Bhavesh Lodaya

Bhavesh Lodaya asked about Qnity's EBITDA guidance for 2026, seeking insights into the underlying assumptions for semiconductor trends, particularly regarding MSI (Memory Semiconductor Industry) and PCBs (Printed Circuit Boards), and how these metrics influence the outlook. He also inquired about the company's expected quarterly cadence for the year, following the first quarter's high single-digit sequential top-line growth and similar margins to the fourth quarter.

Answer

CEO Jon Kemp explained that the 2026 EBITDA guidance is anchored on mid-single-digit growth expectations for both MSI and PCB indicators, aligning with market estimates plus Qnity's anticipated outperformance. Regarding quarterly cadence, Mr. Kemp noted less seasonality since the 2023 downturn, expecting consistent, steady performance throughout 2026 with a slight peak in the third quarter, similar to 2025 after adjusting for the IT system cutover.

Bhavesh Lodaya inquired about the key metrics and assumptions underpinning Qnity's 2026 EBITDA guidance, specifically regarding MSI and PCB market trends, and asked for insights into the company's quarterly cadence for the year.

Answer

CEO Jon Kemp explained that the 2026 guidance is anchored to mid-single-digit MSI and PCB growth, similar to 2025, combined with Qnity's expected outperformance. He noted less seasonality since the 2023 downturn, with Q1 showing high single-digit sequential growth and consistent, steady performance expected through the year, peaking slightly in Q3, similar to 2025 after adjusting for spin-related sales shifts.

Bhavesh Lodaya asked why ESI was placed in the Specialty segment and if the overall segment is expected to achieve mid-single-digit growth in 2026. He also inquired about the 2025 performance of Micromax and ESI, if the 2026 guidance includes them at $70 million EBITDA, and the timeline for realizing untapped commercial opportunities.

Answer

CEO Ben Gliklich explained ESI's placement in the Specialty segment due to its autonomous operation and broad end markets, noting it enhances the segment's growth and margins. For 2026, he expects mid-single-digit EBITDA growth for Specialties, driven by robust offshore business and ESI's strong growth, despite uninspiring industrial markets. Mr. Gliklich confirmed Micromax's 2025 EBITDA was ~$40 million and ESI's ~$30 million (expected $30 million in 2026), totaling ~$70 million in the 2026 guide. He added that both acquisitions are outperforming initial expectations, and early integration efforts are identifying commercial collaboration opportunities, though quantifying revenue synergies and their timeline is difficult.

Bhavesh Lodaya asked for Element Solutions' rationale behind placing the EFC acquisition within the Specialty segment and whether the overall segment is expected to achieve mid-single-digit growth in 2026. He also questioned the 2025 performance of Micromax and EFC, their inclusion in the $70 million EBITDA guide, and the timeline for realizing untapped commercial opportunities.

Answer

CEO Ben Gliklich explained that EFC, a niche business with highly technical products across diverse industries, was placed in the Specialty segment due to its autonomous operation and broad market reach, enhancing both growth and margins for the segment. He expects the Specialty segment to repeat mid-single-digit EBITDA growth in 2026, driven by robust offshore business and strong EFC growth, despite uninspiring industrial end markets. Mr. Gliklich confirmed Micromax and EFC contributed roughly $40 million and $30 million EBITDA respectively in 2025, included in the $70 million 2026 guide with modest growth and integration conservatism. He noted Micromax outgrew expectations (>10% organic revenue growth in 2025) and both are outperforming initial expectations in early 2026, with commercial opportunities from collaboration already identified.

Bhavesh Lodaya from BMO Capital Markets inquired about the expected performance of Micromax under Element Solutions Inc's ownership, including opportunities with existing customers, and anticipated growth and synergies from the projected $40 million EBITDA. He also asked for an update on Kouprion's commercialization activities, its planned startup, and initial thoughts on its earnings or EBITDA contribution for the next year.

Answer

President and CEO Benjamin Gliklich expressed excitement about integrating Micromax into Element Solutions Inc's electronics segment, MacDermid Alpha Electronic Solutions. He noted Micromax's mid-single-digit market growth algorithm, with Element Solutions Inc's supply chain connectivity expected to accelerate this. Cost synergies are anticipated to be modest, but value creation will come from accelerated growth and enhanced value propositions. Regarding Kouprion, Mr. Gliklich confirmed the mid-scale site is on track to be operational by year-end, providing product for qualification and sales, with meaningful sales and profits expected next year. Commercialization is progressing with compelling opportunities and qualification milestones anticipated in the fourth quarter.

Bhavesh Lodaya inquired about the expected performance of the Micromax platform under Element Solutions Inc's ownership, including opportunities with existing customers, and anticipated growth and synergies beyond the initial $40 million EBITDA mark. He also asked for an update on Kouprion's commercialization activities, its planned startup this quarter, and initial thoughts on its earnings or EBITDA contribution next year.

Answer

President and CEO Benjamin Gliklich expressed excitement for Micromax joining the Element Solutions Inc family, expecting it to outperform its mid-single-digit market growth due to ESI's deep supply chain connectivity and OEM/specifier relationships. He noted modest cost synergies but significant growth acceleration. For Kouprion, Mr. Gliklich confirmed the mid-scale site is on track to be operational by year-end, anticipating meaningful sales and profits next year, with qualification milestones expected in Q4.

Bhavesh Lodaya of BMO Capital Markets asked for a comparison of the current Electronics business to its prior peak in 2022, focusing on volumes and sub-segment performance, and also inquired about the competitive landscape for Power Electronics and advanced packaging products.

Answer

President and CEO Benjamin Gliklich clarified that while Electronics revenue hit a new peak, volumes have not, particularly in the circuitry and assembly businesses, which are impacted by softer smartphone and industrial markets. He noted that in the established wafer-level packaging market, Element Solutions is gaining share, and in the newer Power Electronics market, the company is outgrowing the market despite new entrants due to its differentiated technology and IP.

Bhavesh Lodaya of BMO Capital Markets asked for a comparison of the Electronics segment's current performance to its prior peak in 2022, questioning if volumes have fully recovered, and inquired about any new competitive pressures in Power Electronics and advanced packaging.

Answer

President & CEO Benjamin Gliklich explained that while Electronics revenue is at a new peak, volumes are not, with the semiconductor business at peak levels but circuitry and assembly lagging due to smartphone and industrial softness. He noted that competition in wafer-level packaging is established, while in the newer Power Electronics market, new competitors are emerging, but Element Solutions maintains a strong, IP-protected position.

Bhavesh Lodaya asked about potential actions the company could take to protect its annual guidance if end-market demand slows in the second half, and also questioned Executive Chairman Sir Martin Franklin about his future involvement and ownership in the company.

Answer

CEO Ben Gliklich highlighted the company's highly variable cost structure, noting they can quickly reduce discretionary spending and incentive compensation, as demonstrated in Q2 2020, though this is not currently contemplated in the guide. Executive Chairman Sir Martin Franklin explained his recent share sale was for personal liquidity reasons and does not change his long-term vision or involvement with the company.

Bhavesh Lodaya of BMO Capital Markets inquired about the scenarios underpinning the high and low ends of the EBITDA guidance range, given the short-cycle nature of the business. He also asked if the company has seen any business impact from recent discussions around tariffs.

Answer

CEO Benjamin Gliklich explained that guidance is based on unit expectations. The high end of the range assumes an accelerated replacement cycle for devices and better industrial health, while the low end considers risks from potential tariffs or a weakening industrial market. He added that the company has not yet seen a real impact from tariffs, though it continues to benefit from longer-term supply chain realignments to Mexico and Southeast Asia.

Bhavesh Lodaya from BMO Capital Markets asked if the Electronics segment could repeat its strong 2024 EBITDA growth in 2025, given positive market forecasts. He also inquired about the source of growth in Advanced Packaging, whether from existing or new customers.

Answer

CEO Benjamin Gliklich noted it was too early for 2025 guidance but expressed confidence in outperforming the market, supported by durable, long-term growth dynamics. He explained that growth in Advanced Packaging comes from both existing customers ramping up and new customer wins. The shift to varied, non-standard chip designs has increased ESI's mindshare with a growing base of specifiers, including OSATs, semi fabs, and OEMs.

Bhavesh Lodaya asked for a longer-term view (next 3-4 years) on MSI, considering current MSI is below prior peaks and increasing CapEx in AI data centers. He also inquired how Entegris counts outperformance metrics, specifically if content gains are included as outperformance or if it's measured over and above utilization and content gains.

Answer

CEO Dave Reeder explained that advanced logic (7nm and below) is fully utilized and needs more capacity for MSI growth. DRAM is highly utilized, requiring incremental capacity. NAND's ~85% utilization is being consumed more by layer count than MSI growth, with potential for capacity additions later. Mainstream logic, which represents the bulk of MSI, has been slow to recover and is mixed, despite healthy inventory levels. Dave clarified that outperformance is measured from a revenue perspective, and increased layer count, which boosts content per wafer, contributes to revenue and is counted as outperformance relative to the market.

Bhavesh Lodaya inquired about how Entegris's outperformance metrics are counted, specifically whether content gains from more layers are considered outperformance or if outperformance is over and above utilization and content gains.

Answer

Dave Reeder (CEO, Entegris) clarified that outperformance is viewed from a revenue perspective. Incremental content per wafer, driven by layer count growth, increases revenue and is counted as outperformance to the market because it's incremental to what the normal market would see.

Bhavesh Lodaya asked if Entegris sees opportunities to reduce capacity or increase utilization of newer plants, or if the company is currently right-sized. He also inquired about capital allocation priorities after leverage reduction is achieved.

Answer

CEO Dave Reeder stated that Entegris has ample capacity to capture demand in an upcycle with limited incremental CapEx, and decisions on manufacturing footprint will be made based on the rate and pace of industry growth. He reiterated that the near-term capital allocation priority is debt reduction (aiming for <3x, preferably <2x leverage), with other strategic capital allocation strategies to be discussed at a future Capital Markets Day.

Bhavesh Lodaya of BMO Capital Markets questioned the assumptions behind the high and low ends of the Q3 guidance, particularly concerning tariff impacts. He also asked for an update on the progress and timeline for requalifying products to move manufacturing for Chinese customers out of the U.S.

Answer

CEO Bertrand Loy explained that the Q3 guidance reflects a stronger wafer start environment but remains prudent due to uncertainties from tariffs and erratic customer buying patterns. On requalification, Loy reported significant progress, stating that Entegris expects to serve about 85% of its China demand from Asian manufacturing sites by the end of the year, with a target of reaching 95% in the following year.

Bhavesh Lodaya questioned the drivers behind the strong 2024 growth in CMP pads and slurries and asked if this was a leading indicator for other platforms. He also inquired about the impact of adverse currency movements and the company's hedging strategy.

Answer

CEO Bertrand Loy attributed the strong CMP performance to the success of the CMC Materials acquisition, citing cross-selling synergies and a solution-selling approach, particularly for emerging moly applications. CFO Linda LaGorga clarified that the company's global manufacturing footprint provides a natural hedge against currency fluctuations, resulting in minimal impact on gross margin.

Bhavesh Lodaya questioned if 2025 top-line growth could be at least 8% given the Q4 exit rate and better industry expectations. He also asked about the progress of customer qualifications at the Taiwan facility.

Answer

CEO Bertrand Loy stated it was too early to quantify 2025 growth but acknowledged positive drivers like inventory normalization and a potential PC refresh cycle. Regarding the Taiwan facility, Loy confirmed qualifications are progressing well, though liquid filter qualifications are taking longer as planned due to strategic process and supply chain changes aimed at long-term resilience.

Bhavesh Lodaya with BMO Capital Markets asked about Ashland's Life Sciences platform's exposure to the recently FDA-approved oral dose GLP-1 drug and the potential for demand pull from this medication.

Answer

Chair and CEO Guillermo Novo and SVP, Life Sciences and Intermediates, Alessandra Faccin Assis confirmed that oral GLP-1 and oral biologics represent a significant opportunity. Ashland's VP&D portfolio and tablet coatings, particularly high solids coatings like Aquarius Genesis, are relevant. They have multiple active projects with major pharma players, a pipeline of over 80 emerging opportunities, and plan to launch sodium caprate, a formulation enhancer, over the summer.

Bhavesh Lodaya asked about the Life Sciences platform's exposure to oral dose GLP-1 drugs and the potential for demand pull from this medication line.

Answer

Alessandra Faccin Assis, SVP, Life Sciences and Intermediates, confirmed oral GLP-1 and oral biologics are significant opportunities, with Ashland's VP&D portfolio and tablet coatings (Aquarius Genesis) being relevant. She noted multiple active projects with major pharma players, a pipeline of over 80 emerging opportunities, and a planned launch of sodium caprate (formulation enhancer) this summer.

Bhavesh Lodaya from BMO Capital Markets inquired about the potential impact of reciprocal tariffs on regions like Europe and Canada, and asked for an update on the competitive pressures from China in the Specialty Additives segment.

Answer

CEO Guillermo Novo and CFO John Willis clarified that the direct tariff impact outside of China is limited due to in-region sourcing and significant finished goods inventory in Europe. General Manager Dago Caceres described the China market as 'stable at the bottom,' with ongoing competitive intensity in export markets. However, he noted that strong execution in North America and Europe, where customers value quality and reliability, helps offset these pressures.

Bhavesh Lodaya from BMO Capital Markets asked for details on the municipal water applications market within the HIP segment, including its size, growth rate, and key competitors. He also inquired whether the pricing pressures seen in the pipes and fittings subsegment were abating.

Answer

EVP & CFO Steven Bender described the municipal water market as growing at 5-7% over time, with key private competitors like Diamond Plastics and J.M. Eagle. He highlighted Westlake's advantage in providing an integrated kit of both pipes and fittings. Bender also acknowledged that they continue to deal with day-to-day market pricing issues and must remain competitive, especially as resin prices have declined.

Bhavesh Lodaya of BMO Capital Markets questioned if the comment about Q3 earnings being in line with Q2 (excluding one-time items) also applied to the HIP segment, and asked if last year's Q4 seasonality is a good proxy for the upcoming quarter.

Answer

EVP and CFO Steve Bender affirmed that, after adjusting for one-time items and weather impacts, results for both the HIP and PEM segments would have been similar to Q2. He also confirmed that last year's Q4 seasonality is a reasonable expectation for the current year.

Bhavesh Lodaya from BMO Capital Markets asked if customers in the Chlor-Alkali Products and Vinyls (CAPV) business were building inventory ahead of potential tariffs and for an update on channel inventory levels.

Answer

President and CEO Ken Lane stated that customers have been destocking since late 2023 and have not started to rebuild inventories. He does not anticipate any significant restocking until there is a clear market recovery and price improvement, as customers remain focused on managing their own balance sheets and cash flow in the current environment.

Bhavesh Lodaya questioned Olin's chlor-alkali strategy, noting that while industry operating rates are expected to rise, Olin is guiding to lower volumes, and asked what needs to change for this trend to reverse.

Answer

CEO Kenneth Lane clarified that Olin's lower Q1 volume is due to transient issues like a planned turnaround and customer outages, not a change in market position. He stressed that Olin will remain disciplined and will not chase volume in weak markets, preferring to hold value until market conditions justify higher production rates.

Bhavesh Lodaya of BMO Capital Markets asked if weaker commercial demand in the Winchester segment could lead to easing propellant costs and if margins could return to the 19-20% range. He also questioned the contrast between sequential EBITDA improvement in Chlor Alkali and the declining ECU index.

Answer

President and CEO Kenneth Lane stated that propellant costs remain a headwind due to high global demand for restocking, which will likely continue until new capacity comes online in a year or two. Regarding the ECU index, Lane reiterated that the reported decline was a mix effect from the hurricane, and excluding that, results showed stable chlorine and strengthening caustic prices, leading to a slight net improvement.

Bhavesh Lodaya, on behalf of John McNulty at BMO Capital Markets, asked about the competitive dynamics in China's electronics market, particularly concerning the rise of a domestic supply chain, and DuPont's positioning.

Answer

CEO Lori Koch highlighted that DuPont maintains a strong, outsized position in China's semi space compared to peers, representing about 30% of its electronics business. She stated this is playing out favorably as new fab construction is concentrated there. DuPont has a solid position with both local Chinese players and the global OEMs operating in China, which is benefiting its results.

Bhavesh Lodaya, on behalf of John McNulty, questioned how a potential global increase in tariffs and duties might affect Dow, considering its reliance on exports for commodities like polyethylene despite its U.S. cost advantages.

Answer

James Fitterling, Chair and CEO, responded that Dow already operates in an environment with tariffs and maintains its export competitiveness due to strong U.S. Gulf Coast advantages. He noted that major markets like China will remain net importers and that Dow operates as a domestic player in other regions. He also mentioned that carbon border adjustment mechanisms are another form of tariff the company is monitoring.