Welcome to the Entegris First Quarter 2024 Earnings Conference Call. [Operator Instructions] 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 first quarter of 2024. 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 of 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 the IR page of our website at entegris.com. .

And finally, for your reference, we have included in the earnings slide presentation consolidated and divisional P&Ls for Q1 and for all 4 quarters of 2023 that exclude divestitures. .

On the call today are Bertrand Loy, 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 our start to the year. For the first quarter, sales of $771 million were at the high end of our guidance. And gross margin, EBITDA and non-GAAP EPS were above our guidance. .

Looking deeper at our financial performance, sales were down in all divisions and across most product areas as expected and in line with normal seasonality. However, we did see sequential growth in product lines that are critical to our customers' leading-edge node transitions, including selective edge and advanced deposition materials. .

From a profitability point of view, even with the market uncertainty, we chose to maintain high levels of investment in R&D. Despite this and despite the lower sales volumes, we delivered strong results in terms of gross margin and EBITDA. Linda will provide more details on all of that shortly. .

PIM, QED, Electronic Chemicals and a business we sold to Element Solutions. The approximately $1.3 billion in proceeds from those divestitures were used to significantly pay down our debt. .

Next, we're making steady progress with our 2 major investments in new manufacturing capacity, which are vital for us to fully realize our mid- and long-term growth. In Taiwan, our new Kaohsiung facility is on track to ramp up production and is expected to contribute $40 million to $50 million of revenue in the second half of the year.

And in Colorado, construction at our [ Rockrimmon ] site is progressing rapidly, and we continue to expect initial sales from this facility to be generated in the first half of 2025. .

Moving on to our outlook for this year. Our view of the semiconductor industry has not changed. We do believe that the market is healthier with normalizing inventories and a more stable demand environment. And we continue to expect a gradual market recovery throughout the year. .

With this as a backdrop and based on recent forecasts from our customers, for the full year 2024, we continue to expect the market will be up approximately 4% based on our unit and CapEx mix.

In addition, given our strong market position in new logic and memory nodes, we continue to expect to outperform the market by 4 to 5 points this year, excluding the impact of divestitures. .

Putting it all together, we expect our sales in 2024 will be approximately $3.35 billion. We continue to expect EBITDA to be approximately 29% of revenue and non-GAAP EPS to be greater than $3.25. This annual guidance, of course, includes 2 months of the PIM business prior to its sale in early March. .

Let me now turn the call over to Linda.

Linda?.

Good morning, and thank you, Bertrand. Our sales in the first quarter were at the high end of our guidance at $771 million, down 16% year-over-year and down 5% sequentially on an as-reported basis. Q1 sales included approximately 2 months of revenue from the PIM business.

So excluding divestitures from the first quarter and prior periods, Q1 sales were down 5% year-over-year and down 4% sequentially. .

Foreign exchange negatively impacted revenue by approximately $8 million year-over-year and had no impact to revenue sequentially in Q1. Gross margin on a GAAP and non-GAAP basis was 45.6% in the first quarter, above our guidance. The higher margin compared to Q4 primarily reflects improved plant utilization and the PIM divestiture. .

Operating expenses on a GAAP basis were $234 million in Q1. Operating expenses on a non-GAAP basis in Q1 were $174 million. Adjusted EBITDA in Q1 was $223 million or 29% of revenue, above our guidance range, driven by the higher gross margin I just discussed and partially offset by increased R&D investment compared to Q4. .

Net interest expense was $54 million in Q1, below our guidance of $60 million, driven primarily by the positive impact of the PIM sale. The GAAP tax rate in Q1 was 7.1%, and the non-GAAP tax rate was 14.1%. GAAP diluted EPS was $0.30 per share in the first quarter.

Non-GAAP EPS was $0.68 per share, above our guidance range, driven primarily by the higher gross margin and lower net interest expense. .

Sales for our Materials Solutions division in Q1 were $350 million. Sales were down 4% sequentially on an as-reported basis. Excluding the impact of the divestitures, sales were down just 1% sequentially. During the quarter, MS benefited from the early-stage recovery in the memory market, offset by continued weakness in some mainstream end markets. .

Adjusted as-reported operating margin for MS was 21.5% for the quarter, up almost 500 basis points sequentially. The primary driver of that increase was improved plant utilization. .

Our AMH division sales in Q1 of $163 million were down 4% sequentially. The largest driver of the sequential sales decline in AMH were lower sales of fluid-handling products. Adjusted operating margin for AMH was 15.1% for the quarter.

The sequential increase in margin was primarily driven by the positive impact of improved plant utilization ahead of the expected sequential growth in Q2. .

For our MC division, sales in the quarter of $268 million were down 7% sequentially. Revenue was lower in all major product lines, consistent with our expectations. Adjusted operating margin for MC was 32.3% for the quarter. The sequential decline in margin was primarily driven by lower volumes and steady investment in R&D. .

Moving on to cash flow. First quarter free cash flow was $81 million. CapEx for the quarter was $67 million. We continue to expect to spend approximately $350 million in total CapEx in 2024. .

During the first quarter, we paid down a total of [ $419 million ] in debt through a combination of approximately $260 million in PIM sale proceeds and the rest from cash on hand.

The term loan balance after the Q1 paydown was approximately [ $955 million ], which means to date, we have paid down more than $1.5 billion of the term loan since the CMC acquisition. .

In addition to the significant debt paydown, at the end of March, we executed a very successful 75 basis point repricing to our term loan, which resulted in a new interest rate of SOFR plus 175. Blended interest on the debt portfolio is now approximately 4.9%. And since the term loan is fully hedged, currently, 100% of our debt is fixed. .

At the end of Q1, our gross debt was approximately [ $4.3 billion ] and our net debt was approximately $3.9 billion. Gross leverage was 4.6x and net leverage was 4.3x. We continue to expect our gross leverage will be below 4x at the end of 2024. .

Moving on to our Q2 outlook. We expect sales to range from $790 million to $810 million. This equates to 8.5% sequential growth to the midpoint of the guidance range, excluding divestitures. We expect the EBITDA margin to be approximately 28%. We expect GAAP EPS to be $0.42 to $0.47 per share and non-GAAP EPS to be $0.68 to $0.73 per share. .

Let me provide additional modeling information for Q2. We expect gross margin of 45.5% to 46.5%, both on a GAAP and non-GAAP basis, GAAP operating expenses of $242 million to $245 million and non-GAAP operating expenses of $191 million to $194 million.

The sequential increase in non-GAAP OpEx from Q1 to Q2 is primarily driven by higher noncash equity compensation expense. .

This year and going forward, we changed the timing of our equity grants awards to Q2, whereas historically, these grants were made in Q1. We also expect depreciation of approximately $48 million, net interest expense of approximately [ $51 million ] and a non-GAAP tax rate of approximately 15%. .

I'll now hand it back over to Bertrand for some closing remarks. .

Thank you, Linda. In closing, we are pleased with our start of the year. During the quarter, we completed our final planned divestiture, and we used the proceeds of that sale and other cash to significantly lower our debt. We continue to expect a gradual market recovery throughout the balance of the year.

And we remain very optimistic about the secular long-term growth prospects for the semiconductor industry..

In addition, the industry is entering a period of unprecedented technology change and device complexity. Our core competencies in materials science and materials purity, coupled with our unique ability to co-optimize solutions that shorten time to yield have become increasingly critical for our customers. .

All of this means the market is moving toward Entegris, ultimately translating into rapidly expanding content per wafer and strong outperformance for us for years to come, reinforcing Entegris as a value compounder with attractive organic sales growth, leading to significant opportunity for EBITDA and EPS expansion..

With that, operator, let's open the line for questions. .

[Operator Instructions] Our first question comes from Toshiya Hari with Goldman Sachs. .

Bertrand, my first question is on the industry outlook. You're maintaining the up 4% outlook. I'm sure there's quite a few kind of pluses and minuses, puts and takes there.

If you can walk us through what you're seeing from a wafer start perspective across DRAM, NAND, leading-edge logic and trailing edge, to the extent your views have changed, that would be super helpful and then a comment or two on the CapEx side as well. And then I've got a quick follow-up for Linda. .

Okay. Thank you, Toshiya. As I said in my prepared comments, our views for the industry have not really changed since we spoke last. Essentially, we expect the industry to be up 4% using our industry blend of 75% units, 25% CapEx. And what we're seeing is visible signs of life in advanced logic, in DRAM, with a steady increase in wafer fab production..

3D NAND is going through a slower recovery. But again, it's stable, and we expect some gradual recovery in second half of the year. And of course, we've been keeping a close eye on mainstream. We saw a harp compression in fab utilization in Q1. We expect a little bit more of that in Q2, but we expect mainstream to stabilize in the back half of the year.

.

And then for Linda, I guess, a two-parter, one on gross margin and the other on OpEx. So gross margin with the divestiture, you're doing really well and you're guiding Q2 nicely as well. As you think about the second half, I was hoping you could walk us through some of the puts and takes. .

Is there further upside to utilization inside of Entegris? And could that be a tailwind? And how should we be thinking about things like product mix and the ramp of Taiwan and Colorado?.

And then OpEx, very quickly.

So given the shift in the timing of the grants, is it fair to assume Q3 potentially normalizes lower from an OpEx perspective?.

Sure. So let me first hit your question on gross margin second half, some of the puts and takes. As Bertrand mentioned, we're expecting a gradual progression of the industry. With that, some of the tailwinds can be some volume leverage and it can be mix, depending how those tailwinds evolve..

That being said, Toshiya, as you mentioned, we still have KSP. And KSP still does provide some headwinds, although we are expecting those headwinds to start to alleviate to some degree with some of the revenue coming on. But there is that mix still of headwinds and tailwinds.

So right now, we haven't provided gross margin guidance specifically for the full year, but I would think of those gives and takes as we go through the rest of the year and the second half and see how things evolve..

On the OpEx side for the second half, most importantly, I would say we are committed to continuing to invest in our business. And we have said we're going to have R&D of approximately 9%. And you will see that commitment throughout the year. We have many exciting things to invest in..

So right now, as far as OpEx, again, not giving specific guidance. There will be some SG&A leverage, but you should expect to see us continuing to invest, going forward, which will offset some of that SG&A leverage. .

Congrats. .

Thank you. .

Our next question comes from John Roberts with Mizuho Securities. .

Nice quarter. Bertrand, you normally have some price-down in your products over time.

As the mix continues to shift towards leading edge here, do you think the pricing dynamics are going to change?.

Look, at a high level, I would say that I've been pleased with the pricing trend over the last several years. I mean it's fair to say that in a softer industry environment, this is not really particularly conducive to price increases.

But I think that, again, we've had some more favorable trends in the last 3 years as compared to the preceding 3 years. .

And then maybe could you discuss a little bit more currency, given the weakness we've seen in several of the Asian currencies recently?.

Sure. I'll go ahead and pick up the currency question. So I would say, first, we don't try to forecast FX, but we clearly monitor it. So let me give you the context of how to think about our business..

Historically, FX has not had a huge impact on our business, and here's why. Our USD sales are 75% or greater typically in a quarter. We've also had a natural hedge between our sales and our costs. That being said, we have seen this appreciation in the dollar recently.

And when that happens quickly, that does have some impact on our margin due to the timing between when products are built and when they're sold..

So as we looked at our guidance for April, we looked at the currency rates as of the end of last week, and we factored that into our thinking. But we're going to have to continue to monitor currency, going forward. .

Our next question comes from Bhavesh Lodaya with BMO Capital Markets. .

Bertrand, with respect to your materials sciences segment, if I look at Slide 17, the numbers excluding divestitures, the segment has flat sales sequentially, but operating profits jumped almost 30%. Can you share what drove that margin uplift? And then it seems like memory markets have just starting to recover here.

So what kind of margin uplift should we expect heading into 2024 for the segment?.

Right. So Bhavesh, maybe I can take the implied question on top line and what's driving the top line in MS in this past quarter, and then I will defer to Linda to take more precisely your question on margin. .

But we -- obviously, we were very pleased with the performance of our Material Solutions business, again, being essentially flat sequentially at a time when there was some seasonal softness in the industry..

So what's behind that is really -- I mean, remember that this is the one part of the business that has the most exposure to memory. So obviously, memory was a significant headwind for that business last year. And we've talked about that, especially during the first half of last year. .

But that headwind has turned into a tailwind, and we've seen some gradual sequential improvements in that business in Q3 and Q4 and obviously a very solid Q1, which bodes well for the rest of the year?.

Maybe turning to you, Linda, in terms of the implication on margin. .

Yes. Bhavesh, on margin, to your point of the increase in margin this quarter for MS, I mentioned in the call the plant utilization, but let me give you a bit more specifics. For example, we had lines that were idle that are now up and running.

I would also say there was a bit of productivity that contributed to that margin ramp and also some SG&A leverage, cost efficiency as we combined the 2 divisions together. .

Got it. And then there seems to be growing noise around U.S. sanctions on Chinese chip makers. Also, the Chinese government is talking about phasing out, say, Intel, AMD chips from their operations.

Has this changed your view on the sales impact for your company? And are there any offsets where you lose some sales in one area, but you probably make up for that sales as the domestic Chinese players grow in size?.

I'm sorry, Bhavesh, I didn't hear your question really well.

Could you -- would you mind repeating it?.

Absolutely. Yes, this is just around the sanctions that the U.S. government probably -- is increasing, I would say, in intensity. And even the Chinese government, they're talking about phasing out Intel and AMD chips from their operations.

How does that impact your business? And does your exposure in the Chinese domestic players actually help offset some of this?.

Oh, I see. Yes. Well, look, I think that we're not going to speculate on potential new restrictions or escalation between U.S. and China. I think that -- the current export restrictions are well understood. We have invested in a solid and capable team to comply with those restrictions.

We have quantified that impact, which is about a $20 million loss in revenue on a quarterly basis. We saw that impact reflected in our Q4 2022 numbers and some of it in Q1 2023..

But the business has been actually relatively steady. And we continue to do really well with the customers that we can still serve. We saw some steady fab construction activity in China that benefited our AMH business. And then many of those new mainstream fabs have started production. And we saw the benefits of that in our MS and MC divisions as well..

So if you look at our China business, which is again mostly mainstream and international fabs, I mean, it's been doing pretty well. And again, I won't speculate on what comes next, and we will update you if there's something to talk about. .

Our next question comes from Aleksey with KeyBanc Capital Markets. .

Bertrand, could you describe the new node or RAMs at your memory customers, the outlook for 2024 and 2025?.

Yes, Aleksey. So we are obviously paying close attention to node transitions in 3D NAND and in advanced logic and foundry. As you know, we have incremental wafer content opportunities at those new architectures. So this is something that we're watching closely. And we are pleased, first of all, that all of those transitions still appear to be on time..

When it comes to 3D NAND in particular, we have a number of different [ material ] solutions that are becoming increasingly critical to those high layer count architectures. I mean we've been talking about selective etch for a number of years. But what is really exciting, going forward, is the adoption of molybdenum in high-volume production. .

And Entegris has developed a very unique suite of capabilities, leveraging competencies across a number of different business units to develop an industry-leading pro [ evap ] canister to sublimate those solid precursors into gases..

Those gases are highly corrosive. So we have developed some proprietary protective coatings for the lines and of course, gas filtration and gas delivery cabinets. So we are very focused on this transition. Those transitions don't happen very often. And we think that we have a unique opportunity to ease the industry migration to molybdenum.

So this is something, obviously, that we're going to continue to watch very carefully for the balance of the year. .

And just a follow-up on this.

I guess, does this -- is it logical that '25 could be maybe a more productive, faster growth year from a content and transition perspective from memory for you than '24?.

I think, implied -- I mean we're not going to give you a precise guidance on 2025. But you're right, I think that a lot of those node transitions, be it in memory or in logic, will be taking place late in 2024. .

And so, of course, the bulk of the opportunity from a top line standpoint will be -- I mean we've seen -- we will see a little bit of that, and we expect to see a little bit of that. It's taken into account in our annual guidance for 2024, but the bulk of the positive impact will be felt in 2025. .

Our next question comes from Tim Arcuri with UBS. .

I had a different question, Bertrand, on China. And the question really is, it seems like if you read the tea leaves that the update this fall is going to be a lot more in the supply chain and more on the material side. And there was already some news that came out about some bans on the material side.

So I mean, I know you're in close contact with the Commerce Department. So I'm kind of wondering whether you think this presents risk for you this fall when this update comes out. .

Look, Tim, I don't read tea leaves really well. I'm a coffee drinker myself. But as I said, I'm not going to speculate. We are obviously working closely with the government. But again, as I said, I'm not going to speculate on potentially upcoming new rules.

Do you have any other question, Tim?.

I do. I do, Bertrand, yes. So I'm just wondering, to get to the up 4% market number that you're suggesting, I mean, you're guiding your business up [ 9% ] and you're saying that the TAM is up 4%. What is the TAM up 4% based on? Because Gartner has MSI up 11% this year. And if you listen to the [ equipment ] companies, WFE is up high single digits.

I mean I'm [ up ] more like 10%. But if you listen to them, it's up high singles. So if WFE is up high singles and if Gartner MSI is up 11%, how is the TAM up only 4%? I'm just kind of curious how you're getting to that number. .

Yes. I mean, as you know, a lot of those research firms actually will go through multiple revisions of their guidance and forecast for the year. I mean you could say that our assumptions may be conservative, but I think that most market research firms have actually slowly brought their numbers down when it comes to MSI in particular. .

So I think that having a wafer [ stub ] assumption at about 5 is probably a good place to be at this point. And if it is better, then we will, of course, benefit from that..

When it comes to CapEx, remember that our CapEx number is really a full industry CapEx, it's not just WFE. And we believe that the industry CapEx is going to be essentially flat, maybe modestly up, but essentially flat, right? So I think that's really the basis for that 4% number. And we will update you... .

Okay. Yes, I guess... .

Go ahead. .

Yes.

No, I guess I was just going to say, just to put like a fine point on it, whatever the TAM is, you're saying that you're going to outgrow the TAM this year?.

That's right. That's right. And that's what we've done. I mean that's -- the reason why we have established that growth algorithm is we recognize that the industry is notoriously hard to predict. And our goal and our commitment is to outpace the industry by that 3 to 6 points. And this year, we said that, that range is going to be 4 to 5. .

Our next question comes from Charles Shi with Needham. .

I just want to ask a little bit more on the industry-level CapEx expectation for this year. Maybe let me start with the observation of your numbers, first, because I did notice while MS does seem to be off the bottom, if I look at your pro forma numbers for the past 5 quarters.

But MC, AMH, both are -- have a little bit more exposure to CapEx side, and they seem to take a little bit [ down ] in Q1..

And I also noticed that you did point out fluid handling in one of the weakness areas, which I believe is probably more on the infrastructure side. So I get that you are expecting the full industry CapEx to be flat to modestly up.

But between infrastructure and any equipment, do you have a little bit different view there between those two? Maybe infrastructure does sound like it may be temporarily under pressure in Q1, but I just want to get a little bit of sense on a full year basis.

What do you see there?.

If I look at AMH specifically, where you have actually those two components, I mean we sell fluid handling components that go into the new fab construction projects, and then we sell FOUPs that are really more tied to [ lens ].

So fluid handling has been actually relatively steady, and that's really a function of all of the major new fab construction projects that have been announced and have been -- that we've witnessed around the world..

The FOUP business, on the other hand, actually has contracted. I mean we had a very -- still relatively robust demand for our FOUP early in 2023. I mean we came into 2023 with a fair amount of backlog for our FOUP products. That backlog has dissipated. So the FOUP business has been relatively slow and has not recovered.

And we expect actually that we have reached bottom in Q1 of this year, and we expect actually to see gradual recovery in that particular product line for the balance of the year..

So again, a sharper decline in the product lines that are WFE related and less of a decline for the products that are new fab construction related. .

And what's the outlook for the full year between infrastructure, CapEx and equipment? What do you see?.

So right now, we expect relatively steady infrastructure-related demand. And we expect to see some uptick in WFE-related demand in the back half of the year. .

And our next question comes from Christopher Parkinson with Wolfe Research. .

This is Harris Fein on for Chris. So I mean we've seen a lot of grants for new fabs in the U.S. over the last few weeks.

I guess, at what point during the construction process for those fabs would customers start to come to you for FOUPs, filtration systems, things of that nature? And then I guess related to that, how are you feeling about Colorado Springs receiving funding? I guess, what could that look like?.

Yes. So let's talk first about the shape of the opportunity when new fabs are being built. So typically, we start by selling fluid handling solutions. I mean those solutions are used in the sub-fab chemical loops. So we see those opportunities really early on when new fabs are being built. .

It's then followed by the large gas purification systems that those advanced fabs will need. I mean all of those advanced fabs are using much greater volumes of processed gases requiring more advanced purities. So those systems are really key to achieve that..

And then it will be the FOUP fleet, and the fleet is usually delivered at the time the tools are getting into the fabs, right? And then we're going to start actually seeing demand for filters and chemistries when the fabs are gearing up for the ramp.

So that's the way you should think about it, essentially three different waves of opportunities for us..

When it comes to our investment in Colorado, we filed our application last year. We've been in constant dialogue -- constructive dialogue with the CHIPS Program Office.

We believe that this investment in Colorado is clearly in line with objectives of the administration, an objective that is not just to onshore advanced semiconductor manufacturing but also to make sure that the critical components of the ecosystem will be manufactured here in the U.S.

And again, what our plans are for [ Rockrimmon ], which is the name of the site in Colorado, fits squarely that objective. So that's probably as much as I can tell you..

I would just say that obviously, the more incentives we can have and the sooner we can have access to those incentives, the easier it will be for us to accelerate our Phase 1 and then potentially Phase 2 investment in Colorado. .

Got it. That's helpful. And for my follow-up, I know DRAM is not a huge part of your business today. There's some talk around memory customers as they ramp HBM, maybe being a little bit more disciplined than they've been in the past, keeping some capacity off-line.

But at the same time, die sizes are getting larger, yields are becoming a little bit more of a challenge for them. I guess it would be good to hear your perspective on how you see that dynamic playing out. .

Yes. No, it's a great question. So I mean, of course, we will benefit from the increase in wafer [ stubs ] driven by increased demand for HBM. But an HBM chip is essentially a DDR5 chip. I mean the core memory cell is the same. And what it means is that we don't have an additional wafer content opportunity with an HBM chip..

We think that this is going to change because we know that all industry participants are now really very focused on improving the performance of the core memory cell. And to do that, they are turning to EUV.

And they're also considering adopting some 3D architectures in the overall DRAM architecture, all of which will open up a number of new opportunities for us in terms of photoresist filtration, in terms of EUV parts and then, of course, in terms of advanced materials and etching [ chemistry ]..

So again, today, we are enjoying the increase in wafer [ starts ]. And in a few years from now, we will enjoy the increase in content per wafer in DRAM. .

And we will take our last question from Chris Kapsch with Loop Capital Markets. .

My question is a follow-up on the memory market but focused on NAND. And just, Bertrand, your willingness to share a little bit more color around the role that molybdenum will have in the technology roadmap sounds encouraging.

Is it right to assume the confidence in visibility is backed by process of record wins? And more specifically, are those PORs with just, say, 1 or 2 leading memory producers of NAND chips? Or is it really more broadly across the industry?.

And then as a follow-up to that, are there instances -- given the sort of still soft NAND memory backdrop, are there instances where leading producers are, in fact, looking to skip the 2xx layer node right to the 3xx layer node where moly will more definitively play a role?.

Yes, Chris. So look, I mean, first, as I said earlier, I think that transitions of that magnitude don't happen very often in this industry. And tungsten -- to put that in context, I mean tungsten has been the interconnect metal of choice for close to 3 decades in NAND, DRAM and logic/foundry. .

But as architectures become more complex and with the desire of all participants to move to [ thin-film ] deposition, you have a number of new materials that present better thermal and electrical properties, and moly has been on the roadmap for a long time..

And for all of those thin-film resistivity property and the fact that it has essentially no [ resistivity ] into the direct material, which allows the deposition of that layer without a barrier layer, which is obviously very important at the time when 3D companies are trying to increase the number of functional layers without increasing the aspect ratio..

So all of that is great, but it's -- the materials that are used to deposit moly are notoriously difficult to handle and deliver. And that has been really the challenge that the industry has been trying to solve for several years now. And we think we're getting really, really close.

I mean we're working closely with the semiconductor manufacturers, the equipment makers. I think we are within 6 to 9 months of the first POR decisions..

How is that going to play out? Will they -- at what node precisely will they be adopting moly? As I said in previous calls, it's still something that is being discussed. I think all of that is going to be a function of the perceived degree of readiness by the ecosystem.

And the ecosystem is really a combination of the equipment makers and the material suppliers. .

But we think that Entegris has a very, very unique set of capabilities to ease this migration to molybdenum. And this is certainly a very exciting time for the industry, a very exciting time for Entegris. .

That's helpful. Just as a follow-up, given just how enabling this chemistry, it sounds like it will be -- you highlighted a couple of things, the thermal management, elimination of barrier layers, those process steps. It sounds like it's very differentiated in a margin opportunity that will help Material Solutions.

Is there any way you can quantify what the potential margin opportunity is in terms of percentages? Or is it just something that should be... .

No. I mean, I think we don't really disclose specific gross margin information by product. And I mean -- and frankly, that's -- it would be very difficult for us to do that at the current stage of adoption of that product. So we'll pass on that question, Chris. .

It appears that we have no further questions at this time. I will now turn the program back over to Bill Seymour for any additional or closing remarks. .

Thank you for joining our call today. Please reach out to me directly if you have any further questions or you want to set up a call. Have a great day, and you can now disconnect. .

Thank you. This concludes today's Entegris First Quarter 2024 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day..