• Q4 Revenue: $850 million, up 11% year-over-year excluding divestitures.
• Full Year Revenue Growth: More than 5%, excluding divestitures and currency impact.
• Gross Margin (Q4): 45.6% on both GAAP and non-GAAP basis.
• EBITDA Margin (Q4): 29.2% of revenue.
• Non-GAAP EPS (Q4): $0.84 per share, above guidance range.
• Materials Solutions Division Sales (Q4): $361 million, up 14% year-on-year.
• Advanced Purity Solutions Division Sales (Q4): $491 million, up 9% year-on-year.
• CapEx (2024): $316 million, approximately 10% of sales.
• Free Cash Flow (2024): $316 million, with a margin of almost 10%.
• Debt Reduction (2024): Paid down $625 million of debt.
• Gross Debt (End of 2024): Approximately $4 billion.
• Net Debt (End of 2024): Approximately $3.7 billion.
• Q1 2025 Revenue Guidance: $775 million to $805 million.
• Q1 2025 Gross Margin Guidance: 45.5% to 46.5%.
• Q1 2025 Non-GAAP EPS Guidance: $0.64 to $0.71 per share.

• Warning! GuruFocus has detected 8 Warning Signs with ENTG.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Entegris Inc (NASDAQ:ENTG) achieved an 11% year-on-year revenue growth in Q4 2024, excluding divestitures, surpassing guidance.
• The company reported all-time high quarterly sales for its Advanced Purity Solutions division.
• Entegris Inc (NASDAQ:ENTG) expanded its EBITDA margin by over 100 basis points year-on-year to 28.7%, slightly above target.
• The company successfully paid down nearly $625 million of debt in 2024, focusing on further debt reduction in 2025.
• Entegris Inc (NASDAQ:ENTG) secured up to $77 million in funding from the US Department of Commerce under the CHIPS and Science Act for its new Colorado site.

Negative Points

• The semiconductor market outside of advanced logic and AI remained weak throughout 2024, limiting growth opportunities.
• There were no significant technology node transitions in logic or memory, restricting content per wafer increase.
• Foreign exchange negatively impacted revenue by $23 million for the full year 2024.
• The latest restrictions on sales to China are expected to result in an annual revenue loss of $30 million to $40 million in 2025.
• Visibility into a significant semiconductor market rebound remains limited as of early 2025.

Q & A Highlights

Q: Can you provide more details on the market outlook and your expected outperformance for 2025? A: Bertrand Loy, CEO: We anticipate wafer starts to grow in the low single digits, driven by advanced logic and AI applications, while mainstream and memory segments show limited visibility. We expect CapEx to be flat, with elevated spending in advanced foundry and packaging, offset by slower new fab construction. Our outperformance of 4 to 5 percentage points will be driven by node transitions in logic and 3D NAND, despite a $30 million to $40 million revenue impact from China restrictions.

Q: What are the key initiatives for improving free cash flow margins to the mid- to high-teens? A: Linda Lagorga, CFO: We aim to optimize working capital, focusing on inventory management and payables. CapEx will remain around 10% of sales, with improvements driven by EBITDA leverage and working capital optimization. We achieved a 10% free cash flow margin in 2024 and expect to return to pre-pandemic levels over the next few years.

Q: Can you elaborate on the March quarter guidance and any segment-specific factors? A: Bertrand Loy, CEO: Our guidance reflects normal seasonal market decline, with expected sequential declines in wafer starts across all customer segments and a slow start to CapEx. This impacts most product lines and divisions, aligning with typical seasonality and showing a 7% year-over-year increase.

Q: How is Entegris supporting the advanced packaging industry, and what growth do you expect? A: Bertrand Loy, CEO: Advanced packaging revenues are approaching $100 million, with significant growth expected in 2025. We provide solutions for process challenges, focusing on carriers for wafers and fluid management solutions. We also see opportunities in Material Solutions, with dielectric services expected to grow by 3x in 2025.

Q: What drove the strong performance in CMP pads and slurries in 2024, and is it a leading indicator for other platforms? A: Bertrand Loy, CEO: The success in CMP products validates our combination with CMC Materials, driven by cross-selling, innovation, and solution-selling strategies. All CMP products grew in the high teens or higher in 2024. We expect continued momentum in 2025, with new opportunities in moly deposition and etch in 3D NAND.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.