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Entegris' CEO Discusses Q2 2011 Results - Earnings Call Transcript

On the call today are Gideon Argov, President and CEO; Bertrand Loy, Chief Operating Officer; and Greg Graves, Chief Financial Officer. And Gideon will now begin the call.

Gideon Argov

Thank you, Steve, and good morning. Thanks for joining the call. We delivered another quarter of excellent results. Our performance was highlighted by record sales, earnings and operating cash flow. We achieved an operating margin approaching 21%, and generated $52 million in cash from operations. And we continue to grow share on our core business and make inroads into key emerging adjacent markets. Specifically, sales in the second quarter were $209 million, up 3% from the first quarter. The semiconductor portion grew 1% and accounted for 72% of the second quarter total. Within SEMI, our sales from fab customers grew at a faster rate due to good performance of our filtration and purification products for leading edge semiconductor processes. Production output at many of our customers through much of the quarter remained at relatively high levels. We also grew our sales to OEMs, although demand related to new fab infrastructure projects paused after being very strong in recent quarters as some of these projects have been completed.

Outside of the semiconductor market, we also had good performance. Sales to these markets grew 9% sequentially, and accounted for 28% of our total Q2 sales. This reflected growth in TFT/LCD and other high-tech industrial markets, as well as continued traction in emerging markets such as solar. Looking at our sales by type of product, our mix shifted slightly to the units that's inside as sales of unit-driven products such as our filters and wafer shippers represented 62% of our sales and grew 6% in the quarter. Our CapEx driven sales were 38% of total sales and declined 2% sequentially after growing 17% in Q1. We believe this performance over the past few quarters compares quite favorably against the industry's recent capital spending trends. Across our divisions, the Contamination Control Solutions division, or CCS, had an outstanding quarter with record sales of $137 million for the quarter, and a record operating margin of 33%. We had excellent performance in liquid filters, fluid handling components and gas purification systems used in lithography. CCS continues to fill its product pipeline with a number of new offerings, including flow controllers and consumables for wet etch and clean, and CNP applications.

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