BBH Select Mid Cap ETF on Entegris Inc.
Thesis
BBH owns Entegris as a critical supplier of filtration products, materials and delivery equipment used in high-precision semiconductor fabrication. The company reported strong first-quarter results and guided above consensus as industry expectations for wafer volumes and fab construction improved. Gross margin expanded sharply, supporting BBH's view that the relatively new CEO's focus on profitability is working. Robust free cash flow is also expected to reduce net leverage to roughly 3.0x by year-end, improving the balance-sheet profile.
“This matches an upgraded view of industry end markets”
Key risks
- Semiconductor wafer-volume and fab-construction demand are cyclical.
- Net leverage remains elevated even as management targets further deleveraging.