Welcome to the Entegris first quarter 2023 earnings conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. Others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star 0. I would now like to turn the call over to Bill Seymour, Vice President of Investor Relations. Sir? Good morning, everyone. Earlier today, we announced the financial results for our first quarter of 2023. Before we begin, I would like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties. 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 that we 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 and Regulation G. You can find a reconciliation table in today's news release, as well as on our IR page of our website at entegris.com. On the call today are Bertrand Loy, our CEO, who's joining us from Taiwan, and Greg Graves, our CFO. With that, I'll hand the call over to Bertrand. Thank you, Bill. Good morning to all. I would start by saying that I am very pleased with our performance in the first quarter, especially in light of the dynamic semi market backdrop. During the quarter, we delivered strong results above our guidance on all fronts. Sales were $922 million, EBITDA margins were 27%, and non-GAAP EPS was $0.65. Let me make a few additional comments on our financial performance. While sales were down sequentially for us in the quarter, we believe we significantly outperformed the market. This outperformance was driven in large part by our strong position at the leading edge technology nodes and also from the impact of easing supply chain constraints, particularly for our AMH and MC divisions. In terms of profitability, gross margins were up sequentially, and EBITDA margins were essentially flat. Next, I would like to highlight a few very important items that the team is focused on. First, on the CMC integration. The integration is proceeding very well. We are on track to complete the migration to a common ERP platform by the end of the third quarter, which also puts us on track to achieve the $75 million run rate cost synergy target by the fourth quarter as originally planned. As you know, debt paydown is also a high priority for us, and divestitures of non-core assets are a significant lever we can use to reduce our debt. As you've seen so far this year, we have entered into agreements for the sale of two businesses for a total of $835 million. The first divestiture was QED, which was part of CMC. We sold QED for $135 million. That sale closed in Q1. In April, we used the proceeds to pay down the bridge loan. Yesterday, we announced an agreement to sell the Electronic Chemicals business, which was also a part of CMC, to Fujifilm for $700 million at a low teens multiple. We expect the EC sale to close by the end of 2023. We think Fujifilm will be a great owner for the Electronic Chemicals business. They will be well-positioned to support the growing market demand for its high purity processed chemicals in North America, Europe, and beyond with the high level of quality and service that fab customers require. The proceeds for the sale of EC when realized will also be used for debt paydown. Another priority for the team has been aligning our cost structure to the current industry environment. To that end, we have taken several actions to lower costs, including headcount reductions and a few small site closures. These actions, in addition to the CMC synergies, will help reduce our cost basis. While effectively managing our cost structure is important, we also continue to make investments that are critical to our long-term growth and success. To that end, we have maintained our significant R&D investments with particular focus on differentiated and high growth products like advanced deposition materials, CMP slurries, and liquid filtration. Critical to our long-term growth are our announced capacity expansions. Our new manufacturing facility in Taiwan is approaching completion, with initial production expected to begin in the third quarter. I was proud to participate in the opening ceremonies of this facility in Kaohsiung yesterday. The site will be a showcase of Entegris' commitment, not only as a technology leader, but also as a world-class manufacturer. We believe these attributes represent a real competitive advantage as the technology roadmaps of our customers become increasingly challenging and require incredibly precise and stable manufacturing capabilities delivered from their most trusted suppliers. We also expect to break ground soon on our new manufacturing center in Colorado Springs, which is targeted to begin initial commercial operations in early 2025. Both the Taiwan and Colorado Springs facilities are critical to address our long-term capacity needs and both have excellent financial return profiles. Looking at the rest of 2023, forecasting the industry this year continues to be challenging. Based on discussions with our customers and using third-party estimates, we expect that semiconductor fabs utilization will likely bottom in Q2. For the full year of 2023, we now expect the market will be down in the mid-teens or a bit more than the down 13% we cited on the last earnings call. Given our strong position in the new technology nodes, we now expect to outperform the market on a pro forma basis at or slightly above the high end of the 3-6 points outperformance range target we discussed in our recent analyst day. Putting it all together, we continue to expect our pro forma sales in 2023 to be down on percentage basis in the high single digits. Wrapping up our outlook for 2023, we also continue to expect EBITDA will be approximately 27%-28% of revenue for the year, and we expect full year 2023 non-GAAP EPS to exceed $2.30 per share. Our approach this year is playing both defense and offense, being mindful of cost, but also preparing to quickly re-accelerate when signs of an improving market emerge. The semiconductor industry remains poised for significant long-term growth on the way to $1 trillion by 2030, driven by exciting catalysts such as AI and EVs, to name just a few. In addition, the pace of node transitions continue to be on track, and device architectures are becoming much more complex, trends which ultimately play to our strength. Entegris' breadth of capabilities in material science and material purity will enable us to offer unique solutions to help our customers improve device performance and shorten their time to yield. These trends and our increasingly mission-critical solutions are translating into rapidly expanding content per wafer and market share growth for Entegris. Finally, I want to take a moment to thank our customers for the trust and confidence they place in Entegris, and I also want to thank the Entegris team for displaying strong adaptability and a keen focus on our customers in a challenging industry environment. Before I hand over to Greg, I want to welcome Linda LaGorga to our team as our new CFO. Linda will be officially joining us next week, and we cannot wait to have her on board. Today, I want to take a minute to again thank Greg for his immense contributions to Entegris and for being such a great partner to me and the rest of the leadership team for all these years. Now let me turn the call to Greg. Greg? Good morning, everyone. Thank you, Bertrand. On to our results for Q1. Our sales in the first quarter were $922 million, down 4% YoY on a pro forma basis and down 3% sequentially. Sales were up 42% YoY on a reported basis. FX negatively impacted revenue by $18 million YoY on a pro forma basis and positively impacted revenue by $12 million sequentially. GAAP gross margin was 43.5% and non-GAAP gross margin was 44.3% in Q1, above our guidance of 43%. The sequential strength in non-GAAP gross margin was driven by favorable FX rates and product mix. We expect gross margin to be 42%-43% in Q2, both on a GAAP and non-GAAP basis. The modestly lower margin reflects less favorable FX trends and the impact of lower volume. GAAP operating expenses were $388 million in Q1. This included $184 million of non-GAAP items, specifically $89 million of goodwill impairment related to the sale of the electronic chemicals business, $58 million of amortization of intangible assets, $17 million of integration costs and $21 million of other net costs. Non-GAAP operating expenses in Q1 were $204 million within our guidance range. We expect GAAP operating expenses to be approximately $262 million-$267 million in Q2, and non-GAAP operating expenses to be approximately $185 million-$190 million in Q2. The sequential decrease in non-GAAP OpEx from Q1 to Q2 is primarily driven by a decrease in non-cash equity compensation expense, which is higher in Q1 than other quarters. Q1 GAAP operating income was $13 million, and non-GAAP operating income was $205 million. Adjusted EBITDA in Q1 was $252 million, or 27.3% of revenue, and was above our guidance. Looking below the line, the GAAP tax rate in the quarter was negative as we had a pre-tax loss. The non-GAAP tax rate was approximately 17%. We expect the non-GAAP tax rate for the full year 2023 will also be approximately 17%. Q1 GAAP diluted EPS was a negative $0.59 per share. The negative GAAP EPS was driven primarily by the goodwill impairment taken in Q1 related to the electronic chemicals sale. Non-GAAP EPS was $0.65 per share above our guidance. Turning to our performance by division. For ease of analysis, the year-on-year comparisons I am referencing here are on a pro forma basis for the SCEM and APS divisions. Q1 sales of $269 million for MC were up 1% from last year and down 5% sequentially. The sequential sales decline was driven primarily by lower sales of our CapEx driven solutions in MC. Adjusted operating margin for MC was approximately 37% for the quarter, flat year-on-year and down slightly sequentially. The sequential margin decrease was driven primarily by lower volumes. Q1 sales of $219 million for AMH were up 10% versus last year and up 2% sequentially. Sales growth YoY was driven by strength in wafer and fluid handling solutions. Adjusted operating margin for AMH was over 22%, down YoY and up slightly sequentially. The modest YoY margin decline was primarily driven by higher OpEx investments. Q1 sales of $198 million for SCEM were down 6% YoY and down 3% sequentially. The sales decline was driven primarily by the impact of the sale of QED in mid Q1. Adjusted operating margin for SCEM was over 11% for the quarter, down YoY, but up sequentially as expected. The sequential margin increase was driven by lower OpEx spend, improved execution, and favorable FX. Q1 sales of $250 million for APS were down 16% YoY and down just 1% sequentially. The sales decline in APS was driven by lower sales of CMP consumables, except for SiC slurries, which had significant growth. Adjusted operating margin for APS was approximately 23% for the quarter. Operating margin was down year-on-year, but was up sequentially despite the sequential sales decline. The YoY margin decline was primarily driven by the lower volumes. The sequential margin improvement was the result of solid cost controls. Moving on to cash flow and the balance sheet. First quarter cash flow from operations was $152 million, and free cash flow was $18 million. It is worth noting that Q1 is typically the lowest free cash flow quarter of the year, as this is when we pay out variable compensation related to the prior year. CapEx for the quarter was $134 million. We continue to expect to spend approximately $500 million in total CapEx in 2023, a significant portion of which will be for our new facilities in Taiwan and Colorado Springs. We also continue to expect CapEx will decline to a longer-term run rate of approximately 10% of sales starting in 2024. As we have said, we are highly focused on improving our cash flow and especially inventory turns. While inventory increased in Q1, our inventories have started to decline, and we expect the declines to accelerate as the year progresses. A bit on our capital structure. As Bertrand referenced, in April, we paid off the balance of a short-term, high-interest loan associated with the funding of the CMC transaction. Excluding that $135 million, at the end of Q1, our gross debt was $5.8 billion, and our net debt was $5.2 billion. This equates to a gross leverage ratio of five times and a net leverage ratio of 4.6 times pro forma for the announced cost synergies. As a reminder, going forward, after taking into account the hedge we put in place, our variable rate debt is expected to be a bit more than 10% of total debt outstanding. The blended interest rate on the debt portfolio is approximately 5.5%. As Bertrand Loy said, we are very focused on debt paydown and deleveraging. On that note, we expect to steadily lower our leverage toward our target of 3.5x gross leverage by the end of 2024. Our liquidity position continues to be solid. As of the end of Q1, we had over $700 million of cash on hand, $135 million of which was used to repay the short-term loan in April, and well over $1 billion of total liquidity, including our $575 million undrawn revolving credit facility. Now for our Q2 outlook. We expect sales to range from $870 million-$900 million. We expect the EBITDA margin to be approximately 27%-28%. We expect GAAP EPS to be $0.09-$0.14 per share and non-GAAP EPS to be $0.53-$0.58 per share. A few additional modeling items. We expect interest expense of approximately $84 million per quarter for the rest of 2023. Depreciation is expected to be over $55 million in Q2, up from $47 million in Q1, and increasing to over $60 million in Q4. To be clear, all the guidance we've provided today, both for Q2 and for the full year 2023, includes the electronic chemicals business. In closing, I feel very confident, as I am preparing to step down, that Entegris has never been better positioned. The semi market, even giving the challenging near-term environment, is much more diverse than it used to be and has many drivers for attractive long-term secular growth. Our model is 80% unit-driven and as a result, is more resilient than it used to be. We have increased opportunities to grow our content per wafer and continue to outperform the market. Our model has significant variable cost, which helps us in a down year. While we do have significant debt, the debt structure is rock solid. It's approximately 90% fixed rate. There are no meaningful covenants and no meaningful maturities until 2028. We are, of course, committed to paying down the debt and have options to do that, including using the $700 million of proceeds from the EC sale post-close. In closing, I wanna thank my team for all of the great support over the years. Finally, I want to welcome Linda to the team. She is the right person at the right time. Operator, we'll now open up for questions. Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press star one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. Our first question will come from Toshiya Hari with Goldman Sachs. Your line is now open. Hi. Good morning, guys. Thank you so much for taking the question. Bertrand, maybe first one for you. I guess a multi-part question on how to think about, you know, revenue going forward. You talked about the market being down in the mid-teens as kind of your outlook. I was hoping you could differentiate between how you're thinking about wafer starts, WFE and construction CapEx. You mentioned that you expect the market to trough in Q2. Is that a statement for all three buckets of your business, if you will? My second part would be some of the drivers behind the outperformance. You talked about leading-edge customers, no transitions, and also easing supply constraints. I was hoping you could expand on those two. Thank you. A lot of questions here, Toshiya Hari. I will try to remember them all, but don't hesitate to come back online if I have forgotten anything of significance. Let's start with the annual guidance. A little bit more detail and to unpack my statement. MSI, we expect wafer starts to be down in the mid-teens. A little bit worse than last time we spoke. Our forecast right now for CapEx is down near 20%. Pretty much in line with our views about three months ago. That gives you the blend of down mid-teens for the industry. The way to think about the year at this point is that, again, we expect MSI to bottom. We believe that it's gonna be true in advanced logic and memory, we expect, you know, some recovery, some sequential growth in the subsequent quarters for the balance of the year. That's the way to think about the year. If you do the math, you will see that it gives you a rate of outperformance of about 6-7 points and, you know, an overall annual growth rate of about down in a high single digit. We talked about the reasons for that outperformance. It's continued strong level of demands for some of our strategic products, in particular, liquid filters, which are in very high demand. The reasons for that are unchanged, and I believe clear to the audience. The need for higher levels of purity is unabated in this industry. Purity is very important at the leading edge to achieve, you know, optimum yields, and it's increasingly important for mainstream fabs to achieve long-term reliability of their chips. Another factor for the outperformance is, again, the easing of a number of supply chain constraints. You can see evidence of that in particular in MC and AMH. You'll recall last year we talked about some new internal capacity coming online in the back half of the year, so we've been able to ramp up some of those new equipments, in particular in liquid filtration and fluid handling. We are seeing also some new capacity coming online with some critical suppliers of resin in particular. I think those are the various factors behind the performance in Q1 and, you know, how we expect the year to play out. That's very helpful. Thank you. Thank you, Bertrand. As my follow-up, you know, I guess a couple of questions on the cost side. You know, you guys talked about some headcount reductions, some small site closures. You're guiding Q2 OpEx to $185-$190. As we think about the second half run rate from an OpEx perspective, is the $185-$190 kind of the new base that we should be working with? Could there be further reductions given some of the initiatives going on today and perhaps synergies with CMC? Specifically on SCEM, margins were up sequentially from Q4 to Q1. They remain pretty low relative to where you were a year ago, a year and a half ago. What needs to happen, within SCEM for your margins to perhaps normalize higher? Thank you. Okay. Yeah. I'll go ahead and take that. Toshiya, how are you doing this morning? OpEx, you should think about that $185-$190 as sort of the run rate as we go through the year. If you think about that on a pro forma basis, it's about $10 million higher than where we were last year in the second quarter. If you unpack that, it's all ER&D. As Bertrand mentioned, and we're sort of driving with one foot on the gas, one foot on the brake, and we're trying to watch the costs around the SG&A side of the house and the ER&D side of the house, but we do wanna make sure we're continuing to invest for the long term. As it relates to the SCEM division, as you highlighted, we did have slight improvement in the operating margins there. I think as we think about the balance of the year, there are a couple parts of that business where the volumes are very low, and they have relatively high fixed costs, so we need to see higher volumes in those portions of the business. I would just say in general, you know, the margin is gonna improve. It's primarily a volume related issue. With the exception of those two. I talked about two pockets where we've got very low volumes relative to historical standards. Those aren't core business those aren't core areas per sq. Got it. Thanks so much, Greg, and congrats again on your retirement. Yeah, thank you. Thank you. Our next question will come from Kieran de Brun with Mizuho Group. Your line is open. Hi, good morning. Congratulations on the good quarter, and again, congratulations, Greg. I was wondering, in ATS specifically, I mean, it seems like you're seeing really good demand for the silicon carbide slurries. Maybe you can parse out, you know, what's driving that strong demand, like how you're thinking about that business going forward. Then, you know, your outlook for the consumable portion of the business and, like throughout the remainder of the year and how you expect that to trend. I mean, you covered it, I guess, more broadly in terms of where the total business is trending, but if we can just dial down a little bit more into APS, that would be helpful. Yeah. We like talking about the SiC slurry business because first of all, there are a number of very significant investments taking place In this particular segment, many customers are investing massively to build new capacity. The other reason we like to talk about it is that our market position in these particular applications is very, very strong, both for storage and for pads, as well, by the way. It's small today, but we expect this part of the business to grow very rapidly. We saw that in Q1. We expect to see that, as Greg mentioned, through the balance of the year. That part of the business will be expanding, you know, and will be a little bit, you know, swimming against the current here. For the rest of the consumable business, I think, again, we expect that part of the business to be down sequentially in Q2. That's largely a function of further slowdown in wafer starts, especially in advanced logic. Then we expect a steady but modest recovery in the back half of the year. As I mentioned in our previous earnings call, we continue to expect our liquid filtration product lines to do the best across the portfolio. As I was just saying, as an answer to the previous question, it's largely a function of the growing importance of materials purity for our customers, and therefore the growing importance of the solutions we provide for them. That's the way to think about, you know, consumable revenue for the balance of the year. Great. Thank you. Then maybe just a really quick follow-up. You know, the Taiwan facility seems to be on track or even ahead of schedule. How do we think about the contributions as you ramp up that facility in the back half of the year? Then I know it's early for 2024, but any initial thoughts on how to, you know, kind of think about that business and the additions to your portfolio? Thank you. Yes, you're right. I mean, this facility is coming online, in fact, on plan. But that in itself is quite an accomplishment given the fact that we announced the investment late 2020, and this massive construction took place during a global pandemic. The fact that we are able to hit the timeline and to do all of that within budget is quite an accomplishment. Frankly, that's why it was important for me to travel to Taiwan to recognize the team. Frankly, I wouldn't miss the opening and an opportunity to interact with a lot of our major customers who attended the opening. This is gonna be a great showcase for Entegris. You know, not only are we adding new capacity, but we are also investing in the most advanced manufacturing site when it comes to liquid filters, when it comes to high purity drums, when it comes to low-κ and high-κ dielectric materials. Again, exciting times, exciting week for us, obviously, you know, between reporting strong results and opening this very important facility. When it comes to its contribution, as we've said many times, I mean, this year it's gonna be a little bit of a drag to margin in the back half of the year. We are still in the middle of internal and customer qualifications. We expect the first shipments to customers, so billable shipments, by Q3, but it will be modest. The ramp really will take place in 2024, and I would expect, you know, to be maybe reaching full capacity sometime in 2025. Great. Thank you. I'll turn it over. Thank you. Our next question will come from Sidney Ho with Deutsche Bank. Your line is open. Thank you, and good morning. Thanks for the update on the full year guidance. Do you still expect second half revenue to be slightly skewed toward the second half? I guess, revenue to be slightly skewed towards the second half of the year. I think last quarter you talked about 3 nm RAM being a big driver in the second half. Has there been any changes to your expectations about these nodal transitions for 3 nm as well as for on the memory side as well? Sidney. So right now, I think on balance, I would say that, you know, second half will be essentially flat with the first half. We expect, as I mentioned earlier, Q2 revenue to be the lowest point this year for us. After that, we expect, you know, the sequential increase every quarter to be relatively modest through the balance of the year. That's gonna be a function of recovery in MSI and also the benefits of some of the node transitions. That's, again, where we expect to do better than the market, you know, on balance, as I said, second half, think about second half as flat to the first half. Okay. That's helpful. Related to the Electronic Chemicals business, can you talk about the financial profile of that business in terms of revenue and profitability? I think you guys talked about what it was in 2022. Also, related to that, does the announced divestiture of the business change the way you think about the cost and product synergies you laid out in your analyst day in the last time? What about your CapEx outlook going forward? Sure. All good questions. You know, so the decision, first of all, to divest is really the result of really careful and objective assessment of the various parts of the CMC portfolio. We talked about it during the analyst day we had at the end of last year. By the time we presented to you at the end of last year, we knew that we wanted to divest the EC business. We took that into account, and it was factored in the cost synergies that we were targeting. No change to that commitment to deliver $75 million of cost synergies. When it comes to the financial profile of that business, I would just say that, you know, think about 2022 sales around $360 million, and think about an EBITDA number between $50 million - $55 million. Again, you know, EBITDA is directional. This is a carve-out, but that's the range you should probably have in mind. Sidney, as you think about that business, as you get, you know, call it $700 million in proceeds, the operating income is obviously lower than the EBITDA. We're gonna pay off debt that currently is at a rate of 7.7%. The impact on the P&L of this divestiture is neutral to slightly positive. Great. Super helpful. Thank you very much. Thank you. Our next question will come from Charles Shi with Needham & Company. Your line is open. Hi. Thank you for letting me ask a couple questions. Really want to understand a bit of the near term dynamics here. When I look at your segment, the revenue performance in Q1, I would have thought that SCEM and APS to be down a little bit more than what you have reported, and MC and AMH to be holding up slightly better, given that SCEM and APS are more unit driven, the other two are more CapEx driven. Can you help me understand a bit more how to reconcile that, looks like a CapEx still holding relatively strong in Q1, but you see a little bit more of a sequential decline in, especially MC, but SCEM and APS, which are supposed to be more unit driven, probably should have done more, but you're actually doing okay. Thank you? Yeah, good question. There's certainly more than meets the eye, so I'm happy to try to unpack that a little bit more for you. Remember first that when we talk about our CapEx exposure, a lot of that exposure is to new fab constructions. There was, believe it or not, a fairly steady level of investment in new fab construction projects. That helped sustain our fluid handling business in particular, that's largely what helped our AMH business to perform so well year-on-year and sequentially. The other part of that is what I was mentioning earlier, which is really the easing of a number of supply chain constraint. MC, it's a little bit of a tale of two cities. You have, on the one hand, products that are components used in equipment platforms. Demand for those products obviously is under a lot of pressure, so it's down fairly significantly. It was offset nicely by our liquid filtration business. As I mentioned earlier, strong demand for those products. We understand the need for greater purity and what it does for our customers. We also benefited from new capacity that came online, you know, late last year. It was good timing because of the strong demand for those products. When it comes to SCEM and APS, I agree with your statement. I think we were pleased with the performance. It was largely in line with what we were expecting, and the decline is a function of the exposure to memory. I mean, those two divisions have seen actually, you know, fairly steady decline in demand starting late last year. We saw continuation of that in Q1 as expected. We are actually, encouraged by the recent trend, we're seeing actually, you know, signs of improvement for those businesses going forward. That's one of the reasons why we believe that we expect to turn the corner in Q2. Thank you, Bertrand. I think that the other question, I think you talked about MSI or fab utilization to bottom in Q2. I think it specifically called out advanced foundry logic and the memory. Do you have any view about the mature node foundry logic side of the MSI? If you can you kind of quantify to us how much of the exposure of your business to that part of the foundry logic side of the market? I know you're probably more levered to the advanced, but some comment on that part of the market would be great. Thank you. Mainstream certainly has been an area of strength across our portfolio. It was through Q1. We expect that to continue to be true in Q2. Certainly one of the reasons we have more muted expectations for the back half of the year is that we have some concern about the sustainability of demand from those mainstream fabs, and that's something we try to factor into our guidance for the back half of the year. When it comes to, you know, our overall exposure, it's something that is hard to do, but directionally I would say that we have, you know, about 70% exposure to logic and foundry and about 30% exposure to memory for our fab customer business, right? That fab customer business represents roughly 55% of our of our revenue. Within that 70% of the fab business, lever to logic foundry, how much of that is mature or mainstream side of the logic category? That's the question. That, yeah. That part gets a bit trickier to quantify because sometimes we don't have perfect visibility, but I would say think about 60/40. 60% of that would be advanced, 40% would be mainstream, roughly. thank you, Bertrand, for the clarification. Thank you. Sure. Thank you. Our next question will come from John Roberts with Credit Suisse. Your line is open. Thank you and welcome, Linda. I'm sure you're listening in, and best wishes again, Greg. When you talk about easing of supply chain, I assume you're talking about the U.S., China trade restrictions that were impactful in the fourth quarter. Have they largely gone away or half gone away? Or how's the sequential progression in your solutions to that headwind that you had in the fourth quarter? The easing of the supply chain constraints really refer to something different. It's really about two things. One was the number of internal capacity constraints that we had all the way until the end of last year, but as I mentioned, a number of new process equipment lines came online, so we resolved most of our internal limitations. The second part was really, you know, getting access to enough quantities of certain raw materials. As I said, you know, the situation, we're not entirely out of the woods, but we've made great progress versus where we were last year. The U.S., China, technology restrictions are not having an impact at this point? Yeah. The impact is something that we quantified during the last, the previous quarter's call. You know, we spent a lot of time working with the U.S. administration at the end of Q4 and our Chinese customers collecting, you know, certifications from our customers or performing due diligence on their operations. We quantified the permanent impact, negative impact to our top line to be about $20 million, a loss of $20 million of revenue, permanent loss by quarter. We saw actually about that number impacting mostly SCEM and APS in Q1. Great. Thank you. Thank you. Our next question will come from Aleksey Yefremov with KeyBanc Capital Markets. Your line is open. Thanks, and good morning, everyone. Bertrand, do you have any views on node transitions as it relates to your business, sort of beyond the back half of this year? Beyond the back half of this year. What I can tell you is that for this year, you know, we think that those node transitions are largely on schedule. I mean, beyond this year, you know, we, we don't really like to comment on that. There's just. It would be speculative. There's a lot that can change between now and then. I would say that for this year, the node transitions are largely on track, and we know that all of our customers are expressing a desire to continue to maintain the cadence of node transitions. It's in their best interest to maintain a rapid transition to the new nodes. That's the source of competitive advantage for them, and we believe that, again, they're gonna do everything they can to maintain a very rapid cadence, which plays to our strength because we believe we can help them. We can help them with very unique new materials, and we can help them solve their contamination issues, which means, you know, achieve faster time to yield. Again, I'm not gonna comment on 2024. It's too early. Fair enough. On just the current year, should we think about your demand for your products, broadly as sort of coincidental with fab utilization or would it be somewhat lagging or maybe leading the industry growth, the industry trough? My answer would differ by division. There's a much stronger correlation with to wafer starts with SCEM and APS. The correlation is good, but not as strong with MC in particular. The reason being that, you know, sometimes when customers actually ramp up production in a fab, they will use large quantities of filters, for instance, to just purge the lines, you know, the chemical loops in the fabs. That will create a little bit of a bump up front. Then those volumes actually will recede to what would be the normal level of daily consumption. That's why sometimes, you know, when you have a large node, you can see some weird trends. I mean, they are totally expected and understood on our side, but sometimes externally it's a bit hard to read. Thanks a lot. Thank you. Our next question will come from Chris Kapsch with Loop Capital Markets. Your line is open. Yeah, good morning. This is rare for me, but I do wanna give a shout-out to Greg. Just, you know, the history there. You've been through a lot with the company. Kudos to all your accomplishments. I've appreciated the relationship over the years, and wish you the best and hope to keep in touch. Good luck. Just on the results- Yeah. Thank you, Chris. I appreciate it. Cheers. Just, you know, terrific narrative, especially considering the macro. I do have a follow-up, and it's really, you know, focused on this not just your sales resilience, but really the comments about the outperformance relative to the market being greater than expected. I'm just curious, Bertrand, is this a statement about where you see the end market, you know, recovery being stronger vis-à-vis what may continue to be slower language? In other words, It's known that you have, you know, more process per record wins and therefore more content per wafer, if you will, at these advanced more complex nodes. For you to outperform greater than expected, is it really just a statement about, you know, a view that that's where the demand will hold in better vis-à-vis maybe some of the legacy nodes or some of the more mature nodes? Yes. I mean, Chris, this is exactly what's happening. I mean, we're seeing steady Entegris content per wafer increase node after node. You know, even when you hear about wafer start reductions in memory, you know that a lot of those reductions are taking place in the lagging nodes. At, at some level, you know, it gives us increased additional opportunity for us to, you know, to continue to push forward and to enjoy greater content per wafer. The algorithm that we laid out for you in the last two or three analyst days, it's, you know, in full gear and we are, you know, we are seeing the benefits of that and we're seeing the... You know, we have often had the question about whether the algorithm would stop working in a downturn. You know, here we are demonstrating that, you know, Entegris is truly a resilient business on a cross-cycle basis. You know, we've been able to deliver very compelling outperformance in an upturn. I think that we are obviously not immune to a downturn. Our revenue will be down, relative to the rest of the industry, I believe that we will be able to deliver some fairly, you know, fairly strong result. I don't wanna be bragging, it will be down. There's really no reason for us to be bragging about a down year. I think on a relative basis, I think we will prove to be resilient. Got it. Just a, as a follow-up, the, one thing that I've observed over the many years is that when there's node transitions, particularly more challenging ones that, you know, initially, I mean, it shows up in, at the chip maker in the form of gross margin weakness. The, you know, the initial ramp, there's low yields which, you know, effectively results in higher consumables in order to get the die production, even if the yields are low. There's a disproportion benefit to the leading edge consumable supplier when these node transition happen. Wondering if that dynamic is playing in to the extent that you have visibility to it? Yeah, that was. It is. That was- Yes, it is playing in two ways. It's playing in the fab environment, exactly, as you described it, Chris. It's also playing upstream in the supply lines because increasingly, I mean, as our fab customers transition to more demanding nodes, they will push their bulk chemical suppliers to significantly increase the purity levels of a broader array of process chemistries coming into the fabs. It translates into great opportunities for more point of filtrations using more advanced filters that need to be replaced more frequently upstream in those supply lines. It's also gonna drive consumptions of more high purity drums. Those are exactly the types of investments we've been making here in Kaohsiung. In Taiwan, we are adding capacity to our advanced filters. We are adding capacity to our high-purity drums, to serve the extended ecosystem of our, you know, strategic fab customers here on the island. It's happening everywhere in the world where there is a big push to the advanced nodes. Very helpful. Thank you. Thank you. All right. Thank you. Our next question will come from Michael Harrison with Seaport Research Partners. Your line is open. Hi. Good morning. I'm curious on the Microcontamination Control business, and the weakness that you saw on the CapEx or more equipment related side. Do you view those CapEx related products as leading indicators? Do you view the Q1 weakness as maybe just a temporary impact or air pocket, or do you expect further weakness on the equipment side? Typically those are indeed, you know, leading indicators of what to expect in terms of WFE. You know, so we expect those product lines to continue to face some headwinds going into Q2. Then we frankly have very little visibility for the back half of the year. Internally, right now, we are not counting on any recovery for those products, in 2023. All right. Thank you for that. On the ATS business, I'm curious if you could comment on opportunities you're seeing in the pads side of the business. That was always an area that CMC saw as having a lot of growth potential. I think they had some challenges delivering on that growth. I'm curious if you're maybe seeing more success already or expecting that you can be more successful on the pad side. It's a good question. As I mentioned, actually, we are very excited about some emerging opportunities in SiC applications, not just for the slurries but for the pads as well. In addition to that, we've seen some nice progress for, you know, silicon applications. It's still early days, but that part of the business has been, over the last few quarters, has been performing actually better than expected. To your point, we have high expectations for this business to continue to perform better than it has historically. All right. Thank you very much. All right. Thank you very much. Thank you for joining our call today. Please follow up with me, this is Bill Seymour, if you have anything else you wanna cover. Have a great day. Thank you. Thank you, ladies and gentlemen. This concludes today's Entegris first quarter 2023 earnings conference call. Please disconnect your line at this time and have a wonderful day.