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What changed in ENTEGRIS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ENTEGRIS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+413 added−441 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-15)

Top changes in ENTEGRIS INC's 2024 10-K

413 paragraphs added · 441 removed · 325 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

123 edited+23 added−37 removed62 unchanged
Biggest changeThe current annual and succeeding annual periods will disclose the reportable segments with prior periods recast to reflect the change. • The Materials Solutions segment, or MS, provides materials-based solutions, such as chemical mechanical planarization (“CMP”) slurries and pads, deposition materials, process chemistries and gases, formulated cleans, etchants 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 Microcontamination Control segment, or MC, offers advanced solutions that improve customers’ yield, device reliability and cost by filtering and purifying critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries. • The Advanced Materials Handling segment, or AMH, develops solutions that improve customers’ yields by protecting critical materials during manufacturing, transportation, and storage, including products that monitor, protect, transport and deliver critical liquid chemistries, wafers, and other substrates for a broad set of applications in the semiconductor, life sciences and other high-technology industries.
Biggest changeThese segments share common business systems and processes, technology centers and technology roadmaps. • 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.
We believe that smartphones, wearable technology, self-driving vehicles, artificial intelligence, the Internet of Things, gaming and virtual reality, high performance and cloud computing, and smart healthcare will drive growth in the demand for semiconductors, drive wafer starts and create significant opportunities for our products.
We believe that artificial intelligence, high-performance and cloud computing, smartphones, wearable technology, self-driving vehicles, the Internet of Things, gaming and virtual reality, and smart healthcare will drive growth in the demand for semiconductors, drive wafer starts and create significant opportunities for our products.
We have a global infrastructure of design, manufacturing, logistics, distribution, service and technical support facilities to meet the needs of our global customers. We further enhanced this footprint with the opening of a new manufacturing center of excellence in Taiwan, our KSP facility, in May 2023, which will become our largest manufacturing facility.
Global Infrastructure . We have a global infrastructure of design, manufacturing, logistics, distribution, service and technical support facilities to meet the needs of our global customers. We further enhanced this footprint with the opening of a new manufacturing center of excellence in Taiwan, our KSP facility, in May 2023, which will become our largest manufacturing facility.
Entegris has 14 Table of Contents been helping its customers solve their critical materials challenges and enhance their manufacturing yields for over 55 years, tracing its corporate origins back to Fluoroware, Inc., which began operating in 1966. AVAILABLE INFORMATION Our Internet address is www.entegris.com.
Entegris has been helping its customers solve their critical materials challenges and enhance their manufacturing yields for over 55 years, tracing its corporate origins back to Fluoroware, Inc., which began operating in 1966. 14 Table of Contents AVAILABLE INFORMATION Our Internet address is www.entegris.com.
These include: engineered polymer conversion and processing; specialty coating capabilities; advanced membrane modification and cleaning; solids and powders compounding and handling; chemical formulation, blending, distillation, synthesis and purification; graphite synthesis; gas delivery systems; blow molding; high-purity gas handling and transfilling; rotational molding; high-purity materials packaging; machining; and membrane casting; assembly. cartridge manufacturing and assembly; We have made significant investments in systems and equipment to create innovative products and tool designs, including metrology and 3D printing capabilities for rapid analysis and prototype production.
These include: engineered polymer conversion and processing; specialty coating capabilities; advanced membrane modification and cleaning; solids and powders compounding and handling; chemical formulation, blending, synthesis and purification; graphite synthesis; gas delivery systems; blow molding; high-purity gas handling and transfilling; rotational molding; high-purity materials packaging; machining; and membrane casting; assembly. cartridge manufacturing and assembly; We have made significant investments in systems and equipment to create innovative products and tool designs, including metrology and 3D printing capabilities for rapid analysis and prototype production.
We provide solutions for the handling of such chemicals, including: • Ultra-high purity chemical container products, such as drums, flexible packaging and associated coded connection systems, which are designed to maintain chemical purity, maximize utilization and ensure safe transport, containment and dispense of valuable, ultra-clean process fluids, from bulk chemical manufacturing to point-of-use in the manufacturing process; and • Ultra-pure valves, fittings, tubings and sensing and control products, which are used to distribute these chemicals around the fab and in wet process tools.
We provide solutions for the handling and ensuring the purity of such chemicals, including: • Ultra-high purity chemical container products, such as drums, flexible packaging and associated coded connection systems, which are designed to maintain chemical purity, maximize utilization and ensure safe transport, containment and dispense of valuable, ultra-clean process fluids, from bulk chemical manufacturing to point-of-use in the manufacturing process; and • Ultra-pure valves, fittings, tubings and sensing and control products, which are used to distribute these chemicals around the fab and in wet process tools.
We maintain a network of service centers, applications laboratories and technology centers located in key markets internationally and in the U.S. to support our products and our customers with their advanced development needs, provide local technical service, application support and help ensure fast turnaround time. COMPETITION The market for our products is highly competitive.
We maintain a network of service centers, applications laboratories and technology centers located in key markets internationally and in the U.S. to support our products and our customers with their advanced development needs, provide local technical service and application support and help ensure fast turnaround time. COMPETITION The market for our products and solutions is highly competitive.
The competitive landscape is varied, ranging from business segments within large multinational companies to small regional or regionally-focused companies. While product quality and technology remain critical, overall, industry trends overall indicate a shift to localized, cost-competitive and consolidated supply chains.
The competitive landscape is varied, ranging from business segments within large multinational companies to small regional or regionally-focused companies. While product quality and technology remain critical, industry trends indicate a shift to localized, cost-competitive and consolidated supply chains.
Leveraging Our Collective Expertise . We leverage our expertise across our three segments and across our broad portfolio of advanced materials, materials handling and purification capabilities to create innovative, new and co-optimized solutions to address unmet customer needs.
Leveraging Our Collective Expertise . We leverage our expertise across our segments and broad portfolio of advanced materials, materials handling and purification capabilities to create innovative, new and co-optimized solutions to address unmet customer needs.
Our product offerings that are used throughout the photolithography process include: • Liquid filtration, high-purity packaging and high-precision dispense systems designed to ensure the pure, accurate and uniform distribution of contamination-free photoresists onto the wafer, enabling manufacturers to achieve optimum yields in the manufacturing process; and • Gas microcontamination control solutions designed to eliminate airborne contaminants that often disrupt effective photolithography processes.
Our product offerings that are used throughout the photolithography process include: • Liquid filtration, high-purity packaging and high-precision dispense systems designed to ensure the pure, accurate and uniform distribution of contamination-free photoresists onto the wafer, enabling manufacturers to achieve optimum yields in the manufacturing process; and • Gas microcontamination control solutions designed to eliminate airborne contaminants that can disrupt effective photolithography processes.
Item 1. Business. OUR COMPANY Entegris, Inc. (“Entegris”, “the Company”, “us”, “we”, or “our”) is a leading supplier of mission-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, performance and technology in the most advanced manufacturing environments.
Item 1. Business. OUR COMPANY Entegris, Inc. (“Entegris”, “the Company”, “us”, “we”, or “our”) 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.
Additionally, we owned about 2,200 pending patent applications globally. We also license certain patents owned by third parties. We rely on a combination of patent, copyright, trademark and trade secret laws and license agreements to establish and protect our proprietary rights. We seek to refresh our intellectual property on an ongoing basis through continued innovation.
Additionally, we owned about 2,300 pending patent applications globally. We also license certain patents owned by third parties. We rely on a combination of patent, copyright, trademark and trade secret laws and license agreements to establish and protect our proprietary rights. We seek to refresh our intellectual property on an ongoing basis through continued innovation.
Finally, we regularly evaluate opportunities for strategic alliances, joint development programs and other strategic investments to achieve a variety of objectives including expanding our manufacturing capacity, producing products closer to our customers, developing optimized products more quickly and developing new sources of supply to provide us with a competitive advantage.
Finally, we regularly evaluate opportunities for strategic alliances, joint development programs and other strategic investments to achieve a variety of objectives including expanding our manufacturing capacity, producing products closer to our customers, developing optimized products more quickly and developing new sources of supply to provide us with a competitive advantage. Adjacent Markets .
We acquired all of the issued and outstanding common shares of CMC Materials for $133.00 in cash and 0.4506 shares of our common stock per share, representing a total purchase price (inclusive of debt retired and cash assumed) of $6.0 billion (based on our closing price on June 30, 2022), including $3.8 billion in cash paid to CMC Materials’ shareholders, the issuance of 12.9 million shares of our common stock (excluding unvested CMC stock options and unvested CMC Materials restricted stock units, restricted shares and performance share units equity awards assumed), $0.9 billion of debt 1 Table of Contents retired and approximately $0.3 billion of acquired cash.
We acquired all of the issued and outstanding common shares of CMC Materials for $133.00 in cash and 0.4506 shares of our common stock per share, representing a total purchase price (inclusive of debt retired and cash assumed) of $6.0 billion (based on our closing price on June 30, 2022), including $3.8 billion in cash paid to CMC Materials’ shareholders, the issuance of 12.9 million shares of our common stock (excluding unvested CMC stock options and unvested CMC Materials restricted stock units, restricted shares and performance share units equity awards assumed), $0.9 billion of debt retired and approximately $0.3 billion of acquired cash.
Securities and Exchange Commission, or SEC: our annual, quarterly, and current reports on Forms 10-K, 10-Q, and 8-K; our proxy statements; any amendments to those reports or statements, and Form SD. All such filings are available on our website free of charge.
Securities and Exchange Commission (“SEC”): our annual, quarterly, and current reports on Forms 10-K, 10-Q, and 8-K; our proxy statements; any amendments to those reports or statements, and Form SD. All such filings are available on our website free of charge.
Our customers require that their key materials suppliers demonstrate greater capabilities and efficiencies in their processes, including sustainability, scalability, flexible manufacturing, quality control, supply chain management and the ability to effectively collaborate on solutions to problems.
Our customers require that their key materials suppliers demonstrate greater capabilities and resiliency in their processes, including sustainability, scalability, flexible manufacturing, quality control, supply chain management and the ability to effectively collaborate on solutions to problems.
None of our employees is represented by a labor union or covered by a collective bargaining agreement other than statutorily-mandated programs in certain international jurisdictions. We believe that our labor relations have generally been good. Culture .
None of our employees are represented by a labor union or covered by a collective bargaining agreement other than statutorily-mandated programs in certain international jurisdictions. We believe that our labor relations have generally been good. Culture .
These products, which are designed to ensure device performance and achieve the targeted manufacturing yields of semiconductor manufacturers, include: • Advanced precursor materials, which are utilized to meet the semiconductor industry’s composition, uniformity and thickness requirements of deposited films; and 2 Table of Contents • Filtration and purification products, which are used to remove contaminants during the deposition process, consequently reducing defects on wafers.
These products, which are designed to ensure device performance and achieve desired manufacturing yields, include: 2 Table of Contents • Advanced precursor materials, which are utilized to meet the semiconductor industry’s composition, uniformity and thickness requirements of deposited films; and • Filtration and purification products, which are used to remove contaminants during the deposition process, consequently reducing defects on wafers.
Fluid Management Products . Our broad portfolio of packaging and container products, from low-volume containers to transport high-value photoresist chemistries, such as our NOWPak® products, to large intermediate bulk containers, such as our FluoroPure® products, ensures the purity of the chemistries they contain.
Our broad portfolio of packaging and container products, from low-volume containers to transport high-value photoresist chemistries, such as our NOWPak® products, to large intermediate bulk containers, such as our FluoroPure® products, ensures the purity of the chemistries they contain.
While we seek to have several sources of supply for raw materials, certain materials included in our products, such as certain filtration membranes in our MC segment, certain engineered abrasive particles, specialty and commodity chemicals and petroleum coke in our MS segment, and certain polymer resins in our AMH segment, are obtained from a single source, a limited group of suppliers or from suppliers in a single country.
While we seek to have several sources of supply for raw materials, certain materials included in our products, such as certain filtration membranes and polymer resins in our APS segment and certain engineered abrasive particles, specialty and commodity chemicals and petroleum coke in our MS segment, are obtained from a single source, a limited group of suppliers or from suppliers in a single country.
As a result, our revenue is generally more impacted by overall global semiconductor demand and global GDP growth, rather than the sales of semiconductor capital equipment, which has historically been more cyclical. • Our solutions are increasingly specified and tailored to meet our customers’ unique process conditions and technical roadmaps.
As a result, our revenue is generally more impacted by overall global semiconductor demand and global GDP growth, rather than the sales of semiconductor capital equipment, which has historically been more cyclical. • Our solutions are increasingly specified into our customers’ manufacturing processes and tailored to meet our customers’ unique process conditions and technical roadmaps.
For example, our IntelliGen® integrated, high-precision liquid dispense systems enable the uniform application of advanced chemistries during the wafer fabrication process, integrating our valve control expertise with filter device technologies from our MC segment, in order to conserve high-value chemistry and reduce defects on wafers.
For example, our IntelliGen® integrated, high-precision liquid dispense systems enable the uniform application of advanced chemistries during the wafer fabrication process, integrating our valve control expertise with filter device technologies, in order to conserve high-value chemistry and reduce defects on wafers.
We financed the cash portion of the purchase price through debt financing. On February 10, 2023, the Company terminated a definitive agreement to sell its Pipeline and Industrial Materials (“PIM”) business, which became part of the Company with the acquisition of CMC Materials, to Infineum USA L.P.
We financed the cash portion of the purchase price through debt financing. 1 Table of Contents On February 10, 2023, the Company terminated a definitive agreement to sell its Pipeline and Industrial Materials (“PIM”) business, which became part of the Company with the acquisition of CMC Materials, to Infineum USA L.P.
We leverage the expertise that we have gained from serving the semiconductor industry, as well as our core capabilities in material science and material purity, to develop products for other industries that employ technologies and production processes that require materials integrity management, high-purity fluids and integrated dispense systems.
We leverage the expertise that we have gained from serving the semiconductor industry, as well as our core capabilities in material science and material purity, to develop product extensions for other industries that employ technologies and production processes that require materials integrity management, high-purity fluids and integrated dispense systems.
MANUFACTURING Our customers rely on our products and materials to ensure the integrity of the critical materials used in their manufacturing processes by providing purity, cleanliness, consistent performance, dimensional precision and stability.
MANUFACTURING Our customers rely on our solutions to ensure the integrity of the critical materials used in their manufacturing processes by providing purity, cleanliness, consistent performance, dimensional precision and stability.
Deposition . Deposition is a process during which certain materials are transferred to the surface of a wafer. Deposition processes include physical vapor deposition, or PVD, chemical vapor deposition, or CVD, atomic-layer deposition, or ALD, and electro-plating. We provide products that are used during these deposition processes and that are critical to enabling new device architectures.
Deposition . Deposition is a process during which certain materials are transferred to the surface of a wafer. Deposition processes include physical vapor deposition, or PVD, chemical vapor deposition, or CVD, and atomic-layer deposition, or ALD. We provide products that are used during deposition processes and that are critical to enabling new device architectures.
We seek to attract and retain talented employees by providing a compelling total rewards package consisting of competitive pay, health and welfare, work / life benefits and financial wellness programs. We design our programs with the core belief that our employees are at their best when they prioritize their emotional and physical health.
We seek to attract and retain talented employees by providing a compelling total rewards package consisting of competitive pay, health and welfare, work-life benefits and financial wellness programs. We design our programs with the core belief that our employees are at their best when they prioritize their emotional and physical health. We review and assess these programs annually.
ACQUISITIONS AND DIVESTITURES On July 6, 2022 (the “Closing Date”), we completed the acquisition of CMC Materials, Inc. (now known as CMC Materials LLC) (“CMC Materials”).
ACQUISITIONS AND DIVESTITURES On July 6, 2022, we completed the acquisition of CMC Materials, Inc. (now known as CMC Materials LLC) (“CMC Materials”).
Several of our products are utilized during and after the etch process, including: • Selective etch chemistries to enable high aspect ratio structures, such as 3D-NAND; • Formulated cleaning solutions to remove photoresists and post-etch residues; • Filters and purifiers, which help to ensure the purity of formulated cleaning chemistries and to achieve desired yields in the etch processing steps; and • Precision-engineered coatings to provide barriers to corrosive chemistries in the etch environment, protect surfaces of equipment components from erosion and minimize particle generation.
Several of our products are utilized during and after the etch process, including: • Selective etch chemistries to enable high aspect ratio structures, such as 3D-NAND devices and gate-all-around (“GAA”) features; • Formulated cleaning solutions to remove photoresists and post-etch residues; • Filters and purifiers, which help to ensure the purity of formulated cleaning chemistries and to achieve desired yields in the etch processing steps; and • Precision-engineered coatings to provide barriers to corrosive chemistries in the etch environment, protect surfaces of equipment components from erosion and minimize particle generation.
We collaborate closely with our customers to create end-to-end solutions across platforms and modules allowing them to optimize value and accelerate time to yield.
We collaborate closely with our customers to create complementary solutions across platforms and modules allowing them to optimize value and accelerate time to yield.
We maintain a culture with an intense focus on safety and strive to identify, eliminate and control risk in the workplace in an effort to prevent injury and illness. Our employees have access to a global safety management system and are encouraged to report incidents, near misses or other observations in the system.
We maintain a culture with an intense focus on safety and strive to identify, eliminate and control risk in the workplace in an effort to prevent injury and illness. Our employees have access to a global safety management system and are encouraged to report incidents, near misses or other observations in 13 Table of Contents the system.
For example, we have introduced sub-5 nanometer filtration products, advanced deposition materials for 5 Table of Contents next generation transistor and interconnect technologies, polishing slurry and pad solutions with post-cleaning formulations to meet the needs of advanced memory applications, advanced reticle pods for EUV photolithography applications, advanced 300 millimeter wafer carriers and advanced coatings to meet the rigorous defectivity specifications for the manufacturing of advanced technology nodes.
For example, we have introduced sub-5 nanometer filtration products, advanced deposition materials for next generation transistor and interconnect technologies, polishing slurry and pad solutions with post-cleaning formulations to meet the needs of advanced memory applications, selective etching formulations for advanced device applications, advanced reticle pods for EUV photolithography applications, advanced 300 millimeter wafer carriers and advanced coatings to meet the rigorous defectivity specifications for the manufacturing of advanced technology nodes.
During 2023, these topics included commitment to Entegris’ core values, safety and general employee satisfaction. Management uses the information gathered from these surveys to inform its decision making with respect to employee matters, aiming to continue to be an employer of choice. Diversity and Inclusion .
During 2024, these topics included commitment to Entegris’ core values, safety and general employee satisfaction. Management uses the information gathered from these surveys to inform its decision making with respect to employee matters, aiming to continue to be an employer of choice.
Therefore, switching away from our products may be costly and time consuming for our customers and may introduce risk to their manufacturing yields. • Our product portfolio is broad and not overly concentrated on any single product or product platform.
Therefore, switching away from our products may be costly and time-consuming for our customers and may introduce risk to their manufacturing yields. • We have a broad product portfolio that is not overly concentrated on any single product or product platform.
Our products used during the ion implant process include: • Safe Delivery Source® (“SDS®”) and Vacuum Actuated Cylinders (“VAC®”) gas delivery systems designed to ensure the safe, effective and efficient delivery of the necessary specialty gases; and • Electrostatic chucks and proprietary low temperature plasma coating processes for core components, which are critical elements of ion implantation equipment.
Our products used during the ion implant process include: • Implant process gases and mixtures in our Safe Delivery Source® (“SDS®”) and Vacuum Actuated Cylinders (“VAC®”) gas delivery systems, designed to ensure the safe, effective and efficient delivery of these materials; and • Electrostatic chucks and proprietary low temperature plasma coating processes for core components, which are critical elements of ion implantation equipment.
Our offerings include: • CMP slurries, used for polishing a wide range of materials used in semiconductors, including tungsten, dielectric materials, copper, tantalum (commonly referred to as “barrier”), aluminum, silicon carbide (“SiC”) and gallium nitride (“GaN”); • CMP polishing pads, which are used in conjunction with slurries in the CMP process on a variety of polishing tools and wafers over a range of technology nodes and applications, including tungsten, copper, and dielectrics; • Formulated cleaning chemistries, which remove residues from wafer surfaces after the CMP process; • Filtration and purification solutions, which are used to remove select particles and contaminants from slurries and cleaning chemistries that can cause defects on a wafer’s surface; • Roller brushes, which are used in conjunction with our formulated cleaning chemistries to clean the wafer after completion of the CMP process in order to prepare the wafer for subsequent steps in the manufacturing process; and • Process monitoring and control equipment, which maintain the integrity of the CMP slurries.
Our offerings include: • CMP slurries, used for polishing a wide range of materials used in semiconductors, including tungsten, dielectric materials, copper, tantalum (commonly referred to as “barrier”), molybdenum, aluminum, silicon carbide (“SiC”) and gallium nitride (“GaN”); • CMP polishing pads, which are used in conjunction with slurries in the CMP process on a variety of polishing tools and wafers over a range of technology nodes and applications, including tungsten, copper, and dielectrics; • Formulated cleaning chemistries, which remove residues from wafer surfaces after the CMP process; • Filtration and purification solutions, which are used to remove select particles and contaminants from slurries and cleaning chemistries that can cause defects on a wafer’s surface; and • Process monitoring and control equipment, which maintain the integrity of the CMP slurries.
Further, we provide market-leading instrumentation solutions to ensure consistency and monitoring of complex blended chemistries, such as our on-tool Accusizer® system, which performs automated online particle size and count analysis with applications in both semiconductor and life science industries, and our SemiChem® systems and our Invue® products, which measure chemical concentration in CMP slurries and formulated cleaning chemistries.
Our instrumentation solutions ensure consistency and monitoring of complex blended chemistries, such as our on-tool Accusizer® system, which performs automated online particle size and count analysis with applications in both semiconductor and life science industries, and our SemiChem® systems and our Invue® products, which measure chemical concentration in CMP slurries and formulated cleaning chemistries.
For example, the decision to introduce a new material at the deposition stage of the semiconductor manufacturing process will impact CMP and the post-CMP clean, as well as the selection of filters in several other stages of the process.
For example, the decision to introduce a new material at the deposition stage of the semiconductor manufacturing process will impact CMP and the post-CMP cleans, etch and post-etch residue cleans, as well as the selection of filters in several other stages of the process.
We undertake this work to extend the reach of our internal ER&D and to gain access to leading ideas and concepts beyond the time horizon of our internal development activities. PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS As of December 31, 2023, we owned approximately 4,400 active patents worldwide, of which about 815 were U.S. patents.
We undertake this work to extend the reach of our internal ER&D and to gain access to leading ideas and concepts beyond the time horizon of our internal development activities. PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS As of December 31, 2024, we owned approximately 4,500 active patents worldwide, of which about 800 were U.S. patents.
Manufacturers of high purity chemicals and semiconductor fabs use our Trinzik® and Microgard™ products for the filtration of chemicals and ultra-pure water. Our Impact® series of filters are used in point-of-use photochemical dispense applications, including those provided by our AMH segment, where the delivery of superior flow rate performance and reduced microbubble formation is critical.
Manufacturers of high purity chemicals and semiconductor fabs use our Trinzik® and Microgard™ products for the filtration of chemicals and ultra-pure water. Our Impact® series of filters are used in point-of-use photochemical dispense applications where the delivery of superior flow rate performance and reduced microbubble formation is critical.
While we license and expect to continue to license technology used in the manufacture and distribution of products from third parties, we do not consider any particular patent or license to be material to our business. We vigorously protect and defend our intellectual property.
We also license and expect to continue to license technology used in the manufacture and distribution of products from third parties. However, we do not consider any particular Company patent or third-party license to be material to our business. We vigorously protect and defend our intellectual property.
Below is a table showing the percentage of our net sales to top customers and the percentage of our net sales that are international during the three most recent fiscal years. 2023 2022 2021 Percentage of net sales to top customers: TSMC 11 % 12 % 12 % Remaining top ten customers 32 % 31 % 31 % Total top ten customers 43 % 43 % 43 % Percentage of net sales by market: Domestic/U.S. 25 % 24 % 23 % Foreign/International 75 % 76 % 77 % We may enter into supply agreements with our customers.
Below is a table showing the percentage of our net sales to top customers and the percentage of our net sales that are international during the three most recent fiscal years. 2024 2023 2022 Percentage of net sales to top customers: TSMC 16% 11% 12% Remaining top ten customers 32% 32% 31% Total top ten customers 48% 43% 43% Percentage of net sales by market: Domestic/U.S. 21% 25% 24% Foreign/International 79% 75% 76% We may enter into supply agreements with our customers.
We seek to embed our corporate social responsibility program into our business strategy. Our program is built around the four core pillars of Innovation, Safety, Personal Development and Inclusion and Sustainability. The program includes goals for each of the four pillars to guide us towards 2030.
We seek to embed our corporate social responsibility (“CSR”) program into our business strategy and measure progress toward the 2030 goals we have established. Our program is built around the four core pillars of Innovation, Safety, Personal Development and Inclusion, and Sustainability. The program includes goals for each of the four pillars to guide us towards 2030.
While we expect that capital expenditures will be necessary to ensure that any new manufacturing facility is in compliance with environmental and health and safety laws, we do not expect these expenditures to be material. See “Item 1A. Risk Factors” for a more detailed description of the regulatory risks we face.
While we expect that capital expenditures will be necessary to ensure that our manufacturing facilities remain in compliance with environmental and health and safety laws, we do not expect these expenditures to be material. See “Item 1A. Risk Factors” for a more detailed description of the regulatory risks we face.
Further, as the semiconductor industry looks to new interconnect metals like molybdenum, our portfolio of deposition precursors, CMP slurries and pads, post-CMP cleans, selective etch formulations, combined with our filtration, sensing, and delivery products will enable us to create end-to-end solutions and position our customers to enhance their device performance and optimize time to yield. Corporate Social Responsibility .
Furthermore, as the semiconductor industry looks to new interconnect metals like molybdenum, our portfolio of deposition precursors, CMP slurries and pads, post-CMP cleans and selective etch formulations, combined with our filtration, sensing, and delivery products will enable us to create complementary solutions and enable our customers to enhance their device performance and optimize time to yield.
Existing applications in data processing, wireless communications, broadband infrastructure, personal computers, handheld 3 Table of Contents electronic devices and other consumer electronics are also expected to drive demand for semiconductors, and in turn, demand for our products. Manufacturing Complexity and Architecture . Emerging applications require more powerful, faster and more energy-efficient semiconductors.
Existing applications in data processing, wireless communications, broadband infrastructure, personal computers, handheld electronic devices and other consumer electronics are also expected to drive demand for semiconductors, and in turn, for our products. Manufacturing Complexity and Device Architectures . Emerging applications require more powerful, faster and more energy-efficient semiconductors.
SALES, MARKETING AND SUPPORT 10 Table of Contents We sell our products worldwide, primarily through our direct sales force and strategic independent distributors located in all major semiconductor markets. We also use independent distributors in other market territories and for specific market segments. As of December 31, 2023, our sales and marketing force consisted of approximately 783 employees worldwide.
SALES, MARKETING AND SUPPORT We sell our products worldwide, primarily through our direct sales force and strategic independent distributors located in all major semiconductor markets. We also use independent distributors in other market territories and for specific market segments. As of December 31, 2024, our sales and marketing force consisted of approximately 800 employees worldwide.
Semiconductors, or integrated circuits, are key components in electronic devices that have changed, and that we believe will continue to change, the way we live, communicate and work.
Semiconductors, or integrated circuits, are key components in electronic devices that continue to change the way we live, communicate and work.
Our customers need suppliers that can provide a broad range of advanced, customized, reliable and cost-effective products and materials, as well as the technological and application expertise necessary to enhance their productivity, quality and yield, especially as they drive towards more advanced technology nodes.
Our customers need a broad range of advanced, customized, reliable and cost-effective products and materials, as well as the technological and application expertise to enhance their productivity, quality and yield, especially as they move towards more advanced technology nodes.
In response, semiconductor architectures are changing, with transistor design increasing in complexity, the use of multilayered patterning (for example, extreme ultraviolet lithography), structures such as FinFET, 3D NAND and gate-all-around, and shrinking dimensions. These advanced architectures require more process steps, new and innovative materials and more sophisticated contamination control solutions.
In response, semiconductor architectures are changing and dimensions are shrinking, with transistor design increasing in complexity, the use of extreme ultraviolet lithography, multilayered patterning, and vertical structures such as FinFET, 3D NAND and GAA devices. These advanced technologies and architectures require more process steps, new and innovative materials and more sophisticated contamination control solutions.
As of December 31, 2023, we offered over 28,000 standard and customized products, and in 2023 no single product platform represented more than 4% of our net sales. • We have a broad and diverse customer base. As of December 31, 2023, our top ten customers make up 43% of our sales.
As of December 31, 2024, we offered over 21,000 standard and customized products, and in 2024 no single product platform represented more than 3% of our net sales. • We have a broad and diverse customer base. As of December 31, 2024, our top ten customers make up 48% of our sales.
We believe that demand for our materials and consumable products will benefit from the increase in process steps in lithography, deposition, CMP and etch and clean required to manufacture leading-edge semiconductors. New and Advanced Materials . New and advanced materials have played a significant role in enabling improved device performance, and we expect this trend to continue.
We believe that the increase in process steps in lithography, deposition, CMP, etching and cleaning required to manufacture leading-edge semiconductors will increase the overall demand for our solutions. New and Advanced Materials . New and advanced materials have played a significant role in enabling improved device performance, and we expect this trend to continue.
For example, certain of our formulated cleaning chemistry products are developed and manufactured by our MS segment, with collaboration from our filtration expertise in our MC segment, packaged with our ultra-clean container and connector system made by our AMH segment, and delivered to the process tools through fluid handling systems also made by our AMH segment.
For example, certain of our formulated cleaning chemistry products are developed and manufactured by our MS segment, with collaboration from our filtration expertise in our APS segment, packaged with our ultra-clean container and connector system, delivered to the process tools through fluid handling systems each from our APS segment, and, in the process tools, may be purified through systems produced by our APS segment.
As we continue making progress toward achieving our debt reduction targets, we will continue to pursue strategic acquisitions and business partnerships that enable us to address gaps in our product offerings, secure new customers, diversify into complementary product markets, broaden our technological capabilities and product offerings, access local or regional markets and achieve benefits of increased scale.
We expect to continue to pursue strategic acquisitions and business partnerships that enable us to address gaps in our product offerings, secure new customers, diversify into complementary product markets, broaden our technological capabilities and product offerings, access local or regional markets and achieve benefits of increased scale.
Our post-CMP clean chemistry products, such as PlanarClean® and ESC 784, are designed to efficiently remove the abrasive slurry particles and organic residue from the wafer after the CMP process, removing residue that might affect yield while not contributing to contamination. In addition, our consumable polyvinyl alcohol roller brush products are used to clean the wafer following the CMP process.
Post-CMP Cleans and Brushes . Our post-CMP clean chemistry products, such as PlanarClean® and ESC 784, are designed to efficiently remove the abrasive slurry particles and organic residue from the wafer after the CMP process, removing residue that might affect yield while not contributing to contamination.
We are committed to providing competitive total rewards and quality development and training opportunities for our employees. As of December 31, 2023, we had approximately 8,000 employees, of whom approximately 55%, 13%, 9%, 9%, 6%, 5% and 2% are located in North America, Southeast Asia, Japan, Taiwan, South Korea, China and Europe, respectively.
We are committed to providing competitive total rewards and quality development and training opportunities for our employees. As of December 31, 2024, we had approximately 8,200 employees, of whom approximately 53%, 15%, 10%, 8%, 7%, 5% and 2% are located in North America, Southeast Asia, Taiwan, Japan, South Korea, China and Europe, respectively.
We expect these trends to translate into a higher served addressable market for our products and expanding Entegris’ content per semiconductor wafer, which we believe will allow us to achieve growth that outperforms our markets.
We believe these capabilities are critical enablers of our customers’ technology roadmaps. We expect these trends to translate into a higher served addressable market for our products and to expand Entegris’ content per semiconductor wafer, which we believe will allow us to achieve growth that outperforms our markets.
Customers Collaboration . We view the strong relationships we have with our customers, which include leading logic and memory semiconductor manufacturers, original equipment manufacturers (“OEMs”) and semiconductor materials suppliers, as critical to our long-term success. Our expansive global presence allows us to meet our customers where they operate, which has enabled us to build strong relationships with them.
Customers Collaboration . We believe the strong relationships we have with our customers, which include leading logic and memory semiconductor manufacturers, original equipment manufacturers (“OEMs”) and semiconductor materials suppliers, are critical to our long-term success. We have built strong relationships with our customers through our expansive global presence, which allows us to engage with our customers where they operate.
These segments share common business systems and processes, technology centers and technology roadmaps. With the complementary capabilities across these segments, 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.
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.
Products and emerging applications such as smartphones, wearable technology, self-driving vehicles, artificial intelligence, the Internet of Things, gaming and virtual reality, high-performance and cloud computing, and smart healthcare will require faster, more powerful, more compact and more energy efficient semiconductors. We believe these trends, combined with existing applications, will drive long-term secular growth for semiconductors.
Products and emerging applications such as artificial intelligence, high-performance and cloud computing, smartphones, wearable technology, self-driving vehicles, the Internet of Things, gaming and virtual reality, and smart healthcare will require faster, more powerful, more compact and more energy efficient semiconductors.
For example, leading-edge semiconductor manufacturers are moving towards atomic layer scale, where the precision of the manufacturing process and purity of the materials used is vital to maintain device integrity. These materials need to be supplied and delivered at increasing levels of purity and control, from point-of-production to point-of-dispense on the wafer to improve and maximize yields.
For example, leading-edge semiconductor manufacturers are moving towards atomic layer scale. These advanced materials need to be supplied and delivered at increasing levels of purity and control, from point-of-production to point-of-dispense on the wafer to improve and maximize yields and minimize the risk of defects.
Our customers include a broad cross-section of the semiconductor ecosystem, from chemical companies, and equipment manufacturers, to semiconductor fabs. • We have been actively assessing certain portions of our portfolio and are executing transactions to streamline our platform to focus on the core areas of our businesses, which we believe have the greatest strategic value in supporting our customers and their technology roadmaps.
Our customers include a cross-section of the semiconductor ecosystem, from chemical companies and equipment manufacturers to semiconductor fabs. • We have streamlined our platform to focus on the core areas of our businesses that we believe have the greatest strategic value in supporting our customers and their technology roadmaps.
To that end, as further described above, during 2023, we completed the divestiture of QED and our EC business and terminated the Alliance Agreement with MacDermid Enthone. • We believe the cash generated from our business, together with proceeds received from the strategic transactions described above will allow us to pay down our debt, while also investing in research and development and the advanced manufacturing capabilities necessary to maintain and expand our technology leadership and to drive organic growth.
To that end, as further described above, during 2023 and 2024, we completed the divestitures of QED, our EC business and our PIM business and terminated the Alliance Agreement with MacDermid Enthone. • We intend to continue to further pay down our debt, while also investing in research and development and the advanced manufacturing capabilities necessary to maintain and expand our technology leadership and to drive organic growth.
Our strategy is to continue to develop and improve our extensive supply chain and manufacturing capabilities into a competitive advantage by driving operational excellence and operating in a manner that ensures the safety of our employees and the quality of our products.
Operational Excellence . Our customers are increasingly focused on the effectiveness, dependability, resiliency and consistency of their supply chains. Our strategy is to continue to develop and enhance our extensive supply chain and manufacturing capabilities into a competitive advantage by driving operational excellence, operating in a manner that ensures the safety of our employees and the quality of our products.
Employees are provided feedback and continuous development discussions through formal and informal review sessions throughout the year. While we continue to search for new perspectives and insights with external hires, we also seek to provide opportunities for our employees to grow their careers at the Company and regularly fill open vacancies with internal candidates.
While we continue to search for new perspectives and insights with external hires, we also seek to provide opportunities for our employees to grow their careers at the Company and regularly fill open vacancies with internal candidates.
Chemical Mechanical Planarization . CMP is a polishing process used by semiconductor manufacturers to planarize, or flatten, many of the layers of material that have been deposited on silicon wafers. With the acquisition of CMC Materials, we expanded our offerings used during and immediately following the CMP process.
Chemical Mechanical Planarization . CMP is a polishing process used by semiconductor manufacturers to planarize, or flatten, many of the layers of material that have been deposited on silicon wafers.
Furthermore, we believe that the greater scale we achieved from the acquisition of CMC Materials will allow us to better serve our customers, invest more in engineering, research and development (“ER&D”) and bring complementary, co-optimized solutions to market faster than ever before. Continued Consolidation .
Furthermore, as 4 Table of Contents we continue to achieve greater scale, for example, through the acquisition of CMC Materials, we believe we will better serve our customers, be able to invest more in engineering, research and development (“ER&D”) and bring complementary, co-optimized solutions to market faster than ever before. Continued Consolidation .
Our CMP Pads, such as our NexPlanar™, Medea™ and Ultra pad products are designed to provide the exact hardness, pore sizes, compressibility, and groove patterns needed to meet and exceed the requirements of various CMP applications.
Our CMP Pads, such as our NexPlanar™, Medea™ and Ultra pad products are designed to provide the exact hardness, pore sizes, compressibility, and groove patterns needed to meet and exceed the requirements of various CMP applications. Our Epic Power™ CMP Pads are designed for SiC wafers and offer a balance of best-in-class performance, quality, and cost of ownership.
For example, we can now develop and provide complementary offerings solving customers’ complex manufacturing challenges across the deposition, CMP process and post-CMP modules with co-optimized products from each of our divisions, such as advanced deposition materials, CMP slurries, pads and post-CMP cleaning chemistries from our MS segment, CMP slurry filters from our MC segment, and CMP slurry high-purity packaging and fluid monitoring systems from our AMH segment.
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).
Additionally, we recently began constructing our new state-of-the-art Colorado Springs manufacturing facility, which is intended to increase our service levels to new fabs expected to be built in the U.S. and provide us with greater manufacturing resiliency in the form of enhanced business continuity plans. Reliance on Trusted Suppliers .
This new Colorado Springs facility is intended to increase our service levels to new fabs expected to be built in the U.S. and provide us with greater manufacturing resiliency in the form of enhanced business continuity plans. See “Item 1A. Risk Factors” for a more detailed description of the geopolitical risks we face. Reliance on Trusted Suppliers .
We offer the following Deposition and Etch Solutions products: Advanced Deposition Materials Products . Our advanced deposition materials include advanced liquid, gaseous and solid precursors, including organometallic precursors for the deposition of tungsten, titanium, cobalt, aluminum, molybdenum and other emerging metal films and organosilane precursors for the deposition of silicon oxide, silicon nitride and advanced dielectric materials films.
We offer the following Deposition and Etch Solutions products: 7 Table of Contents Advanced Deposition Materials Products . Our advanced deposition materials include ultra-pure liquid and solid precursors, including organometallic and inorganic precursors for the deposition of molybdenum, tungsten, titanium, hafnium, zirconium, aluminum and other emerging metal and metal-based films.
ENGINEERING, RESEARCH AND DEVELOPMENT We believe that technology is important to the success of our businesses. We plan to continue to devote significant resources to ER&D, balancing efforts between shorter-term market needs and longer-term investments. As of December 31, 2023, we had approximately 1,361 employees in ER&D.
We plan to continue to devote significant resources to ER&D, balancing efforts between shorter-term market needs and longer-term investments. As of December 31, 2024, we had approximately 1,400 employees in ER&D.
Our KSP site, which opened in May 2023, will be our largest manufacturing facility and will enhance our ability to serve our customers efficiently and effectively in Taiwan and other Asia-pacific locations.
Recent examples of this strategy include our new facilities located in Kaohsiung Science Park (“KSP”) in Taiwan and in Colorado Springs, Colorado. Our KSP site, which opened in May 2023, will be our largest manufacturing facility and will enhance our ability to serve our customers efficiently and effectively in Taiwan and other Asia Pacific locations.
Our significant investments in our new KSP facility in Taiwan and our facility in Colorado Springs, Colorado are intended to enhance our operational excellence as we focus on the following priorities that we believe enable us to perform at the high level that our customers expect. • Investing in and using manufacturing equipment and facilities incorporating leading-edge process technology, including advanced cleanroom and cleaning procedures; • Implementing automated manufacturing, statistical process controls, quality and supply chain management systems; and • Maintaining a highly-skilled and agile organization, capable of rapid design, prototyping and ramping to high volume manufacturing while promptly responding to new customer requirements and feedback.
To perform at the high level of our customers’ expectations, we intend to continue to invest in the following priorities: • Manufacturing equipment and facilities incorporating leading-edge process technology, including advanced cleanroom and cleaning procedures; • Automated manufacturing, statistical process controls, quality and supply chain management systems; and • A highly skilled and agile organization, capable of rapid design, prototyping and ramping to high volume manufacturing while promptly responding to new customer requirements and feedback.
These precursors are designed in close collaboration with OEM process tool manufacturers and device makers to produce application specific solutions that are compatible with complex integrations of material solutions used to build the semiconductor device.
These precursors are designed in close collaboration with OEM process tool manufacturers and device makers to produce application-specific solutions that are compatible with complex integrations of material solutions used to build the semiconductor device. We offer delivery systems and containers that allow for reliable storage and delivery of low volatility solid and liquid precursors required in atomic layer deposition processes.
The construction of our KSP manufacturing facility in Taiwan and a new research center in South Korea are examples of the Company’s commitment to effectively collaborate with our customers locally to jointly uncover novel solutions to their yield, reliability and performance challenges.
For example, we chose to invest in our KSP manufacturing facility in Taiwan and in our new research center in South Korea to effectively collaborate with our customers locally in order to jointly uncover novel solutions for our customers’ yield, reliability and performance challenges.
To that end, we seek to promote diverse backgrounds and perspectives throughout our organization and strive to provide fair and equal opportunity for career development and advancement to all our employees.
We believe that maintaining a culture of diverse perspectives, experiences and backgrounds helps enable us to innovate more effectively and perform better overall. To that end, we seek to promote diverse backgrounds and perspectives throughout our organization and strive to provide fair and equal opportunity for career development and advancement to all our employees.
Wafer and Package Testing . In our Advanced Cleaning Materials business, which was added as part of the CMC Materials acquisition, we develop and manufacture high-performance consumable products for cleaning advanced probe cards and test sockets at semiconductor manufacturing facilities. We also design innovative polymer products for semiconductor fabs that improve front-end tool uptime and reduce operating costs.
Wafer and Package Testing . We develop and manufacture high-performance consumable products for cleaning advanced probe cards and test sockets at semiconductor manufacturing facilities and innovative polymer products for semiconductor fabs that improve front-end tool uptime and reduce operating costs. INDUSTRY TRENDS 3 Table of Contents Emerging and Existing Applications .
We believe that the trend for greater materials purity will provide opportunities to utilize our capabilities to provide innovative materials management, filtration, purification, transport and process solutions to semiconductor customers. Geopolitical Implications of the Semiconductor Industry .
We believe that the trend for greater materials purity will provide opportunities for us to provide innovative materials management, filtration, purification, transport and process solutions to semiconductor customers. Geopolitical Implications of the Semiconductor Industry . We have seen, and expect to continue to see, certain governments foster and bolster domestic semiconductor manufacturing and the broader semiconductor ecosystem.
Our advanced filtration and purification products and solutions for air, bulk or specialty gas, and wet chemicals are designed to reduce defects and enable higher yields for our customers. Our materials handling solutions protect critical materials throughout the fabrication process, allowing our customers to store, process and transport critical materials in ultra-pure environments throughout the manufacturing process.
Our advanced filtration and purification products and solutions for air, bulk or specialty gas, and wet chemicals are designed to reduce defects and enable higher yields for our customers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur international operations are subject to a number of risks and potential costs that could adversely affect our revenue and profitability, including: • changes and uncertainties with respect to trade and export regulations (including new and changing regulations for exports of certain technologies to China), trade policies and sanctions, tariffs, international trade disputes and any retaliatory measures, which impact countries in which we conduct significant business could (1) impose additional costs on our operations, (2) limit our ability to operate our business and (3) adversely impact us, our customers or our suppliers; • positions taken by governmental agencies regarding possible national, commercial and/or security issues posed by the development, sale or export of certain raw materials, products and technologies; • geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, the war between Israel and Hamas, the current conflict in the Red Sea and increasing tensions with China, and other political and economic instability and uncertainty, which may result in severely diminished liquidity and credit availability, rating downgrades of sovereign debt, declining valuation of certain investments, declines in consumer confidence, declines in economic growth, volatility in unemployment rates, increased logistics costs and delays and uncertainty about economic stability; • challenges in hiring and integrating workers in different countries; • challenges in managing a diverse workforce with different experience levels, languages, cultures, customs, business practices and worker expectations, along with differing employment practices and labor issues; • challenges of maintaining appropriate business processes, procedures and internal controls and complying with legal, environmental, health and safety, anti-bribery, anti-corruption, data privacy, cybersecurity and other regulatory requirements that vary by jurisdiction; • challenges in developing relationships with local customers, suppliers and governments; • fluctuating pricing and availability of raw materials and supply chain interruptions or slowdowns, including as a result of difficulties, financial or otherwise, faced by segments of the transportation industry; • public health crises, such as the COVID-19 pandemic, and related implications thereof; 18 Table of Contents • expense and complexity of complying with U.S. and foreign import and export regulations, including the ability to obtain and renew required import and export licenses; • fluctuations in interest rates and currency exchange rates, including the relative strength or weakness of the U.S. dollar against foreign currencies that are important to our business, including the Japanese yen, euro, Taiwanese dollar, Korean won, Chinese renminbi, Singapore dollar, Malaysian ringgit, Canadian dollar or Israeli shekel, which could cause our sales and profitability to decline; • liability for foreign taxes assessed at rates higher than those applicable to our domestic operations; • imposition of a global minimum tax rate, including by the Organization of Economic Co-operation and Development (“OECD”); • challenges and costs associated with the protection of our intellectual property throughout the world; • challenges associated with managing global and regional third-party service providers, including certain engineering, software development, manufacturing, IT and other functions; and • customer or government efforts to encourage operations and sourcing in a particular country, such as Korea or China, including efforts to develop and grow local competitors, require local manufacturing, and provide special incentives to government-backed local customers to buy from local competitors.
Biggest changeWe intend to continue to maintain extensive sales, product development and manufacturing operations internationally, which are subject to a number of risks, uncertainties and potential costs that could adversely affect our revenue, profitability and reputation, including: • changes and uncertainties with respect to trade and export regulations (including new and changing regulations for exports of certain technologies to China), trade policies and sanctions, tariffs, international trade disputes and any retaliatory measures, which impact countries in which we conduct significant business, which could (1) impose 18 Table of Contents additional costs on our operations, (2) limit our ability to operate our business and (3) adversely impact us, our customers or our suppliers; • positions taken by governments or governmental agencies regarding national, commercial and/or security issues posed by the development, sale or export of certain raw materials, products and technologies; • geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, the ongoing conflict in the Middle East and increasing tensions between China and Taiwan and between China and the U.S., and other political and economic instability and uncertainty; • cybersecurity incidents; • challenges in hiring and integrating workers in different countries; • challenges in managing a diverse workforce with different experience levels, languages, cultures, customs, business practices and worker expectations, along with differing employment practices and labor issues; • challenges of maintaining appropriate business processes, procedures and internal controls and complying with legal, environmental, health and safety, anti-bribery, anti-corruption, trade compliance, data privacy, cybersecurity and other regulatory requirements that vary by jurisdiction; • challenges in developing relationships with local customers, suppliers and governments; • fluctuating pricing and availability of raw materials and supply chain interruptions or slowdowns, including as a result of difficulties, financial or otherwise, faced by segments of the transportation industry; • public health crises; • expense and complexity of complying with U.S. and foreign import and export regulations, including the ability to obtain and renew required import and export licenses; • fluctuations in interest rates and currency exchange rates, including the relative strength or weakness of the U.S. dollar against foreign currencies that are important to our business; • liability for foreign taxes assessed at rates higher than those applicable to our domestic operations; • imposition of a global minimum tax rate, including by the Organization of Economic Co-operation and Development (“OECD”); • challenges and costs associated with the protection of our intellectual property throughout the world; • challenges associated with managing global and regional third-party service providers, including certain engineering, software development, manufacturing, IT and other functions; • customer or government efforts to encourage operations and sourcing in a particular country, such as Korea or China, including efforts to develop and grow local competitors, require local manufacturing, and provide special incentives to government-backed local customers to buy from local competitors; and • impacts of natural disasters and extreme and chronic weather events on our operations and those of our customers and suppliers, which may be exacerbated by climate change.
In addition, if new products have reliability or quality problems, we may experience reduced orders, higher manufacturing costs, delays in acceptance and payment, additional service and warranty expense and damage to our reputation. Manufacturing interruptions or delays, or other disruptions to our operations, could adversely affect our business, financial condition and results of operations.
In addition, if new products have reliability or quality problems, we may experience reduced orders, higher manufacturing costs, delays in acceptance and payment, additional service and warranty expense and damage to our reputation. Manufacturing interruptions or delays, or other disruptions to our operations, could adversely affect our business, financial condition, results of operations and reputation.
Demand for semiconductors and other factors outside of our control have resulted in, and may in the future result in, a shortage of raw materials and components needed to manufacture and deliver our products, higher raw materials costs, costly and time-consuming re-qualification of products manufactured with new raw materials and delays in, and unpredictability of, shipments due to transportation interruptions.
Surge in demand for semiconductors and other factors outside of our control have resulted in, and may in the future result in, a shortage of raw materials and components needed to manufacture and deliver our products, higher raw materials costs, costly and time-consuming re-qualification of products manufactured with new raw materials and delays in, and unpredictability of, shipments due to transportation interruptions.
Proposed regulations under consideration could require that we transition away from the usage of PFAS-containing products, which could adversely impact our business, operations, revenue, costs, and competitive position. Suitable replacements for PFAS-containing parts and materials may not be available at similar costs, or at all.
Proposed regulations under consideration could require that we transition away from the usage of PFAS-containing products, which could adversely impact our business, operations, revenue, costs, and competitive position. Suitable replacements for PFAS-containing parts and materials may not be available at similar performance and costs, or at all.
For example, we rely on single or limited source suppliers for certain raw materials that are critical to the manufacturing of our products, such as plastic polymers, filtration membranes, abrasive particles, petroleum coke and other materials.
For example, we rely on single, sole or limited source suppliers for certain raw materials that are critical to the manufacturing of our products, such as plastic polymers, filtration membranes, abrasive particles, petroleum coke and other materials.
Interruptions in our supply chain, including those from our single and limited source suppliers, could affect our ability to manufacture our products and meet demand, which, in turn, could have an adverse effect on our revenue and results of operations.
Interruptions in our supply chain, including those from our sole, single and limited source suppliers, could affect our ability to manufacture our products and meet demand, which, in turn, could have an adverse effect on our revenue and results of operations.
Our continuity plans designed to mitigate the impact of disruptions to our operations may be insufficient, and any prolonged disruption may impede our ability to manufacture and deliver products to our customers, resulting in an adverse impact on our business and results of operations.
Our continuity plans may be insufficient to mitigate the impact of disruptions to our operations, and any prolonged disruption may impede our ability to manufacture and deliver products to our customers, resulting in an adverse impact on our business and results of operations.
Further changes to or our failure to comply with these and similar regulations could (1) restrict our ability to expand, build or acquire new facilities, (2) require us to acquire costly control equipment, (3) cause us to incur expenses associated with remediation of contamination, (4) cause us to modify our manufacturing or shipping processes or (5) otherwise increase our cost of doing business, which may have a negative impact on our financial condition, results of operations and cash flows.
Further changes to or our failure to comply with these and similar regulations could (1) restrict our ability to expand, build or acquire new facilities, (2) require us to acquire costly control equipment, (3) cause us to incur expenses associated with remediation of contamination, (4) cause us to modify our product design, operations or manufacturing or shipping processes or (5) otherwise increase our cost of doing business, which may have a negative impact on our financial condition, results of operations and cash flows.
The semiconductor industry may continue to undergo consolidation, and if any of our customers merge or are acquired, we may experience lower overall sales to the merged or combined companies. Our customer base is also geographically concentrated, particularly in Taiwan, Korea, Japan, China and the U.S.
The semiconductor industry may continue to undergo consolidation, and if any of our customers merge or are acquired, we may experience lower overall sales to, or lower profitability from sales to, the merged or combined companies. Our customer base is also geographically concentrated, particularly in Taiwan, Korea, Japan, China and the U.S.
We have moved, and we may again move, the manufacture of certain products from one plant to another. If we fail to transfer and re-establish the manufacturing processes in the destination plant efficiently and effectively, we may not be able to meet customer demand, we may lose credibility with our customers and our business may be harmed.
We have moved, and we may in the future move, the manufacture of certain products from one plant to another. If we fail to transfer and re-establish the manufacturing processes in the destination plant efficiently and effectively, we may not be able to meet customer demand, we may lose credibility with our customers and our business may be harmed.
We have undertaken and expect to continue to undertake a number of complex internal reorganizations of our foreign subsidiaries in order to rationalize and streamline our foreign operations, focus our management efforts on certain local opportunities and take advantage of favorable business conditions in certain localities.
We have undertaken, and expect to continue to undertake, complex internal reorganizations of our foreign subsidiaries in order to rationalize and streamline our foreign operations, focus our management efforts on certain local opportunities and take advantage of favorable business conditions in certain localities.
If we were to lose any one of these or other critical sources, or there is as an industry-wide increase in demand for, or the discontinuation of, raw materials or other 17 Table of Contents components used in our products, it could be difficult for us, or we may be unable, to find an alternative supplier to provide certain raw materials and components, in which case our operations could be adversely affected.
If we were to lose any one of these or other critical sources, or there is as an industry-wide increase in demand for, or the discontinuation of, raw materials or other components used in our products, it could be difficult for us, or we may be unable, to find an alternative supplier to provide certain raw materials and components, in which case our operations could be adversely affected.
Cybersecurity threats may target us directly or indirectly through our third-party providers and global supply chain. Cybersecurity attacks are increasing in number and the attackers are increasingly organized and well-financed, or at times supported by state actors. Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine or increasing tensions with China, may create a heightened risk of cybersecurity attacks.
Cybersecurity threats may target us directly or indirectly through our third-party providers and global supply chain. Cybersecurity attacks are increasing in number and the attackers are increasingly organized and well-financed, or at times supported by state actors. Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine and increasing tensions with China, have created a heightened risk of cybersecurity attacks.
We have recorded goodwill impairment charges in the past, and such charges have materially affected our historical results of operations. For additional information, see Note 10 – Goodwill and Intangible Assets to the accompanying consolidated financial statements.
We have recorded goodwill impairment charges in the past, and such charges have materially affected our historical results of operations. For additional information, see Note 9 – Goodwill and Intangible Assets to the accompanying consolidated financial statements.
These restrictions may prohibit the transfer of certain of our products, services and technologies, and they may require us to obtain a license from the U.S. government before delivering the controlled item or service.
These restrictions may prohibit the sale of certain of our products, services and technologies, and they may require us to obtain a license from the U.S. government before delivering the controlled item or service.
These transactions involve numerous risks to our business, financial condition and operating results, including but not limited to: • difficulty in identifying suitable acquisition candidates and completing transactions at appropriate valuations, in a timely manner, on a cost-effective basis or at all, due to substantial competition for acquisition targets; • inability to successfully integrate any acquired businesses into our business operations; • failure to realize the anticipated synergies or other benefits of any such transaction; • entry into markets in which we have limited or no prior experience; • finding acquirors and obtaining adequate value for businesses that no longer meet our strategic objectives; • difficulties surrounding the disentanglement of a divested business, including the diversion of resources away from our business operations to address such matters; • inability to complete proposed or pending transactions due to factors such as the failure or inability to obtain regulatory or other approvals, which may be exacerbated by the recent, more aggressive regulatory approaches to merger control globally, such as the July 19, 2023 joint statement of antitrust policy by the Department of Justice and Federal Trade Commission and the April 15, 2023 Provisions on the Review of Concentrations of Undertakings issued by China’s State Administration for Market Regulation, among others; • requirements imposed by government regulators in connection with their review of a transaction, which may include, among other things, divestitures and restrictions on the conduct of our existing business or the acquired business; • undertaking multiple transactions at the same time in order to take advantage of acquisition or divestiture opportunities that do arise, which could strain our ability to effectively execute and integrate such transactions; • diversion of management’s attention from our day-to-day business due to dedication of significant management resources to such transactions; • employee uncertainty and lack of focus during the integration process that may also disrupt our business; • risk of litigation or claims associated with a proposed or completed transaction; • challenges associated with managing new, more diverse and more widespread operations, projects and people, potentially located in regions where we have not historically conducted or operated our business; • dependence on unfamiliar or less secure supply chains and inefficient scale of the acquired entity; • increasing costs of performing due diligence to meet the expectations of investors and government regulators; • despite our due diligence, we could assume unknown, underestimated or contingent liabilities, such as potential environmental, health and safety liabilities, any of which could lead to costly litigation or mitigation actions; • an acquired technology or product may have inadequate or invalid intellectual property protection or may be subject to claims of infringement by a third party, which may result in claims for damages and lower than anticipated revenue; • negative effects on our reported results of operations from dilutive results from operations and/or from future potential impairment of acquired assets, including goodwill, related to acquisitions; • an acquired company may have inadequate or ineffective internal controls over financial reporting, disclosure controls and procedures, cybersecurity, privacy, environmental, health and safety, anti-bribery, anti-corruption, human resource or other policies or practices, which may require unexpected or additional integration, mitigation and remediation costs; • reductions in cash or increases in debt to finance transactions, which reduce the cash flow available for general corporate or other purposes, including share repurchases and dividends; and • difficulties in retaining key employees or customers of an acquired business.
These transactions involve numerous risks to our business, financial condition and operating results, including but not limited to: • difficulty in identifying suitable acquisition candidates and completing transactions at appropriate valuations, in a timely manner, on a cost-effective basis or at all, due to substantial competition for acquisition targets; • inability to successfully integrate any acquired businesses into our business operations; • failure to realize the anticipated synergies or other benefits of any such transaction; • entry into markets in which we have limited or no prior experience; • finding acquirors and obtaining adequate value for businesses that no longer meet our strategic objectives; • difficulties surrounding the disentanglement of a divested business, including the diversion of resources away from our business operations to address such matters; • inability to complete proposed or pending transactions due to factors such as the failure or inability to obtain regulatory or other approvals, which may be exacerbated by the recent, more aggressive regulatory approaches to merger control globally, such as the July 19, 2023 joint statement of antitrust policy and final rules published on October 10, 2024 concerning changes to the premerger notification process under the Hart-Scott-Rodino Act of 1976 by the Department of Justice and Federal Trade Commission and the April 15, 2023 Provisions on the Review of Concentrations of Undertakings issued by China’s State Administration for Market Regulation, among others; 28 Table of Contents • requirements imposed by government regulators in connection with their review of a transaction, which may include, among other things, divestitures and restrictions on the conduct of our existing business or the acquired business; • undertaking multiple transactions at the same time in order to take advantage of acquisition or divestiture opportunities that do arise, which could strain our ability to effectively execute and integrate such transactions; • diversion of management’s attention from our day-to-day business due to dedication of significant management resources to such transactions; • employee uncertainty and lack of focus during the integration process that may also disrupt our business; • risk of litigation or claims associated with a proposed or completed transaction; • challenges associated with managing new, more diverse and more widespread operations, projects and people, potentially located in regions where we have not historically conducted or operated our business; • dependence on unfamiliar or less secure supply chains and inefficient scale of the acquired entity; • increasing costs of performing due diligence to meet the expectations of investors and government regulators; • despite our due diligence, we could assume unknown, underestimated or contingent liabilities, such as potential environmental, health and safety liabilities, any of which could lead to costly litigation or mitigation actions; • an acquired technology or product may have inadequate or invalid intellectual property protection or may be subject to claims of infringement by a third party, which may result in claims for damages and lower than anticipated revenue; • negative effects on our reported results of operations from dilutive results from operations and/or from future potential impairment of acquired assets, including goodwill, related to acquisitions; • an acquired company may have inadequate or ineffective internal controls over financial reporting, disclosure controls and procedures, cybersecurity, privacy, environmental, health and safety, anti-bribery, anti-corruption, human resource or other policies or practices, which may require unexpected or additional integration, mitigation and remediation costs; • reductions in cash or increases in debt to finance transactions, which reduce the cash flow available for general corporate or other purposes, including repayment of existing debt, share repurchases and dividends; and • difficulties in retaining key employees or customers of an acquired business.
Our actions to counteract adverse impacts to our gross margins and other operating results could be unsuccessful or reduce demand, which would adversely impact our revenue. Additionally, our suppl iers may not have the capacity to meet increases in our demand for raw materials and other components, in turn, making us unable to meet customer demand for our products.
Our actions to counteract adverse impacts to our gross margins and other operating results could be unsuccessful or reduce demand, which would adversely impact our revenue. Additionally, our suppliers may not have the capacity to meet increases in our demand for raw materials and other components, in turn, making us unable to meet customer demand for our products.
In addition, we are subject to export control and economic sanctions laws and regulations that restrict the delivery of some of our products and services to certain countries (and nationals thereof), to certain end users, and for certain end uses.
We are subject to export control and economic sanctions laws and regulations that restrict the delivery of some of our products and services to certain countries (and nationals thereof), to certain end users, and for certain end uses.
The semiconductor industry is subject to rapid technological change, changing customer requirements and frequent new product introductions. In our industry, the first company to introduce an innovative product that addresses an identified market need will often have a significant advantage over competing products.
We operate in the semiconductor industry, which is subject to rapid technological change, changing customer requirements and frequent new product introductions. In our industry, the first company to introduce an innovative product that addresses an identified market need will often have a significant advantage over competing products.
Our certificate of incorporation authorizes our Board of Directors to issue, without further stockholder approval, up to 5,000,000 shares of preferred stock in one or more series and to fix and designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, redemption rights and liquidation preferences.
Our certificate of incorporation authorizes our Board of Directors to issue, without further stockholder approval, up to 5,000,000 shares of preferred stock in one or more series and to fix and designate the rights, preferences, privileges and 27 Table of Contents restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, redemption rights and liquidation preferences.
Our top ten customers accounted for 43%, 43% and 43% of our net sales in 2023, 2022 and 2021, respectively. We would have no or limited contractual recourse if our customers decided to stop buying and using our products in their manufacturing processes with limited advance notice to us.
Our top ten customers accounted for 48%, 43% and 43% of our net sales in 2024, 2023 and 2022, respectively. We would have no or limited contractual recourse if our customers decided to stop buying and using our products in their manufacturing processes with limited advance notice to us.
We may be subject to IT system failures, network disruptions and breaches in data security, which could damage our reputation and adversely affect our financial condition, results of operations and cash flows. New laws and regulations regarding data privacy may also increase our costs.
We may be subject to IT system failures, network disruptions and cybersecurity and data breaches, which could damage our reputation and adversely affect our financial condition, results of operations and cash flows. New laws and regulations regarding data privacy may also increase our costs.
Our failure to comply with these covenants could result in the acceleration of some or all of our indebtedness, which could lead to bankruptcy, reorganization or insolvency. Risks Related to Owning our Common Stock The price of our common stock has been and may remain volatile. The price of our common stock has been volatile.
Our failure to comply with these covenants could result in the acceleration of some or all of our indebtedness, which could lead to bankruptcy, reorganization or insolvency. 26 Table of Contents Risks Related to Owning our Common Stock The price of our common stock has been and may remain volatile. The price of our common stock has been volatile.
If a product concept does not progress beyond the development stage or only achieves limited acceptance in the marketplace, we may not receive a direct return on our expenditures, we may lose market share and our revenue, and profitability may decline.
If a product concept does not progress beyond the development stage or only achieves limited acceptance in the marketplace, we may not receive a direct return on our expenditures, which may be significant, we may lose market share and our revenue, and profitability may decline.
These conditions can cause material adverse changes in our results of operations and financial condition, including: • a decline in demand for our products, which would have an immediate negative impact on our revenues; • an increase in reserves for accounts receivable due to our customers’ inability to pay us; • lower utilization of our manufacturing facilities, which could lead to lower margins; • an increase in write-offs for excess or obsolete inventory that we cannot sell; • potential impairment charges relating to goodwill, intangible assets, manufacturing equipment or other long-lived assets, to the extent that any downturn indicates that the carrying amount of the asset may not be recoverable; • limiting our suppliers’ ability to deliver parts and raw materials, which would negatively affect our ability to manage operations, manage our costs and sell our products; • consolidation or strategic alliances among other suppliers to semiconductor manufacturers, which could adversely affect our ability to compete effectively; 16 Table of Contents • greater challenges in forecasting operating results, making business decisions and identifying and prioritizing business risks; and • additional cost reduction efforts, including additional restructuring activities, which may adversely affect our ability to capitalize on opportunities.
These uncertain and volatile economic conditions can cause material adverse changes in our results of operations and financial condition, including: • a decline in demand for our products, which would have an immediate and potentially long-lasting negative impact on our revenues; • an increase in reserves for accounts receivable due to our customers’ inability to pay us; 16 Table of Contents • lower utilization of our manufacturing facilities, which could lead to lower margins; • an increase in write-offs for excess or obsolete inventory that we cannot sell; • potential impairment charges relating to goodwill, intangible assets, manufacturing equipment or other long-lived assets, to the extent that any downturn indicates that the carrying amount of the asset may not be recoverable; • limiting our suppliers’ ability to deliver parts and raw materials, which would negatively affect our ability to manage operations, manage our costs and sell our products; • consolidation or strategic alliances among other suppliers to semiconductor manufacturers, which could adversely affect our ability to compete effectively; • greater challenges in forecasting operating results, making business decisions and identifying and prioritizing business risks; • additional cost reduction efforts, including additional restructuring activities, which may adversely affect our ability to capitalize on opportunities; and • limitations on our ability to access cash maintained in our bank accounts as a result of bank failures, which could affect our ability to manage our operations.
Our results of operations could be affected by tax audits, changes in tax rates, changes in laws and regulations governing the calculation, location and taxation of earned profit, changes in laws and regulations affecting our ability to realize deferred tax assets on our balance sheet and changes in laws and regulations relating to the repatriation of cash into the United States.
Our results of operations could be affected by tax audits, changes in tax rates, changes in laws and regulations governing the calculation, location and taxation of earned profit, changes in laws and regulations affecting our ability to realize deferred tax assets on our balance sheet and changes in laws and regulations relating to the repatriation of cash into the U.S.
Because a significant amount of our sales and manufacturing activity occurs outside the U.S., we are exposed to risks inherent in operating a global business. Sales to customers outside the U.S. accounted for approximately 75%, 76% and 77% of our net sales in 2023, 2022 and 2021, respectively.
Because a significant amount of our sales and manufacturing activity occurs outside the U.S., we are exposed to risks inherent in operating a global business. Sales to customers outside the U.S. accounted for approximately 79%, 75% and 76% of our net sales in 2024, 2023 and 2022, respectively.
Any scrutiny of our carbon emissions or other sustainability disclosures or our failure to achieve related strategies, commitments and targets, or our failure to disclose our sustainability measures consistent with applicable laws and regulations or to the satisfaction of our stakeholders, could negatively impact our reputation or performance.
Any scrutiny of our greenhouse gas emissions or other sustainability disclosures or our failure to achieve related strategies, commitments and targets, or our failure to disclose our sustainability measures consistent with applicable laws and regulations or to the satisfaction of regulators or our stakeholders, could negatively impact our reputation or performance.
The amounts of our 26 Table of Contents dividend payments may change from time to time, and we may decide at any time to reduce, suspend or discontinue the payment of dividends or the repurchase of shares.
The amounts of our dividend payments may change from time to time, and we may decide at any time to reduce, suspend or discontinue the payment of dividends or the repurchase of shares.
Changes in market dynamics, stakeholder expectations, local, national and international climate change policies, and the frequency and intensity of extreme weather events on critical infrastructure in the United States and abroad, all have the potential to disrupt our business and operations.
Changes in market dynamics, stakeholder expectations, local, national and international climate change policies, and the frequency and intensity of extreme weather events on critical infrastructure in the U.S. and abroad, all have the potential to disrupt our business and operations.
The terms of the Amended Credit Agreement and the Indentures may restrict our operations, particularly our ability to respond to changes or raise additional funds. 25 Table of Contents The Amended Credit Agreement contains restrictive covenants that impose significant operating and financial restrictions that may limit our and our restricted subsidiaries’ ability to take actions that may be in our long-term best interest, including restrictions on our and our restricted subsidiaries’ ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; • prepay, redeem or repurchase certain debt; • make investments, loans, advances and acquisitions; • engage in sale-leaseback or hedging transactions; • create liens on, sell or otherwise dispose of assets, including capital stock of our subsidiaries; • enter into transactions with affiliates; • enter into agreements that restrict the ability to create liens, pay dividends or make loan repayments; • alter the businesses we conduct; and • merge or sell all or substantially all of our assets or incur a change of control in our capital stock ownership.
The Amended Credit Agreement contains restrictive covenants that impose significant operating and financial restrictions that may limit our and our restricted subsidiaries’ ability to take actions that may be in our long-term best interest, including restrictions on our and our restricted subsidiaries’ ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; • prepay, redeem or repurchase certain debt; • make investments, loans, advances and acquisitions; • engage in sale-leaseback or hedging transactions; • create liens on, sell or otherwise dispose of assets, including capital stock of our subsidiaries; • enter into transactions with affiliates; • enter into agreements that restrict the ability to create liens, pay dividends or make loan repayments; • alter the businesses we conduct; and • merge or sell all or substantially all of our assets or incur a change of control in our capital stock ownership.
Furthermore, government authorities may take retaliatory actions, impose conditions that require the use of local suppliers or partnerships with local companies, or require the license or other transfer of intellectual property, which could have a significant adverse impact on our business.
Furthermore, government authorities may take retaliatory actions, impose conditions that require the use of local suppliers or partnerships with local companies, increase tariff and other customs costs or require the license or other transfer of intellectual property, which could have a significant adverse impact on our business.
Our export and trade control compliance program may be ineffective or circumvented, exposing us to legal liabilities. Compliance with these laws could significantly limit our sales in the future.
Our export and trade control compliance program may be ineffective or circumvented, exposing us to legal liabilities. Compliance with these laws could significantly 19 Table of Contents limit our sales in the future.
In addition, standards and processes for measuring and reporting carbon emissions and other sustainability metrics may change over time and result in inconsistent data or significant revisions to our strategies, commitments and targets, and our ability to achieve them.
In addition, standards and processes for measuring and reporting greenhouse gas emissions and other sustainability metrics may change over time, increase our costs and result in inconsistent data or significant revisions to our strategies, commitments and targets, and our ability to achieve them.
As a public company with global operations, we are subject to the laws of multiple jurisdictions and the rules and regulations of various governing bodies, including those related to health and safety, export controls, financial and other disclosures, corporate governance, privacy, anti-corruption, such as the Foreign Corrupt Practices Act and other local laws prohibiting corrupt payments to governmental officials or customers, conflict minerals or other social responsibility legislation, employment practices, immigration or travel regulations and antitrust regulations, among others.
As a public company with global operations, we are subject to the laws of multiple jurisdictions and the rules and regulations of various governing bodies, including those related to health and safety, import and export controls, financial and other disclosures, accounting standards, corporate governance, public procurement and public funding, environment (including those relating to sustainability and climate change), privacy, anti-corruption, such as the Foreign Corrupt Practices Act and other local laws prohibiting corrupt payments to governmental officials or customers, conflict minerals or other social responsibility legislation, employment practices, immigration or travel regulations and antitrust regulations, among others.
Future decreases in our stock price may adversely impact our ability to raise sufficient additional capital in the future, if needed. We may decrease or discontinue cash dividends and may never adopt a new program to repurchase our shares of common stock.
Fluctuations in our results of operations could cause our stock price to decline significantly. Future decreases in our stock price may adversely impact our ability to raise sufficient additional capital in the future, if needed. We may decrease or discontinue cash dividends and may never adopt a new program to repurchase our shares of common stock.
Risks Related to Government Regulation We are subject to a variety of environmental laws and regulations that could cause us to incur significant liabilities and expenses.
Risks Related to Government Regulation 23 Table of Contents We are subject to a variety of rapidly evolving environmental laws and regulations that could cause us to incur significant liabilities and expenses.
Such uncertain and volatile conditions in any of our key sales or manufacturing regions can cause or exacerbate negative trends in business and consumer spending and have historically impacted customer demand for our products and costs of manufacturing and delivering our products.
Such uncertain and volatile conditions in any of our key sales or manufacturing regions can cause or exacerbate negative trends in business and consumer spending, which, in turn, have historically had a negative impact on customer demand for our products and costs of manufacturing and delivering our products.
Such shortages, delays and unpredictability have adversely impacted, and may continue to adversely impact or impact in the future (1) our suppliers’ ability to meet our demand requirements, (2) our manufacturing operations, (3) our ability to meet customer demand, (4) our gross margins and (5) our other operating results.
These results could harm our reputation or the competitiveness of our products. Such shortages, delays and unpredictability have adversely impacted, and may impact in the future (1) our suppliers’ ability to meet our demand requirements, (2) our manufacturing operations, (3) our ability to meet customer demand, (4) our gross margins and (5) our other operating results.
Our debt could have important consequences, including: • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate purposes; • requiring a substantial portion of our cash flow to be dedicated to debt service payments instead of other purposes; • increasing our vulnerability to adverse changes in general economic, industry and competitive conditions; • exposing us to increased interest expense for borrowings with variable interest rates, including borrowings under the Credit Facilities; and • placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt having more favorable terms.
Our debt could have important consequences, including: • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate purposes; • requiring a substantial portion of our cash flow to be dedicated to debt service payments instead of other purposes; • increasing our vulnerability to adverse changes in general economic, industry and competitive conditions; • exposing us to increased interest expense for borrowings with variable interest rates, including borrowings under the Credit Facilities; and • placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt having more favorable terms. 25 Table of Contents We may be unable to generate sufficient cash to service our indebtedness and may be forced to take other actions, which may not be successful, to satisfy our obligations under our indebtedness.
We maintain this information in our data centers, on our networks and on IT systems owned and maintained by third parties. The secure processing, maintenance and transmission of this information is critical to our operations. All IT systems are subject to disruptions, security breaches, outages and failures.
We maintain this information in our data centers, on our networks and on IT systems owned and maintained by third parties. The secure processing, maintenance and transmission of this information is critical to our operations. All IT systems are subject to disruptions, security breaches, outages and failures, which may be caused by a variety of internal and external factors.
We manage our expenses based in part on our expectations of future revenues. Because some of our expenses are relatively fixed in the short term, a change in the timing of revenue or the amount of profit we generate from a small number of transactions can unfavorably affect operating results in a particular period.
Because some of our expenses are fixed in the short term, a change in the timing of revenue or the amount of profit we generate from a small number of transactions can unfavorably affect operating results in a particular period.
Such litigation could (1) result in substantial costs and the diversion of resources, (2) require us to pay damages or royalties, alter our products or processes, or obtain a license to continue selling the impacted product, which we may be unable to do on commercially acceptable terms, or at all and (3) negatively affect our sales, profitability and prospects.
In the future, such litigation could (1) impose substantial costs and cause the diversion of resources and the attention of management; (2) require us to pay damages or royalties; (3) require us to alter our products or processes, or obtain a license to continue selling the impacted product, which we may be unable to do on commercially acceptable terms, or at all; (4) severely harm our reputation and competitive position; and (5) negatively affect our sales, profitability and prospects.
From time to time we communicate our strategies, commitments and targets related to sustainability, carbon emissions, diversity and inclusion, human rights, and other environmental, social and governance matters. These strategies, commitments and targets reflect our current plans and aspirations, and we may be unable to achieve them.
From time to time we communicate our strategies, commitments and targets related to sustainability, greenhouse gas emissions, the sustainability of our products, human rights, and other environmental, social and governance matters. These strategies, commitments and targets reflect our current plans and aspirations, and we may be unable to achieve them.
Factors that may cause our financial results to fluctuate unpredictably include: • legal, tax, accounting or regulatory changes (including changes in import/export regulations and tariffs, such as regulations imposed by the U.S. government restricting exports to China) or changes in the interpretation or enforcement of existing requirements; • trends in the semiconductor industry, macroeconomic and market conditions and geopolitical uncertainty, including impacts caused by the Russian invasion of Ukraine, the war between Israel and Hamas, the current conflict in the Red Sea or bank failures; • the size and timing of customer orders; • consolidation of our customers, which could impact their purchasing decisions and negatively affect our revenues; • procurement shortages, increased prices, the failure of suppliers to perform their obligations and additional expenses to respond promptly to any supply shortages or other supplier problems; • decisions to increase or accelerate our purchasing of raw materials, components or other supplies in an effort to mitigate supply risk; • changes in our capital expenditure requirements, such as our new facilities in Taiwan and Colorado, and the schedule and timing, including potential delays, thereof; • manufacturing difficulties; • customer decisions to decelerate orders in order to draw down their inventory; • customer cancellations of or delays in shipments, installations or customer acceptances or, alternatively, acceleration of orders from customers to increase their inventory; • our customers’ rate of replacement of our consumable products or decision to delay expansion projects; • changes in average selling prices, customer mix and product mix; • our ability to develop, introduce and market new, enhanced and competitive products in a timely manner; • our competitors’ introduction of new products; • disruptions in transportation, communication, demand, information technology (“IT”) or supply, including strikes, acts of God, wars, terrorist activities and natural or man-made disasters; • changes in our estimated tax rate; and • foreign currency exchange rate fluctuations.
Factors that may cause our financial results to fluctuate unpredictably include: • legal, tax, accounting or regulatory changes (including changes in import/export regulations and tariffs, such as regulations imposed by the U.S. government restricting exports to China) or changes in the interpretation or enforcement of existing requirements; • trends in the semiconductor industry, macroeconomic and market conditions and geopolitical uncertainty, including impacts caused by the Russian invasion of Ukraine, the war between Israel and Hamas, conflict and resulting political instability in the Middle East or bank failures; • customer considerations, including the size and timing of customer orders, customers’ decisions to accelerate, decelerate or delay shipments, customers’ decisions on how to manage their inventory, customers’ rate of replacement of our consumable products or their decisions to delay expansion projects, and the consolidation of our customers, which may impact their future purchasing decisions; • procurement shortages, increased prices, the failure of suppliers to perform their obligations and additional expenses we may incur to respond promptly to mitigate any supply shortages or other supplier problems; • changes in our capital expenditure requirements, such as our new facilities in Taiwan and Colorado, and the schedule and timing, including potential delays, thereof; • unanticipated manufacturing difficulties; • changes in average selling prices, customer mix and product mix; • our ability to develop, introduce and market new, enhanced and competitive products in a timely and cost-effective manner; • our competitors’ introduction of new products; • disruptions in transportation, communication, demand, information technology (“IT”) or supply resulting from factors outside of our control, including strikes, acts of God, wars, terrorist activities, international conflict and natural or man-made disasters; and 17 Table of Contents • foreign currency exchange rate fluctuations.
Tariffs, additional taxes, trade barriers and other measures, particularly those arising out of relations between the U.S. and China, may increase costs of raw materials and our manufacturing costs, decrease margins, reduce the competitiveness of our products or inhibit our ability to sell products or purchase necessary equipment and supplies, any of which could have a material adverse effect on our business, results of operations or financial condition.
Tariffs, additional taxes, trade barriers and other measures may increase raw material and manufacturing costs, decrease margins, affect customer ordering patterns, reduce the competitiveness of our products or inhibit our ability to sell products or purchase necessary equipment and supplies, any of which could have a material adverse effect on our business, results of operations or financial condition.
Any actual or anticipated changes or downgrades in such credit rating may have a negative impact on our liquidity, capital position or access to capital markets and affect our ability to obtain any future required financing on acceptable terms or at all.
In addition, we may be unable to maintain the current creditworthiness or prospective credit rating of the Company. Any actual or anticipated changes or downgrades in such credit rating may have a negative impact on our liquidity, capital position or access to capital markets and affect our ability to obtain any future required financing on acceptable terms or at all.
In 2023, the closing price of our stock on The Nasdaq Global Select Market (“Nasdaq”) ranged from a low of $64.13 to a high of $121.60, and, as in past years, the price of our common stock may show even greater volatility in the future.
In 2024, the closing price of our stock on The Nasdaq Global Select Market (“Nasdaq”) ranged from a low of $97.67 to a high of $146.48, and, as in past years, the price of our common stock may show even greater volatility in the future.
A failure to successfully anticipate and respond to technological changes by developing, marketing and manufacturing new products or enhancements to our existing products could harm our business prospects and significantly reduce our sales. We cannot guarantee that the new products and technology we choose to develop and market will be successful.
A failure to successfully anticipate and respond to technological changes by developing, marketing and manufacturing new products or enhancements to our existing products could harm our business prospects, limit our market share, result in unanticipated costs and significantly reduce our sales. The new products and technology we choose to develop and market may also not be successful.
Infringement or misappropriation of our intellectual property rights could result in uncompensated lost market and revenue opportunities, which could adversely affect our business and financial condition. Third parties may misappropriate our intellectual property rights, and disputes regarding intellectual property rights may arise.
Replication of our intellectual property or the infringement or misappropriation of our intellectual property rights could result in uncompensated lost market and revenue opportunities, which could adversely affect our business and financial condition.
Uncertain and volatile economic conditions, including uncertain and volatile financial markets, rising inflation and interest rates, economic slowdowns and/or recessions, national debt and bank failures, could materially and adversely impact our operating results.
Global economic uncertainty may materially and adversely affect our business, financial condition and results of operations. Uncertain and volatile economic conditions, including uncertain and volatile financial markets, inflation, fluctuating interest rates, economic slowdowns and/or recessions, national debt and bank failures, could materially and adversely impact our operating results.
In particular, we manufacture specialty chemicals, which is an inherently hazardous process that may result in accidents, and store and transport hazardous raw materials, products and waste in, to and from various facilities.
Our operations involve, and we are exposed to the risks associated with, the use and manufacture of hazardous materials. In particular, we manufacture specialty chemicals, which is an inherently hazardous process that may result in accidents, and store and transport hazardous raw materials, products and waste in, to and from various facilities.
Changing customer sustainability requirements, as well as our sustainability targets, could cause us from time to time to alter our manufacturing, operations or products, and incur substantial additional expense to meet such requirements and targets.
Changing customer sustainability requirements, including increasing customer demand for sustainable products, as well as actions taken to achieve our sustainability targets, could cause us from time to time to alter our manufacturing, operations or products, and incur substantial additional expense.
These or any future reorganizations could result in adverse tax consequences in one or more jurisdictions, which could adversely impact our profitability from foreign operations and result in a material reduction in our results of operations.
These or any future reorganizations could result in adverse tax consequences in one or more jurisdictions, which could adversely impact our profitability from foreign operations and result in a material reduction in our results of operations. 24 Table of Contents Various jurisdictions in which we operate are considering changes to their tax laws.
Additionally, we may incur unexpected or additional costs to align our operations with demand. If we do not, or are unable to, adequately anticipate changes in our business environment, we may lack the infrastructure, manufacturing capacity and resources to scale up our business to meet customer expectations and compete successfully during a period of growth.
Additionally, if we do not, or are unable to, adequately anticipate changes in our business environment, we may lack the infrastructure, manufacturing capacity and resources to scale up our business to meet customer expectations and compete successfully during a period of growth. Conversely, we may expand our capacity too rapidly, resulting in excess fixed costs and lower profitability.
The loss of the services of any of our key employees or an inability to attract, hire, train and retain qualified and skilled employees, particularly research and development and engineering personnel, including as a result of changes to immigration policies, could cause business interruptions and inhibit our ability to operate and grow our business.
The loss of our key employees or an inability to attract, hire, train, motivate and retain qualified and skilled employees, particularly research and development and engineering personnel, could cause business interruptions and inhibit our ability to operate and 22 Table of Contents grow our business.
For example, new or modified regulations could require us to make substantial expenditures to enhance our environmental compliance efforts. We are exposed to various risks from our regulatory environment.
For example, new or modified regulations could require us to make substantial expenditures to enhance our environmental compliance efforts.
We may be unable to generate sufficient cash to service our indebtedness and may be forced to take other actions, which may not be successful, to satisfy our obligations under our indebtedness. We may be unable to maintain sufficient cash flow from operating activities to permit us to pay the principal of, premium, if any, and interest on our indebtedness.
We may be unable to maintain sufficient cash flow from operating activities to permit us to pay the principal of, premium, if any, and interest on our indebtedness.
We also manufacture a significant portion of our products outside the U.S. and depend on international suppliers for many of our parts and raw materials. We intend to continue to pursue opportunities in both sales and manufacturing internationally.
We also develop and manufacture a significant portion of our products outside the U.S. and depend on international suppliers for many of our parts and raw materials.
Over the last several years, the U.S. government has significantly expanded export controls on certain technologies and commodities to certain markets, particularly with respect to semiconductor and other high technology exports to China. On October 17, 2023, the U.S.
Over the last several years, the U.S. government has significantly expanded export controls on certain technologies and commodities to certain markets, particularly with respect to semiconductor and other high technology exports to China, a market which represented approximately 21% of our sales in 2024.
Any future difficulties could cause lower yields, make our products unmarketable and/or delay deliveries to customers. In addition, any modification to the manufacturing process of a product could require that the product be re-qualified by customers, which can increase our costs and delay our ability to sell this product to our customers.
In addition, any modification to the manufacturing process of a product, including changes designed to improve manufacturing yields, process stability and product quality, could require that the product be re-qualified by customers, which can increase our costs and delay or prevent our ability to sell this product to our customers.
For more information, see “Cautionary Statements” in Item 7 of this Annual Report on Form 10-K. Risks Related to Our Business and Industry Fluctuations in the demand for semiconductors and the overall volume of semiconductor manufacturing may decrease demand for our products and may adversely affect our business. Our revenue is primarily dependent upon demand from the semiconductor ecosystem.
Risks Related to Our Business and Industry Our revenue is primarily dependent upon demand from the global semiconductor ecosystem and fluctuations in demand for semiconductors and the overall volume of semiconductor manufacturing may decrease demand for our products and may adversely affect our business. Our revenue is primarily dependent upon demand from the global semiconductor ecosystem.
The volume of changes to such laws, rules and regulations may increase in the countries where we operate. To maintain high standards of corporate governance and public disclosure, we intend to invest in appropriate resources to comply with evolving standards. Changes in or ambiguous interpretations of laws, regulations and standards may create uncertainty regarding compliance matters.
The volume of changes to such laws, rules and regulations may increase in the countries where we operate. Changes in or ambiguous interpretations of laws, regulations and standards may create uncertainty regarding compliance matters.
As a result, export regulations or other trends that apply to customers in certain countries, such as those in China, have exposed and may further expose our business and results of operations to greater volatility. The geographic concentration of our customer base could shift over time as a result of government policy and incentives to develop regional semiconductor industries.
As a result, export regulations or other trends that apply to customers in certain countries, such as those in China, have exposed and may further expose our business and results of operations to greater volatility.
Global climate change is resulting in, and may continue to result, in certain natural disasters and adverse weather events, such as drought, wildfires, storms, sea-level rise and flooding, occurring more frequently or with greater intensity, which could cause business disruptions and impact employees’ abilities to commute or to work from home effectively. 28 Table of Contents Item 1B.
Global climate change is resulting in, and may continue to result, in certain natural disasters and adverse weather events, such as drought, wildfires, severe storms, sea-level rise and flooding, occurring more frequently or with greater intensity, which could cause business disruptions and adverse impacts where we operate. Item 1B. Unresolved Staff Comments. Not Applicable.
Artificial intelligence capabilities may be used by threat actors to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks. The use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers may introduce vulnerabilities onto our IT systems and data.
The use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers may introduce vulnerabilities onto our IT systems.
The wide variety of federal, state, local and non-U.S. regulatory requirements relating to the release, use, storage, treatment, transportation, discharge, disposal and remediation of, and human exposure to, hazardous chemicals could result in future 23 Table of Contents liabilities, remediation efforts or the suspension of production or shipment. These requirements are dynamic and have become more strict over time.
The wide variety of federal, state, local and non-U.S. regulatory requirements relating to the design, manufacture, sale, shipping, import, export and use of our products, as well as the release, use, storage, treatment, transportation, discharge, disposal and remediation of, and human exposure to, hazardous chemicals, could result in future liabilities, remediation efforts or the suspension of production or shipment.
IT system failures, network disruptions and breaches of data security could (1) cause disruption in our operations, issues with customer communication and order management, the unauthorized or unintentional disclosure of sensitive information, or disruptions in our transaction processing or (2) undermine the integrity of our disclosure controls and procedures and our 22 Table of Contents internal control over financial reporting, which could affect our reputation, result in significant liabilities and expenses, adversely affect our ability to report our financial results in a timely manner and could have a material adverse effect on our financial condition, results of operations and cash flows.
We continue to devote significant resources to network security, threat monitoring and other measures to protect our systems and data from unauthorized access or misuse, and we may be required to expend greater resources in the future, especially in the face of evolving and increasingly sophisticated cybersecurity threats and laws, regulations, contractual and other actual and asserted obligations to which we are or may become subject relating to privacy, data protection, and cybersecurity. 21 Table of Contents IT system failures, network disruptions and breaches of data security could (1) cause disruption in our operations, issues with customer communication and order management, the unauthorized or unintentional disclosure of sensitive information, or disruptions in our transaction processing or (2) undermine the integrity of our disclosure controls and procedures and our internal control over financial reporting, which could affect our reputation, result in significant liabilities and expenses, adversely affect our ability to report our financial results in a timely manner and could have a material adverse effect on our financial condition, results of operations and cash flows.
Our manufacturing processes are complex and require the use of expensive and technologically sophisticated equipment and materials. These processes are frequently modified to improve manufacturing yields, process stability and product quality. We 20 Table of Contents have, on occasion, experienced manufacturing difficulties, such as critical equipment breakdowns or the introduction of impurities in the manufacturing process.
Our manufacturing processes are complex and require the use of expensive and technologically sophisticated equipment and materials. We have, on occasion, experienced manufacturing difficulties, such as critical equipment breakdowns, delayed ramp up of newly constructed or expanded manufacturing facilities or the introduction of impurities in the manufacturing process.
Risks R elated to Our Indebtedness We have a substantial amount of indebtedness and may in the future incur substantially more debt, each of which could adversely affect our ability to obtain financing in the future and react to changes in our business. 24 Table of Contents As of December 31, 2023, we had an aggregate principal amount of $4.7 billion of indebtedness outstanding, including the $1.4 billion from our senior secured term loan facility due 2029 (the “Term Loan Facility”), $1.6 billion aggregate principal amount of the 4.75% senior secured notes due April 15, 2029, $1.7 billion aggregate principal amount of the 5.95% senior unsecured notes due June 15, 2030, our 4.375% senior unsecured notes due April 15, 2028, and our 3.625% senior unsecured notes due May 1, 2029 (collectively, the “Notes”).
As of December 31, 2024, we had an aggregate principal amount of $4.0 billion of indebtedness outstanding, including the $0.8 billion from our senior secured term loan facility due 2029 (the “Term Loan Facility”), $1.6 billion aggregate principal amount of the 4.75% senior secured notes due April 15, 2029, $1.7 billion aggregate principal amount of the 5.95% senior unsecured notes due June 15, 2030, our 4.375% senior unsecured notes due April 15, 2028, and our 3.625% senior unsecured notes due May 1, 2029 (collectively, the “Notes”).
If these efforts are successful, are widespread amongst our customers and expand to our products and solutions broadly, overall global demand for our customers’ products or for other products produced or manufactured in the United States or based on U.S. technology may be reduced, in turn reducing demand for our products, which could have a material adverse effect on our business, financial condition and results of operations.
We may be unable to continue to compete favorably against these local and foreign competitors. If these efforts are successful, are widespread amongst our customers and expand to our products and solutions broadly, overall global demand for our products may be reduced, which could have a material adverse effect on our business, financial condition and results of operations.
As a result of these restrictive measures, certain of our customers have made efforts to source products domestically in order to mitigate perceived risks to their supply chain.
These and other regulations have reduced our ability to sell our products to customers in China and it is possible future regulation could further reduce demand for our products. As a result of these restrictive measures, certain of our customers have made efforts to source products domestically in order to mitigate perceived risks to their supply chain.
In the past, we incurred significant impairment charges for capital expenditures related to developing the capability to manufacture shippers and FOUPs for 450 millimeter wafers, which major semiconductor manufacturers announced that they would not initiate manufacturing for in the foreseeable future.
In the past, we incurred significant impairment charges for capital expenditures related to developing the capability to manufacture shippers and FOUPs for 450 millimeter wafers, which major semiconductor manufacturers announced that they would not initiate manufacturing for the foreseeable future. 20 Table of Contents We believe that our future success will depend upon our ability to continue to develop novel, mission-critical solutions to maximize our customers’ manufacturing yields and enable higher performance semiconductor devices.
Climate change may have a long-term impact on our business. There are inherent climate-related risks wherever our business is conducted.
Climate change may have a long-term impact on our business, including by causing disruptions to our operations which may result in decreased revenue and cash flows. There are inherent climate-related risks wherever our business is conducted.
The confidentiality agreements we enter into with our employees and certain third parties to protect our proprietary information and technology may be inadequate to protect our interests, and the remedies available to us for any breach may not adequately mitigate any breach. Our confidential and proprietary information and technology may be replicated or obtained through lawful means.
Our confidentiality agreements (including confidentiality agreements entered into between us and our employees) may be breached and the remedies for any such breach may be inadequate. Our confidential and proprietary information and technology may also be replicated or obtained through lawful means.
In addition, the level and quality of our earnings, operations, business and management, among other things, will impact the determination of our credit ratings. A decrease in the ratings assigned to us by the ratings agencies may negatively impact our access to the debt capital markets and increase our cost of borrowing.
In addition, the level and quality of our earnings, operations, business and management, among other things, will impact the determination of our credit ratings.
Tariffs, export controls and other trade laws and restrictions resulting from international trade disputes, strained international relations and changes to foreign and national security policy, especially as they relate to China, could have an adverse impact on our operations and reduce the competitiveness or availability of our products relative to local and global competitors.
Tariffs, additional taxes, and other protectionist measures resulting from international trade disputes, strained international relations and changes to foreign and national security policy could increase our procurement and manufacturing costs, reduce the competitiveness or availability of our products and have other adverse effects on our operations.
We may bring litigation in order to enforce our patents, copyrights or other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement.
We have initiated, and may initiate in the future, litigation in order to enforce our intellectual property rights, protect our trade secrets, and determine the validity and scope of the proprietary rights of others. From time to time, third parties have also asserted, and may continue to assert, intellectual property claims against us and our products.
During such downturns, we typically experience greater pricing pressure and shifts in product and customer mix, which can adversely affect our gross margin and net income. The semiconductor industry is also affected by seasonal shifts in demand, and as a result, we may experience short-term fluctuation in our results of operations from one period to the next.
The semiconductor industry is also affected by seasonal shifts in demand, and as a result, we have in the past and may experience in the future short-term fluctuation in our results of operations from one period to the next. We are unable to predict the timing, duration or severity of any current or future downturns in the semiconductor industry.
The semiconductor industry has historically been, and is likely to continue to be, cyclical with periodic downturns, resulting in decreased demand for our products. The semiconductor industry may be negatively impacted by factors such as decreased consumer spending, macroeconomic uncertainty and slow or negative economic growth.
The semiconductor industry has historically been, and is likely to continue to be, cyclical with periodic downturns, resulting in decreased demand for our products, which has negatively impacted our results of operations in the past and could do so again in the future.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePartnering with third parties enables us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes are well-designed and effective. For example, in 2023, we engaged a global law firm to conduct an external assessment of our cybersecurity governance framework and processes and provide recommendations to improve our cybersecurity readiness and posture.
Biggest changeFor example, in 2023, we engaged a global law firm to conduct an external assessment of our cybersecurity governance framework and processes and provide recommendations to improve our cybersecurity readiness and posture. We also work with third party specialists who perform threat and vulnerability assessments, such as penetration testing, and develop strategies to mitigate cybersecurity-related risks.
Item 1C. Cybersecurity Risk management and strategy As a key supplier to in the semiconductor ecosystem, security and risk management of our technology systems and processes is critical to ensuring our ability to serve our customers without interruption. Management of Cybersecurity Risks Our management of cybersecurity risks is integrated into our company-wide enterprise risk management program.
Item 1C. Cybersecurity Risk management and strategy As a key supplier in the semiconductor ecosystem, security and risk management of our technology systems and processes is critical to ensuring our ability to serve our customers without interruption. Management of Cybersecurity Risks Our management of cybersecurity risks is integrated into our Company-wide enterprise risk management program.
In addition, our CISO Council, which includes our CISO and our Chief Information and Digital Officer, holds meetings with our Executive Leadership Team on a quarterly basis to review these cybersecurity risks and mitigation measures in further detail. Our cybersecurity risk management program is aligned with the National Institute of Standards and Technology (NIST) Cybersecurity Framework.
In addition, our CISO Council, which includes our CISO and our Chief Information and Digital Officer (“CIDO”), holds meetings with our Executive Leadership Team on a quarterly basis to review these cybersecurity risks and mitigation measures in further detail. Our cybersecurity risk management program is aligned with the National Institute of Standards and Technology Cybersecurity Framework.
Risks from Cybersecurity Threats The Company’s information and operational technology systems and its third-party providers’ systems have been, and will likely continue to be, subject to cybersecurity threats, such as computer viruses or other malicious codes, ransomware, 29 Table of Contents unauthorized access attempts, business email compromise, cyber extortion, denial of service attacks, phishing, social engineering, hacking and other cyberattacks attempting to exploit vulnerabilities.
Risks from Cybersecurity Threats The Company’s information and operational technology systems and its third-party providers’ systems have been, and will likely continue to be, subject to cybersecurity threats, such as computer viruses or other malicious codes, ransomware, unauthorized access attempts, business email compromise, cyber extortion, denial of service attacks, phishing, social engineering, hacking and other cyberattacks attempting to exploit vulnerabilities.
In addition, the full Board receives an annual report on cybersecurity directly from the CISO. Management’s Role Managing Risk Our CISO is responsible for the implementation, operation and monitoring of our cybersecurity risk management program. Our current CISO, who reports to our CIDO, has over 20 years of experience managing the information technology and cybersecurity operations within large, global organizations.
In addition, the full Board receives an annual report on cybersecurity directly from the CISO. Management’s Role Managing Risk Our CISO is responsible for the implementation, operation and monitoring of our cybersecurity risk management program. Our current CISO, who reports to our CIDO, has over 20 years of experience managing the IT and cybersecurity operations within large, global organizations.
Governance Board of Directors’ Oversight The Audit and Finance Committee (the “Audit and Finance Committee”) of our Board of Directors is responsible for reviewing and monitoring general information technology and cybersecurity matters, including related risks and reporting to the Board its determinations, actions and recommendations related thereto.
Governance Board of Directors’ Oversight The Audit and Finance Committee (the “Audit and Finance Committee”) of our Board of Directors is responsible for reviewing and monitoring general IT and cybersecurity matters, including related risks, and reporting to the Board its determinations, actions and recommendations related thereto.
To date, the Company is not aware that its business or operations have been materially impacted by these cyberattacks. However, the Company’s security efforts and the efforts of its third-party providers may not prevent or timely detect attacks and resulting breaches or breakdowns of the Company’s, or its third-party service providers’, databases or systems.
To date, the Company is not aware that its business or operations have been, or are reasonably likely to be, materially impacted by these cyberattacks. However, the Company’s security efforts and the efforts of its third-party providers may not prevent or timely detect attacks and resulting breaches or breakdowns of the Company’s, or its third-party service providers’, databases or systems.
Our CISO, together with our Chief Information and Digital Officer (“CIDO”), provide quarterly updates to our Audit and Finance Committee regarding the cybersecurity risk landscape, specific risks affecting the Company and solutions to mitigate those risks, and legal and regulatory requirements relating to cybersecurity. These updates assist the Board in performing its oversight and risk management function.
Our CISO, together with our CIDO, provide quarterly updates to our Audit and Finance Committee regarding the cybersecurity risk landscape, specific risks affecting the Company and 30 Table of Contents solutions to mitigate those risks, and legal and regulatory requirements relating to cybersecurity. These updates assist the Board in performing its oversight and risk management function.
In the event such an incident is identified by our MSSP or any of our employees, the incident is assigned a severity classification (minor, moderate or major) by our cybersecurity team and escalated accordingly.
In the event such an incident is identified by our MSSP or any of our employees, our cybersecurity team assigns it a severity classification and escalates the incident accordingly.
Our cybersecurity team conducts a post-incident review of all major cybersecurity incidents, which review includes identification of vulnerabilities, assessment of the incident’s impact on the Company and recommendations to help prevent similar incidents in the future. 30 Table of Contents
The CISO receives regular updates on all incidents and incident responses, which the CISO shares with our Executive Leadership Team on a weekly basis. Our cybersecurity team conducts a post-incident review of all major cybersecurity incidents, which review includes identification of vulnerabilities, assessment of the incident’s impact on the Company and recommendations to help prevent similar incidents in the future.
To mitigate such risks, we conduct security assessments of high-risk third-party providers before engagement and maintain ongoing monitoring to ensure compliance with our cybersecurity standards. The monitoring includes annual assessments by our CISO and ongoing assessments by our security engineers. This approach is designed to mitigate risks related to data breaches or other security incidents originating from third-parties.
Oversight of Third-Party Risk We are aware of the cybersecurity risks associated with engaging third-party service providers. To mitigate such risks, we conduct security assessments of high-risk third-party providers before engagement and maintain ongoing monitoring to ensure compliance with our cybersecurity standards. The monitoring includes ongoing assessments by our security engineers.
Each quarter, our Chief Information Security Officer (“CISO”) presents an overview of the Company’s cybersecurity risk landscape to our Enterprise Risk Management Committee, which includes our Executive Leadership Team and Vice President, Internal Audit.
As part of this process, our risk management team works closely with our IT department to identify and evaluate potential cybersecurity risks to the Company and to develop controls to mitigate and protect against those risks. 29 Table of Contents Each quarter, our Chief Information Security Officer (“CISO”) presents an overview of the Company’s cybersecurity risk landscape to our Enterprise Risk Management Committee, which includes our Executive Leadership Team and Vice President, Internal Audit.
To increase our employees’ vigilance of cybersecurity risks and educate them on best practices relating to those risks, we conduct cybersecurity trainings and awareness campaigns, such as quarterly phishing campaigns. Engagement of Third Parties Given the complex and evolving nature of cybersecurity threats, the Company engages third parties to assist us in developing and maintaining effective cybersecurity risk management.
To increase our employees’ vigilance of cybersecurity risks and educate them on best practices relating to those risks, we conduct cybersecurity trainings and awareness campaigns, such as quarterly phishing campaigns.
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As part of this process, our risk management team works closely with our IT department to identify and evaluate potential cybersecurity risks to the Company and to develop controls to mitigate and protect against those risks.
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Engagement of Third Parties Given the complex and evolving nature of cybersecurity threats, the Company periodically engages third parties to assist us in evaluating our security vulnerabilities and developing and maintaining effective cybersecurity risk management. Partnering with third parties enables us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes are well-designed and effective.
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We also work with third party specialists who perform threat and vulnerability assessments, audits and develop strategies to mitigate cybersecurity-related risks. Oversight of Third-party Risk We are aware of the cybersecurity risks associated with engaging third-party service providers.
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This approach is designed to mitigate risks related to data breaches or other security incidents originating from third parties.
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The CISO receives daily and weekly updates on all incidents and incident responses, which the CISO shares with our Executive Leadership Team on a weekly basis.
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See “Item 1A. Risk Factors” for a more detailed description of the cybersecurity risks we face. 31 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeInformation about our principal and certain other facilities is set forth below: Location Principal Function Approximate Square Feet Leased/ Owned Reporting Segment Bedford, Massachusetts Research & Manufacturing 80,000 Owned MC & MS Billerica, Massachusetts (1) Executive Offices, Research & Manufacturing 175,000 Leased MC, MS & AMH Burnet, Texas Research & Manufacturing 86,000 Owned MS Decatur, Texas Manufacturing 359,000 Owned MS Waller, Texas Manufacturing 210,000 Owned MS Chaska, Minnesota Executive Offices, Research & Manufacturing 186,000 Owned AMH Colorado Springs, Colorado Manufacturing 82,000 Owned AMH Danbury, Connecticut Research & Manufacturing 73,000 Leased MS San Luis Obispo, California Manufacturing 57,867 Owned MC San Luis Obispo, California Manufacturing 59,124 Leased MC Aurora, Illinois Manufacturing 414,000 Owned MS Hillsboro, Oregon Manufacturing 112,344 Leased MS Hsin-chu, Taiwan Executive Offices, Sales Research & Manufacturing 146,330 Leased MC, MS & AMH Kaohsiung City,Taiwan (North) Manufacturing 105,874 Owned MS Kaohsiung City,Taiwan (South) Manufacturing 573,696 Owned MC, MS & AMH JangAn, South Korea Manufacturing 127,000 Owned MC, MS & AMH Oseong, South Korea Manufacturing 108,355 Owned MS Suwon, South Korea Executive Offices & Research 42,000 Leased MC & MS Kulim, Malaysia Manufacturing 195,000 Owned MS & AMH Yonezawa, Japan Manufacturing 185,000 Owned MC & AMH Tsu, Mie, Japan Manufacturing 160,259 Owned MS Singapore Manufacturing 215,235 Owned MS (1) This lease has been extended through September 30, 2026 and is subject to one five-year renewal option.
Biggest changeInformation about our principal and certain other facilities is set forth below: Location Principal Function Approximate Square Feet Leased/ Owned Reporting Segment Bedford, Massachusetts Research & Manufacturing 80,000 Owned APS & MS Billerica, Massachusetts (1) Executive Offices, Research & Manufacturing 175,000 Leased APS & MS Burnet, Texas Research & Manufacturing 86,000 Owned MS Decatur, Texas Manufacturing 359,000 Owned MS Chaska, Minnesota Executive Offices, Research & Manufacturing 186,000 Owned APS Colorado Springs, Colorado Manufacturing 82,000 Owned APS Danbury, Connecticut Research & Manufacturing 73,000 Leased MS San Luis Obispo, California Manufacturing 57,867 Owned APS San Luis Obispo, California Manufacturing 59,124 Leased APS Aurora, Illinois Manufacturing 414,000 Owned MS Hillsboro, Oregon Manufacturing 112,344 Leased MS Hsin-chu, Taiwan Executive Offices, Sales Research & Manufacturing 146,330 Leased APS & MS Kaohsiung City,Taiwan (North) Manufacturing 105,874 Owned MS Kaohsiung City,Taiwan (South) Manufacturing 573,696 Owned APS & MS JangAn, South Korea Manufacturing 127,000 Owned APS & MS Oseong, South Korea Manufacturing 108,355 Owned MS Suwon, South Korea Executive Offices & Research 42,000 Leased APS & MS Kulim, Malaysia Manufacturing 195,000 Owned APS & MS Yonezawa, Japan Manufacturing 185,000 Owned APS Tsu, Mie, Japan Manufacturing 160,259 Owned MS Singapore Manufacturing 47,770 Owned MS (1) This lease has been extended through September 30, 2026 and is subject to one five-year renewal option.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeBased on the current information, the Company does not believe any known matters have a reasonable possibility of a material amount for litigation or other contingencies related to legal proceedings. Item 4. Mine Safety Disclosures. Not applicable. 31 Table of Contents PART II
Biggest changeBased on the current information, the Company does not believe any known matters have a reasonable possibility of a material amount for litigation or other contingencies related to legal proceedings. Item 4. Mine Safety Disclosures. Not applicable. 32 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 31 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 Item 6. Reserved 33 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 32 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 33 Item 6. Reserved 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 49 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn January 17, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per share to be paid on February 21, 2024 to shareholders of record as of January 31, 2024.
Biggest changeOn January 15, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per share to be paid on February 19, 2025 to shareholders of record as of January 29, 2025. The Company currently expects to continue paying dividends comparable with our historic dividend practices.
Comparative Stock Performance The following graph compares the cumulative total shareholder return on the common stock of Entegris, Inc. from December 31, 2018 through December 31, 2023 with the cumulative total return on (1) The Nasdaq Composite Index, and (2) The Philadelphia Semiconductor Index, assuming $100 was invested at the close of trading on December 31, 2018 in Entegris, Inc. common stock, the Nasdaq Composite Index and the Philadelphia Semiconductor Index and that all dividends are reinvested.
Comparative Stock Performance The following graph compares the cumulative total shareholder return on the common stock of Entegris, Inc. from December 31, 2019 through December 31, 2024 with the cumulative total return on (1) The Nasdaq Composite Index, and (2) The Philadelphia Semiconductor Index, assuming $100 was invested at the close of trading on December 31, 2019 in Entegris, Inc. common stock, the Nasdaq Composite Index and the Philadelphia Semiconductor Index and that all dividends are reinvested.
Dividend Policy Holders of the Company’s common stock are entitled to receive dividends when and if they are declared by the Company’s Board of Directors. The Company’s Board of Directors declared cash dividends of $0.10 per share during each of the first, second, third and fourth quarters of 2023, which totaled $60.3 million.
Dividend Policy Holders of the Company’s common stock are entitled to receive dividends when and if they are declared by the Company’s Board of Directors. The Company’s Board of Directors declared cash dividends of $0.10 per share during each of the first, second, third and fourth quarters of 2024, which totaled $60.7 million.
Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2023. Index Data: Copyright NASDAQ OMX, Inc. Used with permission.
Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2024. Index Data: Copyright NASDAQ OMX, Inc. Used with permission.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders Entegris’ common stock, $0.01 par value per share, trades on the Nasdaq Global Select Market under the symbol “ENTG”. As of February 12, 2024, there were 1,030 shareholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders Entegris’ common stock, $0.01 par value per share, trades on the Nasdaq Global Select Market under the symbol “ENTG”. As of February 5, 2025, there were 965 shareholders of record.
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All rights reserved. 32 Table of Contents December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Entegris, Inc. $100.00 $180.85 $348.72 $504.19 $239.52 $439.54 Nasdaq Composite 100.00 136.69 198.09 242.03 163.27 236.15 Philadelphia Semiconductor Index 100.00 163.26 250.87 358.36 233.36 389.73 Issuer Purchases of Equity Securities The Company did not repurchase any of its common stock in 2023 under a Board-authorized common stock repurchase plan.
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All rights reserved. 33 Table of Contents December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Entegris, Inc. $100.00 $192.83 $278.79 $132.44 $243.04 $201.58 Nasdaq Composite 100.00 144.92 177.06 119.45 172.77 223.86 Philadelphia Semiconductor Index 100.00 153.66 219.50 142.94 238.72 287.31 Issuer Purchases of Equity Securities The Company does not have a publicly announced stock repurchase program and we did not repurchase any equity securities during the year ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThese risks and uncertainties include, but are not limited to, weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for the Company’s products and solutions; the level of, and obligations associated with, the Company’s indebtedness, including the debts incurred in connection with the acquisition of CMC Materials; risks related to the acquisition and integration of CMC Materials, including unanticipated difficulties or expenditures relating thereto, the ability to achieve the anticipated synergies and value-creation contemplated by the acquisition of CMC Materials and the diversion of management time on transaction-related matters; raw material shortages, supply and labor constraints, price increases, inflationary pressures and rising interest rates; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the Company’s ability to meet rapid demand shifts; the Company’s ability to continue technological innovation and introduce new products to meet customers’ rapidly changing requirements; substantial competition; the Company’s concentrated customer base; the Company’s ability to identify, complete and integrate acquisitions, joint ventures, divestitures or other similar transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; the impact of regional and global instabilities, hostilities and geopolitical uncertainty, including, but not limited to, the ongoing conflicts between Ukraine and Russia, between Israel and Hamas and the current conflict in the Red Sea, as well as the global responses thereto; the increasing complexity of certain manufacturing processes; changes in government regulations of the countries in which the Company operates, including the imposition of tariffs, export controls and other trade laws and restrictions and changes to national security and international trade policy, especially as they relate to China; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; and other matters.
Biggest changeThese risks and uncertainties include, but are not limited to, fluctuations in the demand for semiconductors and the overall volume of semiconductor manufacturing; the impact of global economic uncertainty, including volatile financial markets, inflationary pressures and interest rate fluctuations, economic recessions, national debt and bank failures, raw material shortages, supply and labor constraints, and price increases; fluctuations in the Company’s revenues and operating results and their impact on the Company’s stock price; supply chain interruptions and the Company’s dependence on sole, single and limited source suppliers; operational, political and legal risks of the Company’s international operations; the impact of regional and global instabilities, hostilities and geopolitical uncertainty, including, but not limited to, the ongoing conflicts between Ukraine and Russia, and between Israel and Hamas, as well as the global responses thereto; tariffs, additional taxes, and other protectionist measures resulting from international trade disputes, strained international relations, and changes in foreign and national security policy; export controls, economic sanctions, and similar restrictions; the concentration and consolidation of the Company’s customer base; the Company’s ability to meet rapid demand shifts; the Company’s ability to continue technological innovation and to introduce new products to meet customers’ rapidly changing requirements; manufacturing and other operational disruptions or delays; the risks associated with the use and manufacture of hazardous materials; goodwill impairment; challenges in attracting and retaining qualified personnel; the Company’s ability to protect and enforce intellectual property rights; IT system failures, network disruptions, and cybersecurity risks; the Company’s environmental, social, and governance commitments; legal and regulatory risks, including changes in laws and regulations related to the environment, health and safety, accounting standards, and corporate governance, across the jurisdictions in which the Company operates; changes in taxation or adverse tax rulings; the Company’s ability to effectively implement any organizational changes; the ability to obtain government incentives and the possibility that competitors will benefit from government incentives; the amount and consequences of the Company’s indebtedness, its ability to repay its debt and to obtain future financing, and the Company’s obligations under its current outstanding credit facilities; volatility in the Company’s stock price; the payment of cash dividends and the adoption of future share repurchase programs; challenges associated with a potential change of control; substantial competition; the Company’s ability to identify, complete and integrate acquisitions, joint ventures, divestitures or other similar transactions; the impacts of climate change; and other matters.
They are not guarantees of future performance and involve substantial risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.
They are not guarantees of future performance and they involve substantial risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.
Adjusted Operating Income is defined by the Company as Adjusted EBITDA exclusive of the depreciation addback noted above. The Company also utilizes ratios of non-GAAP financial measures such as Adjusted EBITDA to Company net sales and Adjusted Operating Income (referred to as Adjusted EBITDA Margin and Adjusted Operating Margin, respectively).
Adjusted Operating Income is defined by the Company as Adjusted EBITDA exclusive of the depreciation addback noted above. The Company also utilizes ratios of non-GAAP financial measures such as Adjusted EBITDA to Company net sales and Adjusted Operating Income to Company net sales (referred to as Adjusted EBITDA Margin and Adjusted Operating Margin, respectively).
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 its business and believes these measures provide investors and analysts additional and meaningful information for the assessment of the Company’s ongoing results.
Non-GAAP EPS is defined as 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 its business and believes these measures provide investors and analysts additional and meaningful information for the assessment of the Company’s ongoing results.
These risks and uncertainties include, but are not limited to, the risk factors and additional information described in this Annual Report on Form 10-K under the caption “Risk Factors,” elsewhere in this Annual Report on Form 10-K and in the Company’s other periodic filings.
These risks and uncertainties also include, but are not limited to, the risk factors and additional information described in this Annual Report on Form 10-K under the caption “Risk Factors,” elsewhere in this Annual Report on Form 10-K and in the Company’s other periodic filings.
There can be no assurance that any such financing would be available on commercially acceptable terms, or at all. During 2023, we did not experience 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.
There can be no assurance that any such financing would be available on commercially acceptable terms, or at all. During 2024, we did not experience 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.
Third, there is no assurance that the Company will not have future charges for fair value write-up of acquired inventory, restructuring activities, deal and transaction costs, integration costs, asset or goodwill impairments, loss on extinguishment of debt or similar items and, therefore, may need to record additional charges (or credits) associated with such items, including the 46 Table of Contents tax effects thereon.
Third, there is no assurance that the Company will not have future charges for fair value write-up of acquired inventory, restructuring activities, deal and transaction costs, integration costs, asset or goodwill impairments, loss on extinguishment of debt or similar items and, therefore, may need to record additional charges (or credits) associated with such items, including the tax effects thereon.
We have contractual obligations for principal and interest payments on our long-term debt. See Note 11 of the consolidated financials for additional information. Debt obligations are classified based on their stated maturity date, regardless of their classification on the Company’s consolidated balance sheets.
We have contractual obligations for principal and interest payments on our long-term debt. See Note 10 of the consolidated financials for additional information. Debt obligations are classified based on their stated maturity date, regardless of their classification on the Company’s consolidated balance sheets.
Through December 31, 2023, the Company was in compliance with all applicable financial covenants included in the terms of its debt arrangements. The Company has commitments under the Revolving Facility of $575.0 million.
Through December 31, 2024, the Company was in compliance with all applicable financial covenants included in the terms of its debt arrangements. The Company has commitments under the Revolving Facility of $575.0 million.
These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market 36 Table of Contents comparable, projected future cash flows (including timing and profitability), the discount rate reflecting the risk inherent in future cash flows, the perpetual growth rate, and projected future economic and market conditions.
These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market comparable, projected future cash flows (including timing and profitability), the discount rate reflecting the risk inherent in future cash flows, the perpetual growth rate, and projected future economic and market conditions.
Except as required under the federal securities laws and the rules and regulations of the SEC, the Company undertakes 34 Table of Contents no obligation to update publicly any forward-looking statements or information contained herein, which speak as of their respective dates.
Except as required under the federal securities laws and the rules and regulations of the SEC, the Company undertakes no obligation to update publicly any forward-looking statements or information contained herein, which speak as of their respective dates.
Information pertaining to fiscal year 2021 results of operations and the year-over-year comparison of changes in our Financial Condition and Results of Operations as of and for the year ended December 31, 2022 and 2021 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 23, 2023.
Information pertaining to fiscal year 2022 results of operations and the year-over-year comparison of changes in our Financial Condition and Results of Operations as of and for the year ended December 31, 2023 and 2022 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 15, 2024.
On July 28, 2022, the Company entered into a floating-to-fixed interest rate swap agreement to hedge the variability in SOFR-based interest payments associated with $1.95 billion of its $2.495 billion Initial Term Loan Facility. The notional amount of the swap is $1.4 billion at December 31, 2023 and is scheduled to decrease quarterly and will expire on December 30, 2025.
On July 28, 2022, the Company entered into a floating-to-fixed interest rate swap agreement to hedge the variability in SOFR-based interest payments associated with $1.95 billion of its $2.495 billion Initial Term Loan Facility. The notional amount of the swap is $750.0 million at December 31, 2024 and is scheduled to decrease quarterly and will expire on December 30, 2025.
In 2023, other expense, net consisted mainly of loss of extinguishment and modification of debt of $29.9 million associated with the repayments on the Company’s bridge credit facility and senior secured term loan facility and the amendments of the Company’s Existing Credit Agreement (see Note 11 to the Company’s consolidated financial statements) and foreign currency transaction losses of $5.7 million, partially offset by net proceeds received of $10.9 million resulting from the termination of the definitive agreement with Infineum related to the PIM business.
In 2023, other expense, net consisted mainly of loss of extinguishment and modification of debt of $29.9 million associated with the repayments on the Company’s bridge credit facility and senior secured term loan facility and the amendments of the 39 Table of Contents Company’s Existing Credit Agreement and foreign currency transaction losses of $5.7 million, partially offset by net proceeds received of $10.9 million resulting from the termination of the definitive agreement with Infineum related to the PIM business.
See Note 11 to the Company’s consolidated financial statements for further discussion of the debt financing that occurred during the year. The Company’s total dividend payments were $60.2 million in 2023 compared to $57.3 million in 2022. The Company has paid a cash dividend in each quarter since the fourth quarter of 2017.
See Note 10 to the Company’s consolidated financial statements for further discussion of the debt financing that occurred during the year. The Company’s total dividend payments were $60.6 million in 2024 compared to $60.2 million in 2023. The Company has paid a cash dividend in each quarter since the fourth quarter of 2017.
Impairment of Goodwill Goodwill is tested for impairment annually as of August 31. If circumstances change during interim periods between annual tests that would more likely than not reduce the fair value of a reporting unit below its carrying value, the Company will test goodwill for impairment.
If circumstances change during interim periods between annual tests that would more likely than not reduce the fair value of a reporting unit below its carrying value, the Company will test goodwill for impairment.
Interest projections on both variable and fixed rate long-term debt are based on interest rates effective as of December 31, 2023 and do not include $91.6 million for net unamortized discounts and debt issuance costs.
Interest projections on both variable and fixed rate long-term debt are based on interest rates effective as of December 31, 2024 and do not include $63.9 million for net unamortized discounts and debt issuance costs.
Non-GAAP Information The Company’s 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.
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.
Goodwill impairment The Company recorded a goodwill impairment charges of $115.2 million in 2023. See Note 3 to the Company’s consolidated financial statements for further discussion. Gain on termination of Alliance Agreement In connection with the termination of the Alliance Agreement, the Company recognized a pre-tax gain, net of $184.8 million in 2023.
See Note 3 to the Company’s consolidated financial statements for further discussion. Gain on termination of alliance agreement In connection with the termination of the alliance agreement, the Company recognized a pre-tax gain, net of $184.8 million in 2023. See Note 5 to the Company’s consolidated financial statements for further discussion.
Non-GAAP Net Income is defined by the Company as net income before, as applicable, (1) goodwill impairment, (2) deal and transaction costs, (3) integration costs, (4) contractual costs and non-cash integration costs, (5) restructuring costs, (6) loss on extinguishment of debt and modification, (7) loss (gain) on sale of businesses, (8) gain on termination of the Alliance Agreement, (9) Infineum termination fee, net, (10) charge for fair value write-up of sale of acquired inventory, (11) interest expense, net, (12) impairment of long-lived assets, (13) amortization of intangible assets, (14) the tax effect of the foregoing adjustments to net income, stated on a per share basis, divided by diluted weighted average shares outstanding.
Non-GAAP Net Income is defined by the Company as net income before, as applicable, (1) goodwill impairment, (2) deal and transaction costs, (3) integration costs, (4) restructuring costs, (5) patent infringement settlement gain, net (6) acquired tax equalization asset reduction, (7) loss on extinguishment of debt and modification, (8) (gain) loss on sale of businesses and held-for-sale assets, net, (9) gain on termination of the alliance agreement, (10) Infineum termination fee, net, (11) impairment of long-lived assets, (12) amortization of intangible assets, (13) the tax effect of the foregoing adjustments to net income, stated on a per share basis, divided by diluted weighted average shares outstanding.
Acquisition of property and equipment totaled $456.8 million in 2023, which primarily reflected investments in facilities, equipment and tooling, compared to $466.2 million in 2022, which also primarily reflected investments in equipment and tooling.
Acquisition of property and equipment totaled $315.6 million in 2024, which primarily reflected investments in facilities, equipment and tooling, compared to $456.8 million in 2023, which also primarily reflected investments in facilities, equipment and tooling.
However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to an unforeseeable event (such as a tax audit settlement). See Note 17 of the consolidated financials for additional information.
However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to an unforeseeable event (such as a tax audit settlement).
Selling, general and administrative expenses Selling, general and administrative (“SG&A”) expenses consist primarily of payroll and related expenses for the sales and administrative staff, professional fees (including accounting, legal and technology costs and expenses), and sales and marketing costs. SG&A expenses for 2023 increased $32.7 million, or 6%, to $576.2 million from $543.5 million in 2022.
Selling, general and administrative expenses Selling, general and administrative (“SG&A”) expenses consist primarily of payroll and related expenses for the sales and administrative staff, professional fees (including accounting, legal and technology costs and expenses), and sales and marketing costs. SG&A expenses for 2024 decreased $129.6 million, or 22%, to $446.6 million from $576.2 million in 2023.
For 2022, MS net sales increased to $1,380.2 million, up 94% from $711.3 million in 2021. The sales increase primarily reflects the inclusion of sales of $594.4 million attributed to acquisitions, primarily of CMC Materials, and also reflects modestly improved sales of advanced deposition materials, formulated cleans, selective etch and specialty coating products.
For 2023, MS net sales increased to $1,689.5 million, up 22% from $1,380.2 million in 2022. The sales increase primarily reflects the inclusion of sales of $537.8 million attributed to acquisitions, primarily of CMC Materials, and also reflects modestly improved sales of advanced deposition materials, formulated cleans, selective etch and specialty coating products.
These segments share common business systems and processes, technology centers and technology roadmaps. With the complementary capabilities across these segments, 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.
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.
Amortization of intangibles and depreciation have been, and will continue to be for the foreseeable future, significant recurring expenses with an impact upon the Company’s results of operations, notwithstanding the lack of immediate impact upon cash flows.
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, significant recurring expenses with an impact upon the Company’s results of operations, notwithstanding the lack of immediate impact upon cash flows.
Net income Net income was $180.7 million, or $1.20 per diluted share, in 2023 compared to net income of $208.9 million, or $1.46 per diluted share, in 2022. The decrease reflects the Company’s aforementioned operating results described in greater detail above.
Net income Net income was $292.8 million, or $1.93 per diluted share, in 2024 compared to net income of $180.7 million, or $1.20 per diluted share, in 2023. The increase reflects the Company’s aforementioned operating results described in greater detail above.
Compared to 2022, the $277.3 million increase in cash provided by operating activities in 2023 was primarily driven by $288.9 million of changes in operating assets and liabilities, offset by a $11.7 million decrease of net income adjusted for non-cash reconciling items.
Compared to 2023, the $12.8 million decrease in cash provided by operating activities in 2024 was primarily driven by $174.5 million of changes in operating assets and liabilities, offset by a $161.7 million increase of net income adjusted for non-cash reconciling items.
The increase in MS’s profit in 2022 was primarily due to the segment profit attributed to the CMC Materials acquisition, partially offset by unfavorable product mix and a $61.9 million charge for a fair value write-up resulting from the sale of acquired CMC Materials inventory. 41 Table of Contents Microcontamination Control (MC) For 2023, MC net sales increased to $1,127.6 million, up 2% from $1,106.0 million in 2022.
The increase in MS’s profit in 2023 was primarily due to the segment profit attributed to the CMC Materials acquisition, partially offset by unfavorable product mix and a $61.9 million charge for a fair value write-up resulting from the sale of acquired CMC Materials inventory.
New Accounting Pronouncements Recently adopted accounting pronouncements Refer to Note 1 to the Company’s consolidated financial statements for a discussion of accounting pronouncements implemented in 2023. Recently issued accounting pronouncements Refer to Note 1 of the Company’s consolidated financial statements for a discussion of accounting pronouncements recently issued but not yet adopted.
Recently issued accounting pronouncements Refer to Note 1 of the Company’s consolidated financial statements for a discussion of accounting pronouncements recently issued but not yet adopted. Non-GAAP Information The Company’s consolidated financial statements are prepared in conformity with GAAP.
(Dollars in thousands) 2023 2022 % of net sales % of net sales Net sales $ 3,523,926 100.0 % $ 3,282,033 100.0 % Cost of sales 2,026,321 57.5 1,885,620 57.5 Gross profit 1,497,605 42.5 1,396,413 42.5 Selling, general and administrative expenses 576,194 16.4 543,485 16.6 Engineering, research and development expenses 277,313 7.9 228,994 7.0 Amortization of intangible assets 214,477 6.1 143,953 4.4 Goodwill impairment 115,217 3.3 — — Gain on termination of Alliance Agreement (184,754) (5.2) — — Operating income 499,158 14.2 479,981 14.6 Interest expense 312,378 8.9 212,669 6.5 Interest income (11,257) (0.3) (3,694) (0.1) Other expense, net 25,367 0.7 23,926 0.7 Income before income taxes 172,670 4.9 247,080 7.5 Income tax (benefit) expense (8,413) (0.2) 38,160 1.2 Equity in net loss of affiliates 414 — — — Net income $ 180,669 5.1 $ 208,920 6.4 Net sales For 2023, net sales were $3,523.9 million, increased by $241.9 million, or 7%, from 2022.
(Dollars in thousands) 2024 2023 % of net sales % of net sales Net sales $ 3,241,208 100.0 % $ 3,523,926 100.0 % Cost of sales 1,754,489 54.1 2,026,321 57.5 Gross profit 1,486,719 45.9 1,497,605 42.5 Selling, general and administrative expenses 446,567 13.8 576,194 16.4 Engineering, research and development expenses 316,111 9.8 277,313 7.9 Amortization of intangible assets 190,119 5.9 214,477 6.1 Goodwill impairment — — 115,217 3.3 Gain on termination of Alliance Agreement — — (184,754) (5.2) Operating income 533,922 16.5 499,158 14.2 Interest expense 215,217 6.6 312,378 8.9 Interest income (7,368) (0.2) (11,257) (0.3) Other expense, net 4,021 0.1 25,367 0.7 Income before income taxes 322,052 9.9 172,670 4.9 Income tax expense (benefit) 28,332 0.9 (8,413) (0.2) Equity in net loss of affiliates 933 — 414 — Net income $ 292,787 9.0 $ 180,669 5.1 Net sales For 2024, net sales were $3,241.2 million, decreased by $282.7 million, or 8%, from 2023.
The Company also has a line of credit with one bank that provides for borrowings of Japanese yen for the Company’s Japanese subsidiary equivalent to an aggregate of approximately $7.1 million. There were no outstanding borrowings under this line of credit and no balance was outstanding at December 31, 2023.
During the twelve months ended December 31, 2024, the Company borrowed and repaid $140.0 million under this Revolving Facility and no balance was outstanding at December 31, 2024. The Company also has a line of credit with one bank that provides for borrowings of Japanese yen for the Company’s Japanese subsidiary equivalent to an aggregate of approximately $6.4 million.
For example, we can now develop and provide complementary offerings solving customers’ complex manufacturing challenges across the deposition, CMP process and post-CMP modules with co-optimized products from each of our divisions, such as advanced deposition materials, CMP slurries, pads and post-CMP cleaning chemistries from our MS segment, CMP slurry filters from our MC segment, and CMP slurry high-purity packaging and fluid monitoring systems from our AMH segment.
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).
Changes in operating assets and liabilities were driven by changes in trade accounts and notes receivable, inventories, accounts payable and accrued liabilities, income taxes payable and refundable income taxes. The change for trade receivables was mainly due to lower sales. The change for inventory was driven by the Company’s initiative to reduce inventory.
Changes in operating assets and liabilities were driven by changes in trade accounts and notes receivable, inventories and accounts payable and accrued liabilities. The change for trade receivables was mainly due to increased sales at the end of the period. The change for inventory was driven by increased business activity.
Management’s utilization of different judgments or estimates could result in material differences in the amount and timing of the Company’s results of operations for any period. In addition, actual results could be different from the Company’s current estimates, possibly resulting in increased future charges to earnings.
Management’s utilization of different judgments or estimates could result in material differences in the amount and timing of the Company’s results of operations for any period.
The Revolving Facility bears interest at a rate per annum equal to, at the Company’s option, either a base rate (such as prime rate) or SOFR, plus, in each case, an applicable margin. During the twelve months ended December 31, 2023, there were no borrowings under this Revolving Facility and no balance was outstanding at December 31, 2023.
The Revolving Facility bears interest at a rate per annum equal to, at the Company’s option, either a base rate (such as prime rate) or SOFR, plus, in each case, an applicable margin.
The Second Amendment, dated September 11, 2023, provides for, among other things, the refinancing of the Company’s outstanding term loans B under the senior secured term loan facility due 2029 in an aggregate principal amount of $2.318 billion with a new tranche of term loans B in an aggregate principal amount of $2.318 billion.
The Third Amendment provides for, among other things, the refinancing of the Company’s outstanding term loans B under the Term Loan Facility in an aggregate principal amount of $955.0 million with a new tranche of term loans B in an aggregate principal amount of $955.0 million.
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. 45 Table of Contents Adjusted EBITDA is defined by the Company as net income before, as applicable, (1) income tax (benefit) expense, (2) interest expense, (3) interest income, (4) other expense, net, (5) goodwill impairment, (6) deal and transaction costs, (7) integration costs, (8) contractual costs and non-cash integration costs, (9) restructuring costs, (10) loss (gain) on sale of businesses, (11) charge for fair value write-up of acquired inventory sold, (12) gain on termination of the Alliance Agreement, (13) impairment of long-lived assets, (14) amortization of intangible assets and (15) depreciation.
Adjusted EBITDA is defined by the Company as net income before, as applicable, (1) equity in net loss of affiliates, (2) income tax expense (benefit), (3) interest expense, (4) interest income, (5) other expense, net, (6) goodwill impairment, (7) deal and transaction costs, (8) integration costs, (9) restructuring costs, (10) acquired tax equalization asset reduction, (11) (gain) loss on sale of businesses and held-for-sale assets, net, (12) gain on termination of the alliance agreement, (13) impairment of long-lived assets, (14) amortization of intangible assets, and (15) depreciation.
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 consolidated financial statements in their entirety and to not rely on any single financial measure.
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.
The decrease in MC’s profit in 2023 was primarily due to increased costs associated with the ramp up of our new manufacturing facility in Taiwan and increased investment in research and development. For 2022, MC net sales increased to $1,106.0 million, up 20% from $919.4 million in 2021.
The decrease in APS’s profit in 2024 was primarily due to increased costs associated with the ramp up of our new manufacturing facility in Taiwan and higher operating expenses. For 2023, APS net sales decreased to $1,846.6 million, down 4% from $1,914.0 million in 2022.
These expenses were $277.3 million in 2023 and $229.0 million in 2022. 39 Table of Contents An analysis of the factors underlying the increase in ER&D expenses is presented in the following table: (In thousands) Engineering, research and development expense in 2022 $ 228,994 Employee costs, mainly driven by the inclusion of CMC Materials 27,434 Depreciation expense, mainly driven by the inclusion of CMC Materials 11,983 Project related costs, mainly driven by the inclusion of CMC Materials 4,902 Other increases, net 4,000 Engineering, research and development expense in 2023 $ 277,313 The Company’s overall ER&D efforts will continue to focus on developing and improving its technology platforms for semiconductor and advanced processing applications and identifying and developing products for new applications.
An analysis of the factors underlying the increase in ER&D expenses is presented in the following table: (In thousands) Engineering, research and development expense in 2023 $ 277,313 Employee costs 14,874 Project related costs 11,411 Depreciation expense 8,013 Other increases, net 4,500 Engineering, research and development expense in 2024 $ 316,111 The Company’s overall ER&D efforts will continue to focus on developing and improving its technology platforms to support the semiconductor ecosystem and identifying and developing products for new applications.
All of these judgments and estimates can significantly impact the determination of the amortization period of the intangible asset, and thus net income. 37 Table of Contents Results of Operations Year ended December 31, 2023 compared to year ended December 31, 2022 The following table sets forth the results of operations and the relationship between various components of operations, stated as a percent of net sales, for 2023 and 2022.
Results of Operations Year ended December 31, 2024 compared to year ended December 31, 2023 The following table sets forth the results of operations and the relationship between various components of operations, stated as a percent of net sales, for 2024 and 2023.
The reconciliation of GAAP measures to adjusted operating income and Adjusted EBITDA for the years ended December 31, 2023 and 2022 are presented below: (In thousands) 2023 2022 Net sales $ 3,523,926 $ 3,282,033 Net income $ 180,669 $ 208,920 Net income - as a % of net sales 5.1 % 6.4 % Adjustments to net income Equity in net loss of affiliates 414 — Income tax (benefit) expense (8,413) 38,160 Interest expense 312,378 212,669 Interest income (11,257) (3,694) Other expense, net 25,367 23,926 GAAP – Operating income 499,158 479,981 Operating margin - as a % of net sales 14.2 % 14.6 % Goodwill impairment 1 115,217 — Deal and transaction costs 2 3,001 39,543 Integration costs: Professional fees 3 36,650 35,422 Severance costs 4 1,478 6,269 Retention costs 5 1,687 1,987 Other costs 6 13,710 7,053 Contractual and non-cash integration costs: CMC Materials retention costs 7 — 18,030 Stock-based compensation alignment 8 — 21,584 Change in control costs 9 — 22,350 Restructuring costs 10 14,745 — Loss (gain) on sale of businesses 11 23,839 (254) Charge for fair value write-up of acquired inventory sold 12 — 61,932 Gain on termination of Alliance Agreement 13 (184,754) — Impairment of long-lived assets 14 30,464 — Amortization of intangible assets 15 214,477 143,953 Adjusted Operating Income 769,672 837,850 Adjusted Operating Margin 21.8 % 25.5 % Depreciation 172,683 135,371 Adjusted EBITDA $ 942,355 $ 973,221 Adjusted EBITDA – as a % of net sales 26.7 % 29.7 % 47 Table of Contents 1 Non-cash impairment charges associated with goodwill. 2 Deal and transaction costs associated with CMC Materials acquisition and completed and announced divestitures. 3 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.
The reconciliation of GAAP measures to Adjusted Operating Income and Adjusted EBITDA for the years ended December 31, 2024 and 2023 are presented below: 46 Table of Contents (In thousands) 2024 2023 Net sales $ 3,241,208 $ 3,523,926 Net income $ 292,787 $ 180,669 Net income - as a % of net sales 9.0 % 5.1 % Adjustments to net income Equity in net loss of affiliates 933 414 Income tax expense (benefit) 28,332 (8,413) Interest expense 215,217 312,378 Interest income (7,368) (11,257) Other expense, net 4,021 25,367 GAAP – Operating income 533,922 499,158 Operating margin - as a % of net sales 16.5 % 14.2 % Goodwill impairment 1 — 115,217 Deal and transaction costs 2 — 3,001 Integration costs: Professional fees 3 2,574 36,650 Severance costs 4 794 1,478 Retention costs 5 — 1,687 Other costs 6 — 13,710 Restructuring costs 7 3,930 14,745 Acquired tax equalization asset reduction 8 2,959 — (Gain) loss on sale of businesses and held-for-sale assets, net 9 (4,311) 23,839 Gain on termination of alliance agreement 10 — (184,754) Impairment of long-lived assets 11 12,967 30,464 Amortization of intangible assets 12 190,119 214,477 Adjusted Operating Income 742,954 769,672 Adjusted Operating Margin 22.9 % 21.8 % Depreciation 188,120 172,683 Adjusted EBITDA $ 931,074 $ 942,355 Adjusted EBITDA – as a % of net sales 28.7 % 26.7 % 1 Non-cash impairment charges associated with goodwill of our former Electronic Chemicals business and a small, industrial specialty chemicals business. 2 Deal and transaction costs associated with the CMC Materials acquisition and completed divestitures. 3 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. 4 Represents severance charges related to the integration of the CMC Materials acquisition. 5 Represents retention charges related directly to the CMC Materials acquisition and completed divestitures, and are not part of our normal, recurring cash operating expenses. 6 Represents other employee-related costs and other costs incurred relating to the CMC Materials acquisition and the completed divestitures.
See “Non-GAAP Information” included below in this section for additional detail, including the reconciliation of the Company’s non-GAAP measures to the most directly comparable GAAP measures.
See “Non-GAAP Information” included below in this section for additional detail, including the reconciliation of the Company’s non-GAAP measures to the most directly comparable GAAP measures. The Company’s non-GAAP financial measures include Adjusted EBITDA and Adjusted Operating Income, together with related percentage changes, and Non-GAAP Earnings Per Share, or EPS.
The Company often works directly with its customers to address their particular needs. Amortization of intangible assets Amortization of intangible assets was $214.5 million in 2023 compared to $144.0 million for 2022. The increase primarily reflects the full-year of amortization expense associated with the intangible assets acquired in the CMC Materials acquisition.
The Company often works directly with its customers to address their needs. Amortization of intangible assets Amortization of intangible assets was $190.1 million in 2024 compared to $214.5 million for 2023.
These costs arise outside of the ordinary course of our continuing operations. 7 Represents non-recurring costs associated with the CMC Materials retention program that was agreed upon and set forth in the definitive acquisition agreement. 8 Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards. 9 Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition. 10 Restructuring charges resulting from cost saving initiatives. 11 Loss (gain) from the sale of our businesses. 12 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to CMC Materials acquisition. 13 Gain on termination of the Alliance Agreement with MacDermid Enthone. 14 Impairment of long-lived assets. 15 Non-cash amortization expense associated with intangibles acquired in acquisitions. 48 Table of Contents The reconciliation of GAAP measures to Non-GAAP EPS for the years ended December 31, 2023 and 2022 are presented below: (In thousands, except per share data) 2023 2022 Net income $ 180,669 $ 208,920 Adjustments to net income: Goodwill impairment 1 115,217 — Deal and transaction costs 2 3,001 39,543 Integration costs: Professional fees 3 36,650 35,422 Severance costs 4 1,478 6,269 Retention costs 5 1,687 1,987 Other costs 6 13,710 7,053 Contractual and non-cash integration costs: CMC Materials retention costs 7 — 18,030 Stock-based compensation alignment 8 — 21,584 Change in control costs 9 — 22,350 Restructuring costs 10 14,745 — Loss on extinguishment of debt and modification 11 29,896 3,287 Loss (gain) on sale of businesses 12 23,839 (254) Gain on termination of Alliance Agreement 13 (184,754) — Infineum termination fee, net 14 (10,877) — Charge for fair value write-up of acquired inventory sold 15 — 61,932 Interest expense, net 16 — 29,822 Impairment on long-lived assets 17 30,464 — Amortization of intangible assets 18 214,477 143,953 Tax effect of adjustments to net income and discrete tax items 19 (71,284) (65,728) Non-GAAP net income $ 398,918 $ 534,170 Diluted earnings per common share $ 1.20 $ 1.46 Effect of adjustments to net income $ 1.45 $ 2.27 Diluted non-GAAP earnings per common share $ 2.64 $ 3.73 Diluted weighted average shares outstanding 150,945 143,146 1 Non-cash impairment charges associated with goodwill. 2 Deal and transaction costs associated with the CMC Materials acquisition and completed and announced divestitures. 3 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.
These costs arise outside of the ordinary course of our continuing operations. 7 Restructuring charges resulting from cost saving initiatives. 8 Represents an asset reduction of an acquired tax equalization asset from the CMC Materials acquisition. 9 (Gain) loss from the sale of certain businesses and held-for-sale assets, net. 10 Gain on termination of the alliance agreement with MacDermid Enthone. 11 Impairment of long-lived assets. 12 Non-cash amortization expense associated with intangibles acquired in acquisitions. 47 Table of Contents The reconciliation of GAAP measures to Non-GAAP EPS for the years ended December 31, 2024 and 2023 are presented below: (In thousands, except per share data) 2024 2023 Net income $ 292,787 $ 180,669 Adjustments to net income: Goodwill impairment 1 — 115,217 Deal and transaction costs 2 — 3,001 Integration costs: Professional fees 3 2,574 36,650 Severance costs 4 794 1,478 Retention costs 5 — 1,687 Other costs 6 — 13,710 Restructuring costs 7 3,930 14,745 Patent infringement settlement gain, net 8 (20,033) — Acquired tax equalization asset reduction 9 2,959 — Loss on extinguishment of debt and modification 10 14,348 29,896 (Gain) loss on sale of businesses and held-for-sale assets, net 11 (4,311) 23,839 Gain on termination of alliance agreement 12 — (184,754) Infineum termination fee, net 13 — (10,877) Impairment on long-lived assets 14 12,967 30,464 Amortization of intangible assets 15 190,119 214,477 Tax effect of adjustments to net income and discrete tax items 16 (40,146) (71,284) Non-GAAP net income $ 455,988 $ 398,918 Diluted earnings per common share $ 1.93 $ 1.20 Effect of adjustments to net income $ 1.07 $ 1.45 Diluted non-GAAP earnings per common share $ 3.00 $ 2.64 Diluted weighted average shares outstanding 151,840 150,945 1 Non-cash impairment charges associated with goodwill of our Electronic Chemicals and a small, industrial specialty chemicals businesses. 2 Deal and transaction costs associated with the CMC Materials acquisition and completed divestitures. 3 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. 4 Represents severance charges related to the integration of the CMC Materials acquisition. 5 Represents retention charges related directly to the CMC Materials acquisition and completed divestitures, and are not part of our normal, recurring cash operating expenses. 6 Represents other employee-related costs and other costs incurred relating to the CMC Materials acquisition and the completed divestitures.
Cash and cash requirements (In thousands) December 31, 2023 December 31, 2022 Cash and cash equivalents $ 456,929 $ 561,559 U.S. 154,015 136,262 Non-U.S. 302,914 425,297 Restricted cash - U.S. — 1,880 Cash, cash equivalents and restricted cash $ 456,929 $ 563,439 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.
There were no outstanding borrowings under this line of credit and no balance was outstanding at December 31, 2024. 43 Table of Contents Cash and cash requirements (In thousands) December 31, 2024 December 31, 2023 Cash and cash equivalents $ 329,213 $ 456,929 U.S. 49,027 154,015 Non-U.S. 280,186 302,914 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.
The sales increase was primarily due to improved sales from liquid filtration products. MC reported a segment profit of $395.3 million for 2023, down 4% compared to $411.5 million in 2022.
The sales decrease was primarily due to lower sales from our microenvironment solutions products, partially offset by improved sales from our liquid filtration products. APS reported a segment profit of $531.4 million for 2023, down 11% compared to $595.2 million in 2022.
For example, the Company’s non-GAAP measure of Adjusted EBITDA may not be directly comparable to EBITDA or an Adjusted EBITDA measure reported by other companies. Second, the Company’s non-GAAP financial measures exclude items such as amortization and depreciation that are recurring.
Accordingly, the methodology used to produce the Company’s non-GAAP financial measures is not computed under GAAP and may differ notably from the methodology used by other companies. For example, the Company’s non-GAAP measure of Adjusted EBITDA may not be directly comparable to EBITDA or an Adjusted EBITDA measure reported by other companies.
These costs arise outside of the ordinary course of our continuing operations. 7 Represents non-recurring costs associated with the CMC retention program that was agreed upon and set forth in the definitive acquisition agreement. 8 Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards. 49 Table of Contents 9 Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition. 10 Restructuring charges resulting from cost saving initiatives. 11 Non-recurring loss on extinguishment of debt and modification of our debt. 12 Loss (gain) from the sale of our businesses. 13 Gain on termination of the Alliance Agreement with MacDermid Enthone. 14 Non-recurring gain from the termination fee with Infineum. 15 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition. 16 Non-recurring interest costs related to the financing of the CMC Materials acquisition. 17 Impairment of long-lived assets. 18 Non-cash amortization expense associated with intangibles acquired in acquisitions. 19 The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate for each respective year.
These costs arise outside of the ordinary course of our continuing operations. 7 Restructuring charges resulting from cost saving initiatives. 8 During the fourth quarter of 2024, the Company settled patent infringement litigation and received net proceeds of $20.0 million. 9 Represents an asset reduction of an acquired tax equalization asset from the CMC Materials acquisition. 10 Loss on extinguishment of debt and modification of our Existing Credit Agreement. 11 (Gain) loss from the sale of certain businesses and held-for-sale assets, net. 12 Gain on termination of the alliance agreement with MacDermid Enthone. 13 Non-recurring gain from the termination fee with Infineum. 14 Impairment of long-lived assets. 15 Non-cash amortization expense associated with intangibles acquired in acquisitions. 16 The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate for each respective year. 48 Table of Contents
Commitments under operating and financing leases primarily relate to leasehold properties. See Note 15 of the consolidated financials for additional information. Income tax liabilities . Of the tax liabilities included in the table above, $67.7 million relates to uncertain tax positions. We are unable to accurately predict when these amounts will be realized or released.
Income tax liabilities . Of the tax liabilities included in the table above, $44.3 million relates to uncertain tax positions. We are unable to accurately predict when these amounts will be realized or released.
Liquidity and Capital Resources We consider the following when assessing our liquidity and capital resources: In thousands December 31, 2023 December 31, 2022 Cash, cash equivalents and restricted cash $ 456,929 $ 563,439 Working capital 1,463,332 1,573,254 Total debt 4,577,141 5,784,893 The Company has historically financed its operations and capital requirements through cash flow from its operating activities, long-term loans, lease financing and borrowings under domestic and international short-term lines of credit.
The $76.3 million decrease is primarily due to a $95.7 million decrease in deal, transaction and integration costs related to the acquisition of CMC Materials, partially offset by an increase in employee costs of $14.1 million. 41 Table of Contents Liquidity and Capital Resources We consider the following when assessing our liquidity and capital resources: (In thousands) December 31, 2024 December 31, 2023 Cash and cash equivalents $ 329,213 $ 456,929 Working capital 1,091,126 1,463,332 Total debt 3,981,105 4,577,141 The Company has historically financed its operations and capital requirements through cash flow from its operating activities, long-term loans, lease financing and borrowings under domestic and international short-term lines of credit.
The following table and discussion reflects the results of operations of the Company’s three reportable segments for the years ended December 31, 2023, 2022 and 2021.
See Note 20 to the consolidated financial statements for additional information on the Company’s two segments. 40 Table of Contents The following table and discussion reflects the results of operations of the Company’s two reportable segments for the years ended December 31, 2024, 2023 and 2022.
They were not recorded as liabilities on the Company’s consolidated balance sheet as of December 31, 2023, as the Company had not yet received the related goods or taken title to the property. We expect capital expenditure spending to be approximately $350.0 million in 2024 for growth capacity investments and the construction of our new manufacturing facility in Colorado.
They were not recorded as liabilities on the Company’s consolidated balance sheet as of December 31, 2024, as the Company had not yet received the related goods or taken title to the property.
An analysis of the factors underlying the increase in SG&A expenses is presented in the following table: (In thousands) Selling, general and administrative expenses in 2022 $ 543,485 Employee costs, mainly driven by the inclusion of CMC Materials 35,671 Impairment on long-lived assets, see Note 3 to the Company’s Consolidated Financial Statements 30,464 Loss on sale of businesses, see Note 5 to the Company’s Consolidated Financial Statements 23,822 Professional costs, mainly driven by the inclusion of CMC Materials 14,321 Computer supplies expense, mainly driven by the inclusion of CMC Materials 6,367 Project related expense, mainly driven by the inclusion of CMC Materials 3,995 Integration, deal and transaction costs, mainly due to CMC Materials acquisition in prior year (95,712) Other increases, net 13,781 Selling, general and administrative expenses in 2023 $ 576,194 Engineering, research and development expenses ER&D expenses consist of expenses for the support of current product lines and the development of new products and manufacturing technologies.
An analysis of the factors underlying the decrease in SG&A expenses is presented in the following table: 38 Table of Contents (In thousands) Selling, general and administrative expenses in 2023 $ 576,194 Integration, deal and transaction costs, mainly due to CMC Materials acquisition (53,158) Loss on sales of EC and QED businesses in 2023 (23,839) Employee costs, mainly driven by divested businesses (17,991) Impairment on long-lived assets, see Note 3 to the Company’s Consolidated Financial Statements (17,497) Depreciation expense (7,919) Gain on sale of PIM business in 2024 (4,311) Other decreases, net (4,912) Selling, general and administrative expenses in 2024 $ 446,567 Engineering, research and development expenses Engineering, research and development (“ER&D”) expenses consist of expenses for the support of current product lines and the development of new products and manufacturing technologies.
See Note 5 to our consolidated financial statements for further discussion. On October 2, 2023, the Company completed its divestiture of the Electronic Chemicals (“EC”) business. The Company received cash proceeds of $737.1 million, or net proceeds of $675.2 million. See Note 5 to our consolidated financial statements for further discussion.
Recent Events On March 1, 2024, the Company completed the sale of its PIM business. The Company received net cash proceeds of $256.2 million. See Note 5 to our consolidated financial statements for additional information.
The decrease resulted primarily from the absence of the prior-year acquisition of CMC Materials, partially offset by proceeds from the sale of QED and the EC businesses totaling $815.0 million, net proceeds from the termination of the Alliance Agreement totaling $199.3 million in the current year, and a $9.4 million decrease in capital expenditures in the current year compared to the prior year.
The decrease in 2024 resulted primarily from less proceeds from divestitures of $564.2 million and the absence of net proceeds from the termination of the alliance agreement of $191.2 million, partially offset by a $141.2 million decrease in capital expenditures compared to the prior year.
Our critical accounting policies that are most significantly affected by estimates, assumptions and judgments used in the preparation of the Company's consolidated financial statements relate to business acquisitions and are discussed below. See Note 1 to the Company’s consolidated financial statements for additional information about the Company’s other significant accounting policies.
In addition, actual results could be different from the Company’s current estimates, possibly resulting in increased future charges to earnings. 36 Table of Contents Our critical accounting policies that are most significantly affected by estimates, assumptions and judgments used in the preparation of the Company's consolidated financial statements relate to business acquisitions and are discussed below.
The Company is a leading supplier of mission-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, performance and technology in the most advanced manufacturing environments.
The Company is a leading supplier of critical advanced materials and process solutions for the semiconductor and other high-technology industries.
Investing activities I nvesting cash flows consist primarily of capital expenditures, cash used for acquisitions, proceeds from sales of businesses and proceeds from sales of property and equipment. In 2023, there was $553.1 million of cash provided by investing activities compared to $4,945.7 million cash used in investing activities in 2022.
The change for accounts payable and accrued liabilities was driven by timing of payments. Investing activities I nvesting cash flows consist primarily of capital expenditures, cash used for acquisitions, proceeds from sales of businesses and proceeds from sales of property and equipment.
On January 17, 2024, the Company’s board of directors declared a quarterly cash dividend of $0.10 per share to be paid on February 21, 2024 to shareholders of record as of January 31, 2024. 43 Table of Contents Other Liquidity and Capital Resources Considerations Debt at par value outstanding (In thousands) December 31, 2023 December 31, 2022 Senior secured term loan due 2029 $ 1,373,774 $ 2,495,000 Senior secured notes due 2029 at 4.75% 1,600,000 1,600,000 Senior unsecured notes due 2030 at 5.95% 895,000 895,000 Senior unsecured notes due 2029 at 3.625% 400,000 400,000 Senior unsecured notes due 2028 at 4.375% 400,000 400,000 Bridge credit facility due 2023 — 135,000 Revolving facility due 2027 — — Total debt (par value) $ 4,668,774 $ 5,925,000 On March 10, 2023, and September 11, 2023, the Company amended its Existing Credit Agreement.
Other Liquidity and Capital Resources Considerations Debt at par value outstanding (In thousands) December 31, 2024 December 31, 2023 Senior secured term loan due 2029 at 4.71% (1) $ 750,000 $ 1,373,774 Senior secured notes due 2029 at 4.75% 1,600,000 1,600,000 Senior unsecured notes due 2030 at 5.95% 895,000 895,000 Senior unsecured notes due 2029 at 3.625% 400,000 400,000 Senior unsecured notes due 2028 at 4.375% 400,000 400,000 Revolving facility due 2027 at 6.07% (2) — — Total debt (par value) $ 4,045,000 $ 4,668,774 (1) The Company entered into a floating-to-fixed swap contract on its variable rate debt under our senior secured term loan facility due 2029.
The Company had no restricted cash as of December 31, 2023. Cash requirements 44 Table of Contents 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 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. 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.
The transaction is described in further detail in Note 4 to the Company’s consolidated financial statements. Financing activities Financing cash flows consist primarily of repurchases of common stock, payment of dividends to stockholders, issuance and repayment of short-term and long-term debt, and proceeds from the sale of shares of common stock through employee equity incentive plans.
Capital expenditures in 2024 included spending related to our previously announced investment in our KSP site and new manufacturing facility in Colorado Springs, Colorado. 42 Table of Contents Financing activities Financing cash flows consist primarily of repurchases of common stock, payment of dividends to stockholders, issuance and repayment of short-term and long-term debt, and proceeds from the sale of shares of common stock through employee equity incentive plans.
The amended loans under the First Amendment bore interest at a rate per annum equal to the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 2.75% which was a reduction from the applicable margin of 3.00% prior to the First Amendment.
The amended loans bear interest at a rate per annum equal to, at the Company’s option, either (i) the SOFR plus an applicable margin of 1.75%, which is a reduction from the applicable margin of 2.50% prior to the amendment, or (ii) a base rate plus an applicable margin of 0.75%, which is a reduction from the applicable margin of 1.50% prior to the amendment.
See Note 5 to the Company’s consolidated financial statements for further discussion. Interest expense Interest expense was $312.4 million in 2023 and $212.7 million in 2022. Interest expense includes interest associated with debt outstanding and the amortization of debt issuance costs associated with such borrowings.
Interest expense Interest expense was $215.2 million in 2024 and $312.4 million in 2023. Interest expense includes interest associated with debt outstanding and the amortization of debt issuance costs associated with such borrowings. The decrease reflects lower interest expense related to lower average debt balances for the period due to repayments on the Company’s outstanding debt.
Accordingly, our segment information was restated retroactively in the third quarter of fiscal year 2023. The segment realignment had no impact on the Microcontamination Control or Advanced Materials Handling segment financial reporting. See Note 21 to the consolidated financial statements for additional information on the Company’s three segments.
Following the segment realignment, the Company’s two reportable segments are Materials Solutions and Advanced Purity Solutions. Accordingly, our segment information was restated retroactively in the fourth quarter of fiscal year 2024. The segment realignment had no impact on the Materials Solutions segment financial reporting.
Supply purchase obligations . We have non-cancelable commitments, including take-or-pay contracts, that are not presented as capital purchase commitments above. They were not recorded as liabilities on the Company’s consolidated balance sheet as of December 31, 2023, as the Company had not yet received the related goods or taken title to the property. Operating and financing lease commitments .
They were not recorded as liabilities on the Company’s consolidated balance sheet as of December 31, 2024, as the Company had not yet received the related goods or taken title to the property. Operating and financing lease commitments . Commitments under operating and financing leases primarily relate to leasehold properties. See Note 14 of the consolidated financials for additional information.
The current annual and succeeding annual periods will disclose the reportable segments with prior periods recast to reflect the change. • The Materials Solutions segment, or MS, provides materials-based solutions, such as chemical mechanical planarization (“CMP”) slurries and pads, deposition materials, process chemistries and gases, formulated cleans, etchants 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 Microcontamination Control segment, or MC, offers advanced solutions that improve customers’ yield, device reliability and cost by filtering and purifying critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries. ▪ The Advanced Materials Handling segment, or AMH, develops solutions that improve customers’ yields by protecting critical materials during manufacturing, transportation, and storage, including products that monitor, protect, transport and deliver critical liquid chemistries, wafers, and other substrates for a broad set of applications in the semiconductor, life sciences and other high-technology industries.
These segments share common business systems and processes, technology centers and technology roadmaps. ▪ 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.
The Company’s effective tax rate was (4.9)% in 2023 compared to an effective tax rate of 15.4% in 2022. The decrease in the effective tax rate from 2022 to 2023 relates to a tax benefit of $17.4 million recorded in 2023 related to divestiture and impairment activity.
Income tax expense The Company recorded income tax expense of $28.3 million in 2024 compared to an income tax benefit of $8.4 million in 2023. The Company’s effective tax rate was 8.8% in 2024 compared to an effective tax rate of (4.9)% in 2023.
The increase in AMH’s profit in 2022 was primarily due to higher sales volume, partially offset by a 16% increase in operating expenses, primarily due to higher compensation costs. Unallocated general and administrative expenses Unallocated general and administrative expenses for 2023 totaled $114.2 million compared to $190.5 million for 2022.
The $55.9 million decrease is primarily due to a $53.2 million decrease in deal, transaction and integration costs related to the acquisition of CMC Materials. Unallocated general and administrative expenses for 2023 totaled $114.2 million compared to $190.5 million for 2022.
Additionally, the tax rate was lower in 2023 due to changes to the jurisdictional income mix resulting from the acquisition of CMC Materials and the temporary changes in the U.S. tax regulations pertaining to foreign tax credits. The tax rate in 2022 was higher due to non-deductible acquisition related costs and a decrease in discrete benefits related to share-based compensation.
The change in the effective tax rate from 2023 to 2024 primarily relates to the integration of the CMC acquisition and, discrete divestiture activity that occurred in 2023. Additionally, the tax rate was lower in 2023 due to changes in U.S. tax regulations pertaining to foreign tax credits.
See Note 11 to our consolidated financial statements for further discussion. During the fiscal year 2023, the Company repaid $1.1 billion of the outstanding borrowings under the New Tranche B Term Loan and $135.0 million in full repayment of all outstanding borrowings under the bridge credit facility.
In connection with the Third Amendment, the Company made a payment of $354.5 million on the term loans B. See Note 10 to our consolidated financial statements for further discussion. During the fiscal year 2024, the Company repaid $623.8 million net of borrowings under the term loans B under the Term Loan Facility.
In 2023, there was $1,282.6 million of cash used in financing activities compared to $4,766.2 million cash provided by in financing activities in 2022. The change was primarily due to the net debt activity, which was a use of cash of $1,259.7 million in 2023 compared to a source of cash of $4,831.3 million.
In 2024, there was $689.0 million of cash used in financing activities compared to $1,297.5 million cash used in financing activities in 2023. The change in 2024 was primarily due to decreased net debt activity of $635.9 million compared to the prior year.
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. 42 Table of Contents In summary, our cash flows for each period were as follows: (in thousands) Year ended December 31, 2023 Year ended December 31, 2022 Net cash provided by operating activities $ 629,562 $ 352,283 Net cash provided by (used in) investing activities 553,071 (4,945,709) Net cash (used in) provided by financing activities (1,282,629) 4,766,203 (Decrease) increase in cash and cash equivalents (106,510) 160,874 Operating activities Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.
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.
Total net sales also reflected unfavorable foreign currency translation effects of $33.2 million, mainly due to the significant weakening of the Japanese yen relative to the U.S. dollar, and decreased demand from customers in the semiconductor market, resulting in a decrease of $146.5 million compared to the year ago period ended December 31, 2022. 38 Table of Contents Sales percentage on a geographic basis for 2023 and 2022 and the percentage increase (decrease) in sales for 2023 compared to sales for 2022 were as follows: Year ended December 31, 2023 December 31, 2022 Percentage increase (decrease) in sales North America 25 % 24 % 12 % Taiwan 17 % 20 % (11) % China 16 % 15 % 13 % South Korea 13 % 13 % 7 % Japan 10 % 11 % 5 % Europe 11 % 10 % 24 % Southeast Asia 7 % 7 % 12 % The increase in sales to customers for all countries and regions, except Taiwan, in the table above was principally driven by the inclusion of sales from the acquisition of CMC Materials.
Sales percentage on a geographic basis for 2024 and 2023 and the percentage increase (decrease) in sales for 2024 compared to sales for 2023 were as follows: Year ended December 31, 2024 December 31, 2023 Percentage increase (decrease) in sales North America 21 % 25 % (25) % Taiwan 20 % 17 % 12 % China 21 % 16 % 18 % South Korea 13 % 13 % (6) % Japan 10 % 10 % (16) % Europe 8 % 11 % (32) % Southeast Asia 7 % 7 % (12) % The decrease in sales to customers in North America primarily relate to the absence of sales from divested businesses.
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 is not computed under GAAP and may differ notably from the methodology used by other companies.
Management strongly encourages investors to review the Company’s consolidated financial statements in their entirety and to not rely on any single financial measure. 45 Table of Contents Management notes that the use of non-GAAP measures has limitations, including but not limited to: First, non-GAAP financial measures are not standardized.
The increase was primarily driven by a full year of interest expense based on timing on CMC Materials close in 2022. Interest income Interest income was $11.3 million in 2023 and $3.7 million in 2022. The increase reflects rising average interest rates and cash balances.
Interest income Interest income was $7.4 million in 2024 and $11.3 million in 2023. The decrease primarily reflects lower average cash balances. Other expense, net Other expense, net, was $4.0 million in 2024 compared to $25.4 million in 2023.
The increase in MS’s profit in 2023 was primarily associated with a gain of $184.8 million resulting from the termination of the Alliance Agreement (see Note 5 to our consolidated financial statements for further discussion), the absence of a $61.9 million charge for a fair value write-up resulting from the sale of acquired CMC Materials inventory that was recorded in the year-ago period and segment profit attributed to the CMC Materials acquisition, partially offset by a goodwill impairment charge of $104.8 million related to the EC reporting unit (see Note 3 to our consolidated financials statements for further discussion), a $8.9 million loss on asset held for sale related to the EC reporting unit, a goodwill impairment charge of $10.4 million, long-lived asset impairment charge of $30.5 million (see Note 3 to our consolidated financials statements for further discussion) and a $14.9 million loss on the sale of QED.
The decrease was primarily associated with (1) the absence of a $184.8 million gain resulting from the termination of the alliance agreement with MacDermid Enthone in 2023, (2) the absence of segment profit associated with divested businesses, partially offset with (3) the absence of a goodwill impairment charge of $115.2 million, (4) the absence of $23.8 million loss on sale of business and held-for-sale in 2023, (5) a decrease of a $17.5 million of impairment charges related to the long-lived assets of a small, industrial specialty chemicals business in 2023, (6) a $4.3 million gain associated with sale of the PIM business, and (7) improved plant performance.
The decrease in sales in Taiwan primarily relates to lower sales demand of AMH and MC products partially offset by an increase in sales resulting from the inclusion of sales from the CMC Materials acquisition.
The decrease in sales to customers in Southeast Asia primarily relates to the absence of sales from divested businesses, partially offset by increased demand for our MS products.
Adjusted Operating Income decreased by 8.1% to $769.7 million in 2023, compared to $837.9 million in 2022. Adjusted Operating Income as a percent of net sales was 21.8% in 2023 compared to 25.5% in 2022. Non-GAAP EPS decreased 29.2% to $2.64 in 2023, compared to $3.73 in 2022.
Year ended (In thousands) December 31, 2024 December 31, 2023 Percent change Adjusted Operating Income $ 742,954 $ 769,672 (3.5) % Adjusted Operating Margin - as a % of net sales 22.9 % 21.8 % Adjusted EBITDA $ 931,074 $ 942,355 (1.2) % Adjusted EBITDA - as a % of net sales 28.7 % 26.7 % Non-GAAP EPS $ 3.00 $ 2.64 13.6 % The decreases in Adjusted Operating Income and Adjusted EBITDA in 2024 compared to 2023 are generally attributable to decreased net sales and gross profit due to divested businesses and higher operating expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Company’s cash and cash equivalents include cash on hand and highly liquid debt securities with original maturities of three months or less. A 100-basis point change in interest rates would potentially increase or decrease annual net income by approximately $3.4 million and $15.5 million annually for the years ended December 31, 2023 and 2022, respectively.
Biggest changeThe Company’s cash and cash equivalents include cash on hand and highly-liquid debt securities with original maturities of three months or less. A 100-basis point change in interest rates would potentially increase or decrease annual net income by approximately $2.5 million and $3.4 million for the years ended December 31, 2024 and 2023, respectively.
The Company occasionally uses derivative financial instruments to manage the foreign currency exchange rate risks associated with its foreign-based operations. However, we are unlikely to be able to hedge these exposures completely. We do not enter into forward contracts or other derivative instruments for speculative or trading purposes. See Note 13 of the consolidated financials for additional information.
The Company occasionally uses derivative financial instruments to manage the foreign currency exchange rate risks associated with its foreign-based operations. However, we are unlikely to be able to hedge these exposures completely. We do not enter into forward contracts or other derivative instruments for speculative or trading purposes. See Note 12 of the consolidated financials for additional information.
The cash flows and results of operations of the Company’s foreign-based operations are subject to fluctuations in foreign currency exchange rates. Approximately 22.0% and 22.7% of the Company’s sales during 2023 and 2022 were collectively denominated in the South Korean won, New Taiwan dollar, Chinese renminbi, Canadian dollar, Malaysian ringgit, Singapore dollar, euro, Israeli shekel and the Japanese yen.
The cash flows and results of operations of the Company’s foreign-based operations are subject to fluctuations in foreign currency exchange rates. Approximately 16.7% and 22.0% of the Company’s sales during 2024 and 2023 were collectively denominated in the South Korean won, New Taiwan dollar, Chinese renminbi, Canadian dollar, Malaysian ringgit, Singapore dollar, euro, Israeli shekel and the Japanese yen.
Item 7A. Quantitative and Qualitative Disclosure About Market Risks. Entegris’ principal financial market risks are sensitivities to interest rates and foreign currency exchange rates. The Company’s interest-bearing cash and cash equivalents and variable rate debt are subject to interest rate fluctuations.
Item 7A. Quantitative and Qualitative Disclosure About Market Risks. Entegris’ principal financial market risks are sensitive to interest rates and foreign currency exchange rates. The Company’s interest-bearing cash and cash equivalents and variable rate debt are subject to interest rate fluctuations.
On July 28, 2022, the Company entered into a floating-to-fixed interest rate swap agreement to hedge the variability in SOFR-based interest payments associated with $1.95 billion of its $2.495 billion Initial Term Loan Facility. The notional amount of the swap is $1.4 billion at December 31, 2023 and is scheduled to decrease quarterly and will expire on December 30, 2025.
On July 28, 2022, the Company entered into a floating-to-fixed interest rate swap agreement to hedge the variability in SOFR-based interest payments associated with $1.95 billion of its $2.495 billion Initial Term Loan Facility. The notional amount of the swap is $750.0 million at December 31, 2024 and is scheduled to decrease quarterly and will expire on December 30, 2025.
Financial results therefore will be affected by changes in currency exchange rates. If all foreign currencies were to see a 10% reduction versus the U.S. dollar during the years ended December 31, 2023 and 2022, revenue would be negatively impacted by approximately $76.8 million and $62.6 million, respectively.
Financial results therefore will be affected by changes in currency exchange rates. If all foreign currencies were to see a 10% reduction versus the U.S. dollar during the years ended December 31, 2024 and 2023, revenue would be negatively impacted by approximately $53.2 million and $76.8 million, respectively.

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