10-QPeriod: Q1 FY2024

ENTEGRIS INC Quarterly Report for Q1 Ended Mar 30, 2024

Filed May 1, 2024For Securities:ENTG

Summary

Entegris, Inc. (ENTG) reported its first-quarter 2024 financial results, showing a significant turnaround from the previous year. Net sales for the quarter were $771.0 million, a decrease of 16% compared to $922.4 million in the first quarter of 2023. This decline was largely attributed to the divestiture of businesses and a general decrease in demand within the semiconductor market, along with unfavorable foreign currency translation effects. Despite the top-line decrease, the company demonstrated improved profitability. Net income was $45.3 million, or $0.30 per diluted share, a substantial improvement from a net loss of $88.2 million, or ($0.59) per diluted share, in the prior-year period. This earnings recovery was driven by enhanced gross margins, a significant reduction in operating expenses, including lower interest expenses and the absence of substantial impairment charges that impacted the prior year. The company also successfully completed the divestiture of its Pipeline and Industrial Materials (PIM) business and took steps to refinance its debt, leading to a stronger financial position.

Financial Highlights

53 data points
Beta

Revenue

$771.00M

45.6% Gross Margin

Net Income

$45.30M

5.9% Net Margin

EPS (Diluted)

$0.30

Total Assets

$8.36B

Cash & Equivalents

$340.70M

Free Cash Flow

$80.60M

Financial Statements
Beta
Revenue$771.00M
Cost of Revenue$419.20M
Gross Profit$351.80M
R&D Expenses$71.80M
SG&A Expenses$112.20M
Operating Expenses$173.50M
Operating Income$117.60M
Interest Expense$57.40M
Net Income$45.30M
EPS (Basic)$0.30
EPS (Diluted)$0.30
Shares Outstanding (Basic)150.50M
Shares Outstanding (Diluted)151.70M

Key Highlights

  • 1Net sales decreased by 16% to $771.0 million in Q1 2024 compared to $922.4 million in Q1 2023, primarily due to business divestitures and reduced semiconductor market demand.
  • 2The company reported a net income of $45.3 million ($0.30 per diluted share) in Q1 2024, a significant improvement from a net loss of $88.2 million ($0.59 per diluted share) in Q1 2023.
  • 3Gross margin improved to 45.6% from 43.5% year-over-year, benefiting from divestitures and operational efficiencies.
  • 4Selling, general, and administrative (SG&A) expenses decreased substantially to $112.2 million from $169.9 million, aided by lower integration and deal costs, and reduced share-based compensation.
  • 5Interest expense decreased significantly to $57.4 million from $86.1 million, reflecting lower average debt balances after debt repayments.
  • 6Entegris completed the sale of its Pipeline and Industrial Materials (PIM) business for net proceeds of $256.8 million.
  • 7The company refinanced its senior secured term loans B, reducing the applicable interest margin and making a prepayment of $354.5 million.

Frequently Asked Questions

Net sales decreased by 16% to $771.0 million in the first quarter of 2024 compared to the prior year period. This decline was primarily due to the impact of business divestitures (specifically the Pipeline and Industrial Materials business) which removed $119.9 million in sales, coupled with a general decrease in demand from semiconductor market customers and unfavorable foreign currency translation effects, mainly from the weakening Japanese Yen.

The company achieved a net income of $45.3 million in the first quarter of 2024, a substantial turnaround from a net loss of $88.2 million in the same period last year. This improvement was driven by several factors, including a higher gross margin (45.6% vs. 43.5%), a significant reduction in selling, general, and administrative expenses, and substantially lower interest expenses. The absence of a large goodwill impairment charge of $88.9 million recorded in the prior year also contributed significantly to the improved profitability.

Entegris made a significant move to optimize its debt structure by amending its credit agreement and refinancing its senior secured term loans B. This resulted in a reduction of the applicable interest margin on these loans. Concurrently, the company made a substantial prepayment of $354.5 million on these term loans, contributing to the overall reduction in debt and subsequent decrease in interest expense.

The company completed the sale of its Pipeline and Industrial Materials (PIM) business in the first quarter of 2024, receiving net proceeds of $256.8 million. Additionally, a small, industrial specialty chemicals business within the Materials Solutions segment continues to be marketed for sale and was classified as held-for-sale as of March 30, 2024.