10-QPeriod: Q1 FY2015

ENTEGRIS INC Quarterly Report for Q1 Ended Mar 28, 2015

Filed April 30, 2015For Securities:ENTG

Summary

Entegris, Inc. (ENTG) reported its first quarter results for the period ending March 28, 2015, showing significant year-over-year revenue growth primarily driven by the acquisition of ATMI, Inc. in April 2014. Net sales increased by 59% to $263.4 million, with ATMI contributing $87.3 million. Excluding the acquisition and unfavorable foreign currency impacts, underlying sales grew by 11%, indicating improved demand in the semiconductor industry. The company's gross profit also saw a substantial increase, rising by $45.2 million to $116.5 million, with a gross margin of 44.2%, up from 43.0% in the prior year. This improvement was attributed to higher sales from both legacy Entegris and ATMI operations, with ATMI products contributing higher average margins. While operating expenses, particularly SG&A and R&D, increased due to the integration of ATMI, the company reported a net income of $14.9 million, or $0.11 per diluted share, a slight increase from $14.3 million ($0.10 per diluted share) in the same period last year. Despite a cash outflow from operations, the company maintained a strong liquidity position with $341.4 million in cash and cash equivalents.

Financial Highlights

49 data points
Beta

Revenue

$263.37M

44.2% Gross Margin

Net Income

$14.87M

5.6% Net Margin

EPS (Diluted)

$0.11

Total Assets

$1.73B

Cash & Equivalents

$341.39M

Free Cash Flow

-$20.62M

Financial Statements
Beta
Revenue$263.37M
Cost of Revenue$146.84M
Gross Profit$116.54M
R&D Expenses$25.80M
SG&A Expenses$50.89M
Operating Income$27.54M
Interest Expense$9.84M
Net Income$14.87M
EPS (Basic)$0.11
EPS (Diluted)$0.11
Shares Outstanding (Basic)139.98M
Shares Outstanding (Diluted)140.74M

Key Highlights

  • 1Net sales surged 59% year-over-year to $263.4 million, largely due to the acquisition of ATMI, Inc.
  • 2Excluding ATMI and currency effects, underlying sales increased by 11%, signaling improved semiconductor industry demand.
  • 3Gross profit increased by $45.2 million to $116.5 million, with gross margin improving to 44.2% from 43.0%.
  • 4Net income was $14.9 million ($0.11 per diluted share), a modest increase from $14.3 million ($0.10 per diluted share) in the prior year.
  • 5Operating activities resulted in a cash outflow of $0.1 million for the quarter.
  • 6Cash and cash equivalents stood at $341.4 million as of March 28, 2015.
  • 7Long-term debt was $741.9 million, with a $25 million prepayment made on the senior secured term loan facility during the quarter.

Frequently Asked Questions

The primary driver of Entegris' revenue growth in the first quarter of 2015 was the acquisition of ATMI, Inc., which was completed on April 30, 2014. ATMI contributed $87.3 million to the reported net sales of $263.4 million.

The ATMI acquisition significantly boosted gross profit due to its sales and higher average margins. However, it also led to increased Selling, General & Administrative (SG&A) expenses and Engineering, Research & Development (ER&D) expenses related to integration and operational infrastructure. Despite these increased costs, the company reported a slight increase in net income.

As of March 28, 2015, Entegris had $341.4 million in cash and cash equivalents, indicating a strong liquidity position. The company had $741.9 million in total long-term debt. During the quarter, Entegris made a $25 million prepayment on its senior secured term loan facility.

Entegris has a diverse debt structure including a senior secured term loan and senior unsecured notes. The company made a voluntary prepayment on its term loan during the quarter. Management believes its current cash on hand, available credit facilities, and operating cash flow will be sufficient to meet its working capital and investment requirements for at least the next twelve months. They do not anticipate needing to repatriate foreign earnings for domestic liquidity needs.