Entegris Inc (ENTG) 2023 Q3 法說會逐字稿

Welcome to Entegris Third Quarter 2023 Earnings Conference Call. (Operator Instructions)

歡迎參加 Entegris 2023 年第三季財報電話會議。 （操作員說明）

I would now like to turn the call over to Bill Seymour, Vice President of Investor Relations.

我現在想將電話轉給投資者關係副總裁比爾·西摩 (Bill Seymour)。

Good morning, everyone. Earlier today, we announced the financial results for our third quarter of 2023. 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.

大家，早安。今天早些時候，我們公佈了 2023 年第三季的財務業績。在開始之前，我想提醒聽眾，我們今天的評論將包括一些前瞻性陳述。這些陳述涉及許多風險和不確定性，實際結果可能與前瞻性陳述中的預測有重大差異。

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.

有關這些風險和不確定性的更多資訊包含在我們向 SEC 提交的最新年度報告和後續季度報告中。請參閱簡報中免責聲明投影片上的資訊。

On this call, we will also refer to non-GAAP financial measures as defined by the SEC and Regulation G. You can find a reconciliation table in today's news release as well as on our IR page of our website at entegris.com.

在本次電話會議上，我們還將參考 SEC 和 G 條例定義的非 GAAP 財務指標。您可以在今天的新聞稿以及我們網站 entegris.com 的 IR 頁面上找到調整表。

On the call today are Bertrand Loy, our CEO; and Linda LaGorga, our CFO. With that, I'll hand the call over to Bertrand.

今天參加電話會議的是我們的執行長伯特蘭·洛伊 (Bertrand Loy)；和我們的財務長 Linda LaGorga。這樣，我就把電話轉給伯特蘭。

Thank you, Bill, and good morning. I would start by saying that I am pleased with another quarter of solid performance. In an industry environment that continues to be challenging, the Entegris team delivered results that were in line or better than our guidance, and we made good progress on all our key commitments.

謝謝你，比爾，早安。首先我要說的是，我對又一個季度的穩健表現感到滿意。在持續充滿挑戰的產業環境中，Entegris 團隊交付的結果符合或優於我們的指導，並且我們在所有關鍵承諾方面取得了良好進展。

First, on our financial performance. Sales were $888 million and EBITDA margin was 26.5%, both squarely at the midpoint of our guidance range. Non-GAAP EPS was $0.68, exceeding our guidance range.

首先，關於我們的財務表現。銷售額為 8.88 億美元，EBITDA 利潤率為 26.5%，兩者正好處於我們指引範圍的中點。非 GAAP 每股收益為 0.68 美元，超出了我們的指導範圍。

Let me make a few additional comments on our sales performance. Sales were down 1% sequentially, in line with our guidance. The drivers of that decline were similar to last quarter.

讓我對我們的銷售業績做一些補充評論。銷售額環比下降 1%，與我們的指導一致。造成這一下降的因素與上季類似。

For our unit-driven products, sales were down across most product areas as utilization rates in both logic and memory continue to bump along the bottom. However, we did see growth in product lines that are of increasing importance to our customers' technology road maps.

對於我們的單元驅動產品，由於邏輯和記憶體的利用率持續下滑，大多數產品領域的銷售額都下降了。然而，我們確實看到了產品線的成長，這些產品線對我們客戶的技術路線圖越來越重要。

In particular, we saw growth in advanced deposition materials and wet etch and clean liquid filters. In addition, we had another strong quarter in SiC slurries and pads, reflecting the growth of that industry segment and our strong market position.

特別是，我們看到了先進沉積材料以及濕蝕刻和清潔液體過濾器的成長。此外，我們在碳化矽漿料和拋光墊方面又經歷了一個強勁的季度，反映了該行業領域的成長和我們強大的市場地位。

In addition, like last quarter, our performance was mixed in our CapEx-driven solutions. Sales were down for FOUPs and other products tied to WFE in contrast to the steady demand for our gas purification systems and sensing and control products, which are tied to new fab construction.

此外，與上季一樣，我們的資本支出驅動解決方案的表現參差不齊。與新晶圓廠建設相關的氣體淨化系統以及感測和控制產品的穩定需求相比，FOUP 和其他與 WFE 相關的產品的銷售額有所下降。

Next, I would like to provide an update on the key commitments the team is focused on. First, on the CMC integration. We wrapped up all the ERP conversion on time in August, and we are on track to achieve the $75 million run rate cost synergy target this quarter. We executed 4 ERP conversions within 13 months of the closing of the CMC acquisition. This is a major accomplishment for the team and a testament to our integration capabilities.

接下來，我想提供有關團隊重點關注的關鍵承諾的最新資訊。首先，關於CMC整合。我們在 8 月按時完成了所有 ERP 轉換，並且預計在本季度實現 7500 萬美元的運行成本協同目標。在 CMC 收購完成後的 13 個月內，我們執行了 4 次 ERP 轉換。這是團隊的重大成就，也是我們整合能力的證明。

Having the whole company on one common ERP platform will allow us to better serve our customers with streamlined end-to-end supply chain and operational capabilities. On the revenue synergies, we have seen early wins in combining products in the CMP module, including slurries, pads, formulated cleans and filters.

讓整個公司使用一個通用的 ERP 平台將使我們能夠透過簡化的端到端供應鏈和營運能力更好地為客戶服務。在收入協同效應方面，我們已經看到了 CMP 模組中產品組合的早期勝利，包括漿料、拋光墊、配方清潔劑和過濾器。

Looking further out, there's growing interest from our customers in our end-to-end solutions and our ability to codevelop solutions to support the adoption of materials like molybdenum and other precursors. Our customers see great benefits in Entegris solutions as they enable faster development times and improve speed to yield, which ultimately, for them, means faster time to market.

展望未來，我們的客戶對我們的端到端解決方案以及我們共同開發解決方案以支援鉬和其他前體等材料的採用的能力越來越感興趣。我們的客戶看到了 Entegris 解決方案的巨大優勢，因為它們可以縮短開發時間並提高產量速度，這最終對他們來說意味著更快的上市時間。

Next, divestitures and paydown. Here, we have made significant progress on our commitments. On October 2, we closed the sale of our Electronic Chemicals business to Fujifilm. Regarding the termination of our distribution agreement with Element Solutions, the deal is largely wrapped up and customer transitions are almost complete. We expect to receive the balance of the proceeds for this transaction by the end of the year.

接下來，資產剝離和償還。在這裡，我們在履行承諾方面取得了重大進展。 10 月 2 日，我們完成了將電子化學品業務出售給富士膠片的交易。關於我們與 Element Solutions 的分銷協議的終止，交易已基本完成，客戶轉換也已基本完成。我們預計在今年底前收到本次交易的收益餘額。

Finally, on the PIM business, which sells drag-reducing agents for the oil and gas industry, as we mentioned last quarter, we are working on the sale of the PIM business. The sale process remains ongoing, and we will update you when we have more to share.

最後，關於PIM業務，即為石油和天然氣行業銷售減阻劑，正如我們上季度提到的，我們正在致力於PIM業務的出售。銷售過程仍在進行中，當我們有更多資訊可以分享時，我們會向您更新。

Summing it up, so far this year, we have sold 3 businesses, not including the PIM business. And we are using the $1 billion in proceeds from those sales to significantly bring down our debt, just as we said we would. In addition, as you will hear from Linda, these transactions are driving both gross margin and EPS accretion.

總結一下，今年到目前為止，我們已經賣了3個業務，還不包括PIM業務。正如我們所說，我們正在利用這些銷售所得的 10 億美元收益來大幅減少我們的債務。此外，正如您將從琳達那裡聽到的那樣，這些交易正在推動毛利率和每股收益的成長。

Lastly, as we discussed, we are focused on improving our free cash flow and, specifically, inventory turns. We saw very good improvement in inventory reductions in the third quarter, which put a bit of pressure on gross margin, but contributed to improving cash flow for the quarter. Linda will also discuss this in more detail shortly.

最後，正如我們所討論的，我們專注於改善我們的自由現金流，特別是庫存週轉率。我們看到第三季庫存減少的情況非常好，這給毛利率帶來了一些壓力，但有助於改善本季的現金流。琳達也將很快對此進行更詳細的討論。

Let me now cover a few other important items before moving on to the outlook. First, on our new facility in Taiwan, as planned, we have begun initial shipments from the Kaohsiung facility. These volumes remain very small, but reflect the steady progress our local team is making. We continue to expect to ramp to higher volumes of production during the second half of 2024. Our new capacity and new facility in Taiwan is critical to addressing our long-term needs.

在繼續展望之前，讓我先介紹一些其他重要的內容。首先，在我們台灣的新工廠，按照計劃，我們已經開始從高雄工廠開始出貨。這些數量仍然很小，但反映了我們當地團隊正在取得的穩定進展。我們繼續預計 2024 年下半年產量將增加。我們在台灣的新產能和新工廠對於滿足我們的長期需求至關重要。

Last quarter, we shared that we were combining the SCEM and APS divisions starting in the third quarter. This combination has been completed. The new division is called Materials Solutions. Materials Solutions will provide our customers the opportunity to leverage our end-to-end capabilities, which we believe will accelerate their road maps by reducing their time to yield and by providing better device performance and superior cost of ownership. I believe that this division has tremendous opportunity for growth and margin expansion.

上個季度，我們宣布從第三季開始合併 SCEM 和 APS 部門。這樣的組合就完成了。新部門稱為材料解決方案。材料解決方案將為我們的客戶提供利用我們的端到端功能的機會，我們相信這將透過縮短產量時間並提供更好的設備性能和卓越的擁有成本來加快他們的路線圖。我相信這個部門有巨大的成長和利潤擴張的機會。

Last week, we submitted an application for Chips Act funding for our new Colorado Springs facility, which we originally announced in December 2022. We believe that this project is squarely in line with the goals of the Department of Commerce to strengthen the domestic semiconductor ecosystem and improve the resiliency of the domestic supply chain. We look forward to doing our engagement with the Chips program office on our project.

上週，我們為科羅拉多斯普林斯的新工廠提交了《晶片法案》資助申請，該工廠最初是在2022 年12 月宣布的。我們相信該項目完全符合商務部加強國內半導體生態系統和發展的目標。提高國內供應鏈的彈性。我們期待與 Chips 專案辦公室就我們的專案進行合作。

Turning to the recently released export controls for China, we do not expect to see any new material direct impact to our business. Next, a few updates on our corporate social responsibility program. In the next few weeks, we will be publishing our latest CSR report. We are proud of the progress we have made since launching our program in 2020, but we also know we can do even more. Entegris recognizes climate change is a critical issue for the world at large and our communities.

談到最近發布的對中國的出口管制，我們預計不會對我們的業務產生任何新的實質直接影響。接下來是我們企業社會責任計畫的一些更新。在接下來的幾週內，我們將發布最新的企業社會責任報告。我們對自 2020 年啟動該計劃以來所取得的進展感到自豪，但我們也知道我們可以做得更多。 Entegris 認識到氣候變遷對於整個世界和我們的社區來說都是一個關鍵問題。

On that note, I am pleased to announce that one of the new goals we are introducing is the commitment to reduce our Scope 1 and Scope 2 greenhouse gas emissions by 42%. In addition, we are pleased that Entegris was recently awarded the Gold sustainability rating from EcoVadis, which puts us in the top 3% of all companies, demonstrating our strong commitment to corporate social responsibility, our colleagues and our corporate values.

就此而言，我很高興地宣布，我們引入的新目標之一是承諾將範圍 1 和範圍 2 溫室氣體排放量減少 42%。此外，我們很高興 Entegris 最近獲得了 EcoVadis 的可持續發展金級評級，這使我們躋身所有公司的前 3%，這表明我們對企業社會責任、我們的同事和我們的企業價值觀的堅定承諾。

Now looking at the rest of 2023, a little less changed in our view of the market. We believe the industry, both for logic and memory, has likely reached the bottom in terms of utilization rates. However, we do not expect any meaningful improvement in the market in the short term. As it pertains to Entegris, given our strong market position, we continue to expect to outperform the market by at least 6 points in 2023.

現在看看 2023 年剩下的時間，我們對市場的看法變化不大。我們認為，邏輯和記憶體產業的利用率可能已觸底。然而，我們預期短期內市場不會有任何有意義的改善。就 Entegris 而言，鑑於我們強大的市場地位，我們繼續預期 2023 年的表現將跑贏市場至少 6 個百分點。

Despite the challenging short-term market conditions, we remain very optimistic about the long-term growth prospects for the semiconductor industry and for Entegris. The market will return to growth on the way to doubling in size to $1 trillion. At the same time, the industry is entering in a period of unprecedented technology change and device complexity, with chips shrinking below 1 nanometer and with the proliferation of 3D structures across most device architectures.

儘管短期市場環境充滿挑戰，但我們對半導體產業和 Entegris 的長期成長前景仍然非常樂觀。市場規模將恢復成長，規模將翻倍至 1 兆美元。同時，該行業正在進入前所未有的技術變革和設備複雜性時期，晶片尺寸縮小到 1 奈米以下，而 3D 結構在大多數設備架構中激增。

And this means the industry is moving toward Entegris because our value proposition is unique and increasingly important to our customers' road maps, especially in the areas of material science, materials purity and end-to-end solutions that enable faster time to yield. This will ultimately translate into rapidly expanding content per wafer and superior growth for Entegris.

這意味著該行業正在向Entegris 方向發展，因為我們的價值主張是獨一無二的，對於客戶的路線圖越來越重要，特別是在材料科學、材料純度和能夠加快產量的端到端解決方案領域。這最終將轉化為每片晶圓含量的快速增長以及 Entegris 的卓越成長。

Let me now turn the call over to Linda. Linda?

現在讓我把電話轉給琳達。琳達？

Good morning, everyone, and thank you Bertrand. Our sales in the second quarter were $888 million, down 11% year-over-year and down 1% sequentially. FX negatively impacted revenue by approximately $4 million year-over-year and negatively impacted revenue by about $6 million sequentially in Q3. As a reminder, the third quarter results and our original guidance still included the full revenue impact of the Electronic Chemicals business and the business we are selling to Element Solutions.

大家早安，謝謝伯特蘭。我們第二季的銷售額為 8.88 億美元，年減 11%，季減 1%。外匯對第三季營收年增了約 400 萬美元的負面影響，對營收產生了約 600 萬美元的負面影響。提醒一下，第三季業績和我們最初的指導仍然包括電子化學品業務和我們出售給 Element Solutions 的業務的全部收入影響。

Gross margin on a GAAP basis was 41.3% and was 41.4% on a non-GAAP basis in the third quarter, within our guidance range. The expected sequential decline in the non-GAAP gross margin was driven by lower plant volumes from our continued focus on inventory reduction, the temporary impact of the termination of our distribution agreement with Element Solutions and the continued ramp of our new facility in Taiwan.

第三季以 GAAP 計算的毛利率為 41.3%，以非 GAAP 計算的毛利率為 41.4%，介於我們的指引範圍內。非公認會計準則毛利率的預期連續下降是由於我們持續關注庫存減少而導致工廠產量下降、終止與 Element Solutions 的分銷協議的暫時影響以及我們在台灣的新工廠的持續擴建。

Operating expenses on a GAAP basis were $250 million in Q3. Operating expenses on a non-GAAP basis in Q3 were $172 million, below our guidance. Adjusted EBITDA in Q3 was $235 million or 26.5% of revenue, at the midpoint of our guidance range. The GAAP tax rate was negative in Q3. The non-GAAP tax rate was 9.3%, below our guidance. Both our GAAP and non-GAAP tax rates were positively impacted by the recent IRS announcement that temporarily allows for certain additional foreign tax credits.

第三季以 GAAP 計算的營運費用為 2.5 億美元。第三季以非公認會計準則計算的營運費用為 1.72 億美元，低於我們的指引。第三季調整後 EBITDA 為 2.35 億美元，佔營收的 26.5%，位於我們指引範圍的中點。第三季的 GAAP 稅率為負。非 GAAP 稅率為 9.3%，低於我們的指引。我們的公認會計原則和非公認會計原則稅率都受到美國國稅局最近宣布暫時允許某些額外外國稅收抵免的積極影響。

GAAP diluted EPS was $0.22 per share in the third quarter. Non-GAAP EPS was $0.68 per share above our guidance, driven by lower operating expenses, modestly lower interest expense and the positive impact of our lower tax rate. This was partially offset by the negative impact of the FX in our other income and expense line.

第三季 GAAP 攤薄後每股收益為 0.22 美元。非 GAAP 每股盈餘比我們的指引高出 0.68 美元，這是由於營運費用下降、利息費用小幅下降以及我們較低的稅率的正面影響。這部分被外匯對我們其他收入和支出項目的負面影響所抵銷。

Now as Bertrand said, our third quarter results now reflect the combination of the SCEM and APS divisions into the new division, Materials Solutions. We've provided historical recast financials for the 3 divisions in our earnings slides.

現在，正如 Bertrand 所說，我們第三季的業績反映了 SCEM 和 APS 部門合併為新部門「材料解決方案」。我們在收益投影片中提供了 3 個部門的歷史重鑄財務資料。

MC sales in the quarter of $286 million were up 2% from last year and up 1% sequentially. The modest sequential sales growth was driven primarily by wet edge and clean liquid filters, which are unit driven; and gas purification solutions, which are tied to facilities-based CapEx. Adjusted operating margin for MC was 35.4% for the quarter, essentially flat sequentially.

本季 MC 銷售額為 2.86 億美元，比去年成長 2%，比上一季成長 1%。銷售額連續小幅成長主要是由單位驅動的濕邊過濾器和清潔液體過濾器推動的；和氣體淨化解決方案，這些解決方案與基於設施的資本支出相關。 MC 本季調整後營業利益率為 35.4%，與上一季基本持平。

AMH sales in Q3 of $180 million were down 14% versus last year and down 5% sequentially. The drivers of the sequential sales decline in AMH were similar to last quarter. Products, which are more tied to fab construction, like sensing and control solutions, continue to grow. And products more tied to WFE, like FOUPs, declined. Adjusted operating margin for AMH was 17.8%, down sequentially, primarily driven by lower volumes.

第三季 AMH 銷售額為 1.8 億美元，比去年下降 14%，比上一季下降 5%。 AMH 銷售額較上季下降的驅動因素與上季類似。與晶圓廠建設密切相關的產品（例如感測和控制解決方案）持續成長。與 WFE 更相關的產品（例如 FOUP）也出現了下降。 AMH 調整後營業利潤率為 17.8%，季減，主要是因為銷售量下降。

For the new division, Materials Solutions, sales in Q3 of $436 million were down 16% year-over-year and down 1% sequentially. The modest sequential sales decline was driven by lower volumes across certain product lines, particularly in memory applications. This was offset by strong growth in SiC slurries and pads, advanced deposition materials and specialty coatings.

新部門材料解決方案第三季銷售額為 4.36 億美元，年減 16%，季減 1%。銷售額環比小幅下降是由於某些產品線銷售下降所致，特別是在記憶體應用領域。這被碳化矽漿料和墊、先進沉積材料和特殊塗層的強勁成長所抵消。

Adjusted operating margin for MS was 16.8% for the quarter. The modest sequential margin decline was primarily driven by the temporary impact of the termination of our distribution agreement with Element Solutions.

MS 本季調整後營業利益率為 16.8%。利潤率環比小幅下降主要是由於我們與 Element Solutions 終止分銷協議造成的暫時影響。

Moving on to cash flow. We continue to be committed to improving free cash flow. And as an organization, we have put a lot of focus on lowering inventory to that end. These efforts are showing great results, with inventory down almost $80 million sequentially in Q3.

轉向現金流。我們持續致力於改善自由現金流。作為一個組織，我們非常重視降低庫存以實現這一目標。這些努力取得了巨大成果，第三季庫存較上季減少了近 8,000 萬美元。

CapEx for the quarter was $78 million. We continue to expect to spend approximately $450 million in total CapEx in 2023. Third quarter free cash flow improved significantly to $122 million. This was driven primarily by our progress toward our goal to reduce inventory this year by approximately $100 million.

該季度的資本支出為 7800 萬美元。我們仍預期 2023 年資本支出總額約為 4.5 億美元。第三季自由現金流大幅改善至 1.22 億美元。這主要是由於我們今年減少庫存約 1 億美元的目標取得了進展。

Next, let's discuss our capital structure. At the end of Q3, our gross debt was $5.5 billion, and our net debt was $4.9 billion. Gross leverage was 5.5x and net leverage was 4.9x, pro forma for our announced cost synergies.

接下來，我們來討論一下我們的資本結構。截至第三季末，我們的總債務為 55 億美元，淨債務為 49 億美元。根據我們宣布的成本協同效應，總槓桿率為 5.5 倍，淨槓桿率為 4.9 倍。

During the third quarter, we made a $75 million voluntary debt payment and executed a 25 basis points reprice in our term loan. During the fourth quarter, we will pay down approximately $730 million of debt with the proceeds from the Electronics Chemicals divestiture and the remainder of the proceeds from the Element transaction.

第三季度，我們自願償還了 7,500 萬美元的債務，並對定期貸款執行了 25 個基點的重新定價。在第四季度，我們將用電子化學品剝離的收益和 Element 交易的剩餘收益來償還約 7.3 億美元的債務。

As a result of this paydown, by the end of the year, we expect our gross debt to drop to approximately $4.8 billion and gross leverage to approximately 5x. The blended interest rate on our debt portfolio will be approximately 5.5% and the proportion of the portfolio that is variable will be close to 0.

由於本次還款，到今年年底，我們預計我們的總債務將降至約 48 億美元，總槓桿率將降至約 5 倍。我們的債務投資組合的混合利率約為 5.5%，可變投資組合的比例將接近 0。

Moving on to our Q4 outlook. Before I start, to be clear, our guidance and our results for the fourth quarter will not include the sold Electronic Chemicals business and will include only a minimal P&L impact from the business we sold to Element Solutions. We expect sales to range from $770 million to $790 million in Q4. To the point I just made, this does not include approximately $90 million of sales from the sold Electronic Chemicals and Element businesses.

繼續我們的第四季展望。在我開始之前，需要明確的是，我們第四季度的指導和業績將不包括出售的電子化學品業務，並且僅包括我們出售給 Element Solutions 的業務產生的最小損益影響。我們預計第四季的銷售額將在 7.7 億美元至 7.9 億美元之間。就我剛才所說的而言，這還不包括已出售的電子化學品和元件業務帶來的約 9,000 萬美元的銷售額。

So on a comparable basis, it implies an approximate 2.2% sales decline from Q3 to the midpoint of our guidance for Q4. We expect the EBITDA margin to be approximately 26% to 27%. We expect GAAP EPS to be $0.25 to $0.30 per share and non-GAAP EPS to be $0.55 to $0.60 per share.

因此，在可比較的基礎上，這意味著銷售額從第三季到我們第四季指引的中點大約下降了 2.2%。我們預計 EBITDA 利潤率約為 26% 至 27%。我們預計 GAAP 每股收益為 0.25 至 0.30 美元，非 GAAP 每股收益為 0.55 至 0.60 美元。

Let me provide some additional modeling items. We expect gross margin to be 42% to 43% in Q4, both on a GAAP and non-GAAP basis. The higher margin compared to Q3 reflects the positive impact of the divestitures and strong cost controls, offset by the impact of further inventory reductions. We expect GAAP operating expenses to range from $221 million to $226 million in Q4 and non-GAAP operating expenses to range from $165 million to $170 million.

讓我提供一些額外的建模項目。我們預計第四季度的毛利率將為 42% 至 43%，無論是以 GAAP 還是非 GAAP 計算。與第三季相比較高的利潤率反映了資產剝離和強有力的成本控制的正面影響，但被進一步減少庫存的影響所抵消。我們預計第四季度 GAAP 營運費用為 2.21 億美元至 2.26 億美元，非 GAAP 營運費用為 1.65 億美元至 1.7 億美元。

Depreciation is expected to be approximately $40 million in Q4. We expect interest expense to be approximately $66 million in Q4. That amount does not include a full quarter impact of the expected debt paydown. We expect the non-GAAP tax rate for the fourth quarter to be approximately 12%.

預計第四季折舊約為 4000 萬美元。我們預計第四季的利息支出約為 6,600 萬美元。該金額不包括預期債務償還的整個季度影響。我們預計第四季的非 GAAP 稅率約為 12%。

Early next year, we are planning to do a brief virtual analyst meeting, where we will update the financial model moving forward. We'll send more information on this in the coming few months.

明年初，我們計劃召開一次簡短的虛擬分析師會議，我們將在會議中更新未來的財務模型。我們將在未來幾個月內發送更多相關資訊。

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

現在我將把它交還給 Bertrand，讓其做一些補充的結束語。

Thank you, Linda. In this soft industry environment, we continue to focus on the things that are within our control. And in that context, we are very pleased with the quality of our execution. We have successfully wrapped up the CMC integration and expect to realize the full cost synergies by year-end. We have made great progress in divesting noncore assets and are using the proceeds to pay down debt.

謝謝你，琳達。在這個疲軟的產業環境下，我們繼續專注於我們控制範圍內的事物。在這種情況下，我們對我們的執行品質感到非常滿意。我們已成功完成 CMC 整合，並預計在年底前實現全部成本綜效。我們在剝離非核心資產方面取得了巨大進展，並正在利用所得款項來償還債務。

We are effectively balancing short-term cost management while making critical investments for the future. We're using this industry downturn to actively engage with our customers on their technology road maps, and we have strong conviction in the long-term growth potential of the industry and the growing importance of our value proposition.

我們正在有效地平衡短期成本管理，同時為未來進行關鍵投資。我們利用這個行業低迷時期，積極與客戶合作制定他們的技術路線圖，我們堅信該行業的長期成長潛力以及我們價值主張日益重要。

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

那麼，接線員，讓我們打開提問線路。

(Operator Instructions) Our first question is coming from Toshiya Hari with Goldman Sachs.

（操作員說明）我們的第一個問題來自高盛的 Toshiya Hari。

I had 2 questions. First, Bertrand, just on the overall market backdrop. I think you mentioned that your outlook really hasn't changed. But curious what you're seeing in the respective applications or end markets, DRAM, NAND, leading edge, logic and foundry and, importantly, the trailing edge. I think things seem to be slowing down a little bit.

我有兩個問題。首先，Bertrand，談談整體市場背景。我想你提到你的觀點確實沒有改變。但很好奇您在各自的應用或終端市場、DRAM、NAND、前沿、邏輯和代工，以及重要的是後沿市場中看到了什麼。我認為事情似乎有點放緩。

So what you're seeing across those 4 buckets? And I know it's premature to talk about 2024 and don't expect you to give us a market forecast. But what are some of the key swing factors that we should be monitoring as we think about '24, both in terms of the market, but also, importantly, your rate of outperformance?

那麼您在這 4 個桶子中看到了什麼？我知道現在談論 2024 年還為時過早，也不指望您為我們提供市場預測。但是，當我們思考 24 世紀時，我們應該監控哪些關鍵的波動因素，無論是在市場方面，還是更重要的是，您的表現出色的比率？

Yes. Thank you, Toshiya. When it comes to the market, both in terms of Q3 and what we are expecting going into Q4, this is really largely in line with our assumptions for the second half of the year. We are seeing some modest recovery in advanced logic. So it's good that this particular segment is stabilizing after a steady decline for 3 or 4 quarters.

是的。謝謝你，俊哉。就市場而言，無論是第三季還是我們對第四季的預期，這在很大程度上符合我們對下半年的假設。我們看到高級邏輯出現了一些溫和的復甦。因此，這個特定細分市場在經歷了三、四個季度的穩定下滑之後趨於穩定，這是一件好事。

But on the logic side, this is offset by the contraction that we are seeing in mainstream fabs. We saw a little bit of that in Q3, and we expect a continuation and an acceleration of that contraction in mainstream fabs in Q4. Memory remains mixed. We saw DRAM improving, as expected. But 3D NAND has remained fairly depressed, with wafer starts continuing to come down in Q3, and we expect no real recovery in Q4. So largely, again, industry conditions that we outlined on the previous call.

但從邏輯角度來看，這被我們在主流晶圓廠中看到的收縮所抵消。我們在第三季看到了一些這種情況，我們預計第四季主流晶圓廠的收縮將繼續並加速。記憶仍然是混雜的。正如預期的那樣，我們看到 DRAM 有所改善。但 3D NAND 仍然相當低迷，第三季晶圓開工量持續下降，我們預計第四季不會出現真正的復甦。在很大程度上，我們在上次電話會議中概述了行業狀況。

When it comes to 2024, it's a bit early for us to go into a lot of specifics. I would probably only limit my comments to saying that we expect wafer starts to be more favorable in 2024. But again, we'll provide some more quantification of that statement when we report our Q4 earnings in February.

說到 2024 年，我們現在討論很多細節還為時過早。我的評論可能僅限於說我們預計晶圓在 2024 年開始變得更加有利。但同樣，當我們在 2 月報告第四季度收益時，我們將提供該聲明的更多量化資訊。

Great. And then as my follow-up, maybe one question on gross margins for Linda. So Q4 guidance, I guess, the midpoint is 42.5%. I guess you're guiding to about 120 basis points of improvement sequentially.

偉大的。然後，作為我的後續行動，也許有一個關於琳達毛利率的問題。所以我猜第四季指引值的中點是 42.5%。我猜你正在指導大約 120 個基點的連續改進。

You talked about divestitures, cost controls and, I guess, those 2 as tailwinds and then the work you're doing on the inventory side as a headwind. Can you kind of break down some of those drivers and how they're impacting your guide? And also, curious if FX is playing a role at all.

你談到了資產剝離、成本控制，我想，這兩個都是順風，然後你在庫存方面所做的工作是逆風。您能否詳細分析其中一些驅動因素以及它們如何影響您的指南？而且，我很好奇外匯是否發揮了作用。

Yes, absolutely. So a couple of things. As we said, the gross margin will be accretive from the divestitures, but we're not seeing the full accretion at this time because of the plant utilization, which is partly driven by the inventory reductions. The inventory reductions are incredibly important to us, right? We're focused on free cash flow. We had an incredible third quarter with the $80 million inventory reduction, and it's allowed us to have a very strong cash flow number this quarter.

是的，一點沒錯。有幾件事。正如我們所說，毛利率將因資產剝離而增加，但由於工廠利用率，我們目前還沒有看到全面的增加，而工廠利用率部分是由庫存減少所推動的。減少庫存對我們來說非常重要，對吧？我們專注於自由現金流。我們的第三季業績令人難以置信，庫存減少了 8,000 萬美元，這使我們本季的現金流量非常強勁。

So you have that tailwind from the divestitures, slightly offset by some of our core initiatives, including the inventory reduction. So as we continue to plan and evolve, as you mentioned, we're always going to be looking at cost controls across our P&L. And we have done that as another offset, and we will continue to do that. But you're thinking about it right, with that balance between the divestitures and some of the key initiatives that we're driving right now is a bit of headwind.

因此，資產剝離帶來了推動力，但我們的一些核心措施（包括減少庫存）略有抵消。因此，正如您所提到的，隨著我們繼續計劃和發展，我們將始終關注損益表中的成本控制。我們已經這樣做了，作為另一個補償，我們將繼續這樣做。但你的想法是對的，資產剝離和我們現在正在推動的一些關鍵舉措之間的平衡有點逆風。

And Linda, sorry, the inventory reductions, is it fair to assume that you'll be done exiting this calendar year? Or could that continue into '24?

琳達，抱歉，庫存減少，可以公平地假設您將在今年退出嗎？或者這種情況會持續到24年嗎？

Well, to me, working cap is always important. And we're going to always maintain a focus on working cap. We have a bigger opportunity this year because we started with a higher level of inventory. But definitely, things aren't going to stop on that focus when we head into '24. So it will continue.

嗯，對我來說，工作上限總是很重要。我們將始終關注工作上限。今年我們有更大的機會，因為我們一開始的庫存水準就較高。但毫無疑問，當我們進入 24 世紀時，事情不會停止在這個焦點上。所以它會繼續下去。

But I think you'll see the numbers come down. $80 million is an incredibly big number. As we go into Q4, what we're targeting to try to see is another $40 million to $50 million inventory reduction. And then as Bertrand said, we'll be giving more color as we go into 2024 with our Analyst Day, but it's a continuing effort.

但我認為你會看到數字下降。 8000萬美元是一個令人難以置信的大數字。當我們進入第四季時，我們的目標是再減少 4,000 萬至 5,000 萬美元的庫存。然後，正如 Bertrand 所說，隨著 2024 年分析師日的到來，我們將提供更多色彩，但這是一項持續的努力。

We'll take our next question from Charles Shi with Needham.

我們將回答 Charles Shi 和李約瑟提出的下一個問題。

First off, Bertrand, I kind of want to ask because if I back out that $19 million contribution from EC and the distributor agreement you have with Element Solutions relative to the guidance you provided a quarter ago, it looks like Q4 is still slightly below what was implied in your guidance about a quarter ago. So I wonder what exactly is baked into the relatively lighter outlook for Q4? Is it still mostly the memory? Or there is some of the mature foundry logic-related weakness baked into the number.

首先，Bertrand，我有點想問，因為如果我撤銷 EC 的 1900 萬美元捐款以及您與 Element Solutions 簽訂的分銷商協議（相對於您一個季度前提供的指導），看起來第四季度仍然略低於大約一個季度前您的指導中就暗示了這一點。所以我想知道第四季相對較淡的前景究竟是由什麼因素造成的？主要還是記憶嗎？或者數字中存在一些與成熟代工廠邏輯相關的弱點。

Yes. So good question. So again, if you look at the midpoint of our guidance, that's about $780 million. That's about 2% down sequentially, and that's really a reflection of a few factors. I mean, first, the market continues to be soft, as I implied in my previous answer. We also want to recognize that Q4 is seasonally a weaker quarter for us.

是的。好問題。再說一次，如果你看看我們指導的中點，那就是大約 7.8 億美元。環比下降約 2%，這實際上反映了幾個因素。我的意思是，首先，正如我在先前的回答中所暗示的那樣，市場繼續疲軟。我們也想認識到，第四季對我們來說是季節性疲軟的季度。

And then the final factor is really the level of utilization that we expect to see in some of our mainstream customers, which is maybe a little bit steeper for reduction than what we were expecting a few months ago. But on balance, again, I think that this is a solid quarter where we expect to continue to outpace the industry.

最後一個因素實際上是我們期望在一些主流客戶中看到的利用率水平，這可能比我們幾個月前的預期下降幅度更大一些。但總的來說，我再次認為這是一個穩健的季度，我們預計將繼續超越行業。

And again, if you take that quarter in the broader context of the year, as we mentioned, we expect to be down about essentially 7% on a comparable basis versus if you look at excluding QED Electronics, Chemicals and the Enthone business from both our 2022 and 2023 numbers. Our top line on a comparable basis will be down 7% 2023 over 2022, which, again, is essentially 6 points of outperformance against the industry, which is in line with the commitment that we have made all along since the beginning of the year.

再說一次，如果你把這個季度放在今年更廣泛的背景下，正如我們提到的，我們預計在可比基礎上將下降約7%，而如果你考慮將QED 電子、化學品和樂思業務排除在我們的業務之外。2022 年和 2023 年 數字。與 2022 年相比，我們 2023 年的可比收入將下降 7%，這又比業界表現好 6 個百分點，這符合我們自年初以來一直做出的承諾。

So maybe just a very quick follow-up. What's the assumption for MSI this year? Obviously, there's some production cuts on memory side and of course, you just mentioned the mature side. I wonder what's the latest thinking in terms of MSI for (inaudible)?

所以也許只是一個非常快速的跟進。今年MSI的假設是什麼？顯然，記憶體方面有一些減產，當然，你剛才提到了成熟的方面。我想知道 MSI 方面的最新想法是什麼（聽不清楚）？

Yes. The way we think about it right now is we think about MSI down in the low to mid-teens for the year. We expect CapEx to be down approximately 20% and so the industry down in the low to mid-teens. So MSI down low teens, CapEx down approximately 20% and the industry blend down low to mid-teens.

是的。我們現在的想法是，我們認為今年的 MSI 會下降到十幾歲左右。我們預計資本支出將下降約 20%，因此該行業的下降幅度將在十幾歲至十幾歲之間。因此，MSI 的股價下降了 10%，資本支出下降了約 20%，產業整體下降了 10% 左右。

We'll take our next question from Mike Harrison with Seaport Research Partners.

我們將回答來自 Seaport Research Partners 的 Mike Harrison 的下一個問題。

Bertrand, you gave a little bit of an update on the Taiwan facility and the ramp-up process, which sounds like it's still going to take a few more quarters. Just curious if you can kind of walk through, quantitatively, how we should think about that margin drag and the impact that it had in Q3 and then how that is going to compare in Q4? Is it going to be a pretty similar drag until we get those commercial volumes starting up in the second half of next year? Or how should we think about that?

Bertrand，您介紹了台灣工廠和啟動流程的一些最新情況，聽起來還需要幾個季度的時間。只是好奇您是否可以定量地介紹一下我們應該如何考慮利潤率拖累及其對第三季度的影響，然後與第四季度相比如何？在我們明年下半年開始商業化之前，這是否會是一個非常相似的阻力？或者說我們該如何思考這個問題？

Yes. So the drag on margin will be very, very similar in Q3, Q4 and as we enter the beginning of next year. The reason for that is really the pace at which we expect to complete our qualifications. So remember that there are 3 major types of products that we intend to manufacture in Taiwan. The first one would be our deposition material products. Our qualification for those products have gone extremely well. We are essentially complete, and we're starting to accept purchase orders from customers for deposition materials.

是的。因此，第三季、第四季以及進入明年初時，利潤率受到的拖累將非常非常相似。原因其實是我們期望完成資格的速度。因此請記住，我們打算在台灣生產 3 種主要類型的產品。第一個是我們的沉積材料產品。我們對這些產品的認證進展非常順利。我們基本上完成了，我們開始接受客戶的沉積材料採購訂單。

Next would be our fluid handling products, specifically our high-purity drums. We have completed our internal qualifications, but the customer qualifications for those products can take up to 6 to 9 months. So we do not expect to see any significant volumes until the second half of next year.

接下來是我們的流體處理產品，特別是我們的高純度桶。我們已經完成了內部資格認證，但這些產品的客戶資格認證可能需要長達 6 到 9 個月的時間。因此，我們預計直到明年下半年才會出現任何顯著的銷售量。

And then last but not least, I mean, the last priority will be the liquid filtration manufacturing in Taiwan. This will be, by far, the largest value of production coming out of that building. And we are very actively completing our internal qualifications, but we don't expect customer qualifications to be completed until the second quarter of next year. So again, we don't expect really significant volumes of production until the second half of the year, and that really means that there won't be really a lot of relief on the P&L drag until that point in time.

最後但並非最不重要的一點是，我的意思是，最後的優先事項將是台灣的液體過濾製造。迄今為止，這將是該建築的最大產值。我們正在非常積極地完成我們的內部資格認證，但我們預計客戶資格認證要到明年第二季才能完成。再說一次，我們預計直到今年下半年才會有真正大量的生產，這實際上意味著在那之前，損益拖累不會有很大的緩解。

All right. That's very helpful. And then kind of a housekeeping question regarding the interest expense number, for Linda. You mentioned that the $66 million guidance in Q4 doesn't really fully reflect all of the paydown from divestitures, maybe some cash flow and obviously some changes that you've made with refinancing. So what is the starting point in 2024 with the modifications that you've made and the paydown that you expect to make before year-end?

好的。這非常有幫助。然後是琳達的一個關於利息費用數字的內務問題。您提到第四季度 6600 萬美元的指導並沒有真正完全反映資產剝離的所有回報，也許還有一些現金流，顯然還包括您在再融資方面所做的一些改變。那麼，2024 年您所做的修改以及您預計在年底前支付的費用的起點是什麼？

Yes, that interest expense number would be approximately $62 million. So the reason it wasn't all paid down this quarter is because it was staggered throughout the quarter, that $730 million based on the hedge.

是的，利息支出約為 6200 萬美元。因此，本季未全部償還的原因是整個季度交錯，即基於對沖的 7.3 億美元。

We'll take our next question from Sidney Ho with Deutsche Bank.

我們將接受德意志銀行 Sidney Ho 的下一個問題。

For 2024, it's good to hear that you guys are reiterating your view that wafer start will get better. But specifically, for first half, do you expect any kind of inflection point or more of the same as in the second half? Are there any areas that you think could see a seasonal cyclical increase? How about areas that may see risk? Like we talk about mature notes or maybe some of the CapEx-related strength you were seeing this year?

對於 2024 年，很高興聽到你們重申晶圓開工將會變得更好的觀點。但具體而言，對於上半年，您是否預計會出現任何轉折點或與下半年相同的轉折點？您認為哪些領域可能會出現季節性週期性成長？可能存在風險的領域怎麼樣？就像我們談論成熟的票據或您今年看到的一些與資本支出相關的優勢？

Sidney, I appreciate you being curious about 2024. But as I said earlier, and I will stick to that, it's too early for us to talk about 2024. But I promise you that we will do that in February.

西德尼，我很感激你對2024 年感到好奇。但正如我之前所說，我會堅持這一點，我們現在談論2024 年還為時過早。但我向你保證，我們會在2 月份這樣做。

Okay. Well, I'll ask a different question then. In your prepared remarks, Bertrand, you highlighted strength of silicon carbide slurries and pad. And over the past few weeks, we started to hear some weakness in silicon carbide. I'm curious what are you seeing in that business? Is your business tend to be a leading indicator for things to come? Or just give us a sense of where things are there?

好的。好吧，那我會問一個不同的問題。 Bertrand 在您準備好的發言中強調了碳化矽漿料和墊的強度。在過去的幾周里，我們開始聽到碳化矽的一些疲軟跡象。我很好奇你在這個行業看到了什麼？您的業務是否往往成為未來發展的領導指標？或只是讓我們了解事物的位置？

Yes. So good question. And indeed, this business has been growing very rapidly for us. There are 2 sides to the opportunity. I mean, one would be things related to the new fab construction. So wafer carriers, large gas purification systems, so products that you're all very familiar with.

是的。好問題。事實上，我們的這項業務一直在快速成長。機會有兩個面向。我的意思是，其中之一是與新晶圓廠建設相關的事情。晶圓載體、大型氣體淨化系統，以及你們都非常熟悉的產品。

But the one area that we've been highlighting in the last quarters are really consumable products. They are SiC slurries and pads, as well as post-CMP cleaning solutions. Specifically, when it comes to SiC slurries and pads, we've seen very rapid adoption of our solutions. And those solutions, obviously, are being used as a function of the level of fab activity.

但我們在過去幾季一直強調的一個領域是真正的消費品。它們是 SiC 漿料和墊，以及 CMP 後清潔解決方案。具體來說，當涉及到 SiC 漿料和墊時，我們看到我們的解決方案得到了非常迅速的採用。顯然，這些解決方案正在被用作晶圓廠活動水平的函數。

So it's true that some customers are talking about bringing down utilization rates, but there's just so much new capacity that is coming online that we don't expect to see a very adverse impact to that business. As a matter of fact, we are actively adding capacity. I mean, this business has essentially doubled in 2023 compared to 2022. It's still small. It's -- think about it as something like about $40 million annually, but it's growing very rapidly. And we are adding capacity ahead of what we expect to be very significant demand for those solutions.

因此，確實有些客戶正在談論降低利用率，但由於有大量新產能上線，我們預計不會對該業務產生非常不利的影響。事實上，我們正​​在積極增加產能。我的意思是，與 2022 年相比，2023 年該業務基本上翻了一番。但規模仍然很小。想想每年約 4000 萬美元，但成長速度非常快。我們正在增加產能，以應對這些解決方案的巨大需求。

Okay. That's helpful. Maybe just quickly a, question for Linda. I may have missed it on the call, but can you quantify what's the drag on the gross margin from the Taiwan facility? And what's the impact on the distribution agreement being terminated? I think last quarter, you talked about that potentially being a 0.5 point of headwind. Just want to get those numbers in.

好的。這很有幫助。也許很快就會問琳達一個問題。我可能在電話會議上錯過了這一點，但您能量化一下台灣工廠對毛利率的拖累嗎？終止經銷協議有何影響？我認為上個季度，您談到了這可能是 0.5 個百分點的阻力。只是想把這些數字輸入進去。

Yes, you're correct. Last quarter on the drag from the Element Solutions transition of the distribution agreement to be approximately 50 basis points. As far as the specific dollar drag or percent drag from the Taiwan facility, we haven't quantified that. As Bertrand said, it is going to be an impact on gross margins until we've fully ramped up that facility.

是的，你是對的。上個季度，Element Solutions 分銷協議過渡的拖累約為 50 個基點。至於台灣工廠的具體美元拖累或拖累百分比，我們尚未對其進行量化。正如伯特蘭所說，在我們完全提高該設施之前，這將對毛利率產生影響。

We'll take our next question from Aleksey Yefremov with KeyBanc Capital Markets.

我們將回答 KeyBanc Capital Markets 的 Aleksey Yefremov 提出的下一個問題。

This is Ryan on for Aleksey. Just want to start with congratulations on coming up with a new name for Materials Solutions. So nice work there. First question for me. I just kind of wanted to dig into what you're seeing on the memory side a little bit. I mean where do you think kind of inventory sit in the chain? It seems like some commentary from some industry peers has been a little bit better. So just wondering like what you guys are kind of seeing there?

這是阿列克西的瑞安。首先恭喜您為材料解決方案起了一個新名稱。那裡的工作真好。我的第一個問題。我只是想深入了解你在記憶體方面看到的內容。我的意思是，您認為庫存在供應鏈中的什麼位置？一些業內同行的評論似乎好一些。所以只是想知道你們在那裡看到了什麼？

Yes. Look, I mean, we don't have perfect visibility. And we rely, obviously, extensively on what we are hearing from our customers directly. And we are hearing the same type of updates as what you're mentioning. I think that most of our customers have been very effectively reducing inventory levels in their channels. And we have seen actually some level of stabilization in fab utilization, which, again, would suggests that this is indeed happening.

是的。聽著，我的意思是，我們沒有完美的能見度。顯然，我們廣泛依賴直接從客戶那裡聽到的資訊。我們聽到的更新類型與您提到的相同。我認為我們的大多數客戶都非常有效地降低了通路中的庫存水準。我們實際上已經看到晶圓廠利用率在一定程度上趨於穩定，這再次表明這種情況確實正在發生。

We're also seeing some firming up of memory pricing, which is another indicator typically of the level of balance between supply and demand in memory. So again, we don't have perfect visibility. We're just looking at the same indicators as you are, and that leads us to believe that we are close to the bottom. But as I said, it's just too early to talk about green shoots and recovery. We don't really have that level of visibility yet.

我們也看到記憶體價格有所上漲，這是記憶體供需平衡水準的另一個指標。再說一次，我們沒有完美的可見性。我們只是專注於與您相同的指標，這讓我們相信我們已接近底部。但正如我所說，現在談論復甦和復甦還為時過早。我們還沒有真正達到那種程度的可見度。

Great. That's helpful. And then just last one for me here. Just any update on terms of node transitions, what you're currently seeing? And any early previews you can give us into next year?

偉大的。這很有幫助。然後是我這裡的最後一個。只是關於節點轉換方面的任何更新，您目前看到了什麼？您能給我們明年的任何早期預覽嗎？

So for this year, we've seen all of the node transitions in logic taking place on time, which was really good news for us, important news for us, and you saw evidence of that in our business performance in Q3 in Taiwan. When it comes to memory, we signaled to all of you that we're expecting delays in the no-transitions in 3D NAND, and we saw that. We were expecting originally going into the year. We're expecting many customers to transition to 200-plus layer architectures before the end of the year, and that is not happening. But we are hoping to see high-volume productions at 200 layers plus early 2024. But again, we'll update you with more specifics on 2024 in a few months.

因此，今年，我們看到所有邏輯節點轉換都按時發生，這對我們來說確實是個好消息，對我們來說是重要消息，並且您在台灣第三季度的業務表現中看到了這一點的證據。當談到記憶體時，我們向大家表示，我們預計 3D NAND 中的無轉換會出現延遲，我們也看到了這一點。我們原本預計今年會到來。我們預計許多客戶會在今年年底前過渡到 200 層以上的架構，但這並沒有發生。但我們希望在 2024 年初看到 200 層的大量生產。不過，我們將在幾個月後向您通報 2024 年的更多具體情況。

We'll take our next question from Tim Arcuri with UBS.

我們將回答瑞銀集團 Tim Arcuri 提出的下一個問題。

Bertrand, I'm not going to ask about all of '24, but I'm just wondering if maybe you can guide us just for what a normal seasonal March would be. Like if you sort of think about -- I mean, I know that there's a lot of million parts, and you're trying to sell PIM, but is there some way to sort of like -- sort of tie into a normal seasonal March? Can you just speak about what you consider to be a normal margin?

Bertrand，我不會詢問 24 年的全部情況，但我只是想知道您是否可以指導我們正常的季節性三月是什麼樣的。就像如果你想一想——我的意思是，我知道有數以百萬計的零件，而你正試圖出售 PIM，但是有沒有某種方式可以與正常的季節性三月聯繫起來？ ？您能談談您認為正常的利潤是多少嗎？

Ye. Again, so without -- a normal March, I mean it feels like every year has been a little bit unique recently. But I mean, typically, again, we see Q2 and Q3 being our strongest quarters in a regular year. And then Q4, typically, is seasonally down versus Q3. That would be what I would call a normal March.

耶。再說一次，如果沒有——正常的三月，我的意思是感覺最近每一年都有點獨特。但我的意思是，通常情況下，我們再次看到第二季和第三季是常規年度中最強勁的季度。然後，第四季通常會比第三季季節性下降。這就是我所說的正常的三月。

But the question then becomes, will we see normal and steady conditions in 2024? Or would we see actually a steady increase in wafer starts and fab utilization? And is that going to impact what would be a normal pattern in 2024? And again, I'm not going to go down that path. But I just want to caveat that the normal year may or may not be what we see in 2024.

但問題是，2024 年我們會看到正常穩定的情況嗎？或者我們實際上會看到晶圓開工率和晶圓廠利用率穩定成長嗎？這會影響 2024 年的正常模式嗎？再說一次，我不會走那條路。但我想提醒大家的是，2024 年可能會是正常年份，也可能不是。

Sure, sure. Okay. And then can you talk about competition in China. We keep hearing about these materials companies. I mean they're not -- they don't seem to be competing with you all that much, but there is a lot of subsidization of the materials supply chain in China. So can you just speak about how competitive you think they're becoming with you? Do you see them? And if so, where?

一定一定。好的。然後可以談談中國的競爭嗎？我們不斷聽到這些材料公司。我的意思是他們不是——他們似乎沒有與你們競爭那麼多，但中國的材料供應鏈有很多補貼。那麼您能談談您認為他們與您的競爭程度如何嗎？你看到他們了嗎？如果是的話，在哪裡？

I mean, you're right. I mean, we're seeing a lot of Chinese competitors that, on paper, would provide similar types of products. But so far, they have not been able to really match the performance of the solutions we develop, and we are hearing that loudly and clearly from our Chinese competitors -- or Chinese customers.

我的意思是，你是對的。我的意思是，我們看到很多中國競爭對手在紙面上會提供類似類型的產品。但到目前為止，他們還無法真正與我們開發的解決方案的性能相匹配，我們從我們的中國競爭對手或中國客戶那裡清楚地聽到了這一點。

They see the value of using our solutions, that helps them improve their device performance, that helps them improve their yields, and they are sticking to the integral solutions when available. And so, again, we are keeping a close eye on what's happening in China. But so far, we feel very good about our competitive position in China.

他們看到了使用我們的解決方案的價值，這有助於他們提高設備性能，幫助他們提高產量，並且他們堅持使用可用的整體解決方案。因此，我們再次密切關注中國正在發生的事情。但到目前為止，我們對自己在中國的競爭地位感到非常滿意。

We'll take our next question from Chris Kapsch with Loop Capital Markets.

我們將回答 Loop Capital Markets 的 Chris Kapsch 提出的下一個問題。

Question focused on the new material solutions segment. So I think it was on a pro forma basis, if you will, but the revenues, you mentioned, down 16% year-over-year, 1% sequentially. It sounds as though the key driver is the softness, the fab utilization rates, the function wafer starts. Just looking for a little more color. Did the Enthone transaction contribute to those variances? I assume they weren't staying as pro forma to reflect the Enthone deal.

問題集中在新材料解決方案領域。所以我認為這是在預估的基礎上，如果你願意的話，但你提到的收入同比下降了 16%，比上一季下降了 1%。聽起來關鍵驅動因素是柔軟度、晶圓廠利用率和功能晶圓啟動。只是尋找更多的顏色。樂思交易是否導致了這些差異？我認為他們不會留下備考記錄來反映樂思的交易。

And then you called out memory. So just wondering if the weakness within this new Materials Solutions segment is skewed towards memory. And within that, is it skewed towards deposition products that were formerly SCEM for 3D NAND architectures? Or is it maybe more a function CMP module and slurries for legacy technology nodes perhaps? Or is it balanced across those different product segments?

然後你喚出了記憶。因此，我想知道這個新材料解決方案領域的弱點是否偏向記憶體。其中，它是否偏向以前用於 3D NAND 架構的 SCEM 沉積產品？或者它可能更像是一個功能 CMP 模組和用於傳統技術節點的漿料？或者它在不同的產品領域之間是否平衡？

Yes. So if you look at Materials Solutions, you're right, you're correct, that they're down about 15% year-to-date. And I would remind you that this is the division with the greatest exposure to memory, number one. But also remember that this is the division that suffered the greatest impact from the export restrictions to China enacted in October 2022, right?

是的。因此，如果你看看 Materials Solutions，你是對的，你是對的，他們今年迄今下跌了約 15%。我想提醒你，這是記憶力接觸最多的部門，第一。但也要記住，這是受 2022 年 10 月實施的對華出口限制影響最大的部門，對嗎？

So when you recast for that, actually, the division is performing in line with our expectations. And for us, in 2023, the focus for the division has been to engage with customers on those new materials and trying to develop those co-optimized solutions across the array of capabilities that we have and Entegris, from the film to the polishing solutions, all the way to post-CMP cleaning solutions, and that's being chemistries.

因此，當你為此進行重新調整時，實際上，該部門的表現符合我們的預期。對我們來說，到2023 年，該部門的重點是與客戶就這些新材料進行互動，並嘗試在我們和Entegris 擁有的一系列能力（從薄膜到拋光解決方案）中開發這些共同優化的解決方案，一直到 CMP 後清潔解決方案，這就是化學。

And I would say that we are very pleased with the quality of those engagements, which have been validating the potential that we see for this division. So again, this year, not particularly exciting for the reasons I was mentioning, exposure to memory, impact of China. But if you look under the hood, a lot of really exciting opportunities in terms of new materials and new slurries opportunities and ancillary cleaning and etching chemistries.

我想說，我們對這些合作的品質非常滿意，這驗證了我們對該部門的潛力。所以，今年，由於我提到的原因，接觸記憶，中國的影響，並不是特別令人興奮。但如果你仔細觀察，你會發現在新材料和新漿料機會以及輔助清潔和蝕刻化學品方面有很多真正令人興奮的機會。

Fair enough. Just one follow-up on your comments about the memory market and the sort of push out and the ramp of HVM for 2xx layered architectures. Just given the downdraft in the memory, I'm just wondering if it's pronounced enough that there's instances where these advanced memory makers look to accelerate the road map to -- because the road map right now goes to 300-plus layers, all the way to 1,000-plus layers.

很公平。這是您對記憶體市場以及 2xx 分層架構 HVM 的推出和升級的評論的後續評論。考慮到記憶體中的下降趨勢，我只是想知道它是否足夠明顯，以至於這些先進的記憶體製造商希望加快路線圖的實現，因為現在的路線圖一直到 300 多個層到 1,000 多層。

Obviously, that's disproportionately beneficial to you given the content per wafer. I'm just curious if there's instances where they look at this sort of soft backdrop as an opportunity to accelerate that transition to advanced nodes? Or is it really they have to crawl at 200 layers before they walk at 300 layers? Or how is that dynamic playing out?

顯然，考慮到每個晶圓的含量，這對您來說是非常有利的。我只是好奇他們是否會在某些情況下將這種軟背景視為加速向高級節點過渡的機會？或者說他們真的要爬200層才能爬300層嗎？或者說這種動態是如何發揮的？

Yes. Good question. So it's true, I mean, again, this year was a difficult year for memory at all levels, capacity utilization reduction, but also decommissioning of some older fabs. So all of that had some devastating impact on this particular part of our business. Now it's true that some customers are thinking about skipping a node. So all of that is something that we will be discussing with them over the next several months and quarters. .

是的。好問題。所以這是真的，我的意思是，今年對各個級別的內存來說都是困難的一年，產能利用率下降，而且一些舊晶圓廠退役。因此，所有這些都對我們業務的這一特定部分產生了毀滅性影響。現在確實有一些客戶正在考慮跳過某個節點。因此，我們將在接下來的幾個月和幾個季度與他們討論所有這些問題。 。

And we've seen that in the past. So the question will be, do they have enough confidence and conviction to do that? And when do they plan to execute on it? Of course, our role as a supplier will be to be ready for them if they choose to accelerate the introduction of a new node.

我們過去已經看到過這一點。那麼問題來了，他們是否有足夠的信心和信念來做到這一點？他們計劃什麼時候執行？當然，如果他們選擇加速引入新節點，我們作為供應商的角色將是為他們做好準備。

And as you pointed, the more layers on a 3D NAND chip, the better it is for Entegris. So we, for sure, will be very focused on giving them the comfort they need to potentially skip those. And it's too early for us to really talk about it.

正如您所指出的，3D NAND 晶片的層數越多，對 Entegris 來說就越好。因此，我們肯定會非常專注於為他們提供可能跳過這些的安慰。我們現在真正談論它還為時過早。

Our next question from Bhavesh Lodaya with BMO Capital Markets.

我們的下一個問題來自 BMO 資本市場的 Bhavesh Lodaya。

You mentioned like-for-like sales expected to be down 2% sequentially in 4Q. As we think about EBITDA or EBITDA margin, specifically, you have some additional noise from the Taiwan facility ramp-up or the inventory reduction actions we have been taking. If we exclude those moving pieces, can you share some thoughts on how your underlying margins are performing, maybe around price versus cost, how they are trending up, down, flat? Any color there?

您提到第四季度的年比銷售額預計將環比下降 2%。具體來說，當我們考慮 EBITDA 或 EBITDA 利潤率時，台灣工廠的擴建或我們一直在採取的庫存削減行動會帶來一些額外的噪音。如果我們排除這些變動因素，您能否分享一些關於您的基本利潤表現的想法，可能是圍繞價格與成本，它們的趨勢是上升、下降還是持平？那裡有什麼顏色嗎？

Well, let me just talk about it this way, and hopefully, this addresses your question. As I think about our Q4 EBITDA margins and let's step back. We talked about gross margin being accretive from the divestitures, with some of the other pressures on the gross margin from inventory reduction and all the transitional period we're going through as a company.

好吧，讓我這樣談談，希望這能解決你的問題。當我想到我們第四季度的 EBITDA 利潤率時，讓我們退後一步。我們談到毛利率因資產剝離而增加，而庫存減少以及我們作為一家公司正在經歷的所有過渡期對毛利率造成了一些其他壓力。

But as I think about getting down to EBITDA, as the CFO, I'm always looking at how we balance cost and investments. In this quarter, we just completed the divestitures. You see the transition of the distribution agreements well on its way. The divestitures are lower OpEx businesses.

但當我認真考慮 EBITDA 時，作為財務官，我一直在考慮如何平衡成本和投資。本季度，我們剛完成了資產剝離。您將看到分銷協議的過渡進展順利。剝離的是營運支出較低的業務。

Going forward, we're always going to be looking at our cost structure. We're going to make the critical investments that we need to make in R&D. And regarding SG&A, we're going to make sure we have the right level of SG&A to balance the ongoing and what we need for the ongoing support of the business.

展望未來，我們將始終關注我們的成本結構。我們將在研發方面進行必要的關鍵投資。關於 SG&A，我們將確保我們有適當的 SG&A 水平，以平衡持續的業務支援和我們持續支援業務所需的內容。

So what I would think about where we are now in this transitionary year, most importantly, as we think about this cost structure and we think about it over the long term, we still remain incredibly committed to deliver the 40% EBITDA flow-through. So this is just a transitionary year with gives and takes.

因此，我認為我們在這個過渡年中所處的位置，最重要的是，當我們考慮這種成本結構並從長遠考慮時，我們仍然非常致力於實現 40% 的 EBITDA 流通。因此，這只是一個過渡的一年，有付出有收穫。

Understood. And maybe the next one. Can you give us an update on the Colorado Springs project? Has there been any change in the investment size or start of timing there given some of the dealers in the industry? Is it still $600 million early 2025? And then I believe you had mentioned the IRR for the Taiwan project to be in the mid-20s. With the Chips Act funding, does the Colorado Springs project get close to that?

明白了。也許是下一個。您能為我們介紹一下科羅拉多斯普林斯計畫的最新情況嗎？業內部分經銷商的投資規模或啟動時間是否有任何變化？ 2025年初還是6億美元嗎？然後我相信您提到台灣專案的內部報酬率在 20 多歲左右。有了《晶片法案》的資助，科羅拉多斯普林斯計畫是否接近這個目標？

All right. So let me answer the question on Colorado Springs. So you're right that the total investment over the next several years will be approximately $600 million, right?

好的。讓我回答有關科羅拉多斯普林斯的問題。那麼您認為未來幾年的總投資約為 6 億美元是對的，對嗎？

Now the first phase that we have initiated is going to 100,000-square foot facility, it's going to be about $250 million. And that's really the -- again, the basis upon which we are seeking funding under the U.S. Chips Act. We continue to expect that the production for that first phase will be early 2025, and we expect the returns to be attractive. But we need help from the U.S. administration in order to get returns similar to what we were able to commit to in our Taiwanese investment. And that's the basis for a discussion for the U.S. administration.

現在，我們啟動的第一期建設面積為 10 萬平方英尺，耗資約 2.5 億美元。這確實是我們根據《美國晶片法案》尋求資金的基礎。我們仍然預計第一階段將於 2025 年初投入生產，並且回報將具有吸引力。但我們需要美國政府的幫助，才能獲得與我們在台灣投資中承諾的類似的回報。這是美國政府討論的基礎。

And there are no further questions. I'll turn the floor back over to Bill Seymour for any closing comments.

沒有其他問題了。我將把發言權交還給比爾·西摩以徵求結束語。

Thank you, and thank you for joining our call today. Please follow up with me directly if you have any additional questions. Have a good day. You can now disconnect. Thank you.

謝謝您，也謝謝您今天加入我們的電話會議。如果您還有任何其他問題，請直接與我聯絡。祝你有美好的一天。您現在可以斷開連線。謝謝。

Thank you. And this does conclude today's Entegris Third Quarter 2023 Earnings Conference Call. Please disconnect your lines at this time, and have a wonderful day.

謝謝。今天的 Entegris 2023 年第三季財報電話會議到此結束。請此時斷開線路，祝您有美好的一天。