Entegris, Inc.

Welcome to the Integris Third Quarter 2024 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. 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, please press star 0. I would now like to turn the call over to Bill Seymour, Vice President of Investor Relations.

Good morning, everyone. Earlier today, we announced the financial results for our third quarter of 2024. Before we begin, I would like to remind listeners that our comments today will include 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've 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 in Regulation G. You can find a reconciliation table 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 appendix of the earnings slide presentation for your reference consolidated and divisional P&Ls that exclude divestitures for the first quarter of 2024 and for 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.

Bertrand Lawat Thank you, Bill, and good morning. Our third quarter revenue, excluding divestitures, grew 7% year on year, but was below our expectations. Despite the softer top line, gross margin, EBITDA margin, and non-GAAP EPS were within our guidance. The industry recovery is happening, but it is happening slower than anticipated, and visibility continues to be limited. Customers, with strong exposure to AI applications are performing well. But the rest of the industry remains challenged. And because Integris serves all parts of the industry ecosystem, including areas like mainstream and NAN, which remain muted, demand for our products is softer than our original expectations. In addition, 2024 continues to be a year of limited technology transitions which limits our incremental wafer content gain opportunity and our level of outperformance this year. Taking a closer look at our quarterly performance breakdown, MS division sales were up 14% year on year, excluding divestitures. Growth was particularly strong in CMP slurries and pads, advanced deposition materials, and etching chemistries. The MS division continues to benefit from the combination of the SEM and APS divisions, which has allowed us to leverage cost efficiencies to increase our R&D investment in support of our customers' technology roadmaps. AMH and MC division sales were up slightly in the third quarter year-on-year. Growth this year in AMH and MC has been impacted by the lower demand from mainstream logic customers, slower new fab construction activity, and reduced backlog, which positively benefited sales last year. At Integris, we are continuously looking at ways to streamline and optimize our operations. To that end, we have decided to combine our AMH and MC divisions. They both support the same mission of enabling materials purity They both serve similar customer segments. They also serve similar applications inside and outside the fab. And AMH is actually one of MC's largest suppliers. With this combined structure, we will develop greater product synergies, optimize our go-to-market strategy, and further increase and differentiate the value we create for our customers. As a result of this combination, we expect to generate $10 to $15 million in annualized cost savings that will be reinvested to maintain adequate investment levels in R&D and increase investments in new operational capabilities to better meet our customers' evolving expectations while we continue to operate within the framework of our published target model. A few other important items I would like to highlight. Our team Our new facility in Kaohsiung, Taiwan continues to make good progress. Customer qualifications ahead of the end-to-end ramp are progressing and remain our number one priority. We are also progressing rapidly at our new Colorado site. Construction of the building for phase one is essentially complete. Tool installations are starting this quarter and we expect to ramp up production in the second half of 2025. In addition, we continue to negotiate the final terms of the CHIPS grant award and look forward to completing the process in the coming month. Our investments in Taiwan and Colorado will provide manufacturing capacity to support the significant growth we expect in the coming years. Given the muted industry recovery we have been experiencing for the past several quarters, we remain focused on balancing cost and maintaining strong profitability while continuing to engage with customers on their technology roadmaps and continuing to fund critical investments that improve our competitiveness and position us for the upturn. On that note, we are pleased with the POR positions we have secured for key new logic and memory nodes. In particular, our efforts in molybdenum or moly deposition materials are progressing well. We have already received several key POR wins in moly and are well positioned for more. We are particularly excited about these POR positions as they represent incremental integrase content for wafer opportunities, in part because we do not make the deposition materials moly replaces. We continue to expect moly will be implemented in the upcoming 3D NAND node transitions expected next year, and in logic, sometime later. These wins validate that our customers' technology roadmaps continue to be opportunity-rich for Integris as they drive for more complex device architectures and further miniaturization. The resulting process complexity is making our expertise in materials science and materials purity increasingly valuable, which is expected to fuel our market outperformance and incremental content away for opportunities in the years to come. Let me now turn the call over to Linda. Linda?