Materion Corporation (MTRN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to today's conference call and webcast with Materion Corporation's management team to discuss today's acquisition announcement. [Operator Instructions] I would now like to turn the call over to Andrew Vento, Manager, Corporate Development and Investor Relations. Mr. Vento, please go ahead.

Good morning, and thank you, everyone, for joining us to discuss our planned acquisition of H.C. Starck Solutions' Electronic Materials portfolio. Before we begin our remarks this morning, I'd like to point out that we posted materials on the company's website that we will reference as a part of today's discussion, including a press release and an accompanying presentation to this webcast. You can also access the materials through the download feature on this call's webcast link. With me today are Jugal Vijayvargiya, President and Chief Executive Officer; and Shelly Chadwick, Vice President and Chief Financial Officer. Jugal will provide an overview of the transaction and the strategic rationale, while Shelly will review financial details. And then we will open the call for questions for Jugal and Shelly. As a reminder, any forward-looking statements made in this presentation, including those referencing our outlook, whether during the presentation or question-and-answer portion are based on current expectations. The company's actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. Those factors are listed in our most recent 10-K filing. Additionally, some of our comments may reference certain non-GAAP financial metrics, such as adjusted earnings before interest, taxes, depreciation and amortization. Definitions of non-GAAP measures and reconciliations to reported results are contained in our most recent earnings release. And now I'll turn the call over to Jugal for his comments.

Thanks, Andrew. And welcome, everyone. We are really excited to be with you this morning to share details about our acquisition of H.C. Starck Solutions' industry-leading premium Electronic Materials business and talk about how it is accelerating the transformation journey we have been on. But before I begin, I want to take the opportunity to thank all the team members who contributed to this transaction to date as well as welcome the 140 employees who will join the Materion family upon close. Thank you for your continued commitment, and we look forward to combining forces to create even greater value for our customers. HCS Electronic Materials is a leading provider of high-purity tantalum thin film materials used in the semiconductor industry as well as leading-edge applications for the industrial and aerospace and defense markets. With a state-of-the-art center of excellence with highly skilled and technical talent, HCS Electronic Materials serves all top semiconductor manufacturers globally. With this end market comprising 80% of their sales, there is no market more compelling to us given the massive growth of chip demand and usage driven by new technologies we're all exposed to every day. The proliferation of smart devices, high-speed connectivity, autonomous driving, artificial intelligence and the cloud all drive the need for greater computing power. And semiconductors are at the heart of each of these global megatrends. We expect the demand for semiconductor applications to be sustainable and long lasting. Our expertise with gold, platinum, palladium, iridium and other exotic materials will be further enhanced by the addition of tantalum, which serves to meaningfully enhance our portfolio. The more sophisticated the chip, the more content is required. The combination of Materion and HCS Electronic Materials truly is 1 plus 1 equals 3, creating a comprehensive electronic materials portfolio for the semiconductor market. Let me highlight 5 key strategic drivers. One, HCS Electronic Materials increases our access to the high-growth semiconductor market and provides greater alignment to the global megatrends. In addition, the combined portfolio will now contain materials, which are used by every 1 of the top 15 global semiconductor manufacturers. Two, it creates significant end market scale in semiconductor and substantially increases our total addressable market in this space while also strengthening established positions in industrial and aerospace and defense markets. Three, it serves to diversify our portfolio and expand our reach across several dimensions, including better geographic balance and adding 2 advanced materials, tantalum and niobium, and providing access to new leading-edge applications. Four, HCS Electronic Materials Massachusetts-based facility is a center of excellence with proprietary technology capabilities, delivering differentiator solutions driven by key talent that will be joining Materion. And five, HCS Electronic Materials will serve to meaningfully enhance Materion's overall financial position. I know that many of you listening today are familiar with our company. But for those of you who are new to Materion, I'd like to take just a minute to bring you up to speed on who we are and the transformation we've been undertaking. With this, you will see how HCS Electronic Materials is an important next step in our journey. We have developed a diversified portfolio of specialty products with leading market positions across a number of attractive end markets. Our largest end market is the growing semiconductor market, followed next by industrial and aerospace and defense. With roughly $800 million in value-added sales and solid 15% plus EBITDA margins, we are well positioned as an integrated producer of high-performance advanced materials in attractive end markets experiencing exciting secular growth trends. We pride ourselves on the long-term relationships we build with our customers. We are not just a supplier but a true value-added partner of choice, working to understand and solve our customers' most complex technical challenges and creating value alongside them. We do this by applying our deep expertise and core capabilities in material science, compositional synthesis and applications and process know-how. This results in the development of advanced materials with differentiator performance characteristics that support a wide array of applications. With our advanced materials know-how and superior process technology, we are delivering comprehensive solutions aligned with the megatrends driving global growth. We have been on a journey to transform a traditional mining and metals producer, largely focused on our beryllium heritage into a leading advanced material solutions provider. Over time, we have taken steps to optimize our portfolio with high value-add, complementary products with advanced material characteristics that are critical to our customers' next-generation products and technologies. Few years back, we defined our One Materion global growth strategy, focused on driving profitable growth. That strategy focused on 5 key pillars of commercial excellence, innovation, digital, operational excellence and acquisitions. It is imperative that we execute on each of these fronts to continue and grow as our customers' partner of choice while driving value for all of our stakeholders. We successfully launched and continue to execute our One Materion profitable growth strategy. We have prioritized investment in R&D to drive innovation and deliver high-performing products and solutions to our customers, resulting in the strongest organic pipeline we've had in the history of our company. We have been thoughtful and clear eyed about our inorganic growth framework, seeking out bolt-on opportunities offering complementary products, technologies and geographies, diverse and attractive high-growth markets, differentiated product portfolios and high-quality talent. Our acquisition of Optics Balzers, which we closed about a year ago, is a great example of how we have made a strategic complementary acquisition to advance our transformation. And where we are going is clear. We are accelerating our global leadership as an advanced material solutions provider, well aligned with the evolving growth megatrends. And the acquisition of HCS Electronic Materials is the right next step on our journey. So coming back to this exciting acquisition we've announced today. HCS Electronic Materials is a highly attractive addition that aligns perfectly with our strategy and one which we believe will drive significant value creation. This addition really delivers against all of our strategic objectives, providing industry-leading solutions, critical scale, deep process technology knowledge, a compelling growth and margin profile and greater access to higher value opportunities. Materion and HCS Electronic materials play a critical role in the chip fabrication process. Both are involved in producing leading-edge physical vapor deposition or PVD sputtering targets, which are used in thin film deposition. Through this process, fine uniform layers of material are applied to the wafer, and this process is repeated dozens of times. To bring this to life, HCS Electronic Materials is currently on their ninth generation of purity and texture control improvements, which are enabling the evolution of shrinking node architectures for advanced semiconductor applications. As you think about the different type of semiconductors, beginning with RF devices and moving up the spectrum to memory and logic, it's important to mention that these more sophisticated chips require more content. As I mentioned, the combination of Materion and HCS Electronic Materials truly is 1 plus 1 equals 3. Combined, we will have a comprehensive electronic materials portfolio for the semiconductor market. One of the things we find extremely compelling is the deep technical expertise of the 140 employees who will be joining the Materion team as well as the proprietary process technology capabilities that have led to HCS Electronic Materials industry leadership. We are excited about the value they will bring to our company. Where we're headed is the most exciting part of our journey. We are continuing to invest in growth and accelerate our leadership as an advanced materials company, and today's announcement, the acquisition of HCS Electronic Materials, takes another step change in our transformation. Now let me turn the call over to Shelly to discuss the financial aspects of the deal.

Thanks, Jugal, and good morning, everyone. Thank you for joining us today to hear more about this exciting announcement. First, let me share some of the transaction details with you. The purchase price of $380 million reflects an expected adjusted EBITDA multiple of 13x or less than 10x when realizing full run rate synergies. The addition of HCS Electronic Materials will be immediately accretive to both our EBITDA margin and EPS. We expect the transaction will close sometime in the fourth quarter, subject to customary closing conditions. Upon close, this business will be part of our Advanced Materials segment. The combination is expected to add annualized 2021 sales of approximately $145 million, increasing our value-added sales by 19% to more than $900 million on a pro forma basis. In addition, pro forma EBITDA will top $143 million, representing an increase of more than 25%. With strong EBITDA margins of 20%, the addition delivers an immediate 100 basis point improvement to our pro forma profitability. From a synergy perspective, we see an opportunity to meaningfully enhance 2 already strong businesses. The biggest factor at play here is the broad access to all 15 top semiconductor manufacturers. Given the strength of the combined portfolio and the strong access, we see an opportunity for cross-selling in both directions. In addition, we will apply the full reach and capabilities of the Materion sales force to our newly expanded product line and leverage our R&D organization to identify new applications. Combined with purchasing synergies and our operational excellence discipline, we expect stronger sales and margins with the combination of these organizations. We expect to realize $4 million of run rate synergies by year 3 and $10 million by year 5. The great news is that the addition of HCS Electronic Materials is compelling purely on a strategic basis, but the combination also provides a strong accelerant to growth and meaningfully enhanced margins. Now let me talk a little bit about the financing. The transaction will be funded by a well-balanced combination of a new $300 million 5-year term loan and borrowing from our $375 million revolver, of which we'll be using $80 million for this transaction. We expect to have additional availability under that revolver of about $200 million at close, providing strong liquidity when combined with our global cash balances. The new term loan is an attractive debt instrument with an appealing cost of capital and a simple structure aligned with the terms of our existing revolver. We expect pro forma leverage at closing to be approximately 2.9x, which is within our stated target range of 1.5x to 3x. We are comfortable with this leverage level for a number of reasons as the acquisition fits within our strategic transformation framework and quite frankly, checked all the boxes. And we have strong free cash flow generation that will afford us the opportunity to not only pay down debt at an appropriate pace, but also enable us to fund our ongoing growth agenda. I'm pleased that we're able to execute and comfortably finance such a strategically important transaction in a compelling and attractive manner. Let me close by saying that this is an exciting transaction that meaningfully accelerates our strategy to become a global high-performing advanced materials solutions provider, serving diverse and attractive markets that are aligned with growth megatrends. We are building a robust pipeline with investments in R&D as we focus on developing innovative solutions for a growing set of customers. We are leveraging our strong cash generation and deploying it in a disciplined and thoughtful manner toward profitable growth opportunities. And finally, we are part of an energized management team focused on executing our strategy and creating value for all of our stakeholders. This concludes our prepared remarks. And with that, we'd be happy to take your questions. Operator?

[Operator Instructions] Our first question is coming from the line of Marco Rodriguez with Stonegate.

Can you hear me?

Marco, yes, we can.

Okay. Good. Well, sorry about that. Wondering if maybe you can talk a little bit about how this acquisition kind of came about.

Well, I can talk to that. I think let me just talk about our strategic direction. We've talked about how we got a road map of where we want to take the company. And I think this just fits right down the fairway of that road map. We want our company to be truly an advanced materials company serving the most dynamic high-growth markets. This acquisition, I think, fits exactly that arena, serving the semiconductor market the aerospace and defense market, the industrial market. We actually -- with this company, we have a long history of working with them through commercial relationships so we know them quite well. And as the opportunity came up, we looked at it and really thought that this presented some great value for us and really helps us to create a sort of a global leader in this semiconductor space. So I think this is exactly in line, Marco, with the type of things that we've been talking about, and I think the direction that we've been outlining for the company.

Great. Very helpful. And can you maybe talk a little bit about HCS' historical growth rates and margins? And maybe you can put any sort of color around seasonality in their financials?

Yes. When you look at the -- I think the semiconductor market in general, I mean, as you know, the market has done quite well over the last couple of years and 2/3 of their business is roughly in that arena, and then you've got industrial and aerospace and defense. I mean some parts of the businesses clearly have taken a hit on the -- from the pandemic, but other parts of the business, I think, have done really well. In general, their business has performed above market growth, which we are really excited about because I think that gives us the confidence in the track record of what they've been able to deliver. I think from a seasonality standpoint, what's really important, I think, as we go forward, particularly in the semiconductor side, is the idea of seasonality that used to exist, I would say, a few years back, it seems to be going away. I mean, almost -- just because of the number of high-growth areas, megatrend-related areas that the semiconductor side is serving. It's no longer just the handsets and no longer just the consumer electronics. Semiconductors are everywhere, whether it's automobiles, whether it's aerospace, whether it's defense, industrial, so the applications for semiconductor, I think, are going across various markets. And as a result of that, I think the seasonality is not as significant as perhaps it may have been a onetime in the overall semiconductor space. So we're quite excited about, I think, what they've done historically, and we think that's a great launch pad for where the business will go.

And maybe just to jump in on profitability. The profitability has been very strong and attractive. We've seen some improvement in the last couple of years as semiconductor has outgrown the other markets. But it's been a really strong performing business and one that's going to be accretive to our margins. So we're excited about that.

Got it. And then in terms of the approval process, I think I do see some mention of some regulatory approvals are necessary. Maybe you can discuss that. And then if maybe you're expecting a full quarter and Q4 results when this is expected to propose?

Well, I think our expectation is that it will close sometime this year, so in Q4. I mean full quarter would have to mean that it would close by the -- really, by the end of this month, in 2 weeks. So I could probably say that, that it's probably safe to assume that it may not happen in that quick of a time frame. But it's standard regulatory approvals. We -- from our perspective, we don't really see any significant issues with that. We're operating in a segment that I think has many suppliers out there, I think, has a lot of great competition out there. So we don't really see any issues with that, and we expect this to be a fourth quarter -- sometime in the fourth quarter close.

Got it. And then just last quick question for me. Just kind of a higher level, trying to understand the HCS position. Are there any specific end market applications or maybe a market share position that they have in a particular application or applications that are the primary drivers of their performance? Or is this more of a, I guess, a leverage play to the growth in the semiconductors in general?

No, I think they have a really a leading position in being able to offer tantalum solutions into the semiconductor market. Tantalum is an extremely, extremely critical material in the semiconductor space. It is the diffusion barrier between copper and silicon when it comes to especially the new higher-level chips, whether it's the logic processors or the high-level memory chips. I mean we all know data is king these days. And whether it's data processing, data storage, data and analytics, data is king. And so for that, more and more chips of the higher complexity, so higher nodes, which means at the end of the day, more copper layers, which then means more tantalum layers are going to be required. And that's really the fundamental growth. So I think this company and this portfolio is not only benefiting, of course, from the semiconductor market growth, but I think there's a great opportunity for content increase. And that's what we like about this. I mean, we're focused a lot on making sure that our business is really geared towards those high-growth segments. Our businesses today on all 3 are our segments as well as, of course, what we're picking up here. So we're really excited, I think, about the portfolio that we're picking up because it's an increasing content portfolio.

Our next question is coming from the line of Samuel McKinney with KeyBanc Capital Markets.

Congratulations on the transaction. It's exciting stuff.

Yes. Thanks, Sam.

Thank you.

If we move into maybe looking at your existing Semis business before this transaction, are you currently running at full capacity in that business and kind of talking about how HCS is going to fit into it? And what's the cadence and outlook of your current order book as we do move into the fourth quarter?

Well, I think right now, the semiconductor market in general continues to perform well, right? We read stories every day about the shortage of semiconductor chips. Car plants, for example, not being able to produce cars because of shortage in semiconductor chips. And so I think in general, the output from semiconductor suppliers or suppliers that are inputting into the semiconductor production process, I think, is probably at an all-time high. So we are engaged very heavily in that. Our facilities are running, I'm going to say, basically around the clock. We need to be able to support the semiconductor market. And we hope that the markets will continue to be that way. When I look at the role that HCS Electronic Materials plays, I think it's very -- I think there's a great opportunity, a great opportunity for them to contribute to this as well, which they've been doing over the last few years and I think they're going to continue to do that. What's really exciting for us, I think, is we see this continuing. We see the semiconductor market in general, continuing to grow over the next 3 to 5 years. And I think both the business that we're picking up as well as our existing business will continue to grow. So we're driving significant operational excellence across the board to be able to create space. We're making investments in equipment to be able to grow and support that growth. So we've got facilities that we feel good about. And I think picking up the Newton facility is an excellent add to that to be able to support the very growing semiconductor market.

And then when we look at this new $300 million term loan that's going to be used to finance the majority of the transaction. I know Shelly, you mentioned it had an appealing cost of capital. Is there any more detail that you can give us around that, about the interest rate and what it's going to cost?

Yes. So if you look at today's rates, we'd be just under 3%, which we find quite attractive, and we'll go from there to see how markets play out.

And are you assuming any D&A that you're taking on with this new deal?

Yes. But I think we'll talk about that as we get closer to close. We've got an opening balance sheet to work through, and certainly, there will be amortization. But be able to give you a better guide on that as we get closer to closing.

Okay. And then last one for me. Thank you for the EPS and the EBITDA improvement detail. But when we look at the assumed EPS accretion more specifically, is that taking into account purchase price accounting and synergies? And if not, does that change your assumption?

Yes. So we talked about EBITDA accretion. We did not yet guide to EPS just for the reason you're mentioning because we've got that opening balance sheet work to do. We've got the amortization to assume. So right now, we're just looking at kind of what this does for EBITDA and for margins.

The next question is from the line of Marisa Hernandez with Sidoti.

Congratulations. So a couple of questions from me. On the transaction itself, I noticed that at some point in the presentation, you referred to as a carve-out. So are you taking only a portion of the company? How does that work?

Well, the HCS or H.C. Starck Solutions is a large entity that has various other businesses. And the business that we have taken on is the Electronic Materials business, which is the business that's located in the Newton facility. So that's what we mean by just simply the -- is that, that facility and then the manufacturing processes, the people, et cetera, that are associated with that is what we have signed the acquisition intent for. So that's what we're really quite excited about, and that supports the semiconductor space as well as aerospace and defense and the industrial space.

And the good news is it was really all centralized in that one facility, so it's not as though you're trying to break apart several facilities amongst business. This was a nice clean carve-out.

Exactly.

Perfect. Also the nature of the synergies, can you elaborate a little bit on how you plan to accomplish those? I'm under the impression that it's more on the revenue side than on the cost side. But if you could give some color on that, that would be great.

Yes. Well, I think if I start with kind of the acquisition that we did about a year ago with Optics Balzers, we clearly stated that our objective was to put the 2 entities together, our entity and Optics Balzers together and to be able to grow the business, accelerate our growth, which then, of course, drives better bottom line performance. And I think it's the same situation here. We are wanting to put this business together with our existing businesses in the semiconductor and aerospace and defense and industrial and then drive significant top line growth. So that is what we're focused on. We want to make sure that the R&D investments continue, and we want to make sure that we leverage the sales force to -- the global sales force of the 2 organizations to really grow. We indicated, for example, in semiconductors that now, on a combined basis, we would have a business with all top -- every 1 of the top 15 semiconductor manufacturers. I think that's a great leverage point for us to be able to grow the top line. There are certainly opportunities I think from a cost standpoint, no question. I mean we're not looking at, of course, any type of facility closures and things like that because it's just the one facility that we're picking up, but there's certainly opportunities for us to use our operational excellence standards. We've done that over the last 4 years within Materion and we hope to be able to do that at the facility in Newton. We want to be able to look at what investments we could possibly make to then drive a lower cost structure for the business. And if there's opportunities for us to do that, and then just the general scale of the 2 businesses and being able to take advantage of the buying power between the 2 companies. So those are some cost type of things. But I think what we are really excited about is what we can do on a combined identity basis to drive the top line.

Okay. That's super helpful. Now just to make sure I understand how you're thinking about the potential here. So the expected EBITDA, I think you said, is $29 million in 2021. And then the full amount of synergies you expect in 5 years is $10 million. But that would be on top, just to make sure I understand this, of the growth that could come on a stand-alone basis. Meaning that $29 million, $30 million EBITDA growth from the market itself, those $10 million would be on top. Is that the right way to think about it?

Yes, Marisa, you have that exactly right. So we certainly expect great growth from this business. And then on top of that, we expect to add the synergy amounts and are targeting $10 million by year 5.

Okay. If I can squeeze one more on the business itself. So the EBITDA margin, as you mentioned, is very attractive. And I was wondering, comparing it to your semiconductor division, what makes it structurally higher? If you could comment on that, please?

Well, I think the EBITDA margin that Shelly spoke to for the -- that's at the company level, right? And then what it does for us, I think, at the company level is what it ends up doing. Each of our businesses, as you can imagine, operates at different levels of margin. It's a different maturity level of kind of where we are in terms of driving operational excellence, commercial excellence, et cetera. So it's at different stages. So I don't think we can necessarily compare, I mean, because it would be sort of apples and oranges. We don't report a semiconductor business EBITDA margin, right? We report, I think, at the company level or the EBITDA margin. So I think it's a great opportunity for us to pick up a little bit of EBITDA accretion, as Shelly has pointed out. And our goal is to continue to do the same thing that we've been talking about in every other call, which is drive the entire business to more of a mid-teens type of an EBIT margin. So that goal will continue. We will continue to focus on that. And hopefully, we can keep reporting progress on that every quarter.

Next question comes from the line of Justin Bergner with Gabelli Funds.

Jugal, Shelly, congratulations.

Thanks, Justin.

Thanks, Justin.

A few quick questions. Can you speak to whether or not this was a competitive bidding process?

Yes. I mean, look, we don't get into the specifics, of course, of what the seller may have been doing. We participated in a process. And I'm sure there were probably competitors out there that were involved, but that's something that we're probably not in a position to answer.

Okay. That's fair. The 2.9x leverage, is that based on where you expect things to look trailing 12 months at September 30, or is that based on June 30 trailing 12-month?

Yes, that's more based on June 30. But our EBITDA will grow, so expect that we'll be able to impact that favorably.

Okay. And then in terms of the synergies, I guess you don't want to be too specific right now as to the breakout of revenue and cost synergies. But if there is a large revenue synergy piece, why does that take 5 years for this deal versus sort of the more 3-year time line for Optics Balzers?

Yes. Well, I think when Shelly spoke to the synergies, she mentioned $10 million by year 5. Now as you can imagine, there's probably some step-by-step growth of those synergies. So it's not intended to be -- our communication does not intend to be that it's a step function $10 million in year 5. There will certainly be some synergies both on the cost side and the revenue side that will move forward. And now I will tell you though that in the semiconductor side, it is extremely a lengthy process to be able to develop and qualify with the customers. We know it very well because we serve that market very well today. And so we plan to work with the 2 teams together and make sure that we take full advantage of it and get it as soon as we can on the top line. But yes, it's not intended to be $10 million in year 5, it's $10 million by year 5.

Okay. That makes sense. I thought I also heard $4 million by year 3. So I was assuming the ramp was towards the back end of that time period, correct me if I'm wrong.

Yes, that's correct. So there is a ramp included in there and assumed there. You are correct.

Okay. Got it. And then the last question is, I know that Advanced Materials, you're excited about that business. It is a business that has to kind of go against the headwinds of price pressure and some substitution risk. Is there anything sort of in the acquisition today that sort of speaks to kind of lower price risk or lower substitution risk than what's in your existing Advanced Materials portfolio?

Yes. Well, first, let me just talk about our existing Advanced Materials portfolio. I think when we talk about price pressure and sort of the substitution risk, I mean, that really comes to are we in shorter cycle type of businesses in general, end market-type of businesses. So those being handset type of devices, handheld type of devices and perhaps even laptops or something that could easily switch to a different technology. I think when we talk about this business -- this business, as we talked about -- as I talked about earlier, is based on tantalum and being able to use tantalum for devices that are higher complexity type of devices that are being introduced and are growing significantly. Tantalum is a required material for that. I mean there is not a substitution. You can't substitute tantalum with something else and create that diffusion barrier that tantalum provides between the silicon and the copper. As I indicated earlier, copper usage in semiconductors is increasing, and therefore, tantalum usage in semiconductors is increasing. So I think the material that we're speaking to, there's really not a substitution that can come forward. When you look at even our existing business and you look at whether it's gold or platinum or palladium or any, those are also materials that are used in the semiconductor space. There's really not substitution materials for those. I think when we -- when you're talking about some of the risks, as I said, those risks probably happen more at an end market level in certain end market portfolios. But it's definitely not in our type of materials portfolio, the Advanced Materials portfolio that we have and that we're picking up.

At this time, we've reached the end of our question-and-answer session. I'll now turn the call over to Jugal for closing remarks.

Okay. Thank you. Yes, I think as we've indicated in our prepared remarks and then also in the Q&A, we're really excited about this acquisition. I think this is just right down the fairway for us. When we think about the type of products, the type of technologies, the customers, the geographic expansion that this gives us and the talent that we pick up, the talent that's associated with the number of years, over 20 years of experience in developing tantalum type of products for semiconductors, the talent that we pick up that has a tremendous manufacturing capability, process capability to develop the type of purity products, the type of grain structure products that we are picking up. I mean we are really excited about it because we think it truly is a 1 plus 1 equals 3. And we can't wait to get this closed and have HCS Electronic Materials be part of the Materion family. And run as a single business in support of the growing semiconductor market as well as supporting the industrial and the aerospace and defense market. So, I just want to say that we're quite excited about it and looking forward to sharing more with you as developments happen.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.