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ENTEGRIS INC (ENTG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $849.8M, up 5% YoY and 5% QoQ, with GAAP EPS $0.67 and non‑GAAP EPS $0.84; gross margin was 45.6% and adjusted EBITDA margin 29.2% . Management highlighted the quarter “exceeded our guidance for both sales and non‑GAAP EPS” and noted EBITDA growth outpaced sales for the year .
  • Segment performance: Materials Solutions (MS) delivered highest quarterly sales in over 2 years; Advanced Purity Solutions (APS) posted an all‑time high quarter . APS grew 9% YoY and 6% QoQ; MS grew 14% YoY ex‑divestitures and 4% QoQ .
  • Q1 2025 guidance: sales $775–$805M; GAAP EPS $0.38–$0.45; non‑GAAP EPS $0.64–$0.71; adjusted EBITDA margin 28–29% .
  • Strategic/catalyst setup: node transitions (N2/18A in logic; molybdenum adoption in 300+‑layer NAND) expected to skew outperformance to 2H25; new China export restrictions are a 1‑point headwind ($30–$40M) but outperformance target remains 4–5 pts .

What Went Well and What Went Wrong

What Went Well

  • Sales and EPS beat guidance: “exceeding our guidance for both sales and non‑GAAP EPS” .
  • Record segment performance: “highest quarterly sales for Materials Solutions in over 2 years and all‑time high quarterly sales for Advanced Purity Solutions” .
  • Cost/FCF discipline: FY24 free cash flow was $316M (~10% margin) and $150M of term‑loan paydown in Q4; gross margin expanded ~70 bps YoY ex‑divestitures; leverage trending down (gross 4.3x, net 4.0x) .

What Went Wrong

  • Product mix capped gross margin at the low end of the range in December (Q4), despite revenue upside .
  • China restrictions add ~$30–$40M annual revenue headwind (~1 point of growth), impacting both divisions .
  • SiC CMP slowed: silicon carbide consumables were flat YoY in 2024 versus prior expectations; recovery timing uncertain, though share/solution set remains strong .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($M)$812.7 $807.7 $849.8
Gross Margin (%)46.2% 46.0% 45.6%
Operating Margin (%)16.0% 16.9% 17.6%
GAAP Diluted EPS ($)$0.45 $0.51 $0.67
Non‑GAAP Diluted EPS ($)$0.71 $0.77 $0.84
Adjusted EBITDA Margin (%)27.8% 28.8% 29.2%

Segment breakdown (recast to MS/APS):

SegmentQ2 2024Q3 2024Q4 2024
MS Net Sales ($M)$342.3 $346.6 $361.1
APS Net Sales ($M)$472.5 $463.1 $491.2
MS Adjusted Segment Profit ($M)$70.8 $71.7 $78.3
APS Adjusted Segment Profit ($M)$122.7 $127.3 $137.1
MS Adjusted Segment Margin (%)20.7% 20.7% 21.7%
APS Adjusted Segment Margin (%)26.0% 27.5% 27.9%

KPIs (Quarterly/Balance Sheet context):

KPIQ4 2024
Operating Cash Flow ($M)$176.1
Capital Expenditures ($M)$107.5
Free Cash Flow ($M)$68.6
Gross Debt ($B, 12/31/24)~$4.0
Net Debt ($B, 12/31/24)~$3.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Net Sales ($M)Q4 2024$810–$840 $849.8 Beat
Non‑GAAP EPS ($)Q4 2024$0.75–$0.82 $0.84 Beat
Adjusted EBITDA Margin (%)Q4 202428.5%–29.5% 29.2% In line
Net Sales ($M)Q1 2025—$775–$805 New
GAAP Diluted EPS ($)Q1 2025—$0.38–$0.45 New
Non‑GAAP Diluted EPS ($)Q1 2025—$0.64–$0.71 New
Adjusted EBITDA Margin (%)Q1 2025—28%–29% New
GAAP Opex ($M)Q1 2025—$236–$240 New
Non‑GAAP Opex ($M)Q1 2025—$188–$192 New
Net Interest Expense ($M)Q1 2025—~$50 New
Non‑GAAP Tax Rate (%)FY 2025—~15% New
Quarterly Dividend ($/share)Q1 2025—$0.10 (payable Feb 19, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiatives“Transition year”; limited node transitions; focus on content per wafer Watching N2/18A logic nodes; molybdenum word‑line adoption in 300+‑layer NAND; 2H‑weighted benefit Building momentum to 2H25
Supply chainNot highlighted in press releases HCl contamination resolved in Q4; valve constraints improving, expected resolved in Q1 Improving
Tariffs/MacroOngoing export controls/geopolitical caution Newly announced tariffs assessed as immaterial to raw materials; monitoring Manageable
Product performanceBroad divisional strength; margins within guidance CMP slurries +14% and pads +24% in 2024; APS strength in fluid/wafer handling and gas purification Strong execution
Regional trends (China)Caution on China policy backdrop China reached ~21% of 2024 revenue; restrictions add $30–$40M headwind Growth with policy headwind
R&D executionInvesting for content per wafer R&D up 14% in 2024; new POR wins (moly deposition/etch, photoresist filters) Accelerating

Management Commentary

  • CEO framing: “We concluded 2024 with strong performance… exceeding our guidance for both sales and non‑GAAP EPS… EBITDA growth that was twice the rate of our sales growth” .
  • Outlook prudence: “Visibility outside of advanced logic and AI‑driven applications remains limited… we have yet to see evidence of a significant broad‑based rebound” .
  • Technology roadmap: Upcoming nodes and increasing process complexity “positioning us very well for the upcoming technology node transitions… fuel our market outperformance” .
  • Segment records: “Highest quarterly sales for Materials Solutions in over 2 years and all‑time high quarterly sales for Advanced Purity Solutions” .
  • Capital structure: “Paid down $150M of the term loan in Q4… gross debt ~$4B, net ~$3.7B; gross leverage 4.3x, net 4.0x” .

Q&A Highlights

  • Market and outperformance drivers: Wafer starts low single digit; WFE low single digit with construction down; outperformance 4–5 pts driven by N2/18A and moly adoption; China restrictions subtract ~1 pt .
  • Free cash flow focus: Mid‑ to high‑teens FCF margin target over next few years via EBITDA leverage and working capital optimization; CapEx ~10% of sales .
  • Advanced packaging: Revenues approached ~$100M in 2024; strong 2025 growth expected; opportunities in carriers and high‑viscosity dispense pumps; dielectric slurries ramping (3x in 2025 from small base) .
  • Gross margin cadence: Q4 mix limited margin; FY25 expected +25–50 bps with puts/takes (volume, productivity, Taiwan/Colorado ramp inefficiencies) .
  • Supply chain normalization: HCl issue resolved in Q4; valve constraints improving and expected resolved in Q1; ongoing supplier localization to reduce risk .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 revenue and EPS was not retrievable due to service request limits; comparisons to estimates are therefore unavailable. Values attempted to be retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Q4 revenue and non‑GAAP EPS both beat prior guidance; adjusted EBITDA margin at 29.2% supports resilient earnings power through mixed cycle conditions .
  • Segment momentum: APS at all‑time high and MS at a multi‑year high set a favorable base for 2025; APS margin ~27.9%, MS margin ~21.7% .
  • 2025 setup: Outperformance likely 2H‑weighted as N2/18A and moly NAND transitions materialize; interim headwinds from China restrictions (~$30–$40M) and site ramp inefficiencies are manageable .
  • Balance sheet/FCF: Leverage trending lower; FY24 FCF $316M and Q4 FCF $68.6M; management prioritizes debt paydown and FCF margin expansion to mid‑/high‑teens over time .
  • Trading implications: Near‑term seasonality guides Q1 down sequentially, but margin discipline and 2H node catalysts could underpin estimate revisions later in the year; watch for updates on moly adoption and advanced packaging growth .
  • Policy risk contained: Tariff impacts assessed as immaterial; export restrictions quantified and incorporated in guidance/outperformance targets .
  • Execution theme: Cross‑selling and solution selling (CMP suite, deposition/etch) continue to validate the CMC deal synergies and support multi‑quarter margin resilience .

Additional Q4‑related press releases

  • Quarterly dividend declared: $0.10 per share payable Feb 19, 2025 .
  • CHIPS Act award agreement: Up to $77M funding for Colorado Springs center (liquid filtration, FOUPs) to begin initial operations in 2025 .