10-QPeriod: Q2 FY2001

ENTEGRIS INC Quarterly Report for Q2 Ended May 26, 2001

Filed July 10, 2001For Securities:ENTG

Summary

Entegris Inc. reported its third-quarter and nine-month results for fiscal year 2001, ending May 26, 2001. While the nine-month period showed a year-over-year increase in net sales and net income, driven by strong performance in both fluid handling and microelectronics product segments, the third quarter itself experienced a significant revenue decline. This downturn is attributed to the broader semiconductor industry slowdown, particularly impacting microelectronics sales. The company also incurred substantial non-recurring charges related to facility closures and a distribution agreement termination, which affected profitability in the current quarter. Despite the challenging short-term environment, Entegris made strategic moves, including the acquisition of NT International to bolster its ultra-high purity sensor and controller offerings. The company is also investing in R&D for next-generation 300mm products. Management anticipates continued sales declines in the fourth quarter but believes its current cash position and credit facilities are adequate for the next twelve months. Investors should monitor the impact of the industry downturn and the integration of recent acquisitions.

Key Highlights

  • 1Net sales for the first nine months of fiscal 2001 increased by 17% to $289.7 million, compared to $247.7 million in the prior year, driven by growth in both fluid handling and microelectronics segments.
  • 2The third quarter of fiscal 2001 saw a 11% decline in net sales to $81.3 million from $91.0 million in the prior year, reflecting a slowdown in the semiconductor industry.
  • 3Microelectronics product sales, comprising 67% of third-quarter sales, fell 16%, while fluid handling product sales remained flat.
  • 4The company recorded significant non-recurring charges of $4.9 million in Q3 fiscal 2001 for facility closures and $8.2 million in Q2 fiscal 2001 for a distribution agreement termination.
  • 5Cash and cash equivalents increased to $129.8 million as of May 26, 2001, and the company reported strong operating cash flow of $51.9 million for the nine-month period.
  • 6Entegris completed the acquisition of NT International on May 31, 2001, for $27.5 million, enhancing its ultra-high purity sensor and controller capabilities.
  • 7Management expects sales to decline further in the fourth quarter of fiscal 2001 due to continued industry weakness.

Frequently Asked Questions

The decline in third-quarter sales, down 11% year-over-year, is primarily attributed to a downturn in the semiconductor industry. This slowdown particularly impacted microelectronics product sales, which fell 16% during the quarter.

The company incurred two major non-recurring charges: $4.9 million in the third quarter of fiscal 2001 related to the closure of facilities in Castle Rock, Colorado, and Munmak, Korea, and $8.2 million in the second quarter of fiscal 2001 related to the early termination of a distribution agreement for the Microelectronics Group with its affiliate, Metron Technology N.V.

The acquisition of NT International, completed on May 31, 2001, for $27.5 million, strengthens Entegris' portfolio by adding ultra-high purity flow and pressure measurement sensors and controllers. This acquisition is expected to contribute to future growth.

Management anticipates that sales for the fourth quarter of fiscal 2001 will decline further from the levels experienced in the third quarter, due to the ongoing weakness in the semiconductor industry and continued decline in order rates.