Entegris Inc.

10/30/2025 | Press release | Distributed by Public on 10/30/2025 14:14

Quarterly Report for Quarter Ending September 27, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the Company's condensed consolidated financial condition and results of operations should be read along with the condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this "Quarterly Report"). The information, except for historical information, contained in this discussion and analysis or set forth elsewhere in this Quarterly Report includes forward-looking statements that involve risks and uncertainties. You should review Part II, Item 1A "Risk Factors" in this Quarterly Report and Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "Annual Report") as well as our other U.S. Securities and Exchange Commission ("SEC") filings for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis or set forth elsewhere in this Quarterly Report. The Company assumes no obligation to publicly release the results of any revisions or updates to these forward-looking statements to reflect future events or unanticipated occurrences.
Overview
The Company is a leading supplier of critical advanced materials and process solutions for the semiconductor and other high-technology industries. We leverage our unique breadth of capabilities to help our customers improve their productivity, product performance and technology in the most advanced manufacturing environments.
Our business is organized and operated in two operating segments.
•The Materials Solutions segment, or MS, provides materials-based solutions, such as chemical vapor and atomic layer deposition materials, chemical mechanical planarization ("CMP") slurries and pads, ion implantation specialty gases, formulated etch and clean materials, and other specialty materials that enable our customers to achieve better device performance and faster time to yield, while providing for lower total cost of ownership.
•The Advanced Purity Solutions segment, or APS, offers filtration, purification and contamination-control solutions that improve customers' yield, device reliability and cost by ensuring the purity of critical liquid chemistries and gases and the cleanliness of wafers and other substrates used throughout semiconductor manufacturing processes, the semiconductor ecosystem and other high-technology industries.
With our complementary capabilities, we believe we are uniquely positioned to create new, co-optimized and increasingly integrated solutions for our customers, which should translate into improved device performance, lower cost of ownership and faster time to market. For example, we have the capabilities and core competencies to develop and co-optimize offerings solving customers' complex manufacturing challenges across the deposition, CMP process and post-CMP modules, with solutions including advanced deposition materials, CMP slurries, pads and post-CMP cleaning chemistries (each from our MS segment), and CMP slurry filters, high-purity packaging and fluid monitoring systems (each from our APS segment).
The Company's fiscal year is the calendar period ending each December 31. The Company's fiscal quarters consist of 13-week or 14-week periods that end on a Saturday. The Company's fiscal quarters in 2025 end on March 29, 2025, June 28, 2025, September 27, 2025 and December 31, 2025.
Global Trade Environment
Recent and continuing developments in U.S. and foreign trade policy have heightened global trade tensions and sparked significant uncertainty in macroeconomic and geopolitical environments, particularly with respect to China. The nature of our global business exposes us to risks associated with trade conflicts between the U.S. and its trading partners. Additionally, our manufacturing operations rely on a global supply chain to manufacture our products, including, in some instances, raw materials from China. The recent tariffs and other similar trade policies (i) have increased, and may continue to increase, our sourcing and manufacturing costs, (ii) have forced, and may continue to force, us to find alternative suppliers, and (iii) may result in manufacturing and delivery delays. As a result, we may face a reduction in the demand for, and in the competitiveness of, our products, particularly from local or domestically sourced competition, harm to our relationships with our customers, and decreased profitability. These issues may be exacerbated by the overall macroeconomic uncertainty stemming from current trade tensions which may slow economic growth and negatively impact the demand for products containing semiconductors, thereby decreasing the demand for our products.
Our strategy has been, and will continue to be, to build a resilient and robust supply chain and a global manufacturing footprint near our customers. While this strategy should mitigate the financial and operational impact of these trade policies, we expect that our business will be impacted, particularly in the near term, when high tariffs are imposed on our products. Given the dynamic nature of this situation, the direct and indirect impact to our customers and our business is difficult to quantify;
however, we will continue to closely monitor this evolving situation, further leverage our global footprint and regional supply chain, and explore additional options to mitigate trade-related risks.
Critical Accounting Policies and Estimates
Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon the Company's condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, sales and expenses and related disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
The critical accounting policies affected most significantly by estimates, assumptions and judgments used in the preparation of the Company's condensed consolidated financial statements are described in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report. On an ongoing basis, the Company evaluates the critical accounting policies used to prepare its condensed consolidated financial statements, including, but not limited to, those related to business acquisitions. There have been no material changes in these critical accounting policies and estimates.
Three and Nine Months Ended September 27, 2025 Compared to Three and Nine Months Ended September 28, 2024
The following table compares operating results for the three and nine months ended September 27, 2025 and September 28, 2024, both in dollars and as a percentage of net sales, for each caption.
Three months ended Nine months ended
(Dollars in millions) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024
Net sales $ 807.1 100.0 % $ 807.7 100.0 % $ 2,372.7 100.0 % $ 2,391.4 100.0 %
Cost of sales 455.8 56.5 435.9 54.0 1,313.4 55.4 1,292.0 54.0
Gross profit 351.3 43.5 371.8 46.0 1,059.3 44.6 1,099.4 46.0
Selling, general and administrative expenses 101.8 12.6 108.5 13.4 320.2 13.5 337.0 14.1
Engineering, research and development expenses 80.9 10.0 80.9 10.0 250.0 10.5 234.6 9.8
Amortization of intangible assets 46.0 5.7 46.2 5.7 138.1 5.8 143.9 6.0
Operating income 122.6 15.2 136.2 16.9 351.0 14.8 383.9 16.1
Interest expense 47.9 5.9 51.6 6.4 151.3 6.4 162.7 6.8
Interest income (1.8) (0.2) (1.2) (0.1) (5.1) (0.2) (5.4) (0.2)
Other expense (income), net 4.2 0.5 (0.2) - 5.3 0.2 17.1 0.7
Income before income tax expense 72.3 9.0 86.0 10.6 199.5 8.4 209.5 8.8
Income tax expense 1.5 0.2 8.2 1.0 12.5 0.5 18.3 0.8
Equity in net loss of affiliates 0.3 - 0.3 - 0.8 - 0.7 -
Net income $ 70.5 8.7 % $ 77.5 9.6 % $ 186.2 7.8 % $ 190.5 8.0 %
Net salesFor the three months ended September 27, 2025, net sales decreased by 0.1% to $807.1 million, compared to $807.7 million for the three months ended September 28, 2024. An analysis of the factors underlying the change in net sales is presented in the following table:
(In millions)
Net sales in the three months ended September 28, 2024
$ 807.7
Decrease primarily associated with volume (3.3)
Increase associated with effect of foreign currency translation 2.7
Net sales in the three months ended September 27, 2025
$ 807.1
As described in the table above, the decrease in net sales was primarily attributable to a reduction of $3.3 million of sales primarily due to decreased semiconductor market demand, partially offset by an increase of $2.7 million of sales attributable to favorable foreign currency translations, primarily related to the strengthening of the Taiwanese dollar relative to the U.S. dollar compared to the fiscal quarter ended September 28, 2024.
On a geographic basis, sales percentage by customers' country or region for the three months ended September 27, 2025 and September 28, 2024 and the percentage increase (decrease) in sales for the three months ended September 27, 2025 compared to the sales for the three months ended September 28, 2024 were as follows:
Three months ended
September 27, 2025 September 28, 2024 Percentage increase (decrease) in sales
North America 17 % 20 % (16 %)
Taiwan 23 % 20 % 15 %
China 22 % 21 % 3 %
South Korea 14 % 13 % 4 %
Japan 10 % 10 % 2 %
Europe 7 % 8 % (16 %)
Southeast Asia 8 % 8 % - %
The decrease in sales to customers in North America primarily relates to decreased demand for our MS and APS products. The increase in sales to customers in Taiwan primarily relates to increased demand for our MS and APS products. The increase in sales to customers in China primarily relates to increased demand for our APS products, partially offset by decreased demand of our MS products. The increase in sales to customers in South Korea primarily relates to increased demand of our APS products, partially offset by decreased demand for our MS products. The increase in sales to customers in Japan primarily relates to increased demand for our MS products. The decrease in sales to customers in Europe primarily relates to decreased demand for our APS products. The sales to customers in Southeast Asia were flat.
Net sales for the nine months ended September 27, 2025 were $2,372.7 million, compared to $2,391.4 million for the nine months ended September 28, 2024. An analysis of the factors underlying the change in net sales is presented in the following table:
(In millions)
Net sales in the nine months ended September 28, 2024
$ 2,391.4
Decrease associated with divestiture (33.9)
Increase associated with effect of foreign currency translation 2.6
Increase primarily associated with volume 12.6
Net sales in the nine months ended September 27, 2025
$ 2,372.7
As described in the table above, the decrease in net sales was primarily attributable to the absence of sales totaling $33.9 million resulting from the divestiture of the PIM business, partially offset by (i) an increase of $2.6 million of sales attributable to favorable foreign currency translations and (ii) a $12.6 million increase in sales primarily due to increased semiconductor market demand compared to the nine months ended September 28, 2024.
On a geographic basis, sales percentage by customers' country or region for the nine months ended September 27, 2025 and September 28, 2024 and the percentage increase (decrease) in sales for the nine months ended September 27, 2025 compared to the sales for the nine months ended September 28, 2024 were as follows:
Nine months ended
September 27, 2025 September 28, 2024 Percentage increase (decrease) in sales
North America 18 % 22 % (17 %)
Taiwan 23 % 20 % 13 %
China 21 % 21 % 1 %
South Korea 13 % 13 % 4 %
Japan 10 % 9 % 5 %
Europe 7 % 9 % (16 %)
Southeast Asia 8 % 7 % 8 %
The decrease in sales to customers in North America primarily relates to the absence of sales resulting from the divestiture of the PIM business and from decreased demand for our MS and APS products. The increase in sales to customers in Taiwan primarily relates to increased demand for our MS and APS products. The increase in sales to customers in China primarily relates to increased demand for our MS products, partially offset by decreased demand of our APS products. The increase in sales to customers in South Korea primarily relates to increased demand of our MS and APS products. The increase in sales to customers in Japan primarily relates to increased demand for our MS and APS products. The decrease in sales to customers in Europe primarily relates to decreased demand for our MS and APS products. The increase in sales to customers in Southeast Asia primarily relates to increased demand for our MS and APS products.
Gross marginThe following table sets forth gross margin (gross profit as a percentage of net sales):
Three months ended Nine months ended
September 27, 2025 September 28, 2024 Percentage point change September 27, 2025 September 28, 2024 Percentage point change
Gross margin: 43.5 % 46.0 % (2.5) 44.6 % 46.0 % (1.4)
Gross margin decreased by 2.5 percentage points for the three months ended September 27, 2025, compared to the same period in the prior year. Gross margin decreased primarily due to lower plant performance.
Gross margin decreased by 1.4 percentage points for the nine months ended September 27, 2025, compared to the same period in the prior year. Gross margin decreased primarily due to lower plant performance and unfavorable product mix.
Selling, general and administrative expensesSelling, general and administrative ("SG&A") expenses were $101.8 million in the three months ended September 27, 2025, compared to $108.5 million in the year-ago period. The factors underlying the change in SG&A expenses are presented in the following table:
(In millions)
Selling, general and administrative expenses in the fiscal quarter ended September 28, 2024
$ 108.5
Employee costs (excluding restructuring costs of $0.4 million in 2025 included in the line below) (0.9)
Professional fees (3.2)
Restructuring costs, see Note 14 to the Company's condensed consolidated financial statements 0.4
Other decreases, net
(3.0)
Selling, general and administrative expenses in the fiscal quarter ended September 27, 2025
$ 101.8
SG&A expenses were $320.2 million in the nine months ended September 27, 2025, compared to $337.0 million in the year-ago period. The factors underlying the change in SG&A expenses are presented in the following table:
(In millions)
Selling, general and administrative expenses in the nine months ended September 28, 2024
$ 337.0
Impairment of long-lived assets in 2024, see Note 3 to the Company's condensed consolidated financial statements (13.0)
Employee costs (excluding restructuring costs of $5.4 million in 2025 included in the line below) (8.2)
Professional fees (7.3)
Restructuring costs, see Note 14 to the Company's condensed consolidated financial statements 11.7
Gain on sale of PIM business in 2024 4.3
Other decreases, net (4.3)
Selling, general and administrative expenses in the nine months ended September 27, 2025
$ 320.2
Engineering, research and development expensesThe Company's engineering, research and development ("ER&D") efforts focus on the support or extension of current product lines and the development of new products and manufacturing technologies. ER&D expenses were $80.9 million in the three months ended September 27, 2025 compared to $80.9 million in the year-ago period. The factors underlying ER&D expenses are presented in the following table:


(In millions)
Engineering, research and development expenses in the fiscal quarter ended September 28, 2024
$ 80.9
Restructuring costs, see Note 14 to the Company's condensed consolidated financial statements 1.0
Depreciation expense 1.0
Project related expenses (2.1)
Other increases, net 0.1
Engineering, research and development expenses in the fiscal quarter ended September 27, 2025
$ 80.9
ER&D expenses were $250.0 million in the nine months ended September 27, 2025 compared to $234.6 million in the year-ago period. The factors underlying ER&D expenses are presented in the following table:
(In millions)
Engineering, research and development expenses in the nine months ended September 28, 2024
$ 234.6
Project related expenses 5.8
Depreciation expense 3.6
Restructuring costs, see Note 14 to the Company's condensed consolidated financial statements 3.1
Other increases, net 2.9
Engineering, research and development expenses in the nine months ended September 27, 2025
$ 250.0
Amortization of intangible assets Amortization of intangible assets was $46.0 million in the three months ended September 27, 2025, compared to $46.2 million for the three months ended September 28, 2024. The decrease primarily reflects the absence of amortization for certain identifiable intangible assets acquired in previous acquisitions that became fully amortized.
Amortization of intangible assets was $138.1 million in the nine months ended September 27, 2025, compared to $143.9 million for the nine months ended September 28, 2024. The decrease primarily reflects the absence of amortization for certain identifiable intangible assets acquired in previous acquisitions that became fully amortized.
Interest expenseInterest expense includes interest associated with debt outstanding and the amortization of debt issuance costs and original issuance discounts associated with such borrowings. Interest expense was $47.9 million in the three months ended September 27, 2025, compared to $51.6 million in the three months ended September 28, 2024. The decrease primarily reflects lower interest expense related to lower average debt balances for the period due to repayments on the Company's outstanding debt.
Interest expense was $151.3 million in the nine months ended September 27, 2025, compared to $162.7 million in the nine months ended September 28, 2024. The decrease primarily reflects lower interest expense related to lower average debt balances for the period due to repayments on the Company's outstanding debt.
Other expense (income), netOther expense, net was $4.2 million in the three months ended September 27, 2025 and consisted mainly of foreign currency transaction losses of $2.5 million and a loss of extinguishment of debt of $1.7 million. Other income, net was $0.2 million in the three months ended September 28, 2024 and consisted mainly of foreign currency transaction gains of $2.1 million, partially offset by other expenses of $1.9 million.
Other expense, net was $5.3 million in the nine months ended September 27, 2025 and consisted mainly of foreign currency transaction losses of $4.5 million and a loss of extinguishment of debt of $1.7 million, partially offset by other income of $1.0 million. Other expense, net was $17.1 million in the nine months ended September 28, 2024 and consisted mainly of a loss of extinguishment of debt of $12.3 million associated with the repayments on the Term Loan Facility and foreign currency transaction losses of $2.2 million and other expenses of $2.5 million.
Income tax expense Income tax expense was $1.5 million in the three months ended September 27, 2025, compared to income tax expense of $8.2 million in the three months ended September 28, 2024. The Company's effective income tax rate was 2.1% for the three months ended September 27, 2025, compared to 9.5% for the three months ended September 28, 2024. The effective tax rate for the fiscal quarter ended September 27, 2025 was lower primarily due to the release of unrecognized tax benefits resulting from the expiration of applicable statute of limitations and a change in income mix. This benefit was partially offset by the impact of the enactment of the One Big Beautiful Bill Act ("Act").
Income tax expense was $12.5 million in the nine months ended September 27, 2025, compared to income tax expense of $18.3 million in the nine months ended September 28, 2024. The Company's effective income tax rate was 6.3% for the nine months ended September 27, 2025, compared to 8.7% for the nine months ended September 28, 2024. The effective tax rate for the nine
months ended September 27, 2025 was lower due to the release of unrecognized tax benefits resulting from the expiration of applicable statutes of limitations and a change in income mix. This benefit was partially offset by an increase in discrete tax expense recorded associated with share-based compensation and the enactment of the Act.
Pillar 2
The Organization for Economic Co-operation and Development ("OECD") introduced Base Erosion and Profit Shifting ("BEPS") Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries have already enacted, or are expected to enact, legislation to implement the 15% minimum tax rate. We have evaluated the impact of this legislation based on Entegris' current global landscape and do not believe it will have a material impact. We will continue to monitor the ongoing legislation throughout the year and evaluate any future potential impact on our consolidated financial statements and related disclosures.
One Big Beautiful Bill Act
The One Big Beautiful Bill Act (the "Act") was enacted on July 4, 2025. In accordance with ASC 740-10, the Company accounted for the effects of the new tax legislation in the fiscal quarter ended September 27, 2025, which is the quarter of enactment. The key provisions of the Act impacting the Company's financial statements include the modification of interest expense limitations under Section 163(j) of the Internal Revenue Code of 1986, as amended, and revisions to foreign-derived intangible income and global intangible low-taxed income.
The Company updated its estimated annual effective tax rate to reflect the impact of the new legislation for interim reporting purposes. Certain provisions of the Act are effective for tax years beginning after December 31, 2025, and therefore did not affect the current quarter's financial results. The Company continues to evaluate the impact of the Act on its future tax positions.
Net income Due to the factors noted above, the Company recorded net income of $70.5 million, or $0.46 per diluted share, in the three months ended September 27, 2025, compared to net income of $77.5 million, or $0.51 per diluted share, in the three months ended September 28, 2024.
In the nine months ended September 27, 2025, the Company recorded net income of $186.2 million, or $1.22 per diluted share, compared to net income of $190.5 million, or $1.25 per diluted share, in the nine months ended September 28, 2024.
Non-GAAP Financial MeasuresThe Company's condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). The Company also utilizes certain non-GAAP financial measures as a complement to financial measures provided in accordance with GAAP in order to better assess and reflect trends affecting the Company's business and results of operations. See the section entitled "Non-GAAP Information" below for additional detail, including the definition of certain non-GAAP financial measures and the reconciliation of these non-GAAP measures to the Company's GAAP measures.
The Company's principal non-GAAP financial measures are Adjusted EBITDA and Adjusted Operating Income, together with related measures thereof, and Non-GAAP Earnings Per Share ("Non-GAAP EPS").
The following table compares non-GAAP financial measures for the three and nine months ended September 27, 2025 and September 28, 2024, both in dollars and as a percentage of net sales, for each caption.
Three months ended Nine months ended
(In millions) September 27, 2025 September 28, 2024 Percent Change September 27, 2025 September 28, 2024 Percent Change
Adjusted Operating Income $ 170.3 $ 185.9 (8) % $ 506.5 $ 542.9 (7) %
Adjusted Operating Margin - as a % of net sales 21.1 % 23.0 % 21.3 % 22.7 %
Adjusted EBITDA $ 220.7 $ 233.0 (5) % $ 658.1 $ 682.7 (4) %
Adjusted EBITDA - as a % of net sales 27.3 % 28.8 % 27.7 % 28.5 %
Non-GAAP EPS $ 0.72 $ 0.77 (6) % $ 2.05 $ 2.16 (5) %
The decrease in Adjusted Operating Income and Adjusted EBITDA for the three months ended September 27, 2025 compared to the year-ago period is generally attributable to lower gross profit. The decrease in Non-GAAP EPS for the three months ended September 27, 2025 compared to the year-ago period is primarily attributable to lower gross profit, partially offset by lower operating expenses.
The decrease in Adjusted Operating Income and Adjusted EBITDA for the nine months ended September 27, 2025 compared to the year-ago period is generally attributable to lower gross profit. The decrease in Non-GAAP EPS for the nine months ended September 27, 2025 compared to the year-ago period is primarily attributable to lower gross profit, partially offset by lower interest expense.
Segment Analysis
The Company currently reports its financial performance based on two reporting segments. The following is a discussion of the results of operations of these two business segments. See Note 12 to the condensed consolidated financial statements for additional information on the Company's two segments.
In the fourth fiscal quarter of 2024, the Company realigned its segments in order to align its segment financial reporting with a change in its business structure. All prior period amounts related to the segment change have been recast for comparability.
The following table presents selected net sales and segment profit data for the Company's two reportable segments, along with unallocated general and administrative expenses, for the three and nine months ended September 27, 2025 and September 28, 2024.
Three months ended Nine months ended
(In millions) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024
Materials Solutions
Net sales $ 348.6 $ 346.7 $ 1,044.9 $ 1,039.0
Segment profit 65.2 71.7 212.7 209.1
Advanced Purity Solutions
Net sales $ 460.8 $ 463.1 $ 1,334.6 $ 1,359.0
Segment profit 118.2 127.4 322.2 361.2
Unallocated general and administrative expenses $ 14.8 $ 16.7 $ 45.8 $ 42.5
Materials Solutions (MS)
For the thirdfiscal quarter of 2025, MS net sales increased to $348.6 million, up 1% compared to $346.7 million in the comparable period last year. The sales increase was driven primarily by increased sales from CMP consumables and cleaning chemistries. MS reported a segment profit of $65.2 million in the thirdfiscal quarter of 2025, down 9% from a $71.7 million segment profit in the year-ago period. The segment profit decrease was primarily due to a decrease in gross profit from lower plant performance, partially offset by lower operating expenses.
For the nine months ended September 27, 2025, MS net sales increased to $1,044.9 million, up 1% compared to $1,039.0 million in the comparable period last year. The sales increase was driven primarily by increased sales from CMP consumables, selective etch and deposition materials, partially offset by the absence of $33.9 million included in prior-year sales resulting from the divestiture of the PIM business. MS reported a segment profit of $212.7 million in the nine months ended September 27, 2025, up 2% from a $209.1 million segment profit in the year-ago period. The segment profit increase was primarily associated with the absence of the long-lived asset impairment charge of $13.0 million in the year-ago period (see Note 3 to our condensed consolidated financial statements for further discussion) and an increase in sales volume, partially offset by the absence of a $4.3 million gain associated with the sale of the PIM business in the year-ago period (see Note 4 to our condensed consolidated financial statements for further discussion), the absence of segment profit associated with the divestiture of the PIM business and the increase of $3.8 million of restructuring costs in the current period.
Advanced Purity Solutions (APS)
For the thirdfiscal quarter of 2025, APS net sales decreased to $460.8 million, down less than 1% compared to $463.1 million in the comparable period last year. The sales decrease was mainly due to decreased sales from a decline in facilities-based capital expenditure investments, including fluid handling products and FOUPs. APS reported a segment profit of $118.2 million in the thirdfiscal quarter of 2025, down 7% from $127.4 million in the year-ago period. The segment profit decrease was primarily due to a decrease in gross profit from lower plant performance.
For the nine months ended September 27, 2025, APS net sales decreased to $1,334.6 million, down 2% compared to $1,359.0 million in the comparable period last year. The sales decrease was mainly due to decreased sales from a decline in facilities-based capital expenditure investments, including fluid handling products and FOUPs, partially offset by an increase in sales from gas microcontamination products. APS reported a segment profit of $322.2 million in the nine months ended
September 27, 2025, down 11% from $361.2 million in the year-ago period. The segment profit decrease was primarily due to lower sales, unfavorable product mix and higher restructuring costs of $13.2 million in the current period.
Unallocated general and administrative expenses
Unallocated general and administrative expenses totaled $14.8 million in the third fiscal quarter of 2025, down 11% compared to $16.7 million in the comparable period last year. The $1.9 million decrease is primarily due to a $3.0 million decrease in non-income tax expense, partially offset by higher employee costs of $1.9 million.
Unallocated general and administrative expenses totaled $45.8 million in the nine months ended September 27, 2025, up 8% compared to $42.5 million in the comparable period last year. The $3.3 million increase is primarily due to a $5.0 million increase in employee costs, partially offset by a $3.0 million decrease in non-income tax expense.
Liquidity and Capital Resources
We consider the following when assessing our liquidity and capital resources:
(In millions) September 27, 2025 December 31, 2024
Cash and cash equivalents $ 399.8 $ 329.2
Working capital 1,204.2 1,091.1
Total debt, net of unamortized discount and debt issuance costs 3,842.8 3,981.1
The Company has historically financed its operations and capital requirements through cash flow from its operating activities, long-term debt, lease financing, revolving credit facility and borrowings under domestic and international short-term lines of credit.
Based on our analysis, we believe our existing balances of domestic cash and cash equivalents and our currently anticipated operating cash flows will be sufficient to meet our cash needs arising in the ordinary course of business for the next twelve months and for the longer term.
We may seek to take advantage of opportunities to raise additional capital through debt financing or through public or private sales of securities. If in the future our available liquidity is not sufficient to meet the Company's operating and debt service obligations as they come due, management would need to pursue alternative arrangements through additional equity or debt financing in order to meet the Company's cash requirements. There can be no assurance that any such financing would be available on commercially acceptable terms, or at all. As of September 27, 2025, we have not experienced difficulty accessing capital and credit markets, but future volatility in the capital and credit markets may increase costs associated with issuing debt instruments or affect our ability to access those markets. In addition, it is possible that our ability to access the capital and credit markets could be limited at a time when we would like, or need, to do so, which could have an adverse impact on our ability to refinance maturing debt and/or react to changing economic and business conditions.
In summary, our cash flows for each period were as follows:
Nine months ended
(In millions) September 27, 2025 September 28, 2024
Net cash provided by operating activities $ 503.4 $ 455.6
Net cash (used in) provided by investing activities (234.5) 40.8
Net cash used in financing activities (204.1) (523.6)
Increase (decrease) in cash and cash equivalents 70.6 (24.8)
Operating activities Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities. Cash provided by operating activities totaled $503.4 million in the nine months ended September 27, 2025, compared to $455.6 million in the nine months ended September 28, 2024. This increase was driven by a $62.8 million increase in operating assets and liabilities, partially offset by a $15.0 million decrease of net income adjusted for non-cash reconciling items.
Changes in operating assets and liabilities for the nine months ended September 27, 2025 were driven by changes in trade accounts and notes receivables, inventories, accounts payable and accrued liabilities, and income tax payable and refundable income taxes. The change in trade accounts and notes receivable is primarily due to timing of payments received. The change in inventories was mainly due to a decrease in business activity. The change in accounts payable and accrued liabilities was
primarily driven by timing of payments to vendors. The change in income tax payable and refundable income taxes is primarily due to higher income tax payment.
Investing activitiesCash flows used in investing activities totaled $234.5 million in the nine months ended September 27, 2025, compared to cash flows provided by investing activities of $40.8 million in the nine months ended September 28, 2024. The decrease resulted primarily from a decrease in proceeds from divestiture of $250.8 million, partially offset by an increase in cash paid for acquisition of property, plant and equipment of $33.1 million.
Financing activitiesCash used in financing activities totaled $204.1 million during the nine months ended September 27, 2025, compared to cash used in financing activities of $523.6 million during the nine months ended September 28, 2024. The decrease was primarily due to decreased net debt activity of $323.8 million compared to the prior period.
Our total dividend payments were $45.7 million in the nine months ended September 27, 2025 compared to $45.5 million in the nine months ended September 28, 2024. We have paid a cash dividend in each fiscal quarter since the fourth fiscal quarter of 2017. On October 15, 2025, the Company's board of directors declared a quarterly cash dividend of $0.10 per share to be paid on November 19, 2025 to shareholders of record on the close of business on October 29, 2025.
Other Liquidity and Capital Resources Considerations
Debt
(In millions) September 27, 2025 December 31, 2024
Senior secured term loans B due 2029 at 5.01% (1)
$ 600.0 $ 750.0
Senior secured notes due 2029 at 4.75%
1,600.0 1,600.0
Senior unsecured notes due 2030 at 5.95%
895.0 895.0
Senior unsecured notes due 2029 at 3.625%
400.0 400.0
Senior unsecured notes due 2028 at 4.375%
400.0 400.0
Revolving facility due 2027 (2)
- -
Total debt (par value) $ 3,895.0 $ 4,045.0
(1)The Company entered into a floating-to-fixed swap contract on its variable rate debt under our Term Loan Facility. The effective interest rate after consideration of this floating-to-fixed swap contract was 5.01%. Refer to Note 9 for a description of our interest rate swap contract.
(2)Our senior secured revolving credit facility due 2027 (the "Revolving Facility") bears interest at a rate per annum equal to, at the Company's option, either (i) SOFR, plus an applicable margin of 1.75% or (ii) a base rate plus an applicable margin of 0.75%. The Revolving Facility has commitments of $575.0 million. During the nine months ended September 27, 2025, the Company borrowed and repaid $532 million under this Revolving Facility and no balance was outstanding at September 27, 2025.
During the nine months ended September 27, 2025, the Company repaid $150 million under the term loans B under the Term Loan Facility.
Through September 27, 2025, the Company was in compliance with the financial covenant under its debt arrangements.
The Company also has a line of credit with one bank that provides for borrowings in Japanese yen for the Company's Japanese subsidiaries, equivalent in the aggregate to approximately $6.7 million. During the nine months ended September 27, 2025, there were no borrowings under this line of credit and there was no balance was outstanding at September 27, 2025.
Cash and cash equivalents and cash requirements
(In millions) September 27, 2025 December 31, 2024
U.S. $ 107.5 $ 49.0
Non-U.S. 292.3 280.2
Cash and cash equivalents $ 399.8 $ 329.2
Our cash and cash equivalents include cash on hand and highly liquid debt securities with original maturities of three months or less, which are valued at cost and approximate fair value. We utilize a variety of funding strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. We have accrued taxes on any earnings that are not indefinitely reinvested.
Cash requirements
We have cash requirements to support working capital needs, capital expenditures, business acquisitions, contractual obligations, commitments, principal and interest payments on debt and other liquidity requirements associated with our operations. We generally intend to use available cash and funds generated from our operations to meet these cash requirements, but in the event that additional liquidity is required we may also borrow under our Revolving Facility.
There were no material changes to the cash requirements from our Annual Report that were outside the ordinary course of business.
Recently adopted accounting pronouncementsRefer to Note 1 to the Company's condensed consolidated financial statements for a discussion of recently adopted accounting pronouncements.
Recently issued accounting pronouncementsRefer to Note 1 to the Company's condensed consolidated financial statements for a discussion of recently issued but not yet adopted accounting pronouncements.
Non-GAAP InformationThe Company's condensed consolidated financial statements are prepared in conformity with GAAP.
The Company also utilizes certain non-GAAP financial measures as a complement to financial measures provided in accordance with GAAP in order to better assess and reflect trends affecting the Company's business and results of operations. These non-GAAP financial measures include Adjusted EBITDA and Adjusted Operating Income, together with related measures thereof, and Non-GAAP EPS, as well as certain other supplemental non-GAAP financial measures included in the discussion of the Company's financial results.
Adjusted EBITDA is defined by the Company as net income before, as applicable, (1) equity in net loss of affiliate, (2) income tax expense, (3) interest expense, (4) interest income, (5) other expense (income), net, (6) integration costs, (7) restructuring costs, (8) acquired tax equalization asset reduction, (9) gain on sale of business, (10) impairment of long-lived assets, (11) amortization of intangible assets, and (12) depreciation. Adjusted Operating Income is defined by the Company as Adjusted EBITDA exclusive of the depreciation addback noted above. The Company also utilizes non-GAAP financial measures whereby Adjusted EBITDA and Adjusted Operating Income are each divided by the Company's net sales to derive Adjusted EBITDA Margin and Adjusted Operating Margin, respectively.
Non-GAAP Net Income is defined by the Company as net income before, as applicable, (1) integration costs, (2) restructuring costs, (3) acquired tax equalization asset reduction (4) loss on extinguishment of debt and modification, (5) gain on sale of business, (6) impairment of long-lived assets, (7) amortization of intangible assets, and (8) the tax effect of the foregoing adjustments to net income. Non-GAAP EPS is defined as our Non-GAAP Net Income divided by our diluted weighted-average shares outstanding.
The Company provides supplemental non-GAAP financial measures to help management and investors to better understand our business and believes these measures provide investors and analysts additional meaningful information for the assessment of the Company's ongoing results. Management also uses these non-GAAP measures to assist in the evaluation of the performance of the Company's business segments and to make operating decisions.
Management believes the Company's non-GAAP measures help indicate the Company's baseline performance before certain gains, losses or other charges that may not be indicative of the Company's business or future outlook and offer a useful view of business performance in that the measures provide a more consistent means of comparing performance. The Company believes the non-GAAP measures aid investors' overall understanding of the Company's results by providing a higher degree of transparency for such items and providing a level of disclosure that will help investors understand how management plans, measures and evaluates the Company's business performance. Management believes that the inclusion of non-GAAP measures provides greater consistency in its financial reporting and facilitates investors' understanding of the Company's historical operating trends by providing an additional basis for comparisons to prior periods.
Management uses Adjusted EBITDA and Adjusted Operating Income to assist it in evaluations of the Company's operating performance by excluding items that management does not consider as relevant in the results of its ongoing operations. Internally, these non-GAAP measures are used by management for planning and forecasting purposes, including the preparation of internal budgets; for allocating resources to enhance financial performance; for evaluating the effectiveness of operational strategies; and for evaluating the Company's capacity to fund capital expenditures, secure financing and expand our business.
In addition, and as a consequence of the importance of these non-GAAP financial measures in managing our business, the Company's board of directors uses non-GAAP financial measures in the evaluation process to determine management compensation.
The Company believes that certain analysts and investors use Adjusted EBITDA, Adjusted Operating Income and Non-GAAP EPS as supplemental measures to evaluate the overall operating performance of firms in the Company's industry. Additionally, lenders or potential lenders use Adjusted EBITDA measures to evaluate the Company's creditworthiness.
The presentation of non-GAAP financial measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP. Management strongly encourages investors to review the Company's condensed consolidated financial statements in their entirety and to not rely on any single financial measure.
Management notes that the use of non-GAAP measures has limitations, including but not limited to:
First, non-GAAP financial measures are not standardized. Accordingly, the methodology used to produce the Company's non-GAAP financial measures may differ notably from the methodology used by other companies and may not be directly comparable to non-GAAP measures reported by other companies.
Second, the Company's non-GAAP financial measures exclude items such as amortization and depreciation that are recurring. Amortization of intangibles and depreciation have been, and will continue to be for the foreseeable future, a significant recurring expense with an impact upon the Company's results of operations, notwithstanding the lack of immediate impact upon cash flows.
Third, there is no assurance that the Company will not have future charges for integration costs, restructuring activities, loss on extinguishment of debt or modifications, loss (gain) on sale of businesses, or similar items and, therefore, may need to record additional charges (or credits) associated with such items, including the tax effects thereon. The exclusion of these items in the Company's non-GAAP measures should not be construed as an implication that these costs are unusual, infrequent or non-recurring.
Management considers these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their most directly comparable financial measures calculated in accordance with GAAP. The calculations of Adjusted EBITDA, Adjusted Operating Income, Non-GAAP Net Income and Non-GAAP EPS, and reconciliations between these financial measures and their most directly comparable GAAP equivalents, are presented below in the accompanying tables.
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
Three months ended Nine months ended
(In millions) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024
Net sales $ 807.1 $ 807.7 $ 2,372.7 $ 2,391.4
Net income $ 70.5 $ 77.5 $ 186.2 $ 190.5
Net income - as a % of net sales 8.7 % 9.6 % 7.8 % 8.0 %
Adjustments to net income:
Equity in net loss of affiliates 0.3 0.3 0.8 0.7
Income tax expense 1.5 8.2 12.5 18.3
Interest expense 47.9 51.6 151.3 162.7
Interest income (1.8) (1.2) (5.1) (5.4)
Other expense (income), net 4.2 (0.2) 5.3 17.1
GAAP - Operating income 122.6 136.2 351.0 383.9
Operating margin - as a % of net sales 15.2 % 16.9 % 14.8 % 16.1 %
Integration costs:
Professional fees 1
- 0.3 - 2.6
Severance costs 2
- 0.2 - 0.8
Restructuring costs 3
1.7 - 17.4 -
Acquired tax equalization asset reduction 4
- 3.0 - 3.0
Gain on sale of business 5
- - - (4.3)
Impairment of long-lived assets6
- - - 13.0
Amortization of intangible assets7
46.0 46.2 138.1 143.9
Adjusted Operating Income 170.3 185.9 506.5 542.9
Adjusted operating margin - as a % of net sales 21.1 % 23.0 % 21.3 % 22.7 %
Depreciation 50.4 47.1 151.6 139.8
Adjusted EBITDA $ 220.7 $ 233.0 $ 658.1 $ 682.7
Adjusted EBITDA - as a % of net sales 27.3 % 28.8 % 27.7 % 28.5 %
1 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations.
2 Represents severance charges related to the integration of CMC Materials.
3Restructuring charges resulting from discrete cost saving initiatives inclusive of employee termination benefit and asset impairment charges, primarily related to (i) an internal reorganization, combining two complementary divisions into one and realigning our customer facing organization and (ii) workforce reductions and the abandonment of certain capital equipment no longer necessary for the Company's long-term objectives.
4Represents an asset reduction of an acquired tax equalization asset from the CMC Materials acquisition.
5 Gain from the sale of the Company's PIM business.
6Impairment of long-lived assets related to a small, industrial specialty chemicals business.
7 Non-cash amortization expense associated with intangibles acquired in acquisitions.
Reconciliation of GAAP Net Income and Earnings per Share to Non-GAAP Net Income and EPS
Three months ended Nine months ended
(In millions, except per share data) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024
Net income $ 70.5 $ 77.5 $ 186.2 $ 190.5
Adjustments to net income:
Integration costs:
Professional fees 1
- 0.3 - 2.6
Severance costs 2
- 0.2 - 0.8
Restructuring costs3
1.7 - 17.4 -
Acquired tax equalization asset reduction 4
- 3.0 - 3.0
Loss on extinguishment of debt and modification5
1.7 - 1.7 12.3
Gain on sale of business6
- - - (4.3)
Impairment of long-lived assets7
- - - 13.0
Amortization of intangible assets 8
46.0 46.2 138.1 143.9
Tax effect of adjustments to net income and discrete tax items 9
(10.0) (9.6) (31.4) (33.3)
Non-GAAP Net Income $ 109.9 $ 117.6 $ 312.0 $ 328.5
Diluted earnings per common share $ 0.46 $ 0.51 $ 1.22 $ 1.25
Effect of adjustments to net income 0.26 0.26 0.83 0.91
Diluted Non-GAAP EPS $ 0.72 $ 0.77 $ 2.05 $ 2.16
Diluted weighted average shares outstanding 152.3 151.9 152.1 151.8
1 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations.
2 Represents severance charges related to the integration of CMC Materials.
3 Restructuring charges resulting from discrete cost saving initiatives inclusive of employee termination benefit and asset impairment charges, primarily related to (i) an internal reorganization, combining two complementary divisions into one and realigning our customer facing organization and (ii) workforce reductions and the abandonment of certain capital equipment no longer necessary for the Company's long-term objectives.
4Represents an asset reduction of an acquired tax equalization asset from the CMC Materials acquisition.
5 Loss on extinguishment of debt and modification of our Term Loan Facility in 2024 and 2025.
6 Gain from the sale of the Company's PIM business.
7Impairment of long-lived assets related to a small, industrial specialty chemicals business.
8 Non-cash amortization expense associated with intangibles acquired in acquisitions.
9 The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate for each respective year.
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