MKS Inc. (MKSI) Earnings Call Transcript & Summary

Good morning. Welcome to day 3 of the 24th Annual Needham Growth Conference. My name is Jim Ricchiuti senior equity research analyst at Needham, covering industrial technologies companies. Our next presentation will be a fireside chat with the management of MKS Instruments, where we're pleased to have with us this morning, John Lee, CEO of the company. We also have with us David Ryzhik, Director of Investor Relations. We're going to turn it over to David just to go through some of the safe harbor and then we'll jump into it. David, do you want to take it?

Thanks, Jim. So because we're in our quiet period, our comments will solely focus on the long-term growth and opportunities [indiscernible] including, but not limited to our pending acquisition of Atotech Limited and will [ not ] address results for Q4 of 2021. In addition, any forward-looking statements that we may make today are subject to our risk factors in our SEC filings. You can find the GAAP reconciliation to any non-GAAP numbers that we may talk about on the IR page of our website. With that, I'll kick it back to you, Jim.

Perfect. Thanks, David. Okay. A lot of ground to cover. So let's jump into it. If we will, John. So M&A was obvious [indiscernible] center for MKS in '21. Certainly be the case again in '22 with the expected completion of the Atotech acquisition. And before we turn to that, and we certainly will spend some time, could you just give us a quick overview of MKS today?

Yes. No, great. Thanks, Jim, and thanks for having us on here. It's great to kick off the year with the Needham conference as always. And certainly, thanks for your support as well. So at a high level, we think about MKS in the context of being the foundational solutions provider for both semiconductor, advanced electronics and specialty industrial applications, that's really at our core. And when you think about that, the strategy is around the idea of miniaturization and the complexity that goes with miniaturization. This is very obvious and semi. This is something that we've done for 60 years, and the whole industry has done for 60 years. I think it's become accepted now and appreciated now in laser-based manufacturing. Laser-based manufacturing is enabling a lot of the miniaturization that's going on now, where in the past, we used to use drill bits and sawblades and now we have to use lasers. And then when you think about miniaturization for advanced packaging, this is something where every major semiconductor chip company in the world is talking about the ability and the differentiated ability that they have to put multiple types of chips together. So we're making all these great semiconductors but you can't have this roadblock in between. And so you get around that by advanced packaging. And this advanced packaging requires different kinds of processes that are front-end silicon based like silicon interposers, but it also requires traditionally back-end packaging type of processes like high-density interconnects. They're both in the same package that enables advanced packaging. This confluence is really why Atotech makes sense being combined with MKS. And this is really part of our larger foundational solutions provider strategy going forward.

Great. That was a good snapshot and it was a good teaser Atotech as well as we get into that discussion. Just on the semiconductor business, John, you just -- going back to your Q4 guide, it looks like the semiconductor business is going to be up 30% or more based on Street estimates. WFE is forecast at least according to the Needham semi cap team to be up 40% or more. Over the last 10 years, you guys have outgrown the WFE market. You've talked about the growth in the target, sometimes 200 basis points on average above WFE. And I guess the question I'm coming to is, is it reasonable to assume that MKS is still has opportunity to outperform the WFE market? It obviously gets harder and harder.

Yes, that's a great question. You're right that in 2021, it looks like we underperformed WFE, right? But if you take 2020 and '21 together, we actually outperformed WFE CAGR by 700 basis points. Now usually, we out -- we front run in a cycle. And so we do better in the front side and then we do a little worse on the backside as [indiscernible] occurs. And -- but the concept of being 200 basis points above WFE that is something we're very comfortable with continuing going forward. The reason we believe we can continue doing that is a couple. One is, to your point, it is harder to gain market share where in some of our product categories, we're over 80% market share. So it's kind of the market. So you can't there, you're just going to just ride with the market. And so therefore, your opportunities have to come in areas where you don't that kind of market share, but you have to grow it. And our power is one example over the last 6 years, where you didn't see any change in market share for the [indiscernible] because it's about investment, design. Our customers have to get designed in and then the chip at still. But as you saw an acceleration in market share gains in 2019 over 2018. In 2020, a big gain, 10%. Actual market share in our power from 2019. And this year, in 2021, we talked about our RF Power business the first 3 quarters growing 50% more in 2021, relative to the first 3 quarters of 2020 when we already gained 10% market share. And so we expect another gain in market share going forward. This is just an example of the strength of our portfolio. When you have a broad portfolio, no matter where the new opportunities exists or arise, you can do something about it because you have that broad portfolio versus if we were a 1 product category company and then our power became really important. We didn't have our power. So we can start from scratch. But other people are already in it. So that's a hard job. But we're already in most WFE critical subsystems. We are exposed to 85% of WFE. And so we have the ability to move R&D to the most important opportunities as things change going forward. So that's why we're pretty confident that this 200 basis point model that we have of growth above the WFE is something that's very much intact.

Great. You guys like everyone else, have been and impacted by the supply chain constraints over the past 12 to 18 months. You've talked about trying to adapt your own supply chain to become more resilient as we emerge from this whenever we do. Can you talk a little bit about some of the measures you're taking over the short term and longer term to maybe lessen the impact of this going forward?

Yes. Thanks for that. It's certainly top of mind for probably every CEO in semi. First of all, I have to say I'm really proud of our team for going through and dealing with this. It's been accelerating. It's been a big problem in 2021. But you can see from our results that our team has really done a good job of dealing with this and making our products fast enough to deliver to our customers. To your question, there are few things that we've done for sure. One is certainly getting much, much more proactive in reaching down into our supply chain and our suppliers supply chain to ensure that the kind of electronic components, which have been a big part of the constraints are going to come in when they're supposed to come in. And I think early on in the supply chain constraint environment, we wouldn't know until the day it was supposed to come in that not all of it was coming in or it wasn't going to come in or it was just not being much as proactive to call it head and make sure. So we can actually have time to deal with it. I think for sure, we've got engineering involved for sure to redesign and design alternative components whenever we can, and we're taking inventory whenever we can as well. And that's -- that does add headwind to gross margins and costs for sure. I think everybody is seeing that doesn't help with our profitability, but we're managing that pretty well through our profit and cash as well. So these are some of the things that we're doing. We've already increased our capacity in all of our factories so that we can deal with surges. So when that material does come in, because it's spotty, comes in when it comes in and you've got to be ready to kind of run at 50% over time and then you got to go back to [indiscernible] over time. It's very disruptive to our factories, the team has really done a great job putting in the capacity to deal with that and managing the labor to deal with that.

And I guess it's also fair to say you guys are in much closer contact with your customers as you try to coordinate and schedule things. Is that [indiscernible]?

Yes, I would be remiss and not really thanking our customers for that. There's been just a lot more collaboration with our key OEM customers because they understand it's set legacy chip component level. And they certainly have offered help and have helped, and have coordinated with us much more [indiscernible] than I've ever seen in the industry.

Yes, you guys -- MKS tends to shy away from making any kind of forecast about WFE, you leave it to other folks. But you've obviously been a keen observer of the trends. And I'm wondering if there's another way to ask is, what in your view might disrupt the current and forecasted strong demand that where many of us are anticipating for WFE. Do you see anything on the horizon?

Yes. No, I thought about that a lot, Jim, because we're always worried about things turning south. We're very good at reacting to those things. But when I think about WFE in the long term and you think about all the growth drivers for it, everything is kind of up and to the right. When you think about what drove it in the past, computer, PCs and the windows and the microprocessor cycle to smartphone and the mobility. And then you kind of think about what's happening now with the kind of DRAM needs, in the process of needs for cloud-based computing. And then you think about automobiles, right? Even internal combustion automobiles have more chips now than they ever did. But when we go to electric vehicles, that's an even larger growth rate for semiconductors. And you start seeing semiconductors very ubiquitous in everything we do. More of us, whether you believe it or not, you're actually kind of like a [indiscernible] because you're kind of carrying a lot of things attached to yourself. They're not physically attached, but they're on you, right? You've got your watch, you've got your phone, you've got maybe something else that's monitoring something else, right? And so this is really an exciting time for I think for the semiconductor industry. There seems to be an acceleration that's driven by things that make sense, things that we all value, things that we see continuing to grow and some things that haven't even really hit yet like electric vehicles.

Before we jump into Atotech, I want to talk a little bit about the Advanced Markets business. First off, talk to some of the drivers in Light and Motion. And outside of semi, where the -- You guys clearly play in that area. We've addressed some of that. But where do you see the opportunities for gaining share? Or just growing adoption, as you alluded to earlier, of lasers and photonic solutions, it could impact the growth rate in this part of the business?

Yes. No, for sure. That's a great question. I think as you know, there was an effort to acquire a certain laser company that we decided to walk away from. But plan A always is to grow organically if we can. And we're very bullish about what we call surround the workpiece. This is the laser-based components. It's around laser-based manufacturing tools. Lasers being the critical part. And when you think about lasers -- what we talk about lasers is about pulse lasers. And pulse laser allow you to make things smaller and more accurate. Back to our vision of miniaturization and complexity. MKS was a distant market participant in what we call the nanosecond pulse lasers 6 or 7 years ago. And over time, through better design, more efficient laser, we actually are our #1 market share on nanosecond pulse lasers. That has got a lot of applications in certain process steps, but people are also moving to picosecond based lasers. There, we don't have that share. And there, we made investments in order to gain share there as well. We talked about on the order of 20 design wins now with our new picosecond lasers that were released about 2 years ago and new versions being released since then. And then femtosecond. So these are lasers that are pulsed. They're shorter and shorter pulses and this allows you to make more and more precise features in whatever the manufacturing process is. So -- and then you surround all that with optics and power meter things to make sure your laser is operating the way it should. I think this is really 1 of the areas that we're focused on in terms of advanced markets. And I think this is just something that just going to continue. Lasers are going to be a pretty important part of the entire world manufacturing base, and it's just a matter of time when this adoption continues to grow.

You've only got a lot on your plate with Atotech, but I'm just wondering, is inorganic still in the mix for potentially building out this business? Are there some areas that could make some sense for you guys?

Well, yes. So when we closed Atotech for sure, we're going to spend 12 months or so making sure we deliver, that will be our focus. But after that, we've talked about our pipeline, and we're not getting bigger just to be bigger. We're getting bigger because it makes strategic sense. And when you think about what I talked about MKS, foundational supplier for miniaturization and complexity in advanced electronics, we acquired Photon Control in July. That's still makes sense. That's semi. There are multiple opportunities, many more opportunities in photonics, lasers and optics for sure, many smaller companies, it hasn't consolidated as much. So that pipeline has been very rich and robust and continues to grow. So Newport brought in a whole bunch of opportunities, and that continues to grow. And then advanced packaging when -- after we close Atotech, after we de-lever, there could be opportunities there as well. So to your question, in the Light and Motion division, in photonics and optics in particular, there are still many opportunities that would be mostly tuck-in like opportunities that would make a lot of sense.

Got it. Equipment and Solutions, which we still -- many of us still referred to is the ESI business. As we look at the flex drilling business, we're seeing more and more flex PCB content out there, consumer electronics, certainly in smartphones. Are you seeing anything in that business that in the time that you've owned it, that maybe will prove up some of the cycles that we've seen in the past? Or is this still going to be driven mainly by smartphone cycles?

Yes. I think the short answer is the smartphone cycle is still a dominant influence of the cycle. So I think in the near term, that's still the case. But to your point, there are more and more devices that are adopting flexible circuits for lots of good reasons that we've talked about in the past. And I think as those expand, then I think that the effect of the smartphone influence on the cycle will be a little less. Now unfortunately, some of these flexible circuits going into AirPods, for instance, it's still part of a consumer cycle. Even though people buy Airbus all the time because it's like myself, I do them all the time, you still buy a little more during kind of the holiday time. So I think it's still got that characteristic of a consumer product cycle right now. And so that's okay. It's still great, and it's great. And then we manage the cost and work on design wins off cycle.

The other area of that business that we've all been paying attention to because it looks like it could be a nice incremental opportunity and it does lead into the discussion on Atotech is high-density interconnect. So a couple of things. First, how are you measuring the progress that you're making in HDI in terms of customer penetration, share gains? How satisfied are you with the progress you're making in this area just relative to some of the longer-term expectations for this business?

Yes. No. And I think that's key. It's a long-term gain for us. For me, for sure, that's how I view it. Just like our power was a 5-year gain, right? The first 3 years, we talked about the design wins, which is still how we measure progress for even HDI. And then our track record is, when we talk about design is they turn into money eventually when they ramp. So when we think about the design wins we've had, I'm really happy, pleased with some of these. Because when you think about the 2 customers that we publicly talk about who have actually bought multiple units. So there's 2 ] tools out there running today for 6 to 9 months now in production, 24/7. So it tells me a couple of things. One is, it's a tool that can be very much a manufacturing tool. These guys wouldn't be doing this if it was not reliable. The number of beta sites that demo had shown that the value proposition that we brought to the market, smaller, faster, lighter is very valuable, very attractive to many customers. I wish the adoption was a little faster for sure. But the first question if you have to ask is do you have a tool that actually is going to be something that works in this market. And I think the answer to that is statically yes. And then our job is to continue evolving. So we don't still for it. We came in with leadership and throughput. But we certainly expect the competition to try to catch up. And we're going to continue innovating, and that's our job innovating the competition. And I think the market share comes with the design on the come when it comes you get designed into certain customers, they win or don't win. And they win this year or don't win this year and win next year. Now that market share will come. So really, I'm focused on is the tool, the right tool. Are we making improvements to the tool? And are we getting the design wins that we want. And that's -- so I'm very happy with our progress there right now.

Great. Thanks, John. So let's shift some of the conversation to what I'm sure investors have been talking to you of that now for quite a while, and that's Atotech. So both companies who provide an update on anticipated closing of the deal, which I guess is now likely in Q1 as opposed to Q4 of 2021. I can see [indiscernible] how confident are you about just the revised schedule for those?

Yes. Well, no. So as we said, we expect to close in Q1. And as we said in our press release, the 12 out of 13 jurisdictions have already approved regulatory approval. And so we're talking with [indiscernible] and I would characterize them as very productive discussions still. Questions are normal questions that you would expect, and discussions are very productive. So our expectation is still to close in Q1.

Okay. So obviously, some of the we're surprised by this announcement last July that you're going to be acquiring Atotech. Yes, talk to us, we were to look at the top 3 or so factors that weigh into the decision to make this deal, tell us about it?

Yes. No. I think when you think about Atotech in the context of how I described MKS, it's a lot clear that it made sense. I think if you don't have that context, then you kind of say, well, chemistry consumables, packaging, it's a little far field, right? But it's really part of the story of the evolution of MKS over the last 10 years. My predecessor, Jerry Colella, he made the biggest move, I think, which is to acquire Newport. That was the first real substance move outside of just being semi. And a lot of doubters then too. Do you know anything about lasers? Do you think about anything here? And we had to prove the doubters that we can manage it and we can understand it and we can make Newport better, and we did. Understanding Newport, its markets allowed us to conceptually think broader to systems, laser-based systems, that brought a ESI, another old move with some doubters for sure. With the acquisitive aside, that allows us to think even broader about packaging, [indiscernible] packaging, they not the kind of packaging that maybe [indiscernible] talking about or Atotech is talking about. And so it's really an evolution of MKS over time. And when you think about what Atotech brings, what are the top 3 things, a couple of things. One is, it is really -- will be a foundational part of this longer-term strategy about miniaturization and complexity in advanced electronics. Packaging is going to be more important. It is already more and more difficult to make the next-generation packages. Everybody from chip companies on and talking about how it's going to differentiate. That sounds like a great place for MKS to be, and Atotech is market leader there. Atotech also brings certain kinds of attributes, right? One thing we always talk about in our M&A is gross margin. If you can't get your gross margin, then you're not different. And Atotech's gross margins are better than MKS. We're pretty proud of our gross margin but they are better. So they have differentiated solutions for the market requires it, as we're willing to pay for it, and that's really important. So we want markets companies, end markets that require continuous innovation. We talked about in the past. And then as a freebie, not an insignificant one, Atotech brings a lot of recurring revenue, 95% of their $1.4 billion is chemistry recurring revenue. And in pro forma, we talked about Atotech and MKS today is, give or take, $4.5 billion in 2021 given our guidance for Q4, their guidance. The 40% of that would be recurring. That's our service revenue, their service premium and their chemistry revenue. 40% of peak semi ] CapEx, right? And so what that gives us is scale to continually invest in R&D even during any kind of CapEx cycles. And I think when customers think about partnerships with suppliers, that's really critically important, especially the kind of customers that we work with who are pushing boundaries, either in semi or in lasers or in packaging, right? They need partners who can support [indiscernible] they want partners that can be there during downturn, continue to make big bets and invest. Our power is if you go back to that, but that's an example where we double the engineering team twice before money ever arrives into MKS because it's what you have to do to get to that 10% market share gain in the year.

If we think about the synergies, the obvious synergies with the Atotech business or in its EL segment, you're seeing nicely complementary with the ESI business. You've highlighted potential revenue synergies. But as you just have been talking about, both companies already enjoy strong market share in their respective areas of the PCB business. It sounds like -- and I don't want to [indiscernible], but if you think about those revenue synergies, are we talking about just some of the intermediate growth drivers, packaging, HDI. Is that the way to think about these revenue synergies that you see from the combination?

Yes. There's 2 parts, Jim. One is that while we do have a strong market share in relative parts of the E&S division and the Atotech plating division. Atotech has got the strongest market share in HDI plating. And that's not as much in flex plating. And E&S is the opposite. We have the strongest market share. We have leadership in flex plating. But as we talked about, we're still an entrant into HDI drill. And so there's actually a synergy that way in terms of the subsegments of advanced packaging, where it's not about -- It's really about working together under one roof, Atotech plating for HDI and Equipment and Solutions drilling for HDI. So that you can say, optimize the interconnect. Can we make our laser driller slightly different, slightly faster, slightly different profiles so the plating could be better. The plating compensate for something else in the laser so that the interconnect, the solution that our customers need is better and we can get there faster for them, right? That's really the synergy, I think, that we provide to the market, to our customers. And I think that's the value our customers will see it [indiscernible]. And then in addition to that, if we can do that well, we will learn faster. Our laser guys will just learn faster than a competitor who doesn't have a plating line in the same building and vice versa, right? And the speed of learning is really -- that's the name of the game for MKS for 60 years, that's the name of the game for anybody in the high-tech industry where the market requires continuous innovation.

So I'm curious, we're about 6 months into this announcement. And how -- I'm sure you've been out and had conversations with customers. How are they reacting to this?

Well, we have to certainly be hands off with customers for sure in terms of this topic we are. But I would say customer feedback has been -- when the announcement occurred was very positive. Not a couple of customers called directly and [indiscernible], we should meet right away because I think they see the potential of the ability for this combination to accelerate their road map. And I think we look forward to that. And maybe some customers still want to do kind of best-of-breed and do the old way, and that's fine, too. We need to be best of breed in all of our products. But I think the real value to the industry and to our customers is about accelerating road maps for things that are becoming more and more difficult. Packaging -- advanced packaging is going to become more and more difficult. And this is the same story as semi was for 60 years. And when things become more difficult, you have to do R&D way ahead. You can't just do it within the year anymore. You have to do years ahead and then you have to have sustained R&D going forward. And then you -- I think, to your point, you have to have partnership with customers. And I think many customers know that partnership is the only way they can leverage what they do well with suppliers that do what they do well when in the market goes.

As this is completed, John, this is a big deal, clearly. And talk to us a little bit about how the integration comes together and the forces you're bringing to bear in terms of the team you're putting together. You guys have done deals -- quite a few deals over the years, but this is a big one?

This is big, for sure. So we've had a very robust integration planning process with Atotech. And we have multiple visits. I've been there multiple times. They've been to our sites multiple times. Teams have traded site visits and lots of information and planned going forward. And as we announced that publicly we are going to take a key executive within MKS, and he's going to run Atotech. So we have a backlog for him because we have good succession planning. So this is a direct report of mine today that's going to go run Atotech as a business. We also took another key executive out of an operating role and assigned him for 18 months. The sole purpose is the integration of Atotech. This is something that we've really never done to this scale because of the scale. And of course, there's a whole team behind each of them to ensure that we put as much resources on this to make sure this works right out of the gate. Now our integration planning was targeted to December 31, day 1 planning, what do you do in day 1, run order to go and all that kind of stuff. And we did that. And so having a slight delay in the quarter allowed us to find too many small gaps that were left, allows us to have an even more robust at [indiscernible] 100 plan. And so I think -- and continue building the relationships between the 2 teams. So we've learned a lot about how they operate. We've learned a lot about their culture. They've learned about our culture. A lot of things are very similar. Our focus on customers and focus on R&D. Those are 2 big ones, right? If they were not the same in terms of cultural importance, that would be a problem, but they turned out to be exactly the same focus. So I think we're really looking forward to just closing the deal and then just getting out there and running fast and providing those solutions to our customers.

How would you characterize the cultural fit between these 2 companies, maybe in comparison to the more recent deals that investors remember, Newport and ESI?

Yes. in Newport was culturally different than MKS. I think we've talked a little bit about. There's a little more heavy lift in that in changing the culture just in the culture to be a lot more focused on OEMs, big customers, while not losing the 1,000 points of light, a lot more focus on ownership and allowing people to take accountability. I don't -- I think there was some of that for sure. But certainly, I think we brought that level of accountability. And as I've told most of the people who was Newport, as said, how do you think we've got all this great performance, and it's really you guys, it's the same people, literally it's the same people. We didn't hire anybody, everybody is the same. I think it was just a change in how we approach things. And we said, you're permitted to do this. We want you to do this. We encourage you to do this, and we want to hold you accountable for it. And I think the people who have always been there stood up and said, raised their hands and many of them have really -- I've seen them develop into great leaders going forward. ESI was relatively simple from a cultural standpoint integration because the culture is a very simple one. Large equipments, big customers, lots of speed and lots of complexity in technology. So I think there was not a big cultural uplift there. And I think with Atotech, I think that, as I said, the 2 big ones are going to be very similar, how we approach customers, how we approach R&D, how we approach transparency and respect for employees and inclusion. Those are all very much aligned. They have a large footprint in Asia and Europe, not so much in North America. We have a large footprint in Asia too. So there's a lot of different overlap. It's not like their employees in China are different than our employees in China, right? It's the same culture over Japan or Korea. And in Europe, we've had a strong presence in Germany for sure as well as Europe. And so I think, culturally, I think it's not a mystery for us in terms of how to operate there. So I think it's really a great match actually comfortably.

And the one area that I've gotten the question is about, as you probably know, is the general metal finishing part of the Atotech business. And I'm wondering if you could talk to that part of the business, the overlap that there might be an R&D shared resources that? And yes, frankly, you've talked about even other areas of the standalone MKS business that people don't always consider has industrial exposure.

Yes. That's a great question. I think -- so one of the things that maybe you know, but not a lot of folks know is that the Electronics division of Atotech was born out of the general metal finishing division of Atotech. So this is before electronics was that important, I guess. When it started becoming important, there was only one Atotech, general metal finishing. And then they said, "Yes, this electronics might be important." And 30 years later, it's bigger, twice as big as general metal finishing. When you look at general mental finishing, it's got mid-20s EBITDA, great gross margins, similar gross margins. A lot of the R&D is very similar because the R&D is about organic chemistry, inorganic chemistry, surface chemistry, that kind of expertise is very similar for those kind of businesses. Again, so there's a lot of synergy in terms of the R&D. And then when you think about the pro forma MKS with Atotech, $4.5 billion, we're going to have a semi business. That's today, 60% of today's MKS, but pro forma will be 40% of the combined. We're going to have an advanced electronics business outside of semi, a lot of the laser business, a lot of the electronics part of Atotech. And then we're going to have what we'll call specialty industrials. So GMF in automotive. Life and Health Sciences, defense for Light Motion, for instance, industrial Industrials for legacy MKS making diamonds, making microwave to dry [ pasta ], making betatrons to sterilize COVID instrumentation. So that specialty Industrials is actually going to be about 30% of the pro forma MKS. That's more of a GDP plus [ type ]. We are niche players in some of them. We're pretty strong in some of them like we would be, with not automotive. These are a great business to be in. Another stabilizing part of the combined pro forma part because, as I said, 40% is just recurring revenue. There's a little overlap there, so you can't add it to. But there's a specialty industrials business that's fairly GDP plus and more stable than cyclical CapEx or perhaps electronics. And so that's going to be a great -- another great part of the business that -- where the R&D is already done, much of the time focused on advanced electronics and semi and we're just using similar things with minor tweaks into these other industrial specialty industrial markets. There is some development for sure for some of them. And then it adds a lot of stability to the revenue stream of the combined MKS. And that's going to allow us, as I said, to continue to invest during cycles of semi.

We're going to wind this up, but I wanted to get this one last point. First thing, a chance of maybe a faster debt pay down the way we did with Newport and ESI? And then finally, and again, we're just running out of time. But what do you think investors may be missing or not fully appreciating about this transaction?

Yes. When we said the debt pay down, as I say, first 12 months, we're going to just focus on that. And then after that, if something tuck-in light comes in, we'd be open to it. But if something comes in, we just be delevering. And the last 2 times, we delivered no debt, right, before we actually did another acquisition. So no net debt, sorry. With respect to our job in terms of explaining Atotech to investors, I think it's just the same transition when we were just a semi company and then we bought a laser company. Semi investors like what is that all about, right? And then some that stayed on and where we wanted for, and some didn't came back later. And I think with Atotech, it's the same idea of explaining this larger idea of miniaturization and complexity for advanced electronics being a foundational supplier for that entire chain. And if you like advanced electronics, and you like where packaging is going, you like where semi is going, we are going to be the broadest supplier of it. No one else is close. Now you could always pick and choose, right? Companies that are specifically tailored to semi or lasers or best packaging and put your own portfolio together, that's what portfolio managers do. But I would push back and say, "Yes, but if I execute well, I should learn faster than every one of them because I have it all in-house." That's my job to do, and that's what we're going to try to execute to. And I think the results will show and then investors, I think, will get on board.

Perfect. We're going to end it there. John, thank you. Thanks for spending time today.

Great. Thanks, Jim. And as always take care.