Good day everyone and welcome to the Entegris first quarter 2010 earnings release conference call. Today's call is being recorded. At this time, for opening remarks and introduction, I would like to turn call over to Mr Steve Cantor, Vice President of Corporate Relations. Please go ahead sir.

Good morning, and thank you all for joining our call. Earlier this morning, we announced the financial results for our first quarter ended April 03, 2010. You can access a copy of our press release on our Web site, www.entegris.com. Before we begin, I would like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, which are outlined in detail in our reports, and filings with the SEC. On this call, we will also refer to non-GAAP financial measures, as defined by the SEC in Regulation G. You can find a reconciliation table on today's press release as well as on our Web site. On the call today are Gideon Argov, President and CEO; Bertrand Loy, Chief Operating Officer; and Greg Graves, Chief Financial Officer. Gideon will now begin the call.

Thank you Steve and good morning. Thanks for joining the call this morning. I will provide an overview of the first quarter, and then Greg will provide some detail on the financial results. In our last quarter’s conference call, I described the emergence of what we call Entegris 2.0, which is a reflection of the significant changes we put in place over the past 18 months. Our first quarter results not only represented another quarter of very positive trends, but also clearly demonstrated the impact of these transformational changes. Let me highlight a few key items. First, our Q1 sales grew 10% sequentially to $160.5 million reflecting solid growth in both our capital equipment and unit driven businesses and across our product lines. We are clearly benefitting from the upturn in the semiconductor industry, but we are also seeing the benefit from our renewed focus on key customers, and from the increased applications for our technologies as customers move down their technology road maps. Second, we reported non-GAAP EPS of $0.15 and a non-GAAP operating margin of 16.5%, which exceeded our target model for this revenue level. We were able to achieve this with a much leaner cost structure and with excellent execution in our manufacturing and supply chain organization. Third, we generated $28 million in cash from operations and reduced our debt by $20 million. Our balance sheet is now net of cash positive for the first time since the second quarter of 2008. In terms of the revenue trends by market, we continued to benefit from the rebound of the semiconductor industry. Sales to semiconductor customers were up 12% from the fourth quarter and represented 72% of Q1 sales. Outside of semi, we saw strength in TFT [ph], LCD and LED as well as steady but modest improvement…

Thank you, Gideon. I will provide some background on the first quarter financials, and then add some commentary on current business trends and our operating model. We were very pleased with the Q1 results, which demonstrate the operating leverage of the business. Orders grew steadily through the quarter as sales grew 10% over Q4, and we were nearly three times higher than a year ago at the depth of the downturn. Our non-GAAP EPS is $0.15 per diluted share, was a 25% increase over Q4. By geography, sales for our largest region, Asia, grew 7% sequentially. The US grew 19%, Japan was up nominally, and Europe grew 8%. Foreign exchange rates had a very modest, unfavorable impact on sales due to the stronger US dollar. We continued to operate our business within the parameters of our target operating model. We achieved non-GAAP operating margins of 16.5% in Q1. At a $160 million of revenue, our target model is for non-GAAP operating margins of 14% to 15%. This performance was driven by strong gross margin results, and continued control of operating expenses, partially offset by higher variable compensation costs. Gross margins for the first quarter improved to 45.6% from 43.9% in Q4 due to higher volume and high efficiencies in our manufacturing operation. Operating expenses excluding amortization were $46.6 million or 29% of sales. As a percentage of sales, this was only slightly higher than in Q4 even as we restored the remaining salary cuts as well as variable compensation plans. Total spending was slightly in excess of our guidance as higher than expected revenue resulted in higher variable compensation accruals. We had another excellent quarter of cash flow generating $28 million in cash from operations. We continued to remain focused on working capital management. Even with the increasing sales and…

Thank you gentleman. (Operator instructions) We will hear first from Krish Sankar with Bank of America/Merrill Lynch.

Yes, good morning guys. A couple of questions, Greg, if I look at your guidance, modestly up revenues and looking at your cost assumptions, it seems like gross margin is going to be flat and most of the drops were still coming from the OpEx line, is that the right way to think of it?

We would expect gross margins – when we talk about modest revenue, Q1 was up 10%, we would expect Q2 to be up something a little bit less than that. With regard to the gross margin, we did have some significant tail winds in Q1, some of the merit increases will impact gross margin, so I would expect the margin to be flat or up just slightly in Q2.

Got it, got it, okay. And then do you guys have a revised target model now that you are running well ahead of that, what do we think of let us say you hit a $200 million revenue run rate, how would the gross margin or half [ph] margin look like?

Now Krish, I extended it out, we extended it out to $170 million at the Analysts Day on March 4, we have not extended it beyond at that point, but what I will say is that $170 million our variable comp plans are all maxed out, and so as you get beyond that level, there should be very significant operating leverage, although I said we have not set a model out at this point.

Okay, another thing, looking at your businesses, it seems like you are getting a pretty strong growth from the CapEx side of the business. How do you envisage that going into the second-half of the year, and also on the consumable side of the business, is there any seasonality that comes into play? I mean, is there anything such as a normal seasonality?

Okay, Krish this is Gideon, good morning. On the CapEx side, we tend and have always tended to leave on the CapEx side as we supply components and sub systems to go into tools. We saw sales to OEMs grow by 100% from the second quarter to the third quarter, and by a 100% from the third quarter to the fourth quarter, and that is reasonable and logical when you think about leading to the CapEx cycle, which we now see sort of in full bloom here throughout the industry. We would expect to see continued improvement as the CapEx cycle develop, but on a percentage basis, you would not see necessarily the same percentage increases in CapEx going forward although we are very bullish about that business, and we are particularly bullish by the way about some areas that are not related to our traditional, historical core business like LED, which is growing very quickly and where we have a very significant element of participation. So that is on the CapEx side. The seasonality factor that you ask about is really we do not see a lot of seasonality, we do see historically some occasions around the Chinese New Year, we see some fall-off that did not happen this year actually in the first quarter, capacity utilization being as high as it was. I think there is a not a lot of seasonality in the business, Krish.

Got it, Gideon. And on the non-semi business, it gets about roughly $45 million in Q1, is it safe to assume a huge part of the strength is coming from the LCD business and that should probably be sustainable going forward from the rest of the year?

Krish, this is Bertrand. Yes we definitely did see some strength on the LCD market but we saw really frankly strength across our known semi market, I think that the strategy that we described in New York during our Analysts Day, which was really centered around a number of adjacent markets, LEDC [ph] which is where LCD would be part of color are all actually benefitting from meaningful growth in Q1. So I am very pleased seeing the strategy seems to be working. Our dedicated teams keep coming back with very interesting opportunities for us. So I would not necessarily single out one particular market over the others.

Okay and a final question from my end is your Microenvironments and Specialty Materials grew revenues very nicely, but the segment profitability kind of was down, is there any specific reasons for that? This is my final question and congrats on a good quarter.

No, not really. We continue to – as we ramp up in (inaudible) that is the one business where we do have some modest inefficiencies, but overall, I mean, we were pleased with the performance of that business.

Thank you. And we will continue on to Christian Schwab with Craig-Hallum Capital Group.

Thank you. Great quarter guys. Regarding the LED market, can you elaborate on that a little bit further, exactly what products you are selling into that market, which customers you are selling to, approximate revenue in the quarter, as you look out the next one to two years, how big of a business that can be to you?

All right, you have a number of questions here for me. So the types of products that we are primarily selling to markets and applications would be the gas filters, diffusers, gas purification systems. We sell to obviously the two largest OEMs in this particular market, but we also sell gas purification systems directly to the end users as very often – actually, they manage themselves the overall such [ph] utilization investment. In terms of how meaningful it is, it is growing, it is growing actually very, very nicely. We have not broken up the overall revenues coming from LED, until now we do not intend to do it during this particular call, but at some point in time, we may choose to if those numbers continue to grow the way they are. The way those numbers could continue to grow significantly above any market trends would be if at some point in time LED are really – the LED technology is being used in general immunization applications. And frankly, right now, I am saying that this particular industry is making some very interesting progress and they are on fire in terms of making the overall cost of ownership work. So I am pretty optimistic but it is way too early to tell where the LED industry in general will go and how meaningful it will become for us.

Good, great.

Note as well, this is Gideon, from a technology standpoint, the purification systems that we make that go into the MOCVD process has a demonstrable impact on photoluminescence of LED rays, which is really the basis for why they are essential in the manufacturing process. So it is not a nice to have, it is actually a got to have.

Got it. And then Greg, as it relates to back in the envelope calculation just trying to make sure the math is not wrong, it kind of comes to about $0.18 give or take, are we doing our math right over here?

Give or take.

Great. And then my last question, at your Analysts Day you highlighted as the industry grows and you continue to gain market share, and you highlighted with the LED some of the expansion of the same opportunities, you believe in the next couple of years you can drive this business to an $800 million to 950 million a year business. Given what you are seeing today, do you have greater or less conviction in that?

Given what we are seeing today, no, we would not change the statements that we made during the Analysts Day in New York.

Yes, I would agree entirely, very high conviction on that score.

Great, thank you guys.

Thank you Mr. Schwab and we will make our next question from Avinash Kant with DA Davidson.

Good morning Gideon and Greg. One or two quick questions actually.

Good morning Avinash.

Good morning.

I did not catch your remark on the interest expense, what do you expect this to be in the June quarter and what was it in the March quarter?

It was approximately $1 million in March and we expect it to be about $700,000 in June.

And you said you expect to pay off the debt by –

We should pay the debt off in the third quarter and if you think about it, you know, we are $36 million today, we paid off $20 million last quarter on such a current run rate that is very achievable.

Right. How much sales do you have into the LED market right now? It is not material yet right?

We do not want to break it down and give you an actual number. It is material in terms of where it was a year ago and where it is today. It is very high growth rate that I will tell you, its growth rate is sort of very high, let us just say very high growth rate and we expect that to continue over the next few quarters. As Bertrand said, there is a threshold level above which we may choose to highlight that number. I think that it is too early to do that at this point.

Okay.

And I would say Avinash, LED is one of a number of new markets that we highlighted as part of the Analysts Day in New York, we highlighted a variety of what we call adjacent markets. When we talk about $1 million of incremental investment, a large amount of that is going into those new markets, and frankly LED is not the only one of those that is going well. We have a number of others that are very exciting that we choose to not talk about at this point, but we are very excited about.

Avinash, just to clarify, the exact interest expense number in the quarter was $1.3 million.

Okay and you expect it to be $0.7 million in the next quarter?

Yes, okay, good. And talking maybe a little bit about the directionality of the business throughout the year, you have been talking about the unit driven and the CapEx driven businesses, most of the key CapEx guys have still been talking about improvement in revenues into the June quarter. Now, any idea in terms of the unit driven business, how could that be growing in the June quarter, and do you expect that to at least continue to grow throughout the year? What is the visibility out there?

Avinash, this is Bertrand. I would say that based on all of our checks with our major customers, we have a fairly good visibility on business trends going into Q2 and Q3. If you talk to most of the leading foundries for instance, they will tell you that their Q2 and Q3 capacity is totally sold out, and they are working very aggressively to make sure that the same would be true for Q4. So as of right now, I see no indication of softening in terms of our unit driven business and I totally subscribe to some of the industry projections in terms of NSI growth for Q2 and Q3. Again Q4, it is a little too early to comment on, but again fairly robust expectation for Q3 and Q4.

Bertrand, the recent charter has been regarding foundries that they may have been getting worried about double ordering or some inventory build out, have you heard anything from your customers in foundries or others regarding that kind of a situation?

No, as Gideon stated earlier, we look into the inventory situation very carefully, and as of right now, we are not concerned of any significant inventory build up in the channel.

Okay, perfect. Thank you so much.

Thank you and we will hear now from Dick Ryan with Dougherty.

Good morning. So Gideon, can you give us a sense of market share in the Microenvironments 300 millimeter and maybe on the re-use side of that, how that is going and what those margins look like?

Good morning, Dick. So we had a good quarter with a 300-millimeter shipper business, which grew, and we believe we are on track for what we expect to be a 25% market share in 2012 for that marketplace. And so, what I would say is we are on a curve, as we stated at the Analysts Day, we are somewhere around the 10% in the current timeframe, and we did not give precise numbers but that is about what we said, and we are in a trajectory of things to get this available by 2012 and we grew this last quarter. So as far as profitability, I do not have anything particular to say other than that is a business that contributes to profitability and we are happy with what we see there. Re-use is not a – I would call it neither a strategic threat nor a strategic – huge opportunity, it’s a fact of life in the shipper business in some parts of it and it is playing a role here but it not playing an overwhelming role in this business. That is it.

Great. Also Greg you mentioned you were pleased with your market share in key areas, can you give some metrics there or was that just kind of a qualitative statement?

It is a qualitative statement, Dick. I mean, it is hard for us on a product line by product line basis to be terribly specific although we know in some areas of filtration we are gaining market share. We tend to look at the public data versus our main comparable there, and we can see our performance versus theirs just for gaining share. We are gaining share in some CMP applications. We are gaining share in LED applications. So when you take the business as a whole, even in this quarter we had one profit center that had revenue of more than $10 million. So the business is still made up of a lot of small-to-medium size product lines. And so on a product line by product line basis, it is hard to specific other than to talk about those broad trends that I just mentioned.

The modest increase for Q2, is that expected to be linear? Are you seeing that across the quarter or is there any seasonality?

The modest increase in revenue, in general we would expect it to be linear.

Great thanks.

Thank you Mr. Ryan. (Operator instructions) We will now have to James Gentile with Newland [ph].

Hi guys, what a difference the year makes?

Yes James.

Now you are in the luxurious net cash position given what you had said in the first quarter, it is about a couple of quarters early. So, great job on the cash flow. So I am going to be that annoying investor and ask what you are going to do with cash.

James, we have got ways to go on the balance sheet before we have got a balance sheet that we think what we should like in this industry. Right now, we have got net cash we said of about $22 million. I would like to have net cash of somewhere near $100 million. So I look at this year as the year to re-build the balance sheet. At this time next year, we might be thinking about that question but to me it is continue to re-build the balance sheet, get ourselves to $100 million of liquidity, and then think about options from there.

Great, seems like you are on track to attain the $100 million in cash by the end of the year, so congratulations.

Thank you.

Thank you. We will go on to Steve Schwartz with First Analysis.

Hi, good morning everyone. Greg, to stay on you with James’ question, with respect to share buybacks, you did one in 2006, I do not know that that was executed in a way you guys now consider ideal but is that something you would be willing to consider maybe in 2011 or 2012?

No, I think as we get out into 2011 and 2012 we will look at the environment, what our business opportunities are for other investments and decide at that point where we go with our cash, but it is really premature to talk about that at this point. It probably suffices to say we will never do another $250 million tender offer.

Yes. So at this point, you do not really think about the secondary offering and the dilution that came with that and how to maybe offset some of that?

Not really, Steve.

Okay.

At that time, it was the right thing to do, to put the liquidity on the balance sheet and reduce the debt and that was a fact, we are glad that we did it and feel good about where the balance sheet is trending today.

Okay. Thank you.

Thank you. (Operator instructions) We have no additional questions from the audience. Mr Argov, I will turn things back over to you for any additional or closing remarks.

Thank you for joining us on our Q1 conference call. We look forward to updating you as the year unfolds. Have a good day.