10-QPeriod: Q1 FY2018

ENTEGRIS INC Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 26, 2018For Securities:ENTG

Summary

Entegris, Inc. reported a strong first quarter for 2018, with net sales increasing by 16% year-over-year to $367.2 million, driven by robust demand from the semiconductor industry. This growth was supported by high fab utilization rates and increased capital spending. The company's gross profit margin improved significantly to 47.9%, up from 44.0% in the prior year period, largely due to improved factory utilization. Net income saw a substantial increase, reaching $57.6 million, or $0.40 per diluted share, compared to $32.5 million, or $0.23 per diluted share, in the same quarter of 2017. This performance reflects broad-based demand across its three operating segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), and Advanced Materials Handling (AMH). The company also completed a small acquisition of Particle Sizing Systems, LLC (PSS) for $37.7 million. Entegris ended the quarter with $550.2 million in cash and cash equivalents and maintained compliance with its debt covenants. Management anticipates continued strong performance and believes its liquidity and cash flow from operations are sufficient to meet its working capital and investment requirements for the next twelve months.

Financial Highlights

51 data points
Beta

Revenue

$367.20M

47.9% Gross Margin

Net Income

$57.56M

15.7% Net Margin

EPS (Diluted)

$0.40

Total Assets

$1.96B

Cash & Equivalents

$550.24M

Free Cash Flow

$1.16M

Financial Statements
Beta
Revenue$367.20M
Cost of Revenue$191.20M
Gross Profit$176.00M
R&D Expenses$27.59M
SG&A Expenses$58.27M
Operating Income$78.47M
Interest Expense$8.16M
Net Income$57.56M
EPS (Basic)$0.41
EPS (Diluted)$0.40
Shares Outstanding (Basic)141.58M
Shares Outstanding (Diluted)143.65M

Key Highlights

  • 1Net sales increased 16% year-over-year to $367.2 million, driven by strong semiconductor industry demand.
  • 2Gross profit margin improved to 47.9% from 44.0% in the prior year, benefiting from higher factory utilization.
  • 3Net income rose to $57.6 million ($0.40/share) from $32.5 million ($0.23/share) in Q1 2017.
  • 4Acquired Particle Sizing Systems, LLC (PSS) for $37.7 million in January 2018.
  • 5All three operating segments (SCEM, MC, AMH) reported sales growth.
  • 6Cash and cash equivalents stood at $550.2 million at quarter-end, with ample liquidity for the next twelve months.
  • 7Effective tax rate decreased to 19.0% from 21.9% in the prior year, partly due to the Tax Cuts and Jobs Act.

Frequently Asked Questions

The 16% year-over-year increase in net sales to $367.2 million was primarily driven by strong demand from semiconductor industry customers, reflecting high fab utilization rates and increased capital spending. This growth was observed across all of Entegris' product lines and segments.

Entegris acquired PSS for $37.7 million in cash in January 2018. This acquisition contributed $4.8 million to net sales in the first quarter of 2018 and $15.4 million to goodwill on the balance sheet. Amortization expense also increased due to this acquisition.

Entegris ended the quarter with $550.2 million in cash and cash equivalents. Management believes its current cash position, funds available under its credit facilities, and cash flow from operations are sufficient to meet its working capital and investment requirements for at least the next twelve months.

The Tax Cuts and Jobs Act of 2017 led to a reduction in the U.S. corporate income tax rate from 35% to 21%. For the first quarter of 2018, Entegris' effective tax rate was 19.0%, down from 21.9% in the prior year. The company recorded $1.1 million in tax expense related to the Global Intangible Low-Taxed Income (GILTI) provision. The company is still finalizing its accounting for certain tax effects related to the Act.