10-QPeriod: Q1 FY2012

ENTEGRIS INC Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 27, 2012For Securities:ENTG

Summary

Entegris, Inc. reported a notable decrease in net sales for the first quarter of 2012, down 14% to $175.4 million compared to the same period in 2011. This decline is attributed to a slowdown in semiconductor industry capital spending. Despite lower sales, the company maintained its gross margin rate of 43.5%, demonstrating effective cost management. However, operating income decreased significantly to $26.8 million from $37.3 million year-over-year. Financially, the company ended the quarter with a solid cash position of $266.9 million and no outstanding debt, indicating good liquidity. Net income attributable to Entegris fell to $17.9 million ($0.13 per diluted share) from $29.2 million ($0.22 per diluted share) in the prior year. Management attributes the decline primarily to lower net sales and corresponding gross profit reduction, while operating costs were managed effectively with a slight decrease in SG&A and R&D expenses.

Financial Highlights

43 data points
Beta

Revenue

$175.40M

43.5% Gross Margin

Net Income

$17.86M

10.2% Net Margin

EPS (Diluted)

$0.13

Total Assets

$735.65M

Cash & Equivalents

$266.93M

Free Cash Flow

-$10.23M

Financial Statements
Beta
Revenue$175.40M
Cost of Revenue$99.16M
Gross Profit$76.24M
R&D Expenses$11.99M
SG&A Expenses$35.05M
Operating Income$26.76M
Interest Expense$36K
Net Income$17.86M
EPS (Basic)$0.13
EPS (Diluted)$0.13
Shares Outstanding (Basic)136.60M
Shares Outstanding (Diluted)138.05M

Key Highlights

  • 1Net sales decreased by 14% to $175.4 million in Q1 2012 compared to Q1 2011, driven by a slowdown in semiconductor industry capital spending.
  • 2Gross profit margin remained stable at 43.5% year-over-year, despite the decline in net sales.
  • 3Operating income decreased by 28.4% to $26.8 million compared to the prior year.
  • 4Net income attributable to Entegris, Inc. was $17.9 million ($0.13 per diluted share), down from $29.2 million ($0.22 per diluted share) in Q1 2011.
  • 5The company ended the quarter with $266.9 million in cash and cash equivalents and no outstanding debt, indicating strong liquidity.
  • 6Sales of capital-driven products declined significantly (24%), while unit-driven product sales saw a smaller decrease (8%), indicating a shift in customer spending priorities.
  • 7The effective tax rate increased to 33.7% in Q1 2012 from 22.0% in Q1 2011, partly due to the absence of a deferred tax asset valuation allowance release seen in the prior year.

Frequently Asked Questions

The primary reason cited for the 14% decrease in net sales to $175.4 million in the first quarter of 2012, compared to the same period in 2011, is a slowdown in semiconductor industry capital spending that began in the latter half of 2011.

Despite lower sales, Entegris maintained its gross profit margin at 43.5%, the same as the prior year's period. Additionally, selling, general, and administrative (SG&A) expenses and engineering, research, and development (ER&D) expenses saw a combined decrease of 3% year-over-year, helping to partially offset the decline in gross profit.

Entegris maintained a strong liquidity position, with $266.9 million in cash and cash equivalents and no outstanding short-term or long-term debt as of March 31, 2012. The company believes its current cash, available credit facilities, and operational cash flow will be sufficient to meet its needs for the next twelve months.

Sales of unit-driven products decreased by 8%, while sales of capital-driven products fell more significantly by 24%. This shift indicates that customers were spending less on new equipment and facilities (capital-driven) and more on ongoing operations (unit-driven), reflecting the industry slowdown in capital expenditures.