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) February 2, 2017
_______________________________________
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 February 2, 2017, the registrant issued a press release to announce results for the fourth quarter of 2016 and the year ended December 31, 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 February 2, 2017 | |
99.2 | Fourth Quarter and 2016 Year-End Earnings Release Presentation Slides, dated February 2, 2017 | |
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: February 2, 2017 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 February 2, 2017 | |
99.2 | Fourth Quarter and 2016 Year-End Earnings Release Presentation Slides, dated February 2, 2017 | |
Exhibit 99.1
FOR RELEASE AT 7AM ET
Entegris Reports Strong Fourth-Quarter and Fiscal 2016 Results
• | Record annual revenue of $1.2 billion, up 9 percent |
• | Record fourth-quarter revenue of $308.5 million |
• | GAAP net income of $26.1 million, or $0.18 per diluted share |
• | Non-GAAP net income of $34.3 million, or $0.24 per diluted share |
BILLERICA, Mass., February 2, 2017- 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 fourth quarter and fiscal year ended December 31, 2016.
The Company reported sales of $1.2 billion for the 2016 fiscal year, an increase of 9 percent from the prior year. Net income for fiscal 2016 was $97.1 million, or $0.68 per share, which included amortization of intangible assets of $44.3 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 prior year, net income was $80.3 million, or $0.57 per share, which included amortization of intangible assets of $47.3 million and acquisition integration expenses of $12.7 million. Non-GAAP net income for fiscal 2016 was $132.8 million, or $0.94 per diluted share, which increased from $120.6 million, or $0.85 per diluted share, in the prior year.
Fourth-quarter sales were $308.5 million, an increase of 16 percent from the same quarter last year and a 4 percent increase sequentially. Fourth-quarter net income was $26.1 million, or $0.18 per diluted share, which included amortization of intangible assets of $10.9 million. Non-GAAP net income was $34.3 million, or $0.24 per diluted share. In the fourth quarter, the Company generated cash from operations less capital expenditures, or free cash flow, of $37.1 million.
Bertrand Loy, president and chief executive officer, said: "The strong results in the fourth quarter capped a record year in which we grew revenue 9 percent organically, well in excess of our markets. This performance demonstrates that our investments in R&D and innovation over the past few years are paying off, allowing us to expand our served markets and grow our market share. In 2016, we also achieved record non-GAAP earnings per share of $0.94 and generated an adjusted EBITDA of $264 million, an increase of 13 percent from the prior year. This is an all-time high and essentially twice the level we generated prior to the ATMI acquisition in 2014."
"In the fourth quarter, we achieved sales growth above our expectations driven in part by a rebound in our specialty gas products and record demand of our microfiltration, wafer handling, and advanced deposition solutions."
Mr. Loy added: "We believe the industry is in the midst of a multi-year period of wafer growth driven by the ramp of new technologies and expanding end-market demand for semiconductors. New materials are becoming increasingly important to deliver better semiconductor performance and we believe our broad portfolio of solutions puts us in an excellent position to holistically address our customers' needs for materials performance, purity and stability throughout their supply chains and manufacturing processes."
ENTEGRIS, INC. 129 Concord Road, Building 2 T + 1 978 436 6500
entegris.com Billerica, MA 01821 USA F + 1 978 436 6745
Quarterly Financial Results Summary
(in thousands, except per share data)
GAAP Results | Q4-2016 | Q4-2015 | Q3-2016 | |||
Net sales | $308,502 | $266,786 | $296,692 | |||
Operating income | $44,905 | $20,116 | $34,672 | |||
Operating margin | 14.6 | % | 7.5 | % | 11.7 | % |
Net income | $26,098 | $17,573 | $21,947 | |||
Diluted earnings per share (EPS) | $0.18 | $0.12 | $0.15 | |||
Non-GAAP Results | ||||||
Non-GAAP adjusted operating income | $55,843 | $37,141 | $53,877 | |||
Adjusted operating margin | 18.1 | % | 13.9 | % | 18.2 | % |
Non-GAAP net income | $34,294 | $28,822 | $34,647 | |||
Non-GAAP EPS | $0.24 | $0.20 | $0.24 | |||
First-Quarter Outlook
For the first quarter ending April 1, 2017, the Company expects sales of $295 million to $310 million, net income of $25 million to $31 million, and net income per diluted share between $0.18 and $0.22. On a non-GAAP basis, EPS is expected to range from $0.23 to $0.27 per diluted share, which reflects net income on a non-GAAP basis in the range of $32 million to $38 million, which is adjusted for expected amortization expense of approximately $11 million or $0.05 per share.
Segment Results
The Company has changed its financial segment reporting, reflecting an organizational realignment intended to better leverage its unique portfolio of capabilities to create value for its customers by developing mission-critical solutions to maximize manufacturing yields and enable higher performance of devices. The Company's business is reported in the following segments:
Microcontamination Control (MC): MC solutions purify critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.
Specialty Chemicals and Engineered Materials (SCEM): SCEM provides high-performance and high-purity process chemistries, gases, and materials and safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.
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.
Fourth-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the fourth quarter and fiscal year
on Thursday, February 2, 2017, at 10:00 a.m. Eastern Time. Participants should dial 1-888-600-4869 or 1-913-312-0936, referencing confirmation code 4935351. 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 Thursday, February 2 until Saturday, March 18. 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.
Management’s slide presentation concerning the results for the fourth quarter and fiscal year, 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.
Entegris, Inc. - page 2 of 12
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. 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, GAAP Segment Profit to Adjusted Operating Income, 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 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 3 of 12
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended | |||||||
December 31, 2016 | December 31, 2015 | October 1, 2016 | |||||
Net sales | $308,502 | $266,786 | $296,692 | ||||
Cost of sales | 176,702 | 157,488 | 173,712 | ||||
Gross profit | 131,800 | 109,298 | 122,980 | ||||
Selling, general and administrative expenses | 48,734 | 51,024 | 51,614 | ||||
Engineering, research and development expenses | 27,223 | 26,717 | 25,720 | ||||
Amortization of intangible assets | 10,938 | 11,441 | 10,974 | ||||
Operating income | 44,905 | 20,116 | 34,672 | ||||
Interest expense, net | 8,983 | 9,694 | 9,345 | ||||
Other expense (income), net | 1,303 | (3,889 | ) | (565 | ) | ||
Income before income tax expense (benefit) and equity in net loss of affiliates | 34,619 | 14,311 | 25,892 | ||||
Income tax expense (benefit) | 8,521 | (4,731 | ) | 3,945 | |||
Equity in net loss of affiliates | — | 1,469 | — | ||||
Net income | $26,098 | $17,573 | $21,947 | ||||
Basic net income per common share: | $0.18 | $0.13 | $0.16 | ||||
Diluted net income per common share: | $0.18 | $0.12 | $0.15 | ||||
Weighted average shares outstanding: | |||||||
Basic | 141,315 | 140,567 | 141,324 | ||||
Diluted | 142,631 | 141,433 | 142,473 | ||||
Entegris, Inc. - page 4 of 12
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Twelve months ended | |||||
December 31, 2016 | December 31, 2015 | ||||
Net sales | $1,175,270 | $1,081,121 | |||
Cost of sales | 666,579 | 610,890 | |||
Gross profit | 508,691 | 470,231 | |||
Selling, general and administrative expenses | 201,901 | 198,914 | |||
Engineering, research and development expenses | 106,991 | 105,900 | |||
Amortization of intangible assets | 44,263 | 47,349 | |||
Operating income | 155,536 | 118,068 | |||
Interest expense, net | 36,528 | 38,238 | |||
Other income, net | (991 | ) | (12,355 | ) | |
Income before income tax expense and equity in net loss of affiliates | 119,999 | 92,185 | |||
Income tax expense | 22,852 | 10,202 | |||
Equity in net loss of affiliates | — | 1,687 | |||
Net income | $97,147 | $80,296 | |||
Basic net income per common share: | $0.69 | $0.57 | |||
Diluted net income per common share: | $0.68 | $0.57 | |||
Weighted average shares outstanding: | |||||
Basic | 141,093 | 140,353 | |||
Diluted | 142,050 | 141,121 | |||
Entegris, Inc. - page 5 of 12
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, 2016 | December 31, 2015 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $406,389 | $349,825 | ||||||
Short-term investments | — | 2,181 | ||||||
Accounts receivable, net | 165,675 | 141,409 | ||||||
Inventories | 183,529 | 173,176 | ||||||
Deferred tax assets, deferred tax charges and refundable income taxes | 20,140 | 18,943 | ||||||
Other current assets | 24,398 | 23,253 | ||||||
Total current assets | 800,131 | 708,787 | ||||||
Property, plant and equipment, net | 321,562 | 321,301 | ||||||
Goodwill | 345,269 | 342,111 | ||||||
Intangible assets | 217,548 | 258,942 | ||||||
Deferred tax assets - non-current | 8,022 | 7,771 | ||||||
Other assets | 7,000 | 7,785 | ||||||
Total assets | $1,699,532 | $1,646,697 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Long-term debt, current maturities | $100,000 | $50,000 | ||||||
Accounts payable | 61,617 | 36,916 | ||||||
Accrued liabilities | 83,530 | 75,859 | ||||||
Income tax payable and deferred tax liabilities | 16,424 | 12,775 | ||||||
Total current liabilities | 261,571 | 175,550 | ||||||
Long-term debt, excluding current maturities | 484,677 | 606,044 | ||||||
Other liabilities | 54,066 | 62,220 | ||||||
Shareholders’ equity | 899,218 | 802,883 | ||||||
Total liabilities and shareholders’ equity | $1,699,532 | $1,646,697 | ||||||
Entegris, Inc. - page 6 of 12
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended | Twelve months ended | |||||||
December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||
Operating activities: | ||||||||
Net income | $26,098 | $17,573 | $97,147 | $80,296 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 14,303 | 14,225 | 55,623 | 54,305 | ||||
Amortization | 10,938 | 11,441 | 44,263 | 47,349 | ||||
Stock-based compensation expense | 3,373 | 2,913 | 13,436 | 11,033 | ||||
Provision for deferred income taxes | (15,770 | ) | (15,907 | ) | (16,104 | ) | (13,313 | ) |
Other | 3,326 | (1,999 | ) | 22,993 | (14,101 | ) | ||
Changes in operating assets and liabilities: | ||||||||
Trade accounts and notes receivable | (3,046 | ) | 43,232 | (25,298 | ) | 5,212 | ||
Inventories | (2,575 | ) | 12,880 | (19,871 | ) | (26,670 | ) | |
Accounts payable and accrued liabilities | 4,777 | (41,262 | ) | 31,294 | (28,686 | ) | ||
Income taxes payable and refundable income taxes | 14,592 | 8,602 | 3,228 | 4,955 | ||||
Other | 1,063 | 520 | 844 | 538 | ||||
Net cash provided by operating activities | 57,079 | 52,218 | 207,555 | 120,918 | ||||
Investing activities: | ||||||||
Acquisition of property and equipment | (19,992 | ) | (16,281 | ) | (65,260 | ) | (71,977 | ) |
Proceeds from sale and maturities of investments | 94 | 5,581 | 1,726 | 7,692 | ||||
Other | — | 300 | (3,152 | ) | 647 | |||
Net cash used in investing activities | (19,898 | ) | (10,400 | ) | (66,686 | ) | (63,638 | ) |
Financing activities: | ||||||||
Payments on long-term debt | (25,000 | ) | — | (75,000 | ) | (100,000 | ) | |
Issuance of common stock | 1,952 | 1,656 | 4,844 | 4,264 | ||||
Taxes paid related to net share settlement of equity awards | (702 | ) | (50 | ) | (4,018 | ) | (2,508 | ) |
Other | (4,493 | ) | 4,792 | (7,573 | ) | 5,457 | ||
Net cash (used in) provided by financing activities | (28,243 | ) | 6,398 | (81,747 | ) | (92,787 | ) | |
Effect of exchange rate changes on cash | (14,326 | ) | 548 | (2,558 | ) | (4,367 | ) | |
(Decrease) increase in cash and cash equivalents | (5,388 | ) | 48,764 | 56,564 | (39,874 | ) | ||
Cash and cash equivalents at beginning of period | 411,777 | 301,061 | 349,825 | 389,699 | ||||
Cash and cash equivalents at end of period | $406,389 | $349,825 | $406,389 | $349,825 | ||||
Entegris, Inc. - page 7 of 12
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
Three months ended | Twelve months ended | |||||||||
Net sales | December 31, 2016 | December 31, 2015 | October 1, 2016 | December 31, 2016 | December 31, 2015 | |||||
Specialty Chemicals and Engineered Materials | $110,945 | $103,127 | $104,494 | $428,328 | $418,878 | |||||
Advanced Materials Handling | 98,840 | 81,567 | 97,460 | 384,284 | 346,426 | |||||
Microcontamination Control | 98,717 | 82,092 | 94,738 | 362,658 | 315,817 | |||||
Total net sales | $308,502 | $266,786 | $296,692 | $1,175,270 | $1,081,121 | |||||
Three months ended | Twelve months ended | |||||||||
Segment profit | December 31, 2016 | December 31, 2015 | October 1, 2016 | December 31, 2016 | December 31, 2015 | |||||
Specialty Chemicals and Engineered Materials | $25,919 | $24,218 | $18,811 | $96,060 | $100,370 | |||||
Advanced Materials Handling | 16,644 | 10,094 | 15,378 | 73,452 | 66,419 | |||||
Microcontamination Control | 31,719 | 20,671 | 31,617 | 110,042 | 83,076 | |||||
Total segment profit | 74,282 | 54,983 | 65,806 | 279,554 | 249,865 | |||||
Amortization of intangibles | 10,938 | 11,441 | 10,974 | 44,263 | 47,349 | |||||
Unallocated expenses | 18,439 | 23,426 | 20,160 | 79,755 | 84,448 | |||||
Total operating income | $44,905 | $20,116 | $34,672 | $155,536 | $118,068 | |||||
Entegris, Inc. - page 8 of 12
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
(In thousands)
(Unaudited)
Three months ended | Twelve months ended | ||||||||||
December 31, 2016 | December 31, 2015 | October 1, 2016 | December 31, 2016 | December 31, 2015 | |||||||
Net sales | $308,502 | $266,786 | $296,692 | $1,175,270 | $1,081,121 | ||||||
Net income | $26,098 | $17,573 | $21,947 | $97,147 | $80,296 | ||||||
Adjustments to net income: | |||||||||||
Equity in net loss of affiliates | — | 1,469 | — | — | 1,687 | ||||||
Income tax expense (benefit) | 8,521 | (4,731) | 3,945 | 22,852 | 10,202 | ||||||
Interest expense, net | 8,983 | 9,694 | 9,345 | 36,528 | 38,238 | ||||||
Other expense (income), net | 1,303 | (3,889) | (565) | (991) | (12,355) | ||||||
GAAP - Operating income | 44,905 | 20,116 | 34,672 | 155,536 | 118,068 | ||||||
Severance related to organizational realignment | — | — | 2,405 | 2,405 | — | ||||||
Impairment of equipment | — | — | 5,826 | 5,826 | — | ||||||
Integration costs | 5,584 | — | — | 12,667 | |||||||
Amortization of intangible assets | 10,938 | 11,441 | 10,974 | 44,263 | 47,349 | ||||||
Adjusted operating income | 55,843 | 37,141 | 53,877 | 208,030 | 178,084 | ||||||
Depreciation | 14,303 | 14,225 | 13,795 | 55,623 | 54,305 | ||||||
Adjusted EBITDA | $70,146 | $51,366 | $67,672 | $263,653 | $232,389 | ||||||
Adjusted operating margin | 18.1 | % | 13.9 | % | 18.2 | % | 17.7 | % | 16.5 | % | |
Adjusted EBITDA - as a % of net sales | 22.7 | % | 19.3 | % | 22.8 | % | 22.4 | % | 21.5 | % | |
Entegris, Inc. - page 9 of 12
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
(Unaudited)
Three months ended | Twelve months ended | ||||||||||
December 31, 2016 | December 31, 2015 | October 1, 2016 | December 31, 2016 | December 31, 2015 | |||||||
Net sales | $308,502 | $266,786 | $296,692 | $1,175,270 | $1,081,121 | ||||||
Gross profit-GAAP | $131,800 | $109,298 | $122,980 | $508,691 | $470,231 | ||||||
Adjustments to gross profit: | |||||||||||
Severance related to organizational realignment | — | — | 431 | 431 | — | ||||||
Impairment of equipment | — | — | 5,826 | 5,826 | — | ||||||
Adjusted gross profit | $131,800 | $109,298 | $129,237 | $514,948 | $470,231 | ||||||
Gross margin - as a % of net sales | 42.7 | % | 41.0 | % | 41.5 | % | 43.3 | % | 43.5 | % | |
Adjusted gross margin - as a % of net sales | 42.7 | % | 41.0 | % | 43.6 | % | 43.8 | % | 43.5 | % | |
Entegris, Inc. - page 10 of 12
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Segment Profit to Adjusted Operating Income
(In thousands)
(Unaudited)
Three months ended | Twelve months ended | |||||||||
Segment profit-GAAP | December 31, 2016 | December 31, 2015 | October 1, 2016 | December 31, 2016 | December 31, 2015 | |||||
Specialty Chemicals and Engineered Materials | $25,919 | $24,218 | $18,811 | $96,060 | $100,370 | |||||
Advanced Materials Handling | 16,644 | 10,094 | 15,378 | 73,452 | 66,419 | |||||
Microcontamination Control | 31,719 | 20,671 | 31,617 | 110,042 | 83,076 | |||||
Total segment profit | 74,282 | 54,983 | 65,806 | 279,554 | 249,865 | |||||
Amortization of intangible assets | 10,938 | 11,441 | 10,974 | 44,263 | 47,349 | |||||
Unallocated expenses | 18,439 | 23,426 | 20,160 | 79,755 | 84,448 | |||||
Total operating income | $44,905 | $20,116 | $34,672 | $155,536 | $118,068 | |||||
Three months ended | Twelve months ended | |||||||||
Adjusted segment profit | December 31, 2016 | December 31, 2015 | October 1, 2016 | December 31, 2016 | December 31, 2015 | |||||
Specialty Chemicals and Engineered Materials 1 | $25,919 | $24,218 | $19,510 | $96,759 | $100,370 | |||||
Advanced Materials Handling 2 | 16,644 | 10,094 | 22,173 | 80,247 | 66,419 | |||||
Microcontamination Control 3 | 31,719 | 20,671 | 32,354 | 110,779 | 83,076 | |||||
Total adjusted segment profit | 74,282 | 54,983 | 74,037 | 287,785 | 249,865 | |||||
Amortization of intangible assets4 | — | — | — | — | — | |||||
Unallocated expenses5 | 18,439 | 17,842 | 20,160 | 79,755 | 71,781 | |||||
Total adjusted operating income | $55,843 | $37,141 | $53,877 | $208,030 | $178,084 | |||||
1 Adjusted segment profit for Specialty Chemicals and Engineered Materials for the three months ended October 1, 2016 and twelve months ended December 31, 2016 excludes charges for severance related to organizational realignment of $699.
2 Adjusted segment profit for Advanced Material Handling for the three months ended October 1, 2016 and twelve months ended December 31, 2016 excludes charges for impairment of equipment and severance related to organizational realignment of $5,826 and $969, respectively.
3 Adjusted segment profit for Microcontamination Control for the three months ended October 1, 2016 and twelve months ended December 31, 2016 excludes charges for severance related to organizational realignment of $737.
4 Adjusted amortization of intangible assets excludes amortization expense of $10,938, $11,441, and $10,974 for the three months ended December 31, 2016 and 2015, and October 1, 2016, respectively and $44,263 and $47,349 for the twelve months ended December 31, 2016 and 2015, respectively.
5 Adjusted unallocated expenses exclude integration costs of $5,584 for the three months ended December 31, 2015 and $12,667 for the twelve months ended December 31, 2015.
Entegris, Inc. - page 11 of 12
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)
Three months ended | Twelve months ended | ||||||||||
December 31, 2016 | December 31, 2015 | October 1, 2016 | December 31, 2016 | December 31, 2015 | |||||||
GAAP net income | $26,098 | $17,573 | $21,947 | $97,147 | $80,296 | ||||||
Adjustments to net income: | |||||||||||
Severance related to organizational realignment | — | — | 2,405 | 2,405 | — | ||||||
Impairment of equipment | — | — | 5,826 | 5,826 | — | ||||||
Integration costs | — | 5,584 | — | — | 12,667 | ||||||
Net gain on sale of investments | — | (2,016 | ) | — | (156 | ) | (1,449 | ) | |||
Amortization of intangible assets | 10,938 | 11,441 | 10,974 | 44,263 | 47,349 | ||||||
Tax effect of adjustments to net income and discrete items | (2,742 | ) | (3,760 | ) | (6,505 | ) | (16,637 | ) | (18,248 | ) | |
Non-GAAP net income | $34,294 | $28,822 | $34,647 | $132,848 | $120,615 | ||||||
Diluted earnings per common share | $0.18 | $0.12 | $0.15 | $0.68 | $0.57 | ||||||
Effect of adjustments to net income | $0.06 | $0.08 | $0.09 | $0.25 | $0.29 | ||||||
Diluted non-GAAP earnings per common share | $0.24 | $0.20 | $0.24 | $0.94 | $0.85 | ||||||
### END ###
Entegris, Inc. - page 12 of 12
FEBRUARY 2, 2017
Earnings Summary
Fourth Quarter and Fiscal Year 2016
EXHIBIT 99.2
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.
3
4Q16 AND FY2016 HIGHLIGHTS
◦ Achieved record sales of $1.2 billion in fiscal 2016, 9% organic growth and significant outperformance of markets
◦ Generated record EPS and EBITDA for fiscal 2016, and a record EBITDA margin of 22.4 percent
◦ Growth initiatives are on track with key design wins at 10 and 7 nanometer and 3D-NAND processes
◦ Continued pay down our debt, concluding the year with a net leverage ratio of 0.7
◦ Grew our quarterly revenue by 16 percent from a year ago and achieved non-GAAP EPS of $0.24
$ in millions, except per share data 4Q16 4Q16 Guidance 3Q16 4Q15
4Q16 over
3Q16
4Q16 over
4Q15
Net Revenue $308.5 $275 to $290 $296.7 $266.8 4.0% 15.6%
Gross Margin 42.7% 41.5% 41.0%
Operating Expenses $86.9 $88.3 $89.2 (1.6%) (2.6%)
Operating Income $44.9 $34.7 $20.1 29.4% 123.4%
Operating Margin 14.6% 11.7% 7.5%
Tax Rate 24.6% 15.2% (33.1)%
Net Income $26.1 $20 to $26 $21.9 $17.6 19.2% 48.3%
EPS $0.18 $0.14 to $0.18 $0.15 $0.12 20.0% 50.0%
4
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)
$ in millions, except per share data 4Q16 4Q16 Guidance 3Q16 4Q15
4Q16 over
3Q16
4Q16 over
4Q15
Net Revenue $308.5 $275 to $290 $296.7 $266.8 4.0% 15.6%
Adjusted Gross Margin2 42.7% 43.6% 41.0%
Non-GAAP Operating Expenses3 $76.0 $75.4 $72.2 0.8% 5.3%
Adjusted Operating Income $55.8 $53.9 $37.1 3.5% 50.4%
Adjusted Operating Margin 18.1% 18.2% 13.9%
Non-GAAP Tax Rate4 24.7% 23.2% (0.3)%
Non-GAAP Net Income $34.3 $27 to $33 $34.6 $28.8 (0.9%) 19.1%
Non-GAAP EPS $0.24 $0.19 to $0.23 $0.24 $0.20 - 20.0%
5
1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation.
2. Adjusted Gross Margin excludes certain impairment of equipment and severance charges.
3. Non-GAAP Operating Expenses exclude amortization expense, severance and integration costs.
4. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments to GAAP taxes.
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1
$ in millions, except per share data
Fiscal Year
Ended
December 31,
2016
Fiscal Year
Ended
December 31,
2015 Year-over-Year
Net Revenue $1,175.3 $1,081.1 8.7%
Gross Margin 43.3% 43.5%
Operating Expenses $353.2 $352.2 0.3%
Operating Income $155.5 $118.1 31.7%
Operating Margin 13.2% 10.9%
Tax Rate 19.0% 11.1%
Net Income $97.1 $80.3 20.9%
EPS $0.68 $0.57 19.3%
6
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)
$ in millions, except per share data
Fiscal Year
Ended
December 31,
2016
Fiscal Year
Ended
December 31,
2015 Year-over-Year
Net Revenue $1,175.3 $1,081.1 8.7%
Adjusted Gross Margin2 43.8% 43.5%
Non-GAAP Operating Expenses3 $306.9 $292.1 5.1%
Adjusted Operating Income $208.0 $178.1 16.8%
Adjusted Operating Margin 17.7% 16.5%
Non-GAAP Tax Rate4 22.9% 19.0%
Non-GAAP Net Income $132.8 $120.6 10.1%
Non-GAAP EPS $0.94 $0.85 10.6%
7
1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation.
2. Adjusted Gross Margin excludes certain impairment of equipment and severance charges.
3. Non-GAAP Operating Expenses exclude amortization expense, severance related to organizational realignment, and integration costs.
4. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments to GAAP taxes.
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1
8
RESULTS BY SEGMENT
Critical Materials Handling
◦ Liquid Filters and Purifiers
◦ Gas Filters/Diffusers/Purifiers
◦ Airborne Molecular Contamination
Control Products
◦ Microenvironments
◦ Fluid Handling
◦ Sensing & Control
◦ Liquid Packaging
◦ Graphite Products
◦ Specialty Coatings
Electronic Materials
◦ SDS and VAC Based Gases (SG)
◦ Post Etch/CMP Cleans
◦ Plating and CMP Components
◦ Advanced Deposition Products
Previous Segmentation New Segmentation
Microcontamination Control (MC)
◦ Liquid Filters and Purifiers
◦ Gas Filters/Diffusers/Purifiers
◦ Airborne Molecular Contamination Control Products
Specialty Chemicals and Engineered Materials (SCEM)
Advanced Materials Handling (AMH)
◦ Microenvironments
◦ Fluid Handling
◦ SDS and VAC Based Gases (SG)
◦ Post Etch/CMP Cleans
◦ Plating and CMP Components
◦ Advanced Deposition Products
◦ Graphite Products
◦ Specialty Coatings
◦ Sensing & Control
◦ Liquid Packaging
$73.5
$96.1
$110.0
MC4
RESULTS BY SEGMENT
9
1. Excludes amortization of intangibles and unallocated expenses.
2. Segment profit for AMH for the three months ended October 1, 2016 includes charges for impairment of equipment and severance related to organizational realignment totaling $6,795.
3. Segment profit for SCEM for the three months ended October 1, 2016 includes a charge for severance related to organizational realignment of $699.
4. Segment profit for MC for the three months ended October 1, 2016 includes a charge for severance related to organizational realignment of $737.
Fiscal 2016 Sales by Segment
$384.3
$428.3
$362.7
$ in millions
Fiscal 2016 Profit Margin by Segment1
$ in millions
AMH2 SCEM3 MC AMH SCEM
22%
56%
13%
9%
REVENUE BY GEOGRAPHY
10
Revenue By Geography
Asia Japan Europe U.S.
$60.1
$170.5
$40.4
$25.7
$63.0
$180.0
$38.3
$27.1
U.S. Asia Japan Europe
Quarter-to-Quarter Revenue by Geography
$ in millions
3Q16 4Q16 3Q16 4Q16 3Q16 4Q16
FY 2016
3Q16 4Q16
$ in millions 4Q16 3Q16 4Q15
$ Amount % Total $ Amount % Total $ Amount % Total
Cash & Cash Equivalents $406.4 23.9% $411.8 24.0% $349.8 21.2%
Accounts Receivable, net $165.7 9.7% $167.6 9.8% $141.4 8.6%
Inventories $183.5 10.8% $186.0 10.9% $173.2 10.5%
Net PP&E $321.6 18.9% $315.5 18.4% $321.3 19.5%
Total Assets $1,699.5 $1,713.6 $1,646.7
Current Liabilities1 $261.6 15.4% $237.7 13.9% $175.6 10.7%
Long-term debt, excluding
current maturities
$484.7 28.5% $508.8 29.7% $606.0 36.8%
Total Liabilities $800.3 47.1% $816.4 47.6% $843.8 51.2%
Total Shareholders’ Equity $899.2 52.9% $897.2 52.4% $802.9 48.8%
AR - DSOs 49.0 51.5 48.4
Inventory Turns 3.8 3.8 3.5
11
1. Current Liabilities in 4Q16, 3Q16, 4Q15 includes $100 million, $100 million, and $50 million of current maturities of long term debt, respectively.
SUMMARY – BALANCE SHEET ITEMS
12
1. See Reconciliation of GAAP Income to Adjusted Operating Income and Adjusted EBITDA in the appendix of this presentation.
ADJUSTED EBITDA MARGIN1
$232
$264
21.5%
22.4%
0
0.05
0.1
0.15
0.2
0
50
100
150
200
250
2015 2016
Adjusted Annual EBITDA
Adj. EBITDA in $M Adj. EBITDA as % of Sales
$68
$70
22.8% 22.7%
0
0.05
0.1
0.15
0.2
0
10
20
30
40
50
60
70
80
3Q16 4Q16
Adjusted EBITDA
Adj. EBITDA in $M Adj. EBITDA as % of Sales
$ in millions 4Q16 3Q16 4Q15
Beginning Cash Balance $411.8 $373.7 $301.1
Cash from operating activities 57.1 71.9 52.2
Capital expenditures (20.0) (13.1) (16.3)
Payments on long-term debt (25.0) (25.0) -
Other investing activities 0.1 0.1 5.9
Other financing activities (3.2) (0.2) 6.4
Effect of exchange rates (14.3) 4.3 0.5
Ending Cash Balance $406.4 $411.8 $349.8
Free Cash Flow1 $37.1 $58.8 $35.9
Adjusted EBITDA $70.1 $67.7 $51.4
CASH FLOWS
13
1. Free cash flow equals cash from operations less capital expenditures.
OUTLOOK
14
Non-GAAP operating expenses exclude amortization. In 4Q16, amortization is estimated to be approximately $11 million, or $0.05 per share.
$ in millions, except per share data 1Q17 Guidance 4Q16 4Q15
Net Revenue $295 to $310 $308.5 $266.8
Gross Margin 42.7% 41.0%
Operating Expenses $87 to $89 $86.9 $89.2
Net Income $25 to $31 $26.1 $17.6
EPS $0.18 to $0.22 $0.18 $0.12
$ in millions, except per share data 1Q17 Guidance 4Q16 4Q15
Net Revenue $295 to $310 $308.5 $266.8
Gross Margin 42.7% 41.0%
Non-GAAP Operating Expenses1 $76 to $78 $76.0 $72.2
Non-GAAP Net Income $32 to $38 $34.3 $28.8
Non-GAAP EPS $0.23 to $0.27 $0.24 $0.20
Non-GAAP
GAAP
Entegris®, the Entegris Rings Design™ and Pure Advantage™ are trademarks of Entegris, Inc. ©2016 Entegris, Inc. All rights reserved.
15
16
APPENDIX: NON-GAAP RECONCILIATION TABLES
NON-GAAP RECONCILIATION TABLE
RECONCILIATION OF GAAP TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA
17
Three months ended Twelve months ended
December 31,
2016
December 31,
2015
October 1,
2016
December 31,
2016
December 31,
2015
Net sales $308,502 $266,786 $296,692 $1,175,270 $1,081,121
Net income $26,098 $17,573 $21,947 $97,147 $80,296
Adjustments to net income:
Equity in net loss of affiliates — 1,469 — — 1,687
Income tax expense (benefit) 8,521 (4,731) 3,945 22,852 10,202
Interest expense, net 8,983 9,694 9,345 36,528 38,238
Other expense (income), net 1,303 (3,889) (565) (991) (12,355)
GAAP - Operating income 44,905 20,116 34,672 155,536 118,068
Severance related to organizational
realignment —
— 2,405 2,405 —
Impairment of equipment — — 5,826 5,826 —
Integration costs 5,584 0 — 12,667
Amortization of intangible assets 10,938 11,441 10,974 44,263 47,349
Adjusted operating income 55,843 37,141 53,877 208,030 178,084
Depreciation 14,303 14,225 13,795 55,623 54,305
Adjusted EBITDA $70,146 $51,366 $67,672 $263,653 $232,389
Adjusted operating margin 18.1% 13.9% 18.2% 17.7% 16.5%
Adjusted EBITDA - as a % of net sales 22.7% 19.3% 22.8% 22.4% 21.5%
$ in thousands (unaudited)
NON-GAAP RECONCILIATION TABLE
RECONCILIATION OF GAAP PROFIT TO ADJUSTED GROSS PROFIT
18
Three months ended Twelve months ended
December 31, 2016 December 31, 2015 October 1, 2016 December 31, 2016 December 31, 2015
Net sales $308,502 $266,786 $296,692 $1,175,270 $1,081,121
Gross profit-GAAP $131,800 $109,298 $122,980 $508,691 $470,231
Adjustments to gross profit:
Severance related to organizational realignment — — 431 431 —
Impairment of equipment — — 5,826 5,826 —
Adjusted gross profit $131,800 $109,298 $129,237 $514,948 $470,231
Gross margin - as a % of net sales 42.7% 41.0% 41.5% 43.3% 43.5%
Adjusted gross margin - as a % of net sales 42.7% 41.0% 43.6% 43.8% 43.5%
$ in thousands (unaudited)
NON-GAAP RECONCILIATION TABLE
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS PER SHARE
19
Three months ended Twelve months ended
December 31,
2016
December 31,
2015
October 1,
2016
December 31,
2016
December 31,
2015
GAAP net income $26,098 $17,573 $21,947 $97,147 $80,296
Adjustments to net income:
Severance related to organizational
realignment —
—
2,405
2,405
—
Impairment of equipment — — 5,826 5,826 —
Integration costs — 5,584 — — 12,667
Net gain on sale of investments — (2,016 ) — (156 ) (1,449 )
Amortization of intangible assets 10,938 11,441 10,974 44,263 47,349
Tax effect of adjustments to net income
and discrete items
(2,742 ) (3,760 ) (6,505 )
(16,637 ) (18,248 )
Non-GAAP net income $34,294 $28,822 $34,647 $132,848 $120,615
Diluted earnings per common share $0.18 $0.12 $0.15 $0.68 $0.57
Effect of adjustments to net income $0.06 $0.08 $0.09 $0.25 $0.29
Diluted non-GAAP earnings per common share $0.24 $0.20 $0.24 $0.94 $0.85
$ in thousands except for per share data
(unaudited)