EBITDA margins trended in line with our performance at the end of fiscal year 2020, our second half profitability was negatively impacted as we absorbed higher costs, primarily from raw materials, freight, and logistics. In yesterday's earnings release, we announced two key initiatives to mitigate cost challenges and enhance our financial performance. First, to counter the impact of rapidly rising raw materials, freight and logistics costs, we implemented global price increases, which took effect during the first quarter of fiscal year 2022. We believe these price increases will offset the cost headwinds that we have experienced to date and are prepared to implement further pricing actions if needed. We are working closely with our customers and have been encouraged by the adoption of our new pricing to date. In addition, we initiated an enterprise-wide strategic cost optimization program named Future Forward, The program is designed to implement structural changes to enhance operational efficiencies while maintaining our strong focus on technology innovation and customer partnerships. We are confident these actions will help optimize our overall cost structure while maintaining our commitment to innovation and operations and quality across our businesses to drive organic earnings growth. The outlook for our electronic materials segment remains strong, driven by a healthy semiconductor industry as customers continue to invest in their infrastructure and operate at near maximum utilization. We believe our electronic materials segment will continue to benefit from IC technology advances and increased customer capacity. We are well positioned to capitalize on these trends given our many competitive differentiators, including a highly formulated and broad product portfolio, commitment to technological innovation, close customer partnerships, global infrastructure, and ability to manage complex requirements across global supply chains. Turning to our guidance for the fiscal year, we currently anticipate full year adjusted EBITDA in the range of $355 to $385 million. This guidance reflects our confidence to offset and grow beyond the loss of earnings from the exit of the wood treatment business, primarily through a combination of organic growth and the favorable impact of the Future Forward program, while pricing actions are expected to offset the additional impact of inflation. We begin our new fiscal year with optimism. The initiatives announced today, along with our strong differentiated product portfolio and advantage positions, will further contribute to our long track record of profitable growth going forward. With that, I'll turn the call over to the operator as we prepare to take your questions.