Q1 2021 MKS Instruments Inc Earnings Call
Good day, and thank you for standing by and welcome to the MKS instruments or force first quarter 2021 earnings conference call. At this time all participants are in a listen.
Only mode. After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone please.
The advice that today's conference is being recorded if you require any further assistance. Please press star zero and I would now like to hand, the conference over to your Speaker today, David <unk>, Vice President of Investor Relations. Please go ahead.
Good morning, everyone, Hi, David Richard Vice President of Investor Relations and I'm joined this morning by John Lee, President and Chief Executive Officer, and Seth Bagshaw, Senior Vice President and Chief Financial Officer.
Yesterday after market close we released our financial results for the first quarter of 2021, which are posted to our website.
And as T Dot com.
As a reminder, various remarks about future expectations plans and prospects for MKS comprise forward looking statements.
Actual results may differ materially as a result of various important factors, including those discussed in yesterday's press release and and the most recent annual report on form 10-K, and any subsequent quarterly reports on form 10-Q.
These statements represent the company's expectations only as of today and should not be relied upon as representing of the company's estimates or views as of any date subsequent to today and the company disclaims any obligation to update these statements.
During the call we will be discussing various financial measures all of these financial measures will be non-GAAP other than revenue. Please refer to our press release for information regarding our non-GAAP financial results and a reconciliation of our GAAP and non-GAAP financial measures.
Now I'll turn the call over to John Thanks.
Thanks, David and good morning, everyone and thank you for joining us today.
We delivered another record quarter with revenue of $694 million and net earnings per diluted share of $2 56.
Both were above the high end of our guidance range.
Our strong results were driven by robust demand across both our semiconductor and advanced markets.
We're also very pleased with the margin expansion and operating leverage and the quarter, leading to a greater than 60% you of where you increase the net earnings per share.
Sales of our semiconductor market strengthened further in the first quarter exceeding our expectations growing 5% sequentially and 32% year on year.
We saw broad based demand across our vacuum substance to the portfolio generating record revenue and our pressure flow and valve solutions businesses.
We also delivered another exceptional quarter and our power solutions business as well as robust sequential growth and our plasma and reactive gas business.
We continue to harness our photonics expertise across a number of semiconductor applications and and the first quarter, we secured multiple design wins and our world class optics initiatives.
You also had a meaningful wind and our precision motion business tour and advanced wafer packaging application.
You have heard us talk a lot about how our broad portfolio unique innovation engine and operational excellence have enabled us to outperform the markets we serve.
Earlier, this month VLSI and independent market research firm reported the emptiness gain more than 2% share and the overall critical subsystems category and 2020.
And in fact, I'm very proud to say the VLSI also reported that we gained almost 10% of share and the RF.
Category in 2020, and are now neck and neck with the historic market leader.
We also extended our leadership and remote plasma sources by gaining more than 6% of share.
Finally, we also took share and the pressure gauges and valve product categories.
This third party validation of our performance in 2020 further solidifies our decades long model of market share gains Inc.
Clearly demonstrates the strength of our technology Roadmaps.
<unk> of our operational capabilities and the breadth of our customer relationships.
He was the privilege to lead the great teams that delivered the success.
In fact, because I think about the long term opportunity and our semiconductor market the fall.
Blowing powerful secular trends remain intact.
First the demand the chips will continue to growth driven by the explosion in data and the needs of storage transmitted and processes.
Second it's not just more chips, the more leading edge chips and that places of additional demands on the capital equipment ecosystem to drive technology breakthroughs.
And third these breakthroughs and each occur faster as product iterations are increasing and the development cycles of our shortening.
All of this equates to a compelling long term growth profile for capital equipment spending, but also means that those companies the execute on the innovation faster and smarter, while staying operationally nimble and we will outperform.
This has been MKS is key to success of the past few decades and will remain so moving forward.
And the near term day.
And our syndicates of market remains robust and we expect a similar type of revenue to grow sequentially and the second quarter.
Now moving to our advanced markets revenue and the first quarter exceeded our expectations, we delivered strong sequential growth of six per cent and <unk>.
Year over year growth of 27%.
Our strong top line results were driven by growing demand of advanced electronics manufacturing, which is fueled by precision laser processing.
Within the advanced electronics, we continue to see healthy demand for our flexible PCB via drilling solutions as a result of growing capacity needs and technology transitions associated with new <unk> smartphones, which carry higher flex PCB content.
And the first quarter, we secured two design wins for our high density interconnect via drilling solution, one of which is where the large multinational PCB manufacturer.
Demand for our pulse nanosecond and picosecond and Femtosecond lasers continues to increase as we are seeing growing interest across PCB advanced packaging solar and display applications.
We're very pleased with the momentum, we're seeing and our advanced markets and anticipate revenue and the second quarter to grow sequentially.
Finally, I wanted to share a few thoughts regarding our prior efforts to acquire and coherent.
While we believe the company the combined company would have offered and compelling value proposition. We have always been disciplined acquirers and our M&A strategy will remain rooted and our covenant debt to shareholder value creation.
The fact, we could not be more excited about our current portfolio and photonics, which we are executing well and are positioned to capitalize on the growing need for miniaturization and complexity.
We consider the combined revenue from our light and motion Division and the advanced markets component of our equipment and solutions division the bed.
Just characterize how we think about photonics revenue.
This means that in the first quarter, we generated $257 million and subtonic revenue, which grew 25% of year over year and.
And we expect further sequential growth and the second quarter average.
Our photonics business with an annualized run rate of over $1 billion will remain an important area of growth and investment that MKS.
With that I'd like to turn the call over to Seth.
Thank you John I will cover our first quarter 2021 results and provide additional detail on guidance for the second quarter.
Sales for the first quarter were a record $694 million.
Up 5% sequentially up 30% year over year and above the high end of our guidance range.
Our record performance reflects another quarter of strong semiconductor demand.
I suppose the continued acceleration in our advanced markets.
And the first quarter semiconductor sales set yet another record at $412 million.
Up 5% sequentially and up 32% year over year, reflecting broad based demand for our vacuum photonics subsystems.
As John mentioned, we are very pleased to recognize the ideal size of the market share gains in 2020, and the total critical subsystem category.
Equally significant gains and RF power supplies and remote plasma sources as well as gains and other critical subsystem categories, such as pressure gauges and valves.
Excluding our strong performance of power solutions, the combined revenue of our other products of the semiconductor market reached another quarterly record.
The strong growth and significant market share gains are clear validation of our unique surround the chamber strategy, our longstanding and successful track record of the track record of operational excellence and.
The deep commitment to market, leading innovative solutions.
All of which we expect will position us to outperform Deb USA by 200 basis points as outlined in the long term model, we provided at our analyst day.
For the first quarter sales per advanced markets also set a record at $282 million.
Up 6% sequentially and up 27% year over year.
Led by continued acceleration and advanced electronics applications.
Demand for our market, leading flexible PCB via drilling solutions accelerated further in the first quarter and this fall of the particularly strong fourth quarter.
Our customers continue to turn to MKS to enable leading edge flexible PCB manufacturing applications.
And this was driven by large part by five smartphones. We're also seeing growing interest and Wearables and <unk> base station applications.
Revenue from the MLP C test systems also remains healthy and the first quarter as the customers continue to expand capacity.
Within the HDI market, we completed all shipments and installations of systems from our previously announced multi unit order in December which of all now operating and high volume manufacturing applications.
The addition of design wins that John referenced we've seen increased interest and our demo centers from other key HDI PCB manufacturers and.
And working closely with the critical technical teams to transition them to beta customers.
And the first quarter. We also saw solid demand from our pulse laser and surround the workpiece portfolio for advanced electronics applications.
Largely driven by PCB display and solar and advanced packaging applications.
And as you stated on the analyst day, the trains and neutralization and complexity of the semi that we foresaw of decades ago, and now driving growth and advanced markets uniquely positions the broad photonics portfolio across both of our light and motion and equipment solutions divisions.
In fact, as John highlighted and photonics revenue, which of the revenue from of light and motion Division.
And the advanced markets component of equipment solutions Division is now over a $1 billion annual run rate and in the first quarter.
And the advanced markets portion of our photonics revenue now exceeds $850 million annual run rate.
And grew 30% year over year in the first quarter.
For the first quarter revenue split between of semiconductor and advanced markets was 59% and 41% respectively.
First quarter gross margin was 46, 4% above the high end of guidance.
Up 70 basis points sequentially and up.
170 basis points year over year.
The strong performance was due to higher volumes and improved product mix.
First quarter operating expenses were $143 million of $5 million sequentially.
Primarily due to higher variable compensation, resulting from our strong financial performance.
However, really within our guidance range, reflecting the overall cost control.
Okay.
First quarter operating margin was 25, 8% up 110 basis points sequentially and up.
And the 30 basis points year over year.
The strong operating leverage and our financial model.
Net is expense for the first quarter was $6 million cash.
Cash rate was approximately 17%.
Net earnings for the first quarter were a record $143 million and a record $2.56 per diluted share.
On a year over year basis, our EPS increased 66% of more than two times, our revenue growth rate.
The strong financial leverage and exceeded our long term target operating model that we announced at our analyst day.
Actually the first quarter maintained the strong balance sheet liquidity position with.
With cash and short term investments of $910 million.
And $100 million incremental borrowing capacity under and asset based line of credit.
So think of certain borrowing base requirements.
Our term loan principal balance of $831 million at the end of the first quarter.
And we exited the first quarter was $78 million net cash position.
In terms of working capital days sales outstanding were 55 days in the first quarter compared to 54 days at the end of the fourth quarter and the.
Inventory turns were two nine times of both the first and fourth quarter of 2020.
We remained focus on improving our cash conversion cycle and the first quarter operating cash flow was $127 million of 69% year over year increase.
Free cash flow for the first quarter was $100 million, a 55% year over year increase.
Consistent with prior quarters, we had dividend payments of $11 million 20 per share.
I'll now turn to our second quarter outlook based on current business levels, we estimate second quarter revenue of $740 million plus or minus $30 million.
Based on anticipated product mix revenue levels, we estimate second quarter gross margin of 47%.
Plus or minus one percentage point.
Operating expenses of $146 million, plus or minus $4 million.
For the second quarter net interest expenses picked to be approximately $6 million and our.
Tax rate expected the approximately 17%.
Given these assumptions, we expect second quarter net earnings of $2.92 per diluted share.
Lots of minus 26.
I'd like to now turn the call back of the operator for Q&A.
Thank you, ladies and gentlemen ask the question on the phone line you will need the quest the start and the one key on your Touchtone telephone.
To withdraw your question. Please press the pound key.
We ask that you please limit yourself to one question and one follow up.
Please standby, while we compile the Q&A roster.
And our first question coming from the line of Patrick Ho with Stifel. Your line is now open.
Thank you very much and congrats on the nice quarter, John maybe first off on the semiconductor side of things I know you don't want to give guidance past. The June quarter book Qualitatively can you discuss the visibility you're seeing in today's demand environment and what type of I guess outlook you would have with the <unk>.
Half of the year, given the strong demand trends some of your customers have already outlined does that change any of the planning and especially on the procurement side given the potential expectations of away from the long second half of the year.
Hi, Patrick Thanks for the question and I think we certainly have read all of the.
The industry analysts of views over the second half.
Yes.
And tend to agree that the second half is now marginally stronger.
Then just three months ago. So I think we agree with that and of course they are.
Revenue was a little.
Correlated to it all sort of the long term, but short term can be lumpy.
And we're certainly taking all the necessary actions to expand capacity and pull the materials to deliver that and as you've seen we've done that pretty well over the last several quarters of the ramp.
Great that's helpful and maybe as my follow up question on the advanced markets side are you posted very strong results and talk about some of the marketplaces are starting to pick up momentum can you discuss again qualitatively, whether you've seen any synergies.
In terms of your light and motion and the ESI business, just because you did mention a strength in the flex PCB, but there's also.
Opportunities on the PCB and for your light and motion business are you seeing any of the synergies start I guess, the peering and is that giving you the confidence for some of the growth prospect and you talked about in your prepared remarks.
And Patrick So certainly we've been working to unlock all of the synergies between the light motion divisions and the.
E&S division over the last year and of half of the acquisition and so we already have and the laser design and the E&S tool.
And there are other areas and we're working on with respect to future told as well.
I think we're getting the synergy of development synergies that we expected from the acquisition.
Great. Thank you very much.
Thanks, Patrick.
And our next question coming from the line of Christian Karl with Cowen. Your line is now open.
Yeah, Hi, this is Chris can you hear me.
Yes.
Green arc two questions too Unfortunately, the <unk> genre of set.
The gross margin came in much better than expected and it looks like it's probably the upper end of your long term target model to do so is this 47 of them.
The 14th boost and the right number to think and all of these revenue levels and within any one of things in the quarter, but actually like will the day.
And wind for gross margin the June.
And of course is set and I'll take that question, yes, So we said and obviously in the analyst day and and other.
Earnings calls of about 50% variable gross margin, how we look at it internally and so the question of what the jumping off point. So in the in the first core of the margin was a little bit of the we expected and it will better mix and then we're kind of forecasting similar index in the second quarter as well so I believe and the variable margin in Q2, I think it's a little bit above that.
<unk> model at the midpoint of guidance, but the answer your question and there's nothing unique or one off of the year to quarter.
It's driving up the the higher margins.
We said in the past the volume is the biggest piece of it.
And the operations team is managing very well through.
Normal COVID-19 headwinds, we have you know some higher logistics costs those of the manage very well.
And Q1 and Q2, but there's nothing in the first two quarters here on the guidance and Q2 or Q1, actuals and call. It one off the other unique.
Got it Glen and very helpful and then.
I'll follow up with John and it's nice to see the advanced markets recovering and it looks like you are gaining traction and HDI PCB and just kind of curious.
How big is the market today and can you also compete and the behind the cost free play PCB side. Those are you more focused on the HDI at this point.
Yeah Krish.
These markets are very large and and we're just entering and HDI.
The substrate like Pcbs are also.
Within the realm of volume.
Our tools and certainly the future tools and we have the mine so.
Yes, it's a great market I think it goes to our.
The concept of miniaturization and complexity, that's being now realized and advanced packaging. So we're really happy about our position there and the momentum we started to gain and HDI.
Thanks, John.
Thanks Krish.
And our next question coming from the line of <unk> Misra with Baird. Your line is now open.
Hey, good morning, Thanks, everyone.
So on the.
A question on your order of electric.
The electric vehicle exposure, what are you seeing and the cutting and welding applications and.
And that market and.
Do you think youll have the full portfolio of products and laser products to serve those emerging opportunities.
Yes, hi, guys. Thanks for the question, so and EV laser processing there are some pulse laser applications.
There are a lot of our fiber laser continuously with fiber laser applications. So as you know, we participate and pulse lasers, but not and fiber lasers with the laser but we certainly ahead of a lot of exposure with the surround the workpiece portfolio that would support the fiber laser.
The manufacturing process, such as power meters and beam Profilers.
Got it and so these pulse lasers are used for book cutting and welding are only.
Lending.
No.
Mostly.
Cutting for pulse lasers.
Got it and then maybe it's a quick follow up.
And also on the electric vehicle.
And you see opportunities for your hover business or the I guess the are those opportunities and the moment.
And the differentiated and value added or you think those are more.
Come out of dice products.
Are you talking about like the RF power business, yes.
Right.
No I think the electric.
Electric vehicles, and I really don't have a lot of the kind of needs of our empower that we participate in and which is the higher power very precise kind of tired of it that are needed for semiconductor and shooting and deposition.
Got it thanks, Sean.
Thanks, Patrick.
Yeah.
Our next question coming from the line of Tom <unk> with D. A Davidson your line is open.
Yeah, Good morning, and thanks for the question, John and wondering if you're seeing any impact from the chip shortage on your electronics customers and how that might work through to you.
And Tom.
Certainly.
Customers are pulling and trying to add capacity as well publicized I think the shortages are something we're seeing like everybody else within our supply chain.
And so many of our products of P. C D A's and and here and there. They are spot shortages I think incrementally that's got them a little more challenging over the last several months, but.
I think that's what everybody is seeing and you.
You know MKS has done well and so far and dealing with those kinds of shortages and getting those materials and and we'll continue to make sure that we.
Meet our customers' demands.
Okay. So you haven't really seen dip sort of just kind of throttle your customers' demand for your products because they can't get chips for other portions of their products.
We haven't really seen of talking but I would also say and we don't really have that kind of visibility in terms of the customer or maybe having.
Some kind of limits of their production because of the chip shortages that'd be a little difficult for us to say.
So it's happening, it's really probably very minor.
And because we're not seeing any kind of large large changes.
Okay, great well kind of complaint with the results that's for sure.
Alright, and then of on the Flex circuit drilling business historically seasonally weak.
But yeah, the very strong quarter I'm wondering it was this a slug of business or do you think there's a new level of activity that's going to be prolonged just because of the fight you roll out over the next few years and what's your view of PCB drilling.
Yeah, No I think we have of long term view of PCB drilling flex PCB drilling and.
And we've talked about that and drivers for that <unk> phones, having more flex circuits.
Wearables and even moving into mobile and types of devices. So that's the long term view and as you know it can be lumpy, but I think our the levels were seeing now feel like it's meeting the demand rather than any kind of overbuild.
Great. Thanks for the questions.
Okay.
Thanks, Tom.
Our next question coming from the line of Scott Graham with bus and bus Gurdy Youll ask your line is now open.
Yes, hi, good morning, Thanks for taking my question terrific quarter guys.
Two of them a couple of questions for you.
Round.
The materials.
This chip shortages thing has raised the.
Sort of the Spectre and at least for me and you know.
Combining that with commodities prices being higher.
How are you handling that and I mean could you tell us how.
Pricing was in the quarter.
Have you announced price increases have others announced price increases to you. How are you sort of the handling that price cost right now.
Yes, Scott.
And certainly we're probably not going to give you that kind of the color but I.
I would say in general Scott and there are chip shortages or any kind of commodity the shortage prices tend to move up just because of supply and demand.
And I would say broadly, we see areas, where that's happening with respect of electronic components.
But really it's really about trying to get the electronic components because of it.
Percentage of our bomb.
<unk> of our resistor is really not that large.
It's really all of the other stuff that goes around and Thats, a big part of the bonds.
I think in general there are going to be these pressures to increase prices.
And while we have the shortages.
Got it thank you.
I guess the second question would be along the lines of your balance sheet with all of that dry powder.
And then maybe if I could just two questions there and number one you know what you know kind of stopped you short of continuing to move higher on your bid for coherent.
I don't blame you on the numbers came in pretty high but I mean was there something there.
You you just said okay enough is enough and then you know going forward can you maybe take us a little bit through whatever you're seeing and your funnel I mean, obviously coherent was certainly much larger than you've done in the past is that type of that size of acquisitions still on the table and you kind of maybe thinking more.
Or back to what you've done in the past on on M&A you know the several hundred millions of dollar type of sales deal.
And Scott Thanks for that yet and I think.
Yes.
Certainly disciplined acquirers, we had a very precise.
Precise view of how we could add value at what price with the coherent.
And we stuck to it.
Other companies, obviously thought they could get more value and they went up almost $1 billion over what we are we could see for ourselves. So.
One of the judge what their views of the value creation is certainly can be different than ours, but we have our view and we're gonna slip.
Day discipline to it.
And in terms of the pipeline, we have a very broad pipeline of both the advanced markets types of targets as well as studying.
And and also a range of sizes and so we'll have lots of opportunities for tuck ins.
100 million of some middle sized deals and the couple of hundred millions and then of a couple of all of these larger opportunities where we're talking about billions. So.
That whole range of opportunity still exists and Scott and we're looking at all of them as well.
Just wanted to add to that too Scott we've grown organically the market share commentary made as well. So you can grow with M&A and also grow organically and thats been one of our key pillars of our number of years ago back at the analyst day, we now and so we like the seven.
Product categories, we were never one or two back in 2015 and 2020 net 15 of those category. So we've done the M&A of Daniel organic growth rate, we've gained market share. So a lot of levers to kind of pull if you will so we're very bullish on the space very bullish on the opportunities ahead of us and and as John mentioned.
And we'll be disciplined and how we look at the acquisition pipeline.
Would you guys be disappointed if you didn't transact something this year.
It's certainly something that may or may not happen, but I think it really depends on.
And the opportunities that come up.
And Oh, we're going to stay disciplined.
Got it thank you both.
Yes, Thanks Scott.
Our next question coming from the line of Jim Ricchiuti from Needham and company. Your line is open.
Hi, Good morning, maybe just along those lines of of the prior question I'm. Just wondering does the M&A focus perhaps evolved at all or are you looking.
And maybe opportunistically and other market adjacencies with the perhaps weren't on the radar or year or so ago.
And so that's a good question, we certainly have been focused on advanced markets lasers photonics as we've talked about as well as semi which is our historic market, but we've always looked at Adjacencies. You know that we have other markets like life and health Sciences defense.
Industrials.
And every once in a while you know some some company there could could make sense for us and so we would always consider that as the potential third leg of growth. If you will and addition to semi photonics and some other market.
Got it thank you and just with respect.
Two the light and motion business I am wondering are there any areas at this point and the business, where you have not seen the recovery back to pre pandemic levels.
And I think research is still a little still has a little headwind Jim and yeah that is really COVID-19 related I think as you see.
Different regions have reinstituted, the COVID-19 protocols.
But we saw a pickup and the end of the ended the year 2020 of which is the normal quarter for pickup.
And it's kind of reverted back to a seasonal Q1 and Q2, but overall I think there's a bit of headwind and the and the research market as we see at the minimum.
And presumably I guess, the stimulus bill could help down the road and that area of the business.
Yeah sure great infrastructure.
Referring to.
Right.
Okay. Thank you.
Thanks, Jim.
Our next question coming from the line of Joe <unk> with Wells Fargo. Your line is open.
Yeah. Thanks for taking the question and congrats on the results on the semi side you know, there's and there's clearly a funnel of pretty strong demand as we look out and the second half of this year and and even starting to talk about next year I guess, how do we think about your manufacturing footprint of our capabilities to support just the level of demand that we're currently seeing.
Hey, Joe It's a good question one of the things that we pride ourselves and and cast and just trying to get ahead of those kinds of the.
The increases in the market multi.
The multiple.
The investments were made even three years ago with some product line is that right now we have plenty of capacity for the continuing to look at this.
Modeling and what are sort.
Since the year ago, and a $70 billion WMC might look like for us in terms of the factory footprint now it's more of like what's the 100 billion dollar WK look like for us and when we do these models Joe we certainly look at burst capacity because when it's on average 70.
No.
The other piece can be close to the 100 today.
And we're having a lot of pretty well today, but when it gets the on average of 100 billion as you can imagine those peaks would be well over $100 billion.
Because of the nature of what are we on the supply chain.
We also keep a fairly asset light model.
And Joe So we don't really need a lot of capital per se. The buildings, we have plenty of them.
Corporate and around the world of low cost country, and obviously, you know and elsewhere, but.
But we do try to look at the the value and the manufacturing process and final test and assembly and we kind of leverage the capital and again you can bring that cap line relatively quickly and I think the key point you know as John mentioned as we do at the high beams on this and.
And we've made some investments back in 2017 to expand the pressure group you know quite dramatically and.
And that's been extremely helpful. In this environment and so.
The that's really helpful. And then I appreciate the calling out the photonics revenue I guess, if we could go back to the analyst day, and just think about the growth rates and you talked about is this something that we should think about falling into maybe more of like the advanced manufacturing bucket and the kind of low double digit CAGR growth range or something else.
You can think about.
Yes, yes, that's exactly how we look at our photonics business.
Today, it's made up of the advance of electronics, which is probably half of the advanced markets and then the other half of his life and health Sciences defense and industrial so.
Over time, we expect that advanced electronics part of it to grow that low double digit and then it becomes a bigger and bigger part of our photonics revenue. So that's how we look at it.
Perfect. Thank you.
Thanks, Jeremy true.
Our next question coming from the line of Mark Miller with Benchmark Company. Your line is open.
Hi, Thank you for the question congratulations on another strong quarter.
Natural tendency of some has to worry about picking the results, but we have four new major fabs at least four new major fabs planned.
For next year and beyond.
Just wondering when you think order flow will start to occur and.
And would last through 2022 for the Fabs.
And Mark.
That's a great question.
I think we have better minds and us to predict that but we can certainly see long term Mark we agree with you with all of these new Fabs being built just within the U S. As in other regions also compensating that we think the long term. This is just going to be great for the semiconductor equipment industry. So it would be hard for us.
To predict a quarter on quarter, and where the PK is for sure, but the long term and something that we're really very very bullish about.
Are you planning to add capacity to address maybe another wave of major orders and certain and so and what's and what's your areas.
Yes.
And as I said two of the previous question, we are looking at that continuously and continuously adding capacity where needed.
Our RF power supplies sort of.
We're now.
Tied with the historic market leader and that's been an area of when we've invested for the last four of five years in terms of capacity and where we see future capacity needs as well. So that's one area of the call out.
But even in a pressured.
No.
Whereas you mentioned three years ago four years ago, we added capacity.
We continue to look at that as well because.
And that capacity was really helpful. In this environment, but you have to look at it what was the what it would look like when I and the.
<unk> of 100 billion.
Thanks, again, and congratulations again on another strong quarter.
And I appreciate it mark.
Yeah.
Ladies and gentlemen, as your line is to ask the question. Please press star one.
Okay.
Yeah.
I'm showing no further questions at this time I would like to turn the call back over to David Mistaking the closing remarks.
Thank you Olivia.
Thank you everyone for joining us today and for your interest and MKS operator, you may close the call. Please.
Okay.
Ladies and gentlemen that does conclude the conference for today and thank you for your participation you may now disconnect.
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