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) October 26, 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
(Registrants 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 October 26, 2016, the registrant issued a press release to announce results for the third quarter of 2016, ended October 1, 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 |
Description | |
99.1 | Press Release, dated October 26, 2016 | |
99.2 | Third Quarter Earnings Release Presentation Slides, dated October 26, 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: October 26, 2016 | By | /s/ Gregory B. Graves | ||||
Name: | Gregory B. Graves | |||||
Title: | Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX
Exhibit |
Description | |
99.1 | Press Release, dated October 26, 2016 | |
99.2 | Third Quarter Earnings Release Presentation Slides, dated October 26, 2016 |
Exhibit 99.1
PRESS RELEASE
FOR RELEASE AT 7AM ET
Entegris Reports Third-Quarter Results
| Quarterly revenue of $296.7 million |
| GAAP net income of $21.9 million, or $0.15 per diluted share |
| Non-GAAP net income of $34.6 million, or $0.24 per diluted share |
| Record operating cash flow of $71.9 million |
BILLERICA, Mass., October 26, 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 Companys third quarter ended October 1, 2016.
The Company reported third-quarter sales of $296.7 million. Third-quarter net income was $21.9 million, or $0.15 per diluted share, which included amortization of intangible assets of $11.0 million, asset impairment charges of $5.8 million related to certain production equipment and $2.4 million of severance expenses related to an organizational realignment. Non-GAAP net income was $34.6 million, or $0.24 per diluted share. In the third quarter, the Company generated cash from operations less capital expenditures, or free cash flow, of $59 million.
For the first nine months of fiscal 2016, sales of $866.8 million increased 6 percent from the same period a year ago. Net income for the first nine months of fiscal 2016 was $71.0 million, or $0.50 per share, which included amortization of intangible assets of $33.3 million, asset impairment charges of $5.8 million related to certain production equipment and $2.4 million of severance expenses related to an organizational realignment. In the comparable period a year ago, net income was $62.7 million, or $0.44 per share, which included amortization of intangible assets of $35.9 million and acquisition integration expense of $7.1 million. Non-GAAP net income for the first nine months of fiscal 2016 was $98.6 million, or $0.69 per diluted share, which increased from $91.8 million, or $0.65 per diluted share, in the prior year.
Bertrand Loy, president and chief executive officer, said: We are on track to achieve our multiyear objective to outpace our markets and to deliver both record sales and profits in 2016. Our strong quarter reflected record sales of liquid filtration products and solid performance across most of our businesses, as well as the favorable impact of the stronger yen.
Mr. Loy added: In the third quarter, we generated record free cash flow of $59 million and repaid an additional $25 million of long-term debt. Looking ahead, we are excited about our growth prospects given the increasing opportunities for Entegris to leverage its unique breadth of capabilities to address the electronics industrys continual pursuit of higher performance and cleaner materials.
ENTEGRIS, INC. entegris.com
|
129 Concord Road, Building 2 Billerica, MA 01821 USA
|
T +1 978 436 6500 F +1 978 436 6735
|
Quarterly Financial Results Summary
(in millions, except per share data)
GAAP Results |
Q3-2016 | Q3-2015 | Q2-2016 | |||||||||
Net sales |
$ | 296,692 | $ | 270,253 | $ | 303,052 | ||||||
Operating income |
$ | 34,672 | $ | 31,066 | $ | 46,400 | ||||||
Operating margin |
11.7 | % | 11.5 | % | 15.3 | % | ||||||
Net income |
$ | 21,947 | $ | 23,403 | $ | 32,890 | ||||||
Earnings per share (EPS) |
$ | 0.15 | $ | 0.17 | $ | 0.23 | ||||||
Non-GAAP Results |
| |||||||||||
Non-GAAP adjusted operating income |
$ | 53,877 | $ | 44,814 | $ | 57,462 | ||||||
Adjusted operating margin |
18.2 | % | 16.6 | % | 19.0 | % | ||||||
Non-GAAP net income |
$ | 34,647 | $ | 32,444 | $ | 40,290 | ||||||
Non-GAAP EPS |
$ | 0.24 | $ | 0.23 | $ | 0.28 |
Fourth-Quarter Outlook
For the fiscal fourth quarter ending December 31, 2016, the Company expects sales of $275 million to $290 million, net income of $20 million to $26 million, and net income per diluted share between $0.14 and $0.18. On a non-GAAP basis, EPS is expected to range from $0.19 to $0.23 per diluted share, which reflects net income on a non-GAAP basis in the range of $27 million to $33 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. CMHs 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. EMs 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.
Entegris, Inc. | page 2 of 12
Third-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the third quarter on Wednesday, October 26, 2016, at 10:00 a.m. Eastern Time. Participants should dial 1-888-503-8169 or 1-719-457-2631, referencing confirmation code 5752767. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. To access a telephonic replay of the call, please Click Here. The replay will be available starting at 1:00 p.m. ET on Wednesday, October 26 until Saturday, December 10. 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.
Please also refer to Managements slide presentation concerning third-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 Companys 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, GAAP Gross Profit to Adjusted Gross Profit, and GAAP to Non-GAAP Earnings per Share are included elsewhere in this release.
Entegris, Inc. | page 3 of 12
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 10K 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 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 12
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended | ||||||||||||
October 1, 2016 |
September 26, 2015 |
July 2, 2016 |
||||||||||
Net sales |
$ | 296,692 | $ | 270,253 | $ | 303,052 | ||||||
Cost of sales |
173,712 | 153,943 | 163,847 | |||||||||
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Gross profit |
122,980 | 116,310 | 139,205 | |||||||||
Selling, general and administrative expenses |
51,614 | 46,730 | 53,597 | |||||||||
Engineering, research and development expenses |
25,720 | 26,841 | 28,146 | |||||||||
Amortization of intangible assets |
10,974 | 11,673 | 11,062 | |||||||||
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Operating income |
34,672 | 31,066 | 46,400 | |||||||||
Interest expense, net |
9,345 | 9,201 | 9,051 | |||||||||
Other income, net |
(565 | ) | (5,624 | ) | (1,054 | ) | ||||||
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Income before income tax expense and equity in net loss of affiliate |
25,892 | 27,489 | 38,403 | |||||||||
Income tax expense |
3,945 | 4,018 | 5,513 | |||||||||
Equity in net loss of affiliates |
| 68 | | |||||||||
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Net income |
$ | 21,947 | $ | 23,403 | $ | 32,890 | ||||||
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Basic net income per common share: |
$ | 0.16 | $ | 0.17 | $ | 0.23 | ||||||
Diluted net income per common share: |
$ | 0.15 | $ | 0.17 | $ | 0.23 | ||||||
Weighted average shares outstanding: |
||||||||||||
Basic |
141,324 | 140,555 | 140,953 | |||||||||
Diluted |
142,473 | 141,317 | 141,723 |
Entegris, Inc. | page 5 of 12
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Nine months ended | ||||||||
October 1, 2016 |
September 26, 2015 |
|||||||
Net sales |
$ | 866,768 | $ | 814,335 | ||||
Cost of sales |
489,877 | 453,402 | ||||||
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Gross profit |
376,891 | 360,933 | ||||||
Selling, general and administrative expenses |
153,167 | 147,890 | ||||||
Engineering, research and development expenses |
79,768 | 79,183 | ||||||
Amortization of intangible assets |
33,325 | 35,908 | ||||||
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Operating income |
110,631 | 97,952 | ||||||
Interest expense, net |
27,545 | 28,544 | ||||||
Other income, net |
(2,294 | ) | (8,466 | ) | ||||
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Income before income tax expense and equity in net loss of affiliate |
85,380 | 77,874 | ||||||
Income tax expense |
14,331 | 14,933 | ||||||
Equity in net loss of affiliates |
| 218 | ||||||
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|
|||||
Net income |
$ | 71,049 | $ | 62,723 | ||||
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Basic net income per common share: |
$ | 0.50 | $ | 0.45 | ||||
Diluted net income per common share: |
$ | 0.50 | $ | 0.44 | ||||
Weighted average shares outstanding: |
||||||||
Basic |
141,019 | 140,282 | ||||||
Diluted |
141,856 | 141,016 |
Entegris, Inc. | page 6 of 12
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
October 1, 2016 | December 31, 2015 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 411,777 | $ | 349,825 | ||||
Short-term investments |
| 2,181 | ||||||
Accounts receivable, net |
167,559 | 141,409 | ||||||
Inventories |
186,021 | 173,176 | ||||||
Deferred tax charges and refundable income taxes |
18,000 | 18,943 | ||||||
Other current assets |
17,675 | 23,253 | ||||||
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Total current assets |
801,032 | 708,787 | ||||||
Property, plant and equipment, net |
315,512 | 321,301 | ||||||
Goodwill |
349,980 | 342,111 | ||||||
Intangible assets, net |
230,987 | 258,942 | ||||||
Deferred tax assets non-current |
8,690 | 7,771 | ||||||
Other |
7,391 | 7,785 | ||||||
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Total assets |
$ | 1,713,592 | $ | 1,646,697 | ||||
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LIABILITIES AND SHAREHOLDERS EQUITY |
| |||||||
Long-term debt, current maturities |
$ | 100,000 | $ | 50,000 | ||||
Accounts payable |
54,001 | 36,916 | ||||||
Accrued liabilities |
82,963 | 75,859 | ||||||
Income tax payable and deferred tax liabilities |
713 | 12,775 | ||||||
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Total current liabilities |
237,677 | 175,550 | ||||||
Long-term debt, excluding current maturities |
508,775 | 606,044 | ||||||
Other liabilities and deferred tax liabilities |
69,937 | 62,220 | ||||||
Shareholders equity |
897,203 | 802,883 | ||||||
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Total liabilities and shareholders equity |
$ | 1,713,592 | $ | 1,646,697 | ||||
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Entegris, Inc. | page 7 of 12
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended | Nine months ended | |||||||||||||||
October 1, 2016 |
September 26, 2015 |
October 1, 2016 |
September 26, 2015 |
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Operating activities: |
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Net income |
$ | 21,947 | $ | 23,403 | $ | 71,049 | $ | 62,723 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
Depreciation |
13,795 | 13,356 | 41,320 | 40,080 | ||||||||||||
Amortization |
10,974 | 11,673 | 33,325 | 35,908 | ||||||||||||
Share-based compensation expense |
3,697 | 2,975 | 10,063 | 8,120 | ||||||||||||
Other |
11,060 | (4,407 | ) | 19,333 | (9,508 | ) | ||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||
Trade accounts and notes receivable |
13,847 | (9,426 | ) | (22,252 | ) | (38,020 | ) | |||||||||
Inventories |
(5,907 | ) | (11,050 | ) | (17,296 | ) | (39,550 | ) | ||||||||
Accounts payable and accrued liabilities |
12,962 | 21,702 | 26,517 | 12,576 | ||||||||||||
Income taxes payable and refundable income taxes |
(11,771 | ) | (3,283 | ) | (11,364 | ) | (3,647 | ) | ||||||||
Other |
1,334 | (12,357 | ) | (219 | ) | 18 | ||||||||||
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Net cash provided by operating activities |
71,938 | 32,586 | 150,476 | 68,700 | ||||||||||||
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Investing activities: |
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Acquisition of property and equipment |
(13,124 | ) | (21,466 | ) | (45,268 | ) | (55,696 | ) | ||||||||
Other |
138 | 533 | (1,520 | ) | 2,458 | |||||||||||
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Net cash used in investing activities |
(12,986 | ) | (20,933 | ) | (46,788 | ) | (53,238 | ) | ||||||||
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Financing activities: |
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Payments on long-term debt |
(25,000 | ) | (25,000 | ) | (50,000 | ) | (100,000 | ) | ||||||||
Issuance of common stock |
512 | 1,634 | 2,892 | 2,608 | ||||||||||||
Repurchase and retirement of common stock |
| | (3,573 | ) | | |||||||||||
Taxes paid related to net share settlement of equity awards |
(1,113 | ) | (55 | ) | (3,316 | ) | (2,458 | ) | ||||||||
Other |
402 | 313 | 493 | 665 | ||||||||||||
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Net cash used in financing activities |
(25,199 | ) | (23,108 | ) | (53,504 | ) | (99,185 | ) | ||||||||
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Effect of exchange rate changes on cash |
4,281 | (1,226 | ) | 11,768 | (4,915 | ) | ||||||||||
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Increase (decrease) in cash and cash equivalents |
38,034 | (12,681 | ) | 61,952 | (88,638 | ) | ||||||||||
Cash and cash equivalents at beginning of period |
373,743 | 313,742 | 349,825 | 389,699 | ||||||||||||
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Cash and cash equivalents at end of period |
$ | 411,777 | $ | 301,061 | $ | 411,777 | $ | 301,061 | ||||||||
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Entegris, Inc. | page 8 of 12
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
Three months ended | Nine months ended | |||||||||||||||||||
Net sales |
October 1, 2016 |
September 26, 2015 |
July 2, 2016 |
October 1, 2016 |
September 26, 2015 |
|||||||||||||||
Critical Materials Handling |
$ | 192,744 | $ | 166,043 | $ | 194,880 | $ | 553,853 | $ | 507,764 | ||||||||||
Electronic Materials |
103,948 | 104,210 | 108,172 | 312,915 | 306,571 | |||||||||||||||
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Total net sales |
$ | 296,692 | $ | 270,253 | $ | 303,052 | $ | 866,768 | $ | 814,335 | ||||||||||
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Three months ended | Nine months ended | |||||||||||||||||||
Segment profit(1) |
October 1, 2016 |
September 26, 2015 |
July 2, 2016 |
October 1, 2016 |
September 26, 2015 |
|||||||||||||||
Critical Materials Handling |
$ | 45,352 | $ | 37,109 | $ | 52,524 | 135,768 | $ | 122,182 | |||||||||||
Electronic Materials |
20,454 | 23,919 | 27,475 | 69,504 | 72,700 | |||||||||||||||
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Total segment profit |
65,806 | 61,028 | 79,999 | 205,272 | 194,882 | |||||||||||||||
Amortization of intangibles |
10,974 | 11,673 | 11,062 | 33,325 | 35,908 | |||||||||||||||
Unallocated expenses |
20,160 | 18,289 | 22,537 | 61,316 | 61,022 | |||||||||||||||
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Total operating income |
$ | 34,672 | $ | 31,066 | $ | 46,400 | $ | 110,631 | $ | 97,952 | ||||||||||
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1 | Segment profit for Critical Materials Handling for the three and nine months ended October 1, 2016 includes charges for impairment of equipment and severance related to organizational realignment of $5,826 and $1,692, respectively. Segment profit for Electronic Materials for the three and nine months ended October 1, 2016 each include a charge for severance related to organizational realignment of $713. |
Entegris, Inc. | page 9 of 12
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 | Nine months ended | |||||||||||||||||||
October 1, 2016 |
September 26, 2015 |
July 2, 2016 | October 1, 2016 |
September 26, 2015 |
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Net sales |
$ | 296,692 | $ | 270,253 | $ | 303,052 | $ | 866,768 | $ | 814,335 | ||||||||||
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Net income |
$ | 21,947 | $ | 23,403 | $ | 32,890 | $ | 71,049 | $ | 62,723 | ||||||||||
Adjustments to net income: |
||||||||||||||||||||
Equity in net loss of affiliates |
| 68 | | | 218 | |||||||||||||||
Income tax expense |
3,945 | 4,018 | 5,513 | 14,331 | 14,933 | |||||||||||||||
Interest expense, net |
9,345 | 9,201 | 9,051 | 27,545 | 28,544 | |||||||||||||||
Other income, net |
(565 | ) | (5,624 | ) | (1,054 | ) | (2,294 | ) | (8,466 | ) | ||||||||||
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GAAP Operating income |
34,672 | 31,066 | 46,400 | 110,631 | 97,952 | |||||||||||||||
Severance related to organizational realignment |
2,405 | | | 2,405 | | |||||||||||||||
Impairment of equipment |
5,826 | | | 5,826 | | |||||||||||||||
Integration costs |
| 2,075 | | | 7,083 | |||||||||||||||
Amortization of intangible assets |
10,974 | 11,673 | 11,062 | 33,325 | 35,908 | |||||||||||||||
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Adjusted operating income |
53,877 | 44,814 | 57,462 | 152,187 | 140,943 | |||||||||||||||
Depreciation |
13,795 | 13,356 | 13,825 | 41,320 | 40,080 | |||||||||||||||
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Adjusted EBITDA |
$ | 67,672 | $ | 58,170 | $ | 71,287 | $ | 193,507 | $ | 181,023 | ||||||||||
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Adjusted operating margin |
18.2 | % | 16.6 | % | 19.0 | % | 17.6 | % | 17.3 | % | ||||||||||
Adjusted EBITDA as a % of net sales |
22.8 | % | 21.5 | % | 23.5 | % | 22.3 | % | 22.2 | % |
Entegris, Inc. | page 10 of 12
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
(Unaudited)
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October 1, 2016 |
September 26, 2015 |
July 2, 2016 | October 1, 2016 |
September 26, 2015 |
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Net sales |
$ | 296,692 | $ | 270,253 | $ | 303,052 | $ | 866,768 | $ | 814,335 | ||||||||||
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Gross profit-GAAP |
$ | 122,980 | $ | 116,310 | $ | 139,205 | $ | 376,891 | $ | 360,933 | ||||||||||
Adjustments to gross profit: |
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Severance related to organizational realignment |
431 | | | 431 | | |||||||||||||||
Impairment of equipment |
5,826 | | | 5,826 | | |||||||||||||||
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Adjusted gross profit |
$ | 129,237 | $ | 116,310 | $ | 139,205 | $ | 383,148 | $ | 360,933 | ||||||||||
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Gross margin as a % of net sales |
41.5 | % | 43.0 | % | 45.9 | % | 43.5 | % | 44.3 | % | ||||||||||
Adjusted gross margin as a % of net sales |
43.6 | % | 43.0 | % | 45.9 | % | 44.2 | % | 44.3 | % |
Entegris, Inc. | page 11 of 12
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)
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October 1, 2016 |
September 26, 2015 |
July 2, 2016 | October 1, 2016 |
September 26, 2015 |
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Net income |
$ | 21,947 | $ | 23,403 | $ | 32,890 | $ | 71,049 | $ | 62,723 | ||||||||||
Adjustments to net income: |
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Severance related to organizational realignment |
2,405 | | | 2,405 | | |||||||||||||||
Impairment of equipment |
5,826 | | | 5,826 | | |||||||||||||||
Integration costs |
| 2,075 | | | 7,083 | |||||||||||||||
(Gain) loss on impairment or sale of equity investment |
| (50 | ) | (38 | ) | (156 | ) | 567 | ||||||||||||
Amortization of intangible assets |
10,974 | 11,673 | 11,062 | 33,325 | 35,908 | |||||||||||||||
Tax effect of adjustments of net income |
(6,505 | ) | (4,657 | ) | (3,624 | ) | (13,895 | ) | (14,488 | ) | ||||||||||
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Non-GAAP net income |
$ | 34,647 | $ | 32,444 | $ | 40,290 | $ | 98,554 | $ | 91,793 | ||||||||||
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Diluted income per common share |
$ | 0.15 | $ | 0.17 | $ | 0.23 | $ | 0.50 | $ | 0.44 | ||||||||||
Effect of adjustments to net income |
0.09 | 0.06 | 0.05 | 0.19 | 0.21 | |||||||||||||||
Diluted non-GAAP income per common share |
$ | 0.24 | $ | 0.23 | $ | 0.28 | $ | 0.69 | $ | 0.65 |
### END ###
Entegris, Inc. | page 12 of 12
Earnings Summary Third Quarter FY 2016 October 26, 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 3Q16 3Q16 Guidance 2Q16 3Q15 3Q16 over 2Q16 3Q16 over 3Q15 Net Revenue $296.7 $285 to $300 $303.1 $270.3 (2.1%) 9.8% Gross Margin 41.5% 45.9% 43.0% Operating Expenses $88.3 $92.8 $85.2 (4.8%) 3.6% Operating Income $34.7 $46.4 $31.1 (25.2%) 11.6% Operating Margin 11.7% 15.3% 11.5% Tax Rate 15.2% 14.4% 14.6% Net Income $21.9 $25 to $30 $32.9 $23.4 (33.4%) (6.4%) EPS $0.15 $0.18 to $0.21 $0.23 $0.17 (34.8%) (11.8%) SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)
$ in millions, except per share data 3Q16 3Q16 Guidance 2Q16 3Q15 3Q16 over 2Q16 3Q16 over 3Q15 Net Revenue $296.7 $285 to $300 $303.1 $270.3 (2.1%) 9.8% Adjusted Gross Margin2 43.6% 45.9% 43.0% Non-GAAP Operating Expenses3 $75.4 $81.7 $71.5 (7.7%) 5.5% Adjusted Operating Income $53.9 $57.5 $44.8 (6.3%) 20.3% Adjusted Operating Margin 18.2% 19.0% 16.6% Non-GAAP Tax Rate4 23.2% 18.5% 21.1% Non-GAAP Net Income $34.6 $32 to $37 $40.3 $32.4 (14.1%) 6.8% Non-GAAP EPS $0.24 $0.23 to $0.26 $0.28 $0.23 (14.3%) 4.3% SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1 See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. Adjusted gross margin excludes certain impairment of equipment and severance charges. Non-GAAP Operating Expenses exclude amortization expense, severance and integration costs. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments to GAAP taxes.
$ in millions, except per share data Nine Months Ended October 1, 2016 Nine Months Ended September 26, 2015 Year-over-Year Net Revenue $866.8 $814.3 6.4% Gross Margin 43.5% 44.3% Operating Expenses $266.3 $263.0 1.3% Operating Income $110.6 $98.0 12.9% Operating Margin 12.8% 12.0% Tax Rate 16.8% 19.2% Net Income $71.0 $62.7 13.2% EPS $0.50 $0.44 13.6% SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)
$ in millions, except per share data Nine Months Ended October 1, 2016 Nine Months Ended September 26, 2015 Year-over-Year Net Revenue $866.8 $814.3 6.4% Adjusted Gross Margin2 44.2% 44.3% Non-GAAP Operating Expenses3 $231.0 $220.0 5.0% Adjusted Operating Income $152.2 $140.9 8.0% Adjusted Operating Margin 17.6% 17.3% Non-GAAP Tax Rate4 22.3% 24.2% Non-GAAP Net Income $98.6 $91.8 7.4% Non-GAAP EPS $0.69 $0.65 6.2% SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1 See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. Adjusted gross margin excludes certain impairment of equipment and severance charges. Non-GAAP Operating Expenses exclude amortization expense, severance related to organizational realignment, and integration costs. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments to GAAP taxes.
Excludes amortization of intangibles and unallocated expenses. Segment profit for Critical Materials Handling for the three months ended October 1, 2016 includes charges for impairment of equipment and severance related to organizational realignment totaling $7,518. Segment profit for Electronic Materials for the three months ended October 1, 2016 includes a charge for severance related to organizational realignment of $713. RESULTS BY SEGMENT Sales by Segment 2Q16 3Q16 2Q16 3Q16 $ in millions Profit Margin by Segment(1) 2Q16 3Q16 2Q16 3Q16 % Sales 27.0% 25.4% 23.5% 19.7% Critical Materials Handling (2) Electronic Materials (3)
REVENUE BY GEOGRAPHY Revenue By Geography Asia Japan Europe U.S. Quarter-to-Quarter Revenue by Geography $ in millions 2Q16 3Q16 2Q16 3Q16 2Q16 3Q16 Q3 2016 2Q16 3Q16
$ in millions 3Q16 2Q16 3Q15 $ Amount % Total $ Amount % Total $ Amount % Total Cash & Cash Equivalents $411.8 24.0% $373.7 22.0% $301.1 18.1% Accounts Receivable, net $167.6 9.8% $180.6 10.7% $184.3 11.1% Inventories $186.0 10.9% $181.1 10.7% $188.4 11.3% Net PP&E $315.5 18.4% $322.7 19.0% $315.7 18.9% Total Assets $1,713.6 $1,695.5 $1,666.5 Current Liabilities(1) $237.7 13.9% $187.1 11.0% $209.1 12.5% Long-term debt, excluding current maturities $508.8 29.7% $582.2 34.3% $605.1 36.3% Total Liabilities $816.4 47.6% $834.3 49.2% $896.4 53.8% Total Shareholders’ Equity $897.2 52.4% $861.2 50.8% $770.1 46.2% AR - DSOs 51.5 54.4 62.2 Inventory Turns 3.8 3.6 3.3 SUMMARY – BALANCE SHEET ITEMS 1. Current Liabilities in 3Q15, 2Q16, 3Q16 includes $50 million, $50 million, and $100 million of current maturities of long term debt.
Note: See Reconciliation of GAAP Income to Adjusted Operating Income and Adjusted EBITDA on page 15 of this presentation. ADJUSTED EBITDA MARGIN
$ in millions 3Q16 2Q16 3Q15 Beginning Cash Balance $373.7 $344.4 $313.7 Cash from operating activities 71.9 61.2 32.6 Capital expenditures (13.1) (14.3) (21.5) Payments on long-term debt (25.0) (25.0) (25.0) Other investing activities 0.1 0.8 0.5 Other financing activities (0.2) 2.3 1.9 Effect of exchange rates 4.3 4.3 (1.2) Ending Cash Balance $411.8 $373.7 $301.1 Free Cash Flow1 $58.8 $46.9 $11.1 Adjusted EBITDA $67.7 $71.3 $58.2 CASH FLOWS 1. Free cash flow equals cash from operations less capital expenditures.
OUTLOOK GAAP $ in millions, except per share data 4Q16 Guidance 3Q16 4Q15 Net Revenue $275 to $290 $296.7 $266.8 Gross Margin 41.5% 41.0% Operating Expenses $85 to $87 $88.3 $89.2 Net Income $20 to $26 $21.9 $17.6 EPS $0.14 to $0.18 $0.15 $0.12 $ in millions, except per share data 4Q16 Guidance 3Q16 4Q15 Net Revenue $275 to $290 $296.7 $266.8 Gross Margin 43.6% 41.0% Non-GAAP Operating Expenses(1) $74 to $76 $75.4 $72.2 Non-GAAP Net Income $27 to $33 $34.6 $28.8 Non-GAAP EPS $0.19 to $0.23 $0.24 $0.20 Non-GAAP Non-GAAP operating expenses exclude amortization. In 4Q16, amortization is estimated to be approximately $11 million, or $0.05 per share.
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 ended Nine months ended October 1, 2016 September 26, 2015 July 2, 2016 October 1, 2016 September 26, 2015 Net sales $296,692 $270,253 $303,052 $866,768 $814,335 Net income $21,947 $23,403 $32,890 $71,049 $62,723 Adjustments to net income: Equity in net loss of affiliates - 68 - - 218 Income tax expense 3,945 4,018 5,513 14,331 14,933 Interest expense, net 9,345 9,201 9,051 27,545 28,544 Other income, net (565) (5,624) (1,054) (2,294) (8,466) GAAP – Operating income 34,672 31,066 46,400 110,631 97,952 Severance related to organizational realignment 2,405 - - 2,405 - Impairment of equipment 5,826 - - 5,826 - Integration costs - 2,075 - - 7,083 Amortization of intangible assets 10,974 11,673 11,062 33,325 35,908 Adjusted operating income 53,877 44,814 57,462 152,187 140,943 Depreciation 13,795 13,356 13,825 41,320 40,080 Adjusted EBITDA $67,672 $58,170 $71,287 $193,507 $181,023 Adjusted operating margin 18.2% 16.6% 19.0% 17.6% 17.3% Adjusted EBITDA – as a % of net sales 22.8% 21.5% 23.5% 22.3% 22.2%
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP PROFIT TO ADJUSTED GROSS PROFIT Three months ended Nine months ended October 1, 2016 September 26, 2015 July 2, 2016 October 1, 2016 September 26, 2015 Net sales $296,692 $270,253 $303,052 $866,768 $814,335 Gross profit-GAAP $122,980 $116,310 $139,205 $376,891 $360,933 Adjustments to gross profit: Severance related to organizational realignment 431 - - 431 - Impairment of equipment 5,826 - - 5,826 - Adjusted gross profit $129,237 $116,310 $139,205 $383,148 $360,933 Gross margin – as a % of net sales 41.5% 43.0% 45.9% 43.5% 44.3% Adjusted gross margin – as a % of net sales 43.6% 43.0% 45.9% 44.2% 44.3% In thousands, except per share data (unaudited)
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP TO NON-GAAP EARNINGS PER SHARE Three months ended Nine months ended October 1, 2016 September 26, 2015 July 2, 2016 October 1, 2016 September 26, 2015 Net income $21,947 $23,403 $32,890 $71,049 $62,723 Adjustments to net income: Severance related to organizational realignment 2,405 - - 2,405 - Impairment of equipment 5,826 - - 5,826 - Integration costs - 2,075 - - 7,083 (Gain) loss on impairment or sale of equity investment - (50) (38) (156) 567 Amortization of intangible assets 10,974 11,673 11,062 33,325 35,908 Tax effect of adjustments of net income (6,505) (4,657) (3,624) (13,895) (14,488) Non-GAAP net income $34,647 $32,444 $40,290 $98,554 $91,793 Diluted income per common share $0.15 $0.17 $0.23 $0.50 $0.44 Effect of adjustments to net income 0.09 0.06 0.05 0.19 0.21 Diluted non-GAAP income per common share $0.24 $0.23 $0.28 $0.69 $0.65 In thousands, except per share data (unaudited)