10-QPeriod: Q3 FY2015

ENTEGRIS INC Quarterly Report for Q3 Ended Sep 26, 2015

Filed October 29, 2015For Securities:ENTG

Summary

Entegris Inc. (ENTG) reported a return to profitability in the third quarter of fiscal year 2015, a significant improvement from a net loss in the prior-year period. This turnaround was largely driven by the inclusion of results from the ATMI acquisition, which was completed in April 2014. While net sales saw a slight decline year-over-year, primarily due to unfavorable foreign currency translation effects, operational improvements and the absence of certain acquisition-related charges in the prior year contributed to a substantial increase in gross profit and a return to net income. For the nine-month period, net sales increased significantly due to the ATMI acquisition, with organic growth also contributing. The company demonstrated effective cost management, with a notable decrease in selling, general, and administrative expenses. Entegris also focused on debt reduction, making substantial payments on its term loan facility. The company maintains a solid liquidity position, with sufficient cash and access to its revolving credit facility to meet its obligations for the next twelve months.

Financial Highlights

51 data points
Beta

Revenue

$270.25M

43.0% Gross Margin

Net Income

$23.40M

8.7% Net Margin

EPS (Diluted)

$0.17

Total Assets

$1.68B

Cash & Equivalents

$301.06M

Free Cash Flow

$11.12M

Financial Statements
Beta
Revenue$270.25M
Cost of Revenue$153.94M
Gross Profit$116.31M
R&D Expenses$26.84M
SG&A Expenses$46.73M
Operating Income$31.07M
Interest Expense$9.29M
Net Income$23.40M
EPS (Basic)$0.17
EPS (Diluted)$0.17
Shares Outstanding (Basic)140.56M
Shares Outstanding (Diluted)141.32M

Key Highlights

  • 1Entegris returned to profitability in Q3 2015 with a net income of $23.4 million, compared to a net loss of $1.1 million in Q3 2014.
  • 2Nine-month net sales increased by 18% to $814.3 million, primarily driven by the inclusion of ATMI acquisition sales.
  • 3Gross profit improved significantly, with a gross margin of 43.0% in Q3 2015, up from 36.2% in Q3 2014, largely due to the absence of prior-year acquisition inventory write-ups.
  • 4Selling, General, and Administrative (SG&A) expenses decreased by 16% in Q3 2015 year-over-year, aided by reduced integration costs from the ATMI acquisition.
  • 5The company made significant debt reduction, paying down $100 million on its senior secured term loan facility during the nine months ended September 26, 2015.
  • 6Cash and cash equivalents stood at $301.1 million as of September 26, 2015, with the company expressing confidence in its liquidity to meet obligations for at least the next twelve months.
  • 7Goodwill increased slightly to $341.3 million, reflecting purchase accounting adjustments related to the ATMI acquisition.

Frequently Asked Questions

The primary driver of Entegris' improved profitability in Q3 2015 was the full inclusion of the ATMI acquisition's results, which significantly boosted net sales and, combined with cost management and the absence of certain one-time charges from the prior year, led to a net income of $23.4 million compared to a net loss in the prior year.

The ATMI acquisition had a substantial positive impact on the nine-month results. It drove an 18% increase in net sales to $814.3 million, contributing incremental sales of $120.3 million. The acquisition also influenced operating expenses and gross profit, with the company working to integrate ATMI's operations and costs.

Entegris had total long-term debt of $667.1 million as of September 26, 2015, a decrease from $766.8 million at the end of 2014. This reduction was primarily due to $100 million in prepayments made on the senior secured term loan facility during the first nine months of 2015. The company reported compliance with all debt covenants.

Entegris maintains a strong liquidity position with $301.1 million in cash and cash equivalents and access to its $75 million senior secured asset-based revolving credit facility. The company believes its current resources, including operational 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.