10-QPeriod: Q2 FY2011

ENTEGRIS INC Quarterly Report for Q2 Ended Apr 2, 2011

Filed April 22, 2011For Securities:ENTG

Summary

Entegris, Inc. (ENTG) reported a strong first quarter for 2011, with net sales increasing by a significant 27% year-over-year to $203.1 million. This marks the eighth consecutive quarter of sales growth, reaching the highest quarterly sales level in the company's history. The growth was driven by robust demand in the semiconductor market, with both unit-driven and capital-driven product sales showing notable increases. The company also saw an improvement in net income to $29.2 million, or $0.22 per diluted share, up from $16.6 million, or $0.12 per diluted share, in the prior year's comparable quarter. The company's financial position remains solid, with cash and cash equivalents increasing to $142.6 million and no outstanding short-term or long-term debt. Entegris is successfully managing its expenses, with SG&A expenses remaining flat year-over-year as a percentage of sales, and R&D expenses increasing to support new product development. The company also benefited from a favorable tax rate, partly due to a decrease in its U.S. deferred tax asset valuation allowance and tax holidays in Malaysia.

Financial Highlights

28 data points
Beta

Revenue

$203.13M

43.5% Gross Margin

Net Income

$29.18M

14.4% Net Margin

EPS (Diluted)

$0.22

Cash & Equivalents

$142.58M

Free Cash Flow

$4.38M

Financial Statements
Beta
Revenue$203.13M
Cost of Revenue$114.78M
Gross Profit$88.34M
R&D Expenses$12.53M
SG&A Expenses$35.79M
Operating Income$37.33M
Interest Expense$165K
Net Income$29.18M
EPS (Basic)$0.22
EPS (Diluted)$0.22
Shares Outstanding (Basic)133.70M
Shares Outstanding (Diluted)135.44M

Key Highlights

  • 1Net sales surged 27% year-over-year to $203.1 million, reaching a record high quarterly sales level.
  • 2Net income attributable to Entegris, Inc. more than doubled to $29.2 million ($0.22/share) from $16.6 million ($0.12/share) in the prior year's quarter.
  • 3Gross profit increased to $88.3 million, despite a slight decrease in gross margin to 43.5% from 45.6%.
  • 4Operating income rose significantly to $37.3 million from $22.3 million year-over-year.
  • 5Cash and cash equivalents increased to $142.6 million, with no outstanding debt.
  • 6All three operating segments (CCS, ME, SMD) reported year-over-year net sales growth.
  • 7The company successfully resolved ongoing patent litigation with Pall Corporation through a settlement agreement.

Frequently Asked Questions

The substantial increase in net sales was primarily driven by strong demand in the semiconductor industry, which experienced high utilization rates and increased capital spending. Both unit-driven product sales (up 21%) and capital-driven product sales (up 35%) contributed to the growth, reflecting a shift towards increased capital expenditures by semiconductor customers. Favorable foreign currency translation effects also contributed positively.

Entegris demonstrated effective expense management. Selling, general, and administrative (SG&A) expenses remained flat year-over-year and decreased as a percentage of net sales to 17.6% from 22.3%, partly due to lower incentive compensation. Engineering, research, and development (ER&D) expenses increased slightly to support new product development, but also decreased as a percentage of sales. The effective management of expenses, coupled with higher sales, led to a significant increase in operating income and net income.

Entegris maintains a strong liquidity position. Cash and cash equivalents stood at $142.6 million as of April 2, 2011, an increase from $134.0 million at the end of 2010. Importantly, the company had no outstanding short-term borrowings or long-term debt as of the reporting date. They also have access to a $60 million revolving credit facility, with no outstanding borrowings at the time of the report.

Entegris announced on January 13, 2011, that it entered into a comprehensive settlement and license agreement with Pall Corporation, resolving all pending patent infringement litigation between the two companies. This settlement allows both companies to continue manufacturing their existing product lines and has resulted in the dismissal of all related lawsuits, removing a significant legal overhang.