10-QPeriod: Q2 FY2022

ENTEGRIS INC Quarterly Report for Q2 Ended Apr 2, 2022

Filed April 26, 2022For Securities:ENTG

Summary

Entegris, Inc. reported a strong first quarter for 2022, with net sales increasing by 27% year-over-year to $649.6 million. This growth was driven by robust demand across all three business segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), and Advanced Materials Handling (AMH). The company's gross margin improved to 47.7% from 45.8% in the prior year, reflecting strong execution and higher volumes, despite some inflationary pressures on raw materials, logistics, and labor. Net income surged by 48% to $125.7 million, resulting in diluted earnings per share of $0.92, up from $0.62 in the prior year's quarter. The company also made significant progress on its planned acquisition of CMC Materials, including issuing $1.6 billion in Senior Secured Notes to finance a portion of the transaction. Despite increased inventory levels and capital expenditures, the company maintains a positive outlook on its liquidity and ability to meet near-term obligations.

Financial Highlights

52 data points
Beta

Revenue

$649.65M

47.7% Gross Margin

Net Income

$125.70M

19.3% Net Margin

EPS (Diluted)

$0.92

Total Assets

$3.28B

Cash & Equivalents

$352.73M

Free Cash Flow

-$20.62M

Financial Statements
Beta
Revenue$649.65M
Cost of Revenue$339.83M
Gross Profit$309.82M
R&D Expenses$46.72M
SG&A Expenses$87.11M
Operating Income$163.35M
Interest Expense$12.88M
Net Income$125.70M
EPS (Basic)$0.93
EPS (Diluted)$0.92
Shares Outstanding (Basic)135.67M
Shares Outstanding (Diluted)136.55M

Key Highlights

  • 1Net sales increased 27% to $649.6 million in Q1 2022 compared to $512.8 million in Q1 2021, driven by strong performance across all three segments.
  • 2Gross margin improved to 47.7% from 45.8% year-over-year, attributed to strong execution and higher volumes.
  • 3Net income rose significantly to $125.7 million ($0.92 diluted EPS) from $84.7 million ($0.62 diluted EPS) in the prior year's quarter.
  • 4The company issued $1.6 billion in 4.75% Senior Secured Notes due 2029 to finance the pending acquisition of CMC Materials.
  • 5Cash provided by operating activities increased to $63.8 million from $53.1 million, reflecting higher net income.
  • 6Capital expenditures increased to $84.4 million, primarily for property, plant, and equipment, including a new facility in Taiwan.
  • 7The company's pending acquisition of CMC Materials is on track, with significant financing secured and expected to close in the second half of 2022.

Frequently Asked Questions

The primary driver of Entegris's revenue growth was strong demand across all three of its business segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), and Advanced Materials Handling (AMH). This growth was supported by robust industry expansion and increased wafer production for leading-edge semiconductor solutions.

Entegris is financing the acquisition of CMC Materials through a combination of sources. This includes the issuance of $1.6 billion in 4.75% Senior Secured Notes due 2029, commitments for a $4.0 billion Term Loan B Facility, an $895.0 million Bridge Facility, and increased revolving credit commitments. Cash on hand will also be utilized.

Entegris believes its existing cash balances, anticipated operating cash flows, and access to capital markets are sufficient to meet its cash needs for the next twelve months and longer term. The company plans to use its cash flow for working capital, capital expenditures, and debt service obligations. Significant cash will also be deployed for the CMC Materials acquisition.

Entegris saw an improvement in its gross margin to 47.7% from 45.8% year-over-year, driven by strong execution and higher volumes. However, the company noted some offset from raw material, logistics, and modest labor inflation. Operating expenses, including SG&A and R&D, also increased as planned and to support growth and strategic initiatives like the CMC Materials acquisition.