MKS Instruments Inc at Nasdaq Investor Conference Summary

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

Question: Shane Brett - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>So I know you guys have been on the road for the last week and a half or so. Could you kind of just walk us through where do you think the sort of MKSI story may be underappreciated?

Question: Shane Brett - Morgan Stanley - Analyst : Then maybe we can start off with advanced packaging. So last earnings really felt like your strategy of optimizing interconnect was really just starting a bare fruit. It caught me off guard a little bit. Could you kind of tell us about the synergies you're really seeing between Atotech's chemistry offering and maybe some of the existing offerings prior to Atotech and how you're kind of tackling the issues that advanced packaging may be facing in the industry right now.

Question: Shane Brett - Morgan Stanley - Analyst : So at these tech centers, does your engagement go to just your Shinkos and Ibidens, your customers? Or do they go all the way up to sort of the TSMCs and Samsungs in the world where you're really intertwining semiconductor all the way to the advanced packaging portion?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. And just moving on to semiconductor. So we have GAA, 4F2 for DRAM. How is MKSI positioned for these tech inflections? And could you just kind of remind us where your semiconductor business is exposed by end market as well?

Question: Shane Brett - Morgan Stanley - Analyst : And as one of the major players within semiconductor subcomponents, where would you think from a subcomponent's perspective, the biggest challenges for semiconductors going forward? And how do you think MKSI is positioned? Or what are you doing to combat those challenges?

Question: Shane Brett - Morgan Stanley - Analyst : Back in the 2010s, it was vertical NAND and RF power that really drove your growth at that time. Is there any sort of inflection over the next three years, whether it be litho, inspection, etch or deposition, something that really could possibly push MKSI to really outperform WFE over the next two to three years?

Question: Shane Brett - Morgan Stanley - Analyst : On litho, metrology and inspection, could you give us a background on how your share at those customers or how your share at those product lines kind of started to get going and where you kind of envision it going forward?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. And just before I move on to some NAND questions, I know it's top of mind for the audience, but just China exposure, could you kind of remind us where is the China exposure across your entire business and maybe some semiconductor-specific edge?

Question: Shane Brett - Morgan Stanley - Analyst : Okay. So the direct exposure to the China equipment makers would be pretty much?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. Then just on NAND. So industry is probably just going to have upgrades next year. Could you remind us how MKSI is positioned for those upgrades and whether you see more benefits from a greenfield or a brownfield or how those upgrades may shape your business next year?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. And just last question before I move on is obviously with semiconductor architectures is getting so much more complexity. How early do customers like AMAT and Lam possibly engage MKSI? And does your sort of engagement go all the way up to sort of the TSMC's and Samsung's levels?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. And before I move on to the financials, I wanted to ask broad markets. So could you kind of give the audience a reminder what the kind of broad markets business is and how it plays into the MKSI story? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 11:00AM, MKSI.OQ - MKS Instruments Inc at Nasdaq Investor Conference

Question: Shane Brett - Morgan Stanley - Analyst : Got it. And I think this is a good way -- good segue to lever, delever, repeat, which is the MKSI story. So could you remind us of what's the balance sheet situation right now, what's the priorities and possibly what the kind of next two to three years may look like for the balance sheet?

Question: Shane Brett - Morgan Stanley - Analyst : So I know you guys had a minimum requirement on debt paydown this year, but you guys have kind of gone way beyond that.

Question: Shane Brett - Morgan Stanley - Analyst : Could you kind of remind us on what was that minimum payment, where you guys came in and where the sort of strong free cash flow generation comes from? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 11:00AM, MKSI.OQ - MKS Instruments Inc at Nasdaq Investor Conference

Question: Shane Brett - Morgan Stanley - Analyst : And I know you guys have spoken about being ready for a much bigger WFE market than some may envision. I know capital intensity should be kind of within the 3% to 5% range next few years?

Question: Shane Brett - Morgan Stanley - Analyst : Okay. And just one more question on the September quarter, one kind of thing that caught everyone off guard was just how strong the gross margin was. If there's any onetime factors that you'd like to remind people or how we should think about maybe gross margin next year, that would be helpful.

Question: Shane Brett - Morgan Stanley - Analyst : And just last question on the financials. So you guys have your midterm targets, but in terms of the margin, it just seems to be tracking a lot stronger. How should we think about, let's say, margins when we do hit the revenue goals, the medium-term revenue goals that you have laid out?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. With that, I'd like to pause if there's any questions from the audience. Unidentified Participant (inaudible) pricing power, you said some part of your margin was coming through commercial actions. I guess that pricing power?

Question: Shane Brett - Morgan Stanley - Analyst : So I'll just repeat the question for the audience. So the question was on pricing power and how that may impact margins going forward.

Question: Shane Brett - Morgan Stanley - Analyst : Any other questions? And just on sort of the chemistry and the equipment, how do you think the Atotech's business has allowed you to expand your customer base in advanced packaging?

Question: Shane Brett - Morgan Stanley - Analyst : So really the semiconductor strategy over the last decade translating into optimize the interconnect this decade?

Question: Shane Brett - Morgan Stanley - Analyst : And with the consolidation on your customer end, they would be looking out for a player that can probably spend a bit more in R&D of MKSI.

Question: Shane Brett - Morgan Stanley - Analyst : Got it. So we have a few seconds left. Any last comments from you guys?

Question: Shane Brett - Morgan Stanley - Analyst : Got it. That's all we have for today. Thanks very much.