Q3 2022 Entegris Inc Earnings Call
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You are currently on hold for the integrity Q3 conference call. At this time, we are assembling today's audience and plan to be underway. Shortly we appreciate your patience and please remain on the line.
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Good day, everyone and welcome to the Integra Q3, 2022 earnings release call today's call is being recorded.
At this time for opening remarks, and introductions I would like to turn the call over to Bill Seymour VP of Investor Relations. Please go ahead Sir.
Good morning, everyone earlier today, we announced our financial results for our third quarter of 2022.
Before we begin I would like to remind listeners that our comments today will include some forward looking statements. These statements involve a number of risks and uncertainties and actual results could differ materially from those projected in the forward looking statements.
Additional information regarding these risks and uncertainties is contained in our most recent annual report and subsequent quarterly reports, we have filed with the SEC. Please refer to the information on the disclaimer slide in the presentation.
On this call. We will also refer to non-GAAP financial measures as defined by the SEC regulation G. You can find a reconciliation table in today's news release as well as on our IR page of our website at Integra Dot com.
On the call today arbitrage of what our CEO and Greg Graves, our CFO with that I'll hand, it over to Bertrand.
Okay.
Thank you Bill and good morning to all.
Let's turn to our results our sales growth and overall execution was solid in the quarter, especially considering the growing uncertainty in the semi market.
For the quarter on a pro forma basis sales were up 14% year on year and down 2% sequentially.
On a reported basis sales were up 71% year on year and up 44% sequentially.
EBITDA margins were 30% in the quarter.
With our guidance.
non-GAAP EPS on an as reported basis was down year over year, mostly reflecting the increase in interest expense.
Let me make a few additional.
I just would comment what I'll say is performance.
In the third quarter growth in our unit driven solutions was led by the quick penetration formulated cleans and CMP consumables durations, which are of growing importance to our customers' technology roadmaps.
Growth also remained strong in the quarter.
Many of our Capex, driven solutions, which are linked to new fab investments.
So far this year, we have yet to see any meaningful slowdown in new fab construction projects and this has helped sustain strong growth in.
Louis than wafer handling solutions as well as gods penetration of purification products.
As I said, our overall sales performance was solid in the quarter, especially in light of the emerging industry softness.
And while sales were slightly below our guidance it would have been closer to the midpoint of the range, excluding the impact of foreign exchange and the audio performance of the pipeline and industrial for two years business. The business, we expect to divest this quarter.
Moving on to an update on the CMC integration.
As we said in our recent analyst meeting, we have been making fast progress on many critical trumps.
The organizational structure was largely finalized joint integration planning pre close and we are on track to achieve our cost synergy targets.
We have laid out during our analyst meeting.
<unk> of the cost synergies will be driven by the impact of the org changes.
So where does all the synergies expected to be realized shortly after our migration to comment.
<unk> platform by I saw the 2023.
Yeah.
The next critical component of the integration is the realization of revenue synergies.
A lot of progress that's been made here is what we believe our combined offering across our extended E. M. P. Mod here, we provide our customers best in class technology with optimum time to yield its offering and our capabilities are unique in the industry and we believe it will.
Ultimately drive market share gains for integrity over time.
The final point I would like to discuss.
On the integration relates to our assessment of the strategic fit.
Thoughts of the CMC materials portfolio.
On that note on October 11th we announced that we entered into a definitive agreement for a female to acquire the pipeline and industrial materials business for $240 million.
For reference you'd be dolphin Ping is expected to be approximately $25 million this year.
As a reminder, paint was acquired just bothered the CMT acquisition and he's currently reported in the U S Division.
The transaction is expected to close later this year.
To help with your analysis, we expect to provide historical financials, excluding the pin business after the transaction closes.
I would like to emphasize that deleveraging is one of our highest near term priorities and integrity.
And why the divestitures were not included in our debt reduction targets, we laid out in our.
Recent analyst meeting the pin to sell an additional status could accelerate debt pay down.
Going forward, we will provide updates on other potential divestitures as appropriate.
As you know the United States government announced new export controls restricting the stance of semiconductor technology to certain companies in China.
Since the announcement.
Teams have been focused on ensuring full compliance with these rules and have ceased impacted shipments and services as required.
We estimate that these new regulations will reduce sales by approximately $40 million to $50 million in Q4.
And this is reflected in our guidance for Q4 and for the year.
Now traditionally ang two our outlook, Greg will discuss the fourth quarter guidance in more detail, but why is demand for most of our products is holding up while we are taking a more cautious view on the fourth quarter given the tough to name in the semi market and the impact of the U S. Gulf.
But export restrictions I just mentioned.
Given that we now expect revenue to be approximately $3 $3 billion in 2022 on a reported basis.
More than $3 $9 billion in 2022 on a pro forma basis.
This is approximately 13% growth on a pro forma basis, representing another year of very strong outperformance for integra is in 2022.
We also continue to expect pro forma EBITDA.
Combined company to be approximately 30% of revenue in calendar 2022.
We recognize there is increased uncertainty in the overall economy and in the semi space. However.
The positive secular growth drivers of our business have not changed we continue to believe the semiconductor industry is poised for healthy long term growth on the way to a one trillion dollar level by 2030.
And as you know Integrase now offers the industry's most comprehensive electronic materials portfolio.
Operating squarely at the crossroads of materials science and materials purity.
These two core capabilities are quickly, becoming the most critical enablers of our customers' technology Roadmaps and these trends are translating to a rapidly expanding content per wafer and by extension growth above the market point in Texas.
Wrapping it up.
We are pleased with our performance so far this year and we look forward to delivering solid results for the full year.
Looking ahead with approximately 80% of our revenue now unit within our platform should prove to be resilient relative to other industry participants.
You can also expect us to be flexible.
I think going into next year ready to make adjustments as needed prioritizing cash flow and debt pay down all the while continuing to make the necessary investments in our business to capture the full long term growth potential ahead of us.
Finally.
I wanted to take a moment to thank our customers for their trust and confidence that based on integrity and once again, thank our teams around the world for their incredible work and commitment.
Now, let me turn the call to Greg.
Greg.
Yeah.
Thank you Bertrand and good morning, everyone.
Our sales in the third quarter were $994 million up 14% year over year and down 2% sequentially on a pro forma basis.
On a sequential basis FX had an approximately $12 million negative impact to net sales in Q3, largely due to a strengthening in the U S. Dollar in September .
GAAP gross margin was 37% in the third quarter as expected gross margin was negatively impacted by a purchase accounting inventory markup of $62 million related to the inventory that came with CMC as it came onto our balance sheet at fair market value are essentially.
The selling price.
non-GAAP gross margin was approximately 44% in Q3 gross margins were lower than expected, primarily driven by lower volumes and an inventory valuation adjustment and a M. H, we expect gross margin to be approximately 42.5% both on a.
GAAP and non-GAAP basis in Q4, the drivers of the expected sequential decline in gross margin are lower volumes unfavorable FX and mix the lower I'd note lower volumes are in higher margin products.
GAAP operating expenses were 357 million in Q3.
GAAP operating expenses included a $176 million of non-GAAP items $65 million of amortization of intangible assets $58 million of contractual deal related integration costs, including change in control payments 32 million of deal related transaction.
Cos and $21 million of integration costs.
non-GAAP operating expenses in Q3 were 180 million in line with our expectations.
We expect GAAP operating expenses to be approximately 259 to 264 million in Q4, and non-GAAP operating expenses to be approximately $170 million to $175 million.
Q3, GAAP operating income was $15 million non-GAAP operating income was $253 million or 26% of revenue.
It's also worth noting that it is the result of higher asset valuation and related higher depreciation associated with the CMC transaction normalized operating income will be negatively impacted by approximately 80 basis points on a go forward basis.
Adjusted EBITDA was 298 million or 30% of revenue in line with our guidance.
Looking below the line interest expense in the third quarter was 83 million, reflecting the almost full quarter impact of the debt used for the C. M C acquisition.
We expect interest expense to be approximately 83 million in the fourth quarter.
While FX had a minimal impact on gross margin in the third quarter FX impacted the other income expense line as it did in Q2, resulting in a $11 million expense in Q3 or approximately five cents to non-GAAP EPS, our foreign entity balance sheets are value.
Each month and this reflects the loss on the revaluation during Q3.
The GAAP tax rate was 9% in Q3, and the non-GAAP tax rate was 21%.
We expect our fourth quarter tax rate to be approximately 20% on a GAAP and non-GAAP basis.
Q3, GAAP diluted EPS was negative <unk> 50 per share.
On a reported basis non-GAAP EPS of <unk> 85 per share it was down 8% year over year and down 15% sequentially driven by the more than $70 million increase in interest expense.
Higher combined tax rate and the higher share count.
Before I move into the divisional performance a bit on our capital structure.
During the quarter, we paid down $75 million of the $275 million 364 day bridge loan the bridge loan is our most expensive debt.
On that note I would also anticipate that we will continue to pay down the remainder of the bridge loan between now and year end.
As of the end of the quarter, our gross debt was 6 billion and our net debt was $5 2 billion. This equates to a gross leverage ratio of four eight times and net leverage of four two times pro forma for the announced cost synergies.
As a reminder, after taking into account the hedge we put in place our variable rate debt at the beginning of 2023 is expected to be approximately 10% of total outstanding.
As Bertrand said, we are very focused on deleveraging.
Our liquidity position continues to be excellent.
As of the end of Q3, we had over $750 million of cash on hand. In addition, our $575 million revolving credit facility was undrawn.
Turning to our performance by Division.
For ease of analysis the comparisons I am referencing here are on a pro forma basis for the SC and Aps divisions.
Q3 sales of $281 million for M. C were up 24% from last year and up 2% sequentially.
Growth year over year was strong across all major product lines and M. M C, including liquid filtration gas purification in gas filtration.
Adjusted operating margin for M. C was 38% for the quarter up year on year and sequentially. The margin increase was driven primarily by strong overall execution and favorable product mix.
Q3 sales of 210 million for am age, we're up 13% versus last year and down 6% sequentially.
Year on year sales growth was strongest in wafer and fluid handling solutions. The biggest driver of the sequential sales decline and a M. H was lower sales of the aramis bag, which was expected given the significant decline in the distribution of the Covid vaccine.
Adjusted operating margin for <unk> was 20% down year over year and down slightly sequentially. The margin decline was driven primarily by the decrease in volumes in life Sciences.
Q3 sales of $224 million for SCE.
We're up 14% year over year and down slightly sequentially year on year growth was primarily driven by surface preparation solutions specialty coatings and advanced deposition materials.
Adjusted operating margin for SCE.
Was approximately 18% for the quarter down year on year and up sequentially.
Q3 sales of $294 million for Aps were up 9% year over year and down 4% sequentially.
Year on year growth was primarily driven by the CMP consumables products, including CMP pads post CMP cleans and CMP slurry is.
The biggest driver of the sequential sales decline in Aps with CMP consumable products, which are particularly exposed to the memory market.
Adjusted operating margin for Aps was approximately 26% for the quarter up year on year and sequentially.
Capex for the quarter was $127 million, bringing our year to date capex to $319 million on a reported basis.
We expect to spend approximately $475 million in capex for the full year.
On a reported basis.
As outlined in our analyst meeting, we expect Capex as a percent of sales will drop to a longer term run rate of 9% to 10% starting in 2024.
Third quarter cash flow from operations was $146 million and free cash flow was $19 million for context, our normalized free cash flow, excluding CMC deal and transaction costs was approximately $92 million in the quarter.
During Q3, we paid $15 million in quarterly dividends.
Now for our Q4 outlook for the combined company.
We expect sales to range from $930 million to 970 million, which includes the net negative sales impact related to the China trade restrictions.
We expect EBITDA margin to be approximately 29%.
We expect GAAP EPS to be 28 to 33 per share and non-GAAP EPS to be 75 to 80 per share.
In closing we are pleased with the quality of our execution and our ability to maintain a strong focus on the customer all while driving a complex integration.
Our integration efforts are progressing well and we are on track to deliver the $75 million of cost synergies.
We paid down $70 million of debt in the quarter and are committed to further paydowns.
We have a strong conviction in the secular growth of our industry and the integrity flat for <unk>.
And we will be focusing on effectively managing the prevailing uncertainty.
While investing in the future.
Operator, we'll now open up for questions.
Thank you.
I would like to ask a question. Please signal by pressing star one on your telephone keypad.
If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
Again press Star one to ask a question.
And we will take our first question from Sidney Ho with Deutsche Bank. Please go ahead.
Thank you and good morning, everyone.
So at the Analyst day, you guys talked about a three year CAGR between 2022, and 25 for MSI to be up 6% and capex to be flat.
Or are you thinking about for 2023 only at this point for both MH MSI Capex, given what we learned from the memory companies that maybe impact that the east China restriction. Thank you mentioned.
MSI is there a range that you can share with us.
Okay.
Hi, Sidney so.
Obviously, there is growing evidence that we are headed into a downturn in 2023.
It's too early for us to give a much kwan.
Quantification.
Welcome to various industry drivers I think at this point the depth and duration of the downturn remain very unclear.
And I would make a similar statement when it comes to the permanent impact of the new export control restrictions that situation remains dynamic we have some homework to do we're waiting clarification from the U S government.
So it shouldn't be too early for us to comment about the impact of that on 2023 as well.
We will do all of that when we report our Q4 earnings sometime in early February .
Okay.
Maybe a follow up question is on the gross margin that seems to be a lot of cross currents impacting pet care gross margin. If I look at your Q4 guidance of 42 and halfway saying can you help us understand how much are you do you think you are under earning what you think a normalized gross margin level could be at the Q4 revenue level, but maybe you can talk.
About the various components that impact gross margin in Q4 that would be great. Thank you.
Yes, Hi, Sidney it's Greg.
Yeah, I'm not going to comment on the gross margin beyond Q4, because as you point out there are a lot of cross currents. What I will say is that and when I look at the fundamentals of the business I don't have any concern over sort of the long term longer term gross margin trend I mean, I look I mean, if you think about <unk>.
Some of the cross currents and what we clearly are experiencing higher raw materials higher logistics costs, but at the same time, we've done well.
On the pricing front on a very strategic basis, not on an across the board basis.
Still exit fundamentally when I think about the longer term margin I don't have any particular concern when I look at the outlook for Q4, it really boils down to the fact that the weakness in the business that we're experiencing tends to be in our hearts.
Some of our higher margin products and so that.
Is essentially what drives the dip in Q4.
And obviously, the lower the lower the lower volumes play into it.
As well.
Okay. Thank you.
And if you find that your question has been answered you may remove yourself from the queue by pressing star two.
We'll take our next question from Mccarren.
With Mizuho. Please go ahead.
Hi, good morning.
I was just wondering maybe to begin on the export controls is there a particular segment that's getting more impacted from.
The U S export controls and then if it does end up being permanent how do you think about reallocating some of those sales in different geographies.
King.
Yes, so I would say it.
Each divisions will be impacted by the new export controlled foods.
But etfs in particular is where we expect to see the biggest impact mostly because of the greater historic good exposure to the China market.
When it comes to your second part of your question.
It's.
It's too early for us to really elaborate on that I would be speculating and I don't want to do that.
Oh, great. Thank you and then maybe just a quick follow up on Aps.
Regards to the CMP product lines.
Memory, I think anecdotally from what we've heard from from different industry participants has been a little bit weaker.
I know, it's preliminary for 2023, but maybe you could just discuss how that kind of outlook and the demand backdrop changed maybe from <unk> and how youre thinking about the fourth quarter and 23. Thank you.
Yeah.
Yes so.
I won't go into 2023, but I certainly can try to be helpful. In terms of the default trends that we're seeing in Q3, and then what we expect to see.
In Q4.
If you if you think about it at a time.
High level I would say that.
When it comes to Q4.
Top line guidance.
The larger.
Factor.
Explaining the sequential decline is really D.
Anticipated loss of revenue from China, as we comply with the new export control rules than we were.
You need that to be about $40 million to $50 million.
Quarter.
The second factor is in fact, the impact of the expected divestiture.
The pin business, which we expect to close in late November and that will have a negative impact of about $10 million.
Sequentially.
Q4 over Q suite and the last factor is do you expect it to sequentially decline in the industry Capex and MSI and overall, we expect the industry to be down sequentially in the mid single digit.
So if you think about it in terms of the.
Various divisions as I said I think we would expect the division.
The most impacted by those factors to be Ats simply because of their exposure to memory in China.
So when you think about Q4.
We'd say that we'd expect and see anh and SCM to be essentially flat to modestly down.
So again, all in including all of the factors.
China impact as well as the deed.
The industry headwinds.
Great. Thank you very much.
We will take our next question from John Roberts with Credit Suisse. Please go ahead.
John Your line is open you may be muted on your side alright. Thank you sorry, I was muted or are there any inventory effects that are exacerbating the $40 million to $50 million in the December quarter.
Is that really all consumption driven in and then it will get bigger as we go into 2023.
No Kevin.
We don't think so.
I think that as I said the situation remains.
I mean the dynamic.
And I'm not I'm not quite ready to quantify the impact of those export restrictions in 2023, I mean, what currently working with the U S government to get further clarification from the rules, we are working with our China customers to get subcutaneous <unk> and of course, we're working internally.
On the operational rising all of those new rules. So we have work to do.
We will update you as we compete to work and as we better understand.
The long term impact of those new rules.
And now that you've had a few more months to review the portfolio are there any additional divestments that are envisioned.
So during the recent analyst call. We said that we have for the most part completing b D analyses of the portfolio.
And the questions that we have now is really around.
How and when to execute on some of those decisions. So I'm not going to go into any more details than that and just commit to you that we will update you when when appropriate.
Thank you.
Yeah.
We will take our next question from Mike Harrison with Seaport Research partners.
Pat.
Hi, good morning.
We've seen a number of your customers.
Once that theyre pulling back on their capital expenditure plans are those generally just reducing capacity expansions are there are some delays that are happening in their technology Roadmaps, maybe give us a little bit of a sense of kind of what that means.
<unk> four node transitions as you look forward in the next few years.
It's a good question. It's an important question and obviously as you would expect we're very focused on understanding some of those decisions that are.
Hmm.
Major customers, we'd be making over the next 12 to 18 months, but as of right. Now we are not seeing any slowdown in new fab construction projects and that's good because that remains the primary driver for our Capex.
Projects.
More broadly.
We continue to expect steady node transitions.
In 2023.
That is most likely going to be particularly true in the memory segment.
Typically in downturns, we have seen great.
Greater focus by our memory customers to shift more activity to the leading edge where they enjoy.
<unk>.
Greater margins and potentially enjoy a competitive advantage. So I think that typically downturns are an additional incentives for our memory customers to aggressively transition to new nodes. So again I think thats. The current operating assumption subject to change and we would have.
<unk> that'd be February when we report our Q4 results.
Alright, and then my other question is on cash flow I was wondering if you would expect slower market demand to impact your cash flow.
Over the next year or two and therefore impact your plans to reduce balance sheet leverage.
Yes, I'll make two comments on that one is I mean, obviously if.
The profitability declines significantly as a result of a major downturn, that's going to impact our <unk>.
Cash flow, but I would also highlight that in prior downturns.
The impact has not been what you might expect because obviously, we've got high quality receivables has come off the balance sheet, we should see reductions in inventory in a downturn at all.
Those those items.
Help the help the cash flow as well so.
I think it's inevitable that there would be some decline, but I don't think its as great. As you would expect because of the impacts of working capital.
And the other point I would make as it relates to debt reduction.
As.
We do intend to when the transaction closes later in the quarter we will.
Pay down the balance of the.
Bridge loan that we have outstanding that is our highest cost debt.
We will probably with that paid off I mean, that's.
Really only near term obligation will probably be a little bit.
More aggressive in terms of IV.
I shouldn't say aggressive is not the right word will probably carry a little bit lower liquidity levels, which will also allow us to pay down additional debt.
And as a reminder, its star one to ask a question we will take our next question from Timothy Arcuri with UBS. Please go ahead.
Hi, Thanks.
We're trying to I I wanted to ask on China. So I mean based on what the equipment companies have already said, that's coming out of their shipments for the fourth quarter.
I mean, some of them can sort of.
Paper it over with deferred revenue, but theres clearly.
That two $2 billion less of wafer fab equipment shipping inside of Q4.
And so I'm, a little surprised to hear that the impact from China is spread across the businesses and in fact, you said, even more in Aps and really not as much inside of the M. H.
So can you talk about that and I guess also as it relates to gross margin I wanted Greg you to clarify your comment because I think you said that gross margin is lower because.
High margin businesses are down, but I mean, even aps as a relatively low margin business. So can you just clarify that thanks.
Yes, Tim I think.
Your your assessment of the.
You know how.
The export.
Restrictions are impacting our business is corrected.
<unk>.
Business, our direct business to fab customers and it's impacting EBITDA breakeven Tegra <unk>.
With some of the components, we would typically use added to the equipment makers, having said that.
I stand by the comment I made earlier simply because there is actually a pretty significant backlog right now that we have with our OEM customers and I think that that should actually moderate rate the short term impact.
Of course, China restrictions when it comes to A&H in particular.
So again I was making a comment in the context of Q4 and the impact to Q4.
Okay, Yeah, Okay Kevin.
As it relates to the gross margin I think you know my my comment would be within.
Well each of each of the divisions, there's a relatively wide dispersion in terms of gross margins on the various products.
And so I'll stand by my comment that the that we're losing volumes in.
Some of our highest margin products.
Okay, great. Thank you and then I guess last for me so.
It sounds like the impact from China on A&H is probably <unk>.
Still to be seen as you get inside of 2023, and A&H, we know that W. If he's going to be down 25% next year two.
<unk> 2025.
<unk>, 60% Capex driven so.
Is it kind of fair I mean, I'm not asking you for like firm guidance next year, but is it sort of fair to assume that <unk> is down maybe half of that maybe it's down.
Like low to mid teens when you take into account. The fact that the Capex is coming down and also you probably haven't even felt the full impact from China within a M H.
Look again, I won't comment specifically on 2023, but.
I remember a few things does that it so it's true that <unk> is the one division and most exposed to to.
To the industry Capex, but also remember that about half of that exposure relates to new fab construction projects and as of right now.
Most of our customers, though Steve proceeding with those construction projects this could change but as of right. Now. This is not the indications we have received from our customers. So it's too early for us to really quantify the impact of.
Many of those industry drivers, we will do that in February .
Yeah.
Okay. Thank you.
Thank you.
Again as a reminder, its star one to ask a question we will take our next question from Chris Capps with loop capital markets. Please go ahead.
Yes. Good morning, just one follow up on the comments about the.
The weaker sequential trends in higher margin products or so.
I just wanted to make sure I understand if it's fair to two.
To or accurate to extrapolate that to.
The weakness in memory, and then within that I mean I.
Having covered cgmp I'm, assuming you're talking about the tungsten slurry.
The higher margin, so you're feeling that but wanted to confirm that but also just curious if the weakness in memory are you seeing across technology nodes or is it the.
Though down more pronounced and more advanced technology nodes are they slowing the progression to the higher density later Hot Skus me higher density architectures, and therefore affecting some of your.
Growth in your <unk>.
And your SCM products that are that have higher content per die if you will.
As advance nodes.
Yeah, So Chris I'll take the first.
Although the second part and then I'll turn back to drag on the margin implications, but we have seen in Q3.
Sequential decline in the memory segment.
That did impact both Aps and sit in.
Product lines of our STM division as well and we expect to see a repeat of that being in Q4.
The two things that I would want to highlight is that first we saw a significant contraction in Seattle.
H D D business.
I know it's.
And Thats actually.
He was with applications that are <unk>.
EPS as great exposure to and that's one of the reasons, we've seen maybe more pronounced contraction you J P S as compared to two <unk>.
On a going forward basis, typically as I said earlier, we expect our.
<unk> NAND customers in DRAM customers to migrate more wafer productions to leading edge, where they have a greater competitive advantage. So again, there are a lot of puts and takes.
We expect again, some some headwind from an industry standpoint, but we expect an offset.
In terms of the growing integrity as content per wafer at the leading edge. So we tried to put all of that into into numbers in a few months, but we're not ready to do that on this call today.
Then on the margin trough, Greg I don't know if there is no I mean, Chris I would.
I'm not going to get into specifics of margins by products, and which are the higher and which are the lower other than to say that there is a dispersion within each of the divisions, but I would say.
Your comment around.
Your historical observations.
<unk>.
It would be accurate and I would also say as it relates to.
Comment Bertrand just made around S. E. L. I mean, the volumes that we're losing there tend to be the higher margin volumes that we're losing there tend to be more exposed to memory as well, but in both of those divisions.
We're seeing the degradation in volume tends to be in the higher margin products.
Okay. Thanks for that and then.
Different topic I guess.
Industry downturns in the past it provided an opportunity for more tool time to qualify nexgen products and so just curious if.
Any observations about what innovation programs you might be most excited about looking through the cycle and or it may be too early but just any any evidence that some ideas around.
The cross fertilization of the two businesses might lead to.
Top line synergy programs any evidence of that.
Anything.
Any innovation or program that Youre excited about that I'm willing to share at this point. Thanks.
I'm glad actually that you are asking the question the way you are crazy.
Alright that downturns like could you provide many opportunities to engage.
With our customers and I can tell you that.
All customers are seeing.
The potential is.
<unk> platform they understand that today integra is emerging.
He must have partner and emerging as deep bought mood that can most nike helped them achieve both.
Greater performance at the device level. It also faster time to yield.
So we are seeing a lot of excitement with our customers a lot of excitement internally with particular and teams as well.
And the downturn will provide an opportunity for us to really engage with our customers validated a lot of the hypotheses that we have and some of which we have shared with you. During the recent analyst day. So I won't go beyond what I already mentioned during the analyst day, but I think there are many opportunities for us.
Within the CMP body odor to optimize the number of solutions and then I think longer term. There is a desire for us we need to provide that end to end solution for our customers from <unk>.
Phil composition to polishing solutions, all the way too.
Best known methods of.
Post CMP cleaning.
So the downturn will provide us many many opportunities to use the two time that our customers we'd have to actually validate many of those solution sets for them. So again, there's always a silver lining.
Thank you very much.
Alright, I think that would yes.
Okay. Thank you operator that was the final question. Thank you everyone for joining the call today. Please reach out if you have any questions and have a good day. Thank you very much.
Okay.
This concludes today's call. Thank you for your participation you may now disconnect.
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