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Original Source: FD (FAIR DISCLOSURE) WIRE
. Steve Cantor, Entegris, Inc., VP of Corporate Relations . Greg Graves, Entegris, Inc., CFO . Gideon Argov, Entegris, Inc., President and CEO . Chris Blansett, JPMorgan, Analyst . Jean-Marc Pandraud, Entegris, Inc., COO . Brett Hodess, Merrill Lynch, Analyst . Dan Leonard, First Analysis, Analyst . Brian Lee, Citigroup, Analyst
. Colin McArdle, Needham & Company, Analyst . Tim Summers, Stanford Group, Analyst
ENTG reported 3Q07 sales of $151.8m, net income of $8.4m or $0.07 per diluted share. 3Q07 non-GAAP net income from continuing operations was $11.4m or $0.10 per diluted share. Co. expects 4Q07 revenue to be $144-152m, GAAP EPS (excluding any tax impact from the inter-Co. dividend) to be $0.04-0.07 and non-GAAP EPS to be $0.07-0.10.
A. Key Data From Call 1. 3Q07 sales = $151.8m. 2. 3Q07 net income = $8.4m. 3. 3Q07 non-GAAP net income from continuing operations = $11.4m. 4. 3Q07 diluted EPS = $0.07. 5. 3Q07 non-GAAP diluted EPS from continuing operations = $0.10. 6. 3Q07 Opex = $49.4m. 7. 3Q07 Capex = $6.3m. 8. 3Q07 DSO = 62. 9. 3Q07-end cash, cash equivalents, and short-term investments = $125.9m. 10. 4Q07 revenue guidance = $144-152m. 11. 4Q07 GAAP EPS guidance (excluding any tax impact from the inter-Co. dividend)= $0.04-0.07. 12. 4Q07 non-GAAP EPS guidance = $0.07-0.10.
S1. Financial Review (G.G.) 1. 3Q07 Highlights: 1. Pleased with the results, which were above the guidance provided in Aug.
2. Sales were $151.8m. 3. Net income was $8.4m, or $0.07 per diluted share. 4. On a non-GAAP basis, net income from continuing operations was $11.4m, or $0.10 per diluted share. 5. Adjustments to non-GAAP results include $4.8m in merger-related and other restructuring charges. 6. GM on a modified basis improved 100 BP from 2Q07 to 43.7%. 1. 3Q07 GM was impacted by approx. [$700,000] of costs related to the transfer of the manufacturing of several product lines from the US to the facility in Kulim, Malaysia.
2. As discussed last qtr., estimates the cost from these manufacturing transitions could reach $4m in aggregate over the next several quarters.
3. To date, has incurred approx. $1.8m related to these moves.
7. Opex on a modified basis was $49.4m, or 32.5% of sales, which
was right in line with expectations. 1. Spent $9.4m on new product development projects related to contamination control products for advanced semiconductor and microelectronics manufacturing processes, such as photolithography, Wet etch and clean, and CMP.
8. SG&A on a modified basis was 26.3% of sales. 9. GAAP Opex included $3.7m of merger-related amortization. 10. Total stock-based compensation amounted to $2.9m, or $0.02 per diluted share, including about [$400,000] related specifically to restricted stock grants made in connection with 2005 merger. 1. Expects these merger stock grants expenses to be negligible by 1Q08 as they continue to amortize. 11. Adjusted for merger-related and other restructuring, non-GAAP operating income was $16.9m, or 11.1% of sales, 5% improvement over 2Q07. 12. Reported income tax expense on a GAAP basis of $3.2m, or 26% rate. 1. Rate was favorably impacted by the final reconciliation of 2006 tax return and book tax accounts. 13. Shares outstanding on a fully diluted basis at [2Q07-end] were 116m. 14. Cash flow remains strong, as Co. generated $25m in cash from operations. 1. Through the first nine months of 2007, has generated almost $100m in cash from operations. 2. A good portion of that has resulted from working capital improvements, particularly from reductions in inventories, which went from $93m at the start of the year to $81m in the current qtr. 2. Balance Sheet: 1. Inventory turns were about 4.2 times. 2. AR in dollars was roughly flat vs. 2Q07.
3. DSOs were 62 vs. 61 in 2Q07 and 70 at the beginning of the
year. 4. D&A totaled approx. $11m. 5. Capex was $6.3m.
1. Expects 2007 Capex to be approx. $30m. 6. Cash, cash equivalents and short-term investments totaled $125.9m at 3Q07-end, or $10.6m lower than at 2Q07-end. 1. Change in cash reflects strong operating cash flow, offset by the cash used in Aug. to acquire the semiconductor assets of Surmet Corporation. 7. In addition, this month, initiated a series of transactions in the form of inter-Co. dividends and loans from Japanese subsidiary that will allow approx. $100m of cash to be used to support acquisition strategy and commitment to ongoing share buybacks. 1. About $70m relates to cash on hand in Japan, and the balance, or $30m, is funded by low-interest loans from Japanese banks. 2. These transactions will occur in the current qtr., and anticipates this will result in an estimated $10m US tax benefit in 4Q07. 3. These steps are part of the strategy to use the cash flow and the balance sheet to achieve superior long-term shareholder returns. 1. Acquisition of Surmet's …