Qnity Electronics, Inc. Q3 FY2025 earnings call

• Jon Kemp noted the successful spin-off on November 1, joining the NYSE and S&P 500, and emphasized the company's 50+ years of technology and innovation leadership, strong customer relationships. • Matt Harbaugh discussed third quarter net sales of $1.3 billion, up 11% year-over-year with 10% organic growth, driven by advanced nodes, advanced packaging, and thermal management. • Highlighted strategic advantages like local-for-local approach with manufacturing and R&D facilities near customers, enhancing intimacy and supply chain resilience. • Key priorities include investing in innovation, optimizing footprint for cost and complexity, and deploying capital to high-value opportunities.

The Semiconductor Technologies segment posted $692 million in net sales with a volume growth of 9% and an estimated adjusted pro forma EBITDA margin in the mid-30s. The Interconnect Solutions segment delivered net sales of $583 million with a volume growth of 15% and an estimated adjusted pro forma EBITDA margin in the mid-20s. Semiconductor Technologies contributed around 53.23% of the total net sales ($692M out of $1.3B), while Interconnect Solutions contributed around 44.85% ($583M out of $1.3B).

• Raised full year 2025 net sales guidance to $4.7 billion. • Reaffirmed estimated adjusted pro forma operating EBITDA of approximately $1.4 billion, representing 9% top line growth and an estimated 10% EBITDA growth year-over-year. • Adjusted EBITDA margin outlook remains at approximately 30% with momentum expected from top line growth, mix improvements, and productivity initiatives. • Acknowledged the temporary third quarter timing shift won't repeat, incorporating a prudent normalization.

Q: Why did sales grow faster than EBITDA this quarter, and will this pattern continue?

A: Jon Kemp said it's a bit of an aberration due to currency dynamic, mix dynamic, and strategic investments, expecting reversion to typical cadence of EBITDA growth faster than sales going forward.