Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Entegris Inc (ENTG, Financial) reported a 7% year-on-year revenue growth in Q3 2024, excluding divestitures.
- The MS division saw a 14% increase in sales year-on-year, driven by strong performance in CMP slurries and pads, advanced deposition materials, and etching chemistry.
- The company expects to generate $10 million to $15 million in annualized cost savings from the combination of AMH and MC divisions.
- Progress is being made at new facilities in Kaohsiung, Taiwan, and Colorado, with production ramp-up expected in the second half of 2025.
- Entegris Inc (ENTG) has secured key POR positions for new logic and memory nodes, particularly in molybdenum deposition materials, which are expected to drive future growth.
Negative Points
- Q3 2024 sales were below expectations due to a softer overall semiconductor market, particularly in mainstream and 3D NAND.
- The industry recovery is slower than anticipated, with limited visibility and muted demand in certain segments.
- Supply chain constraints impacted the MC division, particularly in gas purification systems and liquid filtration products.
- Gross margin inefficiencies are expected due to ramp-up activities at new facilities in Taiwan and Colorado.
- Mainstream and NAND segments have been more troubled than expected, with significant reductions in fab utilization and inventory levels.
Q & A Highlights
Q: Can you expand on the factors driving the reduction in 2024 revenue and your outlook for 2025?
A: Bertrand Loy, CEO, explained that the industry growth expectation for 2024 has been revised down to 1-2% due to subdued memory and mainstream markets. Wafer starts are expected to be up modestly, driven by advanced logic, but memory remains weak. For 2025, Entegris anticipates better conditions with more node transitions in logic and memory, potentially leading to higher market outperformance.
Q: What is the opportunity for molybdenum adoption in 2025, and how significant could it be?
A: Bertrand Loy noted that while the timing of molybdenum adoption is not fully set, Entegris is well-positioned with a high-quality film and comprehensive delivery solution. The opportunity is significant, especially with expected transitions in NAND and logic, but exact quantification is not provided due to timing uncertainties.
Q: With the current slower mainstream growth, what are your expectations for sales growth in 2025?
A: Bertrand Loy refrained from quantifying 2025 expectations but expressed optimism due to anticipated inventory digestion completion and a potential PC refresh cycle. These factors could lead to improved industry fundamentals in 2025.
Q: How are customer qualifications progressing at the Taiwan facility, and are they on schedule?
A: Bertrand Loy confirmed that qualifications are progressing well, with fluid handling and deposition materials mostly complete. Liquid filter qualifications are taking longer due to changes in process and supply chain, but long-term benefits are expected.
Q: Will AMH and MC divisions be reported separately in the December quarter?
A: Bertrand Loy stated that AMH and MC divisions will be combined starting in Q4. The decision was influenced by successful cost synergies and R&D reinvestment from a previous division combination, leading to increased focus and differentiation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
