Hello, and welcome to the Entegris' First Quarter 2026 Earnings Conference Call. I would now like to turn the call over to Jeffrey Schnell, VP of Investor Relations.

Good morning, everyone. Earlier today, we announced the financial results for the first quarter of 2026. 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 that 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 and Regulation G. You can find reconciliation tables in today's news release as well as on the IR page of our website at entegris.com. Joining me on the call today is Dave Reeder, our CEO. With that, I'll hand the call over to Dave.

Thanks, Jeff, and good morning. The first quarter was a solid start to the year as we continue to execute with focus and discipline against the constructive and improving semiconductor industry environment. We are delivering on our commitments. Revenue increased 5%, slightly above the midpoint of our range, while most other metrics, including adjusted gross margin, EBITDA margin and non-GAAP EPS all exceeded our guidance range. I'm encouraged by these results, and we remain focused on the significant opportunities ahead to fully capitalize on the organization's long-term growth and earnings potential. As I mentioned, total revenue increased 5% in the first quarter as compared to the prior year, driven by a 7% increase in our APS segment and a 3% improvement in MS. Our unit-driven revenue, which is correlated to MSI, increased approximately 7% year-over-year, driven by growth in liquid filtration, advanced deposition and selective etch, all of which are critical product lines for our customers' new technology nodes. We're pleased to see the continued growth in liquid filtration, which posted its third consecutive record quarter. CapEx-driven revenue decreased modestly year-over-year in the first quarter, mostly driven by accelerating order patterns in the prior year quarter in response to tariff actions. Given our current bookings patterns, we expect 2026 CapEx revenue to increase throughout the remainder of the year and contribute more meaningfully to our overall growth profile, driven by strong WFE growth and improving fab construction trends, which support not only the latter half of 2026, but also growth expectations in 2027 and beyond. Our overall results reflect the improving demand landscape across our end markets and regions. This includes double-digit Q1 growth in Taiwan and broader Asia, supported by strong plan of record positions as well as improving demand within advanced logic and memory, driven in part by AI-enabled applications. Turning to profitability. Gross margins improved in the first quarter of 2026. The key drivers to the strength in margins on both a year-over-year and sequential basis were productivity and efficiency actions across our manufacturing network and supply chain, favorability from the useful life accounting change in the first quarter and product mix. Jeff will provide more details on this later, but we are pleased with the structural improvement in margins and expect to build on this progress in the future. Additionally, we are continuing our efforts to optimize our manufacturing network. We closed another subscale facility during the quarter in Chandler, Arizona, further advancing our operational initiatives. These actions represent an important proof point in our ongoing efforts to drive scale, optimize our footprint, improve efficiency and better position the business for growth and improved operating leverage as volumes increase. Free cash flow was also a highlight for the quarter. We delivered $144 million of free cash flow, approximately 18% of sales, despite headwinds from normal working capital seasonality. Our strong free cash flow enabled us to accelerate our deleveraging as we repaid approximately $50 million of our term loan in the quarter. We believe this trend will continue, and now expect to reduce net leverage to approximately 3x by the end of 2026. Turning our commentary to the semiconductor market. We now expect mid- to high single-digit industry MSI growth for the remainder of 2026, which correlates to approximately 75% of our business. This contemplates an improved DRAM outlook, a similar unit outlook compared to last quarter in advanced logic and NAND, and a continued mixed outlook within mainstream logic. And the outlook for fab spending is also improving, which correlates to the remaining 25% of our business, both fab construction and WFE. Let me now address the end markets. Advanced logic, which represents approximately 40% of our total revenue, remains well positioned for strong growth in 2026, primarily driven by accelerating demand for leading edge compute. Utilization rates at the most advanced nodes are already operating near effective capacity, and the industry is responding with aggressive capacity investments to support the demand for next-generation nodes. Additionally, as 2 nanometer technology enters a more meaningful production ramp this year, we expect strong growth in 2 nanometer wafer output. Process complexity meaningfully increases with sub-5 nanometer nodes, driving higher Entegris content per wafer and aligning with our strong positions of record. The memory market, which represents approximately 30% of our revenue, is also structurally strong, underpinned by AI workloads and technology road maps that are reshaping DRAM and NAND architectures. In DRAM, demand continues to accelerate, driven by increased AI consumption. Additionally, and as announced, we expect DRAM capital investments to continue at pace, supporting accelerated DRAM MSI growth beyond 2026. NAND demand and MSI are also expected to increase in 2026, though it remains more nuanced than DRAM. This view is supported by both leading-edge technology transitions and AI-driven storage requirements. The key short-term growth driver in NAND for Entegris will be layer scaling and the resulting incremental Entegris content, with wafer start activity expected to improve in the latter half of 2026 and into 2027. Vertical scaling materially increases process complexity, elevating the importance of yield, precision manufacturing and advanced process steps and materials. These technology shifts are expected to result in double-digit increases in content per wafer for Entegris. And lastly, mainstream logic. The recovery and outlook in this end market, which represents approximately 1/3 of our business, remains mixed. We continue to expect tempered MSI growth in mainstream logic through 2026, improving thereafter as new capacity additions, specifically in memory, begin to ease near-term supply concerns, especially with respect to price-sensitive consumer products. As it relates to CapEx, we are incrementally more positive on the portion of our business related to industry CapEx. The return to growth in fab spending is materializing. This is driven by selective but substantial global capacity additions and pull forwards, primarily in leading-edge logic and memory. Additionally, forecast for WFE spending remains strong as these projects advance. Entegris is well positioned to deliver value for our customers and to capture the multiyear growth opportunities we expect will emerge as we progress through 2026 and into 2027. To summarize, there are several industry and operational tailwinds fueling Entegris' growth. The industry outlook remains constructive. Semiconductor fundamentals are favorable and support growth in 2026 and beyond. This is driven by advanced logic and DRAM with a more stable near-term outlook for NAND and mainstream logic. Stronger order patterns and increasing backlog provide increased visibility and confidence across our unit and CapEx-driven businesses. Next, technology transitions will continue to drive upside for Entegris. Materials intensity and process complexity continue to increase. Beyond node transitions, we differentiate by innovating alongside our customers to advance their technology road maps, which is where Entegris creates the most value. And we are driving a stronger operational focus. We are executing with discipline to improve our operational performance, accelerate growth and strengthen our financial profile. Finally, I want to recognize our employees for their focus, discipline and execution. Their dedication enables all of us to deliver upon our commitments. Before turning the call over to Jeff, I'd like to highlight that following a rigorous search process, Sukhi Nagesh has been appointed as our new Chief Financial Officer, effective May 18. Welcome to the team, Sukhi. His engineering background, significant semiconductor industry experience, deep financial expertise and strong operational discipline make him the ideal CFO for Entegris. Having previously worked with Sukhi, I am confident that his leadership will be instrumental as we continue to execute our strategy to unlock Entegris' full potential. With that, let me turn the call over to Jeff to discuss the financials.

Thanks, Dave. Good morning. Q1 sales were $812 million, an increase of 5% year-over-year and above the midpoint of our guidance range. Gross margin on a GAAP and non-GAAP basis was 46.9%, above the high end of our guidance range. These results included approximately 50 basis points of one-time items, which we do not expect to recur at similar levels in subsequent quarters. The sequential improvement in Q1 was driven by productivity and execution across our network, including more consistent performance and ongoing cost controls, favorable product mix and favorability from the useful life accounting change in the first quarter, which was in line with prior guidance. Operating expenses on a GAAP basis were $239 million in Q1 and were $189 million on a non-GAAP basis. Adjusted EBITDA in Q1 was $226 million or 27.8% of revenue, also above our guidance range. The GAAP tax rate in Q1 was 1% and the non-GAAP tax rate was 8%, which includes an unforecasted release of a tax reserve. GAAP diluted EPS was $0.60 per share in the first quarter and non-GAAP EPS was $0.86 per share, which exceeded our guidance range. Switching to our segments. Material Solutions delivered Q1 sales of $351 million, up approximately 3% year-over-year. Year-over-year growth was led by double-digit increases in advanced deposition materials and selective etch chemistries, along with continued strength in CMP consumables, underscoring the durability of demand for key technologies. Adjusted operating margin was 22%, in line with the prior year period, and increased by approximately 100 basis points sequentially, reflecting improved performance across the manufacturing network. Advanced Purity Solutions delivered Q1 sales of $464 million, representing approximately 7% year-over-year growth. Results were driven by continued strong demand across the portfolio, including the third consecutive record quarter in liquid filtration, a three-year revenue high in FOUPs and growth in gas filtration. Adjusted operating margin was 29.1% for the quarter, expanding both year-over-year and sequentially, reflecting strong operational execution and productivity, favorable product mix and the majority of the favorability from the useful life change. Switching to cash flow. Free cash flow in the first quarter was strong at $144 million, representing a free cash flow margin of 18%, a continuation of the positive trend from the second half of 2025. The increase in free cash flow compared to the prior year was driven by three factors: the improvement in earnings, an increase in cash from operations, primarily due to working capital discipline, and lower CapEx in the period. CapEx is expected to increase as the year progresses, but will remain meaningfully below 2025 levels. We continue to expect strong free cash flow generation in 2026. Turning to our capital structure. During the first quarter, we reduced our term loan by $50 million, building on the $300 million reduction in 2025. We currently have $400 million remaining on our term loan, which is the only variable rate debt in our capital structure. At quarter end, our net debt was $3.3 billion and net leverage was 3.6x. As Dave articulated, we expect to improve our net leverage ratio to approximately 3x by the end of 2026, underscoring our commitment to deleveraging. Moving on to the second quarter outlook. We expect 2Q sales to range from $815 million to $845 million, a year-over-year increase of approximately 5% at the midpoint. Gross margin is expected to be between 46.25% and 47.25%, both on a GAAP and non-GAAP basis, a modest improvement at the midpoint from the underlying gross margin level achieved in Q1, but more than 200 basis points of improvement year-over-year. We expect GAAP operating expenses of approximately $241 million and non-GAAP operating expenses of approximately $194 million, which reflects higher variable comp relative to 2025 and other intentional investments to support the expected growth across our portfolio. EBITDA margin of 27.5% at the midpoint, driven by incremental improvements in gross margins. Net interest expense of approximately $46 million, which accounts for debt paydown to date. We expect our non-GAAP tax rate to return to a more normalized level of approximately 15% in 2Q. We expect GAAP EPS between $0.53 and $0.61 per share and non-GAAP EPS between $0.76 and $0.84 per share. And we expect depreciation to remain largely stable for the balance of 2026 at approximately $35 million per quarter. Looking ahead to our third quarter revenue expectations. Historical industry seasonality supports a sequential improvement in the third quarter. With our current visibility, which we'll refine on our second quarter call, we expect revenue to grow by approximately 5% from the midpoint of the second quarter's guidance range. Finally, I'd like to update a few modeling items for the full year of 2026. We expect net interest expense to be slightly below $190 million, the non-GAAP tax rate to be approximately 15%, diluted share count of approximately 154 million for 2Q and for the full year, CapEx of $250 million, and depreciation of approximately $140 million. Lastly, we have set a date for our Investor Day in New York City in early November 2026, and will share the save-the-date information soon. With that, operator, let's open the line for questions.

Our first question will come from Melissa Weathers with Deutsche Bank.

Looking forward to working with Sukhi in the coming months. For my first question, thank you for all the color you gave in the prepared remarks on the market environment you are seeing. Could you flesh out a little more what you're seeing? It is pretty obvious AI is very strong, but on the consumer electronics side the demand is uncertain and the jury is still out on where fab utilizations are shaping up for those consumer products. Any additional color you can provide on those non-AI markets would be really helpful.

Sure. Melissa, good to speak to you again. We view the mainstream market as mixed, with memory availability and pricing impacting price-sensitive computer products. And then we view that as being offset, however, by power management, data center-related strength and other ancillary AI-related strength. So on the one hand, you've got potentially some pressure on the consumer products due to the availability and pricing of memory. But yet on the other hand, you have some strengths still associated in mainstream with the broader build-out of AI. So we kind of view that as a put and take. We view capacity utilization right now in mainstream as being somewhere between 75% and 80%. There have been some foundries that have reported that have broken that 80% barrier for the first time in several years since the 2022 peak. So we view that as positive. We do think that market is improving, but we're looking at it right now with the current view of being mixed. Did you have a follow-up, Melissa?

Yes, I did. On the CapEx side, I think the numbers we're hearing from WFE companies, and you can see all the fab announcements coming on. It seems like we're going to have a pretty historic fab build-out cycle coming. So any more color on how we should think about the CapEx portion of your business, whether it's groups or the subfab system than you guys do. I think presenting that ahead of these things have buildouts, would be really helpful.

Sure. Let me give you a quick refresher on our CapEx portion of our business. As a reminder, about 25% of our revenue is CapEx related. And of that 25%, about one-third is WFE and about two-thirds is fab construction. So when you think about Entegris, we typically benefit from three cycles of demand when the market enters an up cycle and starts building out new fabs. First, fab construction-related product lines increase. Then you typically see revenue approximately nine to twelve months after groundbreaking, that tends to be centered more towards gas purification and fluid management products in our portfolio. Then WFE related product lines and initial filtration during tool qualification start to ramp up. That typically happens somewhere between 12 and 18 months after groundbreaking. You'll start to see product lines like gas filtration, AMC, LMC bulk filtration start to increase for us. And then finally, you'll start to see the unit-driven product lines ramp, and that's around 24 months after groundbreaking. So those are the three waves. Seventy-five percent of our business is unit driven, 25% of our business CapEx driven. From an end market perspective, we would characterize memory as being in wave one of this cycle, and I'm referring more to DRAM right now. NAND has not announced a lot of incremental fabs at this stage and has been more focused on driving incremental layers. So memory is kind of in wave one with DRAM at the forefront. Advanced logic is going through rolling portions of this phase, probably in the wave two and wave three portion, with some new fabs announced. Those are the dynamics and timing you should consider.

Our next question will come from Elizabeth Sun with Citi.

I guess my first question is on the gross margin side. Your Q1 gross margin had a nice improvement quarter-over-quarter and also above your guidance and in Q2, improved a little bit, I guess, more on volume. But I guess, going forward, looking into the second half and maybe in '27, how should we think about gross margin path? Are you going to continue to rationalize some factories and improve operational efficiency?

Thank you for the question, Elizabeth. I can't tell you how pleased it actually makes me to field some questions about gross margin, particularly because we believe that we're in a period of sustained structural gross margin expansion. As we think about gross margin and what we're trying to drive, we're simplifying and refining our manufacturing network. We're relentlessly driving higher productivity, higher fixed cost absorption and better yields. There is a tremendous amount of work ahead of us, and it will be lumpy, but we are focused on delivering our full gross margin potential, which we think is significantly higher than where we are today. On Q1 gross margin: our 46.9% that we posted on a non-GAAP and GAAP basis included about 50 basis points of one-time items in the first quarter. If you normalize for that, that would put Q1 at about 46.4%, which is about a 240 basis point improvement sequentially. Bridging from fourth quarter, about 100 basis points of that 240 basis point improvement was related to the useful life change we made at the beginning of this year, in line with guidance and as highlighted in our 10-Q. Productivity and other specific efficiency initiatives, including improved plant performance, comprised the remaining 140 basis points. For Q2 at midpoint, we guided gross margin at 46.75%, about a 275 basis point improvement from fourth quarter. We're expecting about 150 basis points related to the useful life change and about 125 basis points driven by improvements in our manufacturing network as well as ongoing productivity and efficiency actions, including the closure of two facilities over the last two quarters. Included in this guidance are incremental production staffing and related project costs to enable incremental capacity in future quarters of 2026 as well as into 2027. So embedded in our second quarter guidance are some incremental costs you have to incur ahead to unlock more capacity in the third quarter, fourth quarter and the first half of 2027. We're quite pleased with our gross margin trajectory.

Yes. I guess the next one is on the congrats on the CFO appointment. I happen to know Sukhi has a lot of experience in M&A and corporate development. So I was just wondering, does this signal you guys are ready to do more M&A once your net leverage is below like 3x, as your target?

It's great to announce Sukhi and we're excited to have him join in mid-May. To recap Sukhi's background: he started in semiconductors in the mid-90s on the wafer fab equipment side and began as an engineer. He has a master's in engineering and later added an MBA, sell-side analyst experience, and significant corporate experience in investor relations, corporate development and corporate strategy. He served as an interim CFO and I had the chance to work with him at GlobalFoundries where he led the IPO. After an extensive process, we convinced him to join Entegris. Specific to corporate strategy and corporate development, right now we're focused on delivering our leverage reduction plan. Initially this year, we told you we thought we would be under 3.5x net leverage. We're already at 3.6x net leverage, and we updated you that we expect to be closer to 3x net leverage by the end of the year. We're very happy with the profitability and free cash flow we're driving. As we progress through the year and pay down our term loan, we feel like we'll be well positioned in 2027 to consider other alternatives, whether it's shareholder return or potential M&A opportunities.

Our next question will come from Timothy Arcuri with UBS.

Dave, can you talk about some of the puts and takes on gross margin and how to think about incremental margins from here? I know Taiwan has been sort of a 100 basis point headwind. Is that still the case? And when does that go away? And then can you talk about Colorado? I think that was only going to go away next year. So can you sort of walk through how do you roll off?

Sure. The best way to think about gross margin is that as we continue to grow volume from here, we should continue to get gross margin improvement from fixed cost absorption and incremental efficiencies across our manufacturing network. Given the strength in our order book that we started seeing in mid-Q1, we're optimizing our manufacturing network while balancing the pace to ensure we can deliver demand in this constructive semiconductor backdrop. Regarding KSP, it is dilutive to our P&L today. We expect that by the end of this year, with the ongoing ramp, it will likely be breaking even on a P&L basis, plus or minus, and then become significantly less dilutive in 2027. Colorado (Rockrimmon) this year is focused on qualification. Last year was about facilitizing and opening the facility; this year is further staffing and qualifying products with customers. We're expecting very little revenue out of Colorado in 2026, with the hope of ramping Colorado in early 2027. So both facilities will be dilutive in 2026, KSP becoming less so toward the end of the year and improving in 2027; Colorado will start to ramp revenue in 2027.

I did, Dave. Can you talk about China and what's going on there? Are you seeing any more competition there? We're hearing about some folks trying to do CNP there and becoming a little more competition for you. So can you talk about that?

I'll touch on regions while the 10-Q hasn't yet been filed. Strong growth from Taiwan, up 18% year-over-year in Q1. Broader Asia was up slightly more than 10% year-over-year in Q1. China was modestly down in the first quarter. China remains a key long-term market for us, but the modest decline was largely driven by some CapEx-related businesses that were down double digits, reflecting dislocated order patterns from the first half of last year related to tariffs. Excluding those, it would have been a more normal quarter in China. We feel we have a strong competitive position in franchise product lines in China: filtration, FOUPs, slurries. Yield and performance matter in China as much as anywhere. At this stage, we view China as largely de-risked and expect a solid second half and solid 2026 in China.

Our next question will come from Bhavesh Lodaya with BMO.

Hi, Dave, and welcome Sukhi. Looking forward to our discussions. Following up on your CapEx and WFE side of the business, as we see higher volumes start moving through your system, I would presume it comes with strong incremental margins, perhaps better than your company average. Maybe if you could provide some color on where margins stand in that business today versus historical peaks? And how should we think about that side as volumes coming in?

Let me start with utilization. We articulated last quarter that we had about $1 billion of incremental upside from our manufacturing network. You have to staff for it and position inventory for it, but that's physical capacity. Whether it's unit-driven or CapEx-driven volume, incremental volume helps meaningfully with fixed cost absorption when you're at the utilization rates we're at. Incremental volume helps from a fixed cost perspective as it drives plant utilization higher, and we expect utilization to grow as the year progresses. We have bookings through the latter half of 2026 and into 2027 for some CapEx items. We do expect gross margin to grow modestly as we deliver fixed cost absorption with incremental volume.

There's been meaningful inflation in polymers and chemical feedstocks. Are you seeing challenges in procurement or pricing for raw materials? And do your contracts with customers build a simple pass-through of these costs, or is there a lag as you price it through to your customers?

We've seen some modest inflation. For some key suppliers, we have contractual terms relating to price increases and long-term agreements covering volumes. For the majority of our supply chain, we have agreements and annual negotiations; those have been productive. We're in a good spot cost-wise, with one notable potential exception: the Iran/Middle East conflict. It's a fluid situation and it's too early to quantify the full cost impact, but we've seen early cost pressure on certain raw materials coming out of the Middle East, specifically some noble gases and some resins. Right now we view the pressure as potentially temporary and have absorbed costs. If the pressure persists materially, we'd evaluate pricing actions with customers. As of today, inflationary pressure is largely as expected, with the exception noted, and we'll continue to review it as we progress through 2026.

Our next question will come from Jim Schneider with Goldman Sachs.

I was wondering if, Dave, you could comment on what you think has changed the most in terms of the wafer start outlook for the year? It sounds like that is mainly DRAM, either increasing utilization rates or pull-ins in terms of capacity. But I was wondering if you could give any color on that? And then maybe if you could explicitly address the analog sector, where it seems like we have the stand to improve the most from a utilization perspective this year.

Thanks, Jim. From February to today, the forecast for fab construction moved meaningfully. In February industry forecasts were for fab construction up low single digits; today the forecast is high single digits. That's a meaningful change and bodes well for 2027, though not all revenue will hit in 2026 given timing from groundbreaking to revenue. MSI we updated from low-to-mid single digits to mid-to-high single digits, with a modest change influenced by advanced logic, DRAM and some incremental NAND, while mainstream we expect to remain similar to February's view. Regarding mainstream and analog: the first quarter was a bit better than we expected. Some customers have reported improving inventory and higher utilizations, with some breaking above 80% for the first time since the 2022 peak. Memory availability remains a factor, so we view mainstream as mixed, and we've included that mixed view in our guidance for 2026 and the initial view for Q3.

Our next question will come from Charles Shi with Needham.

I'll start with the first question around your exposure in advanced packaging. We know this is one of the growth areas for Materials and probably a variable between you and your closest peer in terms of some of the near-term performance. We know you probably were going to talk a little bit more about that at the Investor Day, but Investor Day is still six months out. So we would love to hear some early thoughts. Any new actions undertaking right now at Entegris? We know you talked about the thermal material, you're talking about some of the carrier stuff. Is there anything more in your thinking that Entegris can get a little more exposure in advanced packaging? We know CMP is an important area, especially with the adoption of more hybrid advanced packaging and you have good CMP slurry and pad business, but I want your thoughts.

We think advanced packaging is an attractive market. Our exposure there is limited due to prior investment choices, but we do have products performing well in that space. Specifically: advanced flow control for thick resist, delivery solutions for copper plating and photoresist CMP for high-bandwidth memory and TSVs, and our carrier offering. Our current advanced packaging revenue exceeds a $100 million run rate, and we're excited about traction in areas where we've invested. We have products in the pipeline for the future, but they aren't meaningful to 2026 revenue. We'll provide more detail at Investor Day in November.

Since your 10-K came out intra-quarter, we looked at some customer-specific financials. The largest foundry, your #1 customer, had revenue last year flat to modestly up, trailing what I consider their own growth. What happened last year? Why wasn't your growth keeping up with the leading foundry? And about this year, are you able to catch up to their growth? We heard you talking about the 2 nanometer production ramp later this year, but any thoughts around that?

Speaking to last year, there was a significant build-out in 2024 from a CapEx perspective which creates tougher year-over-year comps in 2025. We felt pretty good about unit volume in 2025, but those comps affected the results. Early results in 2026 (to be reflected in the 10-Q) show strong regional performance: Taiwan up 18% year-over-year in Q1 and broader Asia up a little north of 10% year-over-year. China was modestly down, as I mentioned earlier, but other Asian regions performed well, including Korea, Singapore and Japan. So while I won't comment on specific customers, the regional strength, particularly Taiwan, is encouraging and supports improving performance versus the prior comp dynamics.

Our next question will come from John Roberts with Mizuho.

Welcome, Sukhi. Back to China, are you through with your requalification of sourcing into China? I think you're going to rationalize some products and not requalify others. Is that any headwind to China sales?

In Q1 about 85% of revenue for China was sourced in-region. We expect to pick up another roughly 5% of the product portfolio in 2026, moving that in-region percentage from about 85% to roughly 90% by year end. I don't anticipate we'll ever get to 100% in-region; some products won't justify the expense to relocate production. We'll continue to work on moving more products in-region in 2027 and beyond, but there will always be some product mix impacted by geopolitics or tariffs.

In Material Solutions, are the constraints in the memory market driving any product shifts within that segment?

Not really product shifts, but there are nuances by memory type. NAND is focused on driving bit density through higher layer counts, which introduces new materials like moly. Incremental bit density consumes process steps and capacity and drives incremental materials demand — that benefits Entegris, particularly in areas like moly and selective etch. DRAM is operating near capacity; demand and capacity dynamics are strong there. HBM and advanced packaging related to DRAM also require additional processing where we have slurries and other products. So the trends we're seeing in memory are favorable for incremental Entegris content.

Our next question comes from Chris Parkinson with Wolfe Research.

Given the geopolitical environment, there are some fears about energy availability. You mentioned noble gases and key inputs like helium for fabs located in Asia. As you run the business and talk with customers, how would you characterize the degree of concern around that?

We haven't seen semiconductor-specific concerns around energy availability. There are general concerns around energy consumption and availability for large consumers like data centers, but fabs typically secure energy in advance for long periods when building new facilities. We haven't seen a material semiconductor-specific issue on energy in the market conversations to date.

On the third quarter directional framework, you mentioned historical seasonality supporting a sequential improvement. Does that third quarter view contemplate any cyclical recovery in mainstream logic? Or is that just seasonality and any cyclical recovery would be upside?

Our third quarter guide is based on historical seasonality and current visibility in our order book, particularly CapEx. The approximate 5% sequential growth from Q2 midpoint to Q3 midpoint implies about 8% year-over-year growth versus Q3 2025 actuals. That view incorporates seasonality and current order book visibility and does not include a material mainstream recovery — so any meaningful mainstream cyclical recovery would be upside to that framework.

Our next question will come from Edward Yang with Oppenheimer.

Dave, I appreciate the time and good to see the improvement. First question is on R&D, and that's been ticking down every quarter for the last several quarters. What's driving that? And related to your R&D engine, how does the pipeline look for POR wins that you could leverage above and beyond cyclical recovery?

There's no intention to materially reduce R&D. If revenue grows faster than expected, R&D as a percentage can decline temporarily. Our model of roughly 10% of revenue invested in R&D is the target benchmark, varying by business. We feel good about roughly that level of reinvestment. Regarding POR pipeline, we're confident in our current plans of record, market share and PORs in the pipeline. As manufacturing becomes more complex — higher layer counts in memory, advanced packaging needs, and sub-2 nanometer transitions in logic — the demand for higher purity and precision increases and that favors our development engine and product portfolio. We feel good about our innovation pipeline and will share more at Investor Day in November.

This does conclude the Q&A portion of today's call. I'd like to turn it back over to Jeffrey Schnell for additional or closing remarks.

Yes. Thanks, everybody, for joining our call today, and we look forward to discussing more with you in the coming quarters.

Thank you, ladies and gentlemen. This concludes today's Entegris' First Quarter 2026 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.