Good afternoon, and welcome to the Qnity Business Update Conference and Webcast Call. Please be advised that today's call is being recorded. I will now turn the call over to Nahla Azmy, Vice President of Investor Relations. You may begin.

Thank you. Good afternoon, and thank you for joining Qnity's business update call and a review of our estimated third quarter 2025 results. This morning, DuPont reported its third quarter performance, including the Electronics co-segment results, which do not include our full allocation of corporate costs or pro forma adjustments. Qnity's earnings are not yet final, and our remarks today are based on estimated pro forma results and carved financials. We anticipate releasing our full earnings results mid-November when we file our Form 10-Q, including posting additional supplemental information to the IR section of the Qnity Electronics website. I would like to bring your attention to Slide 2 in our presentation, which notes that we will be discussing forward-looking statements. These statements represent our best view of predictions and expectations for the future, but numerous risks and uncertainties may cause actual results to differ from those provided. Additionally, we will be discussing certain non-GAAP financial measures. The reconciliation of these non-GAAP financial measures to the closest GAAP measure can be found in the appendix of the presentation. As for the agenda, we will start with formal remarks by Qnity's Chief Executive Officer, Jon Kemp; and Chief Financial Officer, Matt Harbaugh. We will then follow with a Q&A session. Now it's my pleasure to turn this over to Jon Kemp. Jon?

Thanks, Nahla. Good afternoon, everyone. Thanks for joining us. It's an honor to speak with you today for the first time as CEO of Qnity following our spin on November 1. This moment marks more than the launch of a new company; it's the beginning of a bold chapter. I want to take a moment to thank DuPont, our Board of Directors and the Qnity team whose dedication, vision, and hard work made the spin and successful launch of our new company possible. Over the past few weeks, Matt and I met with many of you. Thank you for the opportunity to share Qnity's compelling story and for your insights and support as we crossed the finish line for the spin. While the company is new, it's built on more than 50 years of technology and innovation leadership, and our deep and lasting customer relationships continue to be one of our greatest strengths. Over the past few months, I've had countless conversations with customers around the globe from chip fabricators to leading OEMs. And what's clear is that Qnity is seen as a trusted partner with the scale and technical depth and breadth to enable their next-generation technologies. We've worked hard to earn their trust and their confidence, and it's a testament to the impact our teams are making. It reflects the depth of our commitment to delivering the latest technology innovations at an exceptional level of quality, coupled with both speed and reliability. Let's turn to Slide 4. As you can see, we've had a big week. As planned on November 1, we completed the spin and launched Qnity as an independent pure-play electronics company focused on solutions for the semiconductor value chain. On November 3, we started regular way trading on the New York Stock Exchange under the stock ticker Q, and we joined the ranks of the S&P 500. When we spoke to you at Investor Day in September, we told you about our strategic path and operating model to achieve above-market growth and strong profitability. The third quarter results we're sharing today are solid evidence of our ability to stay focused and continue to execute during transformational change while also delivering for our customers and driving consistent financial performance for shareholders. We've delivered six consecutive quarters of sustained strong organic growth. We're continuing to build momentum and invest in the fastest-growing, highest-margin areas with a robust innovation pipeline, a true competitive advantage. And we're making meaningful progress shaping a culture that keeps us focused on what truly matters: our customers, innovation, speed, and our people, empowering us to deliver with purpose and agility at a pace our customers require. With that foundation, let's dive into our third quarter performance, where the results speak to the power of our execution and the value we are creating. We had solid third quarter results driven by AI-related customer demand from advanced nodes, advanced packaging, and thermal management. On a year-over-year basis, net sales were up 11% at about $1.3 billion, with organic growth up 10%. Our results include spin-related timing adjustments on orders contributing to a 3% lift in the quarter. Our estimated adjusted pro forma operating EBITDA was up 6% in the quarter year-over-year, which equates to an estimated 29% margin. These preliminary results reflect the strength of our portfolio and the continuing wins in leading-edge innovation we're delivering to customers, making us their partner of choice with a broad range of offerings and deep application engineering expertise that enable true end-to-end solutions. Based on the strength of our third quarter results, we're raising our 2025 full year net sales guidance to $4.7 billion. We're also reaffirming our estimated adjusted pro forma operating EBITDA of approximately $1.4 billion and margin of roughly 30%. Before I turn things over to Matt, let me cover a few macro trends we're seeing broadly across the industry. The semiconductor market recovery continues to be fueled by the adoption of leading-edge technologies for AI applications, including advanced logic, high-bandwidth memory, advanced packaging, and thermal solutions. We believe customer utilization rates have improved slightly since last quarter, averaging in the high 70% range, led by advanced logic in the high 70s and DRAM in the mid-80s. More recent customer feedback suggests slow improvement in mature logic, although still in the mid-70s. And while NAND commentary has improved, overall utilization has remained steady, also in the mid-70s. MSI wafer start data remains a good indicator for Qnity's demand, given that about 90% of our portfolio is made up of consumable products that are used with every unit produced. We expect MSI to grow mid-single digits this year. We continue to outperform wafer starts driven by our leadership position in next-generation technologies, such as CMP pads, cleans, and slurries; advanced packaging with metallization and substrates; and thermal applications at the chip, package, and device level. With strong company performance and improving semiconductor demand signals, let me turn the call over to Matt to share a more detailed look at our third quarter preliminary results.

Thanks, Jon. Today's preliminary results reflect anticipated recurring stand-alone public company costs, carve-related items, and management adjustments similar to prior quarters disclosed in our Form 10 and the accompanying supplemental information. These reconciliations and bridges will provide a clear view of our underlying performance and the impact of our ongoing transition to a stand-alone public company. In the third quarter, we delivered net sales of $1.3 billion, up 11% year-over-year with 10% organic growth and a 1% benefit from currency. The major drivers fueling this growth were advanced nodes, advanced packaging, and thermal management, including AI-driven applications. In addition, order timing contributed approximately $40 million in net sales from the fourth quarter into the third quarter in advance of our IT systems transition prior to the spin. Sales in the Americas and Asia were very strong for the quarter in both segments. China net sales in the third quarter were 31% and flat versus the third quarter of 2024, in line with normalizing trends. Preliminary adjusted pro forma operating EBITDA for the quarter is estimated to be approximately $370 million, up approximately 6% year-over-year, including a 2% currency headwind. EBITDA margin was approximately 29%. While volume growth was strong, margin expansion was tempered by a net sales mix where interconnect solutions grew faster than semiconductor technologies, but at lower average margins in the mid-20s as a percentage of net sales. Additionally, we made selective growth investments to improve both R&D and supply chain capabilities. Let's shift to our business segments on Slide 6. The Semiconductor Technologies segment posted $692 million in net sales with volume growth of 9% and estimated adjusted pro forma EBITDA margin in the mid-30s. This was led by end market demand strength, as we benefited from content gains in advanced nodes, share gains, and improved customer utilization rates, as Jon mentioned earlier. Our Interconnect Solutions segment delivered higher-than-expected net sales of $583 million with volume growth of 15% and estimated adjusted pro forma EBITDA margin in the mid-20s. This growth was led by strength from AI-driven technology ramps, including advanced packaging, high-layer-count PCBs, and thermal solutions for data centers in addition to growth from other industrial end markets such as aerospace, defense, and automotive. While the broader semiconductor market is still recovering, we saw accelerated growth across several parts of our Interconnect segment, highlighting the strength of our portfolio diversification across the entirety of the semi and advanced electronics value chain. As we look ahead, our fundamentals remain strong. Two-thirds of our portfolio is directly tied to semiconductors, including chip fabrication, advanced packaging, and thermal management. About half of our net sales are driven by chip fabrication, where we are already a key player, especially in areas like CMP pads, cleans, and slurries as well as lithography materials. These areas are critical enablers of AI, high-performance computing, and advanced connectivity, and they will continue to fuel our growth. To ensure our results are transparent and comparable, we will provide detailed reconciliations between our results from the third quarter as a business segment within DuPont, bridging to our pro forma adjusted operating EBITDA for Qnity at the time of our 10-Q filing in a few weeks. Now let's turn to the fourth quarter and our full year guidance. While our third quarter net sales were exceptionally strong, it's important to remember that approximately $40 million of the third quarter strength was accelerated due to IT-related order timing ahead of the spin. Considering this timing effect, our organic growth rate for the third quarter was closer to 7%. Moving forward to Slide 7. On a full year 2025 basis, we are guiding to approximately 9% net sales growth. This outlook reflects our confidence in continued electronics market recovery and our strong execution, but also incorporates prudent normalization, as the temporary third quarter timing shift will not repeat. As Jon highlighted earlier, today, we are updating our full year guidance to $4.7 billion in net sales and reaffirming the estimated $1.4 billion in adjusted pro forma operating EBITDA, representing 9% top-line growth, consistent with above-market growth and an estimated 10% EBITDA growth year-over-year. Adjusted EBITDA margin as a percentage of net sales outlook remains at approximately 30% with continued momentum expected from strong top-line growth, mix improvements, and productivity initiatives. As I wrap up, I'll leave you with this: As an independent company, Qnity is well positioned for growth. We have a resilient business model, a strong balance sheet, and a clear strategy for value creation. With that, let me turn it back over to Jon for his final thoughts before we begin the Q&A.

Thank you, Matt. We're proud of the strong third quarter results we've delivered, thanks to the dedication of our teams and the clarity of our strategy. Over the past few months, I've had many energizing conversations, and I want to take a moment to share why I'm so confident in Qnity's future. With our leading-edge technology, deep customer relationships, and our global network that provides local-for-local flexibility, we're well positioned to build on this momentum to support our customers' ongoing growth. Leveraging decades of innovation and leadership, you can see on Slide 8, we sit at the heart of the semiconductor value chain. Our portfolio allows us to play a critical role across nearly every stage, including chip fabrication, advanced packaging, PCB builds and assembly, and display solutions. We've built trusted relationships with leading global companies that represent nearly 80% of the market. Our top 10 customers have partnered with us for an average of 35 years, and seven of the ten rely on solutions from both segments, underscoring our reputation as a partner of choice. Turning to Slide 9. Another key strategic advantage underlying our performance is our local-for-local approach. Our manufacturing and R&D facilities are located close to customers, enhancing customer intimacy, strengthening supply chain resiliency, and increasing agility to ensure consistent, stable supply. With this footprint and local engagement model, we offer the best of both worlds, close customer collaboration backed by capabilities at scale. As I wrap up on Slide 10, let me highlight our key priorities moving forward. We'll execute Qnity's strategy to drive continued growth by investing in innovation and partnering with customers. We also plan to further optimize our footprint for both cost and complexity, and we will deploy capital to high-value opportunities. With a foundation built on decades of experience, Qnity's strategic vision and performance will continue to build value for our shareholders, customers, and our team. We look forward to updating you on our progress and engaging with you in the weeks ahead. Operator, we're ready to take questions.

And we'll take our first question from Jim Schneider with Goldman Sachs.

I was wondering if you could maybe comment on the sort of high-performance compute and AI segment of your business? Maybe quantify what that was in the quarter? And then if you were to take that in isolation, how fast do you expect that segment to grow or that business to grow over, say, the next 3 years structurally?

Yes, Jim, thanks. A significant portion of our growth is coming from the AI high-performance segment, which is one of several areas in our portfolio. As we mentioned during our Investor Day, it represents about 15% of the total portfolio. This segment is growing well this year due to a mix of offerings, including advanced nodes in both logic and memory, as well as advanced packaging capabilities and high-layer-count printed circuit boards. There is a great variety of applications driving this growth. As I mentioned, it currently accounts for 15% of the portfolio and is on a strong upward trajectory. We noted that data centers and advanced packaging are growing in the high single digits, and we're seeing slightly better performance this year. We anticipate this strong growth to continue throughout the rest of this year and into the next.

And then maybe if you could help us in terms of framing the business and the seasonality you typically see into a normal Q1. You've given us enough data points in Q4, but I'm just kind of curious how you think about the seasonality specifically in Q1? Normally, what you expect this year? And then maybe any additional help on seasonality as we model out 2026.

Yes. Thanks, Jim. If you go back and you look at kind of the history of the business, there's not a ton of seasonality to it. There's a little bit of seasonality where you start kind of from a low point in the year in Q1 and then you increase sequentially into Q2 and then you have kind of a modest peak in Q3 and then you kind of drop sequentially a bit in the fourth quarter and then into the first quarter and it starts again. But these are not huge fluctuations. It's really driven a little bit more by the Interconnect segment because there's not much seasonality at all in the semiconductor segment.

And I just want to echo this is Matt. I want to mention what I said in my prepared remarks. As you're considering the quarterly flow, please keep in mind the $40 million that came into the third quarter which would typically have appeared in the fourth quarter.

And we'll take our next question from Arun Viswanathan with RBC Capital Markets.

Congrats on a strong quarter as a public company. I guess, first of all, it sounds like your growth was about 7% year-on-year in Q3 ex the one-time event, but your EBITDA growth was in the 6% range year-on-year. Maybe you can just kind of highlight how that EBITDA growth should ultimately get to maybe a higher level than sales growth? I think you were guiding maybe to 6% to 7% sales growth longer term and 7% to 9% EBITDA growth. So should we see a little bit more operating leverage come into the model in future periods?

Well, thanks for your comments around a strong quarter. The way we think about it is we did have higher sales in Interconnect Solutions. Therefore, the margins there are in the mid-20 range, EBITDA that is. And semiconductor was a bit under that. So we had a mix shift that was going on. You'll see in the release the last page, we outlined what the currency effect was on the quarter from a top-line perspective. I encourage you to keep that in mind as well. And then we did make some strategic investments in the business during the quarter to set ourselves up well for future quarters and years.

The only thing I would add is that we remain confident that as we drive additional volume growth, we'll continue to see the operating leverage that we discussed at the Investor Day. I would also mention that the third quarter last year was exceptionally strong. It was actually our best margin quarter since mid-2021.

No, I was just going to make a final comment. I know you didn't really ask about the full year. But I just want to highlight, if you look at our financial estimates that we reaffirmed, we still see good strong underlying profitability in that roughly 30% range EBITDA.

Perfect. And just one follow-up would be on the investment side, you mentioned some organic investments and very strong growth in that 15% AI and advanced HPC area. Do you kind of feel like the capacity there you have is sufficient? Or how do you plan to address kind of future capacity needs if that area continues to grow above expectations?

We've been consistently investing in our portfolio from both research and development and capital perspectives. Currently, R&D accounts for about 7% of net sales while capital expenditures represent around 6% of net sales. This totals about 13% of net sales being reinvested in the business. In the past few years, we’ve increased capacity across all our semiconductor businesses in anticipation of a recovery in the electronics market following the challenges faced by the industry during the pandemic. Our capacity is well positioned to support the ongoing recovery in the electronics market, which is reflected in our reinvestment guidance. We're also focused on collaborating with our customers on exciting node migrations and transitions in the coming years. Typically, we engage in node transitions that are 2 to 3 years away while we ramp up the transitions from investments made in 2023 and early 2024.

And we will take our next question from Melissa Weathers of Deutsche Bank.

Congrats on the official spin-out. I'm sure it's a ton of work. So I guess, I wanted to touch on the cyclical side of things. I really appreciate the utilization numbers that you gave across the different semis end markets. So given those utilization levels, can you give us a preliminary, I don't know, sneak peek? Or I guess, what are your assumptions going into 2026 in terms of revenue growth, wafer starts? Do you think that those utilizations will increase? Just any like sneak peek on 2026 would be helpful.

Yes, thanks, Melissa. I appreciate that. As I mentioned earlier, we're observing wafer starts in the mid-single digits for this year, indicating we're in the early stages of recovery, with much of the strength coming from advanced logic and DRAM. There remains some uncertainty regarding forecasts for next year and the speed of recovery in both mature logic and NAND. We remain encouraged by the improving utilization rates, particularly in mature logic, and are optimistic about a return to higher growth rates in that area as we move into next year. However, it's still early to clearly define what this will look like in terms of quantification. As the market improves, 35% of our portfolio is linked to advanced nodes, which is driving growth. As the recovery strengthens in other market segments, we expect to continue to outperform above the wafer starts.

Got it. And then for my follow-up, I wanted to ask on the advanced nodes side of things. I think in your deck, you called out node transitions at these advanced nodes. And so in the context of like 2-nanometer gate-all-around nodes that are ramping late this year and then all throughout next year, can you help us size the content opportunity that you guys are seeing? I think you also got maybe some share gains on that side of the business. So any way to help us think about like gate-all-around that transistor shift in the foundry logic space as we move into 2026?

We are very enthusiastic about the investments and the speed of transitions in both logic and memory. We are well positioned for future migrations in these areas, whether it's in logic with 2A, 2-nanometer, or 18A transitions, or developments in DRAM. Our continuous investments with customers, particularly in the front end of the fab involving our CMP portfolio, including pads, cleans, and slurries, as well as advanced packaging materials like metallization substrates and thermal materials, have been fruitful. We've already experienced benefits from some of these developments this year, which contributed to our reported performance. As more wafer starts come into these advanced nodes, it will generate additional opportunities for us, especially in CMP. With gate-all-around, the increasing process complexity heightens the demand for smoother wafer surfaces to manage device architecture effectively, which leads to more CMP steps and greater chances for our CMP solutions. On the memory side, there are also similar CMP opportunities, along with high-bandwidth memory transitions that foster prospects for advanced packaging, where we have noted significant growth in metallization substrates and thermal materials, particularly from share gains this year.

And we'll take our next question from Bhavesh Lodaya with BMO.

Congrats to the full team here. So as a stand-alone company, I presume it's now easier for you to review your business mix and operations here, makes big nimble changes. You mentioned footprint optimization. Could you share early thoughts on what that could look like? Does it also include potentially divesting some platforms, reinvesting in something else, like changing your mix? Any color there?

Yes. I'll start by discussing our portfolio and then let Matt cover the cost aspects. We're really pleased with our portfolio, which continues to perform well. We're committed to seeking opportunities for inorganic growth in specific areas like thermal management and advanced packaging, where adding new technologies can create strategic benefits. We have established criteria for evaluating these opportunities and aim to maintain a consistent performance rhythm. Looking ahead to next year, we will assess available opportunities to further strengthen our portfolio. Throughout our management of the portfolio, we evaluate it based on return on invested capital and potential returns, making adjustments as necessary, including some product line trimming we've done in the past.

Yes. Thank you, Jon. I think the easiest way for me to answer your question is kind of to do a walk down the P&L. Obviously, you know our viewpoint on net sales. We've talked about that a lot of late. So let's talk about our cost of goods sold. Our team has done an excellent job in taking cost out over time, and we expect that to continue. So we'll see some improvement there. And we'll continue to operate the company and focus on operational excellence and flexibility. Where our opportunities are probably greater would be in the SG&A category, and we're going to look at our footprint and see how it aligns with where the business is going to unfold in the coming years. We have a big effort to reduce our complexity in IT systems, and we're also looking at legal entities and warehouses as well. So a number of opportunities there. As Jon said earlier on the call, we're going to look to optimize our R&D spend, but keep it at that 7% level. So that should give you some color around how we think about it. We haven't quantified the cost takeout, but we certainly know that, that's a real important area to focus on in the coming weeks, months, and years.

Appreciate that. And then as a follow-up, Interconnect Solutions continues to grow at double digits here. Can you touch on how advanced packaging and thermal solutions is growing within that? And if possible, any early look into 2026 growth rates?

Yes. So obviously, the strength of the Interconnect segment is being driven by advanced packaging and thermal. I would say we saw growth accelerate off of the first half of the year in both of those areas nicely, as we saw additional opportunities to scale up some of the wins and some incremental capacity become available. We saw some of those growth rates accelerate into the third quarter. As we get additional capacity available for these different technologies, we would expect to be well positioned to continue to participate in the growth as we see more wafer starts and more volumes come to these technologies.

And we will take our next question from John Roberts with Mizuho Securities.

Your trend line growth targets are for semiconductors to grow faster than the Interconnect segment. How do we think about that being flipped here in the recent results?

Yes, it's a great question. The Interconnect segment has had significant growth opportunities due to increases in advanced packaging and thermal technologies, while the mature node portion of the semiconductor business has faced challenges. This has led to an unusual shift in growth rates, with the Interconnect business experiencing accelerated growth, although we have still shown strong growth from our semiconductor portfolio. As the semiconductor market begins to recover more broadly, we expect to see further growth from our full range of technologies and customers, rather than primarily from the advanced nodes as we are currently experiencing.

And then how will we get additional financials like the full balance sheet, full income statement? I'm not sure what your requirements are to file here.

Yes. As Nahla mentioned in the prepared remarks, we will be filing in a couple of weeks, and we'll give you as much color as we can give you. So stay tuned.

And we will take our next question from Chris Parkinson with Wolfe Research.

Jon, before the spin was announced, there were several false starts regarding the recovery and various perspectives on lagging edge memory, particularly with HBM seeing significant improvements. It seems that things are changing quite positively, especially with a lot of customer feedback from last week. Is there anything you can highlight that feels different about the sustainability of this recovery and how we should approach building more confidence for 2026 and possibly even 2027? What stands out now compared to six, twelve, or eighteen months ago?

Yes, Chris, there are a couple of points I would highlight. First, the industry seems to be in a good place regarding inventory levels, which have cleared significantly. Although this process took longer than anticipated, we are now in a strong position. Additionally, it's important to mention that for the first time in a while, we are seeing mature logic utilization rates starting to improve. We have noticed a slight upward trend in these rates across our customer base. While there is still a considerable opportunity for further improvement, this is the first indication we’ve had of progress. These two factors give me more confidence moving forward. However, I want to emphasize that many aspects will also depend on broader macroeconomic conditions, particularly since many of the chips are being allocated to automotive and other sectors within the industrial economy.

Got it. As a quick follow-up, you've had numerous conversations with both the buy and sell sides over the last several months. What are the one or two most consistent pieces of feedback you've received? Is it simply about delivering results, or is it related to capital allocation, M&A, or a greater emphasis on products and clearly communicating concepts and processes to the market? What are the key points that stand out to you that indicate what you need to prioritize as the CEO of an independent company?

Thank you, Chris. I believe there are two key points to highlight. Firstly, our discussions over the past few weeks have been fantastic. I’ve truly enjoyed getting to know many of you in the investor community and sharing the story of Qnity. The feedback we have received consistently emphasizes the need for steady and reliable results, setting a guidance we can not only meet but exceed. This is our primary focus as a management team. We are committed to delivering results that enhance customer partnerships and ensure business continuity, which I find particularly gratifying. Despite the additional efforts involved with the spin process, we have successfully fulfilled customer orders and capitalized on opportunities for technology-driven growth, maintaining strong win rates in our innovation portfolio. Thus, achieving consistent performance is our top priority. The second point of feedback, as people become more familiar with our portfolio, is the way our two segments complement each other, which has surprised many. The semi-segment is well understood, but as awareness about the Interconnect segment grows, especially regarding advanced packaging and thermal solutions, people are beginning to appreciate the synergy in our customer base and the convergence of our technology roadmaps. The strength of our integrated solutions and portfolio has caught many off guard, and we have received numerous inquiries about how we are utilizing these technologies across the market to generate new growth opportunities.

And we will take our final question from Alex Yefremov with KeyBanc Capital Markets.

Congrats. I wanted to ask you about advanced packaging. We talked about node transitions in semis. Is there a similar dynamic where your customers are adopting new technologies where you can gain content and accelerate growth even more perhaps over the next 12 to 18 months?

Yes, I believe much of the growth will come from ongoing investments in our existing technologies. We will continue to see advancements in CoWos or similar packaging on the logic side, as well as migrations from HBM3 to HBM3E and HBM4. These transitions are expected to continue over the next 12 to 18 months as we expand our capacity within these established architectures. Additionally, we are excited about other incremental opportunities, such as hybrid bonding and potentially panel-level packaging. While it may be too early to determine the exact timing of these advancements, we are looking forward to collaborating with our customers on their technology roadmaps involving these emerging packaging technologies.

And then I think you gave explanation why sales grew faster than EBITDA this quarter. Is this the type of picture we should expect for the next few quarters or should it revert to sort of more typical EBITDA growth faster than sales over the next quarter or two?

I believe this situation is somewhat unusual. The currency fluctuations and the mix dynamics, which Matt mentioned earlier, represent a relatively unique scenario. I do not anticipate these conditions to continue in a structural way. Therefore, I expect a return to our usual performance patterns that we discussed at Investor Day moving forward.

And we have reached our allotted time for questions. This concludes the call and webcast. You may disconnect your line at this time, and have a wonderful day.