10-QPeriod: Q3 FY2021

ENTEGRIS INC Quarterly Report for Q3 Ended Oct 2, 2021

Filed October 26, 2021For Securities:ENTG

Summary

Entegris, Inc. (ENTG) reported a strong third quarter and first nine months of 2021, driven by robust demand across its semiconductor and high-technology industry customer base. Net sales increased significantly year-over-year for both periods, reflecting growth in all three operating segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), and Advanced Materials Handling (AMH). The company's profitability also saw a substantial improvement, with net income and diluted EPS showing strong gains. This performance highlights Entegris's strategic positioning in providing mission-critical solutions for advanced manufacturing environments. Financially, the company demonstrated solid operational execution. While gross margins experienced a slight decrease due to an unfavorable sales mix and increased costs, overall profitability remained robust. Entegris also managed its debt effectively, issuing new notes and redeeming older ones, while maintaining a healthy liquidity position. The company continues to invest in research and development and capital expenditures, signaling confidence in future growth and market leadership.

Key Highlights

  • 1Significant Year-over-Year Revenue Growth: Net sales increased by 20% for the three months ended October 2, 2021, and 24% for the nine months ended October 2, 2021, driven by strong demand across all segments.
  • 2Improved Profitability: Net income rose to $117.5 million ($0.86 per diluted share) for Q3 2021 from $79.3 million ($0.58 per diluted share) in Q3 2020. For the nine months, net income increased to $290.9 million ($2.13 per diluted share) from $208.3 million ($1.53 per diluted share) in the prior year period.
  • 3Strong Segment Performance: All three operating segments (SCEM, MC, AMH) reported substantial net sales and segment profit increases, indicating broad-based demand for Entegris's solutions.
  • 4Debt Management and Liquidity: The company successfully issued $400 million in new senior unsecured notes and used the proceeds to redeem its 2026 Notes. Despite a decrease in cash and cash equivalents, liquidity remains strong with $475.8 million in cash and equivalents.
  • 5Increased R&D Investment: Engineering, Research & Development expenses increased by 16% for the quarter and 24% for the nine months, reflecting a commitment to innovation and future product development.
  • 6Positive Outlook on Demand: Management noted continued strong demand driven by digitalization, 5G applications, and high-performance computing, despite ongoing supply chain and logistics challenges.

Frequently Asked Questions

The primary driver of Entegris's revenue growth was strong demand across all three of its operating segments (SCEM, MC, and AMH), fueled by robust industry conditions and record demand for its products and solutions, particularly from the semiconductor and other high-technology industries.

Entegris managed its debt by issuing $400 million in new 3.625% senior unsecured notes due 2029 and using the proceeds, along with cash on hand and borrowings under its revolving credit facility, to redeem its $550 million aggregate principal amount of senior unsecured notes due 2026. This resulted in a loss on extinguishment of debt.

Entegris anticipates continued strong demand driven by trends like accelerated digitalization, 5G applications, and high-performance computing. However, the company acknowledges ongoing challenges related to a dynamic supply chain, global logistics, raw material constraints, higher freight costs, and delivery delays.

Profitability improved significantly. For the third quarter, net income increased by over 48% year-over-year, and diluted EPS rose from $0.58 to $0.86. For the first nine months, net income increased by over 39% and diluted EPS grew from $1.53 to $2.13.