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MKS Instruments, Inc. (NASDAQ:MKSI)

Q1 2008 Earnings Call Transcript

April 24, 2008 8:30 am ET

Executives

Jonna Manes – Director of IR

Leo Berlinghieri – President and CEO

Ron Weigner – VP and CFO

Analysts

Brett Hodess – Merrill Lynch

CJ Muse – Lehman Brothers

Jay Deanha – JPMorgan

Jim Covello – Goldman Sachs

Edwin Mok – Needham & Company

Operator

Welcome to the MKS Instruments first quarter earnings conference call. During today's presentation, all parties will be in a listen-only mode. And following today's presentation, the conference will be open for questions. (Operator instructions) This conference is being recorded today Thursday, April 24, 2008.

Now, I would now like to turn the conference over to Ms. Jonna Manes, Director of Investor Relations. Please go ahead ma'am.

Jonna Manes

Thank you. Good morning and thank you for joining our earnings conference call this morning. Earlier this morning, we released our financial results for the first quarter of 2008. You can access this release at our Web site, www.mksinstruments.com.

As a reminder, various remarks that we may make about future expectations, plans and prospects for MKS constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in today's press release and in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2007, which is on file with the SEC. In addition, these forward-looking statements represent the company's expectations only as of today. While the Company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statements should not be relied upon as representing the company's estimates or views as of any date subsequent to today. We ask that you limit questions to two per firm and we will circle back as time allows.

Now, I will turn the call over to Leo Berlinghieri, Chief Executive Officer and President of MKS.

Leo Berlinghieri

Thanks Jonna and good morning everyone. Thank you for joining us on the call this morning. I'll give an overview of the first quarter, our strategies and outlook. Ron Weigner, our Chief Financial Officer, will review our financial results and guidance, and then we'll open the call up for your questions.

I'm pleased to report that we started 2008 with another quarter of sequential growth. After a stronger than expected fourth quarter sales, first quarter sales increased by 5% sequentially to $193 million and we exceeded the high end of our guidance. We delivered strong operating performance on the higher sales volume and non-GAAP earnings increased to $0.39 per share, which also exceeded our guidance.

With our broad technology portfolio, we enable advanced processes and solve process problems in many markets. Our first quarter growth was driven by increased demand in semiconductor, solar and flat panel display markets.

One of our goals is to continue to grow faster than our core served market in wafer fab equipment. Our first quarter sales demonstrate that we continue to make progress. Sales to semiconductor OEMs grew 11% sequentially, primarily from two OEMs who we believe had end customer specific demand for tools that have high MKS content.

Demand for our process critical technology was strong across all of our product groups. With strong product penetration at all major OEMs, we are well positioned when fabs select tools.

In the quarter, we were impacted by the slowdown in fab capital spending. Sales to fabs were flat sequentially, after 19% growth in the fourth quarter. Our position with key fab customers remained strong and we see opportunity ahead when they increase capital spending and look to improve productivity. In addition to service and spares, we provide upgrades, retrofits and other solutions for process challenges.

For example, fabs are having success in improving yield by using our residual gas analyzers that detect photoresist residue before it can damage the wafer. We expect to see continued growth in the adoption of this technology in future quarters.

More than a third of our first quarter sales were to non-semiconductor markets. Our strategy is to leverage our technology portfolio in key markets with higher growth opportunities, such as solar and flat panel, and to provide specific process technology in many other markets. Our results for the last several quarters demonstrate that we are executing this strategy.

First quarter sales to the solar market grew to almost 6 million as we provided technology, both thin film and silicon substrate solar processes. Our growth in solar may not be linear every quarter. Today, we have nearly 60 solar customers across the U.S., Europe, Japan and China. Our solar market penetration is increasing and we believe we are on track to double or even triple our 2007 solar sales of 17 million this year.

For example, our technology for process chamber cleaning is becoming more critical as thin film solar cells and flat panel displays increase in size. Large solar cells and flat panels require larger process chambers, which can take longer to clean. In the first quarter, we saw increased demand in solar and flat panel markets for our ASTRON reactive gas generators. ASTRON generates high flow rates of atomic fluorine to accelerate cleaning time and reduce downtime. ASTRON is just one of our technologies to improve uptime yield and throughput and reduce manufacturing costs.

Our opportunity in solar is increasing as solar cell production shifts to thin film processes to reduce cost per watt and make solar energy competitive. Industry analysts estimate that thin film solar cells represented about 10% of the total cell output in 2007. They say by 2015, thin film solar cells could be 20% of a much larger base.

We are benefiting from the transition to thin film processes, where we can leverage more of our technology. We are winning business as silicon substrate-based solar manufacturers diversify and shift to thin film processes, and as new thin film players enter the solar market. For example, as thin film solar shifts from R&D pilot lines to full scale production, manufacturers require higher process efficiency. Our technology can help them reach their cost and panel efficiency targets.

Our market leadership is also a competitive advantage. For example, thin film amorphous silicon lines use a plasma enhanced deposition or what's called PECVD processes to deposit active layers in a solar cell. PECVD processes require more RF power generators. We are a leader in RF power and we are winning solar business with RF power generators. Solar is a rapidly growing market and is becoming a significant part of our non-semiconductor business.

We also serve other markets, where opportunities range from high-growth emerging applications to industrial applications with more stable revenues. For example, we provide solutions for greenhouse gas analysis and other energy and environmental monitoring applications that range from fuel cells to Homeland Security.

The outlook for this business is promising. So is our outlook in the biopharm market, where we leverage our designs for semiconductor vacuum components, control instruments and subsystems in biopharm processes. The high growth potential and diversity of our non-semiconductor business helps to mitigate semiconductor cyclicality and limits our risk of relying on specific customers or markets.

Our business in other markets can be lumpy, but we continue to see opportunity. As we said last quarter, we believe the solar, flat panel and other non-semi markets could provide $45 million to $55 million of incremental sales in 2008. These incremental sales would be consistent with our goal of 10% to 20% growth in our non-semi business long-term.

Our first quarter revenues exceeded our guidance in an uncertain market environment. Because MKS is a turns business, our visibility is quite limited. Industry analysts are forecasting further declines in semiconductor capital equipment spending in 2008, and we are seeing a more challenging environment. We are optimistic about our long-term growth opportunities in semiconductor and non-semiconductor markets.

In the second quarter, while we expect growth in solar and flat panel display markets, we expect a decline in our semiconductor business. We expect the second quarter sales could range from $170 million to $180 million. With this lower revenue outlook, we are taking additional actions to reduce our costs, including taking a week shutdown. As OEMs shorten their lead times to their customers, OEM order patterns to suppliers can change quickly. We are monitoring semiconductor market conditions closely and we will continue to align our costs with the overall business outlook for 2008.

Now, I will turn the call over to Ron to discuss our financial results and to expand on our guidance.

Ron Weigner

Thank you Leo and good morning everyone. As Leo said, first quarter sales increased sequentially, primarily as a result of increased sales to semiconductor OEMs, which we believe may be related to end customer demand for specific tools that have high MKS product content. First quarter GAAP net income increased 34% sequentially to $20.4 million or $0.39 per share. Non-GAAP net earnings increased 11% sequentially to $20.6 million or $0.39 per share.

Turning to the detailed financial results, first quarter sales of $193.4 million increased 5% compared to fourth quarter sales of $184.1 million. Sales to semiconductor OEMs increased 11%. Sales to fabs and other markets in total were essentially flat. However, sales to the solar and flat panel markets increased sequentially. In the first quarter, sales to OEMs represented 55% of sales, sales to fabs 11%, and sales to other markets 34%.

Geographically, sales were strong in the U.S. and Europe. After a strong fourth quarter, sales to Asia decreased, primarily as a result of lower sales to a major semi OEM and fabs. Sales in the U.S. were 64% of total sales, sales in Europe were 13%, and sales in Asia were 23%.

Sales to our top 10 customers were 43% of total sales. Sales to our largest customer, Applied Materials, increased to 20% of total sales from 18% in the fourth quarter. Sales to contract manufacturers of Applied and other semiconductor OEMs remained at 5% of total sales.

First quarter gross margin improved sequentially to 42.3%. The 100 basis point sequential increase primarily reflects the effect of volume increase and lower overhead cost.

As we planned, R&D expense increased by approximately $900,000 sequentially to $19.2 million due to increases in staffing and new product development projects. SG&A expenses were $31.7 million and included a $2.7 million foreign exchange gain related to a one-time legal entity consolidation of some of our international subsidiaries. Excluding this foreign exchange gain, SG&A expense would have been $34.4 million, at the midpoint of our guidance.

At March 31st, we held securities that had an original cost of $5.7 million which were AAA rated when purchased and subsequently went into default. In the fourth quarter, we recorded a $1.5 million charge related to the anticipated reduction in value of these securities. As a result of continued deterioration of the credit markets, these securities further declined in value, and we recorded an additional charge of $1.2 million, which reduces the book value of these securities to $3 million. Currently, we do not own any securities that we believe would be subject to impairments in fair value.

Our tax rate for the quarter was 29%. Non-GAAP earnings, which excluded amortization of acquired intangibles and the foreign exchange gain, as I mentioned previously, were $20.6 million or $0.39 per diluted share on 52.6 million shares, compared to $18.6 million or $0.33 per diluted share on 55.9 million shares in the fourth quarter of 2007.

During the quarter, we continued our stock repurchase program and repurchased approximately 3.5 million shares of common stock for $65.3 million in cash at an average purchase price of $18.81 per share. This contributed to the reduction of diluted shares outstanding in the first quarter to 52.6 million shares. Actual shares outstanding were 50.9 million as of March 31. Since our two-year $300 million share buyback program was authorized on February 12, 2007, we have repurchased approximately 8.3 million shares for approximately $166 million at an average price of $20.18 per share through March 31, 2008.

We expect to continue to generate cash and to be opportunistic about our future use of cash. The timing and amount of any shares to be repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability, and other market conditions, and the program may be discontinued at any time.

Our workforce as of March was 2970 people. We continued to generate cash from operations, which totaled $23 million for the quarter. Cash and investments decreased by $47 million to $277 million or $252 million net of debt. The primary use of cash was for the stock repurchase.

Days sales outstanding were 57 days in the first quarter and inventory turns were 2.9. Capital expenditures of $3.3 million in the quarter were primarily for test equipment. Depreciation totaled $3.6 million for the quarter.

With the current business environment as Leo described, we anticipate that second quarter sales could range from $170 million to $180 million. We anticipate that gross margin could range from 40% to 41% at these lower sales volumes. As we continue to develop next generation products, R&D expense could range from $18.8 million to $19.2 million.

Primarily as a result of our annual compensation adjustment at the end of the first quarter, our SG&A expenses are expected to range from $35.2 million to $35.8 million. Amortization of acquired intangible assets is estimated at $2 million. Net interest income for the second quarter is estimated to be approximately $1.2 million.

Our tax rate for 2008 is estimated at 30%. If the R&D tax credit is reinstated, our tax rate would remain flat to 2007 at 28%. Given these assumptions, second quarter GAAP net income could range from $9.4 million to $13 million or $0.18 to $0.25 per diluted share, on approximately 52 million shares outstanding. Second quarter non-GAAP earnings could range from $10.4 million to $14 million or $0.20 to $0.27 per diluted share.

The level and duration of decreased sales to the semiconductor market is uncertain at this time. We will continue to take initiatives to manage gross margin and control operating expenses. As Leo mentioned, we are taking a one-week shutdown in the second quarter and we have taken actions to reduce or defer non-essential spending.

However, for the longer term, it is important to invest in R&D projects that will provide future revenue growth and to also laying a support structure to enable growth for the long term. We will continue to monitor current and expected future revenue trends and take prudent actions to control costs.

This concludes our discussion and we will now take your questions.

Question-and-Answer Session

Operator

(Operator instructions) And our first question is from the line of Brett Hodess. Please state your company name followed by your question.

Brett Hodess – Merrill Lynch

Merrill Lynch. Good morning. Leo, in the quarter, you obviously had surprisingly strong semiconductor business. As you mentioned, it was two particular OEMs that have a lot of MKS product on their system. Do you continue to see a rich mix like that even in a slower environment, because if you look at your sequential decline that you're projecting for the next quarter, it's a lot less than the shipment declines that your OEM customers have talked about already.

Leo Berlinghieri

Well, I think, Brett, we obviously have been able to grow share over time and that's always been the objective, and we showed some results that can demonstrate that over the long term. And so, I don't know what exactly the mix will be. We don't know in advance what the lead times that we have and some of the lead times even the OEMs have, what that mix will be. But, I think we expect a drop in semi OEMs, but we would expect some make up in some of the non-semi business. Certainly, with overall guidance being declined, we are expecting the semi OEMs to be deeper than any growth we can get in some other markets.

Ron Weigner

Yes, and don't forget, Brett, as I mentioned, 55% of our sales are direct to the OEMs, so not the whole total.

Brett Hodess – Merrill Lynch

And the second question I had was, given where the gross margins are looking like this quarter, 40% to 41% on that kind of revenue drop, if we look back, that's not that much of a drop really, it's sort of in the range you were at back at those revenue run rates last year. So, is the move to manufacturing in China starting to have some impact in keeping your margins from having that much decline, or are there other cost offsets in the actual cost of goods sold?

Leo Berlinghieri

Certainly, it's one of the factors that helps us reduce some of our cost of goods sold. But certainly as you know, last year we made progress in reducing our warranty expense and we're taking initiatives to reduce redundant and/or unnecessary overhead expenses as well. And to a lesser extent, as you know, it's more challenging to reduce purchase material costs, but we are still making some modest progress in those areas as well. So, it's a combination of things, Brett, that will help us on the margin side.

Brett Hodess – Merrill Lynch

Thanks a lot.

Operator

Thank you. Our question is from the line of CJ Muse. Please state your company name followed by your question.

CJ Muse – Lehman Brothers

Yes, good morning. Thank you for taking my question. I guess what I'm trying to get at with my first question is where we think we could bottom on your overall semi business. Back in '05, you were at $85 million. This quarter, it looks like you're around $128 million. Considering where you have taken share and where you penetrated new accounts, where do you think that business could bottom, given the current run rate that you are seeing right now and the visibility you have right now?

Ron Weigner

I think all we can probably comment on in terms of visibility, because obviously from an order standpoint, we don't have that much visibility, I think all we can comment on is what you hear each of the OEM customers on their calls and what the forecasters are saying. And it sounds like it's somewhere in the range -- from what I've heard in the last week or two, somewhere in the range of 10% to 25%. I haven't heard anything beyond that yet, either short term or long term. So, I can't give you a specific number. I know that range is pretty broad, but I think that's what we are hearing externally and with customers that that range is pretty broad right now.

CJ Muse – Lehman Brothers

Okay. And I guess moving over to display, can you give a little bit more color on the trajectory there of revenues and the linearity that you expect throughout the year?

Leo Berlinghieri

Well, most of that business in displays is obviously to a few major OEMs in that business and it really depends on their ordering patterns. So, I think the reason displays can be lumpy is they may tend to order depending on where they're building product, how they're having it manufactured, where they're having it manufactured, whether they're going to buy and send it, whether they need it immediately. So, it's really difficult to comment on lumpiness in the display side of the business. I commented on it in the solar, because we do have a combination of end users and OEMs placing orders that are reasonable size and those things can be more lumpy. But, what we see in the flat panel is really growth for the year. After two years of decline, we started seeing it in the fourth quarter. I think we commented on it around the third quarter for the fourth quarter call. And in fact, the last two quarters have been very strong and we are hoping that continues. It certainly -- the external forecasters believe it will.

Ron Weigner

Yes. As we mentioned, our business was up this quarter because of the flat panel, and it was probably up about 5 million or 6 million or so sequentially compared to fourth quarter.

CJ Muse – Lehman Brothers

I guess last question from me. Budgets right now from panel makers are up 60% plus this year. And so, I guess, if I look at what you talked about in terms of solar and assume that type of uplift in display, then that 45 million to 55 million that you talked about of incremental revenues from other businesses would appear to be solely coming from solar and display. Is that the right way to think about it?

Leo Berlinghieri

Well, I think you have -- we've got a number of non-semi businesses, including medical, including biopharm, including some very typical industrial markets that are more stable. And I think we would expect some of those markets, if the economy slows down, may slow down with them, so there could be some drop. So I wouldn't necessarily say those are the only two. I think we point them out because they probably have the most significant growth opportunities in the next quarter or so, or two.

CJ Muse – Lehman Brothers

Great, thank you.

Leo Berlinghieri

You are welcome.

Operator

Thank you. Our next question comes from the line of Jay Deanha. Please state your company name followed by your question.

Jay Deanha – JPMorgan

Thanks. JPMorgan. Good morning, a couple of questions. First on solar, in terms of your customer base in solar, do you have design wins or volume business with all three of the turnkey thin film solar equipment suppliers, specifically Applied, Ulvac and Oerlikon.

Leo Berlinghieri

We have business with all three of those. In that group of 60, I think you would identify all -- the ones on your list would all be on that list. But then, there may be some that haven't made the list yet because they are either new startups in solar or converting from some other technology to solar.

Jay Deanha – JPMorgan

Right, and do you also have exposure to the cadmium telluride First Solar business?

Leo Berlinghieri

We have some in that area.

Jay Deanha – JPMorgan

Okay. More importantly, if I look across your product line, obviously you have a very broad and very deep product line, I'm just kind of curious with in particular the thin film solar equipment suppliers, do you have opportunities for new design wins for potentially higher ASP products that you are not currently designed into, such as power products?

Leo Berlinghieri

I think as the size of the chambers get larger and certainly as solar customers invest more in productivity improvement, we have that opportunity, and we are starting to see some of that. I think in atomic fluorine generators, there's opportunities for larger chambers. They're looking to add chamber clean and that's a trend -- beginning of a trend. So, that would bring a higher ASP product to that. Some of the RF power is in higher powers, which would provide that opportunity. So, I would believe there's opportunity for higher ASP in some of those areas.

Jay Deanha – JPMorgan

So, basically what I'm getting at is I'm wondering if you have an opportunity for larger revenue per tool down the line with some of your existing solar customers.

Leo Berlinghieri

I think that's true.

Jay Deanha – JPMorgan

Okay. Then lastly, in terms of once these major thin film solar factories start coming up, as this year unfolds and in particular next year, what kind of direct to the factory opportunity do you see, kind of like your direct to the chipmaker business right now, which probably isn't really very much this year, I would think, and how does the integrated subsystem business get impacted by solar?

Leo Berlinghieri

Okay. If I understood, Jay, correctly, what might happen in direct sales to solar manufacturers going forward (inaudible) especially do with fabs for semiconductor, I think certainly RGAs can be used in solar and they've demonstrated they have been successful at some places. So, we have an opportunity. Those typically would not sell to an OEM.

The yield management software, as you start thinking about solar manufacturers looking to improve yield, I don't know how much investment previously they had made in yield management software, but we believe there's some opportunity there. With the acquisition of YDI, we think there may be some opportunities in that area, and as we also have the Umetrics acquisition we did with multivariate analysis. So, we believe there's an opportunity for that. And there may be cases for -- most of the ASTRONs and RF powers would be sold directly.

The other exception would be, because this is a relatively new and growing market, like semiconductor used to be years ago, some of the fabs are still building their own equipment. And so, we have had opportunities and we continue to see opportunities to sell MKS subsystems or instruments or components directly to the fab as they build their own tools. I think they feel there's some proprietary knowledge they have in producing panels and that they've opted to build their own tools. So that certainly is the other possibility. It's a little different 30 years ago, what we did with the fabs, but I think that there's some opportunity for that. It could be very large as well. It depends on how long they continue to do that.

Jay Deanha – JPMorgan

Thank you very much.

Leo Berlinghieri

You are welcome.

Operator

Thank you. Our next question is from the line of Jim Covello. Please state your company name followed by your question.

Jim Covello – Goldman Sachs

Goldman Sachs. Thanks guys so much, good morning, especially you taking my question. Just one real simple quick – well, one quick question. If we could look out three to five years pro forma, what do you think your mix of business is semi versus non-semi? And then, within the non-semi, how does that – what does that look like, and if you could talk about what that would mean for margin implications? Thanks.

Leo Berlinghieri

We probably can't answer your question quite the way you would like to have it answered, which would be complete. I guess what we can say is we have played around with models of a 60/40 semi/non-semi. But, without really -- and you know, it seems like nobody can predict one year in the semi business. I'm not sure how they predict three to five. So, I don't even know what we use for a basis to give you an answer.

But, if semi were to slow down completely, then maybe 60/40 is too much semi, I don't know. But, based on at least projections, we have talked about maybe a 60/40 split would be reasonable. If solar were to pick up and stay strong and maybe one of these markets in Homeland Security or greenhouse gases, as people get more and more concerned about the environment, were to takeoff, maybe it's higher. But, I don't think it's going to be -- I don't think we are sitting here planning a 40/60 semi/non-semi. So I would say that that's probably the best answer I can give you today.

Jim Covello – Goldman Sachs

Thank you.

Leo Berlinghieri

You are welcome.

Operator

Thank you. And we have time for one final question today and our final question comes from the line of Edwin Mok. Please state your company name followed by your question.

Edwin Mok – Needham & Company

Hi, Needham & Company. First, I might have missed you on your guidance. Did you guys give color in terms of how much non-semi business you expect for the coming quarter?

Leo Berlinghieri

No. I think what we commented on is we expected the OEMs to go down and we expected that the solar and flat panel would be up sequentially, but we didn't give that level of detail.

Edwin Mok – Needham & Company

That's fine. The second question is more strategic. So, MKS has done a good job in terms of acquisition and leveraging acquisition to grow. I was just curious, given that solar and LCD is growing right now and solar looks like it will have the longest growth trajectory, any thought about acquisition related to that area? And if so, what kind of technology would be a good fit for that?

Leo Berlinghieri

I can't comment specifically on any particular market or technology we'd be looking at, interested or not. I guess I would comment on it this way. Our focus has been around technology obviously. So, we are always looking at possibilities of good, solid technology companies. And because our objectives are always to grow faster in our core served markets, we are looking for companies that have higher growth potential going forward than maybe historically they've had.

Obviously, semi has been a great market to bring in acquisitions and consolidate and integrate and it has given some competitive advantage, I believe, in its greater products as well, and also leveraging the infrastructure, like sales and service and manufacturing. I think we would continue to look and I don't think we would exclude non-semi markets in those areas. I would caution though it's very uncertain today who is going to win in the solar -- you've got a lot of solar players out there. As I mentioned, in a relatively small market, we have 60 customers we are dealing with, with a lot of different technologies, and I think it's very unclear who is winning. So, we'd be very careful, but anything is a possibility, I would say.

Edwin Mok – Needham & Company

Great, that's all I had. Thanks.

Operator

Thank you. And we actually do have one final question and that question is a follow-up from the line of Jay Deanha. Please go ahead.

Jay Deanha – JPMorgan

Yes, hi. Can you hear me?

Leo Berlinghieri

Yes, Jay.

Jay Deanha – JPMorgan

Okay. Looking forward into 2Q, can you give a sense as to what the percentage decline is embedded into your guidance for semiconductor and what the change is for flat panel and solar? Just trying to get some granularity on your revenue guidance.

Leo Berlinghieri

I can't give you those details at this point. We have -- our forecast is made from the bottom up. There's some overlap in some areas. It's tough enough to separate all the information at the end of a quarter. In the forecast, it becomes even a little more difficult. I think all I can comment is, obviously, the OEMs being up was a bit of a surprise for us as high as they were, when we thought our guidance was a little lower for the first quarter. We absolutely expect that the OEMs will be down and some of the non-semi could be down as well. But, we believe flat panel and solar will be up sequentially. Some of the other non-semi that's more traditional industrial markets could be down, but just based on the economy being a little sluggish.

Jay Deanha – JPMorgan

Okay. And then, one last question if I could and then I'm done. It's pretty clear to us that Applied in particular, but also Oerlikon and Ulvac are talking about a pretty sharp ramp of shipping their machines starting later this year, but in particular next year. So, it looks to me like the opportunity in thin film for subsystems is reasonably decent now, but really starts to hit a more significant ramp later this year and into next year. Is that congruent with what you're expecting?

Leo Berlinghieri

I think the comment we had about the double or tripling of the solar business, at 6 million times 4, that wouldn't double nor triple it. So, I think we are in line with -- there has to be higher growth in the second half of the year than there was in the first quarter at least. So, we would be consistent with that.

Jay Deanha – JPMorgan

Okay, thank you very much.

Leo Berlinghieri

Thank you.

Operator

Thank you. And there are no further questions at this time. I'll turn it back to management for any closing remarks.

Leo Berlinghieri

Great, thank you. Thank you again everyone for joining us on the call this morning. While we expect to see a decrease in our semiconductor business in the second quarter, as we commented on, we are optimistic about our long-term growth opportunities in non-semi and semi markets as we continue to execute on the growth strategies we discussed. Thank you for your interest in MKSI. This concludes our comments.

Operator

Thank you, sir. Ladies and gentlemen, that does conclude the MKS Instruments first quarter earnings conference call. If you would like to listen to a replay of today's conference, please dial 303-590-3000, using the access code of 11111743 followed by pound key. ACT would like to thank you for your participation. You may now disconnect.

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