Entegris, Inc.

on your telephone keypad. If at any point your question has been answered, you can remove yourself from the queue by pressing star and two. So others can hear your questions clearly, we do ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star and zero. I would now like to turn the call over to Bill Seymour.

Good morning, everyone. Earlier today we announced the financial results for the first quarter of 2025. Before we begin, I would like to remind listeners that our comments today will 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 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 in Regulation G. You can find reconciliation tables in today's news release as well as on our IR page. at our website at integris.com. On the call today are Bertrand Bloy, our CEO, and Linda LaGorga, our CFO. With that, I'll hand the call over to Bertrand.

Thank you, Bill, and good morning. Our first quarter revenue grew 5% year-on-year, excluding divestitures, slightly below our guidance wage. Gross margin, EBITDA margin, and non-GAAP EPS were at the midpoint of guidance. Taking a closer look at our quarterly performance by division, material solution sales were up 8% year-on-year, excluding divestitures. As expected, CMP slurries and pads delivered strong year-on-year growth, up almost 20%. Advanced purity solution sales were up 3% year-on-year. This growth was driven by solid demand for our microcontamination control solutions offset by a sharp contraction in FOOPS and fluid handling revenue. In the quarter, we also continued to make solid progress on several fronts. At our new Colorado manufacturing site, we are on track with initial equipment qualifications and our first milestone associated with our CHIPS Act grant now complete. We expect to initiate customer qualifications in the second half of this year. Our facility in Kaohsiung, Taiwan also continued to make progress in the first quarter, and we expect to complete most of the liquid filter qualifications by the end of this year. These facilities are good examples of our strategy over the past decade to invest in a broad global manufacturing footprint, redundant manufacturing sites for our major strategic product lines. In addition, we have developed well-integrated supply chain clusters around our largest manufacturing centers. For example, approximately 90% of the raw materials used by our Yonezawa plant in Japan comes from Japanese suppliers. and our KSP site in Taiwan uses approximately 90% regional suppliers. Likewise, once up and running, we expect our Colorado facility to rely predominantly on US suppliers with nearly 95% of its needs served from domestic suppliers. You can expect us to continue to build on this strategy and evolve our business model to better serve our global customers, to shorten our lead times and de-risk our supply chain. In a current trade environment, having a comprehensive global manufacturing footprint with regionally integrated supply chains represents a significant strategic advantage. And at Integris, all of the necessary building blocks are in place. we now need and will capitalize on our global manufacturing network. During this uncertain time for the semiconductor industry, we continue to prioritize engagement with our customers to help enable their technology roadmaps. On that note, we are making good progress ahead of commercial volumes of MOLLE deposition materials. We have excellent engagements with all major 3D NAND players And we are very pleased with the POR wins we have achieved to date. Our MOLLE deposition film offers the best film conformality and the best cost of ownership in the industry. In addition to the film material, we are also making great progress in developing novel wet etch chemistries for MOLLE etch as an alternative to the current dry etch process the industry is using. Both opportunities are very promising. It will be first adopted in 3D NAND manufacturing and in a few years in DRAM and advanced logic. Another recent win I would like to highlight is with IPA purifiers. Customers in Korea recently came to us concerned about trace metal contamination in IPA chemistries that impacted yields in HBM production. Our teams were quick to respond and promptly developed the required solutions. This is the perfect example of how our customers use Integris' unique capabilities to solve emerging complex yield and process challenges and how we continue to increase our served market over time. As these wins illustrate, we are very well positioned to capture incremental content per wafer and continue to outperform the market in the years to come. Looking forward to the rest of 2025, the environment created by new tariff regimes is the source of significant uncertainty and makes it very difficult to precisely quantify the direct and indirect impact on our customers and on our business. In that context, we are providing a broader-than-normal revenue guidance for Q2 and will not update our 2025 outlook for now that said in this dynamic environment you can expect us to remain focused on what we control proactively adjusting our cost structure and investment levels focusing on improving free cash flow putting m&a on pause staying committed to reducing our debt level and of course we will continue to closely collaborate with our customers by supporting the no transitions in second half of the year and by engaging on their long-term technology roadmaps. Let me now turn the call over to Linda. Linda?

Good morning, and thank you, Bertrand. Our sales in the first quarter of $773 million were up 5% year over year, excluding the impact of divestitures. On an as-reported basis, our sales were flat year over year and down 9% sequentially. Foreign exchange negatively impacted revenue by $5 million year over year and negatively impacted revenue by $2 million sequentially in Q1. Gross margin on a GAAP and non-GAAP basis was 46.1% in the first quarter. Gross margin was at the midpoint of our guidance range and was up sequentially driven by strong cost management across our supply chain. Operating expenses on a GAAP basis were $234 million in Q1. Operating expenses on a non-GAAP basis in Q1 were $186 million, better than our guidance range. Adjusted EBITDA in Q1 was 28.5% at the midpoint of our guidance. The GAAP tax rate in Q1 was 11.5% and the non-GAAP tax rate was 15%. GAAP diluted EPS was 41 cents per share in the first quarter. Non-GAAP EPS was 67 cents per share at the midpoint of guidance. Sales for material solutions in Q1 were $341 million up 8% year on year, excluding the impact of divestitures. Sales were down 5% sequentially, in line with normal seasonality. Adjusted operating margin for MS was 22% for the quarter, up modestly sequentially. Sales for advanced purity solutions in Q1 were $434 million, up 3% year-on-year and down 11% sequentially. The sequential sales decrease was driven by CapEx products, including fluid handling products and soups. Adjusted operating margin for APS was 25.4% for the quarter. The decline in margin was driven by lower volume. As we navigate this dynamic environment, we are focused on controlling what we can control, including our cost structure. For example, we've elected to retain approximately 75% of the previously announced $15 million of cost savings from the formation of the APS division, instead of fully reinvesting those savings. As always, we remain committed to delivering results in line with the framework of our analyst published day target model. Moving on to cash flow, free cash flow was $32 million. As we mentioned in our last earnings call, we are committed to improving our free cash flow margin and have made free cash flow a compensable goal for the management team and the rest of the organization starting this year. In 2025, we expect our free cash flow margin to be in the low double digits. Over the next several years, you can expect steady improvement as we aim at returning to levels similar to where we were pre-pandemic. One of our major focus areas is working capital optimization, in particular inventory, where we have the greatest opportunity as we look to improve lead times and optimize stock levels across our entire network. In addition to working capital improvements, we now expect our capital expenditures to be approximately $300 million in 2025, down from our previous expectation of $325 million. As a reminder, our capital expenditures are weighted more to the first half of the year, driven by strategic investments, including phase one of our Colorado facility. As an aside, I'm pleased to share that we have achieved our first CHIPS Act milestone and expect to receive $9 million in the second quarter. A quick overview of our capital structure. At the end of the quarter, our gross debt was approximately $4 billion and our net debt was $3.7 billion. Gross leverage was 4.4 times, and net leverage was 4 times. Our debt is well-structured and de-risked. The blended interest rate on our debt portfolio is approximately 4.9%. Since our term loan is fully hedged, currently 100% of our debt is fixed, and there are no maturities on the debt until 2028 and no maintenance covenants on the debt. From a capital allocation standpoint, our single priority remains paying down our debt. We will use all levers at our disposal to reduce our gross leverage to below four times. Looking forward, I believe we are well positioned to navigate through the dynamic tariff and economic environment. We expect to see a temporary impact to our top line related to our sales to China. We are actively working with our customers and suppliers to mitigate to the greatest extent possible the direct tariff impact by leveraging our global footprint and regional supply chain. Moving on to our Q2 outlook, we are widening our revenue guidance range to reflect our current assessment of the direct tariff impacts. We expect our Q2 sales to range from $735 million to $775 million. Excluding China, our business remains strong. Let me be clear. The lower sequential sales guidance is driven entirely by the uncertainty of shipments of our U.S.-made products into China. We expect a gross margin of approximately 45%. both on a GAAP and non-GAAP basis. GAAP operating expenses of 225 million to 229 million. And non-GAAP operating expenses of 179 million to 183 million. We expect EBITDA margin of approximately 27.5%. Net interest expense of approximately $50 million. and we expect our non-GAAP tax rate to be approximately 12% due to the expiration of a tax reserve. GAAP EPS between 34 and 41 cents per share, and non-GAAP EPS between 60 and 67 cents per share. We also expect depreciation of approximately $51 million. I'll now hand it back over to Pradran for some closing remarks.

Thank you, Linda. In closing, the industry environment remains dynamic. In that context, we will remain focused on what we can control. Engaging with our customers, managing our cost, delivering strong profitability, improving free cash flow, and paying down our debt. In 2025, we are prioritizing critical investments that enable our customers no transitions and technology roadmaps needs. Looking further out, we continue to have high confidence in the strong long-term growth outlook for semiconductor industry and for Integris. Our customers technology roadmaps are calling for new materials and ever greater purity levels to improve device performance and achieve optimal yields. Our expertise in material science and material security is increasingly valuable. The R&D investments we are making are translating into key wins in new nodes and are expected to fuel our growth and market our performance in the years to come. With that, operator, let's open the line for questions.

Absolutely. The floor is now open for questions. At this time, if you have a question, please press the star and 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star and 2. Again, we ask that you pick up your handset when posing your question to provide for best sound quality. Our first question is coming from Melissa Weathers with Deutsche Bank. Please go ahead. Your line is open.

Melissa Weathers Thank you so much for letting me ask a question. Good morning, everybody. I guess on the comments that you guys have made on the direct impacts from tariffs and China and your outlook, could you help us understand? Is the main message that excluding those direct impacts, everything else is pretty much going as planned as you talked about last quarter? Or just help us, if we could get a little bit more context on how you're guiding and how much of that is tariff impact and how much of that is any cyclical weakness? Thank you.

Yes, good morning, Melissa, and good question. Let me put actually this Q2 guidance in the right context, and I may provide a little bit more details than I usually do, but I think the circumstances warrants that. So let's start with a few facts. I mean, entering Q2, our business is strong. The fill rate is steady. Quarter to date, our book-to-bill ratio is strong. It's actually approaching 1.2. So that's good. That's actually very good. Another important fact. Ex-China, our second quarter forecast is also solid. Actually, we expect the ex-China business to be up sequentially in line with the industry trends that we expect in Q2. Specifically, we expect sequential growth in our consumable product lines consistent with the expected sequential improvement in wafer stocks. that's going to be offset slightly by the sequential contraction in the, you know, in our capex product lines. And that's also consistent with the expected sequential contraction in the industry capex. But again, net net, our ex China business is solid and is expected to be up sequentially. So that's good as well. So, and then, To your question, I mean, we certainly have this China tariff situation to deal with. China introduced new tariffs on imports from the U.S. Our products, unfortunately, do not qualify for the temporary exemptions granted by the Chinese government. And as a result, as of right now, Chinese customers have put inbound shipments from U.S. on hold. So the impact for us, just for Q2, worst case could be up to $50 million again just for Q2. And that's the bad news. Now, the good news, as Linda stated multiple times in her prepared comments, is that we have alternate integrates manufacturing sites across Asia that our China customers could use. Actually, they have started qualifying them. and we are ourselves in the process of hiring and training additional staff ramping up our local supply chain so realistically we expect to be able to mitigate some of that impact in q2 and that gets you somewhere at the midpoint of that guidance range for q2 and of course we expect to make more progress in q3 q4 and at high level you know we expect these initiatives to have substantially mitigated the China tariff headwinds by the end of the year. So hopefully, Melissa, that provides the context you were looking for when thinking about the overall business trends and going into Q2.

Great. Thank you for all that color. That's really helpful. And I totally understand you guys pulling your 2025 guide, given that uncertainty. Maybe a bigger picture question then. On the MOLLE side, it was good to hear that you're engaged with all of the main memory players on MOLLE. But given the macro uncertainty and the tariff uncertainty, has there been any change in your customer discussions about their willingness to adopt MOLLE? Has the timing of that MOLLE ramp changed in your mind at all?

Well, it's a great question. I think that despite the uncertainty that we are all experiencing. The good news is that all major node transitions are still on track. It's true for the MOLLE adoption in memory. As a matter of fact, all our discussions with the market leaders in 3D NAND suggest that actually not all of them, but most of them will be transitioning to MOLLE in the second half of the year. So it's good for MOLLE, but that statement also applies to logic. In logic, we also expect N2 and 18A to ramp in the second half of 2025. And for all of those node transitions, both in logic and memory, we are very well positioned, and we are ready to capitalize on the incremental opportunities and backup of the year. And then, of course, as more wafers are produced at those nodes going into 2026, that should have a positive impact on our business in 2026 as well. Great. Thank you.

We'll take our next question from Charles Shi with Needham. Please go ahead. Your line is open.

Hi. Good morning, Dachuan and Linda. Maybe I want to go back to the question that China tariff, retaliatory tariff impact on the last sales for Q2. I recall going back a few quarters, you were expecting maybe China revenue as a percentage of the total to go above 20% from somewhere around the mid-teens, given the increased production, semi-production in China. But how much of the $50 million loss, let's say in Q2, is recoverable, let's say in Q3 and Q4? do your Chinese customers really have an alternative, or do you think that there will be some market share loss going forward? The reason why I'm asking this really is about how much of the loss is irreversible and how much of that you think is reversible. Maybe give it two or three more quarters. Thank you.

Yes, Charles. Fair question. We believe that this is a temporary impact, as Linda mentioned. And I absolutely believe it is. As we've said many times before, our China business is strong. There are competitors in China for sure, but we believe that we've been competing very effectively. Our brand is strong. We continue to be viewed as valued partners by our customers. And remember that our solutions really help our customers improve their device performance, improve their yields, this is really at the heart of our value proposition. And this value proposition is appreciated in China as it is anywhere else in the world. So, you know, we are in active discussions with our China customers. And when I say China customers, by the way, we're talking about international companies operating in China as well as domestic Chinese customers, right? And they have practical experience of some of our other Asia manufacturing centers. They just need to fully qualify certain products coming from those centers and start placing their future demand on those manufacturing centers. So we know it's going to take a little bit of time, but we believe it's entirely recoverable.

Got it. Thanks. Maybe a follow-up question. I really want to go back to the Q1 results. And I think we focused a lot on the Q2, what the tariff impact could be on the Q2 guidance. But your Q1 results still coming a little bit below, I believe, the low end of the guidance, which you guided in February. what exactly happened why why it came in a little bit below your expectation and i think you mentioned the capex products fluid handling hoops we want some of the weakness but what exactly you are seeing in terms of customer behavior assuming q1 that that's all pre-tariff right thank you yeah charles yeah so the q1 performance has nothing to do with tariffs indeed um the um

you know, the top line came in slightly below guidance, and as we've said, it really comes from much softer demand than originally expected for our fluid handling and food products. You know that these products, I mean, demand for these products is linked to new fab construction. We've seen significant slowdown in new fab construction activity in all markets, frankly, but that's especially true in China, in Japan, in Korea. And as a result, we've seen a much more significant contraction in the revenue for those products in Q1. Having said that, I remember that we grew, in spite of this capex headwind, we grew 5% year on year. As I mentioned, strong performance from material solutions up 8%. strong performance of APS. I mean, microcontamination had a very solid quarter. It was offset, obviously, by the decline in the CapEx products that I mentioned. And then finally, one thing that I just want to be sure you remember, Charles, when you're looking at our Q1 performance, especially the year on year, remember that there were new U.S. export restrictions announced in December, and we had quantified that impact to be about $10 million on a quarterly basis. So we saw that in Q1. And then we had some adverse impact from foreign exchange as well. And I think Linda mentioned that year on year was about $5 million. So certainly those last two points don't explain the myths, right? I mean, we're expecting these impacts when sending guidance. But I think it's useful context when you look at Q1 results on a year on year basis. basis, and I would argue that the overall performance is pretty solid in that context.

Thanks, Vajman.

We'll take our next question from Atif Malik. Please go ahead, or from Siddhi. Please go ahead. Your line is open.

Thank you for taking my question. The first one for Linda. Linda, can you walk us through, you talked about the revenue impact from China, but on the gross margin, The 100 basis points sequentially declined to the June quarter. Can you help us understand the puts and takes on the cost side impact from tariffs?

Yes. Thank you for that question. So let me first, since you framed it, let me frame it overall. We're in a dynamic environment. And our guidance is capturing that dynamic environment. To your point on how do tariffs play into gross margin, we do have tariffs on U.S. imports. And we do import some raw materials and finished goods. So we are very confident in the plan we have to mitigate those tariff impacts over time on U.S. imports through select pricing surcharges, different duty programs, focus on regionalized insourcing to limit that tariff impact. But in the near term, there's likely to be some modest impact to our Q2 gross margins as we progress our mitigation plans, because there is a bit of a timing lag. And this is reflected in our guidance. So getting back to a little bit more of a big picture between Q1 and Q2 on the margin, you're correct in saying there's a bit of an impact from tariffs. But as we look across gross margins and look forward, there's going to be puts and takes. So I want to bring you back to looking forward. There's the volume leverage as we progress throughout the year. We're going to continue to focus on productivity. We'll continue to have inefficiencies this year in Taiwan and Colorado, but we're going to get most of that behind us by 2026. And we're going to continue to manage our cost structure, including gross margin in the context of our analyst day. So while there's slightly lower gross margins in Q2, we still expect that in 2025, our overall gross margins will be up modestly compared to 2024.

Very helpful. And one for Bertrand. Bertrand, I fully understand you guys are not commenting on full year given the macro uncertainty. But just kind of broad strokes, how do you see that the CapEx environment going on for second half? Some of the CapEx peers have talked about maybe flattish outlook for CapEx in second half. Some of them are down in second half versus first half. If you can just kind of give your big picture thoughts on the CapEx trend.

Yeah, I mean, look, I mean, remember that when we started the year pre, you know, pre-impact from tariffs and the growing uncertainty around that. We probably already had some fairly conservative expectations when it comes to the industry capex. I would argue that the current prevailing uncertainty is, in my opinion, going to put some additional pressure on capex in the second half of the year. Having said that, we expect that to be somewhat offset by the steady improvement that we expect to see in wafer stocks. So again, all of that is our high level considerations that do not really incorporate any considerations or any changes coming from the uncertainty around the tariff and the indirect impact from tariffs. Thank you.

We'll take our next question from Timothy Arcuri with UBS. Please go ahead. Your line is open.

Thanks a lot. Bertrand, I also wanted to ask about how quickly this revenue can come back. I mean, why does this not sort of, is this not the match that lights the fire for them to qualify local alternatives? I know that not all the way you sell, there's not a local alternative for, you know, all the way you sell, obviously, but There are local alternatives for some of what you sell. And so do they actually have enough inventory on hand to just outright be able to continue to operate with China not accepting shipments? I mean, this is a pretty big number relative to what your China exposure is. So, yeah, thanks.

Yeah, look, it's a fair question, Tim. I think the burden is going to be on us to be very proactive and very effective in transitioning the China demand to some of those alternate Asia sites. I think that those Asia manufacturing alternatives have a lot to offer. I mean, think about the big investment we made in Taiwan, recent investments in Japan and Korea. So we are really offering state-of-the-art manufacturing capabilities. We believe we are offering again, products that are very uniquely enabling device performance and very uniquely enabling the yields of our customers. And that has value. And we certainly hope that this is the point of view that our China customers share with us. And again, all indications are based on discussions we've been having with them in the last month, all indications are that they are very eager to qualify those alternatives. I mean, the proof will be in the pudding, obviously, but I am optimistic.

Okay, got it. And then just a two-part question. So one, what is the Clean Revenue Guide then for June? So is the Clean Revenue Guide something like $800 million minus this issue? So is that the baseline that we should then kind of, I mean, you know, obviously we have to assume how quickly this, this 50 comes back, but is the 800 million, like that's the real sort of demand based guidance for June. That's the first part of the question. And then the, you know, second part is what is your NAND exposure right now? Do you think any of the week, June quarters related to NAND? Thanks.

Yeah. So in reverse order, the NAND exposure right now for us is about, you know, 10% of our, of our revenue, uh, roughly, um, And, you know, in terms of breaking down our Q2 guidance between China and non-China, I mean, I think we've provided a lot of details. I'm not going to go into a lot more details than my answer to the first question, but directionally, the way you think about it is not too far off.

Okay. Thank you.

we'll take our next question from chris parkinson with wolf research please go ahead your line is open great thank you so much um you hit on a few of these but just to dig down a little bit deeper in terms of your second half assumptions of just what you're looking at from the customer level uh do you sit on some non-tariff related factors um specifically you know molly no transitions you know is there anything that has actually changed in the last you know five to six weeks that would ultimately further evolve your views on those. And then perhaps just a quick update on the Taiwan ramp as well would be very helpful. Thank you.

Yeah, so in terms of the benefits that we expect to get from the node transitions, as I said, we are very encouraged by our recent discussions with our customers. All of the major node transitions we're expecting in memory and logic seems to be still on time. And that's positive because it provides an opportunity for us to increase our content per wafer, and that should actually help us, you know, sustain very attractive revenue levels in second half of the year. Having said that, I mean, you're right that today there's still a lot of unknown around, you know, the indirect impact coming from tariffs. I mean, there is a question which usually could correlate with a slower demand environment for semiconductors, but nobody has been able to really quantify that, and I'm certainly not equipped to do that either. So that's something we're going to be obviously keeping an eye on. And then there was a third part to your question, which I forgot Taiwan Taiwan yes so Taiwan yeah we're making actually really good progress in our Kaohsiung facility remember that in 2024 we completed a number of product qualifications high purity containers deposition materials and we initiated qualifications for liquid filters in 25 the focus is to complete the remaining qualifications for all major liquid filters. And when it's all said and done, I would say that I would expect the run rate, the revenue run rate exiting 2025 out of Kaohsiung to exceed $120 million. Remember the last year, the revenue on a full year basis was something closer to $15 million. So a lot of progress. is expected in 2025.

That's very helpful. And just, you know, in terms of the intermediate term, obviously, once again, I understand the world's changing, but, you know, as we sit here today, how are you thinking about the U.S. market, just given the rhetoric of, you know, the current administration, trade, the potential for increases in foreign investment? You know, any updated thoughts just holistically on those topics would be helpful and just how that relates to your thoughts on the Colorado Springs opportunity. Thank you.

Yeah, that's a fair question. I think this is something that we are keeping a very, very close eye on. External market research and our own views is that the new fab construction activity will be significantly down this year in 25. It's true, as I mentioned, in China, Japan, but also will be likely true here in North America. So right now, when it comes to our Colorado investment, we are going full speed ahead with our phase one investment. We have actually hit a number of milestones. So, you know, feeling really good about the progress. And we're going to be starting customer qualifications in the second quarter. Half of this year, we expect production late this year, early next year. Now, when it comes to the timing of phase two, so the next phase of investment, we're going to be looking at the level of new fab activity in the U.S. We're going to take that into consideration, and we will finalize our decisions later this year. So no decision at this point.

Very helpful. Thank you so much.

We'll take our next question from John Roberts with Mizuho. Please go ahead. Your line is open.

Thank you. Sometimes you characterize the business at a high level in terms of mainstream versus advanced applications. I assume advanced is not that affected by China or much less affected, but maybe you could just give us kind of the tone of business in those kind of two big buckets.

Yeah, I mean, look, our advanced applications logic business remain very, very strong. I mean, if you look at our Q1 performance, our revenue in Taiwan was very strong year on year, as we would expect, and as we capitalized on increased demand linked to AI and advanced logic application. But it's true that we continue to face some headwind from still fairly reduced levels of operations in mainstream fabs, and it was true pretty much around the world, including China in Q1.

Yeah, and then I think the public comment period ends today for the new semiconductor tariffs. Have the consultants summarized that for you, or is there anything that kind of maybe sticks out as unexpected in what may have been submitted in terms of public comments?

No, as I said, I think right now there's just a lot of unknown, a lot of uncertainty. I think most of our customers are taking a very prudent approach, frankly, when they think about the balance of the year. And that's the reason why we didn't feel equipped to update our annual guidance. I think hopefully things will settle down and hopefully In a few months, we will be in a better position to update our folio guidance.

Thank you.

We'll take our next question from Mike Harrison with Seaport Research Partners. Please go ahead. Your line is open.

Hi. Good morning. I was hoping we could dig in a little bit on the growth that you're seeing within the microcontamination control portion of the APS. segment, I feel like sometimes you have pretty good visibility on your ability to grow in that business. How is visibility today compared to what you think of as normal? Are you seeing any delays or changes in customer order patterns? Any change in filter usage or anything that suggests that maybe your customers are trying to thrift or extend the life of some of those filters? Any color there would be appreciated.

Yes, it's a good question, Mike. I think you know the answer to the question. I think in advanced logic, there's still this intense focus on defect management, which is really driving the right behaviors when it comes to using the most advanced filters proactively. changing them and doing the right level of preventative maintenance. We are seeing that same behavior now in HBM, and I mentioned that in my prepared remark highlighting a new IPA purifier opportunity. So it's great to see that as device complexity increases, we are starting to see, you know, a greater focus, a greater interest in the microcontamination control solutions. In the case of this HBM opportunity, we were asked to help reduce the level of trace metal contaminations from three parts per trillion to something less than one part per trillion. I think our solutions actually help the customer get to 0.5 parts per trillion, which, you know, put that in context, is about half a drop of water in 20 Olympic-sized swimming pools. So they're the types of solutions that we are developing. We are very proud of the value proposition that our products offer. And we're pleased to see this greater level of focus on purity. But you're right that when utilization levels are low, as they are right now in mainstream, customers will try to stretch the lifetime of the filters. And that's one of the many reasons why our mainstream business has been sluggish, frankly, in the last couple of years now.

All right, and then for Linda, I know you don't typically talk about the FX impact. You mentioned, I believe, some top-line impacts in the first quarter. But with the big swings that we've seen in the dollar, can you talk a little bit about the impact you might expect to see in the second quarter in other parts of the P&L and at the EBITDA level? Is that something that's – leading to some margin weakness in the second quarter as well?

Yeah, thanks, Mike. You know, first, historically, we have not had a meaningful impact on our business from FX. And again, you're asking about other parts of the P&L, but as I mentioned, on the sales side, greater than 75% of our sales are USD. When you get below sales into the gross margin, which could flow down into EBITDA, When we do have significant and fast moves, we do see some impact, but it has been manageable. So there could be a little bit of impact in Q2, but that is not the primary reason why I'm projecting what we're projecting for Q2 in our gross margin. As I said, primarily I'd focus on some of the volume deleveraging and then the impact of the direct tariffs from U.S. imports and a bit of a timing lag.

Thanks very much.

We'll take our next question from Alexey Yeferimov with KeyBank Capital Markets. Please go ahead. Your line is open.

Thanks, and good morning, Bertrand. This is Ryan on for Alexey. I just wanted to ask one on China first. Did you guys see any evidence of pre-buying kind of ahead of all the restrictions that have gone in? I understand You mentioned that they're eager to qualify some of your product from alternative sourcing. Just wondering if there was any pre-buying that you saw ahead of all this.

No, we didn't really see much of that. And when it comes to Q2, obviously, as I said, I think right now, all of our shipments ex-US are on hold. So there is absolutely no pre-buying going on right now. And there was none of that. in Q1 either.

Understood. Okay, thank you. And then I just wanted to ask on advanced packaging. I mean, it seems like growth is kind of accelerating across the space. I was hoping you might be able to remind us what the size of that business is for you today. Maybe what growth kind of looked like in 1Q and kind of what your outlook is like. Thank you.

Yeah, good question, Ryan. So advanced packaging for us is still a fairly small market, right? But as we have mentioned, Multiple times it's growing very fast. It actually did more than double in 2024. We saw actually a doubling in Q1 versus actually more than a doubling in Q1 of this year versus Q1 of last year. When we think about the full year, 2025, we expect this business year on year to grow more than 25%. And the two big drivers for us in 25 are expected to be of high viscosity dispense solutions. That's an APS product. And then the other one would be HPM slurries for TSV applications. So again, feeling good about the momentum, feeling good about our ability to uncover new areas where we can contribute value. Still small, but growing very fast.

And there are no further questions on the line at this time. I'll turn the program back to Bill Seymour for any closing remarks.

Thank you for joining our call today. Please reach out to me personally if you need to follow up. With that, have a great day and you can disconnect.

Thank you. This concludes today's Integra's first quarter 2025 earnings conference call. Please disconnect your line at this time and have a wonderful day.