10-QPeriod: Q3 FY2012

ENTEGRIS INC Quarterly Report for Q3 Ended Sep 29, 2012

Filed October 25, 2012For Securities:ENTG

Summary

Entegris Inc. (ENTG) reported its third-quarter 2012 results, showing a 7% increase in net sales to $184.4 million compared to the prior year's quarter, driven by growth in unit-driven products. However, for the first nine months of 2012, net sales declined by 6% to $548.1 million, reflecting a slowdown in semiconductor industry capital spending. The company's gross margin improved slightly year-over-year in the third quarter due to better factory utilization and royalty revenue, though it remained flat for the nine-month period. Net income attributable to Entegris for the third quarter decreased to $18.0 million ($0.13 per diluted share) from $22.0 million ($0.16 per diluted share) in the same period last year. This decline was impacted by higher selling, general, and administrative expenses, including a $3.9 million charge related to CEO succession, and a higher effective tax rate. For the nine-month period, net income fell to $57.6 million ($0.42 per diluted share) from $83.7 million ($0.62 per diluted share) in the prior year. The company maintained a strong liquidity position with $307.8 million in cash and cash equivalents and no outstanding debt.

Financial Highlights

46 data points
Beta

Revenue

$184.45M

44.4% Gross Margin

Net Income

$18.04M

9.8% Net Margin

EPS (Diluted)

$0.13

Total Assets

$797.15M

Cash & Equivalents

$307.83M

Free Cash Flow

$24.32M

Financial Statements
Beta
Revenue$184.45M
Cost of Revenue$102.52M
Gross Profit$81.93M
R&D Expenses$13.31M
SG&A Expenses$39.09M
Operating Income$27.13M
Interest Expense$43K
Net Income$18.04M
EPS (Basic)$0.13
EPS (Diluted)$0.13
Shares Outstanding (Basic)137.45M
Shares Outstanding (Diluted)138.50M

Key Highlights

  • 1Net sales increased 7% to $184.4 million for the third quarter of 2012, but declined 6% to $548.1 million for the first nine months.
  • 2Gross margin improved to 44.4% in Q3 2012 from 43.2% in Q3 2011, driven by factory utilization and royalty revenue.
  • 3Net income attributable to Entegris decreased to $18.0 million ($0.13/share) in Q3 2012 from $22.0 million ($0.16/share) in Q3 2011.
  • 4Operating income for the nine-month period decreased to $85.5 million from $105.2 million in the prior year.
  • 5Selling, General, and Administrative (SG&A) expenses increased by 17% in Q3 2012, partly due to a $3.9 million CEO succession charge.
  • 6The effective tax rate increased significantly to 32.2% in 2012 from 21.2% in 2011, impacting net income.
  • 7Cash, cash equivalents, and short-term investments stood at $315.8 million as of September 29, 2012, with no outstanding debt.

Frequently Asked Questions

For the third quarter of 2012, net sales increased due to growth in unit-driven products, while the decline in sales for the nine-month period was primarily attributed to lower capital spending in the semiconductor industry. Foreign currency translation had an unfavorable impact on reported sales for both periods.

The decrease in net income for the third quarter was influenced by higher SG&A expenses, including a significant charge for CEO succession, and a higher effective tax rate. These factors offset the improvement in gross profit and sales growth.

Entegris maintained a strong liquidity position with $307.8 million in cash and cash equivalents and $8.0 million in short-term investments as of September 29, 2012. The company had no outstanding debt and generated $76.8 million in operating cash flow for the first nine months of the year, indicating robust financial health.

The company recorded a pre-tax charge of $3.9 million in the third quarter of 2012, classified as selling, general, and administrative expenses, related to compensation for the outgoing CEO as part of the management succession plan.