Entegris, Inc. Q2 FY2025 earnings call

• Global manufacturing and supply chain: Kaohsiung Taiwan facility on track to complete critical product qualifications by end of year, expect to ramp volumes in Q4; Colorado manufacturing site on track, grand opening in Nov, plan to start customer product qualifications later this year. • New Korea Technology Center opened on July 17. • Expanded global manufacturing footprint with redundant sites and integrated supply chain clusters to serve customers during trade policy volatility, aiming for shorter lead times, lower working capital, and more secure supply lines. • Asia customers represent ~70% of total revenue, expect ~70% demand served by non-U.S. sites by year end, increasing with ramp of investments in Taiwan, Korea, Japan, and Malaysia.

Materials Solutions sales were $355 million in Q2, up 4% year-on-year and sequentially, driven by CMP slurries and pads, selective etch and deposition materials. Advanced Purity Solutions sales were $440 million in Q2, down 7% year-on-year but up 1% sequentially, impacted by anticipated decline in facilities-based CapEx investments. Asia customers represent approximately 70% of total revenue.

• Q3 sales expected to range from $780 million to $820 million. • GAAP and non-GAAP gross margin percent expected to be approximately in line with Q2. • GAAP operating expenses $228 million to $232 million, non-GAAP operating expenses $182 million to $186 million. • EBITDA margin expected to be approximately 27.5%. • Non-GAAP tax rate expected to be ~9% in Q3 due to tax reserve expiration. • GAAP EPS between $0.43 and $0.50 per share; non-GAAP EPS between $0.68 and $0.75 per share.

• Trade policy volatility with direct and indirect impacts on semiconductor demand and industry CapEx. • Subdued fab activity levels, especially in mainstream logic and 3D NAND, affecting business volumes.

Q: Melissa Weathers asked about industry conditions and cyclicality.

A: Bertrand Loy said AI-related logic and HBM represent less than 5% of wafer starts, fab utilization low, inventory trending to pre-pandemic levels, expecting modest sequential improvement in wafer starts and flattish CapEx.

Q: Bhavesh Lodaya asked about China business requalification.

A: Bertrand Loy said making progress, expect 85% of China demand served by Asia sites by end of year, 95% next year.

Q: Jim Schneider asked about margin headwinds.

A: Linda LaGorga said Q2 was affected by trade uncertainty and demand shifts, made decisions to optimize manufacturing and manage inventory, will continue in Q3/Q4, longer term path to higher margins with volume growth.

Q: Timothy Arcuri asked about China headwind and gross margin.

A: Bertrand Loy said got most of the $50M headwind back in Q2, Linda LaGorga said gross margin pressure due to trade uncertainties, inventory balance, and moving manufacturing locally, but long-term volume and facility ramping will help.

Q: John Roberts asked about sales channels.

A: Bertrand Loy said fab revenue up sequentially, sales to equipment makers/engineering companies down, sales to chemicals/materials companies down due to weak wafer grower demand.

Q: Aleksey Yefremov asked about inventory adjustment and pull forward of demand.

A: Linda LaGorga said inventory management is a working cap optimization lever for free cash flow, Bertrand Loy said hard to quantify pull forward of demand in Q2, not material impact.