10-QPeriod: Q2 FY2002

ENTEGRIS INC Quarterly Report for Q2 Ended Jun 1, 2002

Filed July 16, 2002For Securities:ENTG

Summary

Entegris, Inc. (ENTG) filed its quarterly report for the period ending June 1, 2002, revealing a challenging nine-month period characterized by a significant revenue decline compared to the prior year, primarily due to the downturn in the semiconductor industry. Despite this, the company demonstrated sequential improvement in sales for the third quarter of fiscal 2002, signaling a potential recovery. Financially, the company reported a net loss of $2.1 million for the nine months ended June 1, 2002, a stark contrast to the substantial net income of $40.3 million in the same period of the previous year. This was accompanied by a decrease in gross profit and an increase in SG&A expenses as a percentage of sales, impacting operating results. However, the company maintained a strong liquidity position with $70.4 million in cash and cash equivalents and $37.1 million in short-term investments, indicating sufficient resources to fund operations and investments for the next twelve months.

Key Highlights

  • 1Net sales for the nine months ended June 1, 2002, decreased by 46% to $156.3 million compared to $289.7 million in the prior year, reflecting the semiconductor industry downturn.
  • 2The company reported a net loss of $2.1 million for the first nine months of fiscal 2002, a significant shift from a net income of $40.3 million in the comparable prior-year period.
  • 3Third quarter fiscal 2002 sales showed sequential improvement of 18% from the second quarter, reaching $59.7 million, indicating a potential bottoming out of the market downturn.
  • 4Gross profit margin for the first nine months of fiscal 2002 was 38.6%, down from 49.7% in the prior year, largely due to lower sales volumes and inventory reserve adjustments.
  • 5Selling, general, and administrative (SG&A) expenses, as a percentage of net sales, increased to 34.3% for the nine-month period, up from 20.6% in the prior year, primarily due to lower sales volumes.
  • 6Entegris maintained a healthy liquidity position with $70.4 million in cash and cash equivalents and $37.1 million in short-term investments as of June 1, 2002.
  • 7The company expects fourth quarter fiscal 2002 sales to range between $62 million and $66 million, suggesting continued sequential improvement.

Frequently Asked Questions

The primary driver was the severe downturn in the semiconductor industry, which began in the second half of fiscal year 2001 and continued through the reporting period. This led to a 46% decrease in net sales for the first nine months of fiscal 2002 compared to the same period in the prior year.

Yes, there are signs of sequential recovery. The company's third quarter fiscal 2002 sales increased by 18% from the second quarter, marking the second consecutive quarter of improvement. Additionally, management forecasts fourth quarter sales to range between $62 million and $66 million, indicating continued positive momentum.

Entegris adopted SFAS No. 142, which prohibits the amortization of goodwill. While goodwill amortization expense was $0.8 million for the first nine months of fiscal 2001, it is no longer recognized under the new standard. The company performed an impairment test at adoption and found no indication of goodwill impairment, thus avoiding any transitional impairment loss. The company estimates that without this change, goodwill amortization would have been approximately $1.7 million for the first nine months of fiscal 2002.

Entegris maintains a strong liquidity position with $70.4 million in cash and cash equivalents and $37.1 million in short-term investments as of June 1, 2002. Coupled with available credit facilities, the company believes these resources are sufficient to meet its working capital and investment requirements for the next twelve months. However, future growth, including potential acquisitions, may necessitate additional equity or debt financing.