Entegris, Inc. (ENTG) | The Buildout — AI Infrastructure
The Verdict
Entegris makes the consumable materials, chemistries, filtration, wafer carriers, and contamination-control products that advanced semiconductor fabs require at nearly every major process step. Its products are qualified into deposition, CMP, etch and clean, lithography support, and wafer-handling workflows, so demand is tied both to wafer starts and to the construction and tooling of new fab capacity.
| Market Cap | — |
| Revenue (TTM) | $3.2B |
| Revenue Growth | −0.2% |
| EBITDA Margin (TTM) | 37.8% |
| Net Debt | $3.3B |
| Earnings Beats | 4 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Revenue growth is guided to step from +5% YoY in Q1 2026 to +11% in Q2, ~14% in Q3, and mid-teens in Q4 2026.
- Q2 2026 gross margin of 47.6% was the highest since early 2022, and Q3 guidance of 47.5%–48.5% implies more than 400 basis points of YoY expansion.
- WFE order rates were up 20–30% YoY, with CapEx-oriented bookings strengthening through Q2 and backlog levels higher.
- Management is tracking more than 20 leading-edge capacity expansions: 8–10 advanced logic, 7–8 advanced memory, and 6–8 advanced packaging projects.
- Net leverage is targeted below 3x, or the high 2x range, by year-end 2026 after $200M of debt repaid in Q2 and $25M more in July.
What We’re Watching
- Materials Solutions margin is 20.9% in Q2 2026, roughly flat YoY, even as management guides double-digit segment revenue growth in H2 2026.
- China revenue was modestly down in Q1 2026 on prior-year tariff pull-in; management expects a second-half recovery that is not yet proven.
- Mainstream logic, about one-third of revenue, remains mixed but modestly improving.
- KSP and Colorado facilities remain margin headwinds through 2026, with Colorado expected to contribute little revenue until early 2027.
The thesis is strengthening. Between Q1 and Q2 2026, revenue growth accelerated, gross margin reached its best level since early 2022, the CapEx order book strengthened, and deleveraging ran ahead of management's own plan. The open question is whether the Materials Solutions segment can convert guided double-digit H2 revenue growth into operating margin expansion and whether the tracked fab expansions become 2027 revenue as management expects.
Earnings Beat
Entegris reported Q2 2026 revenue of $883M, up 11% YoY and above guidance, with gross margin of 47.6% — the highest since early 2022. Adjusted EBITDA reached $251M, or 28.4% of sales, and liquid filtration delivered its fourth consecutive record quarter.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $812M | $824M | $773M | +5.0% |
| Gross margin | 41.2% | 43.8% | 40.1% | +110bps |
| EBITDA | $222M | $670M | $221M | +0.7% |
| EPS | $0.60 | $0.32 | $0.41 | +44.8% |
| Unit-driven revenue | +10% YoY | +7% YoY | n/a | — |
| CapEx-related revenue | +15% YoY | modest YoY decline | n/a | — |
I never anticipated that I could sit here on this call today here in August and be able to tell you that we expect to end the year with a net leverage ratio that starts with a 2. That was an expectation that I did not have starting this year.— Dave Reeder, Chief Executive Officer, August 6, 2026
Management tone: Management's tone shifted from confident in Q1 to more bullish in Q2, with the CEO saying he had not anticipated ending the year with a net leverage ratio that starts with a 2. Management gave specific numbers on WFE order rates, molybdenum competition, and capacity, while deferring advanced packaging detail to the November Investor Day.
Management Guidance
For Q3 2026, management guided revenue of $905M–$935M, gross margin of 47.5%–48.5% on both GAAP and non-GAAP, EBITDA margin of about 28.5% at the midpoint, and non-GAAP EPS of $0.96–$1.04. The preliminary Q4 view is for revenue to grow about 4% sequentially from the Q3 midpoint, implying mid-teens YoY growth, with both segments expected to grow more than 10% YoY. Full-year items include CapEx of $250M, net interest expense of about $180M, non-GAAP tax rate of about 14%, diluted share count of about 154M, and net leverage below 3x / high 2x by year-end.
Trajectory
Reported revenue moved from $811.9M (+5% YoY) in Q1 2026 to $883M (+11% YoY) in Q2 2026, and management guides Q3 midpoint of about $920M (~14% YoY) and Q4 mid-teens YoY. Gross margin reached 47.6% in Q2, the highest since early 2022, and Q3 is guided to 47.5%–48.5%. The lift came from unit-driven revenue growing 10% and CapEx-related revenue growing 15%, backed by WFE order rates up 20–30% and more than 20 tracked capacity expansions. Sequential revenue was down 1.5% in Q1 2026 after several quarters of modest QoQ growth, but management's YoY compares accelerate through the 2026 guides.
The Model
The model projects FY+1 revenue of $3,425M and EBITDA of $966M (28.2% margin), then FY+2 revenue of $3,850M and EBITDA of $1,136M (29.5% margin). The FY+1 projection is anchored by the guided Q3 and Q4 ramp and a stronger CapEx order book; FY+2 extends the revenue-wave logic as the 20-plus tracked fab expansions move from construction into tooling and wafer starts.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $3.2B | $3.4B | $3.9B |
| YoY Growth | — | +7.1% | +12.4% |
| EBITDA | $1.2B | $966M | $1.1B |
| EBITDA Margin | 38.2% | 28.2% | 29.5% |
Projections are the median of 5 independent model runs. The model’s revenue sits 0.9% below analyst consensus.
For Q3 2026, management guided revenue of $905M–$935M, gross margin of 47.5%–48.5% on both GAAP and non-GAAP, EBITDA margin of about 28.5% at the midpoint, and non-GAAP EPS of $0.96–$1.04. The preliminary Q4 view is for revenue to grow about 4% sequentially from the Q3 midpoint, implying mid-teens YoY growth, with both segments expected to grow more than 10% YoY. Full-year items include CapEx of $250M, net interest expense of about $180M, non-GAAP tax rate of about 14%, diluted share count of about 154M, and net leverage below 3x / high 2x by year-end.
What Could Go Right — and Wrong
- Advanced packaging grows beyond the current >$100M annual revenue run-rate after the November Investor Day product roadmap.
- Material pricing or expanded supply agreements enter guidance, adding margin upside management says is not currently assumed.
- Materials Solutions delivers double-digit H2 2026 revenue growth with margin expansion, not just volume growth.
- The 20-plus tracked leading-edge capacity expansions convert into 2027 fab-construction revenue earlier or larger than the current wave model.
- Molybdenum precursor demand approximately doubles in FY2026 while no third entrant appears in a meaningful way.
- CapEx order momentum reverses, and WFE order rates fall from the 20–30% YoY range.
- A major qualification or share loss occurs at TSMC, which is 16% of FY2025 revenue.
- Materials Solutions margin stays near 20.9% or declines even as H2 revenue grows double digits.
- A single-source supply disruption hits filtration membranes, polymer resins, engineered abrasive particles, specialty chemicals, or petroleum coke.
- KSP and Colorado dilution extends into 2027 despite early KSP breakeven expectations.
Looking Ahead
Over the next 12 months, management expects H2 2026 CapEx revenue to be driven by strong WFE growth, with much of the fab-construction benefit landing in 2027. Key signposts are KSP potentially reaching P&L breakeven, China local supply reaching about 90% by year-end 2026, Colorado ramping in early 2027, and the November 9, 2026 Investor Day detailing the advanced packaging roadmap.
- Q3 2026Q3 results vs guidance — Tests guided revenue midpoint of ~$920M (~14% YoY), gross margin of 47.5%–48.5%, and non-GAAP EPS of $0.96–$1.04.
- Q3/H2 2026KSP P&L breakeven — Management says KSP may break even in Q3, ahead of schedule.
- H2 2026Materials Solutions double-digit growth — Management expects MS YoY growth above 10% in Q3 and Q4.
- November 9, 2026Investor Day in New York City — Management has deferred advanced packaging strategy detail to this event.
- Year-end 2026Net leverage below 3x / high 2x — After $200M Q2 repayment and $25M July repayment.
- Year-end 2026China local supply ~90% — Up from ~85% in Q1 2026.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $3.2B | $3.2B | $3.2B | -1.4% |
| Gross Margin | 45.9% | 43.0% | 43.2% | 290bps |
| EBITDA | $912M | $1.2B | $6.6B | +33.8% |
| EBITDA Margin | 28.1% | 38.2% | 37.8% | +1,002bps |
| Net Income | $293M | $236M | $264M | -19.5% |
| Free Cash Flow | $316M | $571M | $2.4B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)43.2%
- EBITDA Margin (TTM)37.8%
- Net Margin (TTM)8.2%
- ROIC10.1%
- FCF Conversion55.6%
- SBC / Revenue2.2%
The Company
Entegris supplies critical advanced materials and process solutions for semiconductor manufacturing and other high-technology industries. Its products — including advanced deposition materials, CMP slurries and pads, liquid and gas filtration, FOUPs, wafer carriers, specialty coatings, and selective etch chemistries — are used to improve yield, purity, and productivity in advanced manufacturing environments.
The company runs two reporting segments: Materials Solutions (MS) and Advanced Purity Solutions (APS). After recent facility rationalizations, it operates roughly 35 manufacturing facilities, with named locations including Billerica, Massachusetts; KSP Taiwan; Colorado Springs; South Korea; Yonezawa, Japan; Toronto; Chaska, Minnesota; Aurora, Illinois; and Burnet, Texas. It produces the majority of its filters across three sites — North America, Japan, and KSP Taiwan — and is qualifying new capacity while investing ahead of demand.
Business Segments
Competitive Landscape
Entegris competes in advanced materials, filtration, CMP, and contamination control. Management said the molybdenum market is largely a two-horse race with no meaningful third entrant seen to date. A criticality assessment notes that if Entegris disappeared, AI fabs could shift consumables to alternatives like MKSI or DuPont within about two quarters, though gas purification and advanced CMP would face temporary bottlenecks.
- MKSINamed in the criticality assessment as a possible alternative for consumables if Entegris disappeared.
- DuPontNamed in the criticality assessment as a possible alternative for consumables if Entegris disappeared.
Supply Chain
Entegris sits between specialty-material and component suppliers and leading-edge semiconductor fabs. No scanned neighbor transcript mentions Entegris by name, so supplier and customer links below are a mix of direct disclosure and inference.
More on ENTG: Earnings recap