10-QPeriod: Q2 FY2023

ENTEGRIS INC Quarterly Report for Q2 Ended Apr 1, 2023

Filed May 11, 2023For Securities:ENTG

Summary

Entegris Inc. (ENTG) reported a challenging first quarter for fiscal year 2023, marked by a significant net loss of $88.2 million ($0.59 per diluted share), a sharp contrast to the $125.7 million net income ($0.92 per diluted share) in the prior year's comparable period. This downturn was heavily influenced by an $88.9 million goodwill impairment charge related to the Electronic Chemicals reporting unit within the Advanced Planarization Solutions segment, as well as increased operating expenses. Despite the net loss, the company saw a substantial 42% increase in net sales to $922.4 million, primarily driven by the full integration of CMC Materials, acquired in July 2022. However, gross margins declined by 4.2 percentage points due to the lower margins of acquired products and restructuring costs. The company also completed the divestiture of its QED Technologies business, receiving $134.8 million in proceeds. Looking ahead, Entegris announced an agreement to sell its Electronic Chemicals business for $700 million, signaling ongoing portfolio optimization.

Financial Highlights

52 data points
Beta

Revenue

$922.40M

43.5% Gross Margin

Net Income

-$88.17M

-9.6% Net Margin

EPS (Diluted)

$-0.59

Total Assets

$10.07B

Cash & Equivalents

$709.03M

Free Cash Flow

$17.88M

Financial Statements
Beta
Revenue$922.40M
Cost of Revenue$520.71M
Gross Profit$401.69M
R&D Expenses$71.91M
SG&A Expenses$169.87M
Operating Income$13.47M
Interest Expense$86.15M
Net Income-$88.17M
EPS (Basic)$-0.59
EPS (Diluted)$-0.59
Shares Outstanding (Basic)149.43M
Shares Outstanding (Diluted)149.43M

Key Highlights

  • 1Reported a net loss of $88.2 million for the quarter, a significant decline from the prior year's net income of $125.7 million.
  • 2Net sales increased by 42% to $922.4 million, largely attributed to the integration of the acquired CMC Materials business.
  • 3Recorded an $88.9 million goodwill impairment charge for the Electronic Chemicals reporting unit.
  • 4Gross margin decreased by 4.2 percentage points year-over-year, primarily due to the inclusion of lower-margin acquired products and restructuring costs.
  • 5Completed the divestiture of QED Technologies for $134.8 million.
  • 6Announced the agreement to sell the Electronic Chemicals business for $700 million, expected to close by year-end 2023.
  • 7Maintained a strong liquidity position with cash, cash equivalents, and restricted cash totaling $709.0 million.

Frequently Asked Questions

The net loss of $88.2 million was primarily driven by an $88.9 million goodwill impairment charge recognized for the Electronic Chemicals reporting unit, along with increased operating expenses including integration costs and restructuring charges.

The acquisition of CMC Materials significantly boosted net sales by 42% to $922.4 million for the quarter. However, it also contributed to lower gross margins due to the inclusion of products with inherently lower margins and increased operating expenses such as integration costs, R&D, and amortization.

Entegris is actively managing its portfolio. This quarter saw the divestiture of the QED Technologies business and the announcement of an agreement to sell the Electronic Chemicals business for $700 million. These actions indicate a strategic focus on streamlining operations and potentially divesting non-core assets.

Entegris has a substantial debt load, primarily related to the CMC Materials acquisition. However, the company ended the quarter with strong liquidity, holding $709.0 million in cash, cash equivalents, and restricted cash. They also recently amended their credit agreement and repaid a bridge credit facility, demonstrating active debt management.