MKS Inc.

Good day and thank you for standing by. Welcome to the MKS fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. I would now like to ask I would now like to hand the conference over to your speaker today, Paritosh Misra. Please go ahead, sir.

Good morning, everyone. I'm Paritosh Misra, Vice President of Investor Relations, and I'm joined this morning by John Lee, President and Chief Executive Officer, and Ram Vempuruk, Executive Vice President and Chief Financial Officer. Yesterday, after market close, we released our financial results for the fourth quarter and full year 2025. which are posted to our investor website at investor.mks.com. As a reminder, various remarks about future expectations, plans, and prospects for MKS comprise forward-looking statements. Actual results may differ materially as a result of various important factors, including those discussed in yesterday's press release and in our most recent annual report on Form 10-K and any subsequent quarterly report on Form 10-Q. These statements represent the company's expectations only as of today and should not be relied upon as representing the company's estimates or views as of any date subsequent to today, and the company disclaims any obligation to update these statements. During the call, we will be discussing various non-GAAP financial measures. Unless otherwise noted, all income statement related financial measures will be non-GAAP other than revenue and gross margin. Please refer to our press release and the presentation materials posted to the investor relations sections of our website for information regarding our non-GAAP financial results and a reconciliation to our GAAP measures. Our investor website also provides a detailed breakout of revenues by end market and division. Now, I'll turn the call over to John.

Thanks, Paritosh, and good morning, everyone. 2025 was a year of impressive execution for MKS in a gradually improving demand environment. Year over year, we delivered 10% sales growth, 20% EPS growth, and over 20% free cash flow growth. We maintained strong gross margins despite trade policy dynamics, while staying focused on delivering for our customers, investing in our business, and proactively bringing down our leverage. We're proud of our accomplishments in 2025 and grateful for the continued support and collaboration of our customers, suppliers, and employees. Our partnerships and engagement have been critical as we work together to deliver the broadest portfolio of differentiated solutions that are foundational to advanced electronics in the AI era. As we begin 2026, the demand outlook across our semiconductor and electronics and packaging markets is strengthening. And we are already seeing this in the ambitious CapEx plans announced by large chip manufacturers. MKS has a long track record about performing WFE in rising spending environments, and we are in an excellent position with a broad and deep portfolio of designed-in products that are foundational to semiconductor manufacturing and electronics and packaging. I'll highlight some examples as I review our financial and end-market performance. Our Q4 revenue, gross margin, and earnings per diluted share all came in above the midpoint of the guidance ranges we provided on our Q3 call in November. Revenue was strong across all three of our end markets. In our semiconductor market, revenue was above the high end of our guidance, driven primarily by subsystems serving etch and deposition applications in the DRAM and logic foundry markets. Our plasma and reactive gases business delivered another strong quarter. We also maintained healthy momentum in dissolved gases for advanced logic applications and in back-end applications related to high-bandwidth memory. Order activity in both areas remains robust. NAND-related activity remains stable sequentially as expected. I'm also pleased to note that our semiconductor business outperformed estimated WFE growth for the full year 2025, consistent with our track record of outperforming industry spending in improving demand environments. Looking to the first quarter, we expect semiconductor revenue to be up on a sequential basis. We believe this outlook is consistent with market views of steady improvement in industry spending over the course of the year. With our global footprint, broad product portfolio, and deep technical expertise, we are ready to respond to demand as it comes with solutions that solve our customers' hardest problems and enable their increasingly complex roadmaps. On that front, we are excited to be ramping our new supercenter factory in Malaysia in the second half of this year. which will give us added capacity and resiliency to meet our customers' needs. Turning to electronics and packaging, revenue came in near the high end of our guidance. The sequential increase was primarily driven by increased flexible PCB drilling and chemistry equipment sales. The flex market continues to largely follow seasonal patterns tied to smartphone and PC cycles. And we also saw continued momentum in orders for our chemistry and chemistry equipment solutions for advanced PCBs related to AI applications. AI is driving increasing packaging complexity, and we are uniquely positioned to help our customers with the broadest portfolio of differentiated solutions. Excluding the impact of FX and palladium pass-through, the chemistry sales increased 16% in the fourth quarter and 11% for the full year, compared to the same periods in 2024, reflecting another year of healthy growth. When we acquired Adatech in 2022, we saw the importance of advanced packaging for electronic devices well ahead of many in our industry. With AI now rapidly driving demand for more complex PCBs with rapidly increasing numbers of layers, we are seeing growth despite multi-year softness in smartphones and PCs. Looking ahead to Q1 and the anticipated seasonal impact from the Lunar New Year holiday, We expect electronics and packaging revenue to be up slightly sequentially and to increase in the low 20% range year over year. Key drivers for our expected performance in Q1 include higher flexible PCB drilling revenue and a continued strong performance in our chemistry equipment business. In our specialty industrial market, revenues came in at the high end of our guidance. We saw sequential improvement in research and defense in certain industrial applications. Looking ahead to Q1, we expect specialty industrial revenue to decline low to mid-single digits, mainly due to the Lunar New Year holiday, which impacts our general metal finishing business. Year over year, we expect revenue to be up in the mid-single digits, led by the industrial and research and defense markets. Overall, our specialty industrial market continues to deliver steady performance and contribute attractive cash flows. Our fourth quarter performance and outlook for Q1 underscore our strong position across our two key end markets. In SEMI, we continue to strengthen our position in supporting leading-edge foundry and high bandwidth memory investment through our vacuum and photonics offerings, while also remaining well-positioned to capitalize on large-scale investment in NAND equipment upgrades expected over the next several years. In electronics and packaging, we are demonstrating momentum with equipment and chemistries ideally suited to supporting smaller, complex and more vertical packaging structures for AI and other emerging devices, such as foldable phones. We've set this business to grow over time as we realize the long-term revenue streams from proprietary chemistries moving through production lines built with our equipment. The secular drivers powering our end markets are fully intact and present exciting opportunities for MKS in the years to come. Our business is in a strong position with a resilient global footprint and margins that reflect the value we deliver and strong fee cash flows that we are reinvesting into the business and using to pay down debt. Lastly, we are proud to have been honored for the third consecutive year as one of America's most responsible companies by Newsweek and Statista, an honor that reflects our continued focus and commitment to our people, customers, and suppliers. Now let me turn it over to Rahm to run through the financial results and first quarter guidance in more detail. Rahm?