CHASKA, Minn. and MINNEAPOLIS, Oct. 29, 2007 (PRIME NEWSWIRE) -- Entegris, Inc. (Nasdaq:ENTG) today reported its financial results for its fiscal third quarter ended September 29, 2007. Highlights for the quarter included:
* Sales of $151.8 million * Net income per share of $0.07 * Modified gross margin improved 100 basis points to 43.7 percent * Non-GAAP operating margin of 11.1 percent * Non-GAAP EPS of $0.10 * Cash flow from operations of $25.1 million
Third-quarter sales were $151.8 million, versus $169.9 million for the prior-year period and $153.5 million for the second quarter of fiscal 2007.
Third-quarter net income was $8.4 million, or $0.07 per fully diluted share, which includes a loss from discontinued operations of $0.5 million net of tax. On a non-GAAP basis, third-quarter net income was $11.4 million, or $0.10 per diluted share. The non-GAAP result is adjusted to exclude the effects of merger-related and other restructuring charges. A reconciliation of GAAP to non-GAAP results is provided elsewhere in this release. The third-quarter results include total pretax stock-based compensation of $2.9 million, or $0.02 per fully diluted share, of which $0.4 million represents integration-related stock-based compensation expense.
Sales for the nine months ended September 29, 2007, were $464.9 million. Net income was $33.6 million, or $0.26 per diluted share, which includes a loss from discontinued operations of $1.6 million. On a non-GAAP basis, net income was $40.3 million, or $0.31 per diluted share.
Gideon Argov, president and chief executive officer, said: "We are pleased with our results for the third quarter, particularly in light of current industry conditions. Sales of unit-driven products, which were 61 percent of total third-quarter sales, were up from the second quarter. Sales of our capital spending-driven products, which were 39 percent of sales, declined 5 percent from the prior quarter, reflecting reduced industry spending."
Argov added: "Our third-quarter operating margin improved despite slightly lower sales. We also generated $25 million in cash from operations even as we continued to invest in key product, market, and manufacturing initiatives. With one of the broadest lines of innovative contamination control solutions in our markets, we believe our largely unit-driven business model provides a solid platform to maximize profitability and cash flow through the industry cycle."
Through the first nine months of fiscal 2007, the Company generated $99.2 million in cash from operations and ended the quarter with $125.9 million of cash and cash equivalents.
In October 2007, the Company initiated a series of transactions in the form of inter-company dividends and loans from its Japanese subsidiary that will allow approximately $100 million of its cash balances outside the U.S. to be used to support the Company's business development activity as well as potential stock repurchases. Of the $100 million, approximately $70 million relates to cash on hand and $30 million is to be funded by low-interest loans from Japanese banks. These transactions will likely result in an estimated $10 million U.S. tax benefit in the fourth quarter of fiscal 2007.
Outlook
For its fourth quarter ending December 31, 2007, the Company expects sales to be approximately $144 million to $152 million. Net income per diluted share is expected to range from $0.05 to $0.07, excluding any impact from the inter-company dividend. Non-GAAP net income per diluted share is expected to range from approximately $0.07 to $0.10, excluding any impact from the inter-company dividend. Non-GAAP net income per share amounts reflect pretax adjustments for merger-related amortization expense of $3.9 million and integration-related stock-based compensation expense of approximately $0.3 million.
Third-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the 2007 third quarter on Monday, October 29, 2007, at 10:00 a.m. Eastern Time. Participants should dial 1-888-202-2422 (domestic callers) or 1-913-981-5545 (callers outside the U.S.); all callers should use passcode 8788461. A replay of the call can be accessed at 1-719-457-0820 using the same passcode. The webcast of the call may be accessed from the investor relations portion of the Entegris website at www.entegris.com.
About Entegris
Entegris is the global leader in materials integrity management, delivering a wide range of products for purifying, protecting and transporting critical materials used in processing and manufacturing in semiconductor and other high-tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, China, France, Germany, Israel, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at www.entegris.com.
Non-GAAP Information
In addition to reporting results that are determined in accordance with generally accepted accounting principles in the U.S. (GAAP), the Company also reports non-GAAP results of operations that exclude certain expenses and charges. These non-GAAP results are provided as a complement to results provided in accordance with GAAP in order to provide investors with relevant and useful information about the Company's ongoing operations. As such, non-GAAP information primarily excludes expenses and charges resulting from purchase accounting and integration activities associated with the Company's August 2005 merger with Mykrolis Corporation and the August 2007 acquisition of Surmet Corporation. Earnings guidance for the quarter ending December 31, 2007 is disclosed on both a GAAP and a non-GAAP basis. A reconciliation of GAAP to non-GAAP financial information discussed in this release is contained in the attached exhibits and on the Company's website at www.entegris.com.
Forward-Looking Statements
Certain information contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current management expectations only as of the date of this press release, which involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Statements which are modified by words such as "anticipate," "believe," "estimate," "expect," "forecast," "may," "will," "should" or the negative thereof and similar expressions as they relate to Entegris or our management are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris' stock, future operating results of Entegris, other acquisition and investment opportunities available to Entegris, general business and market conditions and other factors. Additional information concerning these and other risk factors may be found in previous financial press releases issued by Entegris and Entegris' periodic public filings with the Securities and Exchange Commission, including the discussion described under the headings "Risks Relating to our Business and Industry," "Manufacturing Risks," "International Risks," and "Risks Related to Securities Markets and Ownership of Our Securities" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as well as other matters and important factors disclosed previously and from time to time in the filings of Entegris with the U.S. Securities and Exchange Commission. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update publicly any forward-looking statements contained herein. Entegris, Inc.
Entegris, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
------------------- --------------------
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
2007 2006 2007 2006
--------------------------------------------
Net sales $151,811 $169,880 $464,890 $ 505,582
Cost of sales(a) 86,301 94,042 265,378 269,935
------------------- --------------------
Gross profit 65,510 75,838 199,512 235,647
Selling, general and
administrative
expenses(b) 43,983 43,284 134,244 146,534
Engineering, research
and development
expenses 9,409 9,651 29,622 28,670
------------------- --------------------
Operating income 12,118 22,903 35,646 60,443
Interest income, net (140) (2,846) (5,516) (6,765)
Other loss (income),
net(c) 53 (702) (5,997) (2,296)
------------------- --------------------
Income before income
taxes 12,205 26,451 47,159 69,504
Income tax expense 3,156 8,526 11,970 22,986
Equity in net loss
(earnings) of
affiliates 96 (93) (8) (288)
------------------- --------------------
Income from continuing
operations 8,953 18,018 35,197 46,806
(Loss) income from
discontinued operations,
net of taxes (536) (197) (1,620) 561
--------------------------------------------
Net income $ 8,417 $ 17,821 $ 33,577 $ 47,367
============================================
Basic income (loss)
per common share:
Continuing operations $ 0.08 $ 0.13 $ 0.28 $ 0.34
Discontinued
operations $ 0.00 $ 0.00 $ (0.01) $ 0.00
Net income $ 0.07 $ 0.13 $ 0.27 $ 0.35
Diluted income (loss)
per common share:
Continuing operations $ 0.08 $ 0.13 $ 0.28 $ 0.33
Discontinued
operations $ 0.00 $ 0.00 $ (0.01) $ 0.00
Net income $ 0.07 $ 0.13 $ 0.26 $ 0.34
Weighted average
shares outstanding:
Basic 114,333 135,538 125,251 136,624
Diluted 116,415 138,921 127,980 139,981
a) Cost of sales for the three months and nine months ended
September 29, 2007 include $0.8 million and $1.2 million,
respectively, of merger-related and other restructuring
charges, integration expenses, and integration-related
stock-based compensation expense. Cost of sales for the
three months and nine months ended September 30, 2006 include
$52 thousand and $2.2 million of merger-related and other
restructuring charges, integration expenses, and
integration-related stock-based compensation expense.
b) Selling, general and administrative expenses for the three
months and nine months ended September 29, 2007 include
$4.0 million and $14.7 million, respectively, of merger-
related and other restructuring charges, integration expense,
integration-related stock-based compensation expense, and
merger-related amortization of intangibles. Selling, general
and administrative expenses for the three months and nine
months ended September 30, 2006 include $5.7 million and
$25.8 million, respectively, of merger-related and other
restructuring charges, integration expense, integration-
related stock-based compensation expense, and merger-
related amortization of intangibles.
c) Other income, net for the nine months ended September 29, 2007
includes a $6.1 million gain from the sale of an equity
investment.
Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Three Months Ended September 29, 2007
(in thousands, except per share data)
(Unaudited)
U.S. GAAP Adjustments Non-GAAP
----------------------------------------
Net sales $151,811 $ -- $151,811
Cost of sales(a) 86,301 765 85,536
----------------------------------------
Gross profit 65,510 (765) 66,275
Selling, general and
administrative
expenses(b) 43,983 3,990 39,993
Engineering, research
and development
expenses 9,409 -- 9,409
----------------------------------------
Operating income 12,118 (4,755) 16,873
Interest income, net (140) -- (140)
Other loss, net 53 -- 53
----------------------------------------
Income before income
taxes 12,205 (4,755) 16,960
Income tax expense 3,156 (1,788) 4,944
Equity in net loss of
affiliates 96 -- 96
----------------------------------------
Income from continuing
operations 8,953 (2,967) 11,920
Loss from discontinued
operations, net of
taxes (536) -- (536)
----------------------------------------
Net income $ 8,417 $ (2,967) $ 11,384
========================================
Basic income (loss)
per common share:
Continuing operations $ 0.08 $ (0.03) $ 0.10
Discontinued
operations $ 0.00 -- $ 0.00
Net income per common
share $ 0.07 $ (0.03) $ 0.10
Diluted income (loss)
per common share:
Continuing operations $ 0.08 $ (0.03) $ 0.10
Discontinued operations $ 0.00 -- $ 0.00
Net income per common
share $ 0.07 $ (0.03) $ 0.10
Weighted average shares
outstanding:
Basic 114,333 114,333 114,333
Diluted 116,415 116,415 116,415
a) Cost of sales is adjusted for $0.8 million of merger-related
and other restructuring charges, primarily the write-up of
Surmet inventory to market, and integration-related stock-
based compensation expense.
b) Selling, general and administrative expenses are adjusted
for $(0.1) million of integration expense and other
restructuring, $0.4 million of integration-related stock-
based compensation expense, and $3.7 million of merger-related
amortization of intangibles.
Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Three Months Ended September 30, 2006
(in thousands, except per share data)
(Unaudited)
U.S. GAAP Adjustments Non-GAAP
----------------------------------------
Net sales $169,880 $ -- $169,880
Cost of sales(a) 94,042 52 93,990
----------------------------------------
Gross profit 75,838 (52) 75,890
Selling, general and
administrative
expenses(b) 43,284 5,720 37,564
Engineering, research
and development
expenses 9,651 -- 9,651
----------------------------------------
Operating income 22,903 (5,772) 28,675
Interest income, net (2,846) -- (2,846)
Other income, net (702) -- (702)
----------------------------------------
Income before income
taxes 26,451 (5,772) 32,223
Income tax expense 8,526 (1794) 10,320
Equity in net earnings
of affiliates (93) -- (93)
----------------------------------------
Income from continuing
operations 18,018 (3,978) 21,996
Loss from discontinued
operations, net of
taxes (197) -- (197)
----------------------------------------
Net income $ 17,821 $ (3,978) $ 21,799
========================================
Basic income per
common share:
Continuing operations $ 0.13 $ (0.03) $ 0.16
Discontinued operations $ 0.00 -- $ 0.00
Net income per common
share $ 0.13 $ (0.03) $ 0.16
Diluted income per
common share:
Continuing operations $ 0.13 $ (0.03) $ 0.16
Discontinued operations $ 0.00 -- $ 0.00
Net income per common
share $ 0.13 $ (0.03) $ 0.16
Weighted average
shares outstanding:
Basic 135,538 135,538 135,538
Diluted 138,921 138,921 138,921
a) Cost of sales includes $52 thousand of merger-related and
other restructuring charges, integration expenses, and
integration-related stock-based compensation expense.
b) Selling, general and administrative expenses include $5.7
million of merger-related and other restructuring charges,
integration expense, integration-related stock-based
compensation expense, and merger-related amortization of
intangibles.
Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Nine Months Ended September 29, 2007
(in thousands, except per share data)
(Unaudited)
U.S. GAAP Adjustments Non-GAAP
----------------------------------------
Net sales $464,890 $ -- $464,890
Cost of sales(a) 265,378 1,192 264,186
----------------------------------------
Gross profit 199,512 (1,192) 200,704
Selling, general and
administrative
expenses(b) 134,244 14,650 119,594
Engineering, research
and development
expenses 29,622 -- 29,622
----------------------------------------
Operating income 35,646 (15,842) 51,488
Interest income, net (5,516) -- (5,516)
Other (income) loss,
net(c) (5,997) (6,068) 71
----------------------------------------
Income before income
taxes 47,159 (9,774) 56,933
Income tax expense 11,970 (3,054) 15,024
Equity in net earnings
of affiliates (8) -- (8)
----------------------------------------
Income from continuing
operations 35,197 (6,720) 41,917
Loss from discontinued
operations, net of
taxes (1,620) -- (1,620)
----------------------------------------
Net income $ 33,577 $ (6,720) $ 40,297
========================================
Basic income (loss)
per common share:
Continuing operations $ 0.28 $ (0.05) $ 0.33
Discontinued operations $ (0.01) -- $ (0.01)
Net income $ 0.27 $ (0.05) $ 0.32
Diluted income (loss)
per common share:
Continuing operations $ 0.28 $ (0.05) $ 0.33
Discontinued operations $ (0.01) -- $ (0.01)
Net income $ 0.26 $ (0.05) $ 0.31
Weighted average
shares outstanding:
Basic 125,251 125,251 125,251
Diluted 127,980 127,980 127,980
a) Cost of sales includes $1.2 million of merger-related and
other restructuring charges, integration expenses, and
integration-related stock-based compensation expense.
b) Selling, general and administrative expenses include $14.7
million of merger-related and other restructuring charges,
integration expense, integration-related stock-based
compensation expense, and merger-related amortization of
intangibles.
c) Other income, net includes a $6.1 million gain from the sale
of a minority investment interest.
Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Nine Months Ended September 30, 2006
(in thousands, except per share data)
(Unaudited)
U.S. GAAP Adjustments Non-GAAP
----------------------------------------
Net sales $505,582 $ -- $505,582
Cost of sales(a) 269,935 2,163 267,772
----------------------------------------
Gross profit 235,647 (2,163) 237,810
Selling, general
and administrative
expenses(b) 146,534 25,825 120,709
Engineering,
research and
development expenses 28,670 -- 28,670
----------------------------------------
Operating income 60,443 (27,988) 88,431
Interest income, net (6,765) -- (6,765)
Other income, net (2,296) -- (2,296)
----------------------------------------
Income before income
taxes 69,504 (27,988) 97,492
Income tax expense 22,986 (9,238) 32,224
Equity in net
earnings of
affiliates (288) -- (288)
----------------------------------------
Income from
continuing operations 46,806 (18,750) 65,556
Income from
discontinued
operations, net of
taxes 561 -- 561
----------------------------------------
Net income $ 47,367 $(18,750) $ 66,117
========================================
Basic income per
common share:
Continuing operations $ 0.34 $ (0.14) $ 0.48
Discontinued operations $ 0.00 -- $ 0.00
Net income $ 0.35 $ (0.14) $ 0.48
Diluted income per
common share:
Continuing operations $ 0.33 $ (0.13) $ 0.47
Discontinued operations $ 0.00 -- $ 0.00
Net income $ 0.34 $ (0.13) $ 0.47
Weighted average
shares outstanding:
Basic 136,624 136,624 136,624
Diluted 139,981 139,981 139,981
a) Cost of sales includes $2.2 million of merger-related and
other restructuring charges, integration expenses, and
integration-related stock-based compensation expense.
b) Selling, general and administrative expenses include $25.8
million of merger-related and other restructuring charges,
integration expense, integration-related stock-based
compensation expense, and merger-related amortization of
intangibles.
Entegris, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
Sept. 29, Dec. 31,
2007 2006
---------------------------------
ASSETS
Cash, cash equivalents and
short-term investments
$125,873 $274,974
Accounts receivable 103,794 127,396
Inventories 81,148 93,426
Deferred tax assets 44,435 45,149
Other current assets
and assets held for sale 14,552 15,376
---------------------------------
Total current assets 369,802 556,321
Property, plant and
equipment, net 125,277 120,987
Intangible assets 488,788 463,408
Deferred tax asset -
non-current 7,105 5,157
Other assets 21,124 11,745
---------------------------------
Total assets $1,012,096 $1,157,618
=================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of
long-term debt & short-term
borrowings $25,409 $401
Accounts payable 22,027 24,952
Accrued liabilities 50,210 56,479
Income tax payable 2,769 10,025
Liabilities of discontinued
operations 4,446 842
---------------------------------
Total current
liabilities 104,861 92,699
Long-term debt, less
current maturities 12,672 2,995
Other liabilities 47,173 45,944
Shareholders' equity 847,390 1,015,980
---------------------------------
Total liabilities and
shareholders' equity $1,012,096 $1,157,618
=================================