PETER KIRLIN - ATMI INC (ATMI)
CEO Interview - published 03/23/2000
DOCUMENT # JAQ201
Peter S. Kirlin, PhD is Executive Vice President of ATMI, Inc. He has
been with ATMI since February 1988. Mr. Kirlin holds a PhD in Chemical
Engineering from the University of Delaware, has 22 issued US Patents
and has received numerous awards including the Victor K. LaMer Award
from the American Chemical Society.
SECTOR: SEMICONDUCTOR EQUIPMENT
TWST: Let's start out by your giving us a brief overview of ATMI,
gentlemen: the company's history, products, services, customers, those
kinds of things.
Dr. Kirlin: ATMI was really founded in 1986 with a focus on advanced
materials for semiconductor processing. Since then, we've experienced a
compound annual growth rate of between 30% and 35%, with revenues this
year peaking somewhere North of $150 million with revenues in 1999
hitting $196 million.
Mr. Sharkey: We went public in 1993, as a real concept play. We were
about $7 million in revenues at the time. But we've grown now to the
point where we've got locations in San Jose, Austin, Phoenix,
Minneapolis, and here in Danbury, Connecticut as well as operations in
South Korea. So we've become a global company. We've got products in
both semiconductor materials; those markets are driven by wafer starts
and we have products in, what I call, semiconductor equipment, which are
driven by fabrication plant construction and capacity expansion within
the industry. I think we count approximately 70 of the world's largest
semiconductor manufacturers as customers.
TWST: How do you think your R&D expenditures will change in the future?
Dr. Kirlin: We expect that on an absolute basis, R&D dollars are going
to grow as the revenues grow. Right now R&D spending is between 11% and
12% of revenues and that's allowed ATMI over the last dozen years to
patent more than 160 inventions, where we actually have issued patents,
and there's another 180 or 185 patent applications on file. And I think
it's fair to say that we are widely recognized by our customers as
technology leaders in the market niches that we serve.
TWST: What are the most significant trends, developments, or changes you
are anticipating in your marketplace over the next several years?
Dr. Kirlin: We think the most significant trend for our customers, in
particular the integrated semiconductor manufacturers, is a significant
shift to differentiation being done on the basis of design. In turn,
this has driven a manufacturing outsourcing model in the industry. The
most graphic example of this trend is the growth of the foundries in
Southeast Asia coupled with the success of the fabless business model.
That's what's happening with our customers. As far as our business is
concerned, outsourcing of manufacturing is pushing more and more of the
process development and process integration back onto both the equipment
supplier and the materials supplier. We're driving our company to
respond to this new marketplace paradigm using a two-pronged strategy.
One strategic vector is bundling materials with equipment to increase
the productivity of the OEM tool. The end result is a lower total cost
of consumables. The other strategic vector is be anywhere inside the fab
where high value added material is used, in other words we aspire to
serve the $3 Billion specialty materials market segment with a
comprehensive offering of best of breed products. And the goal of doing
that is to minimize time-to-market of a new material solution.
TWST: What are the greatest opportunities for ATMI over the next several
years, gentlemen? Is there a chain of events that could lead the company
to substantially beat expectations in the future?
Dr. Kirlin: I roll back to the answer I just gave you, and that is, we
see the opportunity to really consolidate our segment, which is about a
$3 billion total available market, so that we can bring the customers
comprehensive material solutions. If we can execute on that strategy,
that should certainly drive ATMI's growth beyond our market rate.
Mr. Sharkey: I think what drives that possibility is, as we mentioned
earlier, the intellectual property engine that we have built that
enables us to develop innovative products to grab market share in these
markets. Also our strategy has been tightly linked with several mergers
and acquisitions that we have used to build critical mass and a breadth
of product line that no one else in the industry has. And having those
kind of vectors attacking this market, we think we can grab a
significant share of it.
TWST: What are the major concerns that the company faces now and might
be facing in the future?
Dr. Kirlin: I think when we look at managing our business, given our
business model, which is growth both by internal product development as
well as mergers and acquisitions, our biggest challenge, is to ensure
that we integrate acquired companies well. And that means more than just
adding a product to our catalogue, so to speak. It means integrating
those companies so that our knowledge that walks out the door at 6
o'clock every afternoon or every evening, stays with the company, gets
linked and levered to drive us forward. So that's, typically, our
biggest risk.
TWST: Could you remark further on the company's advantages versus
competition? What sets your company apart from your competitors?
Dr. Kirlin: We see, first of all, our intellectual property, our
technology and our global infrastructure. We service customers across
the globe with the same level of expertise that we have here in the
United States. And, finally, it's the breadth of our product lines. We
have products actively serving the CVD market, the Etch market, the ion
implant market, and the photo-resist ancillary markets inclusive of
residue removers and photo-resist strippers. We also have an early stage
entry into the CMP market niche. As I mentioned earlier, we don't just
offer the materials; they are coupled with the equipment that deliver
them to the tool and devices that monitor the amount of material
entering as well as that exiting the tool. And finally we are a market
leader in the equipment which mitigates the environmental impact of
these consumable materials.
TWST: Any opportunities for improvement within the company, particularly
any weaknesses to be addressed?
Dr. Kirlin: We are presently focused on a few key areas; typically, we
enter a market with a goal to be number one or number two in that
particular market niche. Areas where we have early entries are CMP and
the gas monitoring, and we're working to drive these two product lines
to number one or number two in their respective niche.
Mr. Sharkey: You never like to admit to your weaknesses, but I think
where we need to concentrate to make sure that we stay on our strategic
pathway is to intelligently select the acquisition candidates that we
need and intelligently hire people as our business grows to be able to
manage the growth because we expect it to be a pretty high growth
engine.
TWST: What are the specific goals for ATMI over the next several years?
Dr. Kirlin: It goes back to number one and number two in every market
segment of that $3 billion market that I described before. Historically,
our market has had a growth rate on an average basis of high teens
15%-17%. ATMI has a historical growth rate of double the market growth
rate. And we certainly have internal goals and strategies in place to
drive the business forward at a similar clip. So it's number one and
number two and it's growth at approximately double industry rates.
TWST: How do you gentlemen feel about your current stock price?
Mr. Sharkey: You know, the stock price is a score, but it's not a score
that we really look at short term. I mean, obviously, it helps in the
financing of the enterprise, but our real attitude toward the market cap
or the stock price is that if we execute on our strategy it will take
care of itself. So market dynamics will drive the market valuation; it's
more or less things that are out of our control. Within our control is
the running of the business, and we think long term that will really
equate to what the market value is.
TWST: Speaking long term, if you were sitting down now with a group of
potential long-term investors, what reasons would you give them to
invest in ATMI?
Dr. Kirlin: It goes like this. Our business model/strategy; our
intellectual property; and then the management/employees.
Mr. Sharkey: I think those are the three enduring assets of the company
over time, the strategic vision, the investment in intellectual
property, and the people.
TWST: Thank you.
PETER S. KIRLIN, PH.D.
Exec. Vice President
DANIEL P. SHARKEY
VP, CFO & Treasurer
ATMI, Inc.
7 Commerce Drive
Danbury, CT 06810
(203) 794-1100
(203) 830-4116 - FAX
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