Element Solutions Inc (ESI) 2023 Q2 法說會逐字稿

Good morning, and welcome to the Element Solutions Q2 2023 Financial Results Conference Call. (Operator Instructions)

早上好，歡迎參加 Element Solutions 2023 年第二季度財務業績電話會議。 （操作員說明）

I would now like to turn the call over to Varun Gokarn, Senior Director of Strategy and Finance. Please go ahead.

我現在想將電話轉給戰略與財務高級總監 Varun Gokarn。請繼續。

Good morning, and thank you for participating in our second quarter 2023 earnings conference call. Joining me are our Executive Chairman, Mr. Martin Franklin; CEO, Ben Gliklich; and CFO, Carey Dorman.

早上好，感謝您參加我們的 2023 年第二季度收益電話會議。與我一起的還有我們的執行主席馬丁·富蘭克林先生；首席執行官本·格利克利希（Ben Gliklich）；和首席財務官凱里·多爾曼。

In accordance with Regulation FD, or Fair Disclosure, we are webcasting this conference call. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Element Solutions is strictly prohibited.

根據 FD 法規（即公平披露），我們對本次電話會議進行網絡直播。未經 Element Solutions 明確書面同意，嚴禁以任何形式重新分發、轉發或轉播本次通話。

During today's call, we will make certain forward-looking statements that reflect our current views about the company's future performance and financial results. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Please refer to our earnings release, supplemental slides and most recent SEC filings for a discussion of material risk factors that could cause actual results to differ from our expectations and predictions. These materials can be found on the company's website at www.elementsolutionsinc.com in the Investors section under News & Events.

在今天的電話會議中，我們將做出某些前瞻性聲明，以反映我們當前對公司未來業績和財務業績的看法。這些陳述基於對未來事件的假設和預期，這些未來事件存在風險和不確定性。請參閱我們的收益發布、補充幻燈片和最近向 SEC 提交的文件，了解可能導致實際結果與我們的預期和預測不同的重大風險因素的討論。這些材料可以在公司網站 www.elementsolutionsinc.com 的“新聞與活動”下的“投資者”部分找到。

Today's materials also include financial information that has not been prepared in accordance with U.S. GAAP. A -- please refer to the earnings release and supplemental slides for definitions and reconciliations of these non-GAAP measures to comparable GAAP financial measures.

今天的材料還包括未根據美國公認會計原則準備的財務信息。答——請參閱收益發布和補充幻燈片，了解這些非公認會計準則衡量指標與可比公認會計準則財務衡量指標的定義和調節。

It is now my pleasure to introduce Element Solutions' CEO, Ben Gliklich.

現在我很高興向您介紹 Element Solutions 的首席執行官 Ben Gliklich。

Thank you, Varun, and good morning, everyone. Thank you for joining. Element Solutions reported sequential adjusted EBITDA growth in what we believe is the trough of the most severe dislocation in the electronics market in recent history. Key drivers and inputs to the electronics market, such as smartphone shipments, semi-production declined more than 10% year-over-year, and this impacted our results. We believe we outperformed our markets and are pleased to see indicators of a recovery in our order book and the electronic supply chain generally as we entered the third quarter.

謝謝瓦倫，大家早上好。感謝您的加入。 Element Solutions 公佈了調整後 EBITDA 環比增長，我們認為這是電子市場近年來最嚴重混亂的低谷。電子市場的主要驅動因素和投入，例如智能手機出貨量、半成品同比下降超過 10%，這影響了我們的業績。我們相信，我們的表現優於市場，並且很高興看到進入第三季度時訂單簿和電子供應鏈普遍復甦的跡象。

We also took advantage of this period of dislocation to significantly improve our position in the highest value, fastest-growing subsectors of the electronics ecosystem, and did so at what we consider attractive values with significant potential upside. Challenging economic conditions were not limited to electronics, with the broader Chinese economy soft and certain countries in Europe on the brink of recession. Nonetheless, our nonelectronics portfolio is growing earnings through solid execution, margin expansion from cost deflation and synergy realization.

我們還利用這段混亂時期，顯著提高了我們在電子生態系統價值最高、增長最快的子行業中的地位，並以我們認為有吸引力的價值和巨大的潛在上升空間做到了這一點。充滿挑戰的經濟狀況不僅限於電子行業，中國整體經濟疲軟，歐洲某些國家也處於衰退邊緣。儘管如此，我們的非電子產品組合正在通過紮實的執行、成本緊縮帶來的利潤擴張和協同效應的實現來增加收益。

Overall, gross margins improved over 200 basis points year-over-year despite lower volumes. Though it was deeper than expected, we believe we can call the second quarter to the trough in electronics. Our semiconductor customers are ramping activity in their fabs. We see this in our July orders. Historically, this has been a leading indicator for an improvement in mobile phone production that also drives demand for our circuit board chemistries and assembly materials. Smartphone sell-in has been lower than sell-through for the last 2 quarters, suggesting channel inventories continue to be digested. These dynamics are reflected in our second half outlook.

總體而言，儘管銷量有所下降，但毛利率仍同比提高了 200 個基點。儘管比預期更深，但我們相信我們可以將第二季度稱為電子產品的低谷。我們的半導體客戶正在加大其晶圓廠的活動力度。我們在 7 月份的訂單中看到了這一點。從歷史上看，這一直是手機生產改善的領先指標，也推動了對電路板化學品和組裝材料的需求。過去兩個季度智能手機銷量一直低於售出率，表明渠道庫存繼續被消化。這些動態反映在我們的下半年展望中。

It was also a productive quarter. We completed 2 exciting strategic transactions that materially improve our semiconductor capabilities ahead of an expected market recovery. In June, we agreed to pay $200 million or roughly $185 million net of estimated cash tax benefits to buy in a long-standing distribution agreement for our ViaForm electrochemical deposition products from Entegris. Element Solutions has historically manufactured these semiconductor materials. And now we have complete ownership from innovation and manufacturing through to sales and support.

這也是一個富有成效的季度。我們完成了兩項令人興奮的戰略交易，在預期的市場復甦之前實質性地提高了我們的半導體能力。 6 月份，我們同意支付 2 億美元（扣除預計現金稅收優惠後約 1.85 億美元），購買 Entegris 的 ViaForm 電化學沉積產品的長期分銷協議。 Element Solutions 歷史上一直生產這些半導體材料。現在，我們擁有從創新和製造到銷售和支持的完整所有權。

Early feedback from customers has been consistently positive and we're excited to grow this high-value product line in the future. Based on its run rate as of closing, we expect to realize annual incremental revenue of $18 million and adjusted EBITDA of $15 million at current demand lows, which should reflect a low point in the cycle. This transaction should be growth, margin and CRI accretive and increase the contribution of our Electronics segment to the company's annual adjusted EBITDA to over 70%.

客戶的早期反饋一直很積極，我們很高興將來能夠發展這一高價值產品線。根據截至收盤時的運行率，我們預計在當前需求低點時將實現年增量收入 1800 萬美元，調整後 EBITDA 為 1500 萬美元，這應該反映了周期的低點。這項交易應該會增加增長、利潤和 CRI，並將我們的電子部門對公司年度調整後 EBITDA 的貢獻提高到 70% 以上。

The purchase price implies an attractive multiple, relative to comparable front end of line semiconductor assets and off of trough earnings. We believe this is a high-quality profit stream with upside potential from commercial optimization and minimal execution risk given our deep knowledge of the technology and existing manufacturing.

相對於同類前端半導體資產和谷底收益而言，收購價格意味著具有吸引力的倍數。我們相信，鑑於我們對技術和現有製造的深入了解，這是一個高質量的利潤流，具有商業優化帶來的上升潛力和最小的執行風險。

We also purchased Kuprion’, a developer of next-generation nano copper technology for the semiconductor, circuit board and electronic assembly markets. The acquisition brings a highly differentiated capability to our portfolio, together with a world-class R&D and application team who developed it. Their active copper technology addresses emerging complex challenges associated with thermal management and adhesion in leading-edge electronics. This should be industry-changing technology with broad applications across our portfolio, including power electronics for electric vehicles, infrastructure to support high-frequency 5G networks, advanced semiconductor packaging and IC substrate metalization.

我們還收購了 Kuprion™，這是一家面向半導體、電路板和電子組裝市場的下一代納米銅技術開發商。此次收購為我們的產品組合帶來了高度差異化的功能，以及開發該功能的世界一流的研發和應用團隊。他們的活性銅技術解決了與尖端電子產品中的熱管理和粘合相關的新興復雜挑戰。這應該是改變行業的技術，在我們的產品組合中具有廣泛的應用，包括電動汽車的電力電子、支持高頻 5G 網絡的基礎設施、先進的半導體封裝和 IC 基板金屬化。

Element Solutions is well positioned to commercialize Kuprion’ solutions and technical capability, given our presence across each of these markets. We bring applications know-how and deep relationships to support the adoption of this technology in our customer base. Customer engagement and the pace of development and qualification work has already exceeded our expectations.

鑑於我們在各個市場的業務，Element Solutions 在將 Kuprion 解決方案和技術能力商業化方面處於有利地位。我們提供應用專業知識和深厚的關係來支持我們的客戶群採用這項技術。客戶參與度以及開發速度和資格認證工作已經超出了我們的預期。

Taken together, these transactions solidify ESI's position as an integral partner and solutions provider to the leading electronics companies in the world. They increase our participation in compelling long-term growth markets, propelled by the proliferation of high-performance computing supporting AI, industrial automation and other emerging applications. Our perception and importance to the company's innovating in electronics hardware have improved dramatically. As we said last quarter, periods of low demand and market uncertainty often generate unique opportunities. We believe 2023 is such an environment and expect to exit this year better positioned than when we entered it.

總而言之，這些交易鞏固了 ESI 作為全球領先電子公司不可或缺的合作夥伴和解決方案提供商的地位。在支持人工智能、工業自動化和其他新興應用的高性能計算激增的推動下，它們增加了我們對引人注目的長期增長市場的參與度。我們對公司電子硬件創新的看法和重要性顯著提高。正如我們上季度所說，需求低迷和市場不確定的時期往往會產生獨特的機會。我們相信 2023 年就是這樣的環境，並預計今年退出時比我們進入時處於更好的位置。

Our core electronics markets are returning to growth and we are positioned to benefit from that growth and more profitably. Our portfolio weight towards higher growth, higher profit markets is increasing, and our commercial pipeline in these markets is growing disproportionately. These are very promising leading indicators.

我們的核心電子市場正在恢復增長，我們有望從這種增長中受益並獲得更多利潤。我們的投資組合對更高增長、更高利潤市場的權重正在增加，並且我們在這些市場的商業管道正在不成比例地增長。這些都是非常有前途的領先指標。

Carey will now take you through second quarter business results in more detail. Carey?

凱里現在將帶您更詳細地了解第二季度的業務業績。凱里？

Thanks, Ben. Good morning, everyone. On Slide 4, you can see a summary of our second quarter financial results. Organic sales declined 6% year-over-year and constant currency adjusted EBITDA declined 14%. We saw a sequential improvement in both revenue and adjusted EBITDA relative to the first quarter. Our expectations entering the quarter were impacted by the softer demand environment in China and deterioration in the broader consumer electronics market. Despite a 9% year-on-year decline in organic sales, we believe the electronics segment continue to outperform key PCB and smartphone end markets.

謝謝，本。大家，早安。在幻燈片 4 上，您可以看到我們第二季度財務業績的摘要。有機銷售額同比下降 6%，固定匯率調整後 EBITDA 下降 14%。與第一季度相比，我們的收入和調整後 EBITDA 均出現連續改善。我們對本季度的預期受到中國需求環境疲軟和更廣泛的消費電子市場惡化的影響。儘管有機銷售額同比下降 9%，但我們相信電子領域的表現將繼續優於主要 PCB 和智能手機終端市場。

Our Industrial & Specialty business declined 2% organically as soft industrial demand in Asia offset double-digit growth in offshore energy. Our second quarter adjusted EBITDA of $116 million was 3% higher sequentially. In constant currency terms, adjusted EBITDA margin declined 60 basis points year-over-year.

由於亞洲工業需求疲軟抵消了海上能源兩位數的增長，我們的工業和特種業務有機下降了 2%。第二季度調整後 EBITDA 為 1.16 億美元，比上一季度增長 3%。按固定匯率計算，調整後 EBITDA 利潤率同比下降 60 個基點。

Electronics segment adjusted EBITDA margin was negatively impacted by volume declines in higher-margin circuitry and semiconductor applications, partially offset by reduced pass-through metal prices.

電子部門調整後的 EBITDA 利潤率受到利潤率較高的電路和半導體應用銷量下降的負面影響，但部分被傳導金屬價格下降所抵消。

Industrial segment margins improved 100 basis points in constant currency due to positive mix from Energy Solutions as well as on ongoing synergy realization, pricing benefits and modest input deflation. Adjusted EBITDA margins improved sequentially 30 basis points from the first quarter. Lower prices on pass-through metals such as tin and silver were a tailwind to margins relative to Q2 2022.

由於能源解決方案的積極組合以及持續的協同效應實現、定價優勢和適度的投入通貨緊縮，按固定匯率計算，工業部門利潤率提高了 100 個基點。調整後 EBITDA 利潤率較第一季度環比提高 30 個基點。與 2022 年第二季度相比，錫和銀等傳遞金屬的價格下跌對利潤率有利。

Excluding the impact of $89 million of pass-through metal sales in our Assembly Solutions business, our adjusted EBITDA margin would have been 23% in the second quarter.

排除裝配解決方案業務中 8900 萬美元直通金屬銷售的影響，第二季度調整後的 EBITDA 利潤率為 23%。

On Slide 5, we share additional detail on organic net sales in our 2 segments. For our Electronics segment, mobile phone and consumer electronics demand had the most material impacts in the quarter. Our automotive electronics business remains resilient, particularly for power electronics applications in electric vehicles. Assembly Solutions grew 3% organically, driven by new business growth and traction with new high reliability alloys for use in automotive end markets. The assembly business is less driven by the smartphone market.

在幻燈片 5 上，我們分享了有關 2 個細分市場有機淨銷售額的更多詳細信息。對於我們的電子產品部門來說，手機和消費電子產品需求在本季度產生了最大的實質性影響。我們的汽車電子業務保持彈性，特別是電動汽車中的電力電子應用。受新業務增長和用於汽車終端市場的新型高可靠性合金的推動，裝配解決方案有機增長了 3%。組裝業務較少受到智能手機市場的推動。

Semiconductor Solutions declined 16% organically, reflecting reduced utilization levels at semiconductor fabs. Circuitry Solutions 3% organically as persistent smartphone weakness continued from the end of last year. Customers across the mobile supply chain for meaningfully lower production volumes and the overall PCB market was as weak as we have seen in many years. Our second quarter performance is better than data we are seeing from several of the largest suppliers operated circuit boards are reporting greater than 30% decline in Q2.

半導體解決方案有機下降 16%，反映出半導體工廠利用率下降。由於智能手機從去年底開始持續疲軟，Circuitry Solutions 有機增長 3%。整個移動供應鏈的客戶的產量大幅下降，整個 PCB 市場的疲軟程度與我們多年來所見的一樣。我們第二季度的業績好於我們從幾家最大的供應商運營的電路板報告第二季度下降超過 30% 的數據看到的數據。

Additionally, we are comparing against a period of particularly strong performance in cloud computing and data storage that benefited our memory disk products in the first half of 2022. We expect demand from both smartphone suppliers and memory disk customers to improve in the second half and into 2024.

此外，我們正在與2022 年上半年雲計算和數據存儲表現特別強勁的時期進行比較，這使我們的內存盤產品受益。我們預計智能手機供應商和內存盤客戶的需求將在下半年和2022 年下半年有所改善。 2024 年。

For the second quarter, organic net sales in Industrial & Specialty declined 2% year-over-year. Industrial Solutions declined 3% organically as demanding global construction and industrial markets slowed from strong prior year levels. Our Automotive business in the Americas and Europe is relatively stable sequentially. Our participation in local Chinese OEM supply chain lag that in other regions. We have not seen the full benefit of automotive recovery in China. We have a specific strategy associated with that supply chain and opportunities in their EV market. It is a large and largely untapped market opportunity that we intend to pursue actively.

第二季度，工業和特種產品的有機淨銷售額同比下降 2%。由於全球建築和工業市場的需求較去年的強勁水平放緩，工業解決方案有機下降 3%。我們在美洲和歐洲的汽車業務相對穩定。我們對中國本土OEM供應鏈的參與程度落後於其他地區。我們還沒有看到中國汽車復甦的全部好處。我們有與供應鍊和電動汽車市場機會相關的具體戰略。這是一個巨大且基本上尚未開發的市場機會，我們打算積極尋求。

Energy Solutions remained a bright spot, with sales growing 11% organically in the quarter as production and drilling activity has rebounded and price actions continue to take effect. We expect continued growth for this business throughout the year, but at a lower rate than experienced in the first half given tougher comps.

能源解決方案仍然是一個亮點，由於生產和鑽探活動反彈以及價格行動繼續生效，本季度銷售額有機增長 11%。我們預計該業務全年將持續增長，但由於競爭更加嚴峻，增速將低於上半年。

Slide 6 addresses cash flow and the balance sheet. We generated $67 million of free cash flow in the second quarter. We invested $16 million into working capital, which reflects a modest inventory build primarily related to a large new business win in Mexico and expectations for stronger demand in Q3.

幻燈片 6 討論了現金流和資產負債表。第二季度我們產生了 6700 萬美元的自由現金流。我們投資了 1600 萬美元用於營運資金，這反映了庫存的適度增長，這主要與墨西哥的大型新業務贏得以及對第三季度需求強勁的預期有關。

Net CapEx in the first half was $22 million, which is below the annual run rate we expect for this year. This number is expected to increase as certain growth projects and integration initiatives progress, but we now expect to spend less than the $70 million we previously forecasted.

上半年淨資本支出為 2200 萬美元，低於我們今年預期的年度運行率。隨著某些增長項目和整合計劃的進展，這一數字預計還會增加，但我們現在預計支出將低於我們之前預測的 7000 萬美元。

Turning to the balance sheet. Our net leverage ratio at the end of the quarter was 3.7x when including the estimated full year benefit of the ViaForm product line. This sequential increase was driven by the ViaForm transaction, which we primarily funded through the issuance of $150 million in Term Loan A. The new term loan is floating rate at SOFR plus 175. However, we have swapped it into 4.6% euro fixed through its January 2026 maturity.

轉向資產負債表。當包括 ViaForm 產品線的預計全年收益時，我們本季度末的淨槓桿率為 3.7 倍。這一連續增長是由ViaForm 交易推動的，我們主要通過發行1.5 億美元的定期貸款A 來提供資金。新的定期貸款的浮動利率為SOFR 加175。但是，我們已通過其固定利率將其轉換為4.6% 的歐元。 2026 年 1 月到期。

Our net leverage ratio was temporarily elevated above our targeted ceiling of 3.5x. But we expect to be back below this level by year-end. We believe this modest uptick is appropriate for a short period of time, given the unique capital allocation opportunities in the second quarter and the continued strong cash flow generation we have seen and should continue to see.

我們的淨槓桿率暫時高於 3.5 倍的目標上限。但我們預計到年底將回到這一水平以下。我們認為，鑑於第二季度獨特的資本配置機會以及我們已經看到並應該繼續看到的持續強勁的現金流生成，這種小幅上漲在短時間內是合適的。

As a reminder, the swap maturities on our Term Loan B are evenly split over the next 3 years. Our capital structure was 100% fixed until 2024 and more than 80% fixed until 2025. We have no debt maturities until 2026, and our liquidity position remains strong.

提醒一下，我們定期貸款 B 的互換期限在未來 3 年平均分配。我們的資本結構在 2024 年之前是 100% 固定的，在 2025 年之前是超過 80% 固定的。在 2026 年之前我們沒有債務到期，而且我們的流動性狀況仍然強勁。

And with that, I will turn it back to Ben.

說到這裡，我會把它轉回給本。

Thank you, Carey. Our first half does not reflect the long-term earnings power of our business. We've seen the trough and are beginning to recover from it. The self-help steps we are taking around cost and ongoing investment in technology should drive incremental earnings acceleration through the recovery. The pace of that recovery is uncertain as we sit here today, but we have conviction it is underway. Our Circuitry business is on track for 10% month-over-month growth in July, and our semiconductor orders appear to reflect the utilization increases we're hearing about it fact.

謝謝你，凱里。我們的上半年並沒有反映出我們業務的長期盈利能力。我們已經度過了低谷，並開始從中恢復。我們圍繞成本和持續技術投資採取的自助措施應該會在復蘇過程中推動增量收益加速。當我們今天坐在這裡時，復甦的速度尚不確定，但我們堅信復甦正在進行中。我們的電路業務 7 月份有望實現 10% 的環比增長，我們的半導體訂單似乎反映了我們所聽到的利用率增長的事實。

For the third quarter of 2023, we expect adjusted EBITDA of approximately $125 million. This sequential improvement assumes a pickup in our semiconductor business, modest sequential gross margin improvement from raw material deflation and continued commercial execution. We should also begin to see impact from ongoing cost actions. We expect our Electronics business to grow about 10% sequentially second half over first half this year. This is only modestly lower than our expectation entering the year. However, we'll be growing off a lower baseline. This translates to an updated full year 2023 adjusted EBITDA guidance range of $490 million to $500 million.

對於 2023 年第三季度，我們預計調整後 EBITDA 約為 1.25 億美元。這種連續改善的前提是我們的半導體業務有所回升、原材料通貨緊縮帶來的毛利率適度連續改善以及持續的商業執行。我們還應該開始看到持續的成本行動的影響。我們預計今年下半年我們的電子業務將比上半年環比增長 10% 左右。這僅略低於我們今年的預期。然而，我們將以較低的基線增長。這意味著更新後的 2023 年全年調整後 EBITDA 指導範圍為 4.9 億美元至 5 億美元。

Given some favorability on CapEx and cash taxes that partially offset the lower level of adjusted EBITDA, we expect to generate roughly $265 million of free cash flow for the full year.

鑑於資本支出和現金稅的一些優惠部分抵消了調整後 EBITDA 的較低水平，我們預計全年將產生約 2.65 億美元的自由現金流。

In 2023, even with the expected second half recovery in Electronics, semiconductor production and units in high-end electronics will be far below their long-term averages, let alone more recent peaks. With emerging applications for computing power, expanding vehicle electrification programs, our continued commercial execution with large wins converting to revenue as new fabs come online and the full year benefit from our cost program, we're confident that Element Solutions is positioned for strong growth in 2024 and beyond.

到 2023 年，即使預計電子行業下半年將復蘇，高端電子產品的半導體產量和產量仍將遠低於長期平均水平，更不用說近期的峰值了。隨著計算能力的新興應用、不斷擴大的車輛電氣化項目、我們持續的商業執行以及隨著新工廠上線而將巨大勝利轉化為收入的持續商業執行，以及我們的成本計劃全年受益，我們相信Element Solutions 已做好了強勁增長的準備。 2024 年及以後。

In that context and in closing, despite a challenging quarter and first half, we remain enthusiastic about the future and have evidence that the growth we have come to expect from our businesses is returning. The potential for our business resides in the people in our business, and I'm grateful for their energy and effort this quarter and going forward.

在這種背景下，最後，儘管季度和上半年充滿挑戰，我們仍然對未來充滿熱情，並有證據表明我們預期的業務增長正在回歸。我們業務的潛力在於我們業務中的人員，我感謝他們本季度和未來的精力和努力。

With that, operator, please open the line for questions.

那麼，接線員，請開通提問線路。

(Operator Instructions) Your first question comes from the line of Josh Spector with UBS.

（操作員說明）您的第一個問題來自 UBS 的 Josh Spector。

So looking at the cadence into 3Q and 4Q, I mean, you talked about order books for circuit up 10%. I think smartphone sell-in looking about up 10%. Gross margin benefits ViaForm layers on, I guess, with what you laid out there, less than 10% sequential growth. What are some of the offsets in your mind that we should be considering or it's just the fact that the recovery has been more slow and if there's some conservatism and push that further back?

因此，看看第三季度和第四季度的節奏，我的意思是，您談到了電路訂單增長 10%。我認為智能手機銷量有望增長 10% 左右。我猜，按照你所說的，ViaForm 的毛利率將連續增長不到 10%。您認為我們應該考慮哪些抵消措施，或者只是複蘇速度較慢這一事實，以及是否存在一些保守主義並將其進一步推遲？

Yes. Thanks for the question. Look, phasing in the second half of the year is difficult to call in most years. And so the guidance assumes a continuing ramp in the second half, both in the semiconductor market and in the circuitry market, smartphone units will still be down in the third quarter year-over-year. And it also has incremental cost actions that will contribute more in the fourth quarter than in the third quarter.

是的。謝謝你的提問。看來，在大多數年份裡，下半年的分階段實施都很難確定。因此，該指引假設下半年半導體市場和電路市場將持續增長，但智能手機銷量在第三季度仍將同比下降。它還採取了增量成本行動，第四季度的貢獻將比第三季度更大。

We have additional cost levers at our disposal should we need them that are not fully contemplated in the guidance and which we could potentially use in both quarters. So as we think about the back half of the split could be more equal or it could be more fourth quarter weighted. And we took a more conservative position on Q3, given that we're still early in the recovery. When you compare the third quarter of '23 guide to the third quarter of '22, it's important to note and we called this out at the time, we took a $12 million bonus accrual reduction in Q3 of 2022. And if you adjust for that and look at currency, we're actually showing underlying growth in adjusted EBITDA year-over-year.

如果我們需要指導中未充分考慮的額外成本槓桿，我們可以使用這些槓桿，我們可能會在兩個季度使用這些槓桿。因此，當我們考慮後半部分的劃分可能會更加平等，或者第四節的權重可能會更大。鑑於我們仍處於復蘇初期，我們對第三季度採取了更為保守的立場。當您將《23 年指南》第三季度與《22 年指南》第三季度進行比較時，需要注意的是，我們當時指出了這一點，我們在2022 年第三季度減少了1200 萬美元的應計獎金。如果您對此進行調整看看貨幣，我們實際上顯示了調整後 EBITDA 同比的潛在增長。

Okay. That's helpful. And just with ViaForm and that acquisition, just -- can you quantify what you're layering in this year? First, what flows into next year? And just you continue to talk about that as a way to deepen customer relationships. So just how is that going so far? And how do you think about what that has been to the rest of ESI's semis or broader electronics portfolio?

好的。這很有幫助。就通過 ViaForm 和那次收購，您能量化今年的計劃嗎？首先，明年的資金流向是什麼？只是你繼續談論這是加深客戶關係的一種方式。那麼到目前為止進展如何呢？您如何看待這對 ESI 的其他半成品或更廣泛的電子產品組合有何影響？

Yes. So there are 2 questions in there. The first is the current year impact of ViaForm. Given timing and inventory builds, we're expecting, call it, $4 million impact in 2023. And unfortunately, a lot of that's been eroded by FX headwinds, incremental FX headwinds over the second quarter. So it's about net to the 2023 year.

是的。所以里面有兩個問題。第一個是 ViaForm 今年的影響。考慮到時間安排和庫存建設，我們預計 2023 年將產生 400 萬美元的影響。不幸的是，其中很大一部分已被外匯逆風、第二季度增量外匯逆風侵蝕。所以到 2023 年為止。

With regard to the longer-term opportunities here, the customer reception to this development has been very, very positive. And we've gone from a more modest player in some of the front end of line customers to a very important one. And our engagement with those customers has rapidly accelerated. The road map exchanges we've had have increased and the seniority of the people at the customer level involved in those road maps has increased. Combine that with Kuprion’ and our engagement at the leading edge has really accelerated, and the perception of our company has radically improved. And as we said on the call, that's a leading indicator for longer-term growth and wallet share.

就這裡的長期機會而言，客戶對這一發展的反應非常非常積極。我們已經從一些前端客戶中的一個較為溫和的參與者變成了一個非常重要的參與者。我們與這些客戶的互動也迅速加快。我們進行的路線圖交流有所增加，參與這些路線圖的客戶級別人員的資歷也有所增加。與 Kuprion™ 相結合，我們在前沿的參與度確實加快了，我們公司的形像也得到了根本改善。正如我們在電話會議上所說，這是長期增長和錢包份額的領先指標。

Your next question comes from the line of Kieran De Brun with Mizuho Securities.

您的下一個問題來自瑞穗證券的 Kieran De Brun。

Just wondering if you can dial in a little bit more into the industrial segment. I know that China has particularly been weak on the construction side, but automotive seems to have been trending, I think, ahead of expectations during the first half of the year. So any color that you can give us in terms of what you're seeing globally from an automotive perspective and from like an industrial constructive perspective and how you're thinking about that in the back half of the year would be helpful.

只是想知道您是否可以更多地涉足工業領域。我知道中國在建築方面尤其疲軟，但我認為汽車行業的趨勢似乎超出了今年上半年的預期。因此，您能向我們提供的任何關於您從汽車角度和工業建設性角度看到的全球情況以及您在今年下半年對此的看法的信息都會有所幫助。

Yes. Thanks for the question. So the Industrial business, the largest exposure is automotive, followed by construction. The construction market has softened in Europe and remains quite soft in China. And the automotive recovery hadn't been equal on a regional basis. The Chinese market has seen more of an increase and that increase is coming from local Chinese OEMs, where we're underpenetrated, right? We've always been more heavily weighted towards Western OEMs, both in China and in the West.

是的。謝謝你的提問。因此，工業業務中，敞口最大的是汽車，其次是建築。歐洲建築市場已經疲軟，中國建築市場仍然相當疲軟。各地區的汽車復甦情況也不盡相同。中國市場的增長更多，而這種增長來自中國本土的原始設備製造商，而我們在這方面的滲透率還不夠，對嗎？我們一直更重視西方原始設備製造商，無論是在中國還是在西方。

And so taken together, we saw a modest organic decline in IS in the second quarter. That's been offset by pricing actions and synergy realization. So from a profit perspective, that business has actually had modest growth in the second quarter. And we're not anticipating a dramatic change in those dynamics in the second half. We expect the second half to be comparable to the first half with some incremental margin improvement from raw material deflation, logistics deflation and so forth.

綜上所述，我們看到第二季度 IS 略有有機下降。這已被定價行動和協同效應的實現所抵消。因此，從利潤角度來看，該業務實際上在第二季度略有增長。我們預計下半年這些動態不會發生巨大變化。我們預計下半年將與上半年相當，原材料通貨緊縮、物流通貨緊縮等因素導致利潤率有所改善。

Great. And then maybe just a quick follow-up. You mentioned additional potential cost levers that aren't currently in the guidance that you could pull in the back half of the year. Can you just dial in a little bit more into what those might be and how we should think about that impact if you were to have to pull those levers?

偉大的。然後也許只是快速跟進。您提到了其他潛在的成本槓桿，這些槓桿目前不在您可以在今年下半年採取的指導中。您能否進一步了解這些可能是什麼，以及如果您必須拉動這些槓桿，我們應該如何考慮這種影響？

Sure. So as one of the hallmarks of the businesses are their variable operating expense models. And the buckets are things like T&E and marketing and then incentive compensation. And when the company is not growing, all of those levers are at play. And so we have plans around cost containment some of which are temporary around travel and so forth. And then there's a modest cost program, which will be permanent cost savings that will accelerate earnings growth into 2024. Think about the order of magnitude combining those 2 things around $20 million in the back half.

當然。因此，這些企業的標誌之一就是其可變的運營費用模型。這些內容包括差旅費、營銷以及激勵性薪酬等內容。當公司沒有增長時，所有這些槓桿都會發揮作用。因此，我們制定了有關成本控制的計劃，其中一些計劃是針對旅行等的臨時計劃。然後還有一個適度的成本計劃，這將是永久性的成本節約，將加速盈利增長到 2024 年。想想後半部分將這兩件事加起來大約 2000 萬美元的數量級。

Our next question comes from the line of John Roberts of Credit Suisse.

我們的下一個問題來自瑞士信貸銀行的約翰·羅伯茨。

I just have one. Are your backlogs improving equally across assembly, circuitry and semiconductors? Normally would think of semiconductors being upstream of the other businesses. I don't know whether the backlog there is increasing first or talk about any unevenness you might be seeing between the different parts of the supply chain.

我只有一個。您的裝配、電路和半導體方面的積壓訂單是否同樣得到改善？通常會認為半導體是其他業務的上游。我不知道那裡的積壓是否首先增加，或者談論您可能在供應鏈不同部分之間看到的任何不平衡。

Yes. So our semi-business, we talked about it being down 16% organically year-over-year in the second quarter. If you take out the precious metal impact there, it was down about 9%, which is outperformance relative to the circuitry business, which was down below the impact of smartphone units driven by some of the inventory build, particularly in local Chinese smartphones.

是的。我們的半成品業務在第二季度同比有機下降了 16%。如果剔除貴金屬的影響，則下降了約9%，相對於電路業務而言，其表現優於電路業務，電路業務的表現低於受部分庫存增加推動的智能手機部門的影響，尤其是中國本土智能手機。

So the room for recovery, you could say, is greater in the circuitry business. The semi business is recovering earlier as 1 would expect. But the circuitry business, as we said, in July, that business looks to be up 10% over June. So there isn't a huge lag. A bright spot across the whole portfolio is the assembly business, which has been really resilient from a high-end electronics perspective given its penetration in vehicle electrification, some of the innovation we've had around higher reliability alloys, which are gaining share from more legacy technologies, particularly in automotive applications. That's a business that's been stable and we expect it to grow nicely in the back half.

因此，可以說，電路行業的複蘇空間更大。正如人們所預期的那樣，半成品業務正在較早復甦。但電路業務，正如我們在 7 月份所說的那樣，該業務看起來比 6 月份增長了 10%。所以不存在很大的滯後。整個產品組合中的一個亮點是裝配業務，從高端電子產品的角度來看，鑑於其在汽車電氣化方面的滲透，該業務確實具有彈性，我們圍繞更高可靠性合金進行的一些創新正在從更多領域獲得份額傳統技術，特別是在汽車應用中。這是一項一直穩定的業務，我們預計它在下半年會有良好的增長。

Your next question comes from the line of Bhavesh Lodaya with BMO Capital Markets.

您的下一個問題來自 BMO Capital Markets 的 Bhavesh Lodaya。

Maybe one, Kuprion’ acquisition. You noted you are working towards getting product qualifications in place around the nano copper technology. Clearly, in early innings today, can you comment on the time line? It would take for earnings to show up in this platform? And is this thermal management a decent technology is something that you can use in your existing offerings in the semis of circuitry solutions?

也許其中之一就是收購 Kuprion。您提到您正在努力獲得有關納米銅技術的產品資格。顯然，在今天的早期幾局中，你能評論一下時間線嗎？收入需要在這個平台上顯示嗎？這種熱管理是一項不錯的技術嗎？您可以在半電路解決方案的現有產品中使用它嗎？

Yes. It's a great question. We're really, really excited about Kuprion’. It is industry-changing technology and the reception we've had from existing customers and even new customers has been outstanding. The number of projects we're working on qualifications around is huge. North of 30 opportunities have been created just in the first couple of months here. They're all at the leading edge. And so it's long qualification time lines, but they're big revenue opportunities.

是的。這是一個很好的問題。我們對 Kuprion 感到非常非常興奮。這是改變行業的技術，我們從現有客戶甚至新客戶那裡得到的反響非常好。我們正在開展的資格認證項目數量巨大。僅僅在最初的幾個月裡，這裡就創造了超過 30 個機會。他們都處於領先地位。因此，資格認證的時間很長，但它們是巨大的收入機會。

The earn-out attached to this business is capped at $100 million of revenue, right? So we pay a multiple of revenue. It translates if we hit it in the margins we expect to about 4x EBITDA. And we've got, at this point, about 5.5 years to get to $100 million of revenue. We fully expect to pay all of that earnout, which would make this an outstanding transaction because it would contribute tens of millions of dollars of EBITDA, all incremental growth.

這項業務的盈利上限為 1 億美元，對嗎？所以我們支付收入的倍數。如果我們達到預期的 EBITDA 約 4 倍的利潤率，那麼就可以轉化為結果。目前，我們還有大約 5.5 年的時間才能實現 1 億美元的收入。我們完全期望支付所有的收益，這將使這筆交易成為一筆出色的交易，因為它將貢獻數千萬美元的 EBITDA，所有增量增長。

The other thing that's great about this is the applications for this material span all of our existing electronics verticals and into new verticals. So it's got applications in IC substrate metallization, get applications and die attach. It's got applications in package attach, and we're working with customers in each of those areas, existing customers and new ones, as I said. It's got -- the outlook is very bright.

另一件很棒的事情是這種材料的應用涵蓋了我們所有現有的電子垂直領域和新的垂直領域。因此它在 IC 基板金屬化、應用和芯片貼裝方面得到了應用。正如我所說，它的包裝附件中包含應用程序，我們正在與每個領域的客戶合作，包括現有客戶和新客戶。前景非常光明。

Got it. And then a question on the balance sheet. Your leverage went higher following ViaForm transaction. You're targeting reaching 3.5 by year-end. Assuming we are there, what comes next for you? Do you believe you have invested what you want during this draw of the cycle? Or is the philosophy to continue investing as long as the right assets come along? Just wanted to get a sense of your priorities once we read your leverage targets.

知道了。然後是關於資產負債表的問題。 ViaForm 交易後您的槓桿率上升。您的目標是到年底達到 3.5。假設我們在那裡，接下來你會做什麼？您相信您在本輪週期中已經投入了您想要的資金嗎？還是只要有合適的資產出現就繼續投資的理念？只是想在我們閱讀您的槓桿目標後了解您的優先事項。

Yes. Our priority at the moment is to get inside of that leverage ceiling, and that's where we're going to be -- that's what you should expect in the back half of the year, and then we'll remain opportunistic going forward from there.

是的。我們目前的首要任務是突破槓桿上限，這就是我們將要達到的目標——這就是你在今年下半年應該期待的情況，然後我們將繼續保持機會主義。

Your next question comes from the line of Chris Kapsch with Loop Capital Markets.

您的下一個問題來自 Loop Capital Markets 的 Chris Kapsch。

So one question was a follow-up to some of the conversation around these copper acquisitions. So it sounds like the engagement with the ecosystem has been vitalized. I'm curious if that engagement has -- is it more focused on solely next-generation technology nodes? Or is it also a play here for your materials with a more focused and direct approach commercially to display some alternative suppliers in legacy nodes where interconnects were definitively copper? Or is it really across the board in terms of technology nodes?

因此，有一個問題是圍繞這些銅收購的一些對話的後續行動。因此，聽起來與生態系統的參與已經充滿活力。我很好奇這種參與是否更專注於下一代技術節點？或者，這是否也是您的材料的一種玩法，以更集中和直接的商業方法在互連肯定是銅的傳統節點中展示一些替代供應商？或者說在技術節點上真的是一刀切嗎？

Are you referring to ViaForm or Kuprion, Chris?

克里斯，您指的是 ViaForm 還是 Kuprion？

Well, I guess, I was thinking more ViaForm, but I guess Kuprion is more next gen.

好吧，我想，我更多地考慮了 ViaForm，但我想 Kuprion 更像是下一代。

It's relevant for both. Kuprion could display some of the current technologies used for lower-end power electronics, where some of the lower end users are using legacy assembly products, given that it's less expensive than Argomax and has better thermal management capabilities and adhesion capabilities and legacy side products.

這對兩者都相關。 Kuprion 可以展示一些當前用於低端電力電子設備的技術，其中一些低端用戶正在使用傳統的組裝產品，因為它比 Argomax 便宜，並且具有更好的熱管理能力和粘合能力以及傳統的副產品。

ViaForm is an interesting situation where we do believe we have the opportunity to win existing business and displace existing vendors. That's upside to the plan. So there's really 3 avenues for growth versus increasing utilization with existing customers.

ViaForm 是一個有趣的情況，我們確實相信我們有機會贏得現有業務並取代現有供應商。這對計劃來說是有利的。因此，與提高現有客戶的利用率相比，實際上有 3 種增長途徑。

Second is wins at new nodes that are coming online, and third is displacing competitive material. And we've got a good shot, we believe, at all 3 of those, which translates to significant incremental earnings contribution from this acquisition.

其次是在即將上線的新節點上取得勝利，第三是取代競爭材料。我們相信，我們在這三個方面都有很好的機會，這意味著這次收購將帶來顯著的增量收益貢獻。

Got it. That's helpful. And then just a follow-up on, you called out sort of semiconductor fab utilization rates recovering exiting second quarter. I'm just -- can you just confirm -- my understanding is your deposition materials into chip makers is more relevant with logic foundry fabs. And if that's the case, is this -- could this be looked at as a harbinger for pronounced improvement in PCB activity at some point? Just any color on that on how you see that playing out.

知道了。這很有幫助。接下來，您指出半導體工廠利用率在第二季度有所恢復。我只是——你能確認一下嗎——我的理解是，芯片製造商的沉積材料與邏輯代工廠更相關。如果是這樣的話，這是否可以被視為 PCB 活動在某個時候顯著改善的預兆？任何顏色都取決於你如何看待它的發展。

Sure. So yes, our semiconductor materials skew towards logic applications. And as folks in our supply chain like to say, chips don't flow. So the more chips that are being made, the more PCBs need to be made to -- for the electronics hardware they're going into. And so yes, we do believe it's a leading indicator for the circuit board industry and that's contemplated in our guide and evident in our July numbers.

當然。所以，是的，我們的半導體材料偏向於邏輯應用。正如我們供應鏈中的人們喜歡說的那樣，芯片不會流動。因此，製造的芯片越多，需要製造的 PCB 就越多——用於它們要使用的電子硬件。所以，是的，我們確實相信這是電路板行業的領先指標，我們的指南中已經考慮到了這一點，並且在我們 7 月份的數據中也很明顯。

Right. Okay. And then finally, is there any visibility in and around any sort of inventory build or destocking activity for your materials feeding into this ecosystem? Or has that not really -- I don't know if you have visibility, but I'm just curious if the overall demand weaknesses could be tied to that at all.

正確的。好的。最後，對於進入這個生態系統的材料，是否有任何類型的庫存建設或去庫存活動的可見性？或者不是真的——我不知道你是否有可見性，但我只是很好奇整體需求的弱點是否與此有關。

Sure. And so our materials are not stocked at the customer level. Finished goods from our customers have been stocked at the customer level. And we've been digesting that. We saw that in the third quarter last year in our industrial business. And over the past 2 quarters, sell-in has been let in sell-through of smartphones. And so finished goods, right, smartphone inventories were elevated and they're starting to be digested. And that's why -- if you look at the large PCB fabs, for example, in Asia, they were reporting numbers down 30%, 40% in the second quarter because of that inventory dynamic. We believe that inventory dynamic is largely is very much improved as we enter the third quarter.

當然。因此，我們的材料沒有在客戶層面庫存。我們客戶的成品已在客戶級別庫存。我們一直在消化這一點。我們在去年第三季度的工業業務中看到了這一點。在過去的兩個季度中，智能手機的銷售量已經包含在銷售量中。因此，成品、智能手機庫存增加，並且開始被消化。這就是為什麼——例如，如果你看看亞洲的大型 PCB 工廠，他們報告稱，由於庫存動態，第二季度的數量下降了 30%、40%。我們認為，進入第三季度後，庫存動態在很大程度上得到了很大改善。

Your next question comes from the line of Jon Tanwanteng with CJF Securities.

您的下一個問題來自 CJF 證券的 Jon Tanwanteng。

I was wondering if I could dig a little bit more into your confidence on the sequential improvement you expect in Q4. And I guess you do have some -- the cost cutting in your pocket and then maybe some more accretion from the ViaForm business. But I was looking more at the demand side. Is that based more on the leading indicators that you're seeing on the semi business? Maybe firm orders in hand or direct forecast from your customers? Just trying to get a better sense of demand as you head into Q4 and into '24 as well.

我想知道我是否可以進一步了解您對第四季度連續改善的信心。我猜你確實有一些——你的口袋裡有成本削減，然後也許還有來自 ViaForm 業務的更多增值。但我更多地關注需求方面。這是否更多地基於您在半成品行業看到的領先指標？也許是手頭的確定訂單或來自客戶的直接預測？只是想在進入第四季度和 24 年時更好地了解需求。

Yes. So. Thanks for the question, Jon. It's a short cycle business, right? So our visibility to Q4 right now is limited. But we're comfortable with our second half. And in all years, it's hard to be concrete on what's going to fall in the third quarter and what's going to fall in the fourth quarter, and we've basically taken a more conservative approach to the third quarter with knowledge that the semi ramp isn't going to be an elevator. It's going to be a slope and that the cost actions we're going to be taking will impact the fourth quarter more than the third quarter. And that's basically the framework for the second half guide.

是的。所以。謝謝你的提問，喬恩。這是一個短週期的業務，對吧？因此，我們目前對第四季度的能見度有限。但我們對下半場感到滿意。多年來，很難具體確定第三季度和第四季度將會下降什麼，而且我們基本上對第三季度採取了更為保守的方法，因為我們知道半坡道不會增長。不會是電梯。這將是一個斜坡，我們將採取的成本行動對第四季度的影響將大於第三季度。這基本上就是後半部分指南的框架。

Okay. Great. And then just more specifically on the ViaForm business. How quickly do you expect that to grow in the coming years? Do you have maybe some internal targets you can share? I know that there's probably a lot of opportunity out there with the new foundries that are going up. But maybe just let me understand what Entegris maybe wasn't doing that you can do to help you and share in that business and maybe some of the audit development and other marketing stuff that you can do?

好的。偉大的。然後更具體地討論 ViaForm 業務。您預計未來幾年增長速度有多快？您是否有一些可以分享的內部目標？我知道新建的代工廠可能有很多機會。但也許只是讓我了解 Entegris 可能沒有做哪些事情是您可以幫助您並分享該業務以及您可以做的一些審計開發和其他營銷工作？

Entegris was a great partner for us for many years and really grew this business nicely over a 20-year period. The most immediate growth will come from increased fab utilization. The incremental opportunities are from new fabs coming online, which should happen in 2024 into 2025 and then our ability to display semi competitive material, which is 9 to 12 months cycle. And so -- and then there's incremental innovation where we have been innovating around this product and should have new technology to bring to bear to the market. So in 2024, we should see the benefit of the increased fab utilization driving earnings contribution growth and some of the new fabs coming online and then beyond that, it should be from competitive wins and technology introduction.

Entegris 多年來一直是我們的優秀合作夥伴，在 20 多年的時間裡，我們的業務取得了良好的發展。最直接的增長將來自晶圓廠利用率的提高。增量機會來自於新晶圓廠的上線，這應該發生在 2024 年到 2025 年，然後我們有能力展示半競爭材料，週期為 9 到 12 個月。因此，我們一直在圍繞該產品進行創新，並且應該將新技術推向市場，這是漸進式創新。因此，到 2024 年，我們應該會看到晶圓廠利用率提高推動盈利貢獻增長以及一些新晶圓廠上線的好處，除此之外，還應該來自競爭勝利和技術引進。

Okay. Great. And then we've talked about this before, but I was wondering at a high level, could you just give us an update on the long-term EPS goals that you've put out there? What needs to happen for you to hit that, just given the environment we're in today and kind of what you're seeing over the next couple of years or so?

好的。偉大的。我們之前已經討論過這個問題，但我想知道，您能否向我們介紹一下您制定的長期每股收益目標的最新情況？考慮到我們今天所處的環境以及您在未來幾年左右所看到的情況，您需要做什麼才能實現這一目標？

Yes. So obviously, the earnings power in 2023 is behind the straight-line trajectory from when we introduced that goal back in early 2022. But what we've seen from this business is that it can recover very rapidly. And from a capital allocation perspective, very interesting things can become available. So we're going to have opportunities to deploy substantial cash flow over the next 3 years and participate in recovery from a cyclical trough that should contribute at attractive incremental margins and drive the bottom line.

是的。顯然，2023 年的盈利能力落後於我們在 2022 年初引入這一目標時的直線軌跡。但我們從這項業務中看到的是，它可以非常迅速地複蘇。從資本配置的角度來看，可以得到非常有趣的東西。因此，我們將有機會在未來三年內部署大量現金流，並參與週期性低谷的複蘇，這將有助於帶來有吸引力的增量利潤並推動盈利。

If we look back to 2020, we thought there was very little chance we were going to hit our goal sitting in the middle of the year, and we did so 18 months later. So we have not lost hope or confidence in our ability to deliver, even though the slope is a little steeper from where we stand today.

如果我們回顧 2020 年，我們認為在年中實現目標的可能性很小，但我們在 18 個月後做到了。因此，我們並沒有對我們的交付能力失去希望或信心，儘管坡度比我們今天的情況要陡一些。

Your next question comes from the line of Steve Byrne with Bank of America.

您的下一個問題來自美國銀行的史蒂夫·伯恩 (Steve Byrne)。

This is Rock Hoffman on for Steve Byrne. I wanted to go back to your assembly business and just see if I get a little more detail on your penetration and vehicle electrification.

我是洛克·霍夫曼 (Rock Hoffman) 為史蒂夫·伯恩 (Steve Byrne) 發言。我想回到你們的裝配業務，看看我是否能獲得有關你們的滲透率和車輛電氣化的更多細節。

Sure. So we provide materials used in power electronics, both for die-attach and package-attach for very high-performance electric vehicles. And we've got a world-class material for that application that improves reliability and performance, speaking to range for those vehicles. Our penetration in that market is actually still modest because legacy technologies are still being used. When you look at some of the emerging electric vehicle providers in China, they're not using this material. We just opened an applications development lab in Shanghai to much fanfare and have really strong engagements with most of the leading electric vehicle companies in China and around the world. And this acquisition of Kuprion’ brings to bear another lower cost, slightly lower performance, but still much improved performance relative to legacy technology. product to meet that growing need.

當然。因此，我們提供用於電力電子的材料，用於高性能電動汽車的芯片貼裝和封裝貼裝。我們為該應用提供了世界一流的材料，可以提高可靠性和性能，從而提高這些車輛的續航里程。實際上，我們在該市場的滲透率仍然不大，因為仍在使用傳統技術。當你觀察中國一些新興的電動汽車供應商時，你會發現他們並沒有使用這種材料。我們剛剛在上海大張旗鼓地開設了一個應用開發實驗室，並與中國和世界各地大多數領先的電動汽車公司建立了密切的合作關係。這次收購 Kuprion™ 帶來了另一個更低的成本、稍低的性能，但相對於傳統技術，性能仍然大大提高。產品以滿足不斷增長的需求。

So vehicle electrification will be a significant tailwind, and we're in the pole position to benefit disproportionately from that as units grow. And I'm just talking about the assembly business. I'm not even talking about our other businesses. But as units grow and as our technology is better understood and therefore, deployed.

因此，汽車電氣化將成為一個重要的推動因素，隨著銷量的增長，我們處於領先地位，可以從中獲得不成比例的好處。我只是在談論裝配業務。我什至沒有談論我們的其他業務。但隨著單位的發展以及我們的技術被更好地理解並因此得到部署。

And then in regards to your progress on the internal initiatives to accelerate growth and cut costs. I wonder if you could provide any updates there.

然後是關於加速增長和削減成本的內部舉措的進展情況。我想知道你是否可以在那裡提供任何更新。

Yes. So this is the appropriate activity in all times to manage cost. The variable cost nature of the business is something that has been unchanged. And then there are some other ongoing actions to reduce OpEx and accelerate growth going into the 2024. Our view is if one of our businesses is impaired, we will reduce significant costs, but our view is that none of the businesses are impaired. And therefore, our cost actions are around the margins opportunistically. We feel strongly that we have to retain our very talented people all over the world to benefit from the recovery that's inevitable. And so the cost actions are targeted -- the permanent cost actions are targeted and the temporary ones are formulaic, frankly. The cost falls out of the business when we're not growing.

是的。因此，這是任何時候管理成本的適當活動。業務的可變成本性質一直沒有改變。然後還有其他一些持續的行動來減少運營支出並加速增長，直至2024 年。我們的觀點是，如果我們的一項業務受到損害，我們將大幅降低成本，但我們的觀點是所有業務都不會受到損害。因此，我們的成本行動是機會主義的。我們強烈認為，我們必須留住世界各地非常有才華的人才，才能從不可避免的複蘇中受益。因此，成本行動是有針對性的——坦率地說，永久性成本行動是有針對性的，而臨時成本行動是公式化的。當我們不增長時，成本就會從業務中消失。

(Operator Instructions) Your next question comes from David Silver with CL King.

（操作員說明）您的下一個問題來自 CL King 的 David Silver。

Yes. So there's been a lot of discussion about the Viaform acquisition. And to me, it looks like a very attractive strategic addition. A couple of questions. But firstly, I'm just wondering how replicable this might be across your portfolio. In other words, are there other distribution agreements or other relationships where maybe you could bring high-value maybe front end of the line products into your full control as you did with ViaForm?

是的。因此，關於 Viaform 收購的討論很多。對我來說，這看起來是一個非常有吸引力的戰略補充。有幾個問題。但首先，我只是想知道這在你的投資組合中的可複制性如何。換句話說，是否還有其他分銷協議或其他關係，讓您可以像使用 ViaForm 一樣完全控制高價值的前端產品？

And then maybe more broadly, these last couple of transactions here kind of point to, I guess, the convergence between the chip, the wafer and the circuit board, maybe with advanced packaging as the intersection. But how do you think your balance is right now in that regard versus where you'd like to be, I don't know, 3 to 5 years from now?

然後也許更廣泛地說，我猜這最後幾筆交易有點指向芯片、晶圓和電路板之間的融合，也許以先進封裝為交集。但你認為你現在在這方面的平衡與你想要的（我不知道）3 到 5 年後的平衡如何？

So thanks for those questions. So the arrangement around ViaForm was a unique legacy situation where we had split responsibility, if you will, and a predecessor company to Element sold the distribution rights to that product line in 2003. So I don't see more opportunities like this because typically, we go direct for applications like this.

謝謝你提出這些問題。因此，圍繞ViaForm 的安排是一種獨特的遺留情況，如果你願意的話，我們有責任分擔，並且Element 的前身公司在2003 年出售了該產品線的分銷權。所以我看不到更多這樣的機會，因為通常，我們直接申請這樣的應用程序。

That having been said, there have been opportunities where we've identified great technology that we believe can leverage our leading commercial technical teams and supply chain to help commercialize and so there may be more opportunities to engage with emerging technology companies and provide the value that our footprint and capabilities bring to them to create win-wins. That's something that we have been looking at.

話雖如此，我們已經找到了一些偉大的技術，我們相信這些技術可以利用我們領先的商業技術團隊和供應鏈來幫助商業化，因此可能有更多的機會與新興技術公司合作並提供價值我們的足跡和能力為他們帶來雙贏。這是我們一直在關注的事情。

With regard to this next-generation electronics convergence, it's a very powerful, very powerful trend in our end markets and one that we're benefiting from. And we sit really nicely between in that bull's eye, right, where we have capabilities and circuit board capabilities in semiconductor, both front end of line and packaging and capabilities in assembly. And so when we bring the breadth of our product portfolio to bear at the largest OSAT and semi fabs and OEMs, electronics OEMs, they're stunned by our capabilities. And we're seeing it in the P&L already. If you look at the numbers in our semiconductor business, we've said for a long time that it will outgrow our other businesses than it has been. And it's just emerging. It's a unique set of capabilities that we have at Element Solutions that are increasingly appreciated by the supply chain. And the future is very bright in that regard.

就下一代電子融合而言，這是我們終端市場中非常強大的趨勢，我們也從中受益。我們確實處於正確的靶心之間，我們擁有半導體方面的能力和電路板能力，包括生產線前端和封裝以及組裝能力。因此，當我們將廣泛的產品組合應用於最大的 OSAT 和半晶圓廠以及 OEM、電子 OEM 時，他們對我們的能力感到震驚。我們已經在損益表中看到了這一點。如果你看看我們半導體業務的數字，我們很長一段時間以來就說過，它的增長速度將超過我們其他業務的增長速度。而且它才剛剛出現。這是我們 Element Solutions 擁有的一套獨特的能力，越來越受到供應鏈的讚賞。在這方面，未來是非常光明的。

Okay. I appreciate it. Just one more on the Kuprion’ purchase or acquisition. But not your last Analyst Day, but I think 2 Analyst Days ago, you talked a little bit about how your company with its global footprint and leveraging your strong customer relationships. You'd be an attractive partner for attractive but emerging technologies that could use your company's assets as kind of a gateway to commercialization? And greater success together than apart. Is the Kuprion’ transaction, an example of that?

好的。我很感激。再講一個關於 Kuprion 購買或收購的問題。但這不是您的最後一個分析師日，但我認為在 2 個分析師日前，您談到了貴公司如何利用其全球足跡並利用強大的客戶關係。您會成為有吸引力的新興技術的合作夥伴嗎？這些技術可以利用您公司的資產作為商業化的門戶？在一起比分開更能取得成功。 Kuprion 交易就是這樣的一個例子嗎？

In other words, have you been working with them for a while and kind of complementary skills at work here. And then it got to the point where it made sense to bring this technology in-house? Or is this something where maybe they were shopping around to a number of buyers?

換句話說，你已經和他們一起工作了一段時間了，並且在工作中擁有互補的技能。然後到了將這項技術引入內部有意義的地步嗎？或者這可能是他們向許多買家貨比三家的地方？

Yes. Kuprion’ is a case study in that. And it's -- Kuprion shows to work with us. They had alternatives, and they chose to work with us because we were the only company. We are the only company that has a capability in the preponderance of their applications, right? So we've got capability in circuit board where their material can be used for IC substrate metallization. We've got capability in die-attach and assembly materials, power electronics. The things that their potential customers were looking at were all things that they are potential customers for the most part were buying from us already. And this was just a new capability for emerging needs. And so we were a perfect match, and it's a case study for that type of investment.

是的。 Kuprion 就是這方面的一個案例研究。 Kuprion 表示願意與我們合作。他們有其他選擇，他們選擇與我們合作，因為我們是唯一的公司。我們是唯一一家有能力掌握其優勢應用程序的公司，對嗎？因此，我們在電路板方面擁有能力，其材料可用於 IC 基板金屬化。我們在芯片粘接和組裝材料、電力電子領域擁有能力。他們的潛在客戶正在查看的東西都是他們大部分潛在客戶已經從我們這裡購買的東西。這只是針對新興需求的新功能。所以我們是完美的搭檔，這是此類投資的案例研究。

There are no further questions at this time. I'd like to turn the call back over to Ben Gliklich for closing remarks.

目前沒有其他問題。我想將電話轉回給 Ben Gliklich 作結束語。

Thank you very much. Thank you to everybody for joining. We look forward to seeing many of you soon, and hope you have a great day.

非常感謝。感謝大家的加入。我們期待很快見到你們中的許多人，並希望你們度過愉快的一天。

This concludes today's conference call. You may now disconnect.

今天的電話會議到此結束。您現在可以斷開連接。