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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.06pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.03pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.15pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
harm+8
costly+7
delays+6
adversely+5
failure+5
Positive rising
profitability+4
satisfy+3
success+2
achieve+1
greater+1
Risk Factors (Item 1A)
12,589 words
Item 1A. Risk Factors.
In addition to the other information in this Annual Report on Form 10-K, the following risk factors should be carefully considered in evaluating us and our common stock. Any of the following risks, many of which are beyond our control, could materially and adversely affect our financial condition, results of operations or cash flows or cause our actual results to differ materially from those projected in any forward-looking statements. We may also face other risks and uncertainties that are not presently known, are not currently believed to be material or are not identified below because they are common to all businesses. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. For more information, see “Cautionary Statements” in Item 7 of this Annual Report on Form 10-K.
Risk Factor Summary
Risks Related to Our Business and Industry
• Fluctuations in demand for semiconductors and volume of semiconductor manufacturing.
• Global economic uncertainty, including volatile financial markets, inflation, fluctuations in interest rates, economic recessions, and national debt and bank failures.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
restructuring+3
challenges+2
abandonment+2
adverse+1
limitations+1
Positive rising
improve+1
leading+1
enable+1
gains+1
innovative+1
MD&A (Item 7)
7,811 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the Company’s consolidated financial condition and results of operations should be read along with the consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve numerous risks and uncertainties, including, but not limited to, those described in Item 1A, “Risk Factors” and the “Cautionary Statements” section of this Item 7 below. You should review Item 1A “Risk Factors” of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. The Company has elected to omit discussion of the earliest of the three years covered by the consolidated financial statements presented except for the segment analysis. Information pertaining to fiscal year 2023 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, 2024 and 2023 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, 2024, filed on February 12, 2025.
• Supply chain risks, including partial reliance on sole, single or limited source suppliers.
• Challenges inherent in operating a global business, including managing complex political, legal, regulatory, and operational environments across the jurisdictions in which the Company operates.
• The impact of export controls, economic sanctions and other similar restrictions.
• Customer concentration.
• The need for continuing innovation and introduction of new products.
• Manufacturing interruptions or delays and other operational disruptions.
• Information technology (“IT”) system failures, network disruptions, data breaches, and other cybersecurity threats.
• The impact of tariffs and a volatile trade environment.
• The use of hazardous materials in our operations.
• Goodwill impairment.
• Loss of key employees.
• Our ability to obtain, protect, and enforce intellectual property rights.
• Our use, and our competitors’ use, of AI
• Environmental, social, and governance commitments.
Risks Related to Government Regulation
• The impact of being subject to numerous rapidly evolving environmental laws and regulations across many jurisdictions.
• Risks related to the regulatory environment, including compliance costs and being subject to potentially inconsistent or conflicting regulations.
• Changes in taxation or adverse tax rulings.
• The impact of government incentives, including added operational complexity and competition.
Risks Related to Our Indebtedness
• The impact of our indebtedness, including our ability to obtain future financing.
• Risks related to our ability to generate sufficient cash to service our indebtedness.
• Restrictions on our operations as a result of the terms of the Amended Credit Agreement (as defined below) and the Indentures (as defined below).
Risks Related to Owning Our Common Stock
• The volatility of the price of our common stock.
• Changes in capital allocation strategy.
• Provisions in our charter documents and Delaware law may delay or prevent us from being acquired.
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General Risks
• Significant competition.
• Our ability to successfully acquire or integrate other businesses, form joint ventures, or divest businesses.
• The impact of climate change, including changes in market dynamics and stakeholder expectations, and unexpected operational disruptions.
Risks Related to Our Business and Industry
Our revenue is primarily dependent upon demand from the global semiconductor ecosystem. Fluctuations in demand, whether from industry cyclicality, changes in consumer spending, macroeconomic conditions, or other factors, may cause our revenues and operating results to vary significantly, which could adversely affect our business.
Our revenue is primarily dependent upon demand from the global semiconductor ecosystem. 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. Our revenues and operating results may fluctuate significantly from quarter-to-quarter or year-to-year due to a number of factors, many of which are outside our control. A lower volume of sales can have a large and disproportionate impact on our profitability because some of our expenses are fixed in the short term.
Factors that may negatively impact the demand for our solutions or cause our financial results to fluctuate unpredictably include, but are not limited to:
• decreased consumer spending or changes in purchasing habits related to (1) macroeconomic uncertainty, market conditions, slow or negative economic growth or uncertainty about economic and other policies; or (2) geopolitical instability, including the Russian invasion of Ukraine and conflicts in the Middle East;
• trends in the semiconductor industry and demand trends for different types of electronic devices such as logic versus memory integrated circuit (“IC”) devices, or digital versus analog IC devices, and the various technology nodes at which those products are manufactured;
• customer considerations, which may impact their future purchasing decisions, including (1) the size and timing of customer orders; (2) customers’ decisions to accelerate, decelerate or delay shipments; (3) customer inventory management and corrections; (4) customers’ rate of use and replacement of our consumable products; (5) customers’ decisions to delay expansion projects; (6) customers’ device architectures and specific manufacturing processes; (7) consolidation of our customers; and (8) the relative success of our customers vis-à-vis each other;
• the short order-to-delivery time for our products; market share and competitive losses; and pricing changes by us and our competitors;
• 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 regulations imposed by other countries restricting the export of certain materials or the re-export of products containing such materials, or potential additional tariffs on imports, and tariffs imposed by other countries) or changes in the interpretation or enforcement of existing requirements;
• procurement shortages and related increased prices, and the failure of suppliers to perform their obligations;
• changes in our capital expenditure requirements to meet demand for our solutions, 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, 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
• foreign currency exchange rate fluctuations.
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 and cost control 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 recoveries.
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Furthermore, the semiconductor industry is subject to rapid advancements and demand for new and emerging technologies, such as AI. 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. Furthermore, our performance is dependent, in large part, on our exposure to certain market trends and the growth of certain segments of the semiconductor ecosystem. For example, we have less exposure to the market for back-end assembly and testing. If certain markets in which we have limited or no exposure grow more rapidly than the markets we serve, our growth relative to our competitors may lag.
To remain competitive in the semiconductor industry, we have in the past, and will likely in the future, maintain or increase our ER&D activity and invest in our infrastructure, even during downturns and periods of slower demand. 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.
As a result of global economic uncertainty, 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 financial market instability, inflation and increased costs, trade 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 conditions, particularly if present in any of our key sales or manufacturing regions, can cause or exacerbatenegative trends in business and consumer spending, which, in turn, historically have increased our manufacturing and delivery costs and reduced customer demand for our products (and may do so in the future). We may also face a number of other negative effects related to global economic uncertainty, including.
• 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;
• an inability of suppliers 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;
• greaterchallenges in forecasting operating results, making business decisions and identifying and prioritizing business risks;
• a need to undertake 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.
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 ability to increase sales of our products depends in part upon our ability, in a very short timeframe, to ramp up our manufacturing capacity and to mobilize our supply chain. If we are unable to do so, our customers could obtain products from our competitors, which would reduce our market share, harm our reputation as a trusted partner and impact our results of operations. Ensuring a robust and resilient supply chain is critical for us to meet the demand, quality and technological requirements of our customers. We rely on the timely delivery of parts, materials and services, including components and subassemblies, from our suppliers and contract manufacturers.
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 manufacturing our products, such as plastic polymers, filtration membranes, abrasive particles, petroleum coke and other materials. If we were to lose any of these critical sources, or there is an industry-wide increase in demand for, or discontinuation of, raw materials or components used in our products, it could be difficult or impossible to find an alternative supplier, which could adversely affect our operations. In addition, qualifying alternative suppliers or materials (or relocating manufacturing) can be time-consuming and costly due to customer qualification requirements, regulatory approvals,
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and the technical sensitivity of many of our products. Disruptions to transportation routes, ports, air freight capacity, or regional infrastructure in Asia (including in locations where we or our suppliers manufacture or where key customers operate) could further delay deliveries, increase costs, or reduce our ability to serve customers.
Several factors outside of our control, 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 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. These measures could reduce our available working capital, increase our inventory carrying costs, and negatively impact our liquidity and overall financial flexibility.
Further, increased restrictions imposed on a class of chemicals known as per- and polyfluoroalkyl substances (“PFAS”), which are used in a number of products, including parts and materials that are incorporated into our products, may negatively impact our supply chain due to the potentially decreased availability, or non-availability, of PFAS-containing products. 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.
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, 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.
Sales to customers outside the U.S. accounted for approximately 82%, 79% and 75% of our net sales in 2025, 2024 and 2023, respectively. We anticipate that international sales will continue to account for a majority of our net sales. In addition, a number of our key domestic customers derive a significant portion of their revenues from sales in international markets. 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. We 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;
• geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, the ongoing conflict in the Middle East, and tensions between China and Taiwan and between China and the U.S.;
• cybersecurity incidents;
• 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;
• 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;
• public health crises;
• 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;
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• 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 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 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 dispute, impact and/or disruption in any area where we do business could have a materially adverse impact on our future revenue and profits.
Export controls, economic sanctions, and other similar restrictions may limit our ability to sell our products to certain customers, require us to obtain governmental licenses, put the Company at a competitive disadvantage both domestically and internationally and expose us to additional legal liability, all of which could harm our business and financial condition.
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. Although we maintain an export and trade control compliance program, it may not be fully effective or may be circumvented, exposing us to legal liabilities. Compliance with these laws could significantly limit our sales in the future. Changes in, or 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. and other 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 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 U.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 favorablyagainst 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 costs, 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.
These measures could also increase our costs (including logistics, compliance, and supplier qualification costs), disrupt our sourcing and manufacturing plans, and adversely affect our ability to meet customer requirements or contractual commitments.
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A significant portion of our sales is concentrated on a limited number of key customers, and our net sales and profitability may materially decline if we were to lose one or more of these customers.
Sales to a limited number of large customers constitute a significant portion of our overall revenue, shipments, cash flows, collections and profitability and our success is tied in part to their competitive position in their respective markets. Our top ten customers accounted for 50%, 48% and 43% of our net sales in 2025, 2024 and 2023, respectively. Consolidation among semiconductor manufacturers, shifts in customer build plans, and evolving procurement strategies (including efforts to localize supply chains in response to export controls or trade policies) may increase these customers’ bargaining power and result in pricing pressure, more restrictive commercial terms (including audit, cybersecurity, ESG, and flow-down requirements), longer payment cycles, or demands for dual sourcing or rapid qualification of alternative products. If we are unable to satisfy these requirements on commercially reasonable terms, we could lose design wins, experience reduced volumes, or incur additional costs, any of which could materially adversely affect our results of operations.
Because we have limited or no contractual recourse if our customers decided to stop buying and using our products with limited advance notice, the 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’ products, 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 regulations, 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 greatervolatility. 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.
If we are unable to anticipate and respond to rapid technological change and customer requirements by continuing to innovate and introduce new and enhanced products and solutions, we may experience a loss of market share, decreased sales, revenue, profitability and damage to our reputation.
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. 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, 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. Developing new products or enhancing existing products is complex, costly and uncertain, and, if a new product is adopted by our customers, we must ramp manufacturing quickly, while also managing costs. In addition, our customers impose very 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 to comply with industry, regulatory and technical requirements may
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result in reduced orders, higher manufacturing costs, delays in acceptance and payment, additional service and warranty expense and damage to our reputation, which may adversely affect our revenue and results of operations.
Manufacturing interruptions or delays, or other disruptions to our operations, could adversely affect our business, financial condition, results of operations and reputation.
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, which cause lower yields, delivery delays and harm our ability 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, 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, 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 prolongeddisruption may impede our ability to manufacture and deliver products to our customers or to engage with customers on new product applications, resulting in an adverse impact on our business and results of operations.
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.
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 gainunauthorized access to systems, to sophisticated and targeted measures known as advanced persistentthreats. 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 tensions with China, have created a heightened risk of cybersecurity attacks. AI capabilities are and will be used by threat actors to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks, making them even more difficult to defendagainst by creating more effective phishing emails or social engineering and by exploitingvulnerabilities in electronic security programs utilizing false image or voice recognition. The use of AI 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. These security procedures and protection systems are costly and yet they may not be fail-safe. We may still suffer cybersecurity and other incidents, which could have a material adverse effect on our business or operations.
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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.
Our efforts to comply with current and evolving laws, regulations and other obligations, such as contractual or commercial obligations from our customers or other third parties, concerning privacy, cybersecurity, and data protection, increase our compliance costs and could result in significant additional expenses. Any actual or allegedfailure to comply with these obligations could result in inquiries, investigations, and other proceedings against us by regulatory authorities or other third parties.
Recent tariffs and other trade actions taken by the U.S. and other countries where we do business have increased, and may continue to increase, our import and export costs, requiring us, in certain situations, to increase our prices, add a surcharge or find alternative suppliers which, in turn, may harm our relationships with customers, reduce demand for our products and decrease our profitability.
In recent years, including during 2025, the U.S. government has imposed tariffs and implemented other trade actions affecting products and materials imported into the U.S. In response to these tariffs and other changes in U.S. trade policy, several countries, including China, have threatened or imposed retaliatory tariffs on U.S. exports. The continuing imposition of tariffs by the U.S. and others may also give rise to further escalations of protectionist and retaliatory trade measures. Tariffs and related trade measures may be expanded, modified or restructured, and exemptions or exclusions may be limited or unavailable, which could further increase costs or disrupt supply chains.
These tariffs and other trade measures could have a material adverse effect on our business, results of operations, or financial condition. Our business and operating results are heavily dependent on international trade. We import raw materials and finished goods into the U.S. and we export products from the U.S. to our customers throughout the world, including those in China. Because of the recent tariffs and other trade restrictions, we have experienced increased and additional costs with respect to our import and export of such materials, finished goods, and products, and we may continue to experience these costs. In turn, we may be required to increase the prices of our products or add surcharges, which may reduce demand and harm our relationships with our customers. If we do not, or are unable to, increase prices or add surcharges without reducing demand, we may experience reduced profitability. Furthermore, retaliatory tariffs imposed by countries where we have significant sales, like China, could cause our customers to source products from local and non-U.S. competitors, which could further reduce demand for, and the overall competitiveness of, our products and decrease our market share. Additionally, we may be required to source our materials from alternative suppliers which could significantly increase our costs, lead to significant delays, and result in reliability or quality issues, all of which could harm our reputation and decrease demand for our products. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations and overall relationships between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets.
Our operations use hazardous materials that expose us to various risks, including potential liability for personal injury and potential remediation obligations.
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. Potential risks that may disrupt our operations or expose us to significant losses and liabilities include explosions and fires, chemical spills and other discharges, releases of toxic or hazardous substances or gases, and pipeline and storage tank leaks and ruptures. These and other hazards may result in (1) liability for personal injury, death, damage to property and contamination of the environment; (2) suspension of operations; (3) the imposition of civil or criminalfines, penalties and other sanctions; (4) cleanup costs; (5) claims by governmental entities or third parties; (6) reputational harm; (7) increases in our insurance costs; and (8) other adverse impacts on our results of operations. Moreover, a failure of one of our products at a customer site could interrupt the business operations of the customer. For example, while we believe that our SDS and VAC delivery systems are safe to transport, store and deliver toxic gases, any leakage could cause seriousdamage, including injury or death, to any person exposed to those toxic gases,
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potentially creating significant product liability exposure for us. Our insurance coverage may be inadequate to satisfy any such liabilities, and our financial results or financial condition could be adversely affected.
We carry a significant amount of goodwill on our balance sheet.
As of December 31, 2025, we had goodwill of $3,946.7 million. The future occurrence of a potential indicator of impairment, such as a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a material negative change in relationships with significant customers, strategic decisions made in response to economic or competitive conditions, loss of key personnel, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could result in goodwill impairment charges. 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 8 – Goodwill and Intangible Assets to the accompanying consolidated financial statements.
Loss of any of our key personnel could harm our business, and our inability to attract and retain new qualified personnel could inhibit our ability to operate and grow our business successfully.
Many of our key personnel have significant experience in the semiconductor industry and deep technical expertise. 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 grow our business. As the semiconductor industry has grown in recent years, competition for qualified talent, particularly those with significant industry experience, has intensified. Other factors impacting our ability to attract and retain key employees include the attractiveness of our compensation and benefit programs, global economic or political conditions, the ability to obtain necessary authorizations for workers to provide services outside their home countries and our ability to continue to foster a challenging and rewarding work environment. We have experienced in the past, and may in the future continue to experience, an increasingly competitive and constrained labor market, which may limit our ability to add headcount required to meet our customers’ demand, decrease our productivity due to an influx of inexperienced workers and cause our labor costs to increase and our profitability to decline. As a result, the difficulty and costs associated with attracting and retaining employees has risen and may continue to rise.
If we fail to obtain, protect and enforce intellectual property rights, our business and prospects could be harmed.
Our future success and competitive position depend in part upon our ability to obtain, maintain and enforce intellectual property rights. We rely on patent, trade secret and trademark laws as well as confidentiality agreements to protect many of our major product platforms. Even if patents are issued in respect of our patent applications, these patents may nonetheless (1) expire; (2) be challenged, invalidated, circumvented, rendered unenforceable or otherwise compromised by third parties; or (3) fail to provide us with any competitive advantage. We may lose trade secret protections as a result of actions or omissions by us, our employees, or third parties. 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. 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. Monitoring and detecting any unauthorized access, use or disclosure of our intellectual property is difficult and costly and we cannot be certain that the protective measures we have implemented will completely prevent misuse. Our failure to monitor and ensure the proper use of our data, confidential information, and intellectual property in the training and operation of generative artificial intelligence products may result in the loss of intellectual property and raise complex compliance, intellectual property and other issues.
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 claimsagainst us and our products. In the past, intellectual property-related litigation has been time consuming and has caused us to expend significant financial and other resources. 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) severelyharm our reputation and competitive position; and (5) negatively affect our sales, profitability and prospects to commercialize new products.
As we incorporate AI capabilities into our operations, we may be subject to various risks, including compliance risks, the potential for AI to produce inaccurate results, intellectual property and cybersecurity risks, and the risk that we are unable to use AI as successfully as our competitors, which may result in legal liability, reputational damage and other harm to our business.
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AI technology is complex and rapidly evolving, as are the operational, competitive, legal and regulatory environments in which it exists. We are increasingly incorporating AI capabilities into our business operations and our ways of working, which can be both challenging and costly. For example, we may experience difficulty in effectively using, or be unable to use, AI in a manner that benefits our business operations, enhances our efficiency and enables us to improve our products and services more rapidly. AI algorithms or training methodologies may also be flawed, and datasets may contain irrelevant, insufficient or biased information, which can cause errors in outputs. This may give rise to legal liability, reputational damage and other adverse effects. Our business may be further negatively impacted if our competitors are more successful than we are in executing their AI strategies and developing superior products and services with the aid of AI technology.
In addition, the use of AI in the development of our products and services could cause the loss of intellectual property, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy and cybersecurity. Countries may also adopt laws and regulations related to AI that could cause us to incur greater compliance costs or limit the use of AI in our business. Any failure or perceived failure by us to comply with such legal or regulatory requirements could subject us to legal liabilities, damage our reputation, or otherwise have a material and adverse impact on our business.
Implementation of, and reporting on, our environmental, social and governance commitments could result in additional costs, and our inability to achieve these commitments could have an adverse impact on our reputation and performance.
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. 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. Any failure or perceived failure to timely meet these sustainability requirements or targets could adversely impact the demand for our products and subject us to significant costs and liabilities and reputational risks that could adversely affect our business, financial condition and results of operations. 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. We also are or may become subject to new climate and sustainability laws and regulations, such as the State of California’s climate change disclosure rules, the EU’s Corporate Sustainability Reporting Directive and the SEC’s rules on climate-related risks. Compliance with such laws and regulations, as well as increased scrutiny from regulators, customers and other stakeholders in our sustainability practices, could result in additional costs and expose us to new risks, including reputational risks. 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.
Risks Related to Government Regulation
We are subject to a variety of rapidly evolving environmental laws and regulations that could cause us to incur significant liabilities and expenses.
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. These requirements are dynamic and have become stricter over time. These laws and regulations, among others, increase the complexity and costs of operating our facilities and manufacturing and transporting our products. 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, 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. In addition, the potential adoption of new laws, rules or regulations related to climate change and the use or sale of PFAS-containing products poses risks, including subjecting us to future costs and liabilities, that could harm our results of operations or affect the way we conduct our businesses. New or modified regulations could require us to make substantial expenditures to enhance our environmental compliance efforts, or to reformulate our products or substitute raw materials or components with alternatives that may be more expensive, less readily available, or inferior in quality or performance. Any such changes could increase our production costs, weaken our supply chain, or result in less competitive products and may require requalification by our customers, which could result in delays, loss of design wins, or customers transitioning to competing products..
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We are exposed to various risks from our regulatory environment, including being subject to potentially inconsistent or conflicting laws and regulations in the jurisdictions in which we operate, international trade-related disputes and compliance costs, which may adversely impact our reputation, financial condition and results of operations.
We are subject to risks related to new, different, inconsistent, or even conflicting laws, rules, and regulations that may be enacted by legislative or executive bodies and/or regulatory agencies in the countries where we operate; disagreements or disputes related to international trade; and the interpretation and application of laws, rules, and regulations. 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, carbon emissions and climate change concerns), 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. Each of these laws, rules and regulations imposes costs on our business, including financial costs and potential diversion of our management’s attention. There have been, and may continue to be, instances where we fail to ensure full compliance with all of the laws, rules and regulations to which we are subject. These instances present risks to our business, including potential fines, restrictions on our actions and reputational damage. 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, and the speed with which new regulations may be enacted and come into effect, may create uncertainty regarding compliance matters or instances where we may not be in full compliance. Efforts to comply with new and changing regulations have resulted in, and are likely to continue to result in, increased administrative expenses and diversion of management’s time and attention from revenue-generating activities to compliance activities. If we are found by a court or regulatory agency not to be in compliance with laws and regulations, our reputation, business, financial condition and/or results of operations could be adversely affected, we may be disqualified or barred from participating in certain activities and we may be forced to modify our operations to achieve full compliance.
Changes in taxation or adverse tax rulings could adversely affect our results of operations.
We operate in many foreign countries and are subject to taxation at various rates and audit by multiple taxing authorities. 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. Each quarter, we forecast our tax liability based on our forecast of our performance for the year in each tax jurisdiction. If our performance forecast changes, our forecasted tax liability would also likely change, perhaps materially.
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. 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.
Various jurisdictions in which we operate are considering changes to, or have already changed, their tax laws. For example, the OECD introduced the Base Erosion and Profit Shifting 2.0 project that seeks to impose a global minimum income tax rate of 15%. Any tax reform adopted in any foreign jurisdiction may exacerbate the risks described above and cause our corporate tax rate to increase.
We receive government incentives, grants, and subsidies that are subject to conditions, reporting requirements, and compliance obligations, and failure to satisfy these requirements could result in the reduction, termination, or clawback of benefits, as well as potential penalties or reputational harm, any of which could adversely affect our business, financial condition, and results of operations.
From time to time, we may receive and enter agreements for grants, subsidies, loans, tax arrangements and other incentives from national, state and local governments in jurisdictions throughout the world designed to encourage us to establish, maintain or increase our investment, research and development and production activities in those jurisdictions. Our future business plans are impacted by obtaining these government incentives, and they typically require us to achieve or maintain certain levels of investment, capital spending, employment, technology deployment or development milestones, construction or production milestones, or research and development activities to qualify for such incentives or could restrict us from undertaking certain
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activities. Compliance with these requirements may add complexity to our operations and increase our costs, and a failure to comply could result in cancellation of agreements or transactions, investigations, civil and criminalpenalties, forfeiture of profits, reduction, termination or clawback of any funding, suspension or debarment from doing business with the government, or other penalties, any of which could have a material and adverse effect on our business, financial condition and results of operations. For example, we have entered into a direct funding agreement with the U.S. Department of Commerce to receive a grant under the U.S. CHIPS and Science Act of 2022. We may be unable to successfullyachieve the milestones and ancillary requirements to qualify for these incentives or such incentives may otherwise be withheld. In addition, incentives may be subject to ongoing compliance “guardrails,” audit rights, domestic sourcing or workforce requirements, and restrictions on certain activities or transactions. The timing of any reimbursements or funding may not align with our capital spending or operating needs, and we may be required to fund substantial costs in advance of receiving any benefits (if received at all). We also may be unable to obtain future incentives, which may put us at a disadvantageagainst competitors, especially foreign competitors that may benefit from such incentives in the countries in which they are headquartered.
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.
As of December 31, 2025, we had an aggregate principal amount of $3.7 billion of indebtedness outstanding, including the $0.5 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”). In addition, we have approximately $575.0 million of unutilized capacity under our senior secured revolving credit facility due 2027 (the “Revolving Facility”). We refer to the Term Loan Facility and the Revolving Facility as the “Credit Facilities”. The credit agreements that govern the Credit Facilities are referred to collectively as the “Amended Credit Agreement”. Further, we may incur significant additional secured and unsecured indebtedness in the future.
Although the indentures governing the Notes (the “Indentures”) and the Amended Credit Agreement restrict our ability to incur additional indebtedness, the restrictions have a number of significant qualifications and exceptions. For example, the Amended Credit Agreement provides that we can request additional loans and commitments up to the greater of $1.1 billion or 100% of our EBITDA, as well as additional amounts if our secured net leverage ratio is less than a specified ratio. Further, these restrictions do not prevent us from incurring monetary obligations that do not constitute indebtedness. If we add new indebtedness and other monetary obligations to our current debt levels, the related risks that we now face would intensify.
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.
Higher or sustained interest rates and tighter credit market conditions could increase our borrowing costs, reduce refinancing flexibility and limit access to capital. Any downgrade in our credit profile, or reduced lender or investor appetite for debt financing, could further increase our cost of capital and adversely affect our liquidity and financial condition.
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. Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance and the condition of the capital markets, which are subject to prevailing economic, industry and competitive conditions, as well as many financial, business, legislative, political, regulatory and other factors beyond our control. If our cash flow and capital resources are insufficient to fund our debt service obligations, we could
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face substantial liquidity problems, be forced to reduce or delay investments and capital expenditures, dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness, any of which could have a material adverse effect on our business, financial position and results of operations. In addition, the level and quality of our earnings, operations, business and management, among other things, will impact the determination of our credit ratings. Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis may result in a decrease in the ratings assigned to us by the ratings agencies, which may negatively impact our access to the debt capital markets and increase our cost of borrowing. 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 or disruptions in the global financial markets 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.
Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. We may not be able to implement any refinancing on commercially reasonable terms or at all and, even if successful, a refinancing may not allow us to meet our scheduled debt service obligations. The agreements governing our indebtedness restrict our ability to dispose of assets and use the proceeds of such dispositions, and we may be unable to consummate any dispositions or generate proceeds sufficient to meet our debt service obligations.
If we cannot make scheduled payments on our debt, holders of the Notes and lenders under the Credit Facilities could declare all outstanding principal and interest to be due and payable, the lenders under the Revolving Facility could terminate their commitments to advance further loans, our secured lenders could forecloseagainst the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
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.
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.
Also, the Indentures contain limited covenants, such as a covenant restricting our ability and certain of our subsidiaries’ ability to incur certain debt secured by liens, engage in sale-leaseback and incur additional indebtedness by any restricted subsidiary.
In addition, the restrictive covenants under the credit agreement governing the Revolving Facility may, depending on the amount of revolving borrowings, unreimbursed letter of credit drawings and undrawn letters of credit, require us to maintain a secured net leverage ratio, which we may be unable to meet. 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. In 2025, the closing price of our stock on The Nasdaq Global Select Market (“Nasdaq”) ranged from a low of $62.92 to a high of $109.53, and, as in past years, the price of our common stock may show even greatervolatility in the future. The trading price of our common stock is subject to significant volatility in response to numerous factors, many of which are beyond our control or may be unrelated to our operating results, including the following:
• changes to our financial guidance, as well as potential decreased confidence in any guidance we do provide;
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• changes in global economic and geopolitical conditions, including those resulting from trade tensions, rising inflation, and fluctuations in foreign currency exchange and interest rates;
• failure to meet the expectations of securities analysts, which may vary significantly from our actual results;
• changes in financial estimates by securities analysts;
• press releases or announcements by, or changes in market values of, comparable companies;
• high volatility in price and volume in the markets for high-technology stocks;
• public perception of equity values of publicly traded companies;
• fluctuations in our results of operations; and
• other risks and uncertainties described in this Annual Report on Form 10-K and in our other filings with the SEC.
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.
Future payments of quarterly dividends and any future repurchases of shares of our common stock are subject to capital availability and periodic determinations by our Board of Directors that they are in the best interest of our stockholders and comply with all laws and applicable agreements. Future dividends and any future share repurchases may be affected by, among other factors, potential capital requirements for acquisitions and the funding of our research and development activities; legal risks; changes in federal and state income tax laws or corporate laws; contractual restrictions, such as financial or operating covenants in our debt arrangements; availability of domestic cash flow; and changes to our business model. 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. A reduction, suspension or discontinuation of our dividend payments or the lack of a share repurchase program could have a negative effect on the price of our common stock and may harm our reputation.
Provisions in our charter documents and Delaware law may delay or prevent an acquisition of us, which could decrease the value of our shares.
Our certificate of incorporation, our by-laws and Delaware law contain provisions that could make it harder for a third party to acquire us without the consent of our board of directors. These provisions include limitations on actions by written consent of our stockholders.
Our certificate of incorporation makes us subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits publicly held Delaware corporations from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. This provision could discourage parties from bidding for our shares of common stock and could, as a result, reduce the likelihood of an increase in the price of our common stock that would otherwise occur if a bidder sought to buy our common stock.
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. The holders of any shares of preferred stock could have preferences over the holders of our common stock with respect to dividends and liquidation rights. Any issuance of preferred stock may have the effect of delaying, deterring or preventing a change in control. Any issuance of preferred stock could decrease the amount of earnings and assets available for distribution to the holders of common stock and could adversely affect the rights and powers, including voting rights, of the holders of common stock. The issuance of preferred stock could have the effect of decreasing the market price of our common stock.
General Risks
Competition from new or existing companies could harm our financial condition, results of operations and cash flow.
We operate in a highly competitive, global industry. We face many domestic and international competitors, some of which have substantially greater manufacturing, financial, research and development and marketing resources than we do. In addition, some of our competitors may have better-established customer relationships than we do, which may enable them to have their products specified for use more frequently and more quickly by these customers. We also face competition from smaller,
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regional companies that focus on serving customers in their regions. Further, customers continually evaluate the benefits of internal manufacturing versus outsourcing, and a customer’s decision to internally manufacture products that we provide may negatively impact us. If we are unable to maintain our competitive position, we could experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities and a loss of market share, any of which could have a material adverse effect on our results of operations. Further, we expect that existing and new competitors will improve their products and introduce new products with enhanced performance characteristics. The introduction of new products or more efficient production of existing products by competitors could diminish our market share and increase pricing pressure on our products.
Our competitors include companies outside of the U.S., including companies in countries where foreign governments seek to build a domestic-centric semiconductor ecosystem. From time to time, governments around the world may provide incentives or make other investments that could benefit and give competitive advantages to our competitors. Government incentives may not be available to us on acceptable terms or at all. If our competitors can benefit from such government incentives and we cannot, it could strengthen our competitors' relative position and have a material adverse effect on our business.
We may acquire other businesses, form joint ventures or divest businesses, any of which could negatively affect our financial performance.
We intend to continue to engage in business combinations, acquisitions, joint ventures, investments, divestitures or other types of collaborations to (1) address gaps in our product offerings, (2) adjust our business and product portfolio to meet our ongoing strategic objectives, (3) diversify into new and complementary markets, (4) increase our scale or (5) accomplish other strategic objectives. 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;
• 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 divestitureopportunities 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 costlylitigation 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
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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.
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. 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. Such events could result in a significant increase in our costs and expenses and harm our future revenue, cash flows and financial performance. In addition to physical risks, evolving climate-related and sustainability reporting regimes in jurisdictions where we operate (including state and international regimes) may increase compliance costs, require new data collection and assurance processes across our value chain and expose us to reputational harm or litigation if our disclosures, targets or progress are challenged. 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.
Cautionary Statements
This Annual Report on Form 10-K and the portions of the Company’s Definitive Proxy Statement incorporated by reference in this Annual Report on Form 10-K contain “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are based on current management expectations and assumptions only as of the date of this Annual Report on Form 10-K. 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.
These risks and uncertainties include, but are not limited to, fluctuations in the demand for semiconductors; 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 constraints, and price increases; supply chain interruptions and the Company’s dependence on sole, single and limited source suppliers; operational, political and legal risks associated with the Company’s international operations, including those related to geopolitical uncertainty and regional and global instabilities and 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; 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; artificial intelligence; 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.
Overview
This overview is not a complete discussion of the Company’s financial condition, changes in financial condition and results of operations; it is intended merely to facilitate an understanding of the most salient aspects of its financial condition and operating performance and to provide a context for the detailed discussion and analysis that follows, and must be read in its entirety in order to fully understand the Company’s financial condition and results of operations.
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 provide customers with innovative, science-based solutions to their toughest technology challenges, helping improve productivity and product performance in the most advanced manufacturing environments.
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Our business is organized and operated in two operating segments.
▪ The Materials Solutions segment, or MS, provides materials-based solutions, such as chemical vapor and atomic layer deposition materials, chemical mechanical planarization (“CMP”) slurries and pads, ion implantation specialty gases, formulated etch and clean materials, and other specialty materials that enable our customers to achievebetter 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.
Our complementary capabilities enable co-optimized, integrated solutions that improve device performance, lower cost of ownership and accelerate time to market. We address complex manufacturing challenges across deposition, CMP 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). 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.
Global Trade Environment
Recent and continuing developments in U.S. and foreign trade policy have heightened global trade tensions and sparked significant uncertainty in macroeconomic and geopolitical environments, particularly with respect to China. The nature of our global business exposes us to risks associated with trade conflicts between the U.S. and its trading partners. Additionally, our manufacturing operations rely on a global supply chain to manufacture our products, including, in some instances, raw materials from China. The recent tariffs and other similar trade policies may increase our sourcing and manufacturing costs, force us to find alternative suppliers, or result in manufacturing and delivery delays. As a result, we may face a reduction in the demand for, and in the competitiveness of, our products, harm to our relationships with our customers, and decreased profitability. These issues may be exacerbated by the overall macroeconomic uncertainty stemming from current trade tensions which may slow economic growth and negatively impact the demand for products containing semiconductors, thereby decreasing the demand for our products.
Our strategy has been, and will continue to be, to build a resilient and robust supply chain and a global manufacturing footprint near our customers. While this strategy should mitigate the Company from financial and operational impacts of a volatile trade environment in the medium to long term, our business could still be impacted by sudden changes in trade policy in the near term, particularly, for example, our products manufactured in the United States and sold to customers located in China. 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 this volatility.
Recent Events
In January 2026, we completed an assessment of the useful lives of our property, plant and equipment and adjusted the estimated useful lives of certain property, plant and equipment to more closely reflect the expected economic lives of these assets. These adjustments followed an analysis of our actual usage of assets, including the technological and physical obsolescence of these assets, our ability to continue to use equipment, historical usage trends, and anticipated capital plans and technology roadmaps, as well as industry trends and practices. Based on this analysis, we determined that the increase in useful lives was warranted and consistent with the Company’s historical and anticipated use of these assets. The updated estimated useful lives of certain assets for financial reporting purposes are as follows: buildings and improvements, 5 to 35 years increased to 5 to 40 years; manufacturing equipment, 5 to 10 years increased 5 to 14 years; canister and cylinder 3 to 12 years increased to 3 to 19 years; molds 3 to 5 years increased to 3 to 9 years and lab equipment, 3 to 8 years increased to 3 to 9 years.
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 Consolidated Balance Sheet as of December 31, 2025, we expect total depreciation expense in 2026 to be reduced by $72.9 million. We expect this change will result in an increase in gross margin of approximately $52.4 million, a decrease in ER&D expenses of approximately $11.4 million and a decrease in ending inventory values of $9.1 million.
Critical Accounting Policies and Estimates
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Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these consolidated financial statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. At each balance sheet date, management evaluates its estimates, including, but not limited to, those related to long-lived assets (property, plant and equipment, and identified intangible assets), goodwill and income taxes. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. 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.
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.
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. 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, prolongednegative industry or economic trends, or significant under-performance relative to expected, historical or projected future operating results. We allocate goodwill to reporting units at the time of acquisition or when there is a change in the reporting structure and base that allocation on which reporting units will benefit from the acquired assets and liabilities. Reporting units are defined as operating segments 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 Note 20 to our consolidated financial statements.
Management uses judgment to determine whether to use a qualitative analysis or a quantitative fair value measurement for its goodwill impairment testing. For the year ended December 31, 2025, the Company determined to utilize a qualitative analysis for the APS reporting unit and a quantitative analysis for the MS reporting unit. The MS reporting unit's fair value was estimated using an equal weighting of the income and market valuation approaches. The Company's fair value measurement approach combines the income and market valuation techniques for each of the Company’s reporting units that carry goodwill. These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market comparable, projected future revenue growth and gross margins, the discount rate reflecting the risk inherent in future cash flows, the terminal growth rate, and projected future economic and market conditions. Based upon a sensitivity analysis the Company performed, a 50 basis point change in the projected compound annual revenue growth rate, gross margins, discount rate, or terminal growth rate assumption would not result in an impairment in the MS reporting unit.
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.
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Results of Operations
Year ended December 31, 2025 compared to year ended December 31, 2024
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 2025 and 2024.
(Dollars in millions)
% of net sales
% of net sales
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Engineering, research and development expenses
Amortization of intangible assets
Operating income
Interest expense
Interest income
Other expense, net
Income before income taxes
Income tax expense
Equity in net loss of affiliates
Net income
Net sales For 2025, net sales were $3,196.6 million, decreased by $44.6 million, or 1%, from 2024. An analysis of the factors underlying the decrease in net sales is presented in the following table:
(In millions)
Net sales in 2024
Decrease associated with divestiture
Decrease mainly associated with volume
Increase associated with effect of foreign currency translation
Net sales in 2025
As described in the table above, the decrease in net sales was primarily attributable to (i) the absence of $33.9 million in sales associated with the divested PIM business and (ii) a reduction of $14.2 million of sales mainly due to decreased semiconductor market demand compared to the year ago period ended December 31, 2024. These sales were partially offset by an increase of $3.5 million of sales attributable to favorable foreign currency translation effects, primarily related to the strengthening of the Taiwanese dollar, Japanese yen and euro relative to the U.S. dollar compared to the year ago period ended December 31, 2024.
Sales percentage on a geographic basis for 2025 and 2024 and the percentage increase (decrease) in sales for 2025 compared to sales for 2024 were as follows:
Year ended
December 31, 2025
December 31, 2024
Percentage increase (decrease) in sales
North America
Taiwan
China
South Korea
Japan
Europe
Southeast Asia
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The decrease in sales to customers in North America primarily relates to the absence of sales from the divested PIM business and from decreased demand for our MS and APS products. The increase in sales to customers in Taiwan primarily relates to increased demand for our MS and APS products. The decrease in sales to customers in China 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 relates to decreased demand for our MS and APS products. The increase in sales to customers in Southeast Asia primarily relates to increased demand for our MS and APS products.
Gross margin
The following table sets forth gross margin as a percentage of net sales:
Percentage point change
Gross margin as a percentage of net sales:
Gross margin decreased by 1.5% for 2025 compared to 2024. Gross margin decreased primarily due to plant performance and higher depreciation expense.
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 2025 increased $4.0 million, or 1%, to $450.6 million from $446.6 million in 2024.
An analysis of the factors underlying the increase in SG&A expenses is presented in the following table:
(In millions)
Selling, general and administrative expenses in 2024
Restructuring costs, see Note 15 to the Company’s Consolidated Financial Statements
Loss on sale of divested business in 2025
Gain on sale of PIM business in 2024
Impairment on long-lived assets in 2024, see Note 3 to the Company’s Consolidated Financial Statements
Professional fees
Employee costs (excluding restructuring costs of $3.1 included in the line above)
Other decreases, net
Selling, general and administrative expenses in 2025
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. These expenses were $329.0 million in 2025 and $316.1 million in 2024.
An analysis of the factors underlying the increase in ER&D expenses is presented in the following table:
(In millionss)
Engineering, research and development expense in 2024
Depreciation expense
Project related costs
Restructuring costs, see Note 15 to the Company’s consolidated financial statements
Other increases, net
Engineering, research and development expense in 2025
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. The Company often works directly with its customers to address their needs.
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Amortization of intangible assets Amortization of intangible assets was $184.4 million in 2025 compared to $190.1 million for 2024. The decrease primarily reflects the absence of amortization for certain identifiable intangible assets acquired in previous acquisitions that became fully amortized.
Interest expense Interest expense was $199.8 million in 2025 and $215.2 million in 2024. 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.
Interest income Interest income was $7.9 million in 2025 and $7.3 million in 2024. The increase primarily reflects higher average cash balances at our foreign subsidiaries.
Other expense, net Other expense, net, was $9.4 million in 2025 compared to $4.0 million in 2024.
In 2025, other expense, net consisted mainly of loss of extinguishment of debt of $3.2 million associated with the repayments on the Company’s senior secured term loan facility (see Note 9 to the Company’s consolidated financial statements) and foreign currency transaction losses of $7.1 million.
In 2024, other expense, net consisted mainly of loss of extinguishment and modification of debt of $14.3 million associated with the repayments and the Third Amendment on the Company’s senior secured term loan facility (see Note 9 to the Company’s consolidated financial statements) and foreign currency transaction losses of $7.7 million, partially offset by a gain of $20.0 million related to the settlement of patent infringementlitigation.
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. The Company’s effective tax rate was 7.1% in 2025 compared to an effective tax rate of 8.8% in 2024.
The decrease in the effective tax rate from 2024 to 2025 primarily relates to lower income and the release of unrecognized tax benefits resulting from the expiration of applicable statute of limitations. This benefit was partially offset by an increase in discrete tax expense recorded associated with share-based compensation and the enactment of the One Big Beautiful Bill Act.
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. The decrease reflects the Company’s aforementioned operating results described in greater detail above.
Non-GAAP Financial Measures Information The Company’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. The Company also utilizes certain non-GAAP financial measures as a complement to financial measures provided in accordance with GAAP in order to better assess and reflect trends affecting the Company’s business and results of operations. See “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.
Year ended
(In millions)
December 31, 2025
December 31, 2024
Percent change
Adjusted Operating Income
Adjusted Operating Margin - as a % of net sales
Adjusted EBITDA
Adjusted EBITDA - as a % of net sales
Non-GAAP EPS
The decreases in Adjusted Operating Income and Adjusted EBITDA in 2025 compared to 2024 are generally attributable to decreased gross profit and the absence of segment profit associated with the divested PIM business. The decrease in Non-GAAP EPS in 2025 compared to 2024 is primarily attributable to decreased gross profit and the absence of segment profit associated with the divested PIM business, partially offset by lower interest expense.
Segment Analysis
The Company reports its financial performance based on two reportable segments. See Note 20 to the consolidated financial statements for additional information on the Company’s two segments.
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The following table and discussion reflects the results of operations of the Company’s two reportable segments for the years ended December 31, 2025, 2024 and 2023.
(In millions)
Materials Solutions
Net sales
Segment profit
Advanced Purity Solutions
Net sales
Segment profit
Unallocated general and administrative expenses
Materials Solutions (MS)
For 2025, MS net sales increased to $1,406.7 million, up from $1,400.1 million in 2024. The sales increase was driven by increased sales from CMP consumables, selective etch and deposition materials, partially offset by the absence of $33.9 million in prior-year sales from the divested PIM business and decreased sales from advanced materials products.
MS reported a segment profit of $276.6 million for 2025, down 3% compared to $286.2 million in 2024. The decrease was primarily associated with (1) the net impact related to the divested PIM business of $14.5 million (2) loss on sale of small, industrial specialty chemicals business of $10.9 million and (3) lower plant performance, partially offset with (4) a decrease of a $13.0 million of impairment charges related to the long-lived assets of the aforementioned industrial specialty chemicals business in 2024 and (5) higher sales volume.
Advanced Purity Solutions (APS)
For 2025, APS net sales decreased to $1,799.1 million, down 3% $1,850.2 million in 2024. The sales decrease was mainly due to a decline in facilities-based capital expenditure investments in the semiconductor industry, which led to decreased demand for our fluid handling products and FOUPs, partially offset by an increase in sales from gas and liquid filtration products.
APS reported a segment profit of $426.4 million for 2025, down 14% compared to $496.1 million in 2024. The decrease in APS’s profit in 2025 was primarily due to lower sales, unfavorable plant performance, higher depreciation expense and higher restructuring costs of $21.9 million.
Unallocated general and administrative expenses
Unallocated general and administrative expenses for 2025 totaled $62.7 million compared to $58.3 million for 2024. The $4.4 million increase is primarily due to an increase in employee costs.
Liquidity and Capital Resources
We consider the following when assessing our liquidity and capital resources:
(In millions)
December 31, 2025
December 31, 2024
Cash and cash equivalents
Working capital
Total debt
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.
Based on our analysis, we believe our existing balances of domestic cash and cash equivalents and our currently anticipated operating cash flows will be sufficient to meet our cash needs arising in the ordinary course of business for the next twelve months and for the longer term.
We may seek to take advantage of opportunities to raise additional capital through additional 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. During 2025, we did not experience difficulty accessing capital and credit
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markets, but future volatility in the capital and credit markets may increase costs associated with issuing debt instruments or affect our ability to access those markets. In addition, it is possible that our ability to access the capital and credit markets could be limited at a time when we would like, or need, to do so, which could have an adverse impact on our ability to refinance maturing debt and/or react to changing economic and business conditions.
In summary, our cash flows for each period were as follows:
(In millions)
Year ended December 31, 2025
Year ended December 31, 2024
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Increase (decrease) in cash and cash equivalents
Operating activities
Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.
Compared to 2024, the $63.7 million increase in cash provided by operating activities in 2025 was primarily driven by $101.6 million of changes in operating assets and liabilities, partially offset by a $37.9 million decrease 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 income taxes payable and refundable income taxes. The change for trade receivables was mainly due to timing of collections. The change for inventory was driven by decreased business activity. The change in income tax payable and refundable incomes taxes is primarily due to higher income tax payments.
Investing activities
I nvesting 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.
Net cash used in investing activities was $300.8 million in 2025 compared to net cash provided by investing activities $67.1 million cash used in investing activities in 2024, primarily reflecting lower proceeds from divestitures of $257.5 million, partially offset by a $16.4 million decrease in capital expenditures and $8.2 million of proceeds from government incentives.
Financing activities
Financing cash flows consist primarily of 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 2025, there was $366.9 million of cash used in financing activities compared to $688.9 million cash used in financing activities in 2024. The change in 2025 was primarily due to decreased net debt activity of $323.8 million compared to the prior year.
The Company’s total dividend payments were $60.8 million in 2025 compared to $60.6 million in 2024. The Company has paid a cash dividend in each quarter since the fourth quarter of 2017. On January 14, 2026, the Company’s board of directors declared a quarterly cash dividend of $0.10 per share to be paid on February 18, 2026 to shareholders of record as of January 28, 2026.
Other Liquidity and Capital Resources Considerations
Debt at par value outstanding
(In millions)
December 31, 2025
December 31, 2024
Senior secured term loan due 2029 at 4.88% (1)
Senior secured notes due 2029 at 4.75%
Senior unsecured notes due 2030 at 5.95%
Senior unsecured notes due 2029 at 3.625%
Senior unsecured notes due 2028 at 4.375%
Revolving facility due 2027 (2)
Total debt (par value)
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(1) Our senior secured term loan due 2029 bears interest rate at a rate per annum equal to, at the Company’s option, either (i) SOFR, plus an applicable margin of 1.75%, or (ii) a base rate plus an applicable margin of 0.75%.
(2) Our senior secured revolving credit facility due 2027 (the “Revolving Facility”) bears interest at a rate per annum equal to SOFR, plus an applicable margin of 1.75%, or (ii) a base rate plus an appliable margin of 0.75%. The Revolving Facility has commitments of $575.0 million.
During the fiscal year 2025, the Company repaid $300.0 million net of borrowings under the senior secured term loan.
Through December 31, 2025, the Company was in compliance with all applicable financial covenants included in the terms of its debt arrangements.
During the twelve months ended December 31, 2025, the Company borrowed and repaid $567.0 million under this Revolving Facility and no balance was outstanding at December 31, 2025.
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. There were no outstanding borrowings under this line of credit and no balance was outstanding at December 31, 2025.
Cash and cash requirements
(In millions)
December 31, 2025
December 31, 2024
Cash and cash equivalents
Non-U.S.
Our cash and cash equivalents include cash on hand and highly-liquid debt securities with original maturities of three months or less, which are valued at cost and approximate fair value. We utilize a variety of funding strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed.
Cash requirements
We have cash requirements to support working capital needs, capital expenditures, business acquisitions, contractual obligations, commitments, principal and interest payments on debt and other liquidity requirements associated with our operations. We generally intend to use available cash and funds generated from our operations to meet these cash requirements, but, in the event that additional liquidity is required, we may also borrow under our Revolving Facility.
The following table summarizes our short and long-term cash requirements as of December 31, 2025:
(In millions)
Total
Due within one year of December 31, 2025
Due later than one year from December 31, 2025
Long-term debt (principal)
Interest payments on long-term debt
Capital purchase obligations
Supply purchase obligations
Operating and financing leases
Income tax liabilities
Total
Long-term debt and interest payments on long-term debt . We have contractual obligations for principal and interest payments on our long-term debt. See Note 9 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. Interest projections on both variable and fixed rate long-term debt are based on interest rates effective as of December 31, 2025 and do not include $47.4 million for unamortized discounts and debt issuance costs.
Capital purchase obligations . We have capital purchase obligations that represent commitments for the construction or purchase of property, plant and equipment. They were not recorded as liabilities on the Company’s consolidated balance sheet as of December 31, 2025, as the Company had not yet received the related goods or taken title to the property.
We expect capital expenditure spending to be approximately $250.0 million in 2026.
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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, 2025, 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 13 of the consolidated financials for additional information.
Income tax liabilities . Of the tax liabilities included in the table above, $33.7 million relates to uncertain tax positions. We are unable to accurately predict when these amounts will be realized or released. 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 16 of the consolidated financials for additional information.
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 2025.
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.
The Company also utilizes certain non-GAAP financial measures as a complement to financial measures provided in accordance with GAAP in order to better assess and reflect trends affecting the Company’s business and results of operations. These non-GAAP financial measures include Adjusted EBITDA and Adjusted Operating Income, together with related measures thereof, and Non-GAAP EPS, as well as certain other supplemental non-GAAP financial measures included in the discussion of the Company’s financial results.
The non-GAAP financial measures exclude certain specific items (“Special Items”), including certain items related to mergers and acquisitions; divestitures; restructuring and severance charges; impairments of assets; refinancing; certain income tax items and other discrete adjustments related to non-recurring, unusual or unanticipated charges, expenses or gains. We evaluate Special Items on an individual basis. Our evaluation of whether to exclude a Special Item for purposes of determining our non-GAAP financial measures considers both the quantitative and qualitative aspects of the Special Item, including among other things (i) its nature, (ii) whether or not it relates to our ongoing business operations, and (iii) whether or not we expect it to occur as part of our normal business on a regular basis.
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, 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).
Non-GAAP Net Income is defined by the Company as net income, adjusted to exclude the impact of any Special Items and 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 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. Management also uses these non-GAAP measures to assist in the evaluation of the performance of its business segments and to make operating decisions.
Management believes the Company’s non-GAAP measures help indicate the Company’s baseline performance before certain gains, losses or other charges that may not be indicative of the Company’s business or future outlook and offer a useful view of business performance in that the measures provide a more consistent means of comparing performance. The Company believes the non-GAAP measures aid investors’ overall understanding of the Company’s results by providing a higher degree of transparency for such items and providing a level of disclosure that will help investors understand how management plans, measures and evaluates the Company’s business performance. Management believes that the inclusion of non-GAAP measures provides greater consistency in its financial reporting from period-to-period and facilitates investors’ understanding of the Company’s historical operating trends by providing an additional basis for comparisons to prior periods.
Management uses Adjusted EBITDA and Adjusted Operating Income to assist it in evaluations of the Company’s operating performance by excluding items that management does not consider as relevant in the results of its ongoing operations. Internally, these non-GAAP measures are used by management for planning and forecasting purposes, including the preparation
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of internal budgets; for allocating resources to enhance financial performance; for evaluating the effectiveness of operational strategies; and for evaluating the Company’s capacity to fund capital expenditures, secure financing and expand its business.
In addition, and as a consequence of the importance of these non-GAAP financial measures in managing its business, the Company’s Board of Directors uses non-GAAP financial measures in the evaluation process to determine management compensation.
The Company believes that certain analysts and investors use Adjusted EBITDA, Adjusted Operating Income and Non-GAAP EPS as supplemental measures to evaluate the overall operating performance of firms in the Company’s industry. Additionally, lenders or potential lenders use Adjusted EBITDA measures to evaluate the Company’s creditworthiness.
The presentation of non-GAAP financial measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP. Management strongly encourages investors to review the Company’s consolidated financial statements in their entirety and to not rely on any single financial measure.
Management notes that the use of non-GAAP measures has limitations, including but not limited to:
First, non-GAAP financial measures are not standardized. Accordingly, the methodology used to produce the Company’s non-GAAP financial measures 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.
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.
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. The exclusion of these items in the Company’s non-GAAP measures should not be construed as an implication that these costs are unusual, infrequent or non-recurring.
Management considers these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their most directly comparable financial measures calculated in accordance with GAAP. The calculations of Adjusted EBITDA, Adjusted Operating Income, and Non-GAAP EPS, and reconciliations between these financial measures and their most directly comparable GAAP equivalents, are presented below in the accompanying tables.
The reconciliation of GAAP measures to Adjusted Operating Income and Adjusted EBITDA for the years ended December 31, 2025 and 2024 are presented below:
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(In millions)
Net sales
Net income
Net income - as a % of net sales
Adjustments to net income
Equity in net loss of affiliates
Income tax expense
Interest expense
Interest income
Other expense, net
GAAP – Operating income
Operating margin - as a % of net sales
Integration costs:
Professional fees 1
Severance costs 2
Restructuring costs 3
Acquired tax equalization asset reduction 4
Loss (gain) on sale of businesses, net 5
Impairment of long-lived assets 6
Amortization of intangible assets 7
Adjusted Operating Income
Adjusted Operating Margin
Depreciation
Adjusted EBITDA
Adjusted EBITDA – as a % of net sales
1 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations.
2 Represents severance charges related to the integration of the CMC Materials acquisition.
3 Restructuring charges resulting from discrete cost saving initiatives inclusive of employee terminationbenefit, contract termination costs 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, contract termination costs and the abandonment of certain capital equipment no longer necessary for the Company’s long-term objectives.
4 Represents an asset reduction of an acquired tax equalization asset from the CMC Materials acquisition.
5 Loss (gain) from the sale of the Company’s PIM and small, industrial specialty chemicals businesses.
6 Impairment of long-lived assets related to a small, industrial specialty chemicals business.
7 Non-cash amortization expense associated with intangibles acquired in acquisitions.
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The reconciliation of GAAP measures to Non-GAAP EPS for the years ended December 31, 2025 and 2024 are presented below:
(In thousands, except per share data)
Net income
Adjustments to net income:
Integration costs:
Professional fees 1
Severance costs 2
Restructuring costs 3
Patent infringement settlement gain, net 4
Acquired tax equalization asset reduction 5
Loss on extinguishment of debt and modification 6
Loss (gain) on sale of businesses, net 7
Impairment on long-lived assets 8
Amortization of intangible assets 9
Tax effect of adjustments to net income and discrete tax items 10
Non-GAAP net income
Diluted earnings per common share
Effect of adjustments to net income
Diluted non-GAAP earnings per common share
Diluted weighted average shares outstanding
1 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations.
2 Represents severance charges related to the integration of the CMC Materials acquisition.
3 Restructuring charges resulting from discrete cost saving initiatives inclusive of employee terminationbenefit, contract termination costs 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, contract termination costs and the abandonment of certain capital equipment no longer necessary for the Company’s long-term objectives.
4 During the fourth quarter of 2024, the Company settled patent infringementlitigation and received net proceeds of $20.0 million.
5 Represents an asset reduction of an acquired tax equalization asset from the CMC Materials acquisition.
6 Loss on extinguishment of debt in 2024 and 2025 and modification of our Existing Credit Agreement in 2024.
7 Loss (gain) from the sale of the Company’s PIM and small, industrial specialty chemicals businesses.
8 Impairment of long-lived assets related to a small, industrial specialty chemicals business.
9 Non-cash amortization expense associated with intangibles acquired in acquisitions.
10 The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate for each respective year.
