Entegris, Inc. Net Income surged on 183% and Revenue surged on 15.5%
02/05/2019 • About Entegris, Inc. (
$ENTG) • By InTwits
Entegris, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Entegris, Inc. is a fast growth stock: 2018 revenue growth was 15.5%, 5 year revenue CAGR was 17.5% at 2018 ROIC 15.4%
- EBITDA Margin is expanding: 27.1% in 2018 vs. 25.6% in 2017 vs. 10.9% in 2014
- Entegris, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.5%. At the same time it's in pair with industry average of 8.7%
- CAPEX is quite volatile: $63m in 2018, $31m in 2017, $19m in 2016, $12m in 2015, $13m in 2014
- In the last 5 years the company invested considerably less than D&A: $399m vs. $515m
- The company has highly profitable business model: ROIC is 15.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.1x while industry average is -1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 15.5%. Revenue growth showed small slowdown in 18Q4 - it was 14.6% YoY. During 2014-2018 Revenue growth bottomed in 2016 at 8.7% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 20.0% to 21.7% in 2018. EBITDA Margin grew at 3.8 pp per annum in 2014-2018.
Gross Margin increased slightly on 1.1 pp from 45.4% to 46.4% in 2018. Gross Margin followed a growing trend at 1.6 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in 2018. SG&A as a % of Revenue stuck to a declining trend at -1.9 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018.
Net Income margin increased on 9.2 pp from 6.3% to 15.5% in 2018. The efficient tax rate was 5.4% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Entegris, Inc. had CAPEX/Revenue of 7.1%. Entegris, Inc. showed almost no change in CAPEX/Revenue from 2015 to 2018. Average CAPEX/Revenue for the last three years was 6.5%.
Accounts receivable as a % of Revenue increased slightly on 0.66 pp from 13.7% to 14.3% in 2018. Inventories as a % of Revenue increased on 2.5 pp from 14.8% to 17.3% in 2018. Accounts payable as a % of Revenue increased slightly on 1.8 pp from 9.4% to 11.2% in 2018.
Entegris, Inc. has spent
$381m on M&A in 2018 which accounts for 24.6% of revenue.
Return on investment
The company operates at high and attractive ROE (24.0%) while ROIC is a bit lower (15.4%). ROIC increased slightly on 0.66 pp from 14.7% to 15.4% in 2018. ROE surged on 15.0 pp from 9.0% to 24.0% in 2018. ROIC stuck to a growing trend at 3.4 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 2.2x. Net Debt / EBITDA jumped on 0.9x from 0.1x to 1.1x in 2018. Debt jumped on 39.2% while cash dropped on 22.9%. During the last 5 years Net Debt/EBITDA bottomed in 2017 at 0.1x.
Entegris, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 8.6x. Entegris, Inc. has no short term refinancing risk: cash is higher than short term debt (12,051.6%).
Average interest expence charged on company's debt was 3.6% in 2018.
Valuation and dividends
Entegris, Inc.'s trades at EV/EBITDA 12.6x and P/E 20.0x.
The company paid 16.6% of Net Income as dividends in 2018.
Management team
Bertrand Loy is a Entegris, Inc.'s CEO. Bertrand Loy is a founder and has spent 6 years with the company. CEO total compensation was
$4,726,687 in 2018 which included
$844,808 salary. Gregory B Graves is a Entegris, Inc.'s CFO. Gregory B Graves has spent 11 years at the company.
At the end of financial year the company had 1.2% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 4,900 employees. The number of employees surged on 25.6%. Average revenue per employee in 2018 was
$316,428 and it decreased on 8.1%.
Financial and operational results
FY ended 12/31/2018
Entegris, Inc. ($ENTG) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 962 | 1,081 | 1,175 | 1,343 | 1,550 | 15.5% |
| Gross Profit | 377 | 470 | 509 | 609 | 720 | 18.2% |
| SG&A | 232 | 199 | 202 | 216 | 247 | 14.0% |
| EBITDA | 105 | 220 | 255 | 344 | 420 | 22.1% |
| EBIT | 21 | 118 | 156 | 242 | 293 | 21.0% |
| Interest expence | 33 | 39 | 37 | 32 | 34 | 5.4% |
| Tax | -22 | 10 | 23 | 100 | 14 | -86.3% |
| Net Income | 8 | 80 | 97 | 85 | 241 | 183.0% |
| Stock Based Compensation | 8 | 6 | 13 | 15 | 17 | 11.8% |
Balance Sheet
|
|---|
| Cash | 390 | 350 | 406 | 625 | 482 | -22.9% |
| Accounts Receivable | 154 | | 166 | 183 | 222 | 21.1% |
| Inventory | 163 | 173 | 184 | 198 | 268 | 35.4% |
| Accounts Payable | 57 | 37 | 62 | 69 | 93 | 35.3% |
| Short Term Debt | 100 | 50 | 100 | 100 | 4 | -96.0% |
| Long Term Debt | 667 | 606 | 485 | 574 | 935 | 62.8% |
Cash flow
|
|---|
| Capex | 58 | 72 | 65 | 94 | 110 | 17.7% |
| Dividends | | | | 10 | 40 | 300.0% |
| Acquisitions | 809 | | | 20 | 381 | 1,803.5% |
Ratios
|
|---|
| Revenue growth | 38.7% | 12.4% | 8.7% | 14.2% | 15.5% | |
| EBITDA growth | -21.0% | 109.1% | 16.2% | 34.7% | 22.1% | |
|
|---|
| Gross Margin | 39.2% | 43.5% | 43.3% | 45.4% | 46.4% | 1.1% |
| EBITDA Margin | 10.9% | 20.3% | 21.7% | 25.6% | 27.1% | 1.5% |
| EBIT Margin | 2.2% | 10.9% | 13.2% | 18.0% | 18.9% | 0.9% |
| SG&A, % of revenue | 24.1% | 18.4% | 17.2% | 16.1% | 15.9% | -0.2% |
| SBC, % of revenue | 0.8% | 0.5% | 1.1% | 1.1% | 1.1% | -0.0% |
| Net Income Margin | 0.8% | 7.4% | 8.3% | 6.3% | 15.5% | 9.2% |
| CAPEX, % of revenue | 6.0% | 6.7% | 5.6% | 7.0% | 7.1% | 0.1% |
|
|---|
| ROIC | 1.8% | 7.6% | 10.3% | 14.7% | 15.4% | 0.7% |
| ROE | 1.0% | 10.4% | 11.4% | 9.0% | 24.0% | 15.0% |
| Net Debt/EBITDA | 3.6x | 1.4x | 0.7x | 0.1x | 1.1x | 0.9x |
| Interest coverage ratio (ICR) | 0.6x | 3.1x | 4.2x | 7.5x | 8.6x | 1.1x |
| Interest expence / Average debt | 4.3% | 5.4% | 5.9% | 5.1% | 3.6% | -1.5% |
People
|
|---|
| Insider ownership | 1.2% | 1.2% | 1.2% | 1.2% | 1.2% | 0.0% |
| Employees | 3,348 | 3,419 | 3,542 | 3,900 | 4,900 | 25.6% |
| Revenue/Employee, th. $ | 287 | 316 | 332 | 344 | 316 | -8.1% |
Entegris, Inc. ($ENTG) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 367 | 383 | 399 | 402 | | 15.7% | 16.4% | 15.3% | 14.6% |
| EBITDA | 106 | 103 | 106 | 105 | | 39.8% | 21.6% | 22.5% | 8.3% |
| Net Income | 58 | 54 | 48 | 81 | | 77.0% | 35.9% | 17.5% | |
Balance Sheet
|
|---|
| Cash | 550 | 257 | 295 | 482 | | 40.7% | -36.6% | -32.2% | -22.9% |
| Short Term Debt | 100 | 0 | 0 | 4 | | 0.0% | -100.0% | -100.0% | -96.0% |
| Long Term Debt | 550 | 650 | 651 | 935 | | 19.4% | 49.2% | 58.1% | 62.8% |
Ratios
|
|---|
| Gross Margin | 47.9% | 47.6% | 45.6% | 44.8% | | 3.9% | 1.9% | 0.6% | -1.9% |
| EBITDA Margin | 28.9% | 26.8% | 26.6% | 26.2% | | 5.0% | 1.1% | 1.5% | -1.5% |
| Net Income Margin | 15.7% | 14.2% | 12.1% | 20.1% | | 5.4% | 2.0% | 0.2% | 28.2% |
Peers in Semiconductor Equipment
Below we provide Entegris, Inc. benchmarking against other companies in Semiconductor Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Atomera Incorporated ($ATOM) | | | | | 123.6% |
| ACM Research, Inc. ($ACMR) | | | -12.3% | 33.4% | 104.5% |
| SCI Engineered Materials Inc ($SCIA) | | -13.0% | -32.1% | 24.4% | 67.0% |
| Aehr Test Systems ($AEHR) | | -49.1% | 44.7% | 30.3% | 56.4% |
| SolarEdge Technologies, Inc. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
| |
|---|
| Median (37 companies) | | -2.0% | 6.5% | 24.7% | 14.0% |
|---|
| Entegris, Inc. ($ENTG) | | 12.4% | 8.7% | 14.2% | 15.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | 99.5% | 99.8% | 99.8% | 98.3% | 96.7% |
| KLA-Tencor Corporation ($KLAC) | 57.9% | 56.8% | 61.0% | 63.0% | 64.1% |
| Teradyne, Inc. ($TER) | 53.3% | 55.8% | 54.7% | 57.2% | 58.1% |
| Nova Measuring Instruments Ltd. ($NVMI) | 52.7% | 51.9% | 45.9% | 59.1% | 57.8% |
| Nanometrics Incorporated ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| |
|---|
| Median (38 companies) | 34.4% | 38.3% | 37.3% | 43.2% | 40.2% |
|---|
| Entegris, Inc. ($ENTG) | 39.2% | 43.5% | 43.3% | 45.4% | 46.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 29.2% | 26.4% | 34.4% | 38.3% | 39.6% |
| DAQO New Energy Corp. ($DQ) | 32.9% | 31.6% | 43.3% | 49.1% | 36.1% |
| Xperi Corporation ($XPER) | 66.7% | 67.5% | 47.6% | 23.4% | 34.3% |
| Lam Research Corporation ($LRCX) | 21.1% | 20.3% | 23.2% | 27.6% | 32.0% |
| Cabot Microelectronics Corporation ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
| |
|---|
| Median (37 companies) | 6.8% | 9.8% | 11.4% | 16.0% | 16.2% |
|---|
| Entegris, Inc. ($ENTG) | 10.9% | 20.3% | 21.7% | 25.6% | 27.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rubicon Technology, Inc. ($RBCN) | 15.0% | 4.0% | 3.6% | 0.0% | 58.8% |
| DAQO New Energy Corp. ($DQ) | 42.2% | 44.7% | 29.5% | 19.8% | 47.4% |
| AXT Inc ($AXTI) | 2.4% | 5.4% | 3.4% | 21.6% | 39.6% |
| STR Holdings Inc ($STRI) | 7.9% | 8.1% | 1.6% | 9.0% | 36.6% |
| Photronics, Inc. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| |
|---|
| Median (37 companies) | 2.2% | 2.7% | 2.2% | 2.8% | 2.9% |
|---|
| Entegris, Inc. ($ENTG) | 6.0% | 6.7% | 5.6% | 7.0% | 7.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 17.9% | 16.5% | 27.2% | 34.0% | 39.9% |
| Lam Research Corporation ($LRCX) | 10.7% | 10.9% | 11.8% | 18.7% | 33.9% |
| Versum Materials, Inc. ($VSM) | | 26.2% | 32.4% | 30.0% | 32.1% |
| Advanced Energy Industries, Inc. ($AEIS) | 8.8% | 30.2% | 41.2% | 45.7% | 31.3% |
| SolarEdge Technologies, Inc. ($SEDG) | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% |
| |
|---|
| Median (39 companies) | 3.5% | 5.2% | 6.9% | 12.2% | 11.2% |
|---|
| Entegris, Inc. ($ENTG) | 1.8% | 7.6% | 10.3% | 14.7% | 15.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | -0.3x | -0.1x | 4.2x | 5.0x | 2.6x |
| Ultra Clean Holdings, Inc. ($UCTT) | -1.2x | 1.5x | 0.4x | -0.2x | 2.4x |
| Ichor Holdings ($ICHR) | 3.1x | 1.7x | -0.4x | 2.0x | 1.8x |
| Versum Materials, Inc. ($VSM) | -0.2x | -0.1x | 2.7x | 2.1x | 1.4x |
| DAQO New Energy Corp. ($DQ) | 4.6x | 4.3x | 2.3x | 0.9x | 1.2x |
| |
|---|
| Median (31 companies) | -1.2x | -1.3x | -1.3x | -0.7x | -1.0x |
|---|
| Entegris, Inc. ($ENTG) | 3.6x | 1.4x | 0.7x | 0.1x | 1.1x |
