icon
icon
icon
icon
Upgrade
icon

Entegris (ENTG) 4 Nov 24 2024 Q3 Earnings call transcript

AInvestTuesday, Nov 5, 2024 11:38 pm ET
2min read

Entegris, a leading materials solutions provider for the semiconductor industry, reported its third quarter earnings for 2024, highlighting a 7% year-on-year revenue growth, excluding divestitures. Despite falling short of expectations, the company's gross margin, EBITDA margin, and non-GAAP EPS were within the guidance range. CEO Bertrand Loy provided insights into the company's performance, future prospects, and strategic initiatives during the earnings call.

Market Environment and Industry Recovery

The semiconductor industry is currently experiencing a slow recovery, with visibility remaining limited. The industry's recovery is happening at a slower pace than anticipated, with customers in the AI applications segment performing well, while the rest of the industry faces challenges. Entegris, as a supplier to various segments of the industry ecosystem, has been impacted by this industry-wide softness, particularly in areas like mainstream and NAND, which have remained muted.

Strategic Initiatives and Cost Savings

One of the key strategic initiatives undertaken by Entegris is the combination of its AMH and MC divisions. This move is aimed at streamlining operations, developing greater product synergies, optimizing go-to-market strategies, and increasing the value delivered to customers. The company expects to generate annualized cost savings of $10 million to $15 million from this consolidation, which will be reinvested to maintain adequate investment levels in R&D and new operational capabilities.

Sales and Operational Performance

Entegris reported sales of $808 million for the third quarter, up 7% year-on-year, excluding divestitures. The MS division, which focuses on material solutions, saw sales increase by 14% year-on-year, driven by strong growth in CMP slurries, pads, advanced deposition materials, and etching chemistries. However, the AMH and MC divisions, which serve different segments but have similar missions and applications, have experienced lower sales growth due to the impact of lower demand from mainstream logic customers and slower new fab construction activity.

Future Outlook and Investments

Looking ahead, Entegris remains optimistic about the growth prospects for the industry and the company. The company is focused on balancing cost and maintaining strong profitability while continuing to engage with customers on their technology roadmaps and making critical investments that improve competitiveness and position the company for the upturn. Entegris is also investing in new facilities in Taiwan and Colorado to support the significant growth it expects in the coming years.

Market Outperformance and Molybdenum Opportunities

Entegris is well-positioned to outperform the market in the future, especially with the anticipated adoption of molybdenum in the semiconductor industry. The company's expertise in material science and materials purity is expected to fuel market outperformance and incremental content per wafer opportunities in the years to come. Entegris has already secured several key POR positions for molybdenum deposition materials and is confident in its competitive standing in this market.

Conclusion

Entegris' third quarter earnings call provided insights into the company's financial performance, strategic initiatives, and future outlook. Despite the current challenges in the semiconductor industry, the company remains focused on driving growth through cost savings, strategic investments, and a strong focus on its customers' technology roadmaps. With a positive outlook on the industry and its own strategic initiatives, Entegris is well-positioned to navigate the current market environment and capitalize on the opportunities ahead.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.