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 5, 2019
_______________________________________
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:
x 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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On February 5, 2019, Entegris, Inc. issued a press release to announce results for the fourth quarter of 2018 and the year ended December 31, 2018 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 INDEX
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 5, 2019 | By: | /s/ Gregory B. Graves |
Name: | Gregory B. Graves | |
Title: | Executive Vice President and Chief Financial Officer | |
Exhibit 99.1
FOR RELEASE AT 6AM ET
ENTEGRIS’ STRONG FOURTH-QUARTER CAPS RECORD YEAR
• | Fourth-quarter revenue of $401.6 million grew 15 percent from prior year |
• | Fourth-quarter GAAP diluted EPS of $0.57; Non-GAAP diluted EPS $0.47 increased 12% from a year ago |
• | Fiscal 2018 revenue of $1.6 billion increased 15 percent |
• | Fiscal 2018 GAAP diluted EPS of $1.69; Non-GAAP diluted EPS of $1.89 increased 31% from a year ago |
BILLERICA, Mass., February 5, 2019 - 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 the fiscal year ended December 31, 2018.
The Company reported sales of $1.55 billion for fiscal 2018, an increase of 15 percent from the prior year. Net income for the year was $240.8 million, or $1.69 per diluted share, which included amortization of intangible assets of $62.2 million, a $34.5 million tax benefit from legal entity restructuring, a $6.9 million charge for fair value write-up of acquired inventory sold, $8.4 million of integration costs and transaction expenses associated with the purchase of SAES Pure Gas, and a $2.3 million loss on debt extinguishment. Non-GAAP net income for fiscal 2018 was $270 million, or $1.89 per diluted share, which both increased 31 percent, compared to fiscal 2017.
Fourth-quarter sales were $401.6 million, an increase of 15 percent from the same quarter last year. Fourth-quarter net income was $80.8 million, or $0.57 per diluted share, which included amortization of intangible assets of $17.1 million, a $34.5 million tax benefit from legal entity restructuring, a $3.4 million charge for fair value write-up of acquired inventory sold, and a $2.3 million loss on debt extinguishment. Non-GAAP net income was $66.3 million, or $0.47 per diluted share, which increased 11 percent and 12 percent respectively, compared to the fourth quarter of 2017.
Bertrand Loy, president and chief executive officer, said: “Our fourth quarter results capped off another record year for Entegris. In 2018, we grew our sales 15 percent and increased adjusted EBITDA 22 percent, demonstrating the leverage of our model. Our results showcased the strength of our teams’ execution and the resilience of our unit-driven business model. “
Mr. Loy added: “We continue to see tremendous value in our ability to help our customers achieve higher yields, along with new levels of device reliability and performance. Entegris is uniquely positioned to achieve this, with our combination of global scale, world class technical capabilities and operational excellence. In 2019, we expect to leverage these capabilities and continue to outpace our markets.”
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 | Q4-2018 | Q4-2017 | Q3-2018 | |||
Net sales | $401,642 | $350,562 | $398,597 | |||
Operating income | $71,308 | $71,152 | $67,975 | |||
Operating margin | 17.8 | % | 20.3 | % | 17.1 | % |
Net income (loss) | $80,784 | $(28,341) | $48,060 | |||
Diluted earnings (loss) per share (EPS) | $0.57 | $(0.20) | $0.34 | |||
Non-GAAP Results | ||||||
Non-GAAP adjusted operating income | $93,485 | $82,172 | $93,893 | |||
Adjusted operating margin | 23.3 | % | 23.4 | % | 23.6 | % |
Non-GAAP net income | $66,300 | $59,694 | $65,621 | |||
Non-GAAP EPS | $0.47 | $0.42 | $0.46 | |||
First-Quarter Outlook
For the first quarter ending March 30, 2019, the Company expects sales to be approximately at the same level as the fourth quarter of 2018. The Company expects GAAP EPS will be approximately on the same level as the fourth quarter of 2018, excluding the one-time tax benefit (which impacted GAAP net income from the fourth quarter 2018). Non-GAAP EPS is expected to be approximately at the same level as the fourth quarter of 2018.
Segment Results
The Company reports its results in the following segments:
Specialty Chemicals and Engineered Materials (SCEM): SCEM provides high-performance and high-purity process chemistries, gases and materials, as well as safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.
Microcontamination Control (MC): MC solutions purify critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.
Advanced Materials Handling (AMH): AMH develops solutions to monitor, protect, transport, and deliver critical liquid chemistries and substrates for a broad set of applications in the semiconductor industry and other high-technology industries.
Fourth-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the fourth quarter on Tuesday, February 5, 2019, at 9:00 a.m. Eastern Time.Participants should dial 888-254-3590 or +1 323-994-2093 referencing confirmation code 6919701. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. For a replay of the call, please Click Here using passcode 6919701. The replay will be available February 5, 2019 12:00 Eastern Time through March 21, 2019 12:00 Eastern Time. 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 Tuesday morning.
Entegris, Inc. - page 2 of 14
ABOUT ENTEGRIS
Entegris is a leader in specialty chemicals and advanced materials solutions for the microelectronics industry and other high-tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, China, France, Germany, Israel, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at www.entegris.com.
Non-GAAP Information
The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA, Adjusted Gross Profit, Adjusted Segment Profit, and Adjusted Operating Income together with related measures thereof, and non-GAAP EPS, are considered “Non-GAAP financial measures” under the rules and regulations of the Securities and Exchange Commission. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision-making, as a means to evaluate period-to-period comparisons, as well as comparisons to our competitors’ operating results. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring business operating results, such as amortization, depreciation and discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing and understanding our results and performance and when planning, forecasting, and analyzing future periods. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze our business. The reconciliations of GAAP Net Income 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
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include statements related to future period guidance; future sales, net income, net income per diluted share, non-GAAP EPS, non-GAAP net income, expenses and other financial metrics; our performance relative to our markets; market and technology trends; the development of new products and the success of their introductions; Company’s capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the effect of the Tax Cuts and Jobs Act on our capital allocation strategy; the impact of the acquisitions we have made and commercial partnerships we have established; our ability to execute on our strategies; the amount and timing of synergies from the proposed transaction with Versum Materials, the closing date for the proposed transaction with Versum Materials; and other matters. These statements involve risks and uncertainties, and actual results may differ. These risks and uncertainties include, but are not limited to, weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for our products and solutions; our ability to meet rapid demand shifts; our ability to continue technological innovation and introduce new products to meet our customers’ rapidly changing requirements; our concentrated customer base; our ability to identify, effect and integrate acquisitions, joint ventures or other transactions; our ability to
Entegris, Inc. - page 3 of 14
protect and enforce intellectual property rights; operational, political and legal risks of our international operations; our dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages and price increases; changes in government regulations of the countries in which we operate; fluctuation of currency exchange rates; fluctuations in the market price of Entegris’ stock; the level of, and obligations associated with, our indebtedness; and other risk factors and additional information described in our filings with the Securities and Exchange Commission, including under the heading “Risks Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed on February 15, 2018, and in our other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Additional Information about the Merger and Where to Find It
This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. This communication relates to a proposed business combination between Entegris and Versum Materials. In connection with the proposed transaction, Entegris intends to file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 that will include a joint proxy statement of Entegris and Versum Materials that also constitutes a prospectus of Entegris. Each of Entegris and Versum Materials also plan to file other relevant documents with the SEC regarding the proposed transaction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. Any definitive joint proxy statement/prospectus (if and when available) will be mailed to stockholders of Entegris and Versum Materials. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of these documents (if and when available) and other documents containing important information about Entegris and Versum Materials, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Entegris will be available free of charge on Entegris’ website at http://www.entegris.com or by contacting Entegris’ Investor Relations Department by email at irelations@entegris.com or by phone at 978-436-6500. Copies of the documents filed with the SEC by Versum Materials will be available free of charge on Versum Materials’ website at investors.versummaterials.com or by phone at 484-275-5907.
Participants in the Solicitation
Entegris, Versum Materials and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Entegris is set forth in Entegris’ proxy statement for its 2018 annual meeting of shareholders, which was filed with the SEC on March 28, 2018, and Entegris’ Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 15, 2018. Information about the directors and executive officers of Versum Materials is set forth in its proxy statement for its 2019 annual meeting of shareholders, which was filed with the SEC on December 20, 2018, and Versum Materials’ Annual Report on Form 10-K for the fiscal year ended September 30, 2018, which was filed with the SEC on November 21, 2018. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction when such materials become available. Investors should read the joint proxy statement/prospectus
Entegris, Inc. - page 4 of 14
carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Entegris or Versum Materials using the sources indicated above.
Entegris, Inc. - page 5 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended | ||||||||||
December 31, 2018 | December 31, 2017 | September 29, 2018 | ||||||||
Net sales | $ | 401,642 | $ | 350,562 | $ | 398,597 | ||||
Cost of sales | 221,902 | 186,883 | 216,881 | |||||||
Gross profit | 179,740 | 163,679 | 181,716 | |||||||
Selling, general and administrative expenses | 60,707 | 55,018 | 62,358 | |||||||
Engineering, research and development expenses | 30,675 | 26,489 | 29,964 | |||||||
Amortization of intangible assets | 17,050 | 11,020 | 21,419 | |||||||
Operating income | 71,308 | 71,152 | 67,975 | |||||||
Interest expense, net | 8,426 | 7,533 | 7,678 | |||||||
Other expense, net | 3,176 | 21,696 | 810 | |||||||
Income before income tax expense | 59,706 | 41,923 | 59,487 | |||||||
Income tax (benefit) expense | (21,078 | ) | 70,264 | 11,427 | ||||||
Net income (loss) | $ | 80,784 | $ | (28,341 | ) | $ | 48,060 | |||
Basic net income (loss) per common share: | $ | 0.58 | $ | (0.20 | ) | $ | 0.34 | |||
Diluted net income (loss) per common share: | $ | 0.57 | $ | (0.20 | ) | $ | 0.34 | |||
Weighted average shares outstanding: | ||||||||||
Basic | 139,268 | 141,329 | 141,556 | |||||||
Diluted | 140,515 | 141,329 | 143,033 | |||||||
Entegris, Inc. - page 6 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Twelve months ended | |||||||
December 31, 2018 | December 31, 2017 | ||||||
Net sales | $ | 1,550,497 | $ | 1,342,532 | |||
Cost of sales | 830,666 | 733,547 | |||||
Gross profit | 719,831 | 608,985 | |||||
Selling, general and administrative expenses | 246,534 | 216,194 | |||||
Engineering, research and development expenses | 118,456 | 106,951 | |||||
Amortization of intangible assets | 62,152 | 44,023 | |||||
Operating income | 292,689 | 241,817 | |||||
Interest expense, net | 30,255 | 31,628 | |||||
Other expense, net | 8,002 | 25,458 | |||||
Income before income tax expense | 254,432 | 184,731 | |||||
Income tax expense | 13,677 | 99,665 | |||||
Net income | $ | 240,755 | $ | 85,066 | |||
Basic net income per common share: | $ | 1.71 | $ | 0.60 | |||
Diluted net income per common share: | $ | 1.69 | $ | 0.59 | |||
Weighted average shares outstanding: | |||||||
Basic | 141,026 | 141,553 | |||||
Diluted | 142,610 | 143,518 | |||||
Entegris, Inc. - page 7 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, 2018 | December 31, 2017 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | 482,062 | $ | 625,408 | |||||||
Trade accounts and notes receivable, net | 222,055 | 183,434 | ||||||||
Inventories, net | 268,140 | 198,089 | ||||||||
Deferred tax charges and refundable income taxes | 17,393 | 18,012 | ||||||||
Other current assets | 39,688 | 32,665 | ||||||||
Total current assets | 1,029,338 | 1,057,608 | ||||||||
Property, plant and equipment, net | 419,529 | 359,523 | ||||||||
Other assets: | ||||||||||
Goodwill | 550,202 | 359,688 | ||||||||
Intangible assets, net | 295,687 | 182,430 | ||||||||
Deferred tax assets and other noncurrent tax assets | 10,162 | 9,103 | ||||||||
Other | 12,723 | 7,820 | ||||||||
Total assets | $ | 2,317,641 | $ | 1,976,172 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities | ||||||||||
Long-term debt, current maturities | 4,000 | 100,000 | ||||||||
Accounts payable | 93,055 | 68,762 | ||||||||
Accrued liabilities | 141,020 | 99,374 | ||||||||
Income tax payable | 31,593 | 22,835 | ||||||||
Total current liabilities | 269,668 | 290,971 | ||||||||
Long-term debt, excluding current maturities | 934,863 | 574,380 | ||||||||
Other liabilities | 101,085 | 117,803 | ||||||||
Shareholders’ equity | 1,012,025 | 993,018 | ||||||||
Total liabilities and equity | $ | 2,317,641 | $ | 1,976,172 | ||||||
Entegris, Inc. - page 8 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended | Twelve months ended | |||||||||||
December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||
Operating activities: | ||||||||||||
Net income (loss) | $ | 80,784 | $ | (28,341 | ) | $ | 240,755 | $ | 85,066 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation | 16,880 | 15,035 | 65,116 | 58,208 | ||||||||
Amortization | 17,050 | 11,020 | 62,152 | 44,023 | ||||||||
Stock-based compensation expense | 4,385 | 3,849 | 17,112 | 15,306 | ||||||||
Provision for deferred income taxes | (10,810 | ) | 1,374 | (11,876 | ) | 1,628 | ||||||
Loss on extinguishment of debt | 2,319 | 20,687 | 2,429 | 20,687 | ||||||||
Other | 5,804 | 4,267 | 16,278 | 28,295 | ||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||
Trade accounts and notes receivable | (8,760 | ) | (56 | ) | (17,473 | ) | (15,401 | ) | ||||
Inventories | (9,312 | ) | (5,330 | ) | (38,100 | ) | (20,214 | ) | ||||
Accounts payable and accrued liabilities | 29,390 | 8,377 | 19,950 | 15,975 | ||||||||
Income taxes payable, refundable income taxes and noncurrent taxes payable | (21,188 | ) | 62,852 | (30,381 | ) | 64,516 | ||||||
Other | (15,215 | ) | (7,993 | ) | (13,386 | ) | (4,716 | ) | ||||
Net cash provided by operating activities | 91,327 | 85,741 | 312,576 | 293,373 | ||||||||
Investing activities: | ||||||||||||
Acquisition of property and equipment | (34,816 | ) | (25,658 | ) | (110,153 | ) | (93,597 | ) | ||||
Acquisition of business, net of cash | (426 | ) | — | (380,694 | ) | (20,000 | ) | |||||
Other | (111 | ) | 68 | 4,903 | 1,142 | |||||||
Net cash used in investing activities | (35,353 | ) | (25,590 | ) | (485,944 | ) | (112,455 | ) | ||||
Financing activities: | ||||||||||||
Proceeds from long-term borrowings | 400,000 | 550,000 | 402,000 | 550,000 | ||||||||
Payments on long-term debt | (108,850 | ) | (385,000 | ) | (135,850 | ) | (460,000 | ) | ||||
Dividend payments | (9,890 | ) | (9,896 | ) | (39,591 | ) | (9,896 | ) | ||||
Payments for debt extinguishment costs | — | (16,200 | ) | — | (16,200 | ) | ||||||
Issuance of common stock | 2,548 | 1,984 | 5,577 | 5,566 | ||||||||
Taxes paid related to net share settlement of equity awards | (134 | ) | (480 | ) | (14,686 | ) | (5,887 | ) | ||||
Repurchase and retirement of common stock | (143,781 | ) | (10,000 | ) | (173,781 | ) | (28,000 | ) | ||||
Other | (8,512 | ) | (7,062 | ) | (9,258 | ) | (8,332 | ) | ||||
Net cash provided by financing activities | 131,381 | 123,346 | 34,411 | 27,251 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (186 | ) | 6,714 | (4,389 | ) | 10,850 | ||||||
Increase (decrease) in cash and cash equivalents | 187,169 | 190,211 | (143,346 | ) | 219,019 | |||||||
Cash and cash equivalents at beginning of period | 294,893 | 435,197 | 625,408 | 406,389 | ||||||||
Cash and cash equivalents at end of period | $ | 482,062 | $ | 625,408 | $ | 482,062 | $ | 625,408 | ||||
Entegris, Inc. - page 9 of 14
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
Three months ended | Twelve months ended | ||||||||||||||
Net sales | December 31, 2018 | December 31, 2017 | September 29, 2018 | December 31, 2018 | December 31, 2017 | ||||||||||
Specialty Chemicals and Engineered Materials | $ | 133,928 | $ | 125,339 | $ | 131,234 | $ | 530,241 | $ | 485,470 | |||||
Microcontamination Control | 158,181 | 115,650 | 151,345 | 552,844 | 436,225 | ||||||||||
Advanced Materials Handling | 109,533 | 109,573 | 116,018 | 467,412 | 420,837 | ||||||||||
Total net sales | $ | 401,642 | $ | 350,562 | $ | 398,597 | $ | 1,550,497 | $ | 1,342,532 | |||||
Three months ended | Twelve months ended | ||||||||||||||
Segment profit1 | December 31, 2018 | December 31, 2017 | September 29, 2018 | December 31, 2018 | December 31, 2017 | ||||||||||
Specialty Chemicals and Engineered Materials | $ | 29,016 | $ | 30,075 | $ | 31,860 | $ | 129,754 | $ | 111,802 | |||||
Microcontamination Control | 48,389 | 39,328 | 44,530 | 173,964 | 141,413 | ||||||||||
Advanced Materials Handling | 16,791 | 18,226 | 19,494 | 82,541 | 59,838 | ||||||||||
Total segment profit | 94,196 | 87,629 | 95,884 | 386,259 | 313,053 | ||||||||||
Amortization of intangibles | 17,050 | 11,020 | 21,419 | 62,152 | 44,023 | ||||||||||
Unallocated expenses | 5,838 | 5,457 | 6,490 | 31,418 | 27,213 | ||||||||||
Total operating income | $ | 71,308 | $ | 71,152 | $ | 67,975 | $ | 292,689 | $ | 241,817 | |||||
1 Beginning in the first quarter of 2018, the Company has changed its definition of segment profit to include an allocation of certain general and administrative costs for the Company’s human resources, finance and information technology functions previously unallocated by the Company. Prior quarter information was recast to reflect the change in the Company’s definition of segment profit.
Entegris, Inc. - page 10 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
(Unaudited)
Three months ended | Twelve months ended | ||||||||||||||
December 31, 2018 | December 31, 2017 | September 29, 2018 | December 31, 2018 | December 31, 2017 | |||||||||||
Net sales | $ | 401,642 | $ | 350,562 | $ | 398,597 | $ | 1,550,497 | $ | 1,342,532 | |||||
Gross profit-GAAP | $ | 179,740 | $ | 163,679 | $ | 181,716 | $ | 719,831 | $ | 608,985 | |||||
Adjustments to gross profit: | |||||||||||||||
Severance related to organizational realignment | 460 | — | — | 460 | 740 | ||||||||||
Charge for fair value mark-up of acquired inventory sold | 3,379 | — | 3,281 | 6,868 | — | ||||||||||
Impairment of equipment | — | — | — | — | 5,330 | ||||||||||
Adjusted gross profit | $183,579 | $163,679 | $184,997 | $727,159 | $615,055 | ||||||||||
Gross margin - as a % of net sales | 44.8 | % | 46.7 | % | 45.6 | % | 46.4 | % | 45.4 | % | |||||
Adjusted gross margin - as a % of net sales | 45.7 | % | 46.7 | % | 46.4 | % | 46.9 | % | 45.8 | % | |||||
Entegris, Inc. - page 11 of 14
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, 2018 | December 31, 2017 | September 29, 2018 | December 31, 2018 | December 31, 2017 | ||||||||||
Specialty Chemicals and Engineered Materials | $ | 29,016 | $ | 30,075 | $ | 31,860 | $ | 129,754 | $ | 111,802 | |||||
Microcontamination Control | 48,389 | 39,328 | 44,530 | 173,964 | 141,413 | ||||||||||
Advanced Materials Handling | 16,791 | 18,226 | 19,494 | 82,541 | 59,838 | ||||||||||
Total segment profit | 94,196 | 87,629 | 95,884 | 386,259 | 313,053 | ||||||||||
Amortization of intangible assets | 17,050 | 11,020 | 21,419 | 62,152 | 44,023 | ||||||||||
Unallocated expenses | 5,838 | 5,457 | 6,490 | 31,418 | 27,213 | ||||||||||
Total operating income | $ | 71,308 | $ | 71,152 | $ | 67,975 | $ | 292,689 | $ | 241,817 | |||||
Three months ended | Twelve months ended | ||||||||||||||
Adjusted segment profit | December 31, 2018 | December 31, 2017 | September 29, 2018 | December 31, 2018 | December 31, 2017 | ||||||||||
Specialty Chemicals and Engineered Materials 1 | $ | 29,016 | $ | 30,075 | $ | 31,860 | $ | 129,754 | $ | 111,816 | |||||
Microcontamination Control 2 | 51,768 | 39,328 | 47,811 | 180,832 | 143,052 | ||||||||||
Advanced Materials Handling 3 | 17,251 | 18,226 | 19,960 | 83,467 | 67,345 | ||||||||||
Total adjusted segment profit | 98,035 | 87,629 | 99,631 | 394,053 | 322,213 | ||||||||||
Amortization of intangible assets4 | — | — | — | — | — | ||||||||||
Unallocated expenses5 | 4,550 | 5,457 | 5,738 | 23,060 | 23,273 | ||||||||||
Total adjusted operating income | $ | 93,485 | $ | 82,172 | $ | 93,893 | $ | 370,993 | $ | 298,940 | |||||
1 Adjusted segment profit for Specialty Chemicals and Engineered Materials for the twelve months ended December 31, 2017 excludes charges for severance related to organizational realignment of $14.
2 Adjusted segment profit for Microcontamination Control excludes charges for fair value mark-up of acquired inventory sold of $3,379 and$3,281 for the three months ended December 31, 2018 and September 29, 2018, respectively, and $6,868 for the twelve months ended December 31, 2018. Adjusted segment profit for Microcontamination Control excludes impairment of equipment and charges for severance related to organizational realignment of $1,639 for the twelve months ended December 31, 2017.
3 Adjusted segment profit for Advanced Material Handling excludes loss on sale of subsidiary $466 for the three months ended September 29, 2018 and the twelve months ended December 31, 2018. Adjusted segment profit for Advanced Material Handling excludes charges for impairment of equipment and severance related to organizational realignment of $460 for the three and twelve months ended December 31, 2018 and $7,507 for the twelve months ended December 31, 2017, respectively.
4 Adjusted amortization of intangible assets excludes amortization expense of $17,050, $11,020, and $21,419 for the three months ended December 31, 2018, December 31, 2017, and September 29, 2018, respectively, and $62,152 and $44,023 for the twelve months ended December 31, 2018 and December 31, 2017, respectively.
5 Adjusted unallocated expenses excludes integration expenses of $1,288, $752 and $3,237 for the three months ended December 31, 2018 and September 29, 2018 and the twelve months ended December 31, 2018, respectively. Adjusted unallocated expenses excludes deal costs of $5,121 for the twelve months ended December 31, 2018. Adjusted unallocated expenses excludes charges for impairment of intangibles and severance related to organizational realignment of $3,940 for the twelve months ended December 31, 2017.
Entegris, Inc. - page 12 of 14
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, 2018 | December 31, 2017 | September 29, 2018 | December 31, 2018 | December 31, 2017 | |||||||||||
Net sales | $ | 401,642 | $ | 350,562 | $ | 398,597 | $ | 1,550,497 | $ | 1,342,532 | |||||
Net income (loss) | $ | 80,784 | $ | (28,341 | ) | $ | 48,060 | $ | 240,755 | $ | 85,066 | ||||
Adjustments to net income (loss): | |||||||||||||||
Income tax (benefit) expense | (21,078 | ) | 70,264 | 11,427 | 13,677 | 99,665 | |||||||||
Interest expense, net | 8,426 | 7,533 | 7,678 | 30,255 | 31,628 | ||||||||||
Other expense, net | 3,176 | 21,696 | 810 | 8,002 | 25,458 | ||||||||||
GAAP - Operating income | 71,308 | 71,152 | 67,975 | 292,689 | 241,817 | ||||||||||
Charge for fair value write-up of acquired inventory sold | 3,379 | — | 3,281 | 6,868 | — | ||||||||||
Deal costs | — | — | — | 5,121 | — | ||||||||||
Integration costs | 1,288 | — | 752 | 3,237 | — | ||||||||||
Severance related to organizational realignment | 460 | — | — | 460 | 2,700 | ||||||||||
Impairment of equipment and intangibles 1 | — | — | — | — | 10,400 | ||||||||||
Loss on sale of subsidiary | — | 466 | 466 | — | |||||||||||
Amortization of intangible assets | 17,050 | 11,020 | 21,419 | 62,152 | 44,023 | ||||||||||
Adjusted operating income | 93,485 | 82,172 | 93,893 | 370,993 | 298,940 | ||||||||||
Depreciation | 16,880 | 15,035 | 16,537 | 65,116 | 58,208 | ||||||||||
Adjusted EBITDA | $ | 110,365 | $ | 97,207 | $ | 110,430 | $ | 436,109 | $ | 357,148 | |||||
Adjusted operating margin | 23.3 | % | 23.4 | % | 23.6 | % | 23.9 | % | 22.3 | % | |||||
Adjusted EBITDA - as a % of net sales | 27.5 | % | 27.7 | % | 27.7 | % | 28.1 | % | 26.6 | % | |||||
1 Includes product line impairment charges of $5,330 classified as cost of sales for the twelve months ended December 31, 2017.
Includes intangible impairment charge of $3,866 classified as selling general and administrative expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $320 classified as selling general and administrative expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $884 classified as engineering, research and development expense for the twelve months ended December 31, 2017.
Entegris, Inc. - page 13 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)
Three months ended | Twelve months ended | ||||||||||||||
December 31, 2018 | December 31, 2017 | September 29, 2018 | December 31, 2018 | December 31, 2017 | |||||||||||
GAAP net income (loss) | $ | 80,784 | $ | (28,341 | ) | $ | 48,060 | $ | 240,755 | $ | 85,066 | ||||
Adjustments to net income (loss): | |||||||||||||||
Charge for fair value write-up of inventory acquired | 3,379 | — | 3,281 | 6,868 | — | ||||||||||
Deal costs | — | — | — | 5,121 | — | ||||||||||
Integration costs | 1,288 | — | 752 | 3,237 | — | ||||||||||
Severance related to organizational realignment | 460 | — | — | 460 | 2,700 | ||||||||||
Impairment of equipment and intangibles 1 | — | — | — | — | 13,200 | ||||||||||
Loss on debt extinguishment | 2,319 | 20,687 | — | 2,319 | 20,687 | ||||||||||
Loss on sale of subsidiary | — | — | 466 | 466 | — | ||||||||||
Amortization of intangible assets | 17,050 | 11,020 | 21,419 | 62,152 | 44,023 | ||||||||||
Tax effect of adjustments to net income and discrete items2 | (5,603 | ) | (10,385 | ) | (5,797 | ) | (17,812 | ) | (26,046 | ) | |||||
Tax effect of legal entity restructuring | (34,478 | ) | — | — | (34,478 | ) | — | ||||||||
Tax effect of Tax Cuts and Jobs Act | 1,101 | 66,713 | (2,560 | ) | 683 | 66,713 | |||||||||
Non-GAAP net income | $ | 66,300 | $ | 59,694 | $ | 65,621 | $ | 269,771 | $ | 206,343 | |||||
Diluted earnings (loss) per common share | $ | 0.57 | $ | (0.20 | ) | $ | 0.34 | $ | 1.69 | $ | 0.59 | ||||
Effect of adjustments to net income | $ | (0.10 | ) | $ | 0.61 | $ | 0.12 | $ | 0.20 | $ | 0.85 | ||||
Diluted non-GAAP earnings per common share | $ | 0.47 | $ | 0.42 | $ | 0.46 | $ | 1.89 | $ | 1.44 | |||||
1Includes product line impairment charges of $5,330 classified as cost of sales for the twelve months ended December 31, 2017.
Includes intangible impairment charge of $3,866 classified as selling general and administrative expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $320 classified as selling general and administrative expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $884 classified as engineering, research and development expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $2,800 classified as other expense for the twelve months ended December 31, 2017.
2The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.
### END ###
Entegris, Inc. - page 14 of 14
EXHIBIT 99.2 Earnings Summary Fourth Quarter 2018 February 5, 2019
SAFE HARBOR This presentation contains, and management may make, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include statements related to future period guidance; future sales, net income, net income per diluted share, non-GAAP EPS, non-GAAP net income, expenses and other financial metrics; our performance relative to our markets; market and technology trends, including the duration and drivers of any growth trends; the development of new products and the success of their introductions; Company's capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the effect of the Tax Cuts and Jobs Act on our capital allocation strategy; the impact of the acquisitions we have made and commercial partnerships we have established; our ability to execute on our strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ. These risks and uncertainties include, but are not limited to, weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for our products and solutions; our ability to meet rapid demand shifts; our ability to continue technological innovation and introduce new products to meet our customers' rapidly changing requirements; our concentrated customer base; our ability to identify, effect and integrate acquisitions, joint ventures or other transactions; our ability to protect and enforce intellectual property rights; operational, political and legal risks of our international operations; our dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages and price increases; changes in government regulations of the countries in which we operate; fluctuation of currency exchange rates; fluctuations in the market price of Entegris’ stock; the level of, and obligations associated with, our indebtedness; and other risk factors and additional information described in our filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed on February 15, 2018, and in our other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. This presentation contains references to “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Adjusted Operating Income,” “Adjusted Operating Income Margin” and “Non-GAAP Earnings per Share” that are not presented in accordance GAAP. The non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures but should instead be read in conjunction with the GAAP financial measures. Further information with respect to and reconciliations of such measures to the most directly comparable GAAP financial measure can be found attached to this presentation. 2
LEGAL DISCLOSURES Additional Information about the Merger and Where to Find It This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. This communication relates to a proposed business combination between Entegris and Versum Materials. In connection with the proposed transaction, Entegris intends to file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 that will include a joint proxy statement of Entegris and Versum Materials that also constitutes a prospectus of Entegris. Each of Entegris and Versum Materials also plan to file other relevant documents with the SEC regarding the proposed transaction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. Any definitive joint proxy statement/prospectus (if and when available) will be mailed to stockholders of Entegris and Versum Materials. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of these documents (if and when available) and other documents containing important information about Entegris and Versum Materials, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Entegris will be available free of charge on Entegris’ website at http://www.entegris.com or by contacting Entegris’ Investor Relations Department by email at irelations@entegris.com or by phone at 978-436-6500. Copies of the documents filed with the SEC by Versum Materials will be available free of charge on Versum Materials’ website at investors.versummaterials.com or by phone at 484-275-5907. Participants in the Solicitation Entegris, Versum Materials and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Entegris is set forth in Entegris’ proxy statement for its 2018 annual meeting of shareholders, which was filed with the SEC on March 28, 2018, and Entegris’ Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 15, 2018. Information about the directors and executive officers of Versum Materials is set forth in its proxy statement for its 2019 annual meeting of shareholders, which was filed with the SEC on December 20, 2018, and Versum Materials’ Annual Report on Form 10-K for the fiscal year ended September 30, 2018, which was filed with the SEC on November 21, 2018. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction when such materials become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Entegris or Versum Materials using the sources indicated above. 3
4Q18 AND FY2018 HIGHLIGHTS ◦ Fourth-quarter revenue of $402 million grew 15 percent from prior year ◦ Fourth-quarter GAAP EPS of $0.57; Non-GAAP EPS of $0.47 increased 12% from a year ago ◦ Fiscal 2018 revenue of $1.6 billion increased 15 percent ◦ Fiscal 2018 GAAP EPS of $1.69; Non-GAAP EPS of $1.89 increased 31% from a year ago ◦ During 2018 acquired three companies: PSS, SAES Pure Gas and Flex Concepts ◦ Fourth-quarter and through the end of January (2019) repurchased a total of 6.6 million shares for approximately $179 million 4
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP) 4Q18 over 4Q18 over $ in millions, except per share data 4Q18 4Q18 Guidance 3Q18 4Q17 4Q17 3Q18 Net Revenue $401.6 $380 to $400 $398.6 $350.6 14.6% 0.8% Gross Margin 44.8% 45.6% 46.7% Operating Expenses $108.4 $111 to $114 $113.7 $92.5 17.2% (4.7%) Operating Income $71.3 $68.0 $71.2 0.2% 4.9% Operating Margin 17.8% 17.1% 20.3% Tax Rate (35.3%) 19.2% 167.6% Net Income (Loss) $80.8 $43 to $53 $48.1 ($28.3) NM 68% Earnings (loss) per diluted share $0.57 $0.30 to $0.37 $0.34 ($0.20) NM 68% 5
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1 4Q18 over 4Q18 over $ in millions, except per share data Q418 4Q18 Guidance 3Q18 4Q17 4Q17 3Q18 Net Revenue $401.6 $380 to $400 $398.6 $350.6 14.6% 0.8% Adjusted Gross Margin2 45.7% 46.4% 46.7% Non-GAAP Operating Expenses3 $90.1 $90 to $93 $91.1 $81.5 10.5% (1.1%) Adjusted Operating Income $93.5 $93.9 $82.2 13.8% (0.4%) Adjusted Operating Margin 23.3% 23.6% 23.4% Non-GAAP Tax Rate4 21.3% 23.2% 18.9% Non-GAAP Net Income5 $66.3 $59 to $69 $65.6 $59.7 11.1% 1.0% Non-GAAP EPS $0.47 $0.41 to $0.48 $0.46 $0.42 11.9% 2.2% 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 2. Adjusted Gross Margin excludes certain severance charges and fair value mark-up of acquired inventory. 3. Non-GAAP Operating Expenses exclude amortization expense, severance charges, deal costs, integration costs, loss on sale of subsidiary and impairment of equipment and intangibles. 4. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 5. Non-GAAP Net Income excludes amortization expense, severance charges, deal costs, integration costs, loss on debt extinguishment, loss on sale of subsidiary, and impairment of equipment and intangibles. 6
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP) Fiscal Year Fiscal Year Ended Ended December 31, December 31, $ in millions, except per share data 2018 2017 Year-over-Year Net Revenue $1,550.5 $1,342.5 15.5% Gross Margin 46.4% 45.4% Operating Expenses $427.1 $367.2 16.3% Operating Income $292.7 $241.8 21.0% Operating Margin 18.9% 18.0% Tax Rate 5.4% 54.0% Net Income $240.8 $85.1 183.0% EPS $1.69 $0.59 186.4% 7
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1 – YEAR TO DATE Fiscal Year Ended Fiscal Year Ended $ in millions, except per share data December 31, 2018 December 31, 2017 Year-over-Year Net Revenue $1,550.5 $1,342.5 15.5% Adjusted Gross Margin2 46.9% 45.8% Non-GAAP Operating Expenses3 $356.2 $316.1 12.7% Adjusted Operating Income $371.0 $298.9 24.1% Adjusted Operating Margin 23.9% 22.3% Non-GAAP Tax Rate4 19.5% 22.2% Non-GAAP Net Income5 $269.8 $206.3 30.8% Non-GAAP EPS $1.89 $1.44 31.3% 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 and fair value mark-up of acquired inventory. 3. Non-GAAP Operating Expense Exclude amortization expense, severance charges, deal costs, integration costs, loss on sale of subsidiary and impairment of equipment and intangibles. 4. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 5. Non-GAAP Net Income excludes amortization expense, severance charges, deal costs, integration costs, loss on debt extinguishment, loss on sale of subsidiary, and impairment of equipment and intangibles. 8
(LOSS) EARNINGS PER SHARE1 EPS: 4Q18 vs. 4Q17 FY2018 vs. FY2017 $2.00 $1.89 $0.70 $1.80 $1.69 $0.60 $0.57 $1.60 $1.44 $0.50 $0.47 $1.40 $0.42 $0.40 $1.20 $0.30 $1.00 $0.20 $0.80 $0.59 $0.10 $0.60 $0.00 $0.40 4Q17 4Q18 -$0.10 $0.20 -$0.20 $0.00 -$0.20 FY17 FY18 -$0.30 GAAP Non-GAAP GAAP Non-GAAP 1. Represents diluted (loss) earnings per share. See Reconciliation of GAAP Net Income to Non-GAAP Earnings per Share in the appendix of this presentation. 9
RESULTS BY SEGMENT1 Specialty Chemicals and Microcontamination Advanced Materials Engineered Materials Control Segment2 Handling Segment3 Segment $ in millions 40% $120 40% $120 40% $120 $100 $100 $100 30% 30% 30% $80 $80 $80 $60 20% $60 20% $60 20% $40 $40 $40 10% 10% 10% $20 $20 $20 $0 0% $0 0% 4Q17 1Q18 2Q18 3Q18 4Q18 $0 0% 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 Sales Adj. Op. margin Sales Adj. Op. margin Sales Adj. Op. margin 1. Adjusted segment operating margin excludes amortization of intangibles and unallocated expenses. 2. Segment profit for MC includes a charge for fair value write-up of inventory of $208K, $3,281K, and $3,379K for 2Q18, 3Q18, and 4Q18, respectively. 3. Segment profit for AMH for 3Q18 includes charges for loss on sale of subsidiary of $466K. Segment profit for AMH for 4Q18 includes severance and restructuring charges of $460K 10
REVENUE BY GEOGRAPHY: STRONG GROWTH IN SOUTH KOREA AND CHINA FY2018 Revenue by Geography FY2018 vs. FY2017 Growth Rate Revenue = $ million Taiwan 0% Taiwan N. America 21% N. America $289.9M $347.0M South Korea 12% Southeast Japan 24% Asia $118.0M $138.0M Europe China 37% $242.4M Europe 15% $210.8M Japan Southeast Asia 7% South Korea $204.4M China -5% 5% 15% 25% 35% 45% 55% 11
SUMMARY – BALANCE SHEET ITEMS $ in millions 4Q18 3Q18 4Q17 $ Amount % Total $ Amount % Total $ Amount % Total Cash & Cash Equivalents $482.1 20.8% $294.9 14.0% $625.4 31.6% Accounts Receivable, net $222.1 9.6% $212.7 10.1% $183.4 9.3% Inventories $268.1 11.6% $264.1 12.6% $198.1 10.0% Net PP&E $419.5 18.1% $393.7 18.7% $359.5 18.2% Total Assets $2,317.6 $2,103.5 $1,976.2 Current Liabilities1 $269.7 11.6% $211.0 10.0% $291.0 14.7% Long-term debt, excluding $934.9 40.3% $650.6 30.9% $574.4 29.1% current maturities Total Liabilities $1,305.6 56.3% $1,019.8 48.5% $983.2 49.8% Total Shareholders’ Equity $1,012.0 43.7% $1,083.7 51.5% $993.0 50.2% AR – DSOs 50.4 48.7 47.7 Inventory Turns 3.3 3.3 3.8 1. Current Liabilities in 4Q18, 3Q17 and 4Q17 includes $4 million, $100 million and $100 million of current maturities of long term debt, respectively. 12
ADJUSTED EBITDA MARGIN1 Adjusted Annual EBITDA Adjusted EBITDA and EBITDA Margin 28.1% 26.6% 28.9% 28.5% 27.7% 27.7% 27.5% 350 $436 $109 $110 $110 $357 $106 300 $97 80 250 200 150 40 100 50 0 0 4Q17 1Q18 2Q18 3Q18 4Q18 2017 2018 Adj. EBITDA in $M Adj. EBITDA as % of Sales Adj. EBITDA in $M Adj. EBITDA as % of Sales 1. See Reconciliation of GAAP Income to Adjusted Operating Income and Adjusted EBITDA in the appendix of this presentation. 13
CASH FLOWS $ in millions 4Q18 3Q18 4Q17 Beginning Cash Balance $294.9 $257.1 $435.2 Cash from operating activities $91.3 $84.1 $85.7 Capital expenditures ($34.8) ($27.9) ($25.7) Proceeds from long-term debt $400.0 - 550.0 Payments on long-term debt ($108.9) - ($385.0) Payments for debt extinguishment costs - - ($16.2) Repurchase and retirement of common stock ($143.8) ($10.0) ($10.0) Dividend payments ($9.9) ($9.9) ($9.9) Other investing activities ($0.5) $3.1 $0.1 Other financing activities ($6.1) ($0.4) ($5.5) Effect of exchange rates ($0.1) ($1.2) $6.7 Ending Cash Balance $482.1 $294.9 $625.4 Free Cash Flow1 $56.5 $56.2 $60.1 Adjusted EBITDA $110.4 $110.4 $97.2 1. Free cash flow equals cash from operations less capital expenditures. 14
OUTLOOK (1Q19) • For the first quarter ending March 30, 2019, the Company expects sales will be approximately at the same level as the fourth quarter of 2018. • The Company expects GAAP EPS will be approximately on the same level as the fourth quarter of 2018, excluding the one-time tax benefit (which impacted GAAP net income from the fourth quarter 2018). • Non-GAAP EPS is expected to be approximately at the same level as the fourth quarter of 2018. 15
Entegris®, the Entegris Rings Design™ and Pure Advantage™ are trademarks of Entegris, Inc. ©2016 Entegris, Inc. All rights reserved. 16
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT In thousands Three months ended Twelve months ended December 31, December 31, September 29, December 31, December 31, 2018 2017 2018 2017 2018 Net Sales $401,642 $350,562 $398,597 $1,550,497 $1,342,532 Gross profit-GAAP $179,740 $163,679 $181,716 $719,831 $608,985 Adjustments to gross profit: Charge for fair value mark-up of acquired inventory sold 3,379 - 3,281 6,868 - Severance related to organizational realignment 460 - - 460 740 Impairment of equipment - - - 5,330 Adjusted gross profit $183,579 $163,679 $184,997 $727,159 $615,055 Gross margin - as a % of net sales 44.8 % 46.7% 45.6% 46.4% 45.4% Adjusted gross margin - as a % of net sales 45.7% 46.7% 46.4% 46.9% 45.8% 17
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP SEGMENT PROFIT TO ADJUSTED OPERATING INCOME $ in thousands Three months ended Twelve months ended Segment profit-GAAP December 31, 2018 December 31, 2017 September 29, 2018 December 31, 2018 December 31, 2017 Specialty Chemicals and Engineered Materials $29,016 $30,075 $31,860 $129,754 $111,802 Microcontamination Control 48,389 39,328 44,530 179,964 141,413 Advanced Materials Handling 16,791 18,226 19,494 82,541 59,838 Total segment profit 94,196 87,629 95,884 386,259 313,053 Amortization of intangible assets 17,050 11,020 21,419 62,152 44,023 Unallocated expenses 5,838 5,457 6,490 31,418 85,705 Total operating income $71,308 $71,152 $67,975 $292,689 $241,817 Three months ended Twelve months ended Adjusted segment profit December 31, 2018 December 31, 2017 September 29, 2018 December 31, 2018 December 31, 2017 Specialty Chemicals and Engineered Materials1 $29,016 $30,075 $31,860 $129,754 $111,802 Microcontamination Control2 51,768 39,328 47,811 180,832 1430,52 Advanced Materials Handling3 17,251 18,226 19,960 83,467 67,345 Total segment profit 98,035 87,629 99,631 394,053 322,213 Amortization of intangible assets4 - - - - - Unallocated expenses5 4,550 5,457 5,738 23,060 23,273 Total adjusted operating income $93,485 $82,172 $93,893 $370,993 $298,940 1. Adjusted segment profit for Specialty Chemicals and Engineered Materials for the twelve months ended December 31, 2017 excludes charges for severance related to organizational realignment of $14. 2. Adjusted segment profit for Microcontamination Control excludes charges for fair value mark-up of acquired inventory sold of $3,379 and$3,281 for the three months ended December 31, 2018 and September 29, 2018, respectively, and $6,868 for the twelve months ended December 31, 2018. Adjusted segment profit for Microcontamination Control excludes impairment of equipment and charges for severance related to organizational realignment of $1,639 for the twelve months ended December 31, 2017. 3. Adjusted segment profit for Advanced Material Handling excludes loss on sale of subsidiary $466 for the three months ended September 29, 2018, Adjusted segment profit for Advanced Material Handling excludes charges for impairment of equipment and severance related to organizational realignment of $460 for the three and twelve months ended December 31, 2018 and $7,507 for the twelve months ended December 31, 2017, respectively. 4. Adjusted amortization of intangible assets excludes amortization expense of $17,050, $11,020, and $21,419 for the three months ended December 31, 2018, December 31, 2017, and September 29, 2018, respectively, and $62,152 and $44,023 for the twelve months ended December 31, 2018 and December 31, 2017, respectively. 5. Adjusted unallocated expenses excludes integration expenses of $1,288, $752 and $3,237 for the three months ended December 31, 2018 and September 29, 2018 and the twelve months ended December 31, 2018, respectively. Adjusted unallocated expenses excludes deal costs of $5,121 for the twelve months ended December 31, 2018. Adjusted unallocated expenses excludes charges for impairment of intangibles and severance related to organizational realignment of $3,940 for the twelve months ended December 31, 2017. 18
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA Three months ended Twelve months ended $ in thousands December 31, 2018 December 31, 2017 September 29, 2018 December 31, 2018 December 31, 2017 Net sales $401,642 $350,562 $398,597 $1,550,497 $1,342,532 Net income (loss) $80,784 ($28,341) $48,060 $240,755 $85,066 Adjustments to net (loss) income: Income tax (benefit) expense (21,078) 70,264 11,427 13,677 99,665 Interest expense, net 8,426 7,533 7,678 30,255 31,628 Other expense (income), net 3,176 21,696 810 8,002 25,458 GAAP - Operating income 71,308 71,152 67,975 292,689 241,817 Charge for fair value write-up of acquired inventory sold 3,379 - 3,281 6,868 - Deal costs - - - 5,121 Integration costs 1,288 - 752 3,237 - Severance 460 - - 460 2,700 Impairment of equipment and intangibles1 - - - - 10,400 Loss on sale of subsidiary - - 466 466 - Amortization of intangible assets 17,050 11,020 21,419 62,152 44,023 Adjusted operating income 93,485 82,172 93,893 370,993 298,940 Depreciation 16,468 15,035 16,537 65,116 58,208 Adjusted EBITDA $109,953 $97,207 $110,430 436,109 $357,148 Adjusted operating margin 23.3% 23.4% 23.6% 23.9% 22.3% Adjusted EBITDA - as a % of net sales 27.4% 27.7% 27.7% 28.1% 26.6% 1. Includes product line impairment charges of $5,330 classified as cost of sales for the twelve months ended December 31, 2017. Includes intangible impairment charge of $3,866 classified as selling general and administrative expense for the twelve months ended December 31, 2017. Includes product line impairment charge of $320 classified as selling general and administrative expense for the twelve months ended December 31, 2017. Includes product line impairment charge of $884 classified as engineering, research and development expense for the twelve months ended December 31, 2017. 19
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP TO NON-GAAP EARNINGS (LOSS) PER SHARE Three months ended Twelve months ended December 31, September 29, $ in thousands, except per share data December 31, 2018 2017 2018 December 31, 2018 December 31, 2017 GAAP net income (loss) $80,784 ($28,341) $48,060 $240,755 $85,066 Adjustments to net income (loss): Severance 460 - - 460 2,700 Charge for fair value write-up of inventory acquired 3,379 3,281 6,868 - Deal costs - - - 5,121 - Integration costs 1,288 752 3,237 - Impairment of equipment and intangibles1 - - - - 13,200 Loss on debt extinguishment 2,319 20,687 - 2,319 20,687 Loss on sale of subsidiary - - 466 466 - Amortization of intangible assets 17,050 11,020 21,419 62,152 44,023 Tax effect of adjustments to net income and discrete items (5,603) (10,385) (5,797) (17,812) (26,046) Ax effect of legal entity restructuring (34,478) - - (34,478) - Tax effect of Tax Cuts and Jobs Act 1,101 66,713 (2,560) 683 66,713 Non-GAAP net income $66,300 $59,694 $65,621 $269,771 $206,343 Diluted earnings (loss) per common share $0.57 ($0.20) $0.34 $1.69 $0.59 Effect of adjustments to net income (loss) ($0.10) $0.61 $0.12 ($0.20) $0.85 Diluted non-GAAP earnings per common share $0.47 $0.42 $0.46 $1.89 $1.44 1. Includes product line impairment charges of $5,330 classified as cost of sales for the twelve months ended December 31, 2017. Includes intangible impairment charge of $3,866 classified as selling general and administrative expense for the twelve months ended December 31, 2017. Includes product line impairment charge of $320 classified as selling general and administrative expense for the twelve months ended December 31, 2017. Includes product line impairment charge of $884 classified as engineering, research and development expense for the twelve months ended December 31, 2017. Includes product line impairment charge of $2,800 classified as other expense for the twelve months ended December 31, 2017. 2.The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years. 20
GAAP SEGMENT TREND DATA $ in thousands Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Sales SCEM $ 101,107 $ 111,782 $ 104,494 $ 110,945 $ 114,435 $ 121,174 $ 124,522 $ 125,339 $ 130,743 $ 134,336 $ 131,234 $ 133,928 MC 77,619 91,584 94,738 98,717 100,055 104,407 116,113 115,650 118,637 124,681 151,345 158,181 AMH 88,298 99,686 97,460 98,840 102,887 103,421 104,956 109,573 117,819 124,042 116,018 109,533 Total Sales $ 267,024 $ 303,052 $ 296,692 $ 308,502 $ 317,377 $ 329,002 $ 345,591 $ 350,562 $ 367,199 $ 383,059 $ 398,597 $ 401,642 Segment Profit1 SCEM $ 17,818 $ 24,205 $ 14,244 $ 21,061 $ 23,128 $ 29,060 $ 29,539 $ 30,075 $ 31,562 $ 37,316 $ 31,860 $ 29,016 MC 14,181 24,511 27,684 27,535 30,987 31,796 39,302 39,328 41,991 39,054 44,530 48,389 AMH 14,697 18,203 11,192 12,190 13,960 15,169 12,483 18,226 23,142 23,114 19,494 16,791 Total Segment Profit $ 46,696 $ 66,919 $ 53,120 $ 60,786 $ 68,075 $ 76,025 $ 81,324 $ 87,629 $ 96,695 $ 99,484 $ 95,884 $ 94,196 Segment Profit Margin SCEM 17.6% 21.7% 13.6% 19.0% 20.2% 24.0% 23.7% 24.0% 24.1% 27.8% 24.3% 21.7% MC 18.3% 26.8% 29.2% 27.9% 31.0% 30.5% 33.8% 34.0% 35.4% 31.3% 29.4% 30.6% AMH 16.6% 18.3% 11.5% 12.3% 13.6% 14.7% 11.9% 16.6% 19.6% 18.6% 16.8% 15.3% 1. In the first quarter of 2018, the Company updated its definition of segment profit. Segment profit is now defined as net sales less direct segment operating expenses, including certain general and administrative costs for the Company’s human resources, finance and information technology functions previously unallocated by the Company. The remaining unallocated expenses consist mainly of the Company’s corporate functions as well as interest expense, amortization of intangible assets and income tax expense. Prior year information was recast to reflect the change in the Company’s definition of segment profit. 21
NON-GAAP SEGMENT TREND DATA Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Sales$ in thousands SCEM $ 101,107 $ 111,782 $ 104,494 $ 110,945 $ 114,435 $ 121,174 $ 124,522 $ 125,339 $ 130,743 $ 134,336 $ 131,234 $ 133,928 MC 77,619 91,584 94,738 98,717 100,055 104,407 116,113 115,650 118,637 124,681 151,345 158,181 AMH 88,298 99,686 97,460 98,840 102,887 103,421 104,956 109,573 117,819 124,042 116,018 109,533 Total Sales $ 267,024 $ 303,052 $ 296,692 $ 308,502 $ 317,377 $ 329,002 $ 345,591 $ 350,562 $ 367,199 $ 383,059 $ 398,597 $ 401,642 Adjusted Segment Profit SCEM1 $ 17,818 $ 24,205 $ 14,943 $ 21,061 $ 23,128 $ 29,060 $ 29,553 $ 30,075 $ 31,562 $ 37,316 $ 31,860 $ 29,016 MC2 14,181 24,511 28,421 27,535 30,987 33,239 39,498 39,328 41,991 39,262 47,811 51,768 AMH3 14,697 18,203 17,987 12,190 13,960 17,455 17,704 18,226 23,142 23,114 19,960 17,251 Total Adj. Segment Profit $ 46,696 $ 66,919 $ 61,351 $ 60,786 $ 68,075 $ 79,754 $ 86,755 $ 87,629 $ 96,695 $ 99,692 $ 99,631 $ 98,035 Adjusted Segment Profit Margin SCEM 17.6% 21.7% 14.3% 19.0% 20.2% 24.0% 23.7% 24.0% 24.1% 27.8% 24.3% 21.7% MC 18.3% 26.8% 30.0% 27.9% 31.0% 31.8% 34.0% 34.0% 35.4% 31.5% 31.6% 32.7% AMH 16.6% 18.3% 18.5% 12.3% 13.6% 16.9% 16.9% 16.6% 19.6% 18.6% 17.2% 15.7% 1. Adjusted segment profit for Specialty Chemicals and Engineered Materials for the twelve months ended December 31, 2017 excludes charges for severance related to organizational realignment of $14. 2. Adjusted segment profit for Microcontamination Control excludes charges for fair value mark-up of acquired inventory sold of $3,379 and $3,281 for the three months ended December 31, 2018 and September 29, 2018, respectively, and $6,868 for the twelve months ended December 31, 2018. Adjusted segment profit for Microcontamination Control excludes impairment of equipment and charges for severance related to organizational realignment of $1,639 for the twelve months ended December 31, 2017. 3. Adjusted segment profit for Advanced Material Handling excludes loss on sale of subsidiary $466 for the three months ended September 29, 2018 and the twelve months ended December 31, 2018. Adjusted segment profit for Advanced Material Handling excludes charges for impairment of equipment and severance related to organizational realignment of $460 for the three and twelve months ended December 31, 2018 and $7,507 for the twelve months ended December 31, 2017, respectively. 22