UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 27, 2016
ENTEGRIS, INC.
(Exact name of registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
| 001-32598 | 41-1941551 | |
| (Commission File Number) |
(I.R.S. Employer Identification No.) | |
| 129 Concord Road, Billerica, MA | 01821 | |
| (Address of principal executive offices) | (Zip Code) | |
(978) 436-6500
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On July 27, 2016, the registrant issued a press release to announce results for the second quarter of 2016, ended July 2, 2016, and will hold a conference call to discuss such results. A copy of this press release and the supplemental slides to which management will refer during the conference call are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.
In accordance with General Instructions B.2 of Form 8-K, the information in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. The information set forth herein will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Description | |
| 99.1 | Press Release, dated July 27, 2016 | |
| 99.2 | Second Quarter Earnings Release Presentation Slides, dated July 27, 2016 | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ENTEGRIS, INC. | ||||||
| Dated: July 27, 2016 | By: | /s/ Gregory B. Graves | ||||
| Name: | Gregory B. Graves | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release, dated July 27, 2016 | |
| 99.2 | Second Quarter Earnings Release Presentation Slides, dated July 27, 2016 | |
Exhibit 99.1
|
|
PRESS RELEASE
Steven Cantor VP of Corporate Relations T +1 978 436 6750 irelations@entegris.com |
|
FOR RELEASE AT 7AM ET
Entegris Reports Second-Quarter Results
| • | Record quarterly revenue of $303.1 million |
| • | GAAP net income of $32.9 million, or $0.23 per diluted share |
| • | Non-GAAP net income of $40.3 million, or $0.28 per diluted share |
BILLERICA, Mass., July 27, 2016– 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 second quarter ended July 2, 2016.
The Company reported record second-quarter sales of $303.1 million. Second-quarter net income was $32.9 million, or $0.23 per diluted share, which included amortization of intangible assets of $11.1 million. Non-GAAP net income was $40.3 million, or $0.28 per diluted share.
For the first half of fiscal 2016, sales of $570.1 million increased 5 percent from the same period a year ago. First-half 2016 net income was $49.1 million, or $0.35 per share, which included amortization of intangible assets of $22.4 million. Non-GAAP net income for the first half of fiscal 2016 was $63.9 million, or $0.45 per diluted share.
Bertrand Loy, president and chief executive officer, said: “I am very pleased with the quality of our execution and the performance of a number of our new products, as we achieved record sales and earnings per share. Our revenue grew 13.5 percent sequentially, reflecting robust demand across our businesses and particular strength in filtration, wafer handling, and specialty materials. We generated a record $71.3 million in adjusted EBITDA, achieving an adjusted EBITDA margin of 23.5 percent. Our strong cash flow allowed us to increase our cash balance at quarter end to $373.7 million while repaying $25.0 million of our long-term debt.”
Mr. Loy added: “2016 is a year of celebration for Entegris as we mark our 50th year as a company. We are proud of this milestone and the many successes we have achieved. Yet, we are even more excited about what lies ahead as we continue to create unique value for our customers by developing mission-critical solutions for their manufacturing processes.”
129 Concord Road | Billerica, MA 01821 USA | T +1 978 436 6500
Quarterly Financial Results Summary
(in millions, except per share data)
| GAAP Results |
Q2-2016 | Q2-2015 | Q1-2016 | |||||||||
| Net sales |
$ | 303,052 | $ | 280,709 | $ | 267,024 | ||||||
| Operating income |
46,400 | 39,347 | 29,559 | |||||||||
| Operating margin |
15.3 | % | 14.0 | % | 11.1 | % | ||||||
| Net income |
$ | 32,890 | $ | 24,448 | $ | 16,212 | ||||||
| Earnings per share (EPS) |
$ | 0.23 | $ | 0.17 | $ | 0.11 | ||||||
| Non-GAAP Results |
||||||||||||
| Non-GAAP adjusted operating income |
$ | 57,462 | $ | 53,671 | $ | 40,848 | ||||||
| Adjusted operating margin |
19.0 | % | 19.1 | % | 15.3 | % | ||||||
| Non-GAAP net income |
$ | 40,290 | $ | 33,903 | $ | 23,617 | ||||||
| Non-GAAP EPS |
$ | 0.28 | $ | 0.24 | $ | 0.17 | ||||||
Third-Quarter Outlook
For the fiscal third quarter ending September 30, 2016, the Company expects sales of $285 million to $300 million, net income of $25 million to $30 million, and net income per diluted share between $0.18 to $0.21. On a non-GAAP basis, EPS is expected to range from $0.23 to $0.26 per diluted share, which reflects net income on a non-GAAP basis in the range of $32 million to $37 million, which is adjusted for expected amortization expense of approximately $11 million or $0.05 per share.
Segment Results
The Company reports its results in two business segments: Critical Materials Handling (CMH) and Electronic Materials (EM). Summary results by segment are contained in this press release.
CMH provides a broad range of products that filter, handle, dispense, and protect critical materials used in the semiconductor manufacturing process and in other high-technology manufacturing. CMH’s products and subsystems include high-purity materials packaging, fluid-handling and dispensing systems, liquid filters, as well as microenvironments that protect critical substrates such as wafers during shipping and manufacturing. CMH also provides specialized graphite components and specialty coatings for use in high temperature applications.
EM provides high-performance materials and specialty gas management solutions that enable high yield, cost effective semiconductor manufacturing. EM’s products consist of specialized chemistries and performance materials, gas microcontamination control solutions, and sub-atmospheric pressure gas delivery systems for the efficient handling of hazardous gases to semiconductor process equipment.
Second-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the second quarter on Wednesday, July 27, 2016, at 10:00 a.m. Eastern Time. Participants should dial 1-719-325-2435 or toll-free 1-888-455-2263, referencing confirmation code 4609432. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. A replay of the call will be available starting July 27, 2016 at 1:00 p.m. (ET) until Saturday, September 10, 2016. The replay can be accessed by using passcode 4609432 after dialing 1-719-325-2435. A live and on-demand webcast of the call can also be accessed from the investor relations section of Entegris’ website at www.entegris.com.
Entegris, Inc. | page 2 of 11
Please also refer to Management’s slide presentation concerning second-quarter results which may be referred to during the call. This presentation will be posted on the investor relations section of www.entegris.com Wednesday 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 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. These financial measures are provided as a supplement to financial measures provided in accordance with GAAP. We provide non-GAAP financial measures in order to further assess and measure operating performance. Management believes the non-GAAP measures provide meaningful supplemental information regarding our baseline performance before certain gains, losses or other charges that may not be indicative of our business or future outlook. We believe these non-GAAP measures will aid investors’ overall understanding of our results by providing a higher degree of transparency for certain expenses and providing a level of disclosure that will help investors understand how we plan and measure our business. The reconciliations of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA, and GAAP to Non-GAAP Earnings per Share are included elsewhere in this release.
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, and 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 that include such words 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 that are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris’ stock, Entegris’ future operating results, 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 discussions appearing under the headings “Risks Relating to our Business and Industry,” “Risks Relating to Our Indebtedness,” “Manufacturing Risks,” “International Risks,” and “Risks Related to Owning Our Common Stock” in Item 1A of our Annual Report on Form 10–K for the fiscal year ended December 31, 2015, filed with the U.S Securities and Exchange Commission on February 29, 2016, 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
Entegris, Inc. | page 3 of 11
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. | page 4 of 11
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||||
| July 2, 2016 | June 27, 2015 | April 2, 2016 | ||||||||||
| Net sales |
$ | 303,052 | $ | 280,709 | $ | 267,024 | ||||||
| Cost of sales |
163,847 | 152,622 | 152,318 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gross profit |
139,205 | 128,087 | 114,706 | |||||||||
| Selling, general and administrative expenses |
53,597 | 50,270 | 47,956 | |||||||||
| Engineering, research and development expenses |
28,146 | 26,542 | 25,902 | |||||||||
| Amortization of intangible assets |
11,062 | 11,928 | 11,289 | |||||||||
|
|
|
|
|
|
|
|||||||
| Operating income |
46,400 | 39,347 | 29,559 | |||||||||
| Interest expense, net |
9,051 | 9,715 | 9,149 | |||||||||
| Other income, net |
(1,054 | ) | (1,109 | ) | (675 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Income before income tax expense and equity in net loss of affiliate |
38,403 | 30,741 | 21,085 | |||||||||
| Income tax expense |
5,513 | 6,245 | 4,873 | |||||||||
| Equity in net loss of affiliates |
— | 48 | — | |||||||||
|
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|||||||
| Net income |
$ | 32,890 | $ | 24,448 | $ | 16,212 | ||||||
|
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|||||||
| Basic net income per common share: |
$ | 0.23 | $ | 0.17 | $ | 0.12 | ||||||
| Diluted net income per common share: |
$ | 0.23 | $ | 0.17 | $ | 0.11 | ||||||
| Weighted average shares outstanding: |
||||||||||||
| Basic |
140,953 | 140,307 | 140,780 | |||||||||
| Diluted |
141,723 | 140,993 | 141,371 | |||||||||
Entegris, Inc. | page 5 of 11
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Six months ended | ||||||||
| July 2, 2016 | June 27, 2015 | |||||||
| Net sales |
$ | 570,076 | $ | 544,082 | ||||
| Cost of sales |
316,165 | 299,459 | ||||||
|
|
|
|
|
|||||
| Gross profit |
253,911 | 244,623 | ||||||
| Selling, general and administrative expenses |
101,553 | 101,160 | ||||||
| Engineering, research and development expenses |
54,048 | 52,342 | ||||||
| Amortization of intangible assets |
22,351 | 24,235 | ||||||
|
|
|
|
|
|||||
| Operating income |
75,959 | 66,886 | ||||||
| Interest expense, net |
18,200 | 19,343 | ||||||
| Other income, net |
(1,729 | ) | (2,842 | ) | ||||
|
|
|
|
|
|||||
| Income before income tax expense and equity in net loss of affiliate |
59,488 | 50,385 | ||||||
| Income tax expense |
10,386 | 10,915 | ||||||
| Equity in net loss of affiliates |
— | 150 | ||||||
|
|
|
|
|
|||||
| Net income |
$ | 49,102 | $ | 39,320 | ||||
|
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|
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|
|||||
| Basic net income per common share: |
$ | 0.35 | $ | 0.28 | ||||
| Diluted net income per common share: |
$ | 0.35 | $ | 0.28 | ||||
| Weighted average shares outstanding: |
140,867 | 140,146 | ||||||
| Basic |
141,547 | 140,866 | ||||||
| Diluted |
||||||||
Entegris, Inc. | page 6 of 11
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| July 2, 2016 | December 31, 2015 | |||||||
| ASSETS |
||||||||
| Cash and cash equivalents |
$ | 373,743 | $ | 349,825 | ||||
| Short-term investments |
— | 2,181 | ||||||
| Accounts receivable, net |
180,596 | 141,409 | ||||||
| Inventories |
181,086 | 173,176 | ||||||
| Deferred tax charges and refundable income taxes |
18,971 | 18,943 | ||||||
| Other current assets |
17,777 | 23,253 | ||||||
|
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|
|
|||||
| Total current assets |
772,173 | 708,787 | ||||||
| Property, plant and equipment, net |
322,720 | 321,301 | ||||||
| Goodwill |
343,261 | 342,111 | ||||||
| Intangible assets, net |
240,688 | 258,942 | ||||||
| Deferred tax assets – non-current |
8,848 | 7,771 | ||||||
| Other |
7,792 | 7,785 | ||||||
|
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|
|||||
| Total assets |
$ | 1,695,482 | $ | 1,646,697 | ||||
|
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|||||||
| Long-term debt, current maturities |
$ | 50,000 | $ | 50,000 | ||||
| Accounts payable |
49,637 | 36,916 | ||||||
| Accrued liabilities |
73,964 | 75,859 | ||||||
| Income tax payable and deferred tax liabilities |
13,538 | 12,775 | ||||||
|
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|
|||||
| Total current liabilities |
187,139 | 175,550 | ||||||
| Long-term debt, excluding current maturities |
582,235 | 606,044 | ||||||
| Other liabilities and deferred tax liabilities |
64,878 | 62,220 | ||||||
| Shareholders’ equity |
861,230 | 802,883 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,695,482 | $ | 1,646,697 | ||||
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Entegris, Inc. | page 7 of 11
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| July 2, 2016 | June 27, 2015 | July 2, 2016 | June 27, 2015 | |||||||||||||
| Operating activities: |
||||||||||||||||
| Net income |
$ | 32,890 | $ | 24,448 | $ | 49,102 | $ | 39,320 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
| Depreciation |
13,825 | 13,405 | 27,525 | 26,724 | ||||||||||||
| Amortization |
11,062 | 11,928 | 22,351 | 24,235 | ||||||||||||
| Share-based compensation expense |
3,505 | 2,887 | 6,366 | 5,145 | ||||||||||||
| Provision for deferred income taxes |
(720 | ) | 5,868 | (931 | ) | 3,035 | ||||||||||
| Other |
4,408 | 3,706 | 9,204 | (8,136 | ) | |||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||
| Trade accounts and notes receivable |
(29,300 | ) | 3,652 | (36,099 | ) | (28,594 | ) | |||||||||
| Inventories |
1,609 | (20,988 | ) | (11,389 | ) | (28,500 | ) | |||||||||
| Accounts payable and accrued liabilities |
23,065 | (3,164 | ) | 13,555 | (9,126 | ) | ||||||||||
| Income taxes payable and refundable income taxes |
1,133 | (3,605 | ) | 407 | (364 | ) | ||||||||||
| Other |
(278 | ) | (1,891 | ) | (1,553 | ) | 12,375 | |||||||||
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| Net cash provided by operating activities |
61,199 | 36,246 | 78,538 | 36,114 | ||||||||||||
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| Investing activities: |
||||||||||||||||
| Acquisition of property and equipment |
(14,325 | ) | (13,742 | ) | (32,144 | ) | (34,230 | ) | ||||||||
| Other |
837 | 865 | (1,658 | ) | 1,925 | |||||||||||
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| Net cash used in investing activities |
(13,488 | ) | (12,877 | ) | (33,802 | ) | (32,305 | ) | ||||||||
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| Financing activities: |
||||||||||||||||
| Payments on long-term debt |
(25,000 | ) | (50,000 | ) | (25,000 | ) | (75,000 | ) | ||||||||
| Issuance of common stock |
2,380 | 454 | 2,380 | 974 | ||||||||||||
| Repurchase and retirement of common stock |
— | — | (3,573 | ) | — | |||||||||||
| Taxes paid related to net share settlement of equity awards |
(136 | ) | (350 | ) | (2,203 | ) | (2,403 | ) | ||||||||
| Other |
42 | 217 | 91 | 352 | ||||||||||||
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| Net cash used in provided by financing activities |
(22,714 | ) | (49,679 | ) | (28,305 | ) | (76,077 | ) | ||||||||
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| Effect of exchange rate changes on cash |
4,343 | (1,335 | ) | 7,487 | (3,689 | ) | ||||||||||
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|||||||||
| Increase (decrease) in cash and cash equivalents |
29,340 | (27,645 | ) | 23,918 | (75,957 | ) | ||||||||||
| Cash and cash equivalents at beginning of period |
344,403 | 341,387 | 349,825 | 389,699 | ||||||||||||
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| Cash and cash equivalents at end of period |
$ | 373,743 | $ | 313,742 | $ | 373,743 | $ | 313,742 | ||||||||
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Entegris, Inc. | page 8 of 11
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||||||
| Net sales |
July 2, 2016 |
June 27, 2015 |
April 2, 2016 |
July 2, 2016 |
June 27, 2015 |
|||||||||||||||
| Critical Materials Handling |
$ | 194,880 | $ | 174,253 | $ | 166,229 | $ | 361,109 | $ | 341,721 | ||||||||||
| Electronic Materials |
108,172 | 106,456 | 100,795 | 208,967 | 202,361 | |||||||||||||||
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|||||||||||
| Total net sales |
$ | 303,052 | $ | 280,709 | $ | 267,024 | $ | 570,076 | $ | 544,082 | ||||||||||
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| Three months ended | Six months ended | |||||||||||||||||||
| Segment profit |
July 2, 2016 |
June 27, 2015 |
April 2, 2016 |
July 2, 2016 |
June 27, 2015 |
|||||||||||||||
| Critical Materials Handling |
$ | 52,524 | $ | 43,732 | $ | 37,892 | $ | 90,416 | $ | 85,073 | ||||||||||
| Electronic Materials |
27,475 | 28,559 | 21,575 | 49,050 | 48,781 | |||||||||||||||
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| Total segment profit |
79,999 | 72,291 | 59,467 | 139,466 | 133,854 | |||||||||||||||
| Amortization of intangibles |
11,062 | 11,928 | 11,289 | 22,351 | 24,235 | |||||||||||||||
| Unallocated expenses |
22,537 | 21,016 | 18,619 | 41,156 | 42,733 | |||||||||||||||
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| Total operating income |
$ | 46,400 | $ | 39,347 | $ | 29,559 | $ | 75,959 | $ | 66,886 | ||||||||||
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Entegris, Inc. | page 9 of 11
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
(In thousands, except per share data)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||||||
| July 2, 2016 |
June 27, 2015 |
April 2, 2016 |
July 2, 2016 |
June 27, 2015 |
||||||||||||||||
| Net sales |
$ | 303,052 | $ | 280,709 | $ | 267,024 | $ | 570,076 | $ | 544,082 | ||||||||||
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| Net income |
$ | 32,890 | $ | 24,448 | $ | 16,212 | $ | 49,102 | $ | 39,320 | ||||||||||
| Adjustments to net income: |
||||||||||||||||||||
| Equity in net loss of affiliates |
— | 48 | — | — | 150 | |||||||||||||||
| Income tax expense |
5,513 | 6,245 | 4,873 | 10,386 | 10,915 | |||||||||||||||
| Interest expense, net |
9,051 | 9,715 | 9,149 | 18,200 | 19,343 | |||||||||||||||
| Other income, net |
(1,054 | ) | (1,109 | ) | (675 | ) | (1,729 | ) | (2,842 | ) | ||||||||||
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| GAAP – Operating income |
46,400 | 39,347 | 29,559 | 75,959 | 66,886 | |||||||||||||||
| Integration costs |
— | 2,396 | — | — | 5,008 | |||||||||||||||
| Amortization of intangible assets |
11,062 | 11,928 | 11,289 | 22,351 | 24,235 | |||||||||||||||
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| Adjusted operating income |
57,462 | 53,671 | 40,848 | 98,310 | 96,129 | |||||||||||||||
| Depreciation |
13,825 | 13,405 | 13,700 | 27,525 | 26,724 | |||||||||||||||
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| Adjusted EBITDA |
$ | 71,287 | $ | 67,076 | $ | 54,548 | $ | 125,835 | $ | 122,853 | ||||||||||
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| Adjusted operating margin |
19.0 | % | 19.1 | % | 15.3 | % | 17.2 | % | 17.7 | % | ||||||||||
| Adjusted EBITDA – as a % of net sales |
23.5 | % | 23.9 | % | 20.4 | % | 22.1 | % | 22.6 | % | ||||||||||
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Entegris, Inc. | page 10 of 11
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||||||
| July 2, 2016 |
June 27, 2015 |
April 2, 2016 |
July 2, 2016 |
June 27, 2015 |
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| Net income |
$ | 32,890 | $ | 24,448 | $ | 16,212 | $ | 49,102 | $ | 39,320 | ||||||||||
| Adjustments to net income: |
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| Integration costs |
— | 2,396 | — | — | 5,008 | |||||||||||||||
| (Gain) loss on impairment or sale of equity investment |
(38 | ) | (56 | ) | (118 | ) | (156 | ) | 617 | |||||||||||
| Amortization of intangible assets |
11,062 | 11,928 | 11,289 | 22,351 | 24,235 | |||||||||||||||
| Tax effect of adjustments of net income |
(3,624 | ) | (4,813 | ) | (3,766 | ) | (7,390 | ) | (9,831 | ) | ||||||||||
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| Non-GAAP net income |
$ | 40,290 | $ | 33,903 | $ | 23,617 | $ | 63,907 | $ | 59,349 | ||||||||||
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| Diluted income per common share |
$ | 0.23 | $ | 0.17 | $ | 0.11 | $ | 0.35 | $ | 0.28 | ||||||||||
| Effect of adjustments to net income |
0.05 | 0.07 | 0.05 | 0.10 | 0.14 | |||||||||||||||
| Diluted non-GAAP income per common share |
$ | 0.28 | $ | 0.24 | $ | 0.17 | $ | 0.45 | $ | 0.42 | ||||||||||
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### END ###
Entegris, Inc. | page 11 of 11
Earnings Summary Second Quarter FY 2016 JULY 27, 2016 Exhibit 99.2
SAFE HARBOR Certain information contained in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements 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 that include such words 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 that are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris’ stock, Entegris’ future operating results, 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 discussions appearing under the headings “Risks Relating to our Business and Industry,” “Risks Related to Our Indebtedness,” “Manufacturing Risks,” “International Risks” and “Risks Related to Owning Our Common Stock” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the Securities and Exchange Commission on February 29, 2016, 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.
$ in millions, except per share data 2Q16 2Q16 Guidance 1Q16 2Q15 2Q16 over 1Q16 2Q16 over 2Q15 Net Revenue $303.1 $270 to $285 $267.0 $280.7 13.5% 8.0% Gross Margin 45.9% 42% to 43% 43.0% 45.6% Operating Expenses $92.8 $85.1 $88.7 9.0% 4.6% Operating Income $57.5 $40.8 $51.3 40.7% 12.1% Operating Margin 19.0% 15.3% 18.3% Tax Rate 14.4% 23.1% 20.3% Net Income $32.9 $19 to $24 $16.2 $24.4 102.9% 34.5% EPS $0.23 $0.13 to $0.17 $0.11 $0.17 64.7% 16.7% SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)
$ in millions 2Q16 2Q16 Guidance 1Q16 2Q15 2Q16 over 1Q16 2Q16 over 2Q15 Net Revenue $303.1 $270 to $285 $267.0 $280.7 13.5% 8.0% Gross Margin 45.9% 42% to 43% 43.0% 45.6% Non-GAAP Operating Expenses2 $81.7 $73.9 $74.1 10.6% 10.3% Adjusted Operating Income $57.5 $40.8 $53.7 40.9% 7.1% Adjusted Operating Margin 19.0% 15.3% 19.1% Non-GAAP Tax Rate3 18.5% 28% 26.8% 24.6% Non-GAAP Net Income $40.3 $26 to $31 $23.6 $33.9 70.6% 18.8% Non-GAAP EPS $0.28 $0.18 to $0.22 $0.17 $0.24 64.7% 16.7% SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1 See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. Non-GAAP Operating Expenses exclude amortization expense and integration costs. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments to GAAP taxes..
$ in millions, except per share data Six Months Ended July 2, 2016 Six Months Ended June 27, 2015 Year-over-Year Net Revenue $570.1 $544.1 4.8% Gross Margin 44.5% 44.9% Operating Expenses $178.0 $177.7 0.1% Operating Income $98.3 $91.1 7.9% Operating Margin 17.2% 16.7% Tax Rate 17.5% 21.7% Net Income $49.1 $39.3 24.9% EPS $0.35 $0.28 25.0% SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)
$ in millions, except per share data Six Months Ended July 2, 2016 Six Months Ended June 27, 2015 Year-over-Year Net Revenue $570.1 $544.1 4.8% Gross Margin 44.5% 44.9% Non-GAAP Operating Expenses2 $155.6 $148.5 4.8% Adjusted Operating Income $98.3 $96.1 2.3% Adjusted Operating Margin 17.2% 17.7% Non-GAAP Tax Rate3 21.8% 25.9% Non-GAAP Net Income $63.9 $59.3 7.7% Non-GAAP EPS $0.45 $0.42 7.1% SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1 See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. Non-GAAP Operating Expenses exclude amortization expense and integration costs. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments to GAAP taxes..
1. Excludes amortization of intangibles and unallocated expenses. RESULTS BY SEGMENT Sales by Segment 1Q16 2Q16 1Q16 2Q16 $ in millions Profit Margin by Segment1 1Q16 2Q16 1Q16 2Q16 % Sales
REVENUE BY GEOGRAPHY Revenue By Geography Asia Japan Europe U.S. Quarter-to-Quarter Revenue by Geography $ in millions 1Q16 2Q16 1Q16 2Q16 1Q16 2Q16 Q2 2016 1Q16 2Q16
$ in millions 2Q16 1Q16 2Q15 $ Amount % Total $ Amount % Total $ Amount % Total Cash & Cash Equivalents $373.7 20.8% $345.5 20.8% $313.7 19.9% Accounts Receivable, net $180.6 10.7% $149.8 9.1% $177.5 10.5% Inventories $181.1 10.7% $184.0 11.1% $184.7 11.0% Net PP&E $322.7 19.0% $322.7 19.5% $312.9 18.6% Total Assets $1,695.5 $1,653.8 $1,684.0 Current Liabilities(1) $187.1 11.0% $161.7 9.7% $167.9 10.0% Long-term debt, excluding current maturities $582.2 34.3% $606.6 36.7% $654.5 38.9% Total Liabilities $834.3 49.2% $832.1 50.3% $906.4 53.8% Total Shareholders’ Equity $861.2 50.8% $821.8 49.7% $777.6 46.2% AR Turnover Days 54.4 51.2 57.7 Inventory Turns 3.6 3.4 3.5 SUMMARY – BALANCE SHEET ITEMS 1. Current Liabilities in 2Q15, 1Q16, 2Q16 includes $25 million, $50 million, and $50 million of current maturities of long term debt
$ in millions Note: See Reconciliation of GAAP Income to Adjusted Operating Income and Adjusted EBITDA on page 15 of this presentation. EBITDA
$ in millions 2Q16 1Q16 2Q15 Beginning Cash Balance $344.4 $349.8 $341.4 Cash from operating activities 61.2 17.3 36.2 Capital expenditures (14.3) (17.8) (13.7) Payments on long-term debt (25.0) - (50.0) Other investing activities 0.8 (2.5) 0.9 Other financing activities 2.3 (5.6) 0.3 Effect of exchange rates 4.3 3.1 (1.3) Ending Cash Balance $373.7 $344.4 $313.7 Free Cash Flow1 $46.9 ($0.5) $22.5 Adjusted EBITDA $71.3 $54.5 $67.1 CASH FLOWS 1. Free cash flow equals cash from operations less capital expenditures
OUTLOOK GAAP $ in millions, except per share data 3Q16 Guidance 2Q16 3Q15 Net Revenue $285 to $300 $303.1 $270.3 Gross Margin Approx. 45% 45.9% 43.0% Operating Expenses $87 to $89 $92.8 $85.2 Net Income $25 to $30 $32.9 $23.4 EPS $0.18 to $0.21 $0.23 $0.17 $ in millions, except per share data 3Q16 Guidance 2Q16 3Q15 Net Revenue $285 to $300 $303.1 $270.3 Gross Margin Approx. 45% 45.9% 43.0% Non-GAAP Operating Expenses $76 to $78 $81.7 $71.5 Non-GAAP Net Income $32 to $37 $40.3 $32.4 Non-GAAP EPS $0.23 to $0.26 $0.28 $0.23 Non-GAAP
Entegris® and the Entegris Rings Design® are trademarks of Entegris, Inc. ©2016 Entegris, Inc. All rights reserved.
APPENDIX: NON-GAAP RECONCILIATION TABLES
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA In thousands (unaudited) Three months e nded Six months ended July 2, 2016 June 27 , 2015 April 2 , 201 6 July 2, 2016 June 27 , 2015 Net sales $303,052 $280,709 $267,024 $ 570,076 $544,082 Net income $32,890 $24,448 $16,212 $ 49,102 $39,320 Adjustments to net income : Equity in net loss of affiliates - 48 - - 150 Income tax expense 5,513 6,245 4,873 1 0,386 10,915 Interest expense, net 9,051 9,715 9,149 18,200 19,343 Other income , net (1,054 ) (1,109) (675) (1,729 ) (2,842) GAAP – Operating income 46,400 39,347 29,559 75,959 66,886 Integration costs - 2,396 - - 5,008 Amortization of intangible assets 11,062 11,928 11,289 22,351 24,235 Adjusted operating income 57,462 53,671 40,848 98,310 96,129 Depreciation 13,825 13,405 13,700 27,525 26,724 Adjusted EBITDA $71,287 $67,076 $54,548 $125,835 $122,853 Adjusted operating margin 19.0 % 19.1% 15.3% 17.2 % 17.7% Adjusted EBITDA – as a % of net sales 23.5 % 23.9% 20.4% 22.1 % 22.6%
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP TO NON-GAAP EARNINGS PER SHARE In thousands, except per share data (unaudited) T h r e e m o n t h s e n d e d S i x m o n t h s e n d e d J u l y 2 , 2 0 1 6 J u n e 2 7 , 2 0 1 5 A p r i l 2 , 2 0 1 6 J u l y 2 , 2 0 1 6 J u n e 2 7 , 2 0 1 5 N e t i n c o m e $ 3 2 , 8 9 0 $ 2 4 , 4 4 8 $ 1 6 , 2 1 2 $ 4 9 , 1 0 2 $ 3 9 , 3 2 0 A d j u s t m e n t s t o n e t i n c o m e : I n t e g r a t i o n c o s t s - 2 , 3 9 6 - - 5 , 0 0 8 A m o r t i z a t i o n o f i n t a n g i b l e a s s e t s 1 1 , 0 6 2 1 1 , 9 2 8 1 1 , 2 8 9 2 2 , 3 5 1 2 4 , 2 3 5 N e t ( g a i n ) l o s s o n i m p a i r m e n t o r s a l e o f e q u i t y i n v e s t m e n t ( 3 8 ) ( 5 6 ) ( 1 1 8 ) ( 1 5 6 ) 6 1 7 T a x e f f e c t o f a d j u s t m e n t s o f n e t i n c o m e ( 3 , 6 2 4 ) ( 4 , 8 1 3 ) ( 3 , 7 6 6 ) ( 7 , 3 9 0 ) ( 9 , 8 3 1 ) N o n - G A A P n e t i n c o m e $ 4 0 , 2 9 0 $ 3 3 , 9 0 3 $ 2 3 , 6 1 7 $ 6 3 , 9 0 7 $ 5 9 , 3 4 9 D i l u t e d i n c o m e p e r c o m m o n s h a r e $ 0 . 2 3 $ 0 . 1 7 $ 0 . 1 1 $ 0 . 3 5 $ 0 . 2 8 E f f e c t o f a d j u s t m e n t s t o n e t i n c o m e 0 . 0 5 0 . 0 7 0 . 0 5 0 . 1 0 0 . 1 4 D i l u t e d n o n - G A A P i n c o m e p e r c o m m o n s h a r e $ 0 . 2 8 $ 0 . 2 4 $ 0 . 1 7 $ 0 . 4 5 $ 0 . 4 2