Entegris Q1 Earnings Call Highlights

Key Points

• Q1 results beat guidance: Entegris reported revenue of $812 million, up 5% year-over-year, with non-GAAP EPS of $0.86 and gross margin of 46.9%, all above the company's guidance ranges.
• Margin improvement driven by operations: Management attributed sequential gross margin expansion to productivity and supply‑chain efficiency actions plus a useful‑life accounting change, and said it expects this to be a period of "sustained structural gross margin expansion"; the company also closed a subscale Chandler facility while two new sites (KSP and Rockrimmon) will be dilutive in 2026.
• Strong cash flow and deleveraging with constructive outlook: Free cash flow was $144 million (18% margin), net leverage was 3.6x with the term loan down to $400 million and a target of ~3x by end‑2026; Q2 guidance calls for $815–$845 million revenue, 46.25–47.25% gross margin, and $0.76–$0.84 non‑GAAP EPS, and MSI growth was raised to mid‑to‑high single digits for 2026.

Entegris NASDAQ: ENTG reported first-quarter 2026 results that CEO Dave Reeder described as “a solid start to the year” amid what he called a “constructive and improving semiconductor industry environment.” Revenue rose 5% year-over-year and landed slightly above the midpoint of the company’s guidance, while adjusted gross margin, EBITDA margin, and non-GAAP earnings per share all exceeded the guidance range, management said on the company’s earnings call.

First-quarter results and segment performance

VP of Investor Relations Jeffrey Schnell said first-quarter sales totaled $812 million, up 5% year-over-year. Gross margin, on both a GAAP and non-GAAP basis, was 46.9%, which Schnell said was above the high end of guidance and included “approximately 50 basis points of one-time items” that are not expected to recur at similar levels in future quarters.

Adjusted EBITDA was $226 million, or 27.8% of revenue, also above guidance. GAAP diluted EPS was $0.60, and non-GAAP EPS was $0.86, which Schnell said exceeded the guidance range. He also noted that the non-GAAP tax rate of 8% included “an unforecasted release of a tax reserve.”

By segment, Entegris reported:

• Materials Solutions (MS): Q1 sales of $351 million, up about 3% year-over-year. Schnell said growth was led by “double-digit increases in advanced deposition materials and selective etch chemistries,” along with continued strength in CMP consumables. Adjusted operating margin was 22%, in line with the prior year and up about 100 basis points sequentially.
• Advanced Planarization Solutions (APS): Q1 sales of $464 million, up about 7% year-over-year. Schnell attributed results to demand across the portfolio, including “the third consecutive record quarter in liquid filtration,” a “three-year revenue high in FOUPs,” and growth in gas filtration. Adjusted operating margin was 29.1%, expanding year-over-year and sequentially.

Reeder said unit-driven revenue (which he linked to MSI and said correlates to about 75% of Entegris’ business) increased about 7% year-over-year, citing growth in liquid filtration, advanced deposition, and selective etch. He highlighted that liquid filtration delivered its third consecutive record quarter.

Margin drivers and manufacturing actions

Management emphasized improving profitability. Reeder said gross margin improvement was driven by “productivity and efficiency actions across our manufacturing network and supply chain,” benefits from a useful life accounting change in the first quarter, and product mix. Schnell similarly cited productivity and execution, cost controls, favorable mix, and the useful life change.

During the Q&A, Reeder told Citi’s Elizabeth Sun that the company believes it is in a period of “sustained structural gross margin expansion.” He said the Q1 gross margin benefitted from about 50 basis points of one-time items and explained that, excluding those, Q1 would have been about 46.4%, representing about 240 basis points of sequential improvement from Q4 2025. Reeder said roughly 100 basis points of that sequential improvement was related to the useful life change, with the remaining 140 basis points tied to productivity and efficiency initiatives.

Reeder also said Entegris closed “another subscale facility” during the quarter in Chandler, Arizona, as part of efforts to optimize its manufacturing footprint. In response to UBS’s Timothy Arcuri, Reeder discussed two newer facilities—KSP and Rockrimmon in Colorado—saying both will be dilutive in 2026. He said KSP is expected to be near break-even by the end of 2026, while Colorado is expected to generate “very little revenue” in 2026, with a ramp targeted for early 2027.

Cash flow, balance sheet, and deleveraging

Free cash flow was a “highlight,” according to Reeder. Schnell reported $144 million in Q1 free cash flow, representing an 18% margin, and said it continued a positive trend that began in the second half of 2025. Schnell attributed the year-over-year improvement to higher earnings, increased cash from operations driven by working capital discipline, and lower capital expenditures.

On leverage, Schnell said the company reduced its term loan by $50 million in the quarter, following a $300 million reduction in 2025. Entegris ended the quarter with $400 million remaining on the term loan, which Schnell said is its “only variable rate debt.” Net debt was $3.3 billion and net leverage was 3.6x at quarter-end. Reeder said the company expects net leverage to be approximately 3x by the end of 2026.

Market outlook: MSI and CapEx trends

Reeder said Entegris expects “mid-to-high single-digit” semiconductor MSI growth for the remainder of 2026, reflecting an improved DRAM outlook, a similar view versus last quarter for advanced logic and NAND, and a “mixed outlook” in mainstream logic.

He said the outlook for fab spending is improving for the portion of Entegris’ business linked to fab construction and wafer fab equipment (WFE), which together represent about 25% of revenue. In response to Deutsche Bank’s Melissa Weathers, Reeder broke down the CapEx-exposed portion as roughly one-third WFE and two-thirds fab construction and described what he called “three cycles of demand” tied to new fab build-outs, with fab construction-related products typically appearing first and unit-driven consumables ramping later.

Reeder also provided more color on what changed since February, telling Goldman Sachs’ Jim Schneider that industry fab construction forecasts moved from low single digits to high single digits, which he said is meaningful for the setup into 2027 given the typical lag between groundbreaking and Entegris revenue. He added that Entegris’ MSI view was updated from low-to-mid single digits to mid-to-high single digits, while the company’s expectations for mainstream remained “flat” versus February.

Regional trends, China, and other updates

Reeder said demand improved across end markets and regions, including “double-digit” first-quarter growth in Taiwan and broader Asia. He later quantified Taiwan as up 18% year-over-year in Q1, while broader Asia was up “slightly more than 10%.” He said China was “modestly down” in the quarter, attributing the decline largely to double-digit declines in CapEx-related businesses due to order pattern shifts tied to tariffs in the prior-year period.

In response to Mizuho’s John Roberts, Reeder said Entegris’ China revenue was roughly “85%” sourced in-region and that the company expects to increase that to “more than 90%” by the end of 2026, while noting it likely will not reach 100% due to product economics and geopolitical or tariff impacts.

Reeder also addressed raw material inflation, telling BMO that Entegris has seen modest inflation and some “early cost pressure” tied to the Iran and Middle East conflict, particularly involving “some of the noble gases as well as some of the resins.” He said the company has absorbed the costs so far and would evaluate pricing actions if pressures persist.

On advanced packaging, Needham’s Charles Shi asked about Entegris’ exposure. Reeder said the company’s current exposure is “limited” due to prior investment choices but cited products including “advanced flow control for thick resists,” delivery solutions for copper plating and photoresist, CMP for high-bandwidth memory and TSVs, and its carrier offering. He said the company’s current advanced packaging revenue exceeds “a $100 million a year run rate,” with additional pipeline efforts not expected to meaningfully affect 2026 revenue.

Finally, Reeder announced a leadership update: Sukhi Nagesh was appointed chief financial officer, effective May 18. Reeder said Nagesh’s engineering background, semiconductor industry experience, and financial and operational expertise made him “the ideal CFO” for Entegris.

For the second quarter, Schnell guided sales to $815 million to $845 million, gross margin to 46.25% to 47.25% (GAAP and non-GAAP), and non-GAAP EPS to $0.76 to $0.84. Schnell said Entegris expects its non-GAAP tax rate to return to a “more normalized level” of about 15% in Q2. Looking further out, management said historical seasonality supports sequential improvement in Q3, with the company expecting revenue to rise about 5% from the midpoint of Q2 guidance based on current visibility.

About Entegris NASDAQ: ENTG

Entegris, Inc 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.

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