Oct 29, 2026 earnings call — Strong demand, execution unlocked capacity
Q3 revenue hit $1.006 billion, up 25% year-over-year, with adjusted gross margin 48.9% and adjusted EBITDA 30.2%.
Revenue $1.0B (est $0.9B) · EPS $1.23 (est $1.03) · Next-quarter revenue outlook $1.0B–$1.1B
Key quotes
"Demand remains strong across advanced logic, advanced memory and throughout the semiconductor ecosystem, supported by continued investment in AI infrastructure."
"We have focused on increasing manufacturing output, improving productivity and yield, strengthening and centralizing procurement and generating a higher return from our installed capacity."
"We delivered record operating cash flow and record free cash flow of $224 million in the third quarter or 22.2% of sales."
Analyst Q&A 12
Why revenue beat and supply vs demand
Q (Melissa Weathers · Deutsche Bank): Analyst asked why revenue beat guidance and whether upside came from more supply, stronger demand, or other supply-side help.
A: Management said the revenue beat came down to execution and stronger demand. They increased production and throughput, converted backlog into revenue, and saw strength across the portfolio, especially CapEx-related businesses. They also said customers are giving longer planning horizons and they are unlocking capacity and improving productivity.
"The revenue beat for the third quarter really just came down to execution." — David Reeder (CEO)
Will growth continue and supplier readiness
Q (Yiling Sun · Citi): Analyst asked if strong backlog means strength will continue into next year and whether suppliers can support growing backlog.
A: Management said they are very happy with momentum and performance drove much of the growth, not just market. They feel suppliers are generally ready, have identified some pinch points and are working to address them, and they expect technology transitions (e.g., SLC, TLC, QLC) to increase Entegris content as complexity rises.
"As the technology becomes more complex, that really gives us the opportunity to outperform with more content, more layers, as you mentioned, more wafer growth in addition to that." — David Reeder (CEO)
MSI trends and impact on business
Q (Brian Chin · Stifel): Analyst asked if higher MSI growth reports helped Entegris and whether MSI pickup provides tailwind into next year.
A: Management said they expect MSI for the year to be in the mid- to high single digits, roughly 7%, 8%, maybe even 9%, and a bit more weighted to the second half. They saw a pickup in mainstream where available capacity exists, and their MS business is accelerating (Q3 MS grew about 16% year-over-year), which they believe provides tailwinds.
"Because of that, we believe that MSI for the year is probably going to be in kind of the mid- to high single digits, call it 7%, 8%, maybe even 9%." — David Reeder (CEO)
Incremental margins and drivers
Q (Aleksey Yefremov · Barclays): Analyst asked if strong incremental margins should be expected near term and differences between segments.
A: Management said incremental gross margin near 60% and incremental EBITDA greater than 40% are in line with targets and reflect productivity, yield, and inventory control. They said the trend is likely to continue into next year and that much of the improvement was from executing to produce more out of factories.
"And we think this trend is likely going to continue as we head into next year." — Sukhi Nagesh (CFO)
Impact of KSP and Colorado on margins
Q (Timothy Arcuri · UBS): Analyst asked how KSP and Colorado facilities affect margins and when they become breakeven.
A: Management said KSP South reached breakeven in Q3 and they expect a strong ramp there into next year. Colorado is operational and producing samples; they expect revenue to begin next year with roughly a 12-month lag versus Rockrimmon, and KSP will continue to improve gross profit as they head into next year.
"We actually reached breakeven in Q3, and as we look into next year, this quarter and Q4 and next year, we're pretty excited about the ramp we're going to be seeing in KSP South." — Sukhi Nagesh (CFO)
Customer expansion and sales focus update
Q (James Schneider · Goldman Sachs): Analyst asked for update on expanding customer focus and sales efforts since new CEO arrival.
A: Management said they have more customer and engineering engagements than ever and are engaging earlier in the process. That earlier engagement is turning into plan of record wins for long-term road maps and near-term derivative opportunities, and they will provide more detail at Capital Markets Day.
"We have never had more customer engagements and engineering engagements than we have today." — David Reeder (CEO)
Asset utilization and brownfield investments
Q (Christopher Parkinson · Wolfe): Analyst asked about asset base utilization and how Entegris is investing to unlock $1 billion capacity.
A: Management said they prefer investing in CapEx at brownfield sites where existing infrastructure and teams allow rapid fixed-cost absorption and quick returns. They are investing to expand capacity at current sites, optimizing the network, and have more capacity now than at the start of the year despite closing 3 dilutive facilities.
"There's no more attractive dollar than investing in CapEx at a brownfield site, so at a site that already exists." — David Reeder (CEO)
Q1 seasonality and guide down
Q (Yu Shi · Needham): Analyst asked why Q1 guidance shows a mid-single-digit decline and whether seasonality is abnormal.
A: Management said they guide one quarter at a time and their visibility shows healthy demand and momentum. They said the Q1 decline reflects normal seasonality and fewer selling days, noting 75% of the business is unit driven, and underlying orders remain strong.
"But based on our visibility, Charles, that we have today, and we continue to see very healthy demand and strong momentum, right?" — Sukhi Nagesh (CFO)
Where in cycle: fab construction → WFE → wafer starts
Q (Edward Yang · Oppenheimer): Analyst asked which part of the multi-wave cycle (fab construction, WFE, wafer starts) they are in and if waves overlap.
A: Management said each fab is its own wave but overall they are in the earlier part of the innings given how much fab construction has been broken ground and completed. They view the market as still in the CapEx portion of the cycle and expect many unit-related effects to occur later (more like 2028, 2029).
"I really -- I mean each individual fab is kind of its own wave." — David Reeder (CEO)
Customer pricing and pricing actions
Q (Mizuho (on behalf of)): Analyst asked if customers are open to give pricing and whether pricing actions are planned.
A: Management said their priority is to support customers as demand accelerates while being appropriately compensated, and they evaluate pricing at product and customer level. They said they have not included any material pricing actions in the quarter for Q3 or Q4; any pricing would be on new orders, not existing backlog.
"we have not included any material pricing actions in the quarter for Q3 or Q4." — Sukhi Nagesh (CFO)
APS margin step-up and free cash flow
Q (Peter Osterland · Truist): Analyst asked if APS 34%+ margins are sustainable and about Q4 free cash flow expectation.
A: Management said APS is performing incredibly well and there were no unusual one-time items in APS for the quarter; they expect the team to continue to perform well. On free cash flow, they will provide targets at Capital Markets Day but noted near-term Q4 will have CapEx and working capital to support growth, which is embedded in their guidance.
"There were really no unusual one-time items that flow through the APS segment." — David Reeder (CEO)
Microenvironments and filtration demand
Q (Michael Harrison · Seaport Research Partners): Analyst asked if microenvironment business has better margins now and whether filtration/purification revenue matches past projections.
A: Management declined to give margins by specific product but said most products have a good margin structure and they expect value for their products. They highlighted that contamination requirements have increased dramatically (about 3 orders of magnitude over 25 years) and that as leader in filtration and purification they see this as a strong market opportunity with the company’s divisions coming together.
"When you think about migrating down to 2 nanometers and even below, I mean, 2 nanometers is 20 angstroms in a molecule, a large molecule is about 5 angstroms." — David Reeder (CEO)