ENTEGRIS INC

Entegris is a leading supplier of critical advanced materials and process solutions for the semiconductor and other high-technology industries. Industry forecasts project semiconductor sales reaching approximately $1.6 trillion by 2030, which the company believes will create significant opportunities for its products. The semiconductor market has grown significantly over the past few decades and, despite periodic downturns, the company expects the long-term growth trend to continue, driven by products and emerging applications including artificial intelligence, high-performance and cloud computing, smartphones, wearable technology, electric and autonomous vehicles, the Internet of Things, gaming, virtual/augmented reality, and smart healthcare. Key structural forces shaping competition include manufacturing complexity as semiconductors move to smaller geometries and new device architectures, the need for new and advanced materials, increasing materials purity requirements, geopolitical implications fostering domestic semiconductor manufacturing through initiatives such as the U.S. and EU CHIPS Acts, and continued consolidation of the customer base. Entegris offers the industry's most comprehensive electronic materials portfolio, with core capabilities in materials science and materials purity, and complementary solutions that accelerate time to yield.

The market for Entegris's products and solutions is highly competitive. Notable competitors named in the filing for the Advanced Purity Solutions segment include Pall Corporation (part of Danaher Corporation), Shin-Etsu Polymer Co. Ltd., Cobetter Filtration, Gudeng Precision Industrial, Aicello Corporation, and Mersen. For the Materials Solutions segment, competitors include EMD Performance Materials division of Merck KGaA, Qnity Electronics, Inc., the Electronics Advanced Materials division of Air Liquide, Linde plc, and Anji Microelectronics (Shanghai) Co., Ltd. The company believes there are no global competitors that compete with it across the full range of its product offerings. Key competitive strengths cited include broad product offerings, strong engineering, research and development infrastructure, manufacturing excellence, quality control systems, low total cost of ownership, close collaboration on customer technical roadmaps, and deep applications expertise in semiconductor manufacturing processes. The company's top ten customers accounted for 50% ¹ of net sales in 2025, compared to 48% ² in 2024 and 43% ³ in 2023.

Entegris generates revenue primarily from the sale of products consumed during semiconductor manufacturing, with revenue described as predominantly unit-driven or recurring. The company's revenue is therefore more impacted by global semiconductor demand and GDP growth than by semiconductor capital equipment sales. The customer base is broad and diverse, spanning the semiconductor ecosystem including chemical companies, equipment manufacturers and semiconductor fabs. In 2025, no single product platform represented more than 3% ⁴ of net sales. The company's solutions are increasingly specified into customers' manufacturing processes and tailored to their unique process conditions and technical roadmaps, making switching away from its products potentially costly and time-consuming for customers. The business is organized and operated in two operating segments, Materials Solutions and Advanced Purity Solutions, which share common business systems and processes, technology centers and technology roadmaps.

The Materials Solutions segment provides materials-based solutions such as chemical vapor and atomic layer deposition materials, chemical mechanical planarization slurries and pads, ion implantation specialty gases, formulated etch and clean materials, and other specialty materials. For 2025, MS net sales were $1,406.7 million ⁵, up from $1,400.1 million ⁶ in 2024. MS reported a segment profit of $276.6 million ⁷ for 2025, down 3% compared to $286.2 million ⁸ in 2024. The sales increase was driven by increased sales from CMP consumables, selective etch and deposition materials, partially offset by the absence of $33.9 million ⁹ in prior-year sales from the divested PIM business and decreased sales from advanced materials products. The segment includes Molecular and Engineered Solutions products such as advanced deposition materials, specialty gases, specialty coatings and e-chucks, and advanced cleaning materials, as well as Formulated Solutions including CMP slurries, CMP pads, post-CMP cleans and brushes, and surface preparation and integration products. The segment also includes Advanced Materials Markets, which develops and sells products to customers in markets outside semiconductor manufacturing, including POCO premium graphite products and specialty chemicals for end-markets such as aircraft, aerospace, wound care and medical devices.

The Advanced Purity Solutions segment offers filtration, purification and contamination-control solutions that improve customers' yield, device reliability and cost by ensuring the purity of critical liquid chemistries and gases and the cleanliness of wafers and other substrates. For 2025, APS net sales decreased to $1,799.1 million ¹⁰, down 3% from $1,850.2 million ¹¹ in 2024. APS reported a segment profit of $426.4 million ¹² for 2025, down 14% compared to $496.1 million ¹³ in 2024. The sales decrease was mainly due to a decline in facilities-based capital expenditure investments in the semiconductor industry, which led to decreased demand for fluid handling products and FOUPs, partially offset by an increase in sales from gas and liquid filtration products. The segment's product categories include Liquid Microcontamination Control Products such as Torrento filtration solutions, Trinzik and Microgard products, Impact filtration solutions, and Protego solutions; Gas Microcontamination Control Products including Wafergard gas filters, GateKeeper gas purifiers, Chambergard gas diffusers, and Vaporsorb products; Microenvironment Solutions including 300 millimeter FOUPs, wafer transport and process carriers, SMIF pods, Ultrapak products, FOSBs, and EUV reticle pods; and Fluid Management Products including NOWPak products, FluoroPure products, PrimeLock connections, IntelliGen high-precision liquid dispense systems, Accusizer systems, and SemiChem systems and Invue products.

During 2023 and 2024, the company completed the divestitures of QED Technologies International, Inc., its Electronic Chemicals business, and its PIM business, and terminated the Alliance Agreement with MacDermid Enthone. On March 1, 2023, the company completed the sale of QED for $134.3 million ¹⁴. On October 2, 2023, the company completed the sale of its EC business to FUJIFILM Holdings America Corporation for $675.3 million ¹⁵. On March 1, 2024, the company completed the sale of its PIM business, receiving gross cash proceeds of $263.2 million ¹⁶, or net proceeds of $256.2 million ¹⁷, and up to $25.0 million ¹⁸ in cash earn-out payments contingent upon the performance of the PIM business in 2025 and 2026. In December 2024, the company announced a definitive agreement providing for up to $77.0 million ¹⁹ in funding under the CHIPS and Science Act in connection with its Colorado Springs facility. During the fourth quarter of 2025, the company completed the sale of its small, industrial specialty chemicals business, incurring $6.7 million ²⁰ of costs associated with the disposition and recording a loss of $10.9 million ²¹. The company invested approximately $329.0 million ²², $316.1 million ²³ and $277.3 million ²⁴ on engineering, research and development activities in 2025, 2024 and 2023, respectively. The company's Board of Directors declared cash dividends of $0.10 per share during each of the first, second, third and fourth quarters of 2025, which totaled $61.1 million ²⁵. During fiscal year 2025, the company repaid $300.0 million ²⁶ net of borrowings under the senior secured term loan. In January 2026, the company completed an assessment of the useful lives of its property, plant and equipment, and expects total depreciation expense in 2026 to be reduced by $72.9 million ²⁷ as a result.

For fiscal year 2025, net sales were $3,196.6 million ²⁸, a decrease of $44.6 million ²⁹, or 1%, from $3,241.2 million ³⁰ in 2024. Gross profit was $1,419.9 million ³¹ in 2025 compared to $1,486.7 million ³² in 2024, with gross margin decreasing by 1.5% to 44.4% ³³ from 45.9% ³⁴. Operating income was $455.9 million ³⁵ in 2025 compared to $533.9 million ³⁶ in 2024. Net income was $235.6 million ³⁷, or $1.55 per diluted share ³⁸, in 2025 compared to net income of $292.8 million ³⁹, or $1.93 per diluted share ⁴⁰, in 2024. Adjusted EBITDA was $886.2 million ⁴¹ in 2025 compared to $931.1 million ⁴² in 2024, representing 27.7% ⁴³ and 28.7% ⁴⁴ of net sales, respectively. Non-GAAP EPS was $2.75 ⁴⁵ in 2025 compared to $3.00 ⁴⁶ in 2024. Net cash provided by operating activities was $695.4 million ⁴⁷ in 2025 compared to $631.7 million ⁴⁸ in 2024.

The company expects that products and emerging applications including artificial intelligence, high-performance and cloud computing, smartphones, wearable technology, electric and autonomous vehicles, the Internet of Things, gaming, virtual/augmented reality, and smart healthcare will drive long-term secular demand for semiconductors and create significant opportunities for its products. In particular, AI workloads are fueling demand for advanced logic chips with higher transistor density and specialized architectures, as well as High Bandwidth Memory to support the enormous data throughput required for training and inference in large-scale models. AI is also accelerating innovation in chip packaging and interconnect technologies, such as chiplets and 2.5D/3D integration. The company believes these trends position it to capitalize on growth opportunities in next-generation AI and high-performance computing by providing critical materials and process solutions that enable the production of advanced logic devices and HBM. As leading semiconductor manufacturers implement molybdenum into advanced nodes, Entegris is uniquely positioned to support this transition through its expertise and solutions in precursors, deposition, etch, CMP consumables and contamination control.

The company has developed a manufacturing strategy to better serve global customers as they build new fabs in various countries and seek reliable local supply chain partners, driven by initiatives such as the U.S. and EU CHIPS Acts and similar programs in Japan and Korea. Recent examples of this strategy include new facilities in Kaohsiung Science Park in Taiwan and in Colorado Springs, as well as a new Korea Technology Center in South Korea. In December 2024, the company announced a definitive agreement providing for up to $77.0 million ⁴⁹ in funding under the CHIPS and Science Act in connection with its Colorado Springs facility, with installments based on key milestone achievements. The Colorado Springs facility will increase service levels to new U.S. fabs and provide greater manufacturing resiliency, while the KSP facility will enhance the company's ability to serve customers efficiently in Taiwan and other Asia Pacific locations. The company has also expanded capacity at existing facilities, including liquid filtration in Billerica, Massachusetts and Yonezawa, Japan, deposition materials in Toronto, Ontario, materials handling in Chaska, Minnesota and JangAn, Korea, CMP filter and CMP slurries in Taiwan, SiC slurries in Aurora, Illinois and solid precursors in Burnet, Texas. The company expects to continue pursuing strategic acquisitions and partnerships to address product offering gaps, secure new customers, diversify into complementary markets, broaden technological capabilities, access regional markets and achieve scale benefits.

Gross margin decreased by 1.5% for 2025 compared to 2024, primarily due to plant performance and higher depreciation expense. The company's non-GAAP Adjusted Operating Margin was 21.3% ⁵⁰ in 2025 compared to 22.9% ⁵¹ in 2024. Adjusted EBITDA margin was 27.7% ⁵² in 2025 compared to 28.7% ⁵³ in 2024. The decreases in Adjusted Operating Income and Adjusted EBITDA in 2025 compared to 2024 are generally attributable to decreased gross profit and the absence of segment profit associated with the divested PIM business. The company recorded restructuring charges of $29.7 million ⁵⁴ for the year ended December 31, 2025, primarily related to an internal reorganization and workforce reductions, contract termination costs and the abandonment of certain capital equipment. In January 2026, the company adjusted the estimated useful lives of certain property, plant and equipment, which is expected to result in an increase in gross margin of approximately $52.4 million ⁵⁵, a decrease in ER&D expenses of approximately $11.4 million ⁵⁶ and a decrease in ending inventory values of $9.1 million ⁵⁷ in 2026.

The company maintains a global infrastructure of design, manufacturing, logistics, distribution, service and technical support facilities to meet the needs of global customers. As of December 31, 2025, the company owned and leased approximately 3.7 million square feet ⁵⁸ and 1.9 million square feet ⁵⁹ of space, respectively, across 72 owned ⁶⁰ and 31 leased ⁶¹ properties. The company has invested significantly in systems and equipment to create innovative products and tool designs, including metrology and 3D printing capabilities for rapid analysis and prototype production. The company also uses contract manufacturers for certain products in both the U.S. and Asia. As of December 31, 2025, the company had approximately 7,700 employees ⁶², of whom approximately 51% ⁶³, 15% ⁶⁴, 11% ⁶⁵, 9% ⁶⁶, 7% ⁶⁷, 5% ⁶⁸ and 2% ⁶⁹ are located in North America, Southeast Asia, Taiwan, Japan, South Korea, China and Europe, respectively. The company expects capital expenditure spending to be approximately $250.0 million ⁷⁰ in 2026.

The company invested approximately $329.0 million ⁷¹, $316.1 million ⁷² and $277.3 million ⁷³ on engineering, research and development activities in 2025, 2024 and 2023, respectively, representing 10.3% ⁷⁴, 9.8% ⁷⁵ and 7.9% ⁷⁶ of net sales. The company plans to continue to invest significantly in ER&D, balancing short-term market needs with longer-term initiatives. The company intends to continue paying down debt while investing in research and development and advanced manufacturing capabilities. The company's Board of Directors declared cash dividends of $0.10 per share during each quarter of 2025, which totaled $61.1 million ⁷⁷. On January 14, 2026, the Board of Directors declared a quarterly cash dividend of $0.10 per share ⁷⁸ to be paid on February 18, 2026. The company currently expects to continue paying dividends comparable with its historic dividend practices. The company does not have a publicly announced stock repurchase program and did not repurchase any equity securities during the year ended December 31, 2025.

The company faces structural headwinds from the cyclical nature of the semiconductor industry, which has historically experienced periodic downturns resulting in decreased demand for its products. A lower volume of sales can have a large and disproportionate impact on profitability because some expenses are fixed in the short term. The company also faces risks from global economic uncertainty, including volatile financial markets, inflation, fluctuations in interest rates, economic recessions, and national debt and bank failures. Export controls and economic sanctions, particularly with respect to semiconductor and other high technology exports to China, a market which represented approximately 21% ⁷⁹ of sales in 2025, have reduced the company's ability to sell products to customers in China and it is possible future regulation could further reduce demand. The company also faces risks from tariffs and other trade actions taken by the U.S. and other countries, which have increased import and export costs. The company's operations use hazardous materials, exposing it to potential liability for personal injury and potential remediation obligations. The company carries a significant amount of goodwill on its balance sheet, with goodwill of $3,946.7 million ⁸⁰ as of December 31, 2025, and the future occurrence of a potential indicator of impairment could result in goodwill impairment charges.

The company's revenue is primarily dependent upon demand from the global semiconductor ecosystem, which has historically been cyclical with periodic downturns that could result in decreased demand for its products and negatively impact results of operations. The company relies on sole, single or limited source suppliers for certain critical raw materials such as plastic polymers, filtration membranes, abrasive particles, and petroleum coke, and losing any of these sources could adversely affect operations. Export controls and economic sanctions, particularly regarding semiconductor exports to China which represented approximately 21% ⁸¹ of sales in 2025, have reduced the company's ability to sell products in that market and could further limit sales. The company has a substantial amount of indebtedness, with an aggregate principal amount of $3.7 billion ⁸² of debt outstanding as of December 31, 2025, which could limit its ability to obtain additional financing and require a substantial portion of cash flow to be dedicated to debt service. The company carries significant goodwill of $3,946.7 million ⁸³ on its balance sheet, and adverse changes in business conditions could result in future goodwill impairment charges.

Management's message emphasizes the company's position as a leading supplier of critical advanced materials and process solutions for the semiconductor and other high-technology industries, leveraging its unique breadth of capabilities to provide customers with innovative, science-based solutions. The company believes that trends such as AI, high-performance computing, and the increasing complexity of semiconductor manufacturing will create significant opportunities for its products, expand its served addressable market and increase Entegris' content per wafer, positioning it to outperform its markets over the long term. Management has streamlined the platform to focus on core businesses believed to have the greatest strategic value, completing the divestitures of QED, the EC business and the PIM business and terminating the Alliance Agreement with MacDermid Enthone during 2023 and 2024. Key strategic priorities emphasized for the period ahead include continuing to pay down debt while investing in research and development and advanced manufacturing capabilities to maintain and expand technology leadership and drive organic growth, pursuing strategic acquisitions and partnerships to address product offering gaps and broaden technological capabilities, and leveraging the company's global infrastructure and manufacturing strategy to better serve customers as they build new fabs in various countries. The company also highlights its intention to continue investing in operational excellence, including manufacturing equipment and facilities with leading-edge process technology, automated manufacturing, and a skilled, agile organization capable of rapid design, prototyping and high volume manufacturing ramp.