Entegris, Inc.

Hello and welcome to the INTEGRIS first quarter 2026 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 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 that 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 zero. I would now like to turn the call over to Jeffrey Schnell, VP of Investor Relations.

Good morning, everyone. Earlier today, we announced the financial results for the first quarter of 2026. 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 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 reconciliation tables in today's news release as well as on the IR page of our website at integris.com. Joining me on the call today is Dave Reeder, our CEO. With that, I'll hand the call over to Dave.

Thanks, Jeff, and good morning. The first quarter was a solid start to the year as we continued to execute with focus and discipline against the constructive and improving semiconductor industry environment. We are delivering on our commitments. Revenue increased 5%, slightly above the midpoint of our range, while most other metrics, including adjusted gross margin, EBITDA margin, and non-GAAP EPS, all exceeded our guidance range. I am encouraged by these results, and we remain focused on the significant opportunities ahead to fully capitalize on the organization's long-term growth and earnings potential. As I mentioned, total revenue increased 5% in the first quarter as compared to the prior year, driven by a 7% increase in our APS segment and a 3% improvement in MS. Our unit-driven revenue, which is correlated to MSI, increased approximately 7% year over year, driven by growth in liquid filtration, advanced deposition and selective etch, all of which are critical product lines for our customers' new technology nodes. We're pleased to see the continued growth in liquid filtration, which posted its third consecutive record quarter. CapEx-driven revenue decreased modestly year over year in the first quarter, mostly driven by accelerating order patterns in the prior year quarter in response to tariff actions. Given our current bookings patterns, we expect 2026 CapEx revenue to increase throughout the remainder of the year and contribute more meaningfully to our overall growth profile, driven by strong WFE growth and improving FAB construction trends, which support not only the latter half of 2026, but also growth expectations in 2027 and beyond. Our overall results reflect the improving demand landscape across our end markets and regions. This includes double digit Q1 growth in Taiwan and broader Asia, supported by strong plan of record positions, as well as improving demand within advanced logic and memory, driven in part by AI-enabled applications. Turning to profitability, gross margins improved in the first quarter of 2026. The key drivers to the strength in margins on both a year-over-year and sequential basis were productivity and efficiency actions across our manufacturing network and supply chain, favorability from the useful life accounting change in the first quarter, and product mix. Jeff will provide more details on this later, but we are pleased with the structural improvement in margins and expect to build on this progress in the future. Additionally, we are continuing our efforts to optimize our manufacturing network. We closed another subscale facility during the quarter in Chandler, Arizona, further advancing our operational initiatives. These actions represent an important proof point in our ongoing efforts to drive scale, optimize our footprint, improve efficiency, and better position the business for growth and improved operating leverage as volumes increase. Free cash flow was also a highlight for the quarter. We delivered $144 million of free cash flow, approximately 18% of sales. Despite headwinds from normal working capital seasonality, Our strong free cash flow enabled us to accelerate our deleveraging as we repaid approximately $50 million of our term loan in the quarter. We believe this trend will continue and now expect to reduce net leverage to approximately three times by the end of 2026. Turning our commentary to the semiconductor market. We now expect mid to high single digit industry MSI growth for the remainder of 2026. which correlates to approximately 75% of our business. This contemplates an improved DRAM outlook, a similar unit outlook compared to last quarter in advanced logic and NAND, and a continued mixed outlook within mainstream logic. And the outlook for fab spending is also improving, which correlates to the remaining 25% of our business, both fab construction and WFE. Let me now address the end markets. Advanced logic, which represents approximately 40% of our total revenue, remains well positioned for strong growth in 2026, primarily driven by accelerating demand for leading-edge compute. Utilization rates at the most advanced nodes are already operating near effective capacity, and the industry is responding with aggressive capacity investments to support the demand for next-generation nodes. Additionally, as two nanometer technology enters a more meaningful production ramp this year, we expect strong growth in two nanometer wafer output. Process complexity meaningfully increases with sub-five nanometer nodes driving higher integrous content per wafer and aligning with our strong positions of record. The memory market, which represents approximately 30% of our revenue, is also structurally strong. underpinned by AI workloads and technology roadmaps that are reshaping DRAM and NAND architectures. In DRAM, demand continues to accelerate, driven by increased AI consumption. Additionally, and as announced, we expect DRAM capital investments to continue apace, supporting accelerated DRAM MSI growth beyond 2026. NAND demand and MSI are also expected to increase in 2026, though it remains more nuanced than DRAM. This view is supported by both leading-edge technology transitions and AI-driven storage requirements. The key short-term growth driver in NAND for Integris will be layer scaling and the resulting incremental Integris content with wafer start activity expected to improve in the latter half of 2026 and into 2027. Vertical scaling materially increases process complexity, elevating the importance of yield, precision manufacturing, and advanced process steps and materials. These technology shifts are expected to result in double-digit increases in content per wafer for Integris. And lastly, mainstream logic. The recovery and outlook in this end market, which represents approximately a third of our business, remains mixed. We continue to expect tempered MSI growth in mainstream logic through 2026, improving thereafter as new capacity additions, specifically in memory, begin to ease near-term supply concerns, especially with respect to price-sensitive consumer products. As it relates to CapEx, we are incrementally more positive on the portion of our business related to industry CapEx. The return to growth in FAB spending is materializing. This is driven by selective but substantial global capacity additions and pull-forwards, primarily in leading-edge logic and memory. Additionally, forecasts for WFE spending remain strong as these projects advance. Integris is well-positioned to deliver value for our customers and to capture the multi-year growth opportunities we expect will emerge as we progress through 2026 and into 2027. To summarize, there are several industry and operational tailwinds fueling Integris' growth. The industry outlook remains constructive. Semiconductor fundamentals are favorable and support growth in 2026 and beyond. This is driven by advanced logic and DRAM with a more stable near-term outlook for NAND and mainstream logic. Stronger order patterns and increasing backlog provide increased visibility and confidence across our unit and CapEx-driven businesses. Next, technology transitions will continue to drive upside for Integra's. Materials intensity and process complexity continue to increase. Beyond node transitions, we differentiate by innovating alongside our customers to advance their technology roadmaps, which is where Integris creates the most value. And we are driving a stronger operational focus. We are executing with discipline to improve our operational performance, accelerate growth, and strengthen our financial profile. Finally, I want to recognize our employees for their focus, discipline, and execution. Their dedication enables all of us to deliver upon our commitments. Before turning the call over to Jeff, I'd like to highlight that following a rigorous search process, Suki Nagesh has been appointed as our new Chief Financial Officer, effective May 18th. Welcome to the team, Suki. His engineering background, significant semiconductor industry experience, Deep financial expertise and strong operational discipline make him the ideal CFO for Integris. Having previously worked with Suki, I am confident that his leadership will be instrumental as we continue to execute our strategy to unlock Integris' full potential. With that, let me turn the call over to Jeff to discuss the financials.