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Entegris, Inc. (NASDAQ: ENTG) reported its financial results for the third quarter of 2024, highlighting both challenges and achievements within the semiconductor industry. The company posted net sales of $808 million, reflecting a 9% decrease from the previous year.
However, when excluding the impact of divestitures, adjusted net sales increased by 7% year-over-year, signaling growth in core operations amidst a difficult market environment. The company achieved a GAAP diluted earnings per share (EPS) of $0.51 and a non-GAAP diluted EPS of $0.77.
The gross margin as a percentage of net sales was reported at 46.0%, consistent with the previous quarter but up from 41.3% in the same period last year. Operating margins also showed an improvement, with a GAAP operating margin of 16.9%, up from 13.2% a year ago. Bertrand Loy, president and CEO, noted that despite sales coming in below expectations, the company delivered margins and non-GAAP EPS within the guidance range.
This reflects Entegris’ focus on maintaining profitability while navigating a challenging semiconductor market.The company operates in three segments: Materials Solutions, Microcontamination Control, and Advanced Materials Handling.
Notably, the Microcontamination Control segment achieved a profit of $96.7 million, slightly down from $101.1 million last year, but indicative of steady performance. The Materials Solutions segment reported a profit increase to $71.7 million from $56.9 million, highlighting growth in this area.
Entegris Fails to Meet Expectations in the Third Quarter
Entegris’ third-quarter performance was below expectations in terms of revenue but aligned with EPS forecasts when adjusted for non-GAAP measures. The market anticipated an EPS of $0.781, and the company delivered a non-GAAP EPS of $0.77, closely matching expectations.
This was achieved despite a challenging market environment characterized by a slower-than-anticipated recovery in the semiconductor industry. The company’s net sales of $807.7 million were below the previous year’s $888.2 million, reflecting a challenging market landscape.
However, the adjusted net sales, which exclude divestitures, showed a positive trajectory with a 7% increase, underscoring the strength of the company’s core operations. The gross margin improvement from 41.3% to 46.0% year-over-year further highlights operational efficiencies and cost management strategies.
Despite the decline in reported net sales, Entegris managed to improve its operating margin from 13.2% to 16.9%, showcasing its ability to maintain profitability in a tough market. The non-GAAP adjusted EBITDA margin also improved to 28.8% from 26.5% in the previous year, reflecting the company’s focus on operational excellence and cost control.
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Entegris Anticates GAAP Net Income to Be Between $75 to $86 Million for Q4
Looking ahead, Entegris provided guidance for the fourth quarter of 2024, with expected sales ranging from $810 million to $840 million. The midpoint of this guidance indicates an 8% year-over-year increase, excluding the impact of divestitures. The company anticipates a GAAP net income between $75 million and $86 million, with a diluted EPS expected to be between $0.49 and $0.56.
On a non-GAAP basis, diluted EPS is projected to range from $0.75 to $0.82, reflecting strong operational performance. The firm remains optimistic about the growth prospects for the semiconductor industry and its role within it. The company sees opportunities in the increasing complexity of device architectures and further miniaturization, which are expected to drive demand for its advanced materials and process solutions.
Entegris aims to leverage its expertise in materials science and materials purity to capitalize on these trends.The company also highlighted its recent realignment of operating segments, combining the Microcontamination Control and Advanced Materials Handling segments into one. This strategic move is expected to streamline operations and enhance focus on core growth areas.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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