You know, were there some of the reasons why your CapEx-related business, that portion of the business, would or would not exceed WFE growth for 2027?

It's really just the timing, Jim. You know, if you think about the 25% of our business that is CapEx, 10% of it is WFE-driven, 15% of it is fab construction-driven. And, you know, we we don't we don't get revenue on time zero of a fab construction. So we don't get revenue when you kind of move dirt, pour concrete, play steel. We get revenue kind of 12 months post that. Once you start facilitizing the fab, then we get another slug of revenue as you're taking that process piping to tools. and then we get another slug of revenue with the tools with the placement of those tools and then finally we get the unit volume at the end so so kind of a slug of revenue and let's call it's round and call it 12 months another slug of revenue around 18 months wfe around 24 months and units thereafter and so so really the fab construction piece giving all the fabs that uh that we're currently tracking. Assuming that they move into the construction build out and tooling stage, we think timing wise that you kind of migrate from second half of 26 being more WFE driven to perhaps 27 being a bit more fab construction driven towards the end, maybe a bit more WFE. WFE continues to be strong, obviously, but then you start to get units out probably in 28. So we think we kind of have these three waves of demand, if you will.

That's very helpful, Culler. Thank you. And then maybe as a follow-up, Dave, when you took over as CEO, I think you sort of referenced the fact that you would be looking at different elements of strategy, including your sales strategy, and maybe thinking about entering parts of the market or being more aggressive in parts of the market where you hadn't been previously. Can you maybe give us sort of an update on the overall sales strategy now?

Sure. Yeah, we have an enterprise sales team now that sits at the corporate level, which tracks all of our opportunities across kind of our top 35 customers, which represent the largest portion of our business. We've looked at all of those customers. We've tracked our product line placements within each one of those customers and have developed very detailed plans, specific customer by customer to then go forth and kind of penetrate those accounts in greater volume with also more product line coverage. So that's the high level kind of sales strategy that's somewhat different than what we had done historically. In terms of portions of the markets that we're interested in, we're going to color in the lines a little bit more at Capital Markets Day, so we hope to see you in November at Capital Markets Day. But we've talked about, for example, advanced packaging. That's an area where historically the company has not played in a significant way. We've always been more front end of line focused in the fab. As you know, advanced packaging is growing incredibly quickly. There are some portions of that market that are not as attractive to us, but there are also some portions of that market that are attractive to us. We have about $100 million runway, plus or minus, in that portion of the market today. That's an area that we would like to see our business grow more quickly, as well as have more product placement across categories in that portion of the market. So we'll color in more of the lines at Capital Markets Day, but an enterprise sales strategy, customer-by-customer plan across all product lines, not just a few product lines, deep customer engagements from an R&D perspective, more than 50 projects in flight, and then, of course, some attractive SAMs that are growing quickly, example of being advanced packaging that we're looking to penetrate a little bit more deeply in the future. And with that, maybe I'll end it there, and we can color in more of those lines at Capital Markets Day. Thanks, Jim. Thank you.

Thank you. Our next question will come from Charles Shi with Needham. Your line is open.

Thanks for taking my question, Dave and Asuki. Maybe the first question, by now, I mean, a lot of your customers, customers, or maybe customers, fab customers, are signing LTAs, etc., securing pricing with the customers, their customers, but wondering from a materials perspective, from your perspective, any opportunity for you, for your industry to really think about, maybe you should sign LTA as well, And maybe you should have discussed pricing with those customers and maybe capture what's the fair value for companies like Integra. Thank you.

Thanks, Charles. We do have some supply agreements with our customers. I would say we've been approached more recently to engage in more supply agreements, given the current demand environment. And that's an area that we're certainly looking at very closely, not only from a pricing perspective, but just from a supply perspective. You know, our number one business priority at this stage is to make sure that we can support our customers through this period of accelerating demand. We will ensure that we are appropriately compensated for the value, capacity, and technology that we provide. But our number one priority right now is making sure that we can unlock the manufacturing network that I've spoken so much about and then be able to get that fixed cost absorption, get that volume, and provide the products that our customers desperately need as they engage in their ramps. You know, as I mentioned, we're currently tracking more than 50 engineering projects with customers. These are long-term engagements. There's more than 20 advanced fabs that are being built. And so while our guidance today doesn't contemplate material pricing, we are confident that we will be compensated for the value that we bring. Did you have a follow up, Charles?

Yes. Thanks, Dave, for the call on pricing on LTA and other stuff. I want to ask you a product question. I know, I mean, from time to time, asking a question about the single product is kind of tough but for what it's worth MOLLE has been a focal point in a lot of the investor discussion for whatever it's worth again but we've been hearing from some of the equipment companies that at least there's a third equipment company entering the MOLLE deposition at least in the memory space I want to get your thoughts on overall Mali growth, what you're seeing today, going to next year, and more importantly, looks like now it's three OEM equipment companies in the race.

Are you agnostic relative to the puts and takes of the market share among those three? yeah thanks Charles um but Molly we we haven't we we've have not seen um in the wild the uh the third entrant in a meaningful way as of yet um it's largely a two-horse race uh as we see it right now obviously we're we're we're staying close to this market um you know Molly is up significantly on a year-over-year basis. I don't have the exact number in front of me for second quarter, but I think the number was more than 20 percent on a year-over-year basis up in the second quarter. Memory volumes are starting, and I'm referring to NAND, are starting to grow to kind of the high 200s or the 300-plus layer count, which is what's driving that need for MOLLE. We believe we are very well positioned there. MOLLE is a unique and a novel chemistry, and it's a new chemistry for the memory market. It's a chemistry where you not only have to deliver a delivery cabinet that has very stable pressure with a molecule that is incredibly aggressive from a process piping perspective, But you have to sublimate a solid into a gas and deliver it at pressure and at temperature to get the right performance out of the memory process. So we're very good with our position. We think overall it probably doubles for us on a year-over-year basis, 26 versus 25. and we're happy with the performance and the hard work the team's doing. Thanks, Charles.

Thank you. Our next question comes from John Roberts with Mizuho. Your line is open.

Thank you. Maybe you could back up a little bit and tell us where you are overall in your footprint optimization program. You took a couple actions in the quarter, but put that in perspective for us in terms of what's to come.

Sure. Let me maybe broaden it out. and talk a little bit about, you know, what are we trying to drive overall for manufacturing and operations? You know, we have network optimization, which is the rationalization that you reference. We have centralizing procurement, which is driving, you know, more leverage throughout our total procurement supply chain. We have, you know, maniacal focus on driving yield, reducing scrap, improving throughput through those activities. And then, of course, productivity and productivity is measured across both people as well as machines and tooling. And so, those are kind of the four very high-level work streams that we have been working on now for almost a year, coming up on a year. We're making good progress across all of those. All of those have meaningful potential to expand gross margin or expand profitability while driving reduced future capital investment. So increasing units, driving increased profitability by using the same kind of fixed footprint. So those are the big efforts. In terms of additional rationalization, you know, demand remains strong. We mentioned that demand increased materially in the middle of the first quarter and that we were taking a little bit of a pause on rationalization until we determined exactly where that demand signal settled. Demand increased again in the second quarter. And so I'll kind of play back the commentary from the first quarter that, you You know, we're going to kind of carefully evaluate right now where this demand signal settles, because right now the demand profile is continuing to increase from a level that we thought was already elevated in Q1. So no additional plans at this time for incremental network optimization. We still have roughly 35 manufacturing facilities. We will utilize them all to the fullest extent, and then to the extent that we see opportunities in the future, we'll come back and update you at that time. Did you have a follow-up?

Yeah, and then as the balance sheet continues to improve, how are you thinking about bolt-on M&A? There's still a fair amount of white space across your customers' needs.

Yeah, Suki, feel free to chime in on this if you'd like.

Sure. I mean, our immediate near-term focus really is on reducing our leverage. We have a clear path, right? I mean, so as we mentioned in our prepared remarks, we will get to under three times net leverage by the end of this year. In fact, we were actually, in the month of July, we repaid another $25 million of debt. So that still remains our top priority. But overall, look, I mean, the way we look at investments here is relative to our cost of capital. We'll look at internal investments and the return we get from those type of investments. and then we look at CapEx-related investments, and then finally external M&A. Each one of them has different risk profiles to it, but we'll be looking at each one of these areas with the view of actually getting the right type of return for each of the investments.

And if I could just build on something that I'm incredibly excited about, the rate and pace of deleveraging is happening significantly faster than I expected. I never anticipated that I could sit here on this call today, here in August, and be able to tell you that we expect to end the year with a net leverage ratio that starts with a two. That was an expectation that I did not have starting this year. And so, you know, the team has done a great job driving expansion and gross margin. They've taken that gross margin all the way down to net income and even better they've taken it all the way down through free cash flow through a lot of the work that's been done on the working capital side and so i expect that that great work to continue the reward for for good work is even more work and we're going to work very very hard in the second half of this year to continue to drive free cash flow to reduce uh continue to reduce our leverage and then as we do that it opens up a lot of opportunities as suki mentioned thank you Thank you.

Our next question comes from Mike Harrison with Seaport Global. Your line is open.

Hi, good morning. One of your competitors today suggested that they think they're seeing some share gains in CMP slurries and cleans. I was hoping that you could talk a little bit about how you're seeing the competitive environment within CMP and whether you think you're encountering any share shift one way or the other?

We feel good about our C&P business. We've got nice growth rates in C&P. We actually think that we have some very market-leading growth rates in pads. We think we're successfully growing, expanding, and defending plans of records and slurries. And so when you look at our CMP business overall, we're quite pleased with that trajectory, including some of the inroads into advanced packaging that, you know, that weren't in place a year ago. So, you know, overall, we feel good about our CMP business. And as we mentioned, you know, MS is a business that's accelerating as we go through the course of this year, expecting more than 10% growth in the third quarter, implying more than 10% of growth again in the fourth quarter. And so very happy with the MS business overall, and then specifically with the C&P business. Did you have a follow-up?

Yeah, my follow-up is specific to the molybdenum business. You talked a little bit about that, the growth that you're seeing there, But I'm curious, you've talked in the past about the need to optimize the CMP solution as well as selective edge and maybe some of the filtration components around that. Are you seeing that customers are adopting that full optimized suite from Integris, or are they picking and choosing different suppliers for the different aspects of molybdenum deposition at CMP?

Look, specifically for molybdenum, the majority of the envelope tends to sit around the distribution cabinet that I mentioned and the actual molecule itself. The other portions of that process, as you mentioned, both the etch as well as some of the follow-on processes, those are by and large separate buying centers today.

Thank you. Our next question comes from Chris Parkinson with Wolf Research. Your line is open.

Thank you so much. Just in terms of what you're expecting in the second half on a sequential basis, both 3Q and 4Q, Could you hit on your expectation for mainstream operates into the second half of the year, and then as well as HBM as it pertains to memory, just any color there would be greatly appreciated.

You know, mainstream demand remains mixed. There's memory-related pressure on some of the consumer markets, but that's offset by its strength in some of the AI-related applications like power management and silicon photonics. So we see we see mainstream as improving, but still somewhat mixed because because obviously there's a lot of consumer related markets, mobile being a great example that sit within mainstream and the memory pressure on those markets not to be discounted. We think foundry utilization in the mainstream has improved to probably 80 to 85 percent, depending on exactly on, you know, which which mainstream provider you're looking at. But I do I do agree. I think the direction of travel seems to be modestly higher. So I think our view on it is just that it's slightly improved compared to last quarter, but we still expect it to be tempered and below the trend growth for for 2026. potentially longer uh pending the outcome of memory pricing and availability did you have a follow-up chris uh yeah just a quick one actually just uh can you give a little uh extra framework on the businesses um in life sciences that uh you are now out of in terms of just the optics uh on a segment level if you have been available thank you yeah so life sciences the business we exited, think of it as less than $20 million of annual revenue. Think of it as being more like fluid management type products. So we still have some filtration products for life sciences. That business is still ongoing. Think of this as more fluid management in life sciences. It did have a dilutive margin, both gross margin as well as a significantly dilutive EBITDA margin. And so given, you know, the tremendous growth in semiconductors and management time, effort, and focus, it made sense for us at this time to announce the closing of that business and the wind down of that standalone facility. Thanks, Chris. Chris, thank you so much.

Thank you. Our final question for today comes from Edward Yang with Oppenheimer. Your line is open.

Hi, Dave, and welcome, Suki. Nice quarter. Thanks for the time. On the MS side, it's great to see you guiding for double-digit growth in the second half. But it was a bit below industry MSI in the second quarter, and I just wanted to close a loop on that. Was that just timing? And the segment margin there was also down year over year. Do you expect margins in MS to expand in the second half as well?

Yeah, I'll talk about the growth. And, Suki, maybe you can comment on the margins. Look, for MS, yeah, it grew 5% year over year in the second quarter. You know, MSI probably grew around 7% to 8% in the second quarter, depending on, you know, what numbers you're looking at in the market and making sure that you account for the wafer shippers versus actual wafer starts. We think we were in line, given some of the year-over-year comps related to Liberation Day last year and some of the pull forward that we saw in that business. So I would say that we grew in line with market for the MS business for second quarter. And we think, based on current visibility, that we will most likely grow above market in the third quarter and the fourth quarter as well. Suki, do you want to comment on the margins?

Yeah, look, on the margin side, you know, as manufacturing here becomes really complex and customers continue to migrate to advanced nodes, the number of opportunities that the company has is continuing to expand. And we're seeing that reflected in the growing set of SAM opportunities across the portfolio. So, as you would expect, you know, we are investing accordingly in areas where we see significant long-term growth in the MS division. and that includes capabilities such as MOLI precursors and other high-value opportunities. So operating leverage we're generating right now is being intentionally, you know, we are seeing intentional reinvestment to support future growth and that you should see that earnings power start to increase over time.

Edward, did you have a follow-up? Yeah, I do. So Dave, coming back to your comments around advanced packaging and understand you'll provide more detail at Analyst Day, but it didn't sound like you're interested in acquiring a bigger footprint there. So I was just wondering how quickly you could scale that business organically from that $100 million revenue run rate.

Well, we never said that we won't comment on acquisitions either way, but we never said we weren't interested in looking at some businesses in that space. I think when we look at the advanced packaging market, though, it's still being defined. So even today, you still have changes in materials. You have changes in packaging sizes. You have changes in, you know, like real real substantive technical changes with respect to you know uh thermal expansions conductivity uh attach so so there's there's a lot that's still to be defined in the space and it's a very rapidly growing space you know five years ago it was very low single digits as of percentage of CapEx in the industry. And this year, it may be approaching double digits or approaching 10% in terms of percentage of total industry CapEx. So we think there are a lot of growing SAMs. We think there are a lot of SAMs that can support the type of differentiated products that we can provide. And those are the spaces that we want to target. And we think there's more than enough opportunity to target those spaces and still have the right to win without necessarily facing the incumbent advantage. So stay tuned for more during Capital Markets Day and appreciate the question, Edward. Thank you.

Thank you. This concludes today's Integris second quarter 2026 earnings conference call. Please disconnect your line at this time and have a wonderful day.