What happened
Shares of Entegris (ENTG 1.51%), a specialty chemicals, materials, and micro-contamination equipment supplier for the semiconductor industry, were on the rise today, up 19% as of 3 p.m. ET.
Entegris has several moving parts, with the recent $5.7 billion acquisition of CMC Materials in July 2022, which will soon be somewhat offset by the recent sale of its electronics chemicals business to Fujifilm for $700 million, which was just announced yesterday.
However, amid all those moving parts, investors apparently liked Entegris' adjusted results reported this morning. While the semiconductor industry is in a significant downturn, Entegris appeared to defy expectations, which lends optimism about the resilience of its portfolio.
So what
In the first quarter, Entegris' revenue grew 42% year over year, but remember, that was owing to the large CMC acquisition made in mid-2022. Still, that figure came in ahead of expectations. Non-GAAP (adjusted) earnings per share was $0.65, which, while down 39% from the year-ago quarter, also handily beat expectations by $0.13 per share.
Now, for the current quarter, management does foresee a sequential decline, to $870 to $900 million in revenue, and adjusted EPS of $0.53 to $0.58. However, that was apparently better than feared among semiconductor analysts.
While the chip industry is seeing some exciting growth vectors in artificial intelligence and electric vehicles, the consumer electronics and general server segments, which make up the majority of the industry, are still in their own recessions.
CEO Bertrand Loy noted in the press release: "Sales were down sequentially in the quarter, but we believe we outperformed the market, driven in large part by our strong position at the leading-edge technology nodes. ... As device architectures become more complex, our leading capabilities in materials science and materials purity enable us to offer our customers unique mission critical solutions, which will translate into rapidly expanding content per wafer for Entegris."
Now what
Entegris is an interesting way to play the semiconductor market, as its materials and chemicals solutions are used throughout the industry. Despite today's surge, Entegris is still about 42% below its all-time high set back in late 2021.
Of course, much will be determined by how the company integrates CMC, and if it can wring out cost and revenue synergies to capitalize on the growth of chips in general. Given the various corporate moves and the bottoming of the sector, it's an interesting mid-cap opportunity for semiconductor investors to dig into.
