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Press Release

Entegris Reports Record Sales and Earnings in First Quarter of 2018

  • First-quarter revenue of $367.2 million grew 16% from prior year
  • GAAP net income per diluted share of $0.40 increased 74% from a year ago
  • Non-GAAP net income per diluted share of $0.47 increased 68% from a year ago
  • Adjusted EBITDA of $106.0 million grew 40% from a year ago

BILLERICA, Mass.--(BUSINESS WIRE)--Apr. 26, 2018-- Entegris, Inc. (NasdaqGS: ENTG), a leader in specialty chemicals and advanced materials solutions for the microelectronics industry, today reported its financial results for the Company’s first quarter ended March 31, 2018.

First-quarter sales were $367.2 million, an increase of 16% from the same quarter last year and a 5% increase sequentially. First-quarter net income was $57.6 million, or $0.40 per diluted share, which include $11.7 million of amortization of intangible assets, and a $1.5 million tax charge related to the Tax Cuts and Jobs Act. Non-GAAP net income was $68.0 million, or $0.47 per diluted share.

Bertrand Loy, president and chief executive officer, said: "We are very pleased with our record results in the first quarter. We grew our revenue faster than our markets and expanded our profits faster than our top line growth -- both of which are key ongoing goals. Industry trends continue to be positive for Entegris, as the semiconductor industry's intersecting needs for new materials and increasing purity requirements are driving new market opportunities for our unique solutions set."

Mr. Loy added: "We generated record quarterly adjusted EBITDA of $106 million, or 28.9% of revenue. Our strong operational execution supported the deployment of $104 million of capital in the quarter consistent with our strategy, which included capital investments to support future growth, an accretive acquisition, additional debt pay down, and our continued share repurchase and quarterly dividend programs."

Quarterly Financial Results Summary

(in thousands, except per share data)

GAAP Results

Q1-2018

Q1-2017

Q4-2017

Net sales           $367,199           $317,377           $350,562
Operating income           $78,473           $50,920           $71,152
Operating margin           21.4%           16.0%           20.3%
Net income (loss)           $57,562           $32,514           $(28,341)
Diluted earnings (loss) per share (EPS)           $0.40           $0.23           $(0.20)
Non-GAAP Results
Non-GAAP adjusted operating income           $90,142           $61,865           $82,172
Adjusted operating margin           24.5%           19.5%           23.4%
Non-GAAP net income           $68,015           $40,754           $59,694
Non-GAAP EPS           $0.47           $0.28           $0.42

Second-Quarter Outlook

For the second quarter ending June 30, 2018, the Company expects sales of $370 million to $385 million, net income of $52 million to $59 million, and net income per diluted share between $0.36 and $0.41. On a non-GAAP basis, EPS is expected to range from $0.42 to $0.47 per diluted share, which reflects net income on a non-GAAP basis in the range of $60 million to $68 million, which is adjusted for expected amortization expense of approximately $12 million or $0.06 per share.

Segment Results

The Company reports its results in the following segments:

Specialty Chemicals and Engineered Materials (SCEM): SCEM provides high-performance and high-purity process chemistries, gases and materials, as well as safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.

Microcontamination Control (MC): MC solutions purify critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.

Advanced Materials Handling (AMH): AMH develops solutions to monitor, protect, transport, and deliver critical liquid chemistries and substrates for a broad set of applications in the semiconductor industry and other high-technology industries.

First-Quarter Results Conference Call Details

Entegris will hold a conference call to discuss its results for the first quarter on Thursday, April 26, 2018, at 9:00 a.m. Eastern Time. Participants should dial 888-394-8218 or +1 323-701-0225, referencing confirmation code 3750785. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. For a replay of the call, please Click Here using passcode 3750785. The replay will be available starting at 12:00 p.m. ET on Thursday, April 26 through June 9 at 12:00 p.m. ET.

The call can also be accessed live and on-demand from the Entegris website. Point your web browser to http://investor.entegris.com/events.cfm and follow the link to the webcast. The on-demand playback will be available for six weeks after the conclusion of the teleconference.

Management’s slide presentation concerning the results for the first quarter, which may be referred to during the call, will be posted on the investor relations section of www.entegris.com Thursday morning before the call.

ABOUT ENTEGRIS
Entegris is a leader in specialty chemicals and advanced materials solutions for the microelectronics industry 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
The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA, Adjusted Gross Profit, Adjusted Segment Profit, and Adjusted Operating Income together with related measures thereof, and non-GAAP EPS, are considered “Non-GAAP financial measures” under the rules and regulations of the Securities and Exchange Commission. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision-making, as a means to evaluate period-to-period comparisons, as well as comparisons to our competitors' operating results. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring business operating results, such as amortization, depreciation and discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing and understanding our results and performance and when planning, forecasting, and analyzing future periods. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze our business. The reconciliations of GAAP Net Income (Loss) to Adjusted Operating Income and Adjusted EBITDA, and GAAP Net Income (Loss) to Non-GAAP Earnings per Share are included elsewhere in this release.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include statements related to future period guidance; future sales, net income, net income per diluted share, non-GAAP EPS, non-GAAP net income, expenses and other financial metrics; our performance relative to our markets; market and technology trends; the development of new products and the success of their introductions; Company's capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the effect of the Tax Cuts and Jobs Act on our capital allocation strategy; the impact of the acquisitions we have made and commercial partnerships we have established; our ability to execute on our strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ. These risks and uncertainties include, but are not limited to, weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for our products and solutions; our ability to meet rapid demand shifts; our ability to continue technological innovation and introduce new products to meet our customers' rapidly changing requirements; our concentrated customer base; our ability to identify, effect and integrate acquisitions, joint ventures or other transactions; our ability to protect and enforce intellectual property rights; operational, political and legal risks of our international operations; our dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages and price increases; changes in government regulations of the countries in which we operate; fluctuation of currency exchange rates; fluctuations in the market price of Entegris’ stock; the level of, and obligations associated with, our indebtedness; and other risk factors and additional information described in our filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed on February 15, 2018, and in our other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

     
Three months ended
    March 31, 2018         April 1, 2017         December 31, 2017
Net sales     $367,199     $317,377     $350,562
Cost of sales     191,202     177,781     186,883
Gross profit 175,997 139,596 163,679
Selling, general and administrative expenses 58,269 50,492 55,018
Engineering, research and development expenses 27,586 27,239 26,489
Amortization of intangible assets 11,669     10,945     11,020
Operating income 78,473 50,920 71,152
Interest expense, net 7,226 8,393 7,533
Other expense, net     139     902     21,696
Income before income tax expense 71,108 41,625 41,923
Income tax expense     13,546     9,111     70,264
Net income (loss)     $57,562     $32,514     $(28,341)
   
 
Basic net income (loss) per common share: $0.41 $0.23 $(0.20)
Diluted net income (loss) per common share: $0.40 $0.23 $(0.20)
 
Weighted average shares outstanding:
Basic 141,581 141,501 141,329
Diluted 143,652 143,315 141,329
 

Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

           
 
    March 31, 2018         December 31, 2017    
ASSETS
Cash and cash equivalents $550,236 $625,408
Accounts receivable, net 195,284 183,434
Inventories 214,145 198,089
Deferred tax charges and refundable income taxes 17,373 18,012
Other current assets     34,012     32,665
Total current assets 1,011,050 1,057,608
 
Property, plant and equipment, net 364,301 359,523
 
Goodwill 375,340 359,688
Intangible assets 190,814 182,430
Deferred tax assets 10,186 9,103
Other assets     9,639     7,820
Total assets     $1,961,330     $1,976,172
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Long-term debt, current maturities $100,000 $100,000
Accounts payable 68,406 68,762
Accrued liabilities 70,066 99,374
Income tax payable     27,996     22,835
Total current liabilities 266,468 290,971
 
Long-term debt, excluding current maturities 549,821 574,380
Other liabilities 120,647 117,803
Shareholders’ equity     1,024,394     993,018
Total liabilities and shareholders’ equity     $1,961,330     $1,976,172
 

Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 

       
 
    Three months ended    
    March 31, 2018             April 1, 2017    
Operating activities:          
Net income $57,562 $32,514

Adjustments to reconcile net income to net cash
provided by operating activities:

Depreciation 15,897 13,977
Amortization 11,669 10,945
Stock-based compensation expense 4,128 3,870
Provision for deferred income taxes (721 ) 3,422
Other 1,503 3,633
Changes in operating assets and liabilities:
Trade accounts and notes receivable (6,011 ) (7,546 )
Inventories (14,955 ) (5,415 )
Accounts payable and accrued liabilities (33,985 ) (23,490 )
Income taxes payable and refundable income taxes 6,692 (1,252 )
Other         (2,962 )         2,774  
Net cash provided by operating activities         38,817           33,432  
Investing activities:
Acquisition of property and equipment (21,047 ) (22,190 )
Acquisition of business (37,656 )
Other         146           186  
Net cash used in investing activities         (58,557 )         (22,004 )
Financing activities:
Payments on long-term debt (25,000 ) (25,000 )
Issuance of common stock 473 1,041
Taxes paid related to net share settlement of equity awards (14,123 ) (4,575 )
Repurchase and retirement of common stock (10,000 ) (4,000 )
Dividend payments (9,883 )
Other         (246 )         (270 )
Net cash used in financing activities         (58,779 )         (32,804 )
Effect of exchange rate changes on cash         3,347           6,146  
Decrease in cash and cash equivalents (75,172 ) (15,230 )
Cash and cash equivalents at beginning of period         625,408           406,389  
Cash and cash equivalents at end of period         $550,236           $391,159  
 

Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)

 

   
    Three months ended  
Net sales     March 31, 2018         April 1, 2017         December 31, 2017  
Specialty Chemicals and Engineered Materials $130,743     $114,435     $125,339
Microcontamination Control 118,637 102,887 115,650
Advanced Materials Handling     117,819     100,055     109,573
Total net sales     $367,199     $317,377     $350,562
    Three months ended  
Segment profit1     March 31, 2018         April 1, 2017         December 31, 2017  
Specialty Chemicals and Engineered Materials     $31,562     $23,128     $30,075
Microcontamination Control 41,991 30,987 39,328
Advanced Materials Handling     23,142     13,960     18,226
Total segment profit 96,695 68,075 87,629
Amortization of intangibles 11,669 10,945 11,020
Unallocated expenses     6,553     6,210     5,457
Total operating income     $78,473     $50,920     $71,152

1Beginning in the first quarter of 2018, the Company has changed its definition of segment profit to include an allocation of certain general and administrative costs for the Company’s human resources, finance and information technology functions previously unallocated by the Company. Prior quarter information was recast to reflect the change in the Company's definition of segment profit.

Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income (Loss) to Adjusted Operating Income and Adjusted EBITDA
(In thousands)
(Unaudited)

 

         
 
    Three months ended
    March 31, 2018           April 1, 2017           December 31, 2017
Net sales     $367,199         $317,377         $350,562
Net income (loss) $57,562         $32,514         $(28,341)
Adjustments to net income (loss):
Income tax expense 13,546 9,111 70,264
Interest expense, net 7,226 8,393 7,533
Other expense, net     139         902         21,696
GAAP - Operating income 78,473 50,920 71,152
Amortization of intangible assets     11,669         10,945         11,020
Adjusted operating income 90,142 61,865 82,172
Depreciation     15,897         13,977         15,035
Adjusted EBITDA     $106,039         $75,842         $97,207
 
Adjusted operating margin 24.5% 19.5% 23.4%
Adjusted EBITDA - as a % of net sales           28.9%         23.9%         27.7%
 

Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)

   
 
Three months ended
      March 31, 2018       April 1, 2017       December 31, 2017  
GAAP net income (loss) $57,562     $32,514     $(28,341)
Adjustments to net income (loss):
Loss on debt extinguishment 20,687
Amortization of intangible assets 11,669 10,945 11,020

Tax effect of adjustments to net income (loss)
and discrete items1

(2,710) (2,705) (10,385 )
Tax effect of Tax Cuts and Jobs Act     1,494         $66,713  
Non-GAAP net income     $68,015     $40,754     $59,694  
 
Diluted earnings (loss) per common share $0.40 $0.23 $(0.20)
Effect of adjustments to net income (loss) $0.07 $0.06 $0.61

Diluted non-GAAP earnings per common
share

    $0.47     $0.28     $0.42  

1The tax effect of pre-tax adjustments to net income (loss) was calculated using the applicable marginal tax rate during the respective years.

Source: Entegris, Inc.

Entegris, Inc.
Steven Cantor, 978-436-6500
VP of Corporate Relations
irelations@entegris.com

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