Entegris faced a challenging third quarter as the market reacted negatively to its flat year-on-year revenue and ongoing margin pressures, despite sales coming in slightly above Wall Street expectations. Management attributed the performance to continued underutilization of new manufacturing facilities, especially in Taiwan and Colorado, as well as a slow recovery in broader semiconductor demand. CEO David Reeder highlighted that, while advanced logic and AI-related applications supported growth in certain products like liquid filtration, most of the market remained below peak levels, causing a drag on profitability. Reeder noted, “Our year-on-year unit-driven revenue grew, led by CMP slurries, pads, cleans and liquid filtration. Notably, liquid filtration achieved record quarterly sales in Q3.”
Is now the time to buy ENTG? Find out in our full research report (it’s free for active Edge members).
Entegris (ENTG) Q3 CY2025 Highlights:
- Revenue: $807.1 million vs analyst estimates of $802 million (flat year on year, 0.6% beat)
- Adjusted EPS: $0.72 vs analyst estimates of $0.72 (in line)
- Adjusted EBITDA: $220.7 million vs analyst estimates of $223.1 million (27.3% margin, 1.1% miss)
- Revenue Guidance for Q4 CY2025 is $810 million at the midpoint, below analyst estimates of $826.9 million
- Adjusted EPS guidance for Q4 CY2025 is $0.66 at the midpoint, below analyst estimates of $0.76
- Operating Margin: 15.2%, down from 16.9% in the same quarter last year
- Inventory Days Outstanding: 129, down from 144 in the previous quarter
- Market Capitalization: $13.42 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Entegris’s Q3 Earnings Call
- James Schneider (Goldman Sachs) asked about new strategic and operational priorities. CEO David Reeder detailed plans to expand customer engagement across ecosystem partners and focus on ramping new facilities in Taiwan and Colorado.
- Timothy Arcuri (UBS) questioned the impact of production cuts and underutilization. Reeder and CFO Linda LaGorga explained that inventory reduction and cash flow priorities drove selective production cuts, with utilization and profitability expected to recover as demand returns.
- Melissa Weathers (Deutsche Bank) pressed on the rationale for a cautious outlook despite new technology ramps. Reeder clarified that while AI and advanced nodes offer growth, 95% of wafer volume remains muted, so guidance reflects the broader industry rather than just leading-edge demand.
- John Roberts (Mizuho) asked about the local-for-local manufacturing strategy for China and potential sales drag in 2026. Reeder responded that over 90% of Chinese sales will be sourced locally, minimizing potential revenue impact from trade restrictions.
- Edward Yang (Oppenheimer) inquired about exposure to AI and high-bandwidth memory (HBM) growth. Reeder noted that AI-related wafers make up just 5% of total volume but contribute disproportionately to revenue, and described strategic initiatives to expand in advanced packaging and HBM applications.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace at which Entegris ramps production and utilization at its new facilities in Taiwan and Colorado, (2) signs of broader recovery in mainstream logic and memory demand, and (3) progress in expanding product positions in advanced logic, HBM, and advanced packaging markets. Continued execution on inventory management and local-for-local manufacturing will also be important indicators of operational discipline.
Entegris currently trades at $88.72, down from $94.65 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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