Entegris (ENTG), a leading supplier of materials used in semiconductor manufacturing, experienced a significant drop in its share price on Monday following the release of its third-quarter earnings report. The report revealed that the company’s financial performance fell short of analysts’ expectations, raising concerns about the future trajectory of the semiconductor industry.
Entegris reported adjusted earnings per share (EPS) of 77 cents, missing the consensus analyst estimate of 78 cents. Revenue for the quarter came in at $807.69 million, a 9% decline year-over-year and below the anticipated $832.38 million. While adjusted net sales, excluding the impact of divestures, showed a 7% year-over-year increase, the overall revenue shortfall was a major disappointment for investors.
The company also reported other key financial indicators, including adjusted EBITDA of 28.8% and adjusted operating margin of 23%. However, the focus shifted to the company’s outlook for the remainder of the year, which added further pressure on the stock.
Bertrand Loy, President and CEO of Entegris, acknowledged the challenges facing the semiconductor industry. He stated that “2024 is a transition year for the semiconductor industry. The market recovery is taking longer than anticipated, and 2024 continues to be a year of limited technology transitions. Customers with significant exposure to AI applications are performing well, but the rest of the industry continues to be challenged.”
Despite these challenges, Loy emphasized the company’s commitment to maintaining strong profitability and investing in key technologies to position Entegris for future growth.
Looking ahead, Entegris provided guidance for the fourth quarter of 2024, forecasting sales between $810 million and $840 million. This range fell short of analysts’ expectations of $878.78 million. Additionally, the company anticipates adjusted EPS of 75 cents to 82 cents, trailing analyst estimates of 95 cents.
The combination of the weaker-than-expected Q3 results and the cautious outlook for the fourth quarter led to a significant sell-off in Entegris stock. At the time of writing, ENTG shares are trading 4.33% lower at $102.41.
The semiconductor industry is navigating a period of uncertainty, and investors are closely watching the performance of key players like Entegris. While the company’s long-term prospects remain positive, the near-term outlook appears challenging, as evidenced by the stock’s recent decline.
