Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 4, 2026 · Beat 4 of last 6 quarters
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Entegris is a key supplier of materials and purity solutions for advanced semiconductor manufacturing, and its results are a direct indicator of the AI infrastructure buildout. The company's strong growth in liquid filtration, FOUPs, and advanced deposition materials reflects increasing content per wafer at leading-edge nodes, driven by AI demand. Its tracking of over 20 leading-edge capacity expansions suggests sustained multiyear growth for the AI supply chain.
Entegris delivered strong Q2 results, with revenue up 11% YoY to $883M, driven by double-digit growth in both unit-driven (10%) and CapEx-related (15%) businesses. Liquid filtration posted its fourth consecutive record quarter, and FOUPs had their strongest performance in over 3 years. The company exited its U.S. Life Sciences Fluid Management business and announced the closure of its Logan, Utah facility as part of ongoing footprint rationalization. Free cash flow of $120M enabled $200M of debt repayment, reducing net leverage to 3.4x.
Management raised 2026 MSI growth outlook to 7-8% from mid-single-digit at the start of the year, citing accelerating semiconductor capital spending. They guided Q3 revenue to $905-935M (~14% YoY at midpoint) and Q4 to grow ~4% sequentially (mid-teens YoY). Gross margin is expected to improve to 47.5-48.5% in Q3, with EBITDA margin of 28.5%. They expect to end 2026 with net leverage below 3x, and see 2027 benefiting from stronger fab construction growth. The tone was confident, with management highlighting multiple growth vectors from advanced logic, memory, and advanced packaging, and they plan to provide a detailed long-term framework at the November Investor Day.
“We are currently tracking over 20 major leading-edge capacity expansions globally, including approximately 8 to 10 advanced logic facilities, 7 to 8 advanced memory facilities and 6 to 8 advanced packaging projects.”
on Capacity expansion visibility
“We have increased our factory direct labor a double-digit percentage from Q4 that will help unlock additional capacity.”
on Capacity investment
“We are confident that we will be compensated for the value that we bring.”
on Pricing and supply agreements
How should we model the CapEx-oriented business in the second half of this year and into the first half of next year?
Dave Reeder explained that 25% of revenue is CapEx-driven, with 10% from WFE and 15% from fab construction. In 2026, WFE is the main driver, growing 20-30%, while fab construction benefits will mostly accrue to 2027. He outlined a wave pattern: fab construction revenue around 12 months, WFE around 24 months, and unit growth thereafter.
Are there any one-timers helping your drop-through, and is a 75-80% drop-through reasonable to use?
Sukhi Nagesh noted that year-over-year gross margin included about 150 bps from a useful life adjustment, but excluding that, margins still improved over 300 bps. He suggested using a 60% incremental flow-through as a more normalized rate, and Dave Reeder added that sequential Q1 to Q2 flow-through was around 60%.
What are the reasons why your CapEx-related business would or would not exceed WFE growth for 2027?
Dave Reeder explained that revenue timing depends on the stage of fab construction. He outlined a sequence: revenue from fab construction around 12 months, process piping around 18 months, WFE around 24 months, and unit volume thereafter. He expects 2027 to be more fab construction-driven, with WFE continuing strong.