Sign in
EI

ENTEGRIS INC (ENTG)·Q3 2025 Earnings Summary

Executive Summary

  • In-line quarter: Revenue ($807.1M), non-GAAP EPS ($0.72), and Adjusted EBITDA margin (27.3%) came in around the midpoints of guidance; gross margin trailed guidance due to underutilization tied to new Taiwan and Colorado capacity and deliberate inventory reductions to boost free cash flow .
  • Mix of strengths/weaknesses: APS delivered record liquid filtration sales and sequential margin improvement on sales leverage, while CapEx-exposed products (FOUPs/fluid management) and underutilization pressured margins year over year .
  • Q4 guide steady at midpoint: Sales $790–$830M, non-GAAP EPS $0.62–$0.69, Adjusted EBITDA margin 26.5%–27.5%; CFO framed gross margin 43%–44%, non-GAAP tax ~15%, interest ~$47M, and depreciation ~$53M as key P&L items .
  • Cash flow/Deleveraging catalyst: Record operating cash flow ($249.5M) and FCF ($191M) alongside $150M term-loan paydown; management prioritizes further FCF generation and leverage reduction with CapEx falling in 2026 and underutilized capacity set to ramp .

What Went Well and What Went Wrong

  • What Went Well

    • “Revenue, EBITDA and non-GAAP EPS all met guidance; and we delivered record operating cash flow.” — CEO Dave Reeder, highlighting execution and cash discipline .
    • Product momentum at advanced nodes: “Key wins and strong momentum in liquid filtration & purification, deposition materials and CMP consumables,” with liquid filtration achieving a record quarter .
    • Sequential improvement where leveraged: APS sales +4.8% q/q and adjusted margin up on sales leverage; consolidated operating margin improved 180 bps q/q to 15.2% .

  • What Went Wrong

    • Margins under pressure: Gross margin 43.5% (GAAP) and 43.6% (non-GAAP) fell below guidance due to underutilization across sites, including new Taiwan and Colorado facilities; MS adjusted margin declined on lower volumes and mix .
    • CapEx-exposed lines weak: Year-over-year fab/facilities spend down high-single to low-teens continued to weigh on FOUPs and fluid handling, creating a drag on APS despite strong liquid filtration .
    • KSP South qualification behind schedule: Taiwan site qualifications behind plan, delaying margin/volume benefits, though management expects material ramp in 2026 .

Financial Results

Quarterly progression (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)$773.2 $792.4 $807.1
GAAP Diluted EPS ($)$0.41 $0.35 $0.46
Non-GAAP Diluted EPS ($)$0.67 $0.66 $0.72
Gross Margin % (GAAP)46.1% 44.4% 43.5%
Adjusted Gross Margin %46.1% 44.6% 43.6%
Operating Margin % (GAAP)15.8% 13.4% 15.2%
Adjusted EBITDA Margin %28.5% 27.3% 27.3%

Q3 2025 vs S&P Global consensus

MetricActualConsensusSurprise
Revenue ($M)$807.1 $804.1*+0.4%*
EPS (non-GAAP, $)$0.72 $0.725*-0.7%*
Adjusted EBITDA ($M)$220.7 $223.1*-1.1%*
Gross Margin % (Adj.)43.6% 44.77%*-117 bps*

YoY and QoQ change snapshot (company slide)

Metric3Q25 over 3Q243Q25 over 2Q25
Revenue-0.1% +1.9%
Operating Income (GAAP)-10.0% +15.6%
GAAP EPS-9.8% +31.4%
Non-GAAP EPS-6.5% +9.1%
Adjusted EBITDA-5.3% +1.8%

Segment breakdown

SegmentQ3 2024 Sales ($M)Q2 2025 Sales ($M)Q3 2025 Sales ($M)Q3 2024 Seg. Profit ($M)Q2 2025 Seg. Profit ($M)Q3 2025 Seg. Profit ($M)Q3 2024 Adj. Seg. Margin %Q2 2025 Adj. Seg. Margin %Q3 2025 Adj. Seg. Margin %
Materials Solutions (MS)346.7 354.9 348.6 71.7 72.5 65.2 20.7% 21.3% 18.9%
Advanced Purity Solutions (APS)463.1 439.9 460.8 127.4 95.9 118.2 27.5% 24.1% 25.9%

Cash flow and capital structure

KPIQ3 2024Q2 2025Q3 2025
Operating Cash Flow ($M)197.2 113.5 249.5
Capex ($M)(82.2) (66.5) (66.7)
Free Cash Flow ($M)115.0 47.0 191.0
Capital Structure (end of Q3 2025)Value
Gross Debt~$3.9B
Net Debt~$3.5B
Gross Leverage~4.3x
Net Leverage~3.9x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($M)Q4 2025N/A$790–$830 New
GAAP Diluted EPS ($)Q4 2025N/A$0.35–$0.42 New
Non-GAAP Diluted EPS ($)Q4 2025N/A$0.62–$0.69 New
Adjusted EBITDA Margin %Q4 2025N/A26.5%–27.5% New
Gross Margin % (GAAP & non-GAAP)Q4 2025N/A43%–44% New
GAAP Operating Expenses ($M)Q4 2025N/A$232–$236 New
Non-GAAP Operating Expenses ($M)Q4 2025N/A$184–$188 New
Net Interest Expense ($M)Q4 2025N/A~47 New
Non-GAAP Tax RateQ4 2025N/A~15% New
Depreciation ($M)Q4 2025N/A~53 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/advanced nodes contentQ2: AI driving advanced logic/HBM; industry outside AI subdued . Q1: Strong POR wins; optimism LT; tariff uncertainty .Record liquid filtration; momentum in CMP, deposition; AI remains strong but AI wafers ~5% of volume; content/por wins at N2 vs N5 (2x POR) .Improving AI-driven mix; content per wafer rising.
Utilization/capacityQ2: H2 stronger; no big utilization specifics . Q1: Focus on FCF; working capital actions .Underutilization across network (incl. Taiwan/Colorado) depressed GM; deliberate inventory draw to maximize FCF; expect CapEx down 2026; more revenue with current footprint .Margin drag near-term; improving as volumes ramp.
China/local-for-local & tradeQ1: Tariff impact embedded in Q2 guide; leveraging regional supply chain .>80% local-for-local for China by YE25, >90% in 2026; minimal revenue impact from remaining non-local items .Risk mitigation progressing as planned.
CapEx-exposed productsQ2: Industry fab activity subdued .Facilities build down ~high single to low teens YoY; FOUP/fluid handling pressured; outlook embeds continued softness .Headwind persists near-term.
Free cash flow & leverageQ1: Focus on FCF and paying down debt .Record OCF/FCF; $150M debt paydown; leverage still priority with goal <4x gross, trending down .Improving cash engine; deleveraging underway.
Advanced packagingLimited prior commentary.~$100M revenue in 2025; strategic SAM expansion opportunities; tied to AI logic + HBM .Early-stage optionality growing.
Tax rateN/AQ3 non-GAAP tax 9% boosted by reserve release; normalizing to ~15% in Q4 .EPS headwind in Q4 from higher tax rate.

Management Commentary

  • CEO strategic priorities: “Customer intimacy…accelerated product development,” ramp of Taiwan (volume increases in 2026) and Colorado (in service; complete qualifications in 2026), and “improving free cash flow” to reduce leverage .
  • Advanced-node momentum: “Encouraging momentum in liquid filters, liquid purification, deposition materials like moly, and CMP consumables at the most advanced nodes” .
  • Market backdrop: Wafer starts modestly higher led by advanced logic; facilities-related spend down ~10% in 2025; CapEx-driven revenue declined high-single digits YoY .
  • CFO margin/FCF lens: Gross margin below guidance due to underutilization and selective production cuts to reduce inventory; free cash flow of $191M was “our highest in six years,” driven by ~$50M inventory reduction; priority on debt paydown .
  • Selected quotes:
    • “We subsequently expect CapEx to materially decrease on a year-over-year basis.”
    • “Liquid filtration achieved record quarterly sales in Q3.”
    • “Our free cash flow of $191 million was our highest in six years.”

Q&A Highlights

  • Utilization and inventory: Management intentionally reduced production to optimize FCF; expects improved utilization and profitability in 2026 with minimal incremental capacity investment .
  • China strategy and BIS/tariffs: Minimal expected impact from BIS affiliate ban; local-for-local manufacturing >80% by YE25 and >90% in 2026 to mitigate trade frictions; China sequential sales +8% .
  • Node transitions/content: 2x more CMP plan-of-record wins at N2 vs N5; rising content per wafer at advanced nodes, but AI wafers ~5% of volumes (though ~30% of revenue) .
  • APS dynamics: Liquid filtration strength vs continued FOUP/fluid management weakness amid facilities CapEx downturn; sequential APS margin improved on sales leverage .
  • Taiwan/Colorado ramp: KSP South behind schedule but progressing; Rock Rimmon (Colorado) in service, adds depreciation in Q4; ramp/quals major 2026 focus .

Estimates Context

  • Q3 revenue slightly beat consensus ($807.1M vs $804.1M*), while non-GAAP EPS ($0.72) was roughly in line/slightly below the $0.725* consensus; Adjusted EBITDA ($220.7M) modestly trailed $223.1* consensus, and adjusted gross margin (43.6%) lagged the 44.77%* consensus, reflecting underutilization .
  • Into Q4, consensus alignment will likely adjust to management’s 43%–44% gross margin, normalized non-GAAP tax (~15%), and incremental depreciation from Colorado, with EBITDA margin guided at 26.5%–27.5% .

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Operating execution solid despite macro: Results in-line with guidance, but gross margin remains constrained by underutilization; management expects stabilization near current levels with improvement as volumes normalize .
  • Cash and deleveraging are becoming clear positives: Record OCF/FCF and $150M debt reduction; 2026 CapEx set to decline meaningfully, pointing to accelerating FCF and leverage reduction .
  • Mix shift to advanced nodes: Strong momentum in CMP, deposition, and liquid filtration with higher content per wafer; watch ramp timing for advanced nodes and extended ecosystem engagement .
  • APS bifurcation persists: Liquid filtration strength offsets FOUP/fluid management weakness tied to softer facilities CapEx; near-term headwind likely persists per Q4 outlook .
  • Execution watch items: Taiwan (KSP South) and Colorado qualification/ramp pace (margin leverage), gross margin trajectory, and tax normalization impact on EPS in Q4 .
  • China/trade risk mitigants: Rapid migration to local-for-local supply reduces tariff/export-control exposure with minimal expected revenue impact .
  • Upcoming catalyst: Investor Day on May 11, 2026 to detail growth/outperformance framework and SAM expansion areas such as advanced packaging .

Notes and Sources:

  • Q3 2025 8‑K press release details, financials, and reconciliations .
  • Q3 2025 earnings slides (summary deltas, segment margins, balance sheet/cash flow, outlook) .
  • Q3 2025 earnings call transcript for management commentary and Q&A .
  • Prior quarters’ press releases for trend analysis .