MKS Inc at Nasdaq London Investor Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Shane Brett - Morgan Stanley - Analyst : Got it. Thanks, John. I'll kind of talk through the questions by segment. And I want to start with Electronics and Packaging, E&P. So your Q4 guide implies about 20% growth for the full year, which is pretty good. Just could you talk about what has drove this really strong growth this year?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. And with this equipment growth, so the flex PCB drilling has been a pretty good driver for you guys this year. Just can you talk about the trends you're seeing with kind of your customers for these flex PCB drilling tools? And also, you've kind of talked about you're adding some capacity to your (inaudible) factories. Just could you kind of talk about how that sort of ties in with your growth outlook for this equipment portion? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 09, 2025 / 11:00AM, MKSI.OQ - MKS Inc at Nasdaq London Investor Conference

Question: Shane Brett - Morgan Stanley - Analyst : I guess if I just take a step back on the E&P segment, if I'm correct, it's two-third chemistry, one-third sort of equipment and tooling. How would you sort of characterize the growth profile between the two-third chemistry business versus kind of the one-third of equipment?

Question: Shane Brett - Morgan Stanley - Analyst : So when I sort of think about your 20% growth this year, it's been kind of ¡ you were two-third that's growing 10% and then the equipment growth is sort of layering on top of that?

Question: Shane Brett - Morgan Stanley - Analyst : And when I think about kind of the durability of that equipment growth that's been going on for four quarters right now, sort of how do you kind of see an early setup into '26 or kind of...

Question: Shane Brett - Morgan Stanley - Analyst : So I guess I was probably going to ask this a little bit later on the financial portion, but gross margin has been a little bit lighter, I would say, just given just so much equipment sales going on. But equipment may roll over at some point, but chemistry is more utilization based. How would I kind of think about maybe the attach rate between equipment and chemistry and how better equipment ¡ I mean better chemistry may also feed into the financial model? Ramakumar Mayampurath - MKS Inc - Chief Financial Officer, Principal Financial Officer, Executive Vice President and Treasurer Yes, that's true. So after five years, the attach rate drops to about 85%. So we have very high attach rate when we get out of the gate on and you're right, the chemistry sales that follow the equipment sales are very higher than our corporate average gross margins. In the future, mix will be a big part of our gross margin play. If you look back into Q4 ¡ sorry, 2024 up to Q1 of this year, we were running gross margins well above 47%. We finished Q1 at 47.4%. Since then, we had two headwinds to deal with. One is the impact of equipment sales and the tariff impact that hits in Q2 and Q3 in particular. Q2, we had 115 basis points from tariffs. Q3, we had 80 basis points.

Question: Shane Brett - Morgan Stanley - Analyst : Got it. Thank you, Ram. And before I move over to semi, I have to mention, so you're awarded the Optica i4 Individual Lifetime Achievement Award, the Global Photonics Economic Forum in October. Just ¡ could you remind us about MKS' sort of position like MKS' optical businesses and how ¡ kind of what part of the supply chain you guys play a part in there?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. That kind of ties us into talking about semi. So you've seen a nice year in semi. Q4 guide implies about 10% growth for the full year. So your customers have talked about kind of a big second half 2026 ramp. Could you kind of talk about what your sort of early expectations are kind of, I guess, what you're sort of expecting for your semi business in '26? And also it would help with kind of what drove the sort of 10% growth this year as well?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. We're at 11% growth for '26, so a pretty good setup for you guys. I guess just in terms of that lead time. So you guys are at four to eight weeks right now. I guess what does a more normalized lead time look for MKS? And sort of what sort of visibility would you ideally like your customers to provide you?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. Got it. And I just want to touch back on the NAND portion. So when I look back at '21 and '22, you guys had did really well in hand and WFE kind of disappeared for two years to start to come back this year. But how would this sort of a recovery in NAND WFE layer on to kind of your outperformance versus WFE if we think about '26 and '27 seeing hopefully a bit more better NAND WFE?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. And even though that kind of NAND WFE dropped off in 2022, you guys had some nice kind of revenue ramps in the metrology and inspection side. You're talking about kind of your exposure to ALD to me a little bit earlier. Could you talk about kind of the more idiosyncratic sort of MKS initiatives that should lead to sort of WFE performance over the next two years?

Question: Shane Brett - Morgan Stanley - Analyst : I guess what also helps is just the scale of MKSI and the ability to do kind of R&D through cycle. And even the scale, I think you previously mentioned that metrology and inspection was, I think, $150 million five years ago, now closer to $300 million. But that's ¡ that growth is also driven by your customers kind of telling you that if you do more R&D, you can get more business. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 09, 2025 / 11:00AM, MKSI.OQ - MKS Inc at Nasdaq London Investor Conference

Question: Shane Brett - Morgan Stanley - Analyst : Right. Ram, I want to pass it over to you for a few financial questions. But the first one, just on the near term, you kind of talked about it earlier, but gross margin has been weighed down by tariffs and sort of product mix. But could you kind of talk about ¡ so how have these tariffs impacted your business and sneak peek into what gross margin could look like in 2026 and kind of what the puts and takes might be? Ramakumar Mayampurath - MKS Inc - Chief Financial Officer, Principal Financial Officer, Executive Vice President and Treasurer Yes. So the tariff had an impact on our gross margin. It did not have any impact on the top line. And the highest impact was in Q2, and we had 115 basis points of impact. Our gross margin for the year after including the tariffs was 46.6%, would have been well above close to 48% if we didn't have that tariff impact. That dropped to 80 bps in Q3 and our gross margin was 46.6%, including that, would have been above 47% without that tariff impact. And

Question: Shane Brett - Morgan Stanley - Analyst : Got it. Got it. And I mean, when I kind of compare you guys to what you laid out back in '22 for the Analyst Day, like you're well ahead of where you guys kind of thought you would be in terms of gross margin? Ramakumar Mayampurath - MKS Inc - Chief Financial Officer, Principal Financial Officer, Executive Vice President and Treasurer So the cost control side on what we can control has been working well. And the next step change in margins will come with top line growth and the right kind of mix. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 09, 2025 / 11:00AM, MKSI.OQ - MKS Inc at Nasdaq London Investor Conference

Question: Shane Brett - Morgan Stanley - Analyst : Got it. I'd like to open it up to the audience if there's any questions. Gentleman in the back. Unidentified Participant I'm relatively new to the company, but what's the ¡ over the last couple of years and going forward, what's the unit volumes versus price equation for you guys? Would you have a lot of pricing power?

Question: Shane Brett - Morgan Stanley - Analyst : Any other questions? I guess then I'll ask if you ¡ so on the semi portion, so for ALD, I guess, the kind of story there is your ozone generators, if I'm correct. Can you just kind of elaborate on that, sort of what makes MKS' solution there kind of differentiated versus competition? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 09, 2025 / 11:00AM, MKSI.OQ - MKS Inc at Nasdaq London Investor Conference

Question: Shane Brett - Morgan Stanley - Analyst : So when I think about kind of your content per, I think WFE dollar, it's kind of 1.8% to 2.2%, if I'm correct. Deposition would be probably on the lighter end, but hopefully, ALD kind of drives it upper.

Question: Shane Brett - Morgan Stanley - Analyst : Great. So kind of hopefully, the customer is talking about a big second half 2026 comes true and you guys see good '26 then?