10-QPeriod: Q2 FY2005

ENTEGRIS INC Quarterly Report for Q2 Ended May 28, 2005

Filed July 7, 2005For Securities:ENTG

Summary

Entegris, Inc. reported financial results for the third quarter and nine months ended May 28, 2005. While net sales for the nine-month period showed a modest increase of 6% year-over-year to $262.8 million, the third quarter saw a 12% decrease in net sales compared to the prior year, reaching $87.1 million. This decline was primarily driven by a significant 22% drop in sales to the semiconductor market. Despite the revenue challenges in the quarter, the company's net income for the nine-month period improved to $17.3 million from $15.8 million in the prior year, although the third-quarter net income fell by 23% to $7.1 million. The company is progressing with its merger with Mykrolis Corporation, expected to close in August 2005, which is anticipated to be accounted for as a business combination. Management anticipates a challenging fourth quarter with net income projected between $3.0 million and $4.0 million, reflecting ongoing softness in the semiconductor sector and expected realignment costs. The company maintains a strong liquidity position with $163.6 million in cash, cash equivalents, and short-term investments at the end of the period.

Key Highlights

  • 1Nine-month net sales increased 6% to $262.8 million, driven by growth in Data Storage and Services, while the third quarter saw a 12% decline to $87.1 million.
  • 2Third-quarter net income decreased 23% year-over-year to $7.1 million, largely due to a 22% drop in semiconductor sales.
  • 3The proposed merger with Mykrolis Corporation is on track for an August 2005 closing, to be accounted for as a business combination.
  • 4The company has a strong liquidity position, with cash, cash equivalents, and short-term investments totaling $163.6 million.
  • 5Anticipates a net income range of $3.0 million to $4.0 million for the fourth quarter, impacted by realignment costs and semiconductor market conditions.
  • 6Effective tax rate for the nine months ended May 28, 2005, was 26.1%, down from 31.5% in the prior year, partly due to a tax benefit from a U.S. Federal income tax refund claim.
  • 7Inventories decreased by $1.1 million, reflecting lower work-in-process associated with decreased sales activity.

Frequently Asked Questions

For the nine months ended May 28, 2005, Entegris reported net sales of $262.8 million, a 6% increase over the prior year. Net income for this period was $17.3 million, up from $15.8 million. However, the third quarter ended May 28, 2005, showed a 12% decrease in net sales to $87.1 million compared to the same quarter in the previous year, leading to a 23% decline in net income to $7.1 million.

The decline in third-quarter sales was primarily driven by a significant 22% decrease in the semiconductor market, which represents the largest portion of the company's revenue. While the Data Storage and Services segments showed strong growth, they were not enough to offset the weakness in semiconductors. The company also noted a decline in its Services segment due to timing issues related to revenue recognition for cleaning equipment.

Entegris entered into an Agreement and Plan of Merger with Mykrolis Corporation on March 21, 2005. Both companies expect to close the merger transaction on August 5, 2005, provided stockholder approval is received. The merger will be accounted for as a business combination using the purchase method of accounting.

Entegris anticipates that fourth-quarter sales will be flat compared to the third quarter. Net income for the fourth quarter is projected to be in the range of $3.0 million to $4.0 million, or $0.04 to $0.05 per diluted share. This forecast takes into account ongoing semiconductor market conditions, expected realignment costs related to production and administrative activities, and an anticipated gain on the Nortem investment.