ENTG 10-K & 10-Q changes, risk factors and insider trading

•ContinuingThe need for continuing innovation and introduction of new products.

Our revenue is primarily dependent upon demand from the global semiconductor ecosystemecosystem. Fluctuations in demand, whether from industry cyclicality, changes in consumer spending, macroeconomic conditions, or other factors, may cause our revenues and fluctuationsoperating inresults demandto forvary semiconductorssignificantly, andwhich the overall volume of semiconductor manufacturing may decrease demand for our products and maycould adversely affect our business.

During downturns in the semiconductor industry, which can occur suddenly, 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 have in the past experienced 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.industry Furthermore,and thecost semiconductorcontrol or other measures we implement to maintain profitability during such downturns or periods of limited growth may constrain or limit our ability to capitalize on subsequent industry is subject to rapid advancements and demand for new and emerging technologies, such as artificial intelligence. If we do not have, or are unable to develop, products and solutions that are utilized to manufacture semiconductors that enable new end-user demand trends, we may not be able to grow our revenue as fast as anticipated and our results of operations may be impacted.recoveries.

GlobalAs a result of global economic uncertaintyuncertainty, we may experience reduced demand for our products, increased costs, challenges in forecasting our operating results and identifying and prioritizing business risks, and other negative effects, any of which may materially and adversely affect our business, financial condition and results of operations.

Uncertain and volatile economic conditions, including uncertainfinancial market instability, inflation and volatileincreased financialcosts, markets,trade inflation,wars, fluctuating interest rates, economic slowdowns and/or recessions, difficulties in obtaining capital, and national debt and bank failures, could materially and adversely impact our operating results. Such uncertainconditions, andparticularly volatileif conditionspresent in any of our key sales or manufacturing regionsregions, can cause or exacerbate negative trends in business and consumer spending, which, in turn, historically have historicallyincreased hadour amanufacturing negativeand impactdelivery oncosts and reduced customer demand for our products (and costsmay do so in the future). We may also face a number of manufacturingother andnegative deliveringeffects ourrelated products.to global economic uncertainty, including.

•limitingan ourinability suppliers’of abilitysuppliers to deliver parts and raw materials, which would negatively affect our ability to manage operations, manage our costs and sell our products;

•a need to undertake additional cost reduction efforts, including additional restructuring activities, which may adversely affect our ability to capitalize on opportunities; and

The Company’s strategies to limit its reliance on single, sole or limited source suppliers and utilize alternative sources are not feasible or practical in all circumstances. 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. 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,impossible to find an alternative suppliersupplier, which could adversely affect our operations. In addition, qualifying alternative suppliers or materials (or relocating manufacturing) can be time-consuming and costly due to providecustomer certainqualification rawrequirements, materialsregulatory approvals, and components,the technical sensitivity of many of our products. Disruptions to transportation routes, ports, air freight capacity, or regional infrastructure in whichAsia case(including in locations where we or our operationssuppliers manufacture or where key customers operate) could befurther adverselydelay affected.deliveries, increase costs, or reduce our ability to serve customers.

Surge in demand for semiconductors and otherSeveral factors outside of our controlcontrol, including, but not limited to, surges in demand for semiconductors, changes in trade policies, the imposition of foreign export controls on critical materials and minerals and international conflicts, 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. 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 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. If our suppliers or sub-suppliers are unable to maintain their operations,operations due to operational restrictions or financial hardship caused by an economic slowdown or recession, we may need to increase our safety stocks of raw materials or components or alter our payment terms with such suppliers, including prepaying for raw materials,materials. whichThese measures could put downward pressure onreduce our cashavailable flow.working capital, increase our inventory carrying costs, and negatively impact our liquidity and overall financial flexibility.

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.business, including changes in economic policy, geopolitical tensions and challenges in managing a diverse workforce and operating under differing business and legal environments, which may harm our reputation or profitability.

•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 additional costs on our operations, (2) limit our ability to operate our business and (3) adversely impact us, our customers or our suppliersmeasures;

•geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, the ongoing conflict in the Middle EastEast, and increasing tensions between China and Taiwan and between China and the U.S., and other political and economic instability and uncertaintyU.S.;

•challenges in hiring and integrating workers in different countries and 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;

In the past, these factors have disrupted our operations and increased our costs, and we expect that these factors will continue to do so in the future. Furthermore, there is inherent risk, based on the complex relationships among China, Japan, Korea, Taiwan, and the U.S., that political, diplomatic and national security influences could lead to trade disputes, impacts and/or disruptions, in particular those affecting the semiconductor industry. This can adversely affect our business with China, Japan, Korea, and/or Taiwan and potentially the entire Asia Pacific region or global economy. A significant trade dispute, impact and/or disruption in any area where we do business could have a materially adverse impact on our future revenue and profits.

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. 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 and/or other governments before delivering the controlled item or service. Obtaining export licenses may be difficult, costly and time-consuming, and we may fail to receive licenses that we apply for on a timely basis or at all. Even where a license is ultimately granted, the licensing process may result in extended delivery timelines, increased administrative burden, and customer uncertainty, any of which could cause customers to delay, reduce, or cancel orders, shift purchases to competitors, or redesign processes around non-U.S. alternatives. In addition, export controls and sanctions regimes are dynamic and may be expanded to cover additional products, technology, end uses, end users, or jurisdictions (including through restrictions applicable to non-U.S. persons or foreign subsidiaries), which could further limit our ability to sell or support products and services in certain markets. We must also comply with export control and economic sanctions laws and regulations imposed by other countries. OurAlthough we maintain an export and trade control compliance programprogram, it may not be fully effective or may be ineffective or circumvented, exposing us to legal liabilities. Compliance with these laws could significantly limit our sales in the future. Changes in, andor responses to, U.S. or other countries’ trade controls could reduce the competitiveness of our products and cause our sales to decline, which could have a material adverse effect on our business, financial condition and results of operations.

Over the last several years, the U.S. governmentand hasother governments have 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 2024.2025. 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. Furthermore, these restrictive measures have incentivized Chinese domestic semiconductor companies to work more closely with local Chinese companies and companies headquartered outside of the United StatesU.S. in an effort to enable these companies to enhance the technology-level and quality of their products and, as a result, to better compete with our products. 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. 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 costscosts, impose export restrictions on raw materials and components, such as the restrictions imposed on critical materials and minerals by China in 2025, or require the license or other transfer of intellectual property, which could have a significant adverse impact on our business.

SalesBecause towe ahave limited number of large customers constitute a significant portion of our overall revenue, shipments, cash flows, collections and profitability. Our top ten customers accounted for 48%, 43% and 43% of our net sales in 2024, 2023 and 2022, respectively. We would haveor no or limited contractual recourse if our customers decided to stop buying and using our products in their manufacturing processes with limited advance noticenotice, to us. Thethe cancellation, reduction or deferral of purchases of our products by any one of these customers could significantly reduce our revenues in any particular quarter. If we were to lose any of our significant customers, if our products are not specified for our significant customers’ productsproducts, if our customers lose market share to competitors with whom we do not have as strong relationships or as favorable commercial terms, or if we suffer a material reduction in their purchase orders, our revenue could decline and our business, financial condition and results of operations could be materially and adversely affected. Due to the long design and development cycle and lengthy customer product qualification periods required for most of our products, we may be unable to replace these customers quickly, if at all. In addition, our principal customers hold considerable purchasing power and may be able to negotiate sales terms that result in decreased pricing, increased costs, lower margins and/or limit our ability to share jointly-developed technology with others. 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. Furthermore, we rely on independent distributors, in addition to our direct sales force, to market and sell certain of our products globally. If these distributors fail to devote sufficient resources to selling our products or are otherwise unsuccessful in doing so, our revenue and results of operations could be materially adversely affected.

Our customer base is also geographically concentrated, particularly in Taiwan, Korea, Japan, China and the U.S. As a result, export regulationsregulations, the imposition of tariffs 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 changes in technology and competitive landscape, as well as government policy and incentives to develop regional semiconductor industries.

We operate in theThe semiconductor industry, whichindustry 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. Following development, it may take several years for sales of a new product to reach a substantial level, if ever. 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. 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.future, and for other projects that failed to find commercial viability.

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. 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. TheDeveloping new products or enhancing existing products is complex, costly and technologyuncertain, and, if a new product is adopted by our customers, we choosemust toramp developmanufacturing andquickly, market maywhile also notmanaging be successful.costs. In addition, ifour newcustomers productsimpose havevery high quality and reliability standards on our products, which often change and can be difficult and costly to achieve. A failure to satisfy these customer standards or qualityto problems,comply wewith industry, regulatory and technical requirements may experienceresult in reduced orders, higher manufacturing costs, delays in acceptance and payment, additional service and warranty expense and damage to our reputation.reputation, which may adversely affect our revenue and results of operations.

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.process, Any future difficulties couldwhich cause lower yields, makedelivery delays and harm our products unmarketable and/or delay deliveriesability to serve 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. We have moved, and we may in the future move, the manufacture of certain products from one plant to another.another, which may be costly and time-consuming. 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. Even if we successfully move our manufacturing processes, we may not achieve the anticipated levels of cost savings or efficiencies, if any.any, and such disruptions may cause delays in developing or shipping our products. These and other manufacturing difficulties may result in the loss of sales and exposure to warranty and product liability claims.

Disruptions to our operations may be caused by factors outside of our control, including severe weather events and natural catastrophes, civil unrest, outbreaks of disease, and terrorist actions. 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,customers or to engage with customers on new product applications, resulting in an adverse impact on our business and results of operations.

In conducting our business, we use, collect and store sensitive data, including our financial information, intellectual property, confidential information, proprietary business information and personally identifiable information of our employees and others, as well as similar information of our customers, suppliers and business partners. 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 and our third-party suppliers have experienced, and expect to continue to be subject to, cybersecurity threats and incidents ranging from employee or contractor error or misuse to individual attempts to gain unauthorized access to systems, to sophisticated and targeted measures known as advanced persistent threats. 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. Artificial intelligenceAI capabilities are and will be used by threat actors to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks, making them even more difficult to defend against by creating more effective phishing emails or social engineering and by exploiting vulnerabilities in electronic security programs utilizing false image or voice recognition. The use of artificial intelligenceAI by us, our customers, suppliers and other business partners and third-party providers may introduce vulnerabilities onto our IT systems. We may be unable to anticipate, prevent or remediate future attacks, vulnerabilities, breaches or incidents and in some instances we may be unaware of vulnerabilities or cybersecurity breaches or incidents or their magnitude and effects, particularly as attackers are increasingly able to circumvent controls and remove forensic evidence. 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.

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. Cybersecurity incidents affecting our suppliers could impact our supply chain, which, in turn, could lead to difficulties and delays in our ability to obtain parts, materials and services needed to manufacture our products and provide services. Failure to timely recover from such delays could materially and adversely affect our business, financial condition and results of operations, and may also cause our business and financial outlook to be inaccurate.

These 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 ofassociated with the Company’s international operations;operations, theincluding impactthose ofrelated to geopolitical uncertainty and regional and global instabilities, hostilitiesinstabilities and geopolitical uncertainty,hostilities, 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; IT system failures, network disruptions, and cybersecurity risks; tariffs, additional taxes and other protectionist measures resulting from international trade disputes, strained international relations and changes in foreign and national security policy; 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; ITartificial system failures, network disruptions, and cybersecurity risksintelligence; 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. 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. 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.

The Company is a leading supplier of critical advanced materials and process solutions for the semiconductor and other high-technology industries. We leverage our unique breadth of capabilities to help ourprovide customers improvewith innovative, science-based solutions to their productivity,toughest technology challenges, helping improve productivity and product performance and technology in the most advanced manufacturing environments.

With ourOur complementary capabilities,capabilities weenable believe we are uniquely positioned to create new, co-optimized and increasinglyco-optimized, integrated solutions forthat our customers, which should translate into improvedimprove device performance, lower cost of ownership and fasteraccelerate time to market. ForWe example, we have the capabilities and core competencies to develop and co-optimize offerings solving customers’address complex manufacturing challenges across the deposition, CMP process and post-CMP modules,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). As leading semiconductor manufacturers implement molybdenum into advanced nodes, Entegris is uniquely positioned to support this transition and to solve challenges associated with integrating a new material through our expertise and solutions in precursors, deposition, etch, CMP consumables and contamination control.

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. Factors that would necessitate an interim goodwill impairment assessment include a sustained decline in the Company's stock price, effects on a reporting unit such as a change in the composition or carrying amounts of its net assets, prolonged negative industry or economic trends, or significant under-performance relative to expected, historical or projected future operating results. ManagementWe uses judgment to determine whether to use a qualitative analysis or a quantitative fair value measurement for itsallocate goodwill impairment testing. The Company's fair value measurement approach combines the income and market valuation techniques for each of the Company’sto reporting units thatat carrythe goodwill.time Theseof valuationacquisition techniquesor usewhen estimatesthere is a change in the reporting structure and assumptionsbase including,that butallocation noton limitedwhich to,reporting units will benefit from the determinationacquired of appropriate market comparable, projected future cash flows (including timingassets and profitability),liabilities. theReporting discountunits rateare reflectingdefined theas riskoperating inherentsegments or one level below an operating segment, referred to as a component. The Company has defined its reporting units as its operating segments, MS and APS as disclosed in futureNote cash20 flows,to theour perpetualconsolidated growthfinancial rate, and projected future economic and market conditions.statements.

If a reporting unit fails the quantitative impairment test, impairment expense is immediately recorded as the difference between the reporting unit’s fair value and carrying value not to exceed the amount of goodwill recorded. We recorded no impairment charges related to goodwill during the fiscal years ended December 31, 2025 and 2024. Adverse changes in the future could reduce the underlying cash flows used to estimate the reporting unit fair values and could result in a further decrease in fair value that could trigger a future impairment charge of the goodwill balance.

The decrease in sales to customers in North America primarily relaterelates to the absence of sales from the divested businesses.PIM Thebusiness increaseand infrom sales to customers in Taiwan primarily relates to increaseddecreased demand for our MS and APS products. The increase in sales to customers in ChinaTaiwan primarily relates to increased demand for our MS and APS products. The decrease in sales to customers in South Korea primarily relates to decreased demand for our MS and APS products. The decrease in sales to customers in JapanChina primarily relates to decreased demand for our APS products, partially offset by increased demand for our MS products. The increase in sales to customers in South Korea primarily relates to increased demand for our MS and APS products. The increase in sales to customers in Japan primarily relates to increased demand for our MS products, partially offset by decreased demand for our APS products. The decrease in sales to customers in Europe primarily relaterelates to thedecreased absencedemand offor salesour fromMS divestedand businesses.APS products. The decreaseincrease 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 and APS products.

Gross margin increaseddecreased by 3.4%1.5% for 20242025 compared to 2023.2024. Gross margin increaseddecreased primarily due to theplant positive impact of the divested businessesperformance and improvedhigher plantdepreciation performance.expense.

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 20242025 decreasedincreased $129.6$4.0 million, or 22%,1%, to $450.6 million from $446.6 million from $576.2 million in 2023.2024.

An analysis of the factors underlying the decreaseincrease in SG&A expenses is presented in the following table:

Amortization of intangible assets Amortization of intangible assets was $190.1$184.4 million in 20242025 compared to $214.5$190.1 million for 2023.2024. The decrease primarily reflects the absence of amortization for certain identifiable intangible assets acquired in previous acquisitions that became fully amortized and the intangible assets disposed of as part of the EC disposition.amortized.

Interest income Interest income was $7.4$7.9 million in 20242025 and $11.3$7.3 million in 2023.2024. The decreaseincrease primarily reflects lowerhigher average cash balances.balances at our foreign subsidiaries.

In 2024,2025, other expense, net consisted mainly of loss of extinguishment and modification of debt of $14.3$3.2 million associated with the repayments and the Third Amendment on the Company’s senior secured term loan facility (see Note 109 to the Company’s consolidated financial statements) and foreign currency transaction losses of $7.7$7.1 million, partially offset by a gain of $20.0 million related to the settlement of patent infringement litigation.million.

In 2023,2024, other expense, net consisted mainly of loss of extinguishment and modification of debt of $29.9$14.3 million associated with the repayments and the Third Amendment on the Company’s bridge credit facility and senior secured term loan facility and(see theNote amendments9 ofto the Company’s Existingconsolidated Creditfinancial Agreementstatements) and foreign currency transaction losses of $5.7$7.7 million, partially offset by neta proceeds receivedgain of $10.9$20.0 million resulting from the termination of the definitive agreement with Infineum related to the PIMsettlement business.of patent infringement litigation.

Income tax expense The Company recorded income tax expense of $18.0 million in 2025 compared to income tax expense of $28.3 million in 2024 compared to an income tax benefit of $8.4 million in 2023.2024. The Company’s effective tax rate was 8.8%7.1% in 20242025 compared to an effective tax rate of (4.9)%8.8% in 2023.2024.

Net income Net income was $235.6 million, or $1.55 per diluted share, in 2025 compared to net income of $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 2023.2024. The increasedecrease reflects the Company’s aforementioned operating results described in greater detail above.

The decreases in Adjusted Operating Income and Adjusted EBITDA in 20242025 compared to 20232024 are generally attributable to decreased net sales and gross profit dueand tothe absence of segment profit associated with the divested businessesPIM and higher operating expenses.business. The increasedecrease in Non-GAAP EPS in 20242025 compared to 20232024 is primarily attributable to lowerdecreased interestgross expense,profit and the absence of segment profit associated with the divested PIM business, partially offset by thelower decreasesinterest noted above for Adjusted Operating Income and Adjusted EBITDA.expense.

MS reported a segment profit of $286.2$276.6 million for 2024,2025, down 3% compared to $296.4$286.2 million in 2023.2024. The decrease was primarily associated with (1) the absencenet impact related to the divested PIM business of a $184.8$14.5 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 small, industrial specialty chemicals business of $10.9 million and held-for-sale(3) inlower 2023,plant performance, partially offset with (54) a decrease of a $17.5$13.0 million of impairment charges related to the long-lived assets of athe small,aforementioned industrial specialty chemicals business in 2023, (6) a $4.3 million gain associated with sale of the PIM business,2024 and (75) improvedhigher plantsales performance.volume.

For 2023,2025, APS net sales decreased to $1,846.6$1,799.1 million, down 4%3% from $1,914.0$1,850.2 million in 2022.2024. The sales decrease was primarilymainly due to lowera salesdecline fromin facilities-based capital expenditure investments in the semiconductor industry, which led to decreased demand for our microenvironmentfluid solutionshandling products,products and FOUPs, partially offset by improvedan increase in sales from ourgas and liquid filtration products.

APS reported a segment profit of $531.4$426.4 million for 2023,2025, down 11%14% compared to $595.2$496.1 million in 2022.2024. The decrease in APS’s profit in 20232025 was primarily due to lower sales, lowerunfavorable factoryplant performance, increasedhigher depreciation expense and higher restructuring costs associatedof with$21.9 our new manufacturing facility in Taiwan and increased investment in research and development.million.

Unallocated general and administrative expenses for 20242025 totaled $58.3$62.7 million compared to $114.2$58.3 million for 2023.2024. The $55.9$4.4 million decreaseincrease is primarily due to aan $53.2 million decreaseincrease in deal,employee transaction and integration costs related to the acquisition of CMC Materials.costs.

Compared to 2023,2024, the $12.8$63.7 million decreaseincrease in cash provided by operating activities in 20242025 was primarily driven by $174.5$101.6 million of changes in operating assets and liabilities, partially offset by a $161.7$37.9 million increasedecrease of net income adjusted for non-cash reconciling items.

Changes in operating assets and liabilities were driven by changes in trade accounts and notes receivable, inventories and accountsincome taxes payable and accruedrefundable liabilities.income taxes. The change for trade receivables was mainly due to increased sales at the endtiming of the period.collections. The change for inventory was driven by increaseddecreased business activity. The change forin accountsincome tax payable and accruedrefundable liabilitiesincomes wastaxes drivenis byprimarily timingdue ofto higher income tax payments.

Investing cash flows consist primarily of capital expenditures, cash used for acquisitions, proceeds and payments from sales of businesses and proceeds from sales of property and equipment.

In 2024, there was $67.1 million ofNet cash used in investing activities was $300.8 million in 2025 compared to $553.1 millionnet cash provided by investing activities in$67.1 2023.million Thecash decreaseused in 2024investing resultedactivities in 2024, primarily fromreflecting lesslower proceeds from divestitures of $564.2 million and the absence of net proceeds from the termination of the alliance agreement of $191.2$257.5 million, partially offset by a $141.2$16.4 million decrease in capital expenditures comparedand to$8.2 themillion priorof year.proceeds from government incentives.

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.

In 2024,2025, there was $689.0$366.9 million of cash used in financing activities compared to $1,297.5$688.9 million cash used in financing activities in 2023.2024. The change in 20242025 was primarily due to decreased net debt activity of $635.9$323.8 million compared to the prior year. See Note 10 to the Company’s consolidated financial statements for further discussion of the debt financing that occurred during the year.

(21) Our senior secured revolvingterm credit facilityloan due 2027 (the “Revolving Facility”)2029 bears interest rate at a rate per annum equal toto, at the Company’s option, either (i) SOFR, plus an applicable margin of 1.75%.1.75%, Theor Revolving(ii) Facilitya hasbase commitmentsrate plus an applicable margin of $575.0 million.0.75%.

During the fiscal year 2024,2025, the Company repaid $623.8$300.0 million net of borrowings under the senior secured term loans B under the Term Loan Facility.loan.

Recent and continuing developments in U.S. and foreign trade policy have heightened global trade tensions and created significant uncertainty in macroeconomic and geopolitical environments, particularly with respect to China. Beginning in 2025, the U.S. government imposed tariffs and other trade measures affecting products and materials imported into the U.S., prompting protectionist and retaliatory actions by other countries. In February 2026, theThe U.S. Supremegovernment Courthas invalidated tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Although a refund process for previously collected IEEPA duties is underway, the timinginitiated, and scopein ofcertain recoverablecases, amounts remain uncertain and, even assuming recoverability, such retained amounts would not be material to the Company. Following the ruling, the Administration imposed new tariffs under other statutory authorities and has initiatedconcluded investigations that have led, or may leadlead, to additional tariffs under Section 301 of the Trade Act of 19741974, as amended, covering a broad range of products and trading partners, including countries in which we operate. If new tariffs are imposed by the U.S., other countries, including countries into which we sell, may once again impose protectionist and retaliatory measures. The U.S. tariff framework remains subject to ongoing litigation, legislative action, and further executive action, any of which could materially alter the tariff rates applicable to our products and supply chain.

Because of the global nature of our business, these trade developments have exposed, and may continue to expose, our business and operations to various risks, particularly supply chain-related risks. The imposition of tariffs and other trade measures (i) has increased, and may continue to increase, our sourcing and manufacturing costs, (ii) has required, and may continue to require, us to adjust our supply chain and find alternative suppliers, and (iii) may result in manufacturing and delivery delays. In addition, foreign governments may apply rules of origin or other trade measures that treat products we manufacture outside the United States as U.S.-origin goods, potentially subjecting those products to retaliatory tariffs or other restrictions that increase costs for our customers and reduce demand for our products in those markets. Foreign governments have also imposed, and may further impose, export controls or licensing requirements on raw materials and inputs on which we rely, which could disrupt our supply chain or increase our costs. As a result, we may face a reduction in the demand for, and in the competitiveness of, our products, including from increased local or domestically sourced competition, harm to our relationships with our customers, and decreased profitability. These risks may be exacerbated by the overall macroeconomic uncertainty stemming from current trade tensions which may slow economic growth and negatively impact the demand for products containing semiconductors, thereby decreasing the demand for our products.

Our strategy has been, and will continue to be, to build a resilient supply chain and a global manufacturing footprint near our customers. While this strategy should mitigate the financial and operational impact of these trade policies, we expect that our business will be impacted, particularly in the near term, when elevated tariffs are imposed on our products. WeCertain tariffs are alsonot currentlyeligible evaluatingfor ourduty drawback or preferential treatment under free trade agreements, which may limit the options with respectavailable to IEEPAus tariffto refunds.mitigate their impact. Given the dynamic nature of this situation, the direct and indirect impact to our customers and our business is difficult to quantify; however, we will continue to closely monitor this evolving situation, further leverage our global footprint and regional supply chain, and explore additional options to mitigate trade-related risks.

This change in accounting estimate is effective beginning in fiscal year 2026 and is applied prospectively to the assets on our balance sheet as of December 31, 2025 and to future asset purchases. Based on the carrying amount of the assets included in property, plant and equipment, net in our condensed consolidated balance sheet as of December 31, 2025, we expect total depreciation expense in 2026 to be reduced by approximately $73.0 million recognized primarily in cost of revenues and R&D expenses. For additionalfurther information,discussion of the change, see Note 1 to the condensed consolidated financial statements for further discussion of the change.statements.

Three and Six Months Ended MarchJune 28,27, 2026 Compared to Three and Six Months Ended MarchJune 29,28, 2025

The following table compares operating results for the three and six months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, both in dollars and as a percentage of net sales, for each caption.

Net sales For the three months ended MarchJune 28,27, 2026, net sales increased by 5.0%11.5% to $811.9$883.2 million, compared to $773.2$792.4 million for the three months ended MarchJune 29,28, 2025. An analysis of the factors underlying the change in net sales is presented in the following table:

As described in the table above, the increase in net sales was primarily attributable to a $37.5$97.8 million increase in sales primarily due to increased sales from both of our reporting segmentssegments, andpartially anoffset increaseby a decrease of $1.2$7.0 million of sales attributable to favorableunfavorable foreign currency translations compared to the fiscal quarter ended MarchJune 29,28, 2025.

On a geographic basis, sales percentage by customers’ country or region for the three months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025 and the percentage increase (decrease) in sales for the three months ended March 28, 2026 compared to thenet sales for the three months ended MarchJune 29,27, 2026 compared to net sales for the three months ended June 28, 2025 were as follows:

The decrease in sales to customers in North America primarily relates to decreased demand for our MS andproducts, partially offset by increased demand for our APS products. The increase in sales to customers in Taiwan primarily relates to increased demand for our MS and APS products. The decrease in sales to customers in China primarily relates to decreased demand for our MS products, partially offset by increased demand offor our APS products. The increase in sales to customers in South Korea primarily relates to increased demand offor our MS and APS products. The increase in sales to customers in Japan primarily relates to increased demand for our MS and APS products. The decrease in sales to customers in Europe primarily relates to decreased demand for our APS products, partially offset by increased demand for our MS products. The increase in sales to customers in Southeast Asia primarily relates to increased demand offor our MS and APS products.

Gross margin increased by 0.83.2 percentage points for the three months ended MarchJune 28,27, 2026, compared to the same period in the prior year. Gross margin increased primarily as a result of increased production volumes enabled by strong operational performance across our manufacturing facilities and a decrease in depreciation expense due to the change in useful lives offor certain of ourspecific property, plant and equipment. See Note 1 to the condensed consolidated financial statements for further discussion of the change.

Selling, general and administrative expenses Selling, general and administrative (“SG&A”) expenses were $117.6$126.5 million in the three months ended MarchJune 28,27, 2026, compared to $103.3$115.1 million in the year-ago period. The factors underlying the change in SG&A expenses are presented in the following table:

Engineering, research and development expenses The Company’s ERSG&D efforts focus on the support or extension of current product lines and the development of new products and manufacturing technologies. ER&DA expenses were $75.3$244.1 million in the threesix months ended MarchJune 28,27, 20262026, compared to $84.8$218.4 million in the year-ago period. The factors underlying ERthe change in SG&DA expenses are presented in the following table:

Amortization of intangible assets Amortization of intangible assets was $46.3$46.1 million in the three months ended MarchJune 28,27, 2026, compared to $46.1$46.0 million for the three months ended MarchJune 29,28, 2025.

Interest expense Interest expense includes interest associated with debt outstanding and the amortization of debt issuance costs and original issuance discounts associated with such borrowings. Interest expense was $48.9$48.6 million in the three months ended MarchJune 28,27, 2026, compared to $51.0$52.4 million in the three months ended MarchJune 29,28, 2025. The decrease primarily reflects lower interest expense related to lower average debt balances for the period due to repayments on the Company’s outstanding debt.

Other expense, net Other expense, net was $1.4$7.8 million in the three months ended MarchJune 28,27, 2026 and consisted mainly of foreignequity currencyinvestment transaction lossesimpairment of $0.8$6.7 million and a loss on extinguishment of debt of $0.5$1.7 million, partially offset by foreign currency transaction gains of $0.8 million. Other expense,income, net was $1.3$0.2 million in the three months ended MarchJune 29,28, 2025 and consisted mainly of foreign currency transaction lossesgains of $2.1$0.1 million.

Income tax expense Income tax expense was $1.0$16.5 million in the three months ended MarchJune 28,27, 2026, compared to income tax expense of $8.2$2.8 million in the three months ended MarchJune 29,28, 2025. The Company’s effective income tax rate was 1.1%15.0% for the three months ended MarchJune 28,27, 2026, compared to 11.5%5.0% for the three months ended MarchJune 29,28, 2025.2025 The effective tax rate for the fiscal quarter ended MarchJune 28,27, 2026 was lowerhigher primarily due to changesan enactedincrease within thebook Oneincome, Bigtax Beautifulexpense Billrecorded Act,related to a provision to return adjustment, and the release of unrecognized tax benefits resulting from guidance issued byin the IRSquarter ended June 28, 2025 that did not recur in the quarter andended aJune change27, in income mix.2026.

Certain provisions of the Act are effective for tax years beginning after December 31, 2025, and therefore affectaffects the current quarter’syear financial results. The Company continues to evaluate the impact of the Act on the Company’s future tax positions.

Net income Due to the factors noted above, the Company recorded net income of $92.0$93.6 million, or $0.60$0.61 per diluted share, in the three months ended MarchJune 28,27, 2026, compared to net income of $62.9$52.8 million, or $0.41$0.35 per diluted share, in the three months ended MarchJune 29,28, 2025.

The following table compares non-GAAP financial measures for the three and six months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, both in dollars and as a percentage of net sales, for each caption.

The increase in Adjusted Operating IncomeIncome, Adjusted EBITDA and Non-GAAP EPS for the three and six months ended MarchJune 28,27, 2026 compared to the year-ago period is generally attributable to an increase in salessales, operating leverage in our manufacturing facilities and decrease in depreciation expense due to the change in useful lives of certain of ourspecific property, plant and equipment.equipment, Thepartially increaseoffset in Adjusted EBITDA for the three months ended March 28, 2026 compared to the year-ago period is generally attributable toby an increase in sales.SG&A Theexpenses, increaseprimarily in Non-GAAP EPS for the three months ended March 28, 2026 comparedrelated to thevariable year-ago period is primarily attributable to an increase in sales, decrease in depreciation expense due to the change in useful lives of certain of our property, plant and equipment and a decrease in income expense.compensation.

The following table presents selected net sales and segment profit data for the Company’s two reportable segments, along with unallocated general and administrative expenses, for the three and six months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025.

For the firstsecond fiscal quarter of 2026, MS net sales increased to $351.1$371.3 million, up 3%5% compared to $341.4$354.9 million in the comparable period last year. The sales increase was driven primarily by increased sales from advanced deposition materials, specialty materials, selective etch chemistries and CMP consumables. MS reported a segment profit of $75.9$77.7 million in the firstsecond fiscal quarter of 2026, up 1%7% from a $75.0$72.5 million segment profit in the year-ago period. The segment profit increase was primarily due to higher sales.sales and lower depreciation expense as a result of changes in useful lives of specific property, plant and equipment, partially offset by higher variable compensation costs.

For the firstsecond fiscal quarter of 2026, APS net sales increased to $463.6$514.6 million, up 7%17% compared to $433.9$439.9 million in the comparable period last year. The sales increase was mainly due to increased sales from liquid filtration, FOUPs, and gas filtration products.and purification products, FOUPs, and fluid management solutions. APS reported a segment profit of $133.6$150.9 million in the firstsecond fiscal quarter of 2026, up 24%57% from $108.1$95.9 million in the year-ago period. The segment profit increase was primarily due to higher gross profit related to an increase in sales and lower depreciation expense as a result of changes in useful lives of certain of ourspecific property, plant and equipment.equipment, partially offset by higher variable compensation costs.

Unallocated general and administrative expenses totaled $21.6$17.9 million in the firstsecond fiscal quarter of 2026, up 47%10% compared to $14.7$16.3 million in the comparable period last year. The $6.9$1.6 million increase is primarily due to higher employeeprofessional costs.fees.

We may seek to take advantage of opportunities to raise additional capital through debt financing or through public or private sales of securities. If in the future our available liquidity is not sufficient to meet the Company’s operating and debt service obligations as they come due, management would need to pursue alternative arrangements through additional equity or debt financing in order to meet the Company’s cash requirements. There can be no assurance that any such financing would be available on commercially acceptable terms, or at all. As of MarchJune 28,27, 2026, we have not experienced difficulty accessing capital and credit markets, but future volatility in the capital and credit markets may increase costs associated with issuing debt instruments or affect our ability to access those markets. In addition, it is possible that our ability to access the capital and credit markets could be limited at a time when we would like, or need, to do so, which could have an adverse impact on our ability to refinance maturing debt and/or react to changing economic and business conditions.

Operating activities Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities. Cash provided by operating activities totaled $183.0$339.2 million in the threesix months ended MarchJune 28,27, 2026, compared to $140.4$253.9 million in the threesix months ended MarchJune 29,28, 2025. This increase was driven by a $27.1$32.8 million increase in operating assets and liabilities and a $15.5$52.5 million increase of net income adjusted for non-cash reconciling items.

Changes in operating assets and liabilities for the threesix months ended MarchJune 28,27, 2026 were driven by changes in trade accounts receivables, inventories and accounts payable and accrued liabilitiesliabilities. The change in trade accounts receivable is primarily due to timing of paymentscustomer received.collections. The change in inventories was mainly due to an increase in business activity. The change in accounts payable and accrued liabilities was primarily driven by timing of payments to vendors and lower payment of the previous year’shigher incentive compensation.compensation accrual.

Investing activities Cash flows used in investing activities totaled $38.4$74.6 million in the threesix months ended MarchJune 28,27, 2026, compared to cash flows used in investing activities of $108.3$174.9 million in the threesix months ended MarchJune 29,28, 2025. The decrease resulted primarily from a decrease in cash paid for acquisition of property, plant and equipment of $66.5$93.7 million.

Financing activities Cash used in financing activities totaled $61.6$270.1 million during the threesix months ended MarchJune 28,27, 2026, compared to cash used in financing activities of $22.4$40.2 million during the threesix months ended MarchJune 29,28, 2025. The increase was primarily due to increased net debt activity of $50.0$250.0 million compared to the prior period, partially offset by an increase in proceeds from issuance of common stock of $12.9$31.0 million.

Our total dividend payments were $15.4$30.8 million in the threesix months ended MarchJune 28,27, 2026 compared to $15.4$30.6 million in the threesix months ended MarchJune 29,28, 2025. We have paid a cash dividend in each fiscal quarter since the fourth fiscal quarter of 2017. On AprilJuly 15, 2026, the Company’s board of directors declared a quarterly cash dividend of $0.10 per share to be paid on MayAugust 20,19, 2026 to shareholders of record on the close of business on AprilJuly 29, 2026.

(2) Our senior secured revolving credit facility due 20272031 (the “Revolving Facility”) bears interest at a rate per annum equal to, at the Company’s option, either (i) SOFR,SOFR plus an applicable margin of 1.25%, 1.5% or 1.75% or (ii) a base rate plus an applicable margin of 0.75%.0.25%, The0.5% Revolvingor Facility0.75%, hasin commitmentseach case depending on the Company’s first lien net leverage ratio. As of $575.0June million as of March 28, 2026. During the three months ended March 28,27, 2026, the Companyapplicable borrowedmargins were 1.50% and repaid0.50%, $65.0 million under this Revolving Facility and no balance was outstanding at March 28, 2026.respectively.

During the three and six months ended MarchJune 28,27, 2026, the Company repaid $50200 million and $250 million, respectively, under the term loans B under our Term Loan Facility.

The Company also has a line of credit with one bank that provides for borrowings in Japanese yen for the Company’s Japanese subsidiaries, equivalent in the aggregate to approximately $6.3$6.2 million. During the three and six months ended MarchJune 28,27, 2026, there were no borrowings under this line of creditcredit, and there was no balance was outstanding at MarchJune 28,27, 2026.

Adjusted EBITDA is defined by the Company as net income adjusted to exclude (1) equity in net loss of affiliates, (2) income tax expense, (3) interest expense, (4) interest income, (5) other expense,expense (income), net, (6) depreciation, and (7) the impact of any Special Items. 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).

(1) Restructuring charges resulting from discrete cost saving initiatives inclusive of employee termination benefit,benefit and asset impairment charges, primarily related to (i) an internal reorganization, combining two complementary divisions into one and realigning our customer facing organization andorganization, (ii) workforce reductions.reductions and (iii) the wind-down of the Company’s Life Sciences Fluid Management business.

(1) Restructuring charges resulting from discrete cost saving initiatives inclusive of employee termination benefit and asset impairment charges, primarily related to (i) an internal reorganization, combining two complementary divisions into one and realigning our customer facing organization and (ii) workforce reductions.reductions and (iii) the wind-down of the Company’s Life Sciences Fluid Management business.