Entegris Q1 2025 Earnings Report

Entegris EPS Results

• Actual EPS: $0.67
• Consensus EPS: $0.69
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: $0.68

Entegris Revenue Results

• Actual Revenue: $773.20 million
• Expected Revenue: $790.75 million
• Beat/Miss: Missed by -$17.55 million
• YoY Revenue Growth: +0.30%

Entegris Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 9:00AM ET

Entegris (NASDAQ:ENTG) is a leading provider of advanced materials and process control solutions for the semiconductor and other high-technology industries. The company develops and supplies a broad portfolio of products designed to ensure purity and reliability throughout the manufacturing process, helping customers address critical contamination and yield challenges.

Entegris’s product offerings include high-purity chemicals and specialty materials, liquid and gas filtration and purification systems, and sophisticated wafer and chip handling solutions. Its consumable products—such as filters, membranes, liquid delivery systems, and specialty packaging—are engineered to meet stringent cleanliness standards required for semiconductor device fabrication, flat panel display production, and related precision manufacturing applications.

Headquartered in Billerica, Massachusetts, Entegris operates a global network of manufacturing, research and development, and customer support facilities across North America, Europe, and the Asia-Pacific region. The company’s solutions are used by major semiconductor manufacturers, foundries, and research institutions worldwide, positioning Entegris as a key partner in the evolution of advanced electronics and next-generation technology platforms.

Entegris Q1 2025 Earnings Call Transcript

Key Takeaways

• Entegris reported 5% revenue growth year-over-year in Q1 ’25 excluding divestitures, with gross margin, EBITDA margin and non-GAAP EPS all pacing at the midpoint of guidance.
• New retaliatory tariffs in China could delay up to $50 million of Q2 revenue as U.S.-made shipments are on hold, though management expects to recover this via alternate Asia manufacturing sites by year-end.
• Materials Solutions sales rose 8% year-over-year driven by CMP slurries and pads (+20%), while Advanced Purity Solutions grew 3% on strong microcontamination control demand despite FOOPS and fluid-handling headwinds.
• Strategic manufacturing expansions remain on track: the new Colorado site achieved its first CHIPS Act milestone ahead of planned H2 customer qualifications, and Kaohsiung liquid-filter qualifications should wrap by year-end.
• The company is prioritizing free cash flow improvements and debt reduction, trimming 2025 capex to $300 million, pausing M&A and targeting net leverage below 4×.

Presentation

[Bertrand Loy, CEO at Entegris]

Good day, everyone. Welcome to the Entegris First Quarter 2025 earnings conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you can remove yourself from the queue by pressing star and two. So others can hear your questions clearly, we do ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star and zero. I would now like to turn the call over to Bill Seymour.

[Bill Seymour, VP of Investor Relations at Entegris]

Good morning, everyone. Earlier today, we announced the financial results for the first quarter of 2025. Before we begin, I would like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties, and actual results could differ materially from those projected in the forward-looking statements. Additional information regarding these risks and uncertainties is contained in our most recent annual report and subsequent quarterly reports we have filed with the SEC. Please refer to the information on the disclaimer slide in the presentation. On this call, we will also refer to non-GAAP financial measures as defined by the SEC in Regulation G. You can find reconciliation tables in today's news release as well as on our IR page at our website at entegris.com. On the call today are Bertrand Loy, our CEO, and Linda LaGorga, our CFO.

[Bill Seymour, VP of Investor Relations at Entegris]

With that, I'll hand the call over to Bertrand.

[Bertrand Loy, CEO at Entegris]

Thank you, Bailey. Good morning. Our first quarter revenue grew 5% year-on-year, excluding divestitures, slightly below our guidance rate. Gross margin, EBITDA margin, and non-GAAP EPS were at the mid-point of guidance. Taking a closer look at our quarterly performance by division, material solution sales were up 8% year-on-year, excluding divestitures. As expected, CMP slurries and pads delivered strong year-on-year growth, up almost 20%. Advanced purity solution sales were up 3% year-on-year. This growth was driven by solid demand for our micro-contamination control solutions, offset by a sharp contraction in FUPS and fluid handling revenue. In the quarter, we also continued to make solid progress on several fronts. At our new Colorado manufacturing site, we are on track with initial equipment qualifications and our first milestone associated with our CHIPS Act grant now complete. We expect to initiate customer qualifications in the second half of this year.

[Bertrand Loy, CEO at Entegris]

Our facility in Kaohsiung, Taiwan, also continued to make progress in the first quarter, and we expect to complete most of the liquid filter qualifications by the end of this year. These facilities are good examples of our strategy over the past decade to invest in a broad global manufacturing footprint, offering redundant manufacturing sites for our major strategic product lines. In addition, we have developed well-integrated supply chain clusters around our largest manufacturing centers. For example, approximately 90% of the raw materials used by our Yonezawa Plant in Japan comes from Japanese suppliers, and our KSP site in Taiwan uses approximately 90% regional suppliers. Likewise, once up and running, we expect our Colorado facility to rely predominantly on U.S. suppliers, with nearly 95% of its needs served from domestic suppliers.

[Bertrand Loy, CEO at Entegris]

You can expect us to continue to build on this strategy and evolve our business model to better serve our global customers, to shorten our lead times and de-risk our supply chain. In the current trade environment, having a comprehensive global manufacturing footprint with regionally integrated supply chains represents a significant strategic advantage, and at Entegris, all of the necessary building blocks are in place. We now need and will capitalize on our global manufacturing network. During this uncertain time for the semiconductor industry, we continue to prioritize engagement with our customers to help enable their technology roadmaps. On that note, we are making good progress ahead of commercial volumes of MOLY deposition materials. We have excellent engagements with all major 3D NAND players, and we are very pleased with the POR wins we have achieved to date.

[Bertrand Loy, CEO at Entegris]

Our MOLY deposition film offers the best film conformality and the best cost of ownership in the industry. In addition to the film material, we are also making great progress in developing novel wet-edge chemistries for MOLY edge as an alternative to the current dry-edge process the industry is using. Both opportunities are very promising. They will be first adopted in 3D NAND manufacturing and, in a few years, in DRAM and advanced logic. Another recent win I would like to highlight is with IPA purifiers. Customers in Korea recently came to us concerned about trace metal contamination in IPA chemistries that impacted yields in HBM production. Our teams were quick to respond and promptly developed the required solutions. This is the perfect example of how our customers use Entegris's unique capabilities to solve emerging complex yield and process challenges and how we continue to increase our serve-to-market over time.

[Bertrand Loy, CEO at Entegris]

As these wins illustrate, we are very well positioned to capture incremental content per wafer and continue to outperform the market in the years to come. Looking forward to the rest of 2025, the environment created by new tariff regimes is the source of significant uncertainty and makes it very difficult to precisely quantify the direct and indirect impact on our customers and on our business. In that context, we are providing a broader than normal revenue guidance for Q2 and will not update our 2025 outlook for now. That said, in this dynamic environment, you can expect us to remain focused on what we control, proactively adjusting our cost structure and investment levels, focusing on improving free cash flow, putting M&A on pause, staying committed to reducing our debt level.

[Bertrand Loy, CEO at Entegris]

Of course, we will continue to closely collaborate with our customers by supporting their node transitions in the second half of the year and by engaging on their long-term technology roadmaps. Let me now turn the call over to Linda. Linda?

[Linda LaGorga, CFO at Entegris]

Good morning, and thank you, Bertrand. Our sales in the first quarter of $773 million were up 5% year-over-year, excluding the impact of divestitures. On an as-reported basis, our sales were flat year-over-year and down 9% sequentially. Foreign exchange negatively impacted revenue by $5 million year-over-year and negatively impacted revenue by $2 million sequentially in Q1. Gross margin on a GAAP and non-GAAP basis was 46.1% in the first quarter. Gross margin was at the midpoint of our guidance range and was up sequentially driven by strong cost management across our supply chain. Operating expenses on a GAAP basis were $234 million in Q1. Operating expenses on a non-GAAP basis in Q1 were $186 million, better than our guidance range. Adjusted EBITDA in Q1 was 28.5% at the midpoint of our guidance. The GAAP tax rate in Q1 was 11.5%, and the non-GAAP tax rate was 15%.

[Linda LaGorga, CFO at Entegris]

GAAP diluted EPS was $0.41 per share in the first quarter. Non-GAAP EPS was $0.67 per share at the midpoint of guidance. Sales for material solutions in Q1 were $341 million, up 8% year-on-year, excluding the impact of divestitures. Sales were down 5% sequentially, in line with normal seasonality. Adjusted operating margin for MS was 22% for the quarter, up modestly sequentially. Sales for advanced purity solutions in Q1 were $434 million, up 3% year-on-year and down 11% sequentially. The sequential sales decrease was driven by CapEx products, including fluid handling products and FUPS. Adjusted operating margin for APS was 25.4% for the quarter. The decline in margin was driven by lower volume. As we navigate this dynamic environment, we are focused on controlling what we can control, including our cost structure.

[Linda LaGorga, CFO at Entegris]

For example, we have elected to retain approximately 75% of the previously announced $15 million of cost savings from the formation of the APS division instead of fully reinvesting those savings. As always, we remain committed to delivering results in line with the framework of our analyst-published day target model. Moving on to cash flow, free cash flow was $32 million. As we mentioned in our last earnings call, we are committed to improving our free cash flow margin and have made free cash flow a compensable goal for the management team and the rest of the organization starting this year. In 2025, we expect our free cash flow margin to be in the low double digits. Over the next several years, you can expect steady improvement as we aim at returning to levels similar to where we were pre-pandemic.

[Linda LaGorga, CFO at Entegris]

One of our major focus areas is working capital optimization, in particular inventory, where we have the greatest opportunity as we look to improve lead times and optimize stock levels across our entire network. In addition to working capital improvements, we now expect our capital expenditures to be approximately $300 million in 2025, down from our previous expectation of $325 million. As a reminder, our capital expenditures are weighted more to the first half of the year, driven by strategic investments, including phase one of our Colorado facility. As an aside, I'm pleased to share that we have achieved our first CHIPS Act milestone and expect to receive $9 million in the second quarter. A quick overview of our capital structure. At the end of the quarter, our gross debt was approximately $4 billion, and our net debt was $3.7 billion.

[Linda LaGorga, CFO at Entegris]

Gross leverage was 4.4 times, and net leverage was 4 times. Our debt is well-structured and de-risked. The blended interest rate on our debt portfolio is approximately 4.9%. Since our term loan is fully hedged, currently 100% of our debt is fixed, and there are no maturities on the debt until 2028 and no maintenance covenants on the debt. From a capital allocation standpoint, our single priority remains paying down our debt. We will use all levers at our disposal to reduce our gross leverage to below 4 times. Looking forward, I believe we are well positioned to navigate through the dynamic tariff and economic environment. We expect to see a temporary impact to our top line related to our sales to China.

[Linda LaGorga, CFO at Entegris]

We are actively working with our customers and suppliers to mitigate, to the greatest extent possible, the direct tariff impact by leveraging our global footprint and regional supply chain. Moving on to our Q2 outlook, we are widening our revenue guidance range to reflect our current assessment of the direct tariff impacts. We expect our Q2 sales to range from $735 million-$775 million. Excluding China, our business remains strong. Let me be clear, the lower sequential sales guidance is driven entirely by the uncertainty of shipments of our U.S.-made products into China. We expect a gross margin of approximately 45%, both on a GAAP and non-GAAP basis. GAAP operating expenses of $225 million-$229 million, and non-GAAP operating expenses of $179 million-$183 million.

[Linda LaGorga, CFO at Entegris]

We expect EBITDA margin of approximately 27.5%, net interest expense of approximately $50 million, and we expect our non-GAAP tax rate to be approximately 12% due to the expiration of a tax reserve. GAAP EPS between $0.34 and $0.41 per share, and non-GAAP EPS between $0.60 and $0.67 per share. We also expect depreciation of approximately $51 million. I'll now hand it back over to Bertrand for some closing remarks.

[Bertrand Loy, CEO at Entegris]

Thank you, Linda. In closing, the industry environment remains dynamic. In that context, we will remain focused on what we can control, engaging with our customers, managing our cost, delivering strong profitability, improving free cash flow, and paying down our debt. In 2025, we are prioritizing critical investments that enable our customers' node transitions and technology roadmap needs. Looking further out, we continue to have high confidence in the strong long-term growth outlook for the semiconductor industry and for Entegris. Our customers' technology roadmaps are calling for new materials and ever greater purity levels to improve device performance and achieve optimal yields. Our expertise in materials science and materials purity is increasingly valuable. The R&D investments we are making are translating into key wins in new nodes and are expected to fuel our growth and market outperformance in the years to come.

[Bertrand Loy, CEO at Entegris]

With that, Operator, let's open the line for questions.

[Operator]

Absolutely. The floor is now open for questions. At this time, if you have a question, please press the star and one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star and two. Again, we ask that you pick up your handset when posing your question to provide for best sound quality. Our first question is coming from Melissa Weathers with Deutsche Bank. Please go ahead. Your line is open.

[Melissa Weathers, Analyst at Deutsche Bank]

Thank you so much for letting me ask a question. Good morning, everybody. I guess on the comments that you guys have made on the direct impacts from tariffs in China and your outlook, could you help us understand, so is the main message that excluding those direct impacts, everything else is pretty much going as planned, as you talked about last quarter? Or just help us, if we could get a little bit more context on how you're guiding and how much of that is tariff impact and how much of that is any cyclical weakness. Thank you.

[Bertrand Loy, CEO at Entegris]

Yes, good morning, Melissa, and good question. Let me put actually this Q2 guidance in the right context, and I may provide a little bit more details than I usually do, but I think the circumstances warrant that. Let's start with a few facts. I mean, entering Q2, our business is strong. The fill rate is steady. Quarter to date, our book-to-bid ratio is strong. It's actually approaching 1.2. That's good. That's actually very good. Another important fact, ex-China, our second quarter forecast is also solid. Actually, we expect the ex-China business to be up sequentially in line with the industry trends that we expect in Q2. Specifically, we expect sequential growth in our consumable product lines, consistent with the expected sequential improvement in wafer starts.

[Bertrand Loy, CEO at Entegris]

That's going to be offset slightly by the sequential contraction in our CapEx product lines, and that's also consistent with the expected sequential contraction in the industry CapEx. Again, net-net, our ex-China business is solid and is expected to be up sequentially. That's good as well. To your question, I mean, we certainly have this China tariff situation to deal with. China introduced new tariffs on imports from the U.S. Our products, unfortunately, do not qualify for the temporary exemptions granted by the Chinese government. As a result, as of right now, Chinese customers have put inbound shipments from the U.S. on hold. The impact for us, just for Q2, worst case could be up to $50 million, again, just for Q2. That's the bad news.

[Bertrand Loy, CEO at Entegris]

Now, the good news, as Linda stated multiple times in her prepared comments, is that we have alternate Entegris manufacturing sites across Asia that our China customers could use. Actually, they have started qualifying them, and we are ourselves in the process of hiring and training additional staff, ramping up our local supply chain. Realistically, we expect to be able to mitigate some of that impact in Q2, and that gets you somewhere at the midpoint of that guidance range for Q2. Of course, we expect to make more progress in Q3, Q4, and at a high level, we expect these initiatives to have substantially mitigated the China tariff headwinds by the end of the year. Hopefully, Melissa, that provides the context you are looking for when thinking about the overall business trends and going into Q2.

[Bertrand Loy, CEO at Entegris]

Great. Thank you for all that color. That's really helpful. I totally understand you guys pulling your 2025 guide, given that uncertainty. Maybe a bigger picture question then. On the MOLY side, it was good to hear that you're engaged with all of the main memory players on MOLY. Given the macro uncertainty and the tariff uncertainty, has there been any change in your customer discussions about their willingness to adopt MOLY? Has the timing of that MOLY ramp changed in your mind at all?

[Bertrand Loy, CEO at Entegris]

It's a great question. I think that despite the uncertainty that we are all experiencing, the good news is that all major node transitions are still on track. It's true for the MOLY adoption in memory. As a matter of fact, all our discussions with the market leaders in 3D NAND suggest that actually not all of them, but most of them will be transitioning to MOLY in the second half of the year. It's good for MOLY. That statement also applies to logic. In logic, we also expect N2 and 18A to ramp in the second half of 2025. For all of those node transitions, both in logic and memory, we are very well positioned, and we are ready to capitalize on the incremental opportunities in the back half of the year.

[Bertrand Loy, CEO at Entegris]

Of course, as more wafers are produced at those nodes going into 2026, that should have a positive impact on our business in 2026 as well.

[Melissa Weathers, Analyst at Deutsche Bank]

Great. Thank you.

[Operator]

We'll take our next question from Charles Shi with Needham. Please go ahead. Your line is open.

[Charles Shi, Analyst at Needham]

Hi. Good morning, Bertrand, Linda. Maybe I want to go back to the question that China tariff, retaliatory tariff impact on the blast sales for Q2. I recall going back a few quarters, you were expecting maybe China revenue as a percentage of the total to go above 20% from somewhere around the mid-teens, given the increased production, semi-production in China. But how much of the $50 million loss, let's say in Q2, is recoverable, let's say in Q3 and Q4? Because do your Chinese customers really have alternatives, or do you think that there will be some market share loss going forward? The reason why I'm asking this really is about how much of the loss is irreversible and how much of that you think is reversible. Maybe give it two or three more quarters. Thank you.

[Bertrand Loy, CEO at Entegris]

Yes, Charles. Fair question. We believe that this is a temporary impact, as Linda mentioned. I absolutely believe it is. As we have said many times before, our China business is strong. There are competitors in China, for sure, but we believe that we have been competing very effectively. Our brand is strong. We continue to be viewed as valued partners by our customers. Remember that our solutions really help our customers improve their device performance, improve their yields. This is really at the heart of our value proposition. This value proposition is appreciated in China as it is anywhere else in the world. We are in active discussions with our China customers. When I say China customers, by the way, we are talking about international companies operating in China as well as domestic Chinese customers.

[Bertrand Loy, CEO at Entegris]

They have practical experience of some of our other Asia Manufacturing Centers. They just need to fully qualify certain products coming from those centers and start placing their future demand on those manufacturing centers. We know it is going to take a little bit of time, but we believe it is entirely recoverable.

[Charles Shi, Analyst at Needham]

Got it. Thanks. Maybe a follow-up question. Really, I want to go back to the Q1 results. I think we're focused a lot on the Q2, what the tariff impact could be on the Q2 guidance. Your Q1 results still coming a little bit below, I believe, the low end of the guidance, which you guided in February. Wonder, what exactly happened? Why it came in a little bit below your expectation? I think you mentioned the CapEx products, fluid handling, hoops were some of the weakness. What exactly you are seeing in terms of customer behavior, assuming Q1, that's all pre-tariff, right? Thank you.

[Bertrand Loy, CEO at Entegris]

Yeah, Charles. Yeah. The Q1 performance has nothing to do with tariffs, indeed. The top line came in slightly below guidance. As we've said, it really comes from much softer demand than originally expected for our fluid handling and FUPs products. You know that these products, I mean, demand for these products is linked to new fab construction. We've seen significant slowdown in new fab construction activity in all markets, frankly, but that's especially true in China, in Japan, in Korea. As a result, we've seen a much more significant contraction in the revenue for those products in Q1. Having said that, remember that we grew in spite of this CapEx headwind. We grew 5% year on year. As I mentioned, strong performance from material solutions, up 8%. Strong performance of APS. I mean, micro-contamination had a very solid quarter.

[Bertrand Loy, CEO at Entegris]

It was offset, obviously, by the decline in the CapEx products that I mentioned. Finally, one thing that I just want to be sure you remember, Charles, when you're looking at our Q1 performance, especially the year on year, remember that there were new U.S. export restrictions announced in December, and we had quantified that impact to be about $10 million on a quarterly basis. We saw that in Q1. We had some adverse impact from foreign exchange as well. I think Linda mentioned that year on year was about $5 million. Certainly, those last two points do not explain the miss, right? I mean, we're expecting these impacts when setting guidance. I think it's useful context when you look at Q1 results on a year-on-year basis. I would argue that the overall performance is pretty solid in that context.

[Charles Shi, Analyst at Needham]

Thanks, Bertrand.

[Operator]

We'll take our next question from Atif Malik. Please go ahead. Or from Citi, please go ahead. Your line is open.

[Operator]

Thank you for taking my question. The first one for Linda. Linda, can you walk us through? You talked about the revenue impact from China, but on the gross margin, the 100 basis points sequential decline to the June quarter, can you help us understand the puts and takes on the cost side impact from tariffs?

[Linda LaGorga, CFO at Entegris]

Yes. Thank you for that question. Let me first, since you framed it, and let me frame it overall. We're in a dynamic environment, and our guidance is capturing that dynamic environment. To your point on how do tariffs play into gross margin, we do have tariffs on U.S. imports. We do import some raw materials and finished goods. We are very confident in the plan we have to mitigate those tariff impacts over time on U.S. imports through select pricing surcharges, different duty programs, and focus on regionalizing sourcing to limit that tariff impact. In the near term, there's likely to be some modest impact to our Q2 gross margins as we progress our mitigation plans because there is a bit of a timing lag, and this is reflected in our guidance.

[Linda LaGorga, CFO at Entegris]

Getting back to a little bit more of a big picture between Q1 and Q2 on the margin, you're correct in saying there's a bit of an impact from tariffs. As we look across gross margins and look forward, there's going to be puts and takes. I want to bring you back to looking forward. There's the volume leverage as we progress throughout the year. We're going to continue to focus on productivity. We'll continue to have inefficiencies this year in Taiwan and Colorado, but we're going to get most of that behind us by 2026. We're going to continue to manage our cost structure, including gross margin, in the context of our analyst day. While there's slightly lower gross margins in Q2, we still expect that in 2025, our overall gross margins will be up modestly compared to 2024.

[Linda LaGorga, CFO at Entegris]

Very helpful. And one for Bertrand. Bertrand, I fully understand you guys are not commenting on full year given the macro uncertainty. But just kind of broad strokes, how do you see the CapEx environment going on for second half? Some of the CapEx peers have talked about maybe sloppish outlook for CapEx in second half. Some of them are down in second half versus first half. If you can just kind of give your big picture thoughts on the CapEx trends.

[Bertrand Loy, CEO at Entegris]

Yeah. I mean, look, I mean, remember that when we started the year pre-impact from tariffs and the growing uncertainty around that, we probably already had some fairly conservative expectations when it comes to the industry CapEx. I would argue that the current prevailing uncertainty is, in my opinion, going to put some additional pressure on CapEx in the second half of the year. Having said that, we expect that to be somewhat offset by the steady improvement that we expect to see in wafer starts. Again, all of that is our high-level considerations that do not really incorporate any considerations and any changes coming from the uncertainty around the tariff and the indirect impact from tariffs.

[Bertrand Loy, CEO at Entegris]

Thanks.

[Operator]

We'll take our next question from Timothy Arcuri with UBS. Please go ahead. Your line is open.

[Timothy Arcuri, Analyst at UBS]

Thanks a lot. Bertrand, I also wanted to ask about how quickly this revenue can come back. I mean, why does this not sort of, is this not the match that lights the fire for them to qualify local alternatives? I know that not all of what you sell, there is not a local alternative for all of what you sell, obviously. But there are local alternatives for some of what you sell. And do they actually have enough inventory on hand to just outright be able to continue to operate with China not accepting shipments? I mean, this is a pretty big number relative to what your China exposure is. Yeah, thanks.

[Bertrand Loy, CEO at Entegris]

Yeah. Look, it's a fair question, Tim. I think the burden is going to be on us to be very proactive and very effective in transitioning the China demand to some of those alternate Asia sites. I think that those Asia manufacturing alternatives have a lot to offer. I mean, think about the big investment we made in Taiwan, recent investments in Japan and Korea. We are really offering state-of-the-art manufacturing capabilities. We believe we are offering, again, products that are very uniquely enabling device performance and very uniquely enabling the yields of our customers. That has value. We certainly hope that this is a point of view that our China customers share with us. Again, all indications are based on the discussions we've been having with them in the last month. All indications are that they are very eager to qualify those alternatives.

[Bertrand Loy, CEO at Entegris]

I mean, the proof will be in the pudding, obviously, but I am optimistic.

[Timothy Arcuri, Analyst at UBS]

Okay. Got it. And then just a two-part question. One, what is the clean revenue guide then for June? Is the clean revenue guide something like $800 million minus this issue? Is that the baseline that we should then kind of, I mean, obviously, we have to assume how quickly this 50 comes back. Is the $800 million the real sort of demand-based guidance for June? That is the first part of the question. The second part is, what is your NAND exposure right now? Do you think any of the weak June quarter is related to NAND? Thanks.

[Bertrand Loy, CEO at Entegris]

Yeah. In reverse order, the NAND exposure right now for us is about 10% of our revenue, roughly. In terms of breaking down our Q2 guidance between China and non-China, I mean, I think we've provided a lot of details. I'm not going to go into a lot more details than my answer to the first question. Directionally, the way you think about it is not too far off.

[Timothy Arcuri, Analyst at UBS]

Okay. Thank you.

[Operator]

We'll take our next question from Chris Parkinson with Wolfe Research. Please go ahead. Your line is open.

[Chris Parkinson, Analyst at Wolfe Research]

Great. Thank you so much. You hit on a few of these, but just to dig down a little bit deeper. In terms of your second half assumptions of just what you're looking at from the customer level, do you sit on some non-tariff-related factors? Specifically, MOLY, no transitions. Is there anything that has actually changed in the last 5 to 6 weeks that would ultimately further evolve your views on those? And then perhaps just a quick update on the Taiwan ramp as well would be very helpful. Thank you.

[Bertrand Loy, CEO at Entegris]

Yeah. In terms of the benefits that we expect to get from the node transitions, as I said, we are very encouraged by our recent discussions with our customers. All of the major node transitions we're expecting in memory and logic seem to be still on time. That is positive because it provides an opportunity for us to increase our content per wafer, and that should actually help us sustain very attractive revenue levels in the second half of the year. Having said that, I mean, you're right that today, there is still a lot of unknown around the indirect impact coming from tariffs. I mean, there is that recession, which usually could correlate with a slower demand environment for semiconductors, but nobody has been able to really quantify that, and I'm certainly not equipped to do that either.

[Bertrand Loy, CEO at Entegris]

That's something we're going to be obviously keeping an eye on. And then there was a third part to your question, which I forgot.

[Chris Parkinson, Analyst at Wolfe Research]

Taiwan.

[Bertrand Loy, CEO at Entegris]

Taiwan. Yes. So Taiwan, yeah, we're making actually really good progress in our Kaohsiung facility. Remember that in 2024, we completed a number of product qualifications, high-purity containers, deposition materials, and we initiated qualifications for liquid filters. In 2025, the focus is to complete the remaining qualifications for all major liquid filters. And when it's all said and done, I would say that I would expect the revenue run rate exiting 2025 out of Kaohsiung to exceed $120 million. Remember, the last year, the revenue on a full-year basis was something closer to $15 million. So a lot of progress is expected in 2025.

[Chris Parkinson, Analyst at Wolfe Research]

That's very helpful. Just in terms of the intermediate term, obviously, once again, I understand the world's changing, but to the best, as we sit here today, how are you thinking about the U.S. Market just given the rhetoric of the current administration, trade, the potential for increases in foreign investment? Any updated thoughts just holistically on this topic would be helpful and just how that relates to your thoughts on the Colorado Springs opportunity. Thank you.

[Bertrand Loy, CEO at Entegris]

Yeah. That's a fair question. I think this is something that we are keeping a very, very close eye on. External Market Research and our own views is that new fab construction activity will be significantly down this year in 2025. It's true, as I mentioned, in China and Japan, but also will be likely true here in North America. Right now, when it comes to our Colorado investment, we are going full speed ahead with our phase one investment. We have actually hit a number of milestones, so feeling really good about the progress. We're going to be starting customer qualifications in the second half of this year. We expect production late this year, early next year.

[Bertrand Loy, CEO at Entegris]

Now, when it comes to the timing of phase two, so the next phase of investment, we're going to be looking at the level of new fab activity in the U.S. We're going to take that into consideration, and we will finalize our decisions later this year. No decision at this point.

[Chris Parkinson, Analyst at Wolfe Research]

Very helpful. Thank you so much.

[Operator]

We'll take our next question from John Roberts with Mizuho. Please go ahead. Your line is open.

[John Roberts, Analyst at Mizuho]

Thank you. Sometimes you characterize the business at a high level in terms of mainstream versus advanced applications. I assume advanced is not that affected by China or much less affected, but maybe you could just give us kind of the tone of business in those kind of 2 big buckets.

[Bertrand Loy, CEO at Entegris]

Yeah. I mean, look, our advanced logic business remains very, very strong. I mean, if you look at our Q1 performance, our revenue in Taiwan was very strong year on year, as we would expect, and as we capitalized on increased demand linked to AI and advanced logic application. It is true that we continue to face some headwind from still fairly reduced levels of operations in mainstream fabs. It was true pretty much around the world, including China in Q1.

[John Roberts, Analyst at Mizuho]

Yeah. I think the comment period ends today for the new semiconductor tariffs. Have the consultants summarized that for you, or is there anything that kind of maybe sticks out as unexpected in what may have been submitted in terms of public comments?

[Bertrand Loy, CEO at Entegris]

No. As I said, I think right now there's just a lot of unknown, a lot of uncertainty. I think most of our customers are taking a very prudent approach, frankly, when they think about the balance of the year. That's the reason why we didn't feel equipped to update our annual guidance. I think hopefully things will settle down, and hopefully in a few months, we will be in a better position to update our full-year guidance.

[John Roberts, Analyst at Mizuho]

Thank you.

[Operator]

We'll take our next question from Mike Harrison with Seaport Research Partners. Please go ahead. Your line is open.

[Mike Harrison, Analyst at Seaport Research Partners]

Hi. Good morning. I was hoping we could dig in a little bit on the growth that you're seeing within the microcontamination control portion of the APS segment. I feel like sometimes you have pretty good visibility on your ability to grow in that business. How is visibility today compared to what you think of as normal? Are you seeing any delays or changes in customer order patterns? Any change in filter usage or anything that suggests that maybe your customers are trying to thrift or extend the life of some of those filters? Any color there would be appreciated.

[Bertrand Loy, CEO at Entegris]

Yes. It's a good question, Mike. I think, as I think you know the answer to the question. I think in advanced logic, there's still this intense focus on defect management, which is really driving the right behaviors when it comes to using the most advanced filters, proactively changing them and doing the right level of preventative maintenance. We are seeing that same behavior now in HBM, and I mentioned that in my prepared remark highlighting a new IPA purifier opportunity. It's great to see that as device complexity increases, we are starting to see a greater focus, a greater interest in the microcontamination control solutions. In the case of this HBM opportunity, we were asked to help reduce the level of trace metal contaminations from 3 parts per trillion to something less than 1 part per trillion.

[Bertrand Loy, CEO at Entegris]

I think our solutions actually helped the customer get to 0.5 parts per trillion, which, put that in context, is about half a drop of water in a 20 Olympic-sized swimming pool. Those are the types of solutions that we are developing. We are very proud of the value proposition that our products offer. We are pleased to see this greater level of focus on purity. You're right that when utilization levels are low, as they are right now in mainstream, customers will try to stretch the lifetime of the filters. That is one of the many reasons why our mainstream business has been sluggish, and frankly, in the last couple of years now.

[Mike Harrison, Analyst at Seaport Research Partners]

All right. And then for Linda, I know you do not typically talk about the FX impact. You mentioned, I believe, some top-line impacts in the first quarter. With the big swings that we have seen in the dollar, can you talk a little bit about the impact you might expect to see in the second quarter in other parts of the P&L and at the EBITDA level? Is that something that is leading to some margin weakness in the second quarter as well?

[Operator]

Yeah. Thanks, Mike. First, historically, we have not had a meaningful impact on our business from FX. Again, you're asking about other parts of the P&L, but as I mentioned, on the sales side, greater than 75% of our sales are USD. When you get below sales into the gross margin, which could flow down into EBITDA, when we do have significant and fast moves, we do see some impact, but it has been manageable. There could be a little bit of impact in Q2, but that is not the primary reason why I'm projecting what we're projecting for Q2 in our gross margin. As I said, primarily, I'd focus on some of the volume deleveraging and then the impact of the direct tariffs from U.S. imports and a bit of a timing lag.

[Charles Shi, Analyst at Needham]

Thanks very much.

[Operator]

We'll take our next question from Alexey Yafarov with KeyBanc Capital Markets. Please go ahead. Your line is open.

[Ryan Doughty, Analyst at KeyBanc Capital Markets]

Thanks. Good morning, Bertrand. This is Ryan on for Alexey. I just wanted to ask one on China first. Did you guys see any evidence of pre-buying kind of ahead of all the restrictions that have gone in? I understand you mentioned that they're eager to qualify some of your product from alternative sourcing, but just wondering if there was any pre-buying that you kind of saw ahead of all this?

[Bertrand Loy, CEO at Entegris]

No. We did not really see much of that. When it comes to Q2, obviously, as I said, I think right now, all of our shipments ex-U.S. are on hold, so there is absolutely no pre-buying going on right now. There was none of that in Q1 either.

[Ryan Doughty, Analyst at KeyBanc Capital Markets]

Understood. Okay. Thank you. I just wanted to ask on advanced packaging. I mean, it seems like growth is kind of accelerating across the space. I was hoping you might be able to remind us what the size of that business is for you today, maybe what growth kind of looked like in Q1, and kind of what your outlook is like. Thank you.

[Bertrand Loy, CEO at Entegris]

Yeah. Good question, Ryan. Advanced packaging for us is still a fairly small market, right? As we have mentioned multiple times, it is growing very fast. It actually did more than double in 2024. We saw a doubling in Q1 versus actually more than a doubling in Q1 of this year versus Q1 of last year. When we think about the full year, 2025, we expect this business year on year to grow more than 25%. The two big drivers for us in 2025 are expected to be high viscosity dispense solutions. That is an APS product. The other one would be HBM slurries for TSV applications. Again, feeling good about the momentum, feeling good about our ability to uncover new areas where we can contribute value. Still small, but growing very, very fast.

[Operator]

There are no further questions on the line at this time. I'll turn the program back to Bill Seymour for any closing remarks.

[Bill Seymour, VP of Investor Relations at Entegris]

Thank you for joining our call today. Please reach out to me personally if you need to follow up. With that, have a great day, and you can disconnect.

[Operator]

Thank you. This concludes today's Entegris First Quarter 2025 earnings conference call. Please disconnect your line at this time and have a wonderful day.

Participants

Executives

• Bertrand Loy, CEO
• Linda LaGorga, CFO
• Bill Seymour, VP of Investor Relations

Analysts

• John Roberts, Analyst at Mizuho
• Chris Parkinson, Analyst at Wolfe Research
• Melissa Weathers, Analyst at Deutsche Bank
• Ryan Doughty, Analyst at KeyBanc Capital Markets
• Timothy Arcuri, Analyst at UBS
• Mike Harrison, Analyst at Seaport Research Partners
• Analyst
• Charles Shi, Analyst at Needham