Semiconductor materials supplier Entegris (NASDAQ:ENTG) missed Wall Street’s revenue expectations in Q1 CY2025, with sales flat year on year at $773.2 million. On the other hand, the company expects next quarter’s revenue to be around $755 million, close to analysts’ estimates. Its non-GAAP profit of $0.67 per share was 2.4% below analysts’ consensus estimates.
Revenue: $773.2 million vs analyst estimates of $789.9 million (flat year on year, 2.1% miss)
Adjusted EPS: $0.67 vs analyst expectations of $0.68 (2.4% miss)
Adjusted EBITDA: $220.7 million vs analyst estimates of $226.6 million (28.5% margin, 2.6% miss)
Revenue Guidance for Q2 CY2025 is $755 million at the midpoint, roughly in line with what analysts were expecting
Adjusted EPS guidance for Q2 CY2025 is $0.64 at the midpoint, below analyst estimates of $0.71
Operating Margin: 15.8%, in line with the same quarter last year
Free Cash Flow Margin: 4.2%, down from 10.4% in the same quarter last year
Inventory Days Outstanding: 147, up from 126 in the previous quarter
Market Capitalization: $11.67 billion
StockStory’s Take
Entegris’ first quarter results reflected headwinds from softer demand in capital equipment products and the early impact of new U.S.-China semiconductor tariffs. Management attributed the flat sales performance to a significant contraction in fluid handling and FOUPs, which are tied to new fab construction, especially in Asia, while highlighting growth in Materials Solutions and micro-contamination control products. CEO Bertrand Loy noted, “we grew in spite of this CapEx headwind,” pointing to ongoing progress in new product qualifications and manufacturing investments.
Looking ahead, management flagged the uncertainty created by new tariffs as the main reason for broadening guidance and holding back from updating the full-year outlook. Loy stated, “the environment created by new tariff regimes is the source of significant uncertainty,” and explained that while ex-China business trends remain solid, the company is taking a more cautious stance until the direct and indirect effects on customer demand become clearer. CFO Linda LaGorga emphasized ongoing cost discipline and a strong focus on free cash flow improvement, with prioritized investments in global manufacturing and supply chain resiliency.
Key Insights from Management’s Remarks
Management’s remarks focused on the combination of external trade pressures and internal strategic execution as the main themes shaping Q1 performance and the near-term outlook.
Materials Solutions Momentum: Materials Solutions sales rose, driven by nearly 20% growth in CMP (chemical mechanical planarization) slurries and pads, offsetting some of the weakness in capital equipment-related products.
Micro Contamination Control Demand: Advanced Purity Solutions (APS) saw growth in micro contamination control, with management citing a customer win in Korea that addressed a complex purity challenge in HBM (high-bandwidth memory) manufacturing.
Tariff and Trade Impact: Newly imposed Chinese tariffs on U.S. semiconductor imports resulted in halted shipments to China, creating up to a $50 million revenue risk for Q2. Management outlined plans to redirect production to alternative Asian sites, but acknowledged a timing lag before mitigation is fully effective.
Global Manufacturing Footprint Expansion: Entegris progressed with its Colorado and Taiwan facility investments, emphasizing redundancy and regional supply chain integration as a hedge against geopolitical and logistical risks.
Selective Cost Controls: Management reported holding onto 75% of APS division cost savings rather than fully reinvesting, aiming to stabilize margins in the face of lower CapEx product demand and working capital pressure from elevated inventory days outstanding.
Drivers of Future Performance
Management’s outlook for the coming quarters is shaped by external trade challenges, ongoing investment in manufacturing, and anticipated semiconductor node transitions.
Tariff Mitigation and Supply Chain Shifts: The company’s ability to reroute affected China-bound shipments from U.S. to Asian manufacturing sites is expected to determine the speed of revenue recovery and margin stabilization.
Semiconductor Node Transitions: Management expects key technology upgrades—particularly increased adoption of molybdenum (moly) materials in memory and logic chips—to drive incremental content gains for Entegris in late 2025 and beyond.
CapEx Product Demand Uncertainty: Ongoing softness in fab construction, especially in major Asian markets and North America, remains a risk for capital equipment product lines, partially offset by anticipated strength in consumable products as wafer starts improve.
Top Analyst Questions
Melissa Weathers (Deutsche Bank): Asked if the Q2 sales guidance shortfall was fully due to tariffs or if cyclical weakness played a role; management clarified that ex-China, business trends are solid, and the Q2 impact is almost entirely tariff-related.
Charles Shi (Needham): Questioned how much lost China revenue could be recovered in later quarters; management believes the impact is temporary and expects most business to shift to qualified Asian sites over time.
Atif Malik (Citi): Sought detail on gross margin drivers for Q2 amid tariffs; CFO LaGorga explained that gross margin is pressured by tariffs and some volume deleveraging, but mitigation measures are underway.
Timothy Arcuri (UBS): Asked if China customers might permanently switch to local alternatives; CEO Loy responded that Entegris’ solutions are valued for performance and yield, and customers are actively qualifying alternative Entegris sites.
Christopher Parkinson (Wolfe Research): Requested updates on node transitions and Taiwan facility progress; management expects key memory and logic node ramps to stay on schedule and highlighted the ongoing scale-up of the Kaohsiung, Taiwan plant.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will be monitoring (1) the pace at which Entegris can shift China-bound shipments to its Asian manufacturing network, (2) the company’s ability to sustain growth in Materials Solutions and micro contamination control segments amid CapEx headwinds, and (3) progress on customer qualifications and production ramp-up at new facilities in Colorado and Taiwan. Execution on these fronts, along with ongoing tariff mitigation, will be critical for stability and growth.
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