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.
Second quarter sales in our Microenvironments division, or ME, grew 6% to $51 million, a level last achieved in 2007. The growth was driven by demand for shippers including our 300-millimeter wafer shippers which reached a record quarterly sales level. The ME operating margin was 17%. The division continues to move forward in a number of critical initiatives related to advance wafer and radical handling including versions of our new 300-millimeter fruit carriers made of barrier materials, as well as product to support the industry's move to 450-millimeter wafer size and EUV.During the quarter, we improved our manufacturing performance, and we're able to fill a number of orders for the new [indiscernible]. After a very strong 25% sequential growth in the first quarter, sales of our Specialty Materials division declined 6%. Most of the decline reflected lower semiconductor sales for graphic components for etch applications, while the industrial side of this business and demand for sewer products remain solid. Roughly 60% of the Specialty Materials sales are outside the semiconductor market. Operating margin for Specialty Materials was 20% in Q2, ahead of our expectations for this business at these revenue levels. While there were many positives in the quarter, looking ahead, there are some signs of softening in portions of the semiconductor industry. Industry volatility is not new to us. What is different is the strategy and operating model we have put in place over the past 3 years. Our results show that we've accelerated and focused our efforts to take market share by leveraging our strength in controlling contamination in the industry's most challenging manufacturing environments. We have also been bringing that technology to emerging markets, non-SEMI markets that have a growing need for greater contamination growth in their manufacturing processes. But at the same time, we have been extremely careful about adding fixed costs. As a result, we've not only grown faster than many of our peers, but we have delivered much higher operating results and cash flow than anytime in the past cycles. We believe this business model, combined with the diverse product offering in our largely unit-driven portfolio products, is the right recipe to deliver attractive operating performance throughout the cycle. I'll now turn it over to Greg for some additional commentary on the financial and on our outlook for the third quarter. Greg? Read the rest of this transcript for free on seekingalpha.com