Element Solutions Inc (ESI) 2024 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Element Solutions Q3 2024 financial results conference call. (Operator Instructions)

早安，女士們、先生們，歡迎參加 Element Solutions 2024 年第三季財務業績電話會議。（操作員說明）

Thank you. I will now turn the call over to Varun Gokarn, Vice President, Strategy Integration. Please go ahead.

謝謝。我現在會把電話轉給策略整合副總裁 Varun Gokarn。請繼續。

Good morning and thank you for participating in our third-quarter 2024 earnings conference call. Joining me today are our President and CEO, Ben Gliklich; and CFO, Carey Dorman.

早安，感謝您參加我們的 2024 年第三季財報電話會議。今天加入我的是我們的總裁兼執行長 Ben Gliklich；和財務長凱裡·多爾曼。

In accordance with Regulation FD, we are webcasting this conference call. A replay will be made available in the Investors section of the company's website.

根據 FD 法規，我們對本次電話會議進行網路直播。重播將在公司網站的投資者部分提供。

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, which are subject to risks and uncertainties.

在今天的電話會議中，我們將做出某些前瞻性聲明，以反映我們目前對公司未來業績和財務表現的看法。這些陳述是基於對未來事件的假設和預期，存在風險和不確定性。

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 in the Investors section under News and Events.

請參閱我們的收益發布、補充投影片和最近向 SEC 提交的文件，以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。這些資料可以在公司網站「新聞和活動」下的「投資者」部分找到。

Today's materials also include financial information that has not been prepared in accordance with US GAAP. 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資訊。請參閱收益發布和補充投影片，以了解這些非 GAAP 衡量標準與可比較 GAAP 財務衡量標準的定義和調整。

It is now my pleasure to introduce our CEO, Ben Gliklich.

現在我很高興向大家介紹我們的執行長 Ben Gliklich。

Thank you, Varun, and good morning, everyone. Thank you for joining. Element Solutions delivered strong results once again this quarter. Financially, operationally and strategically, we executed well. Our multiyear effort to target the highest value and fastest-growing segments of the electronic supply chain and position ourselves as key enablers of developing technologies is working.

謝謝瓦倫，大家早安。感謝您的加入。Element Solutions 本季再次取得強勁業績。在財務、營運和策略上，我們執行得很好。我們多年來致力於電子供應鏈中價值最高、成長最快的部分，並將自己定位為開發技術的關鍵推動者，這項努力正在發揮作用。

As the market has developed for our offering, supporting high-performance computing, data centers, event packaging using cutting-edge chip designs and power electronics for electric vehicles, our revenue has grown along with it. And because of these emerging growth vectors, our electronics segment has outperformed sluggishness in more traditional electronics and industrial end markets this year.

隨著我們的產品、支援高效能運算、資料中心、使用尖端晶片設計和電動汽車電力電子設備的活動包裝的市場不斷發展，我們的收入也隨之成長。由於這些新興的成長載體，我們的電子產品領域今年的表現超越了更傳統的電子產品和工業終端市場的低迷。

In the quarter, standout volume growth in wafer level packaging and semiconductor assembly drove an acceleration in sales for the electronics segment, which grew 9% organically. Our advanced packaging applications and power electronics businesses accelerated sequentially as expected.

本季度，晶圓級封裝和半導體組裝銷量的顯著成長推動了電子領域銷售的加速，有機成長了 9%。我們的先進封裝應用和電力電子業務如預期相繼加速。

Circuitry solutions also grew over 9% organically, driven by demand for data storage, certain EV applications and circuit boards for high-performance computing. The electronics market overall, however, was not uniformly stronger in the third quarter.

在資料儲存、某些電動車應用和高效能運算電路板需求的推動下，電路解決方案的有機成長也超過 9%。然而，第三季電子市場整體表現並不均勻。

Smartphone sales growth did not accelerate as quickly as expected, and electronics for more industrial applications remain soft, in line with those markets. Our results are a testament to the business shifting away from some of its legacy drivers and towards emerging growth sectors.

智慧型手機銷售成長速度沒有預期那麼快，更多工業應用的電子產品仍然疲軟，與這些市場一致。我們的業績證明了企業正在從一些傳統驅動因素轉向新興成長領域。

The combination of softening demand in Europe and lower revenue from metal price surcharges in the core industrial portfolio were headwinds for our industrial and specialty segment. Profitability, however, improved and so did adjusted EBITDA from raw material cost actions and ongoing strength in our energy business, which grew sales by double digits at high incrementals.

歐洲需求疲軟以及核心工業產品組合中金屬價格附加費收入下降，對我們的工業和特殊產業構成了不利因素。然而，獲利能力有所改善，調整後的 EBITDA 也因原材料成本行動和能源業務的持續強勁而有所改善，該業務的銷售額以兩位數的高增量增長。

The businesses in this segment benefited from work we've done to improve them, whether through procurement, facility rationalization or pricing actions. The impact of these actions translated into earnings growth in a soft market and should be even more evident when end markets inevitably rebound.

該細分市場的業務受益於我們為改善業務所做的工作，無論是透過採購、設施合理化或定價行動。這些行動的影響轉化為疲軟市場中的獲利成長，當終端市場不可避免地反彈時，這種影響應該會更加明顯。

Staying with our Industrial and specialty segment, this quarter, we announced the divestiture of our graphic solutions business. MacDermid Graphic Solutions is a high-quality business with great attributes that does not align with ESI's core businesses and operating model. This transaction is long-term growth, margin and return on capital accretive. For example, the midpoint of our 2024 adjusted EBITDA guidance implies an average constant currency growth rate of 7% since 2019. Ex graphics, that rate increases to 8%.

繼續我們的工業和專業部門，本季度，我們宣布剝離圖形解決方案業務。MacDermid Graphic Solutions 是一家高品質企業，其卓越屬性與 ESI 的核心業務和營運模式並不相符。這項交易具有長期成長、利潤率和資本回報率的增值作用。例如，我們 2024 年調整後 EBITDA 指導的中點意味著自 2019 年以來平均恆定貨幣成長率為 7%。除圖形外，該比率增加至 8%。

The transaction should be 230 basis points accretive to CRI. This transaction values the business at an attractive double-digit multiple. And given our legacy tax attributes, we should pay minimal taxes on the $325 million of gross proceeds. Pro forma for the transaction, our net leverage ratio would have been 2.5 times this quarter. Transaction is expected to close in late 2024 or the first half of 2025 pending closing conditions and regulatory approvals.

該交易將為 CRI 帶來 230 個基點的增值。這筆交易對該業務的估值達到了有吸引力的兩位數倍數。鑑於我們遺留的稅收屬性，我們應該為 3.25 億美元的總收益繳納最低稅。預計本季交易的淨槓桿率為 2.5 倍。交易預計將於 2024 年底或 2025 年上半年完成，尚待成交條件和監管部門批准。

Taken together, we've repositioned the company through innovation, acquisitions and divestitures for faster profit growth. With the supportive electronics market, our confidence in the long-term algorithm for ESI is increasing.

總而言之，我們透過創新、收購和剝離對公司進行了重新定位，以實現更快的利潤成長。隨著電子市場​​的支持，我們對 ESI 長期演算法的信心不斷增強。

We're uniquely positioned with decades of technical expertise across the breadth of the electronics manufacturing supply chain to support OEMs and fabricators as they increasingly rely on unique material sets spanning the circuit board, the chip and the variety of attachment technologies, which connect them to deliver computing performance improvements.

我們擁有獨特的優勢，在整個電子製造供應鏈中擁有數十年的技術專業知識，可以為OEM 和製造商提供支持，因為他們越來越依賴跨越電路板、晶片和各種連接技術的獨特材料組，這些技術將他們與提高計算性能。

Our investments in new technologies from advanced packaging and die attached offerings to nanocopper as well as new applications and research centers in Southeast and subcontinental Asia support our enhanced profile and mind share with specifiers, qualifiers and customers in our supply chain.

我們對新技術的投資，從先進封裝和晶片附加產品到奈米銅，以及在東南亞和次大陸的新應用和研究中心，支持我們在供應鏈中增強形象和與規範者、限定者和客戶的共識。

With this invigorated and focused organization and dry powder to capitalize on strategic opportunities, element solutions is well positioned for 2025.

憑藉這個充滿活力、專注的組織和充分利用戰略機會的乾粉，Element Solutions 為 2025 年做好了充分準備。

Carey will now take you through our third quarter results in more detail. Carey?

凱裡現在將帶您更詳細地了解我們第三季的業績。凱裡？

Thanks, Ben, and good morning to everyone.

謝謝本，祝大家早安。

I am now on slide 3, which provides an overview of the third quarter financial results. We delivered 6% organic sales growth, translating to constant currency adjusted EBITDA growth of 8%. Despite difficult comparisons, gross margins in both segments improved year over year as we benefited from mix in electronics and additional raw material favorability in I&S. Year to date, incremental margins for the business remained well ahead of our targeted 30% to 40% range.

我現在正在看第三張投影片，其中概述了第三季的財務表現。我們實現了 6% 的有機銷售成長，相當於固定匯率調整後 EBITDA 成長 8%。儘管很難進行比較，但由於我們受益於電子產品的混合以及工業和工業領域額外的原材料優惠，這兩個部門的毛利率均較去年同期有所提高。今年迄今為止，該業務的增量利潤率仍然遠高於我們 30% 至 40% 的目標範圍。

These margins did moderate as expected in Q3, given year-over-year comparisons on the OpEx line, primarily due to incentive compensation accruals and other variable spend items as the business continues to perform well against plan.

考慮到營運支出線的同比比較，這些利潤率在第三季度確實有所放緩，這主要是由於激勵性薪酬應計項目和其他可變支出項目，因為業務繼續按照計劃表現良好。

In the third quarter last year, we were accruing below target incentive compensation. And this year, we are above. Together, that accounts for over 100 basis points of year-over-year impact to adjusted EBITDA margin in the quarter.

去年第三季度，我們累積的激勵薪酬低於目標。今年，我們在上面。總和而言，這對本季調整後 EBITDA 利潤率的年比影響超過 100 個基點。

Electronics grew 9% organically, an acceleration from 7% in the second quarter led by growth in advanced packaging solutions, a sequential rebound in power electronics, continued demand for high-value advanced circuit board metallization chemistry and growth in memory disk for cloud storage markets.

電子產品有機成長9%，較第二季度的7% 有所加速，這主要得益於先進封裝解決方案的成長、電力電子產品的連續反彈、對高價值先進電路板金屬化化學的持續需求以及雲端儲存市場儲存磁碟的成長。

Net sales in our industrial and specialty segment were flat organically. The strengthening US dollar negatively impacted total company net sales and adjusted EBITDA in the quarter by roughly 1% and 2%, respectively, year over year.

我們的工業和專業領域的淨銷售額有機持平。美元走強對該季度公司總淨銷售額和調整後 EBITDA 產生了負面影響，年比分別下降約 1% 和 2%。

Constant currency adjusted EBITDA grew 10% in electronics, driven by the mix benefits of higher sales in semiconductor and circuitry solutions. In I&S, constant currency adjusted EBITDA grew 4%, with improvement in offshore margins and input cost favorability, offsetting softer volumes in industrial service treatment.

在半導體和電路解決方案銷售額增加的綜合效益推動下，電子產品領域以固定匯率調整後的 EBITDA 成長了 10%。在 I&S 領域，固定匯率調整後的 EBITDA 成長了 4%，海外利潤率和投入成本有利性有所改善，抵消了工業服務處理量的疲軟。

Excluding the impact of the $109 million of pass-through metal sales in assembly solutions, our adjusted EBITDA margin would have been 27% in the quarter. This is flat year-over-year, but up when excluding the compensation accruals discussed earlier.

排除組裝解決方案中 1.09 億美元的直通金屬銷售的影響，我們本季調整後的 EBITDA 利潤率為 27%。這一數字與去年同期持平，但在排除之前討論的應計薪酬後有所上升。

On slide 4, we share additional detail on the drivers of organic net sales growth in our two segments. Growth in the electronics segment was robust in the quarter as the higher end electronics supply chain continued to improve. Assembly grew 4% organically, improving from 2% growth in the second quarter.

在投影片 4 上，我們分享了更多有關兩個細分市場有機淨銷售額成長驅動因素的詳細資訊。隨著高階電子產品供應鏈持續改善，本季電子產品領域成長強勁。Assembly 有機成長 4%，高於第二季 2% 的成長。

The growth was in Asia, particularly India and China, where softer pace volume demand increased given electronics assembly activity in the region. Volumes for core assembly products continue to decline in Western markets due to automotive and broader industrial market conditions.

成長出現在亞洲，特別是印度和中國，由於該地區的電子組裝活動，需求量成長放緩。由於汽車和更廣泛的工業市場狀況，西方市場的核心組裝產品銷售持續下降。

Circuitry solutions sales grew 9% organically despite the softer-than-expected smartphone market. This result reflects a mix shift in our business towards emerging electronics applications. This is the positive development, which gives us confidence that the next driver of high-end electronics market growth is emerging. Nonetheless, we still believe smartphone and other legacy markets will continue to grow over the medium term as new AI-enabled devices drive a refresh cycle.

儘管智慧型手機市場疲軟，但電路解決方案銷售額有機成長 9%。這一結果反映了我們的業務向新興電子應用的混合轉變。這是積極的發展，這讓我們相信高端電子市場成長的下一個驅動力正在出現。儘管如此，我們仍然相信，隨著新的人工智慧設備推動更新周期，智慧型手機和其他傳統市場將在中期內繼續成長。

Semiconductor solutions grew 26% in the quarter. Last year, in the context of our ViaForm transaction, customers built up inventory in the second quarter ahead of closing, which made the third quarter an easier comparison this year. When adjusting for this timing related item, the semiconductor business still would have grown in the mid-teens due to improved utilization at major OSATs, high demand for wafer plating chemistry at Asian semi fabs and certain new fabs that came online in the quarter.

半導體解決方案本季成長 26%。去年，在我們的 ViaForm 交易中，客戶在第二季交易結束前建立了庫存，這使得今年第三季的比較更容易。在調整這項與時間相關的項目時，由於主要OSAT 利用率的提高、亞洲半晶圓廠和本季度投產的某些新晶圓廠對晶圓電鍍化學品的高需求，半導體業務仍將實現15% 左右的成長。

We see a runway for several years of double-digit organic growth in these product areas. We are gaining market share on legacy nodes and seeing a surge in demand from emerging advanced packaging applications and other innovation we are bringing to market.

我們預計這些產品領域未來幾年將實現兩位數的有機成長。我們正在傳統節點上獲得市場份額，並看到新興先進封裝應用和我們推向市場的其他創新的需求激增。

Finally, as expected, the business benefited from sequentially higher power electronics sales for EV customers due to greater production rates at existing customers and new business wins.

最後，正如預期的那樣，由於現有客戶的生產力提高和新業務的贏得，電動車客戶的電力電子產品銷售額連續增加，該業務受益於此。

In industrial solutions, a little over half of the 3% sales decline was due to reductions in surcharges for commodity metals such as palladium and nickel. As has been the case for most of this year, these metal price swings negatively impacted headline sales, but the higher mix of value-add, high-margin chemistry revenue is beneficial to margins.

在工業解決方案中，銷售額下降 3% 的一半多一點是由於鈀和鎳等商品金屬附加費的降低。與今年大部分時間的情況一樣，這些金屬價格波動對整體銷售產生了負面影響，但增值、高利潤化學收入的更高組合有利於利潤率。

Automotive demand weakened over the course of the quarter as production slowed. Our expectation for revenues in the fourth quarter reflect this trend though continued margin favorability and cost discipline should partially offset the impact to the bottom line. Energy solutions remained a bright spot in the I&S portfolio with organic sales growth of 10%. The energy business should continue to operate at similar levels given ongoing drilling activity.

由於生產放緩，本季汽車需求減弱。我們對第四季度營收的預期反映了這一趨勢，儘管持續的利潤率優惠和成本控制應部分抵消對利潤的影響。能源解決方案仍然是 I&S 產品組合中的亮點，有機銷售額成長 10%。鑑於持續的鑽探活動，能源業務應繼續以類似的水平運作。

Turning to slide 5. We generated $86 million of free cash flow in the third quarter and remain on track to deliver $280 million to $300 million for the full year. Inventory levels improved and overall working capital increased modestly, reflecting sequential sales growth. CapEx was in line at $13 million as we further progress strategic capacity expansion projects and application development initiatives in growth geographies. Our full-year expectations for cash interest, cash taxes and CapEx remain largely unchanged.

轉到投影片 5。我們在第三季創造了 8,600 萬美元的自由現金流，並預計全年實現 2.8 億至 3 億美元的目標。庫存水準有所改善，整體營運資本略有增加，反映出銷售額的環比成長。隨著我們在成長地區進一步推進策略產能擴張專案和應用程式開發計劃，資本支出預計將達到 1,300 萬美元。我們對全年現金利息、現金稅和資本支出的預期基本上保持不變。

Our trailing 12-month net leverage ratio at quarter end was 3.0 times. The strength of our balance sheet was highlighted earlier this month when we reprice the interest rate on our term loans to SOFR plus 1.75%, which we believe are the tightest levels that high-yield credits have been able to achieve in the current market. In conjunction with this repricing, we paid down $100 million of term loan debt.

截至季末，我們過去 12 個月的淨槓桿率為 3.0 倍。本月早些時候，我們將 SOFR 定期貸款利率重新定價為加 1.75%，這突顯了我們資產負債表的實力，我們認為這是當前市場高收益信貸能夠達到的最嚴格水平。結合此次重新定價，我們還清了 1 億美元的定期貸款債務。

Overall, we believe we have navigated several years of elevated interest rates with only a modest impact to cash flows. When we include our expected $310 million plus in proceeds from the Graphic sale, our pro forma net leverage ratio would have been 2.5 times at quarter end. As Ben mentioned, we are in a great balance sheet position with meaningful capacity for future value-enhancing capital deployment.

總體而言，我們認為我們已經度過了幾年的利率上升期，但對現金流的影響不大。當我們計入圖形銷售預計的 3.1 億美元以上收益時，我們預計季度末的淨槓桿率為 2.5 倍。如本所提到的，我們的資產負債表狀況良好，具有未來增值資本部署的重要能力。

Now I'll turn the call back to Ben to discuss our outlook. Ben?

現在我將把電話轉回本，討論我們的前景。本？

Thank you, Carey. We're on track for a record year in 2024. Our competitive position in electronics is as strong as it has ever been as reflected by record segment revenue in the third quarter, even though recovery in these end markets has been mixed through the first nine months of the year. We expect broader-based growth in our electronics end markets in 2025.

謝謝你，凱裡。我們預計在 2024 年迎來創紀錄的一年。儘管今年前九個月這些終端市場的復甦情況參差不齊，但我們在電子產品領域的競爭地位一如既往地強勁，第三季創紀錄的部門收入反映了這一點。我們預計 2025 年我們的電子終端市場將出現更廣泛的成長。

Conversely, industrial end markets are weaker than we expected a few months ago, and our fourth quarter outlook for the I&S segment reflects what is typically a seasonally softer period of activity. It remains to be seen whether interest rate cuts in the US and Europe as well as Chinese stimulus will prove to be a tailwind for large industrial sectors like construction and automotive that have remained weak for much of 2024.

相反，工業終端市場弱於我們幾個月前的預期，我們對 I&S 領域第四季的展望反映了通常的季節性活動疲軟時期。美國和歐洲的降息以及中國的刺激措施是否會成為建築和汽車等大型工業部門的順風車，這些部門在 2024 年的大部分時間裡仍然疲軟，還有待觀察。

Our narrowed full year 2024 adjusted EBITDA guidance range of $535 million to $540 million retains the midpoint of our prior guidance and translates to healthy mid-teens constant currency growth this year. While there is macroeconomic uncertainty as we look out to 2025, we're confident in how we've positioned the business for the next several years.

我們將 2024 年全年調整後 EBITDA 指引縮小為 5.35 億美元至 5.4 億美元，保留了先前指引的中點，並轉化為今年健康的中位數穩定貨幣成長。儘管展望 2025 年，宏觀經濟存在不確定性，但我們對未來幾年的業務定位充滿信心。

We're a critical material solutions partner to our supply chains with broad applications expertise to address a diverse set of growth areas, many of which are proving resilient against the macro backdrop. We have a focused strategy to invest behind and grow our businesses and meaningful opportunities to optimize costs and processes across the company, which we are pursuing.

我們是供應鏈的重要材料解決方案合作夥伴，擁有廣泛的應用專業知識，可滿足各種成長領域的需求，其中許多領域在宏觀背景下被證明具有彈性。我們有一個集中的策略來投資和發展我們的業務，並提供有意義的機會來優化整個公司的成本和流程，這是我們所追求的。

Our balance sheet is in great shape and gives us a great deal of flexibility. In short, we're well positioned for another record year in 2025.

我們的資產負債表狀況良好，給我們很大的彈性。簡而言之，我們已做好充分準備，在 2025 年再創歷史新高。

In closing, I'd like to thank all of our stakeholders for their continued support of Element Solutions and in particular, our exceptional and highly engaged people around the world who are responsible for another strong quarter that laid the foundation for more to come.

最後，我要感謝我們所有利益相關者對Element Solutions 的持續支持，特別是感謝我們在世界各地的傑出且高度敬業的員工，他們為另一個強勁的季度奠定了基礎，為未來的發展奠定了基礎。

Before we begin the Q&A session, I want to acknowledge the recent media speculation around our business. We don't comment on rumors, and we therefore ask that you keep your questions focused on our quarterly results and outlook. Now let's begin the Q&A session.

在我們開始問答環節之前，我想承認最近媒體對我們業務的猜測。我們不對謠言發表評論，因此請您將問題集中在我們的季度業績和前景上。現在我們開始問答環節。

(Operator Instructions) Josh Spector, UBS.

（操作員說明）Josh Spector，UBS。

Congrats on a solid quarter. I just wanted to ask on electronic trends more broadly. So if I look at your results through the year, it looks like we've seen some acceleration on a two, three-year stack over the last couple of quarters.

恭喜季度業績穩健。我只是想更廣泛地詢問電子趨勢。因此，如果我看看你們全年的業績，看起來我們在過去幾季中看到了兩年、三年的業績成長。

Obviously, there's been some moving pieces and some timing effects here, but wondering if you could acknowledge in terms of how that impacts your view on the progression into '25. Are we seeing an accelerating trend continue into fourth quarter into next year? Would you agree with that view? Or is there some different take in terms of how you characterize it?

顯然，這裡有一些令人感動的事情和一些時間效應，但想知道你是否能承認這如何影響你對進入 25 的進展的看法。我們是否看到加速趨勢會持續到第四季到明年？你同意這個觀點嗎？或者你對它的描述有什麼不同的看法嗎？

Yes. Thanks for the question, Josh. The electronics market this year has not been uniformly improving, right? And so when you think about expectations entering the year, there were optimists around smartphone market getting better. Obviously, the auto market broadly is worse, and that's a big electronics driver.

是的。謝謝你的提問，喬許。今年的電子市場並沒有全面改善，對嗎？因此，當你考慮進入今年的預期時，人們對智慧型手機市場的改善持樂觀態度。顯然，汽車市場整體情況更糟，這是電子產品的一大推動因素。

And so what we've seen in our business is traction in some of these emerging technology trends that's offsetting some of that broader weakness. And as we turn to 2025, indicators or early forecasts are for more general improvement in the electronics market, right? So as we sit here today, the forecast for MSI is somewhere between high single-digit and double-digit growth in 2025.

因此，我們在業務中看到，一些新興技術趨勢的吸引力正在抵消一些更廣泛的弱點。當我們轉向 2025 年時，指標或早期預測顯示電子市場會出現更普遍的改善，對嗎？因此，當我們今天坐在這裡時，MSI 的預測將在 2025 年實現個位數和兩位數的高成長。

Recent research we've seen shows PCB square meters growing in the mid- to high single digits. That's a better backdrop than what we're seeing in 2024. And so yes, we'll see a seasonal deceleration in -- or a seasonal impact in Q4 in electronics this year. But we've got reason to be pretty optimistic for, I'd call it, an acceleration from broader electronic health in 2025.

我們最近的研究顯示 PCB 平方米以中高個位數成長。這比我們在 2024 年看到的情況更好。所以，是的，我們將看到今年電子產品第四季出現季節性減速或季節性影響。但我們有理由對 2025 年更廣泛的電子醫療的加速發展感到非常樂觀。

So if I could just follow up on your comments on assembly -- in advanced packaging -- or sorry, advanced packaging, not assembly. Around your comments around acceleration and share gains there. Are you seeing that within your semi segment within circuitry? And can you characterize just broadly how much that's impacting your portfolio in the most recent quarters here?

因此，如果我可以跟進您對裝配（高級封裝）的評論，或者抱歉，是高級封裝，而不是裝配。圍繞您對加速和分享收益的評論。您在電路的半部中看到了嗎？您能否大致描述一下最近幾季這對您的投資組合有多大影響？

Yes. So our -- the beauty of this business is that a trend like innovation in package design and advanced packaging impacts all three of our electronics businesses, right? What we sell in ViaForm and wafer-level packaging and the semiconductor business plays into that. The high-end circuit boards are enabling or effectively becoming the base on to which multiple chips are assembled and then our assembly business at its leading edge also plays into advanced packaging.

是的。因此，我們這項業務的美妙之處在於，包裝設計和先進包裝等創新趨勢會影響我們所有三個電子業務，對嗎？我們在 ViaForm 和晶圓級封裝以及半導體業務中銷售的產品都發揮了這一作用。高階電路板正在成為或有效地成為組裝多個晶片的基礎，然後我們處於領先地位的組裝業務也進入了先進封裝領域。

So the traction and trajectory of advanced packaging is lifting our broader electronics business. It just happens to be a small slice, for instance, in our assembly business and a bigger slice of our semi business. And you can see the divergence in the results accordingly.

因此，先進封裝的牽引力和發展軌跡正在提升我們更廣泛的電子業務。例如，它只是我們的組裝業務的一小部分，而在我們的半成品業務中佔有更大的份額。您可以相應地看到結果的差異。

John Roberts, Mizuho.

約翰·羅伯茨，瑞穗。

Just to follow up on that. How big would you scope advanced packaging to be, if you combined the impact across the three segments?

只是為了跟進此事。如果將這三個細分市場的影響結合起來，您認為先進封裝的範圍有多大？

Yes. The advanced packaging term is somewhat generic. And so it's hard to capture it precisely because I think it means different things to different people. But it's a couple of hundred million dollars of revenue at this point and growing very rapidly.

是的。高級封裝術語有些通用。所以很難準確地捕捉它，因為我認為這對不同的人來說意味著不同的事情。但目前的收入已經達到了數億美元，而且成長非常迅速。

Okay. And then circuitry outperformed the market, I think, during the quarter. China EVs, I think were particularly strong during the quarter because of the stimulus program they had. And I think that's been easing. So how much does that inflect as we go into the fourth quarter in circuitry?

好的。我認為，在本季度，電路的表現優於市場。我認為，由於刺激計劃，中國電動車在本季特別強勁。我認為這種情況已經有所緩解。那麼，當我們進入第四季時，電路方面的變化有多大？

Yes, the circuitry business has, we believe, outperformed its market. And there were three things we pointed to. China EVs being one where certain of our final finish applications are really doing very well in the Chinese EV market, but also data storage and circuitry for high-performance compute, which seems to have real legs as we look ahead.

是的，我們相信電路業務的表現優於其市場。我們指出了三件事。中國電動車是我們的某些最終成品應用在中國電動車市場確實表現出色的領域，而且高性能運算的資料儲存和電路也表現出色，當我們展望未來時，這似乎具有真正的優勢。

So again, I think the seasonality that we're pointing to in the electronics business is pretty normal. And the forward-looking indicators for 2025 that I talked to in the first question, give us confidence for another record year in 2025 and continued strong results across the electronics business, inclusive of circuitry.

再說一遍，我認為我們在電子行業中指出的季節性是非常正常的。我在第一個問題中談到的 2025 年前瞻性指標讓我們對 2025 年再創紀錄的一年充滿信心，並在包括電路在內的整個電子業務中繼續取得強勁業績。

Mike Harrison, Seaport Research Partners.

麥克·哈里森，海港研究夥伴。

Ben, it sounds like some large chip makers are talking about a shortage of advanced packaging materials at least near-term, does that point to a need for you to spend more on additional capacity in the coming quarters and as you think about CapEx for 2025? And the other piece of that question is does tighter supply of advanced packaging materials point to higher pricing for some of your leading-edge technologies?

Ben，聽起來一些大型晶片製造商至少在短期內正在談論先進封裝材料的短缺，這是否表明您需要在未來幾個季度以及在考慮 2025 年資本支出時在額外產能上投入更多資金？這個問題的另一個問題是，先進封裝材料的供應緊張是否意味著你們的一些領先技術的定價更高？

Yes. Thanks for the question, Mike. So our existing footprint for our core products is more than adequate to support significantly increased volumes across the electronics complex inclusive of what we do in advanced packaging, we are working very quickly to scale up Kuprion manufacturing capability for example and making good progress there. But that's really a new product we're introducing. So we have the capacity to support that market, and I don't believe that those capacity constraints you're pointing to are suggesting -- are indicative of an issue on our side.

是的。謝謝你的提問，麥克。因此，我們現有的核心產品足跡足以支持整個電子綜合體的產量大幅增加，包括我們在先進封裝方面的工作，例如，我們正在非常迅速地擴大 Kuprion 製造能力，並在那裡取得良好進展。但這確實是我們推出的新產品。因此，我們有能力支持該市場，而且我不認為您所指出的那些能力限製表明我們這邊存在問題。

They are indicative of really robust demand, which you can see other indicators of when you just look at pricing, for instance, for leading-edge chips. And that to us is a real tailwind and again, gives us further conviction in the growth opportunity here.

它們顯示了真正強勁的需求，當您僅查看定價時，您可以看到其他指標，例如尖端晶片的價格。這對我們來說是真正的順風，再次讓我們更堅信這裡的成長機會。

To the second part of your question around pricing, we're actively, I would say, winning more than our fair share of the new nodes and in discussions on winning legacy nodes and being backwards integrated. We've got a great value proposition.

對於您關於定價的問題的第二部分，我想說的是，我們正在積極贏得超過我們公平份額的新節點，並討論贏得遺留節點和向後整合。我們有一個很好的價值主張。

Our margins in advanced packaging are healthy. There are incremental pricing opportunities from time to time. But I wouldn't say that there's a uniform underpricing of our capability, and I think our margins support that.

我們在先進封裝領域的利潤率很高。不時會有增量定價機會。但我不會說我們的能力被統一低估，我認為我們的利潤支持了這一點。

All right. And then you noted that there is some acceleration going on in power electronics. And it sounds like some of that -- some market recovery, but it also sounds like you're winning additional business. Can you talk about how you see that power electronics opportunity maybe evolving or playing out over the next few quarters?

好的。然後您注意到電力電子領域正在加速發展。聽起來像是一些市場復甦，但聽起來你也贏得了額外的業務。您能否談談您如何看待未來幾季電力電子機會的發展或發揮？

Yes. Thanks for the question, Mike. The power electronics business was soft in the second quarter, we pointed that out, and we expected it to accelerate in the third quarter and indeed it did. That's a product of several things. Some of our core customers were ramping production rates, and we've won new pieces of business.

是的。謝謝你的提問，麥克。我們指出，第二季電力電子業務疲軟，我們預計第三季將加速成長，事實確實如此。這是多種因素共同作用的結果。我們的一些核心客戶正在提高生產力，我們贏得了新的業務。

We've got a really exceptional capability in power electronics, a differentiated product and value proposition that enables performance, reliability, range for leading electric vehicles. And because of the product life cycles of certain automotive OEMs, it's taken some time to get traction in their supply chains and we're seeing that today.

我們在電力電子領域擁有真正卓越的能力、差異化的產品和價值主張，可為領先的電動車提供性能、可靠性和續航里程。由於某些汽車原始設備製造商的產品生命週期，他們需要一些時間才能在其供應鏈中獲得牽引力，而我們今天就看到了這一點。

So the pipeline for our power electronics capability is very, very strong, and the wins have been strong, and we're starting to see them contribute to the P&L. Those are wins with Chinese OEMs, Western legacy OEMs and some of the emerging Western OEMs as well. There's a very bright future for what we do in power electronics. Notwithstanding a weak EV market, that business is growing very nicely.

因此，我們的電力電子能力的管道非常非常強大，而且勝利也很大，我們開始看到它們對損益做出貢獻。這些都是中國原始設備製造商、西方傳統原始設備製造商以及一些新興西方原始設備製造商的勝利。我們在電力電子領域的工作有著非常光明的前景。儘管電動車市場疲軟，但該業務成長非常好。

Bhavesh Lodaya, BMO Capital Markets.

Bhavesh Lodaya，BMO 資本市場。

Just following up on your comments you made in electronics. We have seen consultants calling for roughly twice the growth next year for some metrics like MSI and all. Now if we look at this year, I realize we have ViaForm and some other moving pieces, but we'll see around 15% EBITDA growth for the electronics segment. With your comments on acceleration in growth and putting some of these consultant estimates in MSI and PCB markets in place, do you think next year we see a similar growth profile?

只是跟進您在電子領域發表的評論。我們看到顧問呼籲明年的某些指標（如 MSI 等）成長約兩倍。現在，如果我們看看今年，我意識到我們有 ViaForm 和其他一些移動部件，但我們將看到電子領域 EBITDA 成長約 15%。根據您對成長加速的評論以及對 MSI 和 PCB 市場的一些顧問估計，您認為明年我們會看到類似的成長概況嗎？

Yes. Thanks for the question, Bhavesh. It's early to be talking about guidance or even shadow guidance for 2025. Our commitment and goal every year is to outperform our end markets. We've demonstrated ability to do so.

是的。謝謝你的提問，巴維什。現在談論 2025 年指導甚至影子指導還為時過早。我們每年的承諾和目標都是超越我們的終端市場。我們已經展示了這樣做的能力。

The data points you just pointed to, we are aware of, we spoke to them earlier, and that does give us confidence and conviction for a very good year next year, but it's early to put hard numbers to it. That's where I would -- how I would think about that. But the trajectory is good.

您剛才指出的數據點，我們都知道，我們早些時候與他們交談過，這確實給了我們信心和信念，明年會非常好，但現在給出確切的數字還為時過早。這就是我的想法——我會如何思考這個問題。但軌跡很好。

And furthermore, this isn't just a 2025 trend. The tailwinds and the dynamics in the market that are supporting those estimates for 2025 are long tailed and so -- and durable. And so our outlook isn't just for a strong 2025, but from several years of solid growth in electronics.

而且，這不僅僅是 2025 年的趨勢。支持 2025 年預測的有利因素和市場動態是長尾的，因此也是持久的。因此，我們的前景不僅是 2025 年的強勁成長，而且是電子產品幾年來的穩健成長。

Got it. And then have you seen a change in your customer base or market share for advanced packaging? Are you growing volumes as your existing customers ramp up? Or are you seeing some new business wins outside your current base?

知道了。那麼您是否看到先進封裝的客戶群或市佔率發生了變化？隨著現有客戶的增加，您的銷售是否也在成長？或者您在當前基地之外看到了一些新的業務勝利？

Yes. So what's interesting in the way that the market has evolved is as we've moved from monolithic designs where the computing gains were from scale, right, transistor scale to heterogeneous packaging. There's been no standardization, right? So people are coming at breakthroughs or pursuing breakthroughs in computing power through multiple unique designs. And so you've got designs coming from the semi fabs who are moving into packaging.

是的。因此，市場發展方式中有趣的是，我們已經從單晶片設計轉變，其中計算收益從規模（正確的電晶體規模）轉向異構封裝。沒有標準化，對嗎？所以人們正在透過多種獨特的設計來突破或追求運算能力的突破。因此，您已經獲得了來自正在進入封裝領域的半晶圓廠的設計。

You've got designs coming from OSATs. You've got designs coming from OEMs and hyperscalers. And that gives us a really solid seat at the table because materials requirements are different when you're looking at nonstandard designs. And so I would say that our mind share with qualifiers and specifiers is greater than it's been. And that OSAT segment of the market is growing tremendously.

您的設計來自 OSAT。您的設計來自 OEM 和超大規模廠商。這讓我們在談判桌上佔據了非常穩固的地位，因為當您考慮非標準設計時，材料要求是不同的。所以我想說，我們對限定詞和說明詞的認知比以往任何時候都多。OSAT 市場部分正在大幅成長。

So yes, we're seeing growth in existing customers, but we're seeing new customers, and we're having dialogues with new third parties, right, new specifiers in ways we haven't in the past. Our share is -- our share of the overall market is growing as this segment of the market is growing faster than the overall market. And I think certainly, our mind share is growing even faster than that, and that's a leading indicator.

所以，是的，我們看到現有客戶的成長，但我們看到了新客戶，我們正在與新的第三方進行對話，對，新的指定者以我們過去沒有的方式進行對話。我們的份額是——我們在整個市場中的份額正在成長，因為這一部分市場的成長速度快於整個市場。我認為當然，我們的思維份額成長速度甚至比這更快，這是一個領先指標。

Steve Byrne, Bank of America.

史蒂夫伯恩，美國銀行。

With respect to your auto end market, then I'm specifically referring to the ICE vehicles, are your sales effectively moving just in line with production rates? Or can you comment on whether there's any kind of a shift within the new models? Is there any increased metallization of body parts and so forth? Or could there be a shift away from that? Just curious on that end market for you.

就您的汽車終端市場而言，我特別指的是內燃機汽車，您的銷售是否有效地與生產力保持一致？或者您能否評論一下新模型是否有任何變化？身體部位等的金屬化程度是否有增加？或者是否可以改變這一點？只是對您的終端市場感到好奇。

Yeah. Our ICE auto business is not a direct one-for-one with units there are share gain opportunities that we've been pursuing in certain geographies where we've been underrepresented. And we've had some good success there. There are other applications like brakes where we've been winning quite a bit of market share. And then occasionally, there are fashion trend changes where things move from chrome look and feel to paint.

是的。我們的 ICE 汽車業務並不是直接一對一的業務，我們在某些​​地區一直在尋求分享收益的機會，而這些地區我們的代表性不足。我們在那裡取得了一些成功。還有其他應用，例如煞車，我們已經贏得了相當多的市場份額。有時，時尚趨勢也會發生變化，從鍍鉻的外觀和感覺轉向油漆。

And when that happens, we lose some value. So it's not a direct correlation. We feel as though our share of our addressable market is solid and improving. We've been committed to this market. We've been consolidating this market. And we see an opportunity when that market inevitably recovers for that to propel pretty strong earnings growth in that segment.

當這種情況發生時，我們就會失去一些價值。所以這不是直接相關性。我們認為我們在目標市場中的份額是穩固的並且正在不斷提高。我們一直致力於這個市場。我們一直在鞏固這個市場。當該市場不可避免地復甦時，我們看到了一個機會，可以推動該領域相當強勁的獲利成長。

Okay. And then your -- it looks like your COGS were up 10% year over year. You highlighted higher pricing for metals. Is that the bulk of that? Or is there -- is any of the incentive comp in that? But you also mentioned some procurement rationalizations in your remarks, Ben, is that a meaningful offset? And what are you doing there?

好的。然後你的銷售成本年增了 10%。您強調了金屬的較高定價。這就是其中的大部分嗎？或其中是否有任何激勵措施？但你在演講中也提到了一些採購合理化，Ben，這是一個有意義的抵銷嗎？你在那裡做什麼？

Yes. So most of what you're seeing is metal price inflation. We have done some facility rationalization. We have gotten better around procurement. Our raw materials sequentially were roughly flat year-over-year, they were better.

是的。所以你看到的大部分是金屬價格上漲。我們已經進行了一些設施合理化。我們在採購方面做得更好了。我們的原料與去年同期大致持平，但情況有所改善。

So the inflation is metal price and then we have an ongoing productivity effort to make the business better every quarter. And it's not huge values on a quarter-by-quarter basis, but if you look at the margins in our I&S segment in a declining volume environment, we're driving margins favorably, and we're growing earnings. And I think that's a testament to what we're doing to make the business better.

因此，通貨膨脹就是金屬價格，然後我們不斷努力提高生產力，使每季的業務變得更好。按季度計算，這並不是一個巨大的價值，但如果你在銷量下降的環境下觀察我們的 I&S 部門的利潤率，就會發現我們正在積極推動利潤率，並且我們的收益也在增長。我認為這證明了我們正在努力讓業務變得更好。

Jon Tanwanteng, CJS Securities.

Jon Tanwanteng，CJS 證券。

I was wondering if you could give us an updated expectation on power electronics going forward. Should we expect that business to outgrow the EV market in general? Just based on platform wins and share gains and new platforms ramping up? Or does that catch up to just EV growth rate in general at some point?

我想知道您是否能為我們提供對電力電子技術未來發展的最新期望。我們是否應該預期該業務的成長將超過整個電動車市場？僅僅基於平台的勝利和份額收益以及新平台的崛起？或者說，這是否會在某個時候趕上電動車的整體成長率？

No. So from where we sit today, Jon, and thanks for the question, this business will significantly outstrip EV units. There's a lot of white space. We've got good share on certain platforms and no share on other platforms, and we're working very hard and have a strong pipeline that supports significant expansion. There are certain EVs, very low-end EVs, where this isn't an applicable technology.

不。因此，從我們今天坐的位置來看，喬恩，謝謝你的提問，這項業務將大大超過電動車。有很多空白。我們在某些​​平台上有很好的份額，但在其他平台上沒有份額，我們正在非常努力地工作，並擁有支持顯著擴張的強大管道。對於某些電動車，非常低階的電動車，這不是一項適用的技術。

But for most of the high-performance EVs, this is the best technology, and we expect it to be adopted. And so there's a lot of runway for this business to grow significantly. And as we've seen in a slower growth EV environment, it's significantly outstripping the market.

但對於大多數高性能電動車來說，這是最好的技術，我們預計它會被採用。因此，這項業務有很大的發展空間。正如我們在電動車成長放緩的環境中所看到的那樣，它明顯超過了市場。

Got it. Could you share what the run rate of that business is today? And maybe secondarily, is there an opportunity outside of EVs?

知道了。您能否分享一下該業務目前的運作率是多少？也許其次，電動車之外還有機會嗎？

So we tend not to quantify product revenue, but think about it as somewhere between $75 million and $100 million today. And there is an opportunity outside of EVs, right? So this is a material that's used for power intensive applications. And so where you've got high power densities in small spaces, this material really performs.

因此，我們傾向於不量化產品收入，但將其視為當今 7,500 萬美元到 1 億美元之間。電動車之外還有機會，對吧？因此，這是一種用於功率密集型應用的材料。因此，當您在狹小的空間內獲得高功率密度時，這種材料確實能夠發揮作用。

And so we're seeing it actually or derivations of this material in smartphones and in data centers. And the addressable market is certainly expanding in power conversion and power transmission, utility applications. There's quite a bit of addressable market for this that's untapped.

因此，我們在智慧型手機和數據中心中實際看到了它或這種材料的衍生品。電力轉換和電力傳輸、公用事業應用領域的潛在市場肯定正在擴大。有相當多的潛在市場尚未開發。

Chris Parkinson, Wolfe Research.

克里斯帕金森，沃爾夫研究中心。

So when worth taking a step back and thinking about your longer-term margin opportunity and looking at your portfolio, obviously, getting rid of graphics and some moving parts in electronics. How should we be thinking about your margin progression versus prior peak in each segment? And then just holistically, what are your key considerations? I know you don't manage the business this way, but what are kind of the couple of puts and takes we should all be assessing?

因此，當值得退一步思考您的長期利潤機會並查看您的投資組合時，顯然，要擺脫電子產品中的圖形和一些移動部件。我們應該如何考慮每個細分市場的利潤進展與先前的峰值？然後從整體上看，您的主要考慮因素是什麼？我知道你不會以這種方式管理業務，但是我們都應該評估哪些看跌期權和索取選擇權？

Yes. Thanks for the question, Chris. So when we think about the margin opportunity for the business, we think about it ex pass-through metals. This quarter, ex-pass-through metals EBITDA margin was 27%. And prior peak was in 2021, Q1 of 2021, it was about 29%.

是的。謝謝你的提問，克里斯。因此，當我們考慮業務的利潤機會時，我們會考慮傳遞金屬之外的其他因素。本季度，扣除金屬稅的 EBITDA 利潤率為 27%。而之前的高峰是在2021年，2021年第一季度，約29%。

And as we look at our business today, right, our overall volumes are down because the industrial business has a lower average selling price. Graphics is a lower margin than average business and the businesses that are accelerating are higher than average margin businesses. So we believe that 29% is not a ceiling.

當我們審視今天的業務時，我們的整體銷售量有所下降，因為工業業務的平均售價較低。圖形業務的利潤率低於平均水平，而正在加速發展的業務則高於平均利潤率業務。所以我們認為29%並不是上限。

And we've got a runway to get that number into the 30s. I wouldn't say that, that's one or two quarters away, but certainly, the margin entitlement of this business is different than it was several years ago. And we've got a path forward to driving this margin, that ex-metal margin to new record levels in the next couple of years.

我們已經有一條跑道可以讓這個數字達到 30 多歲。我不會這麼說，那還需要一兩個季度，但可以肯定的是，這項業務的利潤率與幾年前不同。我們已經找到了一條前進的道路，可以在未來幾年內將這一利潤率（即非金屬利潤率）推向新的紀錄水平。

Got it. And just a corollary of that question, Ben, part of me, looks at your business and it seems like the markets and your customers are basically going -- the market is basically going towards your portfolio in terms of necessity and obviously, new -- basically new technologies.

知道了。這只是這個問題的一個必然結果，本，我的一部分，看看你的業務，看起來市場和你的客戶基本上都在發展——市場基本上在必要性和顯然是新的方面朝著你的投資組合發展－基本上是新技術。

And the part of me also looks at you over the last couple of years into just adding a lot of new product capabilities and Kuprion and everything else. Do you feel, especially in electronics, given your comment about, hey, you're not the same thing to everyone, do you feel that your portfolio is exactly where it needs to be in terms of the core semi and circuitry customers? Or do you think there's kind of more to be done over, let's say, the course of the next two years?

我的另一部分也關注著你們在過去幾年中添加了許多新產品功能和 Kuprion 以及其他一切。您是否覺得，特別是在電子領域，考慮到您的評論，嘿，您對每個人來說都是不同的，您是否認為您的產品組合正是核心半導體和電路客戶所需要的？還是您認為未來兩年​​還有更多工作要做？

Yes. Thanks for the question, Chris. We've done a lot of work to reposition the portfolio and invest in new technologies to enhance our value proposition to our customers. And some of it has been fortunate that the market has migrated towards the core assets that we acquired 10 years ago. We don't feel the need to add anything to our portfolio in order to deliver value to our customers today, right?

是的。謝謝你的提問，克里斯。我們做了很多工作來重新定位產品組合併投資新技術，以增強我們對客戶的價值主張。幸運的是，市場已經轉向我們10年前收購的核心資產。我們認為無需在我們的產品組合中添加任何內容即可為當今的客戶提供價值，對嗎？

Strategically, we're well positioned. We're in strong market positions in our core markets. We've enhanced our value proposition through our deliberate actions, whether that's innovation or acquisitions. But of course, we're always open to inorganically add capabilities that would improve our offerings to our markets. We don't feel the need to do that. But that is part of our strategy of operational excellence and prudent capital allocation.

從戰略上講，我們處於有利位置。我們在核心市場中處於強勢的市場地位。我們透過深思熟慮的行動（無論是創新還是收購）增強了我們的價值主張。當然，我們始終對無機添加功能持開放態度，這將改善我們向市場提供的產品。我們覺得沒有必要這樣做。但這是我們卓越營運和審慎資本配置策略的一部分。

Importantly, M&A around us doesn't undermine our strategic position. So we don't think our hand would be forced in that way. But we'll see what's available in the market to enhance our offerings.

重要的是，我們周圍的併購不會損害我們的戰略地位。所以我們認為我們不會被迫這樣做。但我們會看看市場上有什麼可以增強我們的產品。

Mike Leithead, Barclays.

麥克萊特黑德，巴克萊銀行。

Ben, I want to stick on the theme of electronics. I think big picture, you've talked a lot on this call about the shift ongoing in the electronics business from, say, the legacy drivers to some of these new emerging growth drivers. I guess when you think about your electronics business now, how has this changed, if at all, your expected growth rate or returns on your business medium term versus maybe what it was the past three to five years under sort of this legacy framework?

本，我想堅持電子主題。我認為，從大局來看，您在這次電話會議上談到了電子產業正在發生的轉變，例如從傳統驅動因素轉向一些新興成長驅動因素的轉變。我想，當您現在考慮您的電子業務時，與過去三到五年在這種遺留框架下的預期增長率或業務回報相比，這種變化（如果有的話）有何變化？

Yes. Thanks for the question. So the reason for that observation of that shift is we're in a broad -- the electronics market today is not particularly strong. There are just slices of it that are strong. And our traction in those slices is allowing for us to outperform.

是的。謝謝你的提問。因此，觀察到這種轉變的原因是我們所處的環境——當今的電子市場並不是特別強勁。它只有一部分很堅固。我們在這些領域的牽引力使我們能夠超越大盤。

The smartphone market isn't going to be meddling forever. There will be a replenishment cycle. We're not going to be selling 1.1 billion, 1.2 billion smartphones globally forever. And so I think that when we look out a couple of years, the markets that we're benefiting from now will have durability -- should have durability. And then the broader electronics market, whether that's smartphone, automotive, we'll have some recovery, some cyclical recovery.

智慧型手機市場不會永遠幹預。會有一個補貨週期。我們不會永遠在全球銷售 11 億部、12 億部智慧型手機。所以我認為，當我們展望未來幾年時，我們現在受益的市場將具有持久性——應該具有持久性。然後更廣泛的電子市場，無論是智慧型手機、汽車，我們都會出現一些復甦，一些週期性復甦。

And so as we look forward, the growth rate for our business, and you would have seen in some investor material we prepared and went through in April and June. The growth rate for the business is accelerating in electronics as a product of traction for new technologies and recovery from a cyclical trough. We can't call when that recovery from the cyclical trough will be. But in the next couple of years, you'd expect that to come.

因此，當我們展望未來時，我們業務的成長率，您會在我們四月和六月準備和瀏覽的一些投資者資料中看到。由於新技術的推動和周期性低谷的復甦，電子產業的業務成長率正在加快。我們無法預測何時會從週期性低谷中復甦。但在接下來的幾年裡，你會期望這種情況會發生。

And taken together, that gives us confidence that our electronics business should be a mid to high single-digit grower from here. And margins for all of element should accrete because of that because the electronics business has a higher margin than the I&S segment and will become a larger percentage of the overall company.

總而言之，這讓我們有信心我們的電子業務將從現在開始實現中高個位數成長。因此，所有元素的利潤率都會增加，因為電子業務的利潤率高於 I&S 部門，並將在整個公司中佔據更大的比例。

Great. That's super helpful. And then just two quick follow-ups on capital deployment. One, when you receive the graphics sale proceeds, do you have any immediate redeployment plans? Should we expect any sort of buyback on the back of that closing? And two, just given where leverage is today, can you speak to how you're seeing the M&A pipeline relative to buybacks today?

偉大的。這非常有幫助。然後是關於資本部署的兩個快速後續行動。一，當您收到圖形銷售收益後，您是否有立即重新部署的計劃？我們是否應該期待在交易結束後進行任何形式的回購？第二，鑑於目前的槓桿率，您能否談談您如何看待目前相對於回購的併購管道？

Yes. So pro forma four or when we receive the proceeds from the graphic sale, the balance sheet will be the best. It's been since the middle of 2021 and our thinking around capital allocation is unchanged. We're going to be opportunistic and unafraid to move quickly when a great opportunity arises.

是的。所以備考四或當我們收到圖形銷售的收益時，資產負債表會是最好的。自2021年中期以來，我們對資本配置的想法沒有改變。當一個很好的機會出現時，我們會抓住機會，毫不畏懼地迅速採取行動。

David Silver, CL King.

大衛·西爾弗，CL·金。

Yes. So this is a question, I guess, it's been a little bit over a year since you completed the transactions for ViaForm and Kuprion. And at the time, I guess, one of the ancillary benefits was maybe that with an expanded toolkit, it would lead to doors opening or deeper collaborations with some highly desirable very large customers that maybe you couldn't deal with at the same high level prior to that.

是的。所以這是一個問題，我想，自從您完成 ViaForm 和 Kuprion 的交易以來已經有一年多了。我想，當時的附帶好處之一可能是，透過擴展的工具包，它可以打開大門或與一些非常理想的大型客戶進行更深入的合作，而這些客戶可能是您無法在同一高水平上處理的在此之前。

So I was just wondering, it's been a little bit over a year. Could you just talk about the progress or the success with strengthening your front end of the line offering in terms of getting collaborations going with those newer customers? And then secondly, if you could just provide an update on the progress with commercializing the Kuprion products?

所以我只是想知道，已經一年多了。您能否談談在與新客戶合作方面加強前端產品線方面所取得的進展或成功？其次，您能否提供 Kuprion 產品商業化進展的最新資訊？

Sure. Yes. Thanks for the question, David. So the ViaForm business we -- the ViaForm distribution agreement that we terminated last year and paid to terminate has been an outstanding capital deployment. That's a business that we're seeing very strong growth in.

當然。是的。謝謝你的提問，大衛。因此，我們去年終止並付費終止的 ViaForm 業務——ViaForm 分銷協議一直是出色的資本部署。我們看到這一業務成長非常強勁。

We're seeing double-digit EBITDA growth year over year and great traction with customers, with toolmakers. The pipeline for that product is more than tripled year over year. And so that thesis is playing out and the timing was very good. So we feel very good about that transaction. And indeed, it is helping drive better relationships with the important decision-makers in the supply chain.

我們看到 EBITDA 逐年呈現兩位數成長，並且對客戶和工具製造商產生了巨大的吸引力。該產品的管道數量比去年同期增加了兩倍多。所以這篇論文正在發表，而且時機非常好。所以我們對這筆交易感覺非常好。事實上，它有助於與供應鏈中的重要決策者建立更好的關係。

Kuprion is going well as well. It's just at a different stage. So we said a couple of quarters ago that what you're going to hear from us about Kuprion is we're focused on supply chain, right, building our capability and high-value manufacturing and supporting our customers and their capability in applications development at high volume. And we're making good progress there. We're getting closer at scaling the pilot site, I would say.

Kuprion 也進展順利。只是處於不同的階段而已。因此，我們在幾個季度前說過，您將從我們這裡聽到的有關Kuprion 的信息是，我們專注於供應鏈，對吧，建立我們的能力和高價值製造，並支持我們的客戶及其應用開發能力。我們在那裡取得了良好的進展。我想說，我們距離擴大試點站點越來越近了。

The commercial pull for this product is outstanding, and the customers just want more of it to run samples. And so the thesis around the capabilities of this technology is also playing out. I expect we'll have our first product qualification this year. And so revenue will be attached to that. And our confidence in the value proposition it offers to customers and the returns that our owning that will deliver to ESI and its shareholders is very, very high.

該產品的商業吸引力非常突出，客戶只是想要更多的產品來運行樣品。因此，圍繞這項技術功能的論文也正在展開。我預計今年我們將獲得第一個產品資格。因此收入將附加於此。我們對其為客戶提供的價值主張以及我們所擁有的將為 ESI 及其股東帶來的回報充滿信心。

Okay. And then this next question would kind of -- would be in the category of like resourcing for your multiyear growth targets. But your company has laid out kind of five-year targets where adjusted EPS growth, the CAGR is kind of in the low to mid-double digits. And you've mentioned quite often that your business is not inherently capital-intensive.

好的。然後下一個問題將屬於您的多年成長目標的資源類別。但貴公司已經訂定了五年目標，調整後的每股盈餘成長，複合年增長率在低至中兩位數。您經常提到您的業務本質上並不是資本密集的。

With all the opportunities that you see, I mean, I'm just wondering from a -- I don't know, two to three-year outlook from here. What are the key areas that your company would need to resource to keep on track for hitting your multiyear earnings growth targets? I mean I'll just throw out R&D, but I'm guessing that your business will become inherently more R&D intensive going forward?

考慮到你看到的所有機會，我的意思是，我只是想知道——我不知道，未來兩到三年的前景。貴公司需要在哪些關鍵領域投入資源，以維持多年獲利成長目標的軌道？我的意思是我會放棄研發，但我猜測您的企業未來將變得更加研發密集？

And certainly, in some locales, you might be competing for talent with national champions and things like that. So just a thought on where the company might need additional resources to hit your multiyear growth targets.

當然，在某些地方，你可能會與全國冠軍之類的人競爭人才。因此，只需考慮一下公司在哪些方面可能需要額外的資源來實現您的多年成長目標。

Yes. Thanks. We talked about it a little bit in our prepared remarks, right? We're adding scale manufacturing. So we're adding a new line for Argomax production.

是的。謝謝。我們在準備好的發言中稍微討論過這一點，對嗎？我們正在增加規模製造。因此，我們正在為 Argomax 生產添加一條新生產線。

As an example, we're obviously building Kuprion manufacturing. But from a capacity perspective, we are well equipped. We're investing in applications labs close to the customer. And that's probably the biggest area I'd highlight is people and applications capability, where our customers are, and our customers are moving, right?

舉個例子，我們顯然正在建造 Kuprion 製造。但從能力的角度來看，我們裝備精良。我們正在投資靠近客戶的應用實驗室。我要強調的最大領域可能是人員和應用程式能力，我們的客戶在哪裡，我們的客戶正在移動，對嗎？

So we're building an applications lab in Vietnam. We're building an applications lab in Thailand. We're building a research center in India. Customer proximity, being able to solve customer problems quickly, locally is very important, and that's where we're building resources and have been for several years.

因此，我們正在越南建立一個應用實驗室。我們正在泰國建立一個應用實驗室。我們正在印度建立一個研究中心。貼近客戶、能夠在本地快速解決客戶問題非常重要，這也是我們多年來累積資源的方向。

It's on the long-term road map and synchronizes fits with that long-term earnings target that we've articulated. And the long-term incremental margins we expect this business to support in the 30% and 40% range.

它位於長期路線圖上，並與我們闡明的長期獲利目標同步契合。我們預計該業務的長期增量利潤率將維持在 30% 到 40% 的範圍內。

There's no further questions at this time. I will now turn the conference back over to Ben Gliklich for closing remarks. Ben?

目前沒有其他問題。現在，我將把會議轉回 Ben Gliklich 致閉幕詞。本？

Great. Thank you very much. Thanks, everybody, for joining, and we're looking forward to seeing and speaking with many of you in the days and weeks to come. Thank you very much.

偉大的。非常感謝。感謝大家的加入，我們期待在未來的幾天或幾週內與你們中的許多人見面並交談。非常感謝。

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝大家的加入。您現在可以斷開連線。