Entegris, Inc.

Your conference is about to begin. Should you require operator assistance, please press star and zero. Good day, everyone, and welcome to the INTEGRIS second quarter 2024 earnings conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following our presentation. If you would like to ask a question at that time, please press star and one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue simply by pressing star and two. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, a reminder, please press star and zero. I would now like to turn the call over to Bill Seymour, Vice President of Investor Relations. Please go ahead, sir.

Good morning, everyone. Earlier today, we announced the financial results for our second quarter of 2024. Before we begin, I would like to remind listeners that our comments today include some forward-looking statements. These statements involve a number of risks and uncertainties, and actual results could differ materially from those projected in the forward-looking statements. Additional information regarding these risks and uncertainties is contained in our most recent annual report and subsequent quarterly reports that we have filed with the SEC. please refer to the information on the disclaimer slide in the presentation. On this call, we will also refer to non-GAAP financial measures as defined by the SEC and Regulation G. You can find the reconciliation tables in today's news release as well as on our IR page of our website at integris.com. And finally, as a reminder, we have included in the earnings slide presentation for your reference consolidated and divisional P&Ls that exclude divestitures for Q1 and Q2 of 2024 and all four quarters of 2023. On the call today are Bertrand Lawat, our CEO, and Linda LaGorga, our CFO. With that, I'll hand the call over to Bertrand.

Thank you, Bill, and good morning. I am pleased with another strong performance in the second quarter. With a semi-industry that continues to be in transition, The Integris team delivered results that were in line or better than our guidance. Sales of $813 million were above our guidance, and excluding divestitures were up sequentially in all three divisions. Gross margin increased sequentially and was up over 300 basis points year on year, in line with expectations, showing strong execution and the benefit of our recent divestitures. and EBITDA and non-GAAP EPS were within our guidance range. Looking more closely at our sales performance, second quarter sales increased 10% sequentially and 6% year-over-year, excluding divestitures. Sales were up across most product areas. For our unit-driven revenues, sales were particularly strong in CMP slurries and pads, liquid filtration, and etching chemistries. Our capex-driven revenue also rebounded sequentially in the quarter. This was true for facilities-based capex products, like gas purification and fluid handling, as well as for WFE-related capex products, like FOOPS and gas filtration. Let me cover a few other business highlights. Last month, we announced a preliminary award of up to $75 million and proposed direct funding under the Chips and Science Act to support our new manufacturing facility we are building in Colorado. We are honored to be the first materials supplier to be awarded funding through this federal initiative, validating the importance of what we do as a key enabler of the semiconductor industry and its ecosystem. We expect to receive the funding and installments tied to the achievement of several milestones over the next four years. The first phase of this project will include the production of FOOPS and proprietary membrane used in our photoresist liquid filters. Initial sales from this facility are expected to be generated in the second half of 2025. I am also pleased to report that our new facility in Kaohsiung, Taiwan continues to be on track to ramp up production. We generated our first revenue from this new facility in late Q2, a great milestone for our local team, and we continue to expect to generate approximately $40 million in revenue from this facility for the full year 2024. Our investments in both Taiwan and Colorado will provide manufacturing capacity to support the significant growth we expect in the coming years. On that note, We are continuing to make significant R&D investments that are critical to capturing the many growth opportunities ahead of us. In support of this, we expect our R&D spending will increase 15% in 2024. Our customers' technology roadmaps are calling for new materials innovation and ever greater process purity to achieve optimal yields and incremental device performance. The compounding process complexity of these roadmaps is making our expertise in material science and materials purity increasingly valuable to our customers. Investments we are making in fundamental research and new product platforms are expected to translate into key wins in the new nodes, further solidifying us as a critical enabler of our customers' technology roadmaps. providing us with excellent growth opportunities going forward. Moving on to our outlook for the balance of the year, 2024 continues to be a transition year for the semiconductor market. Industry inventories are normalizing and fab utilization rates are broadly improving. These recent trends validate that the industry reached the bottom of the cycle in the first quarter of this year. We expect the market will continue to gradually recover in the second half of this year and will accelerate entering 2025. For 2024, including two months of the PIM business, which we divested in March, we now expect our sales will be approximately $3.3 billion. This modest reduction in our 2024 sales outlook primarily reflects slightly slower than expected market recovery in the back half of the year and the negative impact of foreign exchange versus our original assumptions. Excluding divestitures from both 2023 and 2024, our full year guidance amounts to approximately 7% top line growth versus 2023 and approximately 11% growth in the second half versus the first half of this year. Continue to expect EBITDA to be approximately 29% of revenue in 2024, and we now expect non-GAAP EPS to be approximately $3.15. Let me now turn the call over to Linda. Linda?