10-QPeriod: Q2 FY2003

ENTEGRIS INC Quarterly Report for Q2 Ended May 31, 2003

Filed July 15, 2003For Securities:ENTG

Summary

Entegris Inc. (ENTG) reported its second quarter results for fiscal year 2003, ending May 31, 2003. The company saw a significant increase in net sales, up 17% year-over-year to $70.0 million for the quarter, and up 14% for the nine-month period to $177.8 million. This growth was driven by strong performance in its semiconductor and data storage segments, bolstered by recent acquisitions. The company reported a net income of $4.0 million ($0.05/diluted share) for the quarter, a decrease from $5.2 million ($0.07/diluted share) in the prior year quarter. However, for the nine-month period, Entegris reported a net loss of $1.0 million ($0.01/diluted share), compared to a net loss of $2.1 million ($0.03/diluted share) in the same period last year, indicating improved operational performance despite an overall loss. The company is actively managing its costs and has integrated two strategic acquisitions, Electrol Specialties Company (ESC) and the wafer and reticle carrier (WRC) product lines from Asyst Technologies, Inc., which are expected to contribute to future growth. Financially, Entegris maintained a solid liquidity position with $99.5 million in cash, cash equivalents, and short-term investments as of May 31, 2003. Operating cash flow was robust at $21.6 million for the nine months, supported by non-cash charges and working capital management. The company anticipates stable sales levels for the upcoming fourth quarter, with a slight improvement in gross margins expected due to reduced integration costs. Entegris continues to invest in R&D to support current products and develop new technologies, with projected capital expenditures between $12-$15 million for fiscal year 2003. The company also announced a shelf registration statement, indicating potential future capital raising activities.

Key Highlights

  • 1Net sales increased 17% year-over-year to $70.0 million for the third quarter of fiscal 2003, driven by strong performance in the semiconductor and data storage markets.
  • 2For the nine-month period, net sales grew 14% to $177.8 million, indicating a positive top-line trend.
  • 3The company reported a net income of $4.0 million ($0.05/diluted share) for the third quarter, despite a year-over-year decrease, and a reduced net loss of $1.0 million ($0.01/diluted share) for the nine-month period.
  • 4Entegris completed two strategic acquisitions in the second quarter: Electrol Specialties Company (ESC) and Asyst Technologies' wafer and reticle carrier (WRC) product lines, which are contributing to sales growth.
  • 5Liquidity remains strong with $99.5 million in cash, cash equivalents, and short-term investments as of May 31, 2003.
  • 6Operating cash flow was $21.6 million for the nine-month period, reflecting effective working capital management and significant non-cash charges.
  • 7The company projects fourth-quarter sales to be similar to third-quarter levels with an expectation of slightly improved gross margins.

Frequently Asked Questions

For the nine months ended May 31, 2003, Entegris reported a net loss of $1.0 million, or $0.01 per diluted share, compared to a net loss of $2.1 million, or $0.03 per diluted share, in the same period last year. Net sales increased by 14% to $177.8 million.

The acquisitions of Electrol Specialties Company (ESC) and Asyst Technologies' wafer and reticle carrier (WRC) product lines, completed in the second quarter of fiscal 2003, contributed to the overall increase in net sales. The WRC product line alone accounted for approximately 40% of the sequential increase in semiconductor market sales for the third quarter. The company is in the process of finalizing valuations for these acquisitions.

As of May 31, 2003, Entegris had $99.5 million in cash, cash equivalents, and short-term investments. Operating activities provided $21.6 million in cash flow for the nine months. The company believes its current resources and available credit facilities are sufficient for the next 12 months, though future growth and acquisitions may require additional financing.

The company faces risks related to geopolitical conditions and the global economy, which could impact its projections. Additionally, the company has an investment in Metron Technology N.V. common stock which is subject to price fluctuations, and a pending legal proceeding with Lucent Technologies. The company's effective tax rate can also be volatile due to low profitability levels.