10-QPeriod: Q2 FY2016

ENTEGRIS INC Quarterly Report for Q2 Ended Apr 2, 2016

Filed April 28, 2016For Securities:ENTG

Summary

Entegris, Inc. reported for the first quarter of 2016 a slight increase in net sales to $267.0 million, up 1% from the prior year period, driven by improved semiconductor industry demand. However, gross profit experienced a slight decline to $114.7 million, with a corresponding decrease in gross margin to 43.0% from 44.2% year-over-year. This was attributed to an unfavorable sales mix, higher inventory obsolescence charges, and increased qualification costs at their i2M Center. Despite these pressures, net income remained stable at $16.2 million, or $0.11 per diluted share, reflecting effective management of selling, general, and administrative expenses, which decreased due to the absence of prior year integration costs. Operationally, the company generated $17.3 million in cash from operating activities, though this was partially offset by increased receivables and inventories. Investing activities utilized $20.3 million, primarily for capital expenditures, with a full-year capital expenditure plan of approximately $80 million. The company maintained a strong liquidity position with $344.4 million in cash and cash equivalents and had no borrowings outstanding on its revolving credit facility. Entegris continues to focus on its two key segments: Critical Materials Handling (CMH) and Electronic Materials (EM), with EM showing a 5% sales increase while CMH experienced a slight sales decrease.

Financial Highlights

49 data points
Beta

Revenue

$267.02M

43.0% Gross Margin

Net Income

$16.21M

6.1% Net Margin

EPS (Diluted)

$0.11

Total Assets

$1.65B

Cash & Equivalents

$344.40M

Free Cash Flow

-$480K

Financial Statements
Beta
Revenue$267.02M
Cost of Revenue$152.32M
Gross Profit$114.71M
R&D Expenses$25.90M
SG&A Expenses$47.96M
Operating Income$29.56M
Interest Expense$9.22M
Net Income$16.21M
EPS (Basic)$0.12
EPS (Diluted)$0.11
Shares Outstanding (Basic)140.78M
Shares Outstanding (Diluted)141.37M

Key Highlights

  • 1Net sales increased 1% to $267.0 million year-over-year.
  • 2Gross profit decreased slightly to $114.7 million, with gross margin contracting to 43.0% from 44.2%.
  • 3SG&A expenses decreased by 6% to $48.0 million due to lower integration costs.
  • 4Net income remained stable at $16.2 million ($0.11 per diluted share).
  • 5Operating cash flow was $17.3 million, impacted by increases in receivables and inventories.
  • 6The company ended the quarter with $344.4 million in cash and cash equivalents and no outstanding debt on its revolving credit facility.
  • 7Electronic Materials (EM) segment sales grew 5%, while Critical Materials Handling (CMH) segment sales saw a slight decrease.

Frequently Asked Questions

Entegris experienced modest top-line growth with a 1% increase in net sales, reaching $267.0 million. However, profitability metrics like gross profit and gross margin saw a slight decline due to an unfavorable sales mix and increased operating costs. Net income remained stable year-over-year, indicating effective cost management in other areas.

The Electronic Materials (EM) segment showed positive momentum with a 5% increase in net sales, driven by improved sales of advanced deposition materials. The Critical Materials Handling (CMH) segment experienced a slight decrease in net sales, primarily due to lower sales of specialty materials. Despite the sales difference, CMH contributed a higher segment profit ($37.9 million) than EM ($21.6 million) in absolute terms.

Entegris maintains a strong liquidity position, with $344.4 million in cash and cash equivalents at the end of the quarter. The company also has an undrawn revolving credit facility, indicating no immediate need for external financing. Long-term debt remains substantial at $656.6 million, but interest expenses have decreased due to lower outstanding borrowings.

The slight decrease in gross profit and margin is attributed to several factors: a less favorable sales mix, higher costs associated with excess and obsolete inventory, and increased qualification and start-up expenses at the company's i2M Center. These pressures outweighed the slight increase in overall sales.