Entegris, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This annual filing also reports fourth-quarter results. Entegris supplies advanced materials and process solutions to the semiconductor and other high-technology industries. In Q3 2023, it reorganized reporting into Materials Solutions (MS), Microcontamination Control (MC), and Advanced Materials Handling (AMH); prior segment results were recast.
Financial results and key metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Net sales | $3.524 billion | $3.282 billion |
| Gross profit / margin | $1.498 billion / 42.5% | $1.396 billion / 42.5% |
| Operating income / margin | $499.2 million / 14.2% | $480.0 million / 14.6% |
| Net income | $180.7 million | $208.9 million |
| Diluted EPS | $1.20 | $1.46 |
| Operating cash flow | $629.6 million | $352.3 million |
| Capital expenditures | $456.8 million | $466.2 million |
| Adjusted EBITDA (non-GAAP) | $942.4 million; 26.7% margin | $973.2 million; 29.7% margin |
FY2023 sales rose 7%, but the increase included $537.8 million of acquired CMC Materials sales. Lower semiconductor demand reduced sales by $146.5 million, while divestitures and termination of the Alliance Agreement reduced them by $116.2 million and foreign exchange by $33.2 million. Adjusted operating income fell 8.1% to $769.7 million, with margin declining to 21.8% from 25.5%; management cited lower factory utilization and higher operating expenses.
Fourth quarter: Sales were $812.3 million versus $946.1 million in Q4 2022; net income was $38.0 million versus $57.4 million, and diluted EPS was $0.25 versus $0.38. Q4 gross profit was $344.7 million.
Liquidity and debt: Cash and cash equivalents were $456.9 million at year-end, compared with $561.6 million a year earlier; working capital was $1.463 billion. Debt was $4.669 billion at par ($4.577 billion net of unamortized discounts and issuance costs), down from $5.925 billion at par. The company reported $575 million of unused revolving-credit capacity and compliance with its financial covenants. FY2023 financing cash outflow was $1.283 billion, mainly reflecting debt repayment.
Operating cash flow improved by $277.3 million, primarily due to changes in operating assets and liabilities, including inventory reduction. Cash from investing activities was $553.1 million, including business-sale proceeds; cash from financing activities was negative $1.283 billion. Dividends were $0.10 per share each quarter, totaling about $60.3 million for the year.
Segment performance and material changes
- MS: Sales were $1.689 billion versus $1.380 billion; segment profit was $296.4 million versus $219.2 million. Results included acquired CMC Materials sales and a $184.8 million pre-tax gain from ending the MacDermid Enthone alliance, partly offset by impairment and divestiture-related charges.
- MC: Sales were $1.128 billion versus $1.106 billion; segment profit fell to $395.3 million from $411.5 million, reflecting costs of ramping the Taiwan facility and higher R&D investment.
- AMH: Sales fell 10% to $758.6 million and segment profit fell 26% to $136.1 million, mainly due to lower microenvironment product sales and lower factory utilization.
Entegris sold QED for net proceeds of $134.3 million and its Electronic Chemicals business for net proceeds of $675.2 million; it also received $191.2 million in net proceeds upon terminating the alliance agreement. It recorded $115.2 million of goodwill impairment, including $104.8 million associated with the EC reporting unit, and $30.5 million of long-lived asset impairment. The planned PIM sale was terminated; the business remained classified as held for sale at year-end.
Outlook, risks and other notable items
The filing provides no specific consolidated revenue or earnings guidance. Management expects approximately $350 million of capital expenditures in 2024, primarily for growth capacity and construction of the Colorado Springs facility. It describes long-term semiconductor demand drivers—including AI, cloud computing and increasingly complex chip manufacturing—and believes semiconductor sales could reach $1 trillion by 2030; this is a company expectation, not formal financial guidance.
- Management believes cash on hand and anticipated operating cash flow should meet ordinary-course needs for the next 12 months and longer term, while noting that capital-market access and refinancing conditions could change.
- Major risks include semiconductor cyclicality and customer inventory adjustments; customer concentration (top ten customers were 43% of sales, with TSMC at 11%); China-related export controls and geopolitical risk (China represented about 16% of sales); and reliance on some single- or limited-source suppliers.
- Other disclosed exposures include substantial indebtedness and interest costs, CMC integration and transition risks, potential PFAS restrictions, foreign-exchange movements, manufacturing or supply-chain disruptions, environmental and hazardous-material liabilities, and cybersecurity threats. The company said it was not aware of cyberattacks that had materially affected its business or operations.
- Entegris reported no known legal matter with a reasonable possibility of a material loss. Its financial statements received an unqualified audit opinion; KPMG also gave an unqualified opinion on internal control over financial reporting.
Investor verification priorities
- Separate acquired and divested-business effects from underlying demand: reported sales increased while semiconductor-market demand reduced sales by $146.5 million.
- Assess the durability of margins and earnings after excluding the alliance termination gain and considering impairment, divestiture and integration-related items; compare GAAP results with company-defined non-GAAP measures.
- Review debt repayment capacity, interest burden, covenant terms and refinancing exposure against operating cash flow and planned capital spending.
- Track recovery in AMH and utilization across facilities, as well as MC’s Taiwan ramp costs and the returns expected from capacity investments.
- Monitor export-control effects in China, supplier concentration, the status of held-for-sale PIM and the small industrial chemicals business, and final post-closing adjustments to divestiture proceeds.