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Edited Transcript of VSM earnings conference call or presentation 4-Feb-19 9:30pm GMT

Q1 2019 Versum Materials Inc Earnings Call

TEMPE Feb 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Versum Materials Inc earnings conference call or presentation Monday, February 4, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* George G. Bitto

Versum Materials, Inc. - Executive VP & CFO

* Guillermo Novo

Versum Materials, Inc. - President, CEO & Director

* Soohwan Kim

Versum Materials, Inc. - Head of IR

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Conference Call Participants

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* Brian Edward Chin

Stifel, Nicolaus & Company, Incorporated, Research Division - Associate

* Christopher John Kapsch

Loop Capital Markets LLC, Research Division - MD

* Jacob P. Schowalter

Seaport Global Securities LLC, Research Division - Associate Analyst

* Kieran Christopher De Brun

Crédit Suisse AG, Research Division - Research Associate

* Toshiya Hari

Goldman Sachs Group Inc., Research Division - MD

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Presentation

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Operator [1]

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Good day, and welcome to the Versum Materials First Quarter 2019 Financial Results Conference Call. (Operator Instructions) Please note, this event is being recorded. At this time, I'd like to turn the conference over to Soohwan Kim, Head of Investor Relations. Please go ahead.

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Soohwan Kim, Versum Materials, Inc. - Head of IR [2]

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Thank you, Alex, and thanks everyone for joining us today for our first quarter of 2019 earnings call. We hope you had an opportunity to review the press release we issued earlier this morning. We've also posted the presentation for today's call in the Investor Relations section of our website at versummaterials.com. We encourage you to review these documents. On today's call, we'll begin with prepared remarks from Guillermo Novo, our President and Chief Executive Officer; and George Bitto, our Executive Vice President and Chief Financial Officer. Following their remarks, we'll have a Q&A session. Some of the matters we'll discuss on the call, including our 2019 financial outlook and guidance, are forward-looking and are subject to risks and uncertainties, including those described in today's press release, our Form 10-K and in our SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed in this call. During today's call, we reference certain non-GAAP financial measures. We include reconciliations of non-GAAP financial measures to GAAP in our news release and in the presentation posted on the Investor Relations section of our website. Versum Materials assumes no obligation to update the information presented on this conference call. An archive of this webcast will be made available in the Investor Relations section of our website. And now, I'd like to turn the call over to Guillermo.

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [3]

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Thank you, Soohwan. Good afternoon, and thank you to everyone joining today's call. I'd like to begin with some brief comments on our recently announced merger followed by an overview of our first quarter and then our strategic priorities. I'll then turn the call over to George to take a closer look at the financials. Although the focus of today's call is over Q1 earnings and outlook. I do want to reinforce our excitement about the recent announcement of our merger of equals with Entegris. This combination will create a $9 billion premier specialty materials company with nearly $3 billion in annual revenue and approximately $1 billion in adjusted EBITDA with adjusted EBITDA margins of 33% and strong free cash flow generation. This is truly a strategic move that will create value for all stakeholders by leveraging several core drivers. The combination will broaden our business portfolio, it will strengthen our technology infrastructure and capabilities, it will allow us to leverage our operating critical mass to support growth and increase profitability and grow our enterprise scale and expand our investor base. Since the merger announcement, I have traveled exhaustively to and had a chance to talk to many of our customers, employees and shareholders. I have received overwhelmingly positive feedback, which makes me even more excited about our prospects going forward. We will share more details of the transaction in the upcoming months and we will look forward to keeping you updated on our next steps. Turning to Slide 8. We are pleased to report another solid quarter, driven by growth in both our business segments.

The Materials segment delivered solid growth led by double-digit revenue increases in Advanced Materials. Our advanced deposition and planarization businesses both posted strong results, especially in the memory segment. We have quite a few important -- number of important Process of Records or PORs ramping this year, which will continue to drive growth. Our teams also maintained their innovation momentum with a number of new POR wins, and we have seen accelerated progress on numerous other POR initiatives as our customers make additional tool time available for this work. Process Materials delivered low single digits volume growth, although NF3 remains capacity constrained, the rest of the portfolio is well positioned to grow. Our [ENF3] plant conversion in Hometown was complete and we are now in the process of doing qualification work with our customers. NF3 pricing remained stable and we expect some improvement in the back end of the year as memory and OLED RAMs begin to pick up demand. The Delivery Systems segments also reported higher sales and record profitability. Growth continues to be driven by our equipment and installation project activity. We expect Megasys and our parts and support business to grow steadily. We believe the diversity of our business and product portfolio has allowed us to manage well through the current period of unfavorable sentiment in the marketplace. Given the near-term trends and the higher level of market uncertainty around the ramp timing in the first half of 2019 and the WFE investment in the second half, we are adjusting our EBITDA guidance range down roughly 2%, the details of which George will walk you through in a few moments. Turning to Slide 9. Our core business remains strong and healthy. We believe we remain well positioned to drive profitable growth as we have leadership positions in all our core businesses and are well positioned to partner, create value and grow with all major customers. We're bringing on incremental capacity for several key products and have an exciting innovation portfolio, which continues to deliver strong results now and into the future. Lastly, we are investing in unique growth opportunities, which will allow us to enter new markets and support growth independent of the broader market dynamics. To sum up, the semiconductor materials industry remains relatively healthy. While materials growth may see some impacts from the slower volume RAMs in the near term, we are relatively insulated from the semiconductor CapEx and pricing cycles. Semiconductors are crucial to enabling the data economy and we will continue to invest in innovation to move the industry forward. On Slide 10, our priorities for the year have obviously expanded with the merger announcement. As we have learned from our standup activities, our primary focus will stay on driving our business performance, that is ensuring we maintain our EH&S discipline, deliver on our financial commitments for the year and executing well on our business strategies and core initiatives. The better we do in these areas, the better we can do on our added goal of completing the merger approval and integration planning activities. Now let me pass it over to George to cover some of the financial details for the quarter. George?

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George G. Bitto, Versum Materials, Inc. - Executive VP & CFO [4]

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Thanks, Guillermo, and good afternoon, everyone. Beginning on Slide 12, as Guillermo noted, we delivered solid sales and adjusted EBITDA growth in the quarter, again demonstrating the diversity and the resiliency of our portfolio. First quarter sales were $340 million, an increase of 3% compared to prior year. This improvement was driven by volume growth in both of our business segments. Gross profit margins remained in the 42% range, consistent with prior year as volume growth overcame an unfavorable pricing comparison and inventory evaluation impacts as we established new cost standards. Selling, administrative, research and development costs or SARD, were $48 million or roughly 14% of sales compared to $48 million or 15% of sales in the prior year. We believe, as we grow, we can continue to leverage our SARD costs to increase our margins, even as we invest in resources to drive future growth. Adjusted EBITDA grew 7% versus prior year with first quarter 2019 adjusted EBITDA of $110 million or 32.5% of sales as compared to $103 million or 31% of sales in prior year. On a GAAP basis, net income in the quarter was $61 million as compared to the prior year quarter of $19 million. Excluding onetime costs for restructuring and the Tax Act in the first quarter of last year, adjusted net income increased 2% to $60 million or $0.55 per diluted share compared to $59 million or $0.54 per diluted share in the same period last year, but this year impacted by higher tax rate. Turning to our results by segment and beginning with Materials on Slide 13. Total sales increased 3% to $222 million compared to $215 million in the prior year. Volumes contributed 6% of this growth with Advanced Materials growing double digits and Process Materials growing low single digits. Price mix reduced sales by 2%, roughly in line with the previous quarter, due to accelerated growth in Asia and the lapping of older contract prices which expired at the end of Q1 fiscal '18. Currency also had an unfavorable 1% impact. Segment adjusted EBITDA increased 4% to $80 million compared to $77 million last year. Segment adjusted EBITDA margins remained at 36%, consistent with prior year. Strong volume benefits in our AM business drove our margin performance. And as customers continue to qualify our NF3 product coming out of Hometown, we expect positive contributions to margin going forward. Our Delivery Systems & Services segment reported sales of $117 million, up slightly from both prior year and also prior quarter. Sales were strong in North America and Europe, Taiwan and Greater China versus last year. We have good visibility for the next 2 quarters in this business, given that our build cycle typically ranges from 8 to 12 weeks. While we expect strong overall performance for the next 2 quarters, current order timing suggests Q2 to be the weaker of the 2 quarters. Our infrastructure projects are proceeding with multinational customers, but Q4 equipment orders are still uncertain depending on whether the fab build-outs expected to pick up in the back half of the year occur in our fiscal Q4 or slip into next fiscal year. Segment adjusted EBITDA increased 5% to $35 million, and EBITDA margin was a record 30% due to both the strong sales and favorable product mix. Now please turn to Slide 15, where I'll cover our cash flow performance for the first quarter. Cash from operations was $46 million for the quarter compared to $39 million a year ago. We continue to generate substantial cash flow, allowing us to invest organically in our business. Total CapEx was $22 million for the first quarter. CapEx does exhibit quarterly variability depending on permits and build schedules. We continue to execute our strategic step-out projects and believe our capital spending will still be approximately $120 million for the full fiscal year. For our new NF3 investment in Korea, we will do some engineering work in this fiscal year, however, the majority of capital will be spent in fiscal 2020. Our cash balance as of December 31 grew to $408 million, with about 2/3 in the U.S. were able to be easily repatriated with little additional costs. Please turn to Slide 16 for a discussion on our guidance for fiscal 2019. While there is increasing pessimism short-term in both chip output and industry capital spending, there are also mixed signs of recovery later in the calendar 2019. Given that our fiscal year ends in September, there is some uncertainty in terms of how this recovery cycle will impact our year. We estimate sales for fiscal '19 in the range of $1.38 billion to $1.43 billion, an increase of 1% to 4% versus fiscal '18. We estimate adjusted EBITDA for the fiscal year in the range of $465 million to $485 million, which represents a year-on-year increase of 4% to 9% from prior year. While slowing memory output and a weakening industry capital spending environment will result in less bullish top line performance, new POR wins and DS&S infrastructure projects mitigate some of this top line impact. We believe favorable segment mix and continued cost discipline will drive improved EBITDA margins. Our estimates for depreciation and amortization, interest expense, net income attributable and noncontrolling interest and adjusted effective tax rate remain the same. Restructuring costs are still expected to be minimal, excluding the impacts of the previously announced merger agreement. With that, I will turn the call back over to Guillermo for closing remarks.

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [5]

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Thanks, George. Turning to Slide 18. We're proud of our execution in the first quarter, even as the market goes through a digestion period after an extended growth period. We believe we have a strong business positions, innovation pipeline and unique opportunities to increase or serve available market. We continue to drive our investments in these areas, many of which will start to deliver results in 2019. Our teams have built Versum into a strong and vibrant company. I want to thank our global employees for all their work to serve our customers, your contributions have made all the difference. With the announced merger, we'll be starting a new chapter in our journey. We are no -- not strangers to change, given the journey over the last few years, and we know all of the excitement and rewards that come with change. In this case, it will be to the benefit of all our stakeholders, our customers, our employees and our investors. I hope that you are as excited as we are for the future. With that, operator, we're ready to take some questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question today will come from Kieran De Brun of Crédit Suisse.

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Kieran Christopher De Brun, Crédit Suisse AG, Research Division - Research Associate [2]

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I just was wondering if you can just maybe touch a little bit more within Process Materials as you think about the back half of the year, your ability to start getting pricing in some of your key products in Process Materials and how you see that trending. I don't know if it's too early to talk about 2019, but how do you see that until the back half of the year and then into 2019?

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [3]

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Okay. Yes, I think right now it's really about the ramps that are taking place, especially around VNAND, obviously because of the increase building material impact it has on products like NF3 per wafer, but also OLED that will pick up. So right now most of the capacity that's been added is in the market. Prices have -- if you look at quarter-on-quarter, they remain pretty stable. I think the issue is as the demand starts to ramp up, you'll see the utilization rates increase and more -- a better environment for pricing to start moving. So that's probably going to be more towards the back half of the year and into 2020. There's no new capacity that would come until later in 2020. So I think it's really about the RAMs at this point in time.

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Kieran Christopher De Brun, Crédit Suisse AG, Research Division - Research Associate [4]

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And then maybe just when we think about your cash balance. I mean, you have over $400 million now. In lieu of the merger, have your capital allocation priorities changed at all or is the plan still to kind of prioritize the organic growth? I mean, is there still an opportunity to do any kind of -- if there are small kind of opportunities to do bolt-ons or anything along those lines or even a buyback, I mean, are there kind of limits to how you can deploy capital until the merger closes?

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [5]

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Yes, I think given the recent announcements, we're focused on executing our business strategy, our business plan and our strategy. So obviously the organic growth remains our #1 priority. Most of those projects are ongoing. Especially if you look at the ones we're making -- doing in Korea, they will be finalized by probably mid-calendar year, this year for us. So that's the #1 priority. And that should start generating new revenue, new business towards the back end of this year and into 2020. So clearly #1, if bolt-ons again can continue to execute, I think, other things we will obviously focus on the merger as the biggest step forward.

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George G. Bitto, Versum Materials, Inc. - Executive VP & CFO [6]

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Yes, as you noted, I mean, there are certain restrictions in the merger agreement, which we'll honor but those would be our priorities.

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Operator [7]

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Our next question will come from Mike Harrison of Seaport Global Securities.

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Jacob P. Schowalter, Seaport Global Securities LLC, Research Division - Associate Analyst [8]

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This is Jacob on for Mike. Looking at guidance, the decremental margins on the guidance reduction was better than I would have expected. I know you're going to say some of this is sort of the mix improvement in DS&S becoming a smaller percentage of sales. But will -- are there any other benefits that sort of you think better than expected in terms of maybe the cost line or maybe sort of the margins in the Materials segment are maybe better than expected that's helping to offset?

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [9]

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Right. So obviously the #1 issue is what you mentioned now is just the segment mix change. But the other part, if you look at our growth rates, it's Advanced Materials is the one that's growing the fastest, those were that tend to be driven by newer products going to be more profitable, so also drive mix improvement for us. In general, our AM business has higher gross profit margins. So that will have a positive impact.

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Jacob P. Schowalter, Seaport Global Securities LLC, Research Division - Associate Analyst [10]

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Okay. And then last quarter, I think, you guys pointed out that Q1 was probably going to be your weakest quarter of the year. But given the industry commentary and the guidance reduction, do you think Q2 is going to be lower sequentially or it's still expected to sort of the Q1 was the weakest and we're going to go higher from here?

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [11]

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No, we still think that Q1 will be the weakest of the quarters. I think if you look at the market dynamics right now, I mean, if you look at our portfolio, nothing's really changed. The PORs we won, we won. So this is now about ramp rates. What's ramping when and how does that impact what we had planned before and the new outlook. So if you look at today, in our Q1, clearly foundry was the software, memory continue to do fairly well. I think as we look at Q2, the indication we have from customers is that some of the foundry demand again will start picking up towards the back end of Q2 and into Q3 and that the memory RAMs will also start towards the back end of Q2, more towards Q3 and beyond. So that's really even in our guidance what we're changing is more acknowledging that there is some noise between the ramp rates and that there is a little bit of a pushback a quarter or so from what we had thought in the beginning of the year of our fiscal year.

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George G. Bitto, Versum Materials, Inc. - Executive VP & CFO [12]

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And I think what we said is, I mean, if you look at Delivery Systems, while we expect Q2 and Q3 to hold up fairly well, we do see that from an order pattern perspective that Q2 may shape up weaker than Q3.

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Operator [13]

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Our next question will come from Brian Chin of Stifel.

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Brian Edward Chin, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [14]

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Sure. Maybe again, just kind of an open ended question, and I know Guillermo you touched on in the last week's call, the team touched on the sort of the value potential from this deal. But it'd be great to hear again from your perspective, maybe even saying that out that just why you and the Board felt that now is the right time to do this merger, maybe taking in the consideration things, such as how changes in the industry landscape perhaps the level of collaboration that's now required between material supplier and any other internal company factors as well.

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [15]

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So I think, first, the question of timing right now obviously we started this process last quarter, all the data will come out when we do the proxy. But I think the real question is why now? Well, one it's the sooner we can get the merger in place, I think, the sooner we can move to create value for our shareholders and for our customers. Because this new company is going to have a much bigger portfolio capabilities and infrastructure to leverage. So I don't think that there's going to be a chance for others in the industry to build such a diversified portfolio because there's not going to be the same levels of properties available in the market. So we thought that, that was of strategic importance on moving now. Remember, that this was a merger of equals. So it's the relative value of the 2 companies. So timing, if it's in a stronger external market or a little bit weaker, again that should not have as big of an impact in the relative valuation. So again, we felt that, that driving the strategic value was more critical at this point in time.

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Brian Edward Chin, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [16]

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Okay. Great. That's good to hear. Also, I guess, I think, this was touched on here in a recent question. But you elaborated the weakness in foundry, you saw in the materials side of the business and have you see sort of a delayed ramp up in terms of some of those initiatives and also just the wafer starts as well. Just curious in terms of looking forward a quarter or 2, are you factoring in any sort of potential cutbacks that could manifest in the memory side of that market if pricing continues to worsen?

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [17]

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I think most of what we're hearing from the industry is more about the ramps than really a cutback in production. So, i.e., lower production than prior year. So I think this is about the growth rate, not about going into a contraction in the total market. So the biggest thing that we're acknowledging is that some of the ramps are going to take place probably a quarter later than we thought. If you look at DRAM especially, but also in the case of VNAND. I think the foundry is more a little bit of the market. It's more the market dynamics and demand of phones and all that and the impact it's having on foundry customers. But obviously the expectation is, as they move to 7-nanometer but that will start ramping also towards the back end of our Q2.

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Operator [18]

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Our next question will come from of Toshiya Hari of Goldman Sachs.

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Toshiya Hari, Goldman Sachs Group Inc., Research Division - MD [19]

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Great. I had a follow-up on your full year guidance. You've updated your view on MSI from, I think, it was 5% to 7% on your last call to 2% to 4% growth this quarter, and obviously WFE down from, I think, 7% at the midpoint last quarter to down sort of mid- to high teens this quarter. So given those changes, I'm a little bit surprised by how little your top line guide is being impacted here. So you're clearly picking up some share in Materials and/or DS&S. So if you can provide some color on some of the product areas where you're picking up share, that would be helpful? And then I have a follow up.

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [20]

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Yes, so I think you captured it, Toshiya, that a lot of the growth and you could it see this quarter even with some softness in the market, double-digit growth in Advanced Materials, and that's really a lot of the new PORs. So these are RAMs in 7-nanometer, in -- on the -- with logic and also in DRAM and in VNAND. So we have a very robust portfolio right now if you look at AM in deposition, a lot of new both OS and OM products. So our question right now is it's going to grow, it's just the ramp rates is where the noise is. And that's the part that we're trying to acknowledge it with the adjustment that we made, but it's still going to get very good momentum. Similarly, in our planarization business, STI, barrier, copper have done very, very well. And although the POR work for some of the newer things like tungsten probably won't come in till the end of the year. We're making significant progress, I think, tool time and access that we're getting with customers has really increased because part of the slowdown and that's been very, very helpful in our POR work and even in the cleans. I think, we're also seeing expansion in the non-NF3, where we're still capacity limited. The rest of the PM portfolio, we're seeing also good demand. Obviously, once the ramp starts taking place in memory, that will be more helpful for the overall portfolio.

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George G. Bitto, Versum Materials, Inc. - Executive VP & CFO [21]

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And I'd also add, Toshiya, I mean, on the DS&S side, our infrastructure projects are progressing. And so given our order book, as you know, we don't necessarily perfectly correlate with WFE. So I don't think that the movement in WFE will necessarily translate into the exact movement in our DS&S business.

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Toshiya Hari, Goldman Sachs Group Inc., Research Division - MD [22]

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Great. I appreciate that. And then as a follow-up, just a question on NF3. We recently talked to a couple of your peers in the group in Korea and Japan. And it seems like your competitors are expanding capacity pretty aggressively until late 2019 and into 2020. You talked about the constraints that you're seeing today and the positive outlook in terms of pricing into the back half. But what sort of a conviction or confidence level you have there in terms of pricing improving into the back half?

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [23]

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Yes, I think, towards the back half, I mean, volume at the end of the day for these products are going mid double digits. So demand is there. I think the ramps is the issue. So I think it's a little bit more of the supply-demand balances as some of these new capacity additions come in. From our view of all the announcements, I would say, even ours will be coming in towards the back end of 2020, so we don't see a lot of significant capacity coming in this year or in early parts of next year, just given the scale of some of these investments requirements. So I think, pricing hasn't changed very much over the last few quarters. And it's really about the ramps. Once the ramps happen, I think, that capacity is going to be needed. Remember that for us even with the capacity we're adding, we're not going to expand our share position of the market. This is just about staying relevant. So for us to sell out our -- we've sold out now, to sell out our capacity is not as difficult given this is not our core growth driver. It's just a very profitable and healthy part of our portfolio.

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Operator [24]

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(Operator Instructions) Our next question will come from Chris Kapsch of Loop Capital Markets.

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Christopher John Kapsch, Loop Capital Markets LLC, Research Division - MD [25]

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Guillermo, so I had a question focused on the merger. And from your vantage, the question is about synergy potential and not so much cost synergy. But just from your perspective, do you see opportunity for top line synergies, for example, maybe there's situations where Entegris might have a -- might be overweight with the given customer, where you're underweight that you get piggyback on their stronger relationship or vice versa. Is there anything that you see on -- from the strategic impetus from that standpoint?

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [26]

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All right. I think one that jumps out very clearly for us it's a benefit on our side of our portfolio is Japan, given just our history with their products at that time and that, that was not a core market for them. We have business there, but we don't have as much of an infrastructure. Entegris has a pretty big presence there, I think, that should help accelerate both commercial relationships as well as infrastructure capabilities to support growth. I think the reverse is true in Korea and others areas, where we have very strong positions, especially around the material side with customers and that should help with the portfolio. I think near term, there's going to be not just -- so the portfolio is not a lot of overlap, but there are a lot of capabilities that we'll be able to leverage. I would say, if you look at our formulated products both in planarization and in the cleans, but more towards the planarization side, their capabilities in fluid handling and filtration should be very helpful for us in a lot of the new plants, production quality, reliability, which is also a very important driver of growth. It's not just the product that works, but if your customers really like the quality and reliability and they are raising the bar. I think there is -- that's going to be another big driver. There's a lot of other ones that I'm sure Bertrand over time will communicate and add, but I think it's probably more appropriate for them to talk about these as they look forward.

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Christopher John Kapsch, Loop Capital Markets LLC, Research Division - MD [27]

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That's very helpful. And then my follow-up is on your comments about sort of the softer near-term ramp conditions on the material side and that representing opportunity from picking up more tool time for POR qualifications. And I'm just wondering if that dynamic, is it more pronounced as you might have suggested in foundry, logic or also on memory? I guess, you highlighted the -- yes, go ahead.

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [28]

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It's across the board. But, I mean, for us, we have some very important memory projects that we've really seen significant acceleration. I mean, our time line, for example, when you start the POR work in getting the lab approvals first and then you got to go and do all the testing in the fabs themselves, we've done it in record time. Things that would have taken a year, we've been able to accomplish in 3, 4 months. So that bodes very well for us. But I would say, in general, we've had a record number of POR wins and carryovers, old PORs and just some of the new nodes in both, what, in foundry, in logic and in memory. So it's pretty broad-based. Equally, we have a lot of new BKMs. These are like new molecules that we're working with our OEM partners and our customers for really the next generation. So this is even before the POR work starts. So a lot of exciting new developments and I think bode well for the future.

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Operator [29]

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And ladies and gentlemen, this will conclude our question-and-answer session. At this time, I'd like to turn the conference back over to Mr. Novo for any closing remarks.

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Guillermo Novo, Versum Materials, Inc. - President, CEO & Director [30]

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Well, wanted to thank all of you for participating in today's call. As we indicated another solid quarter, the long-term outlook for our industry and our businesses remained extremely positive. Our businesses are very well positioned for the future. So we're very excited, not only for our own performance and our outlook, but also with the announced merger, what this will be able to bring value for our customers, our shareholders, and all of you, our investors. So thank you very much. And we look forward to connecting with you in the coming weeks.

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Operator [31]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.