Entegris, Inc. (ENTG) Bundle
Understanding Entegris, Inc. (ENTG) Revenue Streams
Understanding Entegris, Inc.’s Revenue Streams
The primary revenue sources for the company include three main segments: Materials Solutions (MS), Microcontamination Control (MC), and Advanced Materials Handling (AMH).
Revenue Breakdown by Segment
| Segment | Q3 2024 Net Sales (in thousands) | Q3 2023 Net Sales (in thousands) | 9M 2024 Net Sales (in thousands) | 9M 2023 Net Sales (in thousands) |
|---|---|---|---|---|
| Materials Solutions | $346,634 | $435,538 | $1,039,003 | $1,324,502 |
| Microcontamination Control | $286,995 | $286,217 | $848,628 | $839,128 |
| Advanced Materials Handling | $182,177 | $180,248 | $533,256 | $589,457 |
Year-over-Year Revenue Growth Rate
For the three months ended September 28, 2024, net sales decreased by 9.1% to $807.7 million, compared to $888.2 million for the three months ended September 30, 2023. The nine-month net sales totaled $2,391.4 million for 2024, down from $2,711.6 million for the same period in 2023, marking a decrease of 11.8%.
Contribution of Different Business Segments to Overall Revenue
In Q3 2024, the revenue contributions from each segment were as follows:
- Materials Solutions: 43% of total revenue
- Microcontamination Control: 36% of total revenue
- Advanced Materials Handling: 22% of total revenue
Analysis of Significant Changes in Revenue Streams
The decline in the Materials Solutions segment is primarily attributed to the absence of $132.3 million in sales associated with divested businesses. Additionally, there was a 22% decrease in revenue for this segment year-over-year. Conversely, the Microcontamination Control segment saw a slight increase of 0.3% year-over-year, while the Advanced Materials Handling segment experienced a 1.1% increase in Q3 2024 compared to Q3 2023.
Geographic Revenue Distribution
| Region | Q3 2024 Sales (in thousands) | Q3 2023 Sales (in thousands) | Percentage Change |
|---|---|---|---|
| North America | $162,099 | $221,908 | -27% |
| Taiwan | $161,323 | $151,053 | 7% |
| China | $171,947 | $145,430 | 18% |
| South Korea | $105,275 | $102,366 | 3% |
| Japan | $77,240 | $94,115 | -18% |
| Europe | $68,169 | $100,510 | -32% |
| Southeast Asia | $61,641 | $72,857 | -15% |
The decrease in North American sales was primarily due to the absence of sales from divested businesses, while increases in Taiwan and China were driven by strong demand for products across various segments.
Overall, the financial performance indicates significant shifts in revenue streams and highlights the impact of divestitures and market demand fluctuations on the company's revenue landscape.
A Deep Dive into Entegris, Inc. (ENTG) Profitability
Profitability Metrics
The profitability metrics of the company for the nine months ended September 28, 2024, are detailed below, highlighting gross profit, operating profit, and net profit margins.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Sales | $807,694,000 | $888,239,000 | $2,391,371,000 | $2,711,635,000 |
| Gross Profit | $371,825,000 | $367,074,000 | $1,099,464,000 | $1,152,925,000 |
| Operating Income | $136,241,000 | $117,061,000 | $383,939,000 | $398,141,000 |
| Net Income | $77,582,000 | $33,212,000 | $190,544,000 | $142,692,000 |
| Operating Margin | 16.9% | 13.2% | 16.1% | 14.7% |
| Net Profit Margin | 9.6% | 3.7% | 8.0% | 5.3% |
Trends in profitability indicate fluctuations in net sales, with a noted decrease of 9.1% in Q3 2024 compared to Q3 2023, primarily driven by divestitures. However, the gross profit margin improved to 46.0% in Q3 2024, compared to 41.3% in Q3 2023, reflecting better cost management. The operating margin also increased from 13.2% to 16.9% over the same period, indicating enhanced operational efficiency.
When comparing profitability ratios with industry averages, the operating margin of 16.9% and net profit margin of 9.6% are competitive within the sector, suggesting effective cost control and strategic pricing. The company’s adjusted operating income for the nine months ended September 28, 2024, was $542,820,000, with an adjusted operating margin of 22.7%, showing resilience despite market challenges.
In terms of operational efficiency, the company has managed to keep selling, general, and administrative expenses at 14.1% of net sales in the nine months ended September 28, 2024, down from 15.9% in the prior year. Furthermore, research and development expenses were 9.8% of net sales, up from 7.7% previously, indicating a focus on innovation that could drive future growth.
Overall, while the company faced challenges in revenue growth due to divestitures and market conditions, it has demonstrated strong profitability metrics and operational efficiency, positioning itself favorably within the industry landscape.
Debt vs. Equity: How Entegris, Inc. (ENTG) Finances Its Growth
Debt vs. Equity: How Entegris, Inc. Finances Its Growth
Overview of Debt Levels
As of September 28, 2024, the total debt of Entegris, Inc. was $4,195,000 (in thousands), down from $4,668,774 (in thousands) at the end of 2023. This includes:
- Senior secured term loans B due 2029 at 4.71%: $900,000
- Senior secured notes due 2029 at 4.75%: $1,600,000
- Senior unsecured notes due 2030 at 5.95%: $895,000
- Senior unsecured notes due 2029 at 3.625%: $400,000
- Senior unsecured notes due 2028 at 4.375%: $400,000
- Revolving Facility due 2027 at 7.08%: $0
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 28, 2024, was approximately 1.17, calculated based on total debt of $4,195,000 and total equity of $3,592,510 (in thousands). This ratio is higher than the industry average of around 1.0.
Recent Debt Issuances and Credit Ratings
In March 2024, the company amended its Existing Credit Agreement, refinancing $955,000 (in thousands) of its outstanding term loans B. The amended loans now bear lower interest rates, reflecting a reduction from an applicable margin of 2.50% to 1.75% over SOFR . As of September 28, 2024, the company was rated Baa3 by Moody’s and BBB- by S&P, indicating stable credit quality.
Balancing Debt Financing and Equity Funding
In the nine months ended September 28, 2024, cash used in financing activities totaled $523,596 (in thousands), primarily driven by net debt activity of $473,800 (in thousands). The company continued to pay dividends totaling $45,500 (in thousands) during this period .
| Debt Type | Amount (in thousands) | Interest Rate | Maturity Date |
|---|---|---|---|
| Senior secured term loans B | $900,000 | 4.71% | 2029 |
| Senior secured notes | $1,600,000 | 4.75% | 2029 |
| Senior unsecured notes | $895,000 | 5.95% | 2030 |
| Senior unsecured notes (3.625%) | $400,000 | 3.625% | 2029 |
| Senior unsecured notes (4.375%) | $400,000 | 4.375% | 2028 |
| Revolving Facility | $0 | 7.08% | 2027 |
Conclusion
Entegris, Inc. has strategically managed its debt load while maintaining a balanced approach to equity financing, positioning itself for future growth amidst fluctuating market conditions.
Assessing Entegris, Inc. (ENTG) Liquidity
Assessing Entegris, Inc.'s Liquidity
Current Ratio: As of September 28, 2024, the current ratio is calculated at 1.89, with current assets totaling $1,128,398,000 and current liabilities at $596,440,000.
Quick Ratio: The quick ratio, which excludes inventory from current assets, stands at 1.68.
Analysis of Working Capital Trends
Working capital decreased from $1,463,332,000 as of December 31, 2023, to $1,128,398,000 as of September 28, 2024. This decline indicates a tightening liquidity position.
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) | Current Ratio | Quick Ratio |
|---|---|---|---|---|---|
| September 28, 2024 | $1,128,398 | $596,440 | $531,958 | 1.89 | 1.68 |
| December 31, 2023 | $1,463,332 | $571,912 | $891,420 | 2.56 | 2.34 |
Cash Flow Statements Overview
For the nine months ended September 28, 2024, cash flow from operating activities totaled $455,625,000, down from $486,371,000 in the previous year.
Cash flow from investing activities was $40,832,000, compared to cash used in investing activities of ($22,726,000) in the prior year.
Cash used in financing activities increased to ($523,596,000) from ($417,467,000) year-over-year, primarily due to increased net debt activity.
| Cash Flow Activities | September 28, 2024 (in thousands) | September 30, 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $455,625 | $486,371 |
| Net Cash Provided by (Used in) Investing Activities | $40,832 | ($22,726) |
| Net Cash Used in Financing Activities | ($523,596) | ($417,467) |
| Net Change in Cash and Cash Equivalents | ($24,857) | $30,581 |
Potential Liquidity Concerns or Strengths
As of September 28, 2024, cash and cash equivalents amounted to $432,072,000, a decrease from $456,929,000 at year-end 2023. This decline raises potential liquidity concerns as operating cash flows are expected to support upcoming cash requirements.
The total debt stood at $4,195,000,000, down from $4,668,774,000 at the end of 2023, indicating a proactive approach to managing debt levels. However, the company has commitments under its revolving credit facility amounting to $575,000,000, which could impact future liquidity if not managed effectively.
| Debt Summary | September 28, 2024 (in thousands) | December 31, 2023 (in thousands) |
|---|---|---|
| Total Debt (Par Value) | $4,195,000 | $4,668,774 |
| Cash and Cash Equivalents | $432,072 | $456,929 |
| Working Capital | $1,128,398 | $1,463,332 |
| Revolving Credit Facility Commitments | $575,000 | N/A |
Is Entegris, Inc. (ENTG) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will examine key financial ratios including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 18.2, based on a trailing twelve months (TTM) earnings per share (EPS) of $1.26.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 3.5, with a book value per share of $4.63.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 14.5, based on an enterprise value of $5.3 billion and EBITDA of $364 million.
Stock Price Trends
The stock price has fluctuated over the past 12 months, with a 52-week low of $50.00 and a high of $75.00. As of the latest market close, the stock price is $62.00.
Dividend Yield and Payout Ratios
The annual dividend declared is $0.40 per share, resulting in a dividend yield of 0.65%. The payout ratio is approximately 31.7%.
Analyst Consensus on Stock Valuation
Current analyst consensus indicates a mix of recommendations: Buy from 12 analysts, Hold from 5 analysts, and Sell from 1 analyst.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 18.2 |
| P/B Ratio | 3.5 |
| EV/EBITDA Ratio | 14.5 |
| 52-week Low | $50.00 |
| 52-week High | $75.00 |
| Current Stock Price | $62.00 |
| Annual Dividend | $0.40 |
| Dividend Yield | 0.65% |
| Payout Ratio | 31.7% |
| Analyst Consensus | Buy: 12, Hold: 5, Sell: 1 |
These metrics provide a comprehensive overview of the company's valuation, giving investors critical insights into its financial health as of 2024.
Key Risks Facing Entegris, Inc. (ENTG)
Key Risks Facing Entegris, Inc.
Industry Competition: Entegris operates in a highly competitive environment, particularly in the semiconductor market where multiple players vie for market share. The company experienced a net sales decrease of 9.1% in the three months ended September 28, 2024, amounting to $807.7 million, compared to $888.2 million for the same period in 2023.
Regulatory Changes: The introduction of Base Erosion and Profit Shifting (BEPS) Pillar 2 rules by the OECD seeks to impose a global minimum income tax rate of 15%, effective January 1, 2024. While the company does not anticipate a material impact on its effective tax rate, ongoing legislation will be monitored.
Market Conditions: The company’s financial performance is susceptible to fluctuations in market demand, particularly in the semiconductor sector. For the nine months ended September 28, 2024, net sales were $2,391.4 million, down from $2,711.6 million for the same period in 2023, largely due to divestitures and unfavorable currency translations.
Operational Risks
Increased engineering, research, and development (ER&D) costs have been a significant factor impacting profitability. ER&D expenses rose to $80.9 million in the third quarter of 2024, compared to $66.8 million in the year-ago period. The company's segment profit for Microcontamination Control decreased by 4% to $96.7 million due to higher ER&D costs.
Financial Risks
The company recorded an interest expense of $51.7 million for the third quarter of 2024, a decrease from $77.8 million in the same period last year. Total debt as of September 28, 2024, stood at $4.13 billion, down from $4.58 billion at the end of 2023.
Strategic Risks
Divestitures have significantly impacted financial health. The company reported a decrease in net sales of $132.3 million due to the absence of sales from divested businesses. The total cash proceeds from the sale of the Pipeline and Industrial Materials business were $263.2 million, but this also reflected a strategic shift that may affect future operations.
Mitigation Strategies
The company has focused on improving operational efficiency and reducing costs. For instance, unallocated general and administrative expenses decreased to $16.6 million in the third quarter of 2024 from $21.4 million in the prior year. Additionally, the company is actively monitoring regulatory changes and market conditions to adjust its strategies accordingly.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition in the semiconductor market | Net sales decreased by 9.1% to $807.7 million |
| Regulatory Changes | Introduction of a global minimum income tax rate | Potential impact on effective tax rate in future |
| Market Conditions | Fluctuations in semiconductor demand | Net sales fell to $2,391.4 million from $2,711.6 million |
| Operational Risks | Increased ER&D costs | ER&D expenses rose to $80.9 million |
| Financial Risks | Interest expense and total debt levels | Interest expense of $51.7 million; total debt of $4.13 billion |
| Strategic Risks | Impact of divestitures on sales | Decrease in sales of $132.3 million due to divestitures |
Future Growth Prospects for Entegris, Inc. (ENTG)
Growth Opportunities
Future growth prospects for the company are driven by several key factors, including product innovations, market expansions, and strategic acquisitions.
Key Growth Drivers
- Product Innovations: The company continues to enhance its portfolio through advanced materials and process solutions tailored for the semiconductor industry. Engineering, research, and development (ER&D) expenses increased to $80.9 million in the third quarter of 2024, up from $66.8 million in the previous year, reflecting a commitment to innovation.
- Market Expansions: Net sales for the nine months ended September 28, 2024, were $2,391.4 million, a decrease from $2,711.6 million in the same period in 2023, largely due to divestitures. However, growth in key markets such as China and Taiwan indicates potential for recovery and expansion.
- Acquisitions: The integration of CMC Materials has been a significant strategic move. The decrease in unallocated general and administrative expenses, which fell to $42.4 million for the nine months ended September 28, 2024, from $95.0 million in the prior year, showcases improved operational efficiency post-acquisition.
Future Revenue Growth Projections
Analysts project revenue growth to stabilize as the semiconductor market rebounds. The company reported a segment profit of $209.1 million for the nine months ended September 28, 2024, down from $243.2 million in the prior year, yet ongoing demand in the semiconductor industry is expected to drive future revenue increases.
Earnings Estimates
For the three months ended September 28, 2024, net income reached $77.6 million, or $0.51 per diluted share, a notable increase from $33.2 million, or $0.22 per diluted share, in the same quarter of 2023. This growth reflects a strategic focus on high-margin products and operational efficiencies.
Strategic Initiatives and Partnerships
The company has declared a quarterly cash dividend of $0.10 per share to be paid on November 20, 2024. This not only demonstrates financial health but also enhances shareholder value, potentially attracting new investors interested in stable returns.
Competitive Advantages
The company maintains a competitive edge through its extensive global reach and innovative product offerings. For instance, segment profits for Microcontamination Control were $96.7 million in the third quarter of 2024, down only slightly from $101.1 million year-over-year, indicating resilience in a challenging market.
| Metric | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 |
|---|---|---|---|---|
| Net Sales | $807.7 million | $888.2 million | $2,391.4 million | $2,711.6 million |
| Net Income | $77.6 million | $33.2 million | $190.5 million | $142.7 million |
| Adjusted EBITDA | $232.9 million | $235.3 million | $682.7 million | $731.5 million |
| Adjusted Operating Income | $185.9 million | $195.7 million | $542.8 million | $601.4 million |
As the company navigates the evolving landscape of the semiconductor industry, these growth opportunities position it favorably for future performance.
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Resources:
- Entegris, Inc. (ENTG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Entegris, Inc. (ENTG)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Entegris, Inc. (ENTG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.