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 14, 2023
 | ||
_______________________________________
Entegris, Inc.
(Exact name of registrant as specified in its charter)
_______________________________________
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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 14, 2023, Entegris, Inc. issued a press release to announce results for the fourth quarter of 2022 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 | ||||||||
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
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 14, 2023 | By: | /s/ Gregory B. Graves | ||||||
| Name: | Gregory B. Graves | |||||||
| Title: | Executive Vice President and Chief Financial Officer | |||||||
 | PRESS RELEASE Bill Seymour VP of Investor Relations T + 1 952 556 1844 bill.seymour@entegris.com | |||||||||||||
Exhibit 99.1
ENTEGRIS REPORTS RESULTS FOR FOURTH QUARTER OF 2022
•Fourth-quarter revenue (as reported) of $946 million, increased 49% from prior year
•Fourth-quarter revenue (proforma), increased 1%
•Full-year 2022 revenue (as reported), increased 43% from prior year
•Full-year 2022 revenue (proforma), increased 13%
•Fourth-quarter GAAP diluted EPS of $0.38
•Fourth-quarter non-GAAP diluted EPS of $0.83
BILLERICA, Mass., February 14, 2023 - Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s fourth quarter ended December 31, 2022. Fourth-quarter sales were $946.1 million, an increase of 49% from the same quarter last year. Fourth-quarter GAAP net income was $57.4 million, or $0.38 earnings per diluted share, which included $53.5 million of amortization of intangible assets, $18.6 million of integration costs, $0.3 million of deal and transaction costs, $3.6 million contractual and non-cash integration costs. Non-GAAP net income was $124.5 million for the fourth quarter and non-GAAP earnings per diluted share was $0.83. All the results presented herein (unless noted) are shown on a “as reported” basis and not on a “proforma” basis, and as a result do not include CMC Materials’ results in prior periods. Results in the second half of 2022 include CMC Materials.
Bertrand Loy, Entegris’ president and chief executive officer, said: “Our solid fourth quarter results capped off a strong year for Entegris. Sales (proforma) grew 13 percent in 2022, several points higher than estimated industry growth. This above-market growth was driven in large part by our strong position at the leading-edge technology nodes.”
Mr. Loy added: “2023 is shaping up to be an uncertain year for the semiconductor industry. Given this backdrop, we will take the necessary steps to manage costs, prioritize cash flow and debt paydown, while making the R&D investments that are critical for our future growth. Our differentiated unit-driven model and experienced team will be key as we navigate this near-term environment.”
Mr. Loy added: “Looking further ahead, the positive long-term secular growth drivers of the semiconductor industry are intact. At the same time, as device architectures become more complex, Entegris breadth of capabilities in material sciences and contamination control enable us to offer unique solutions to help our customers improve performance and shorten their time to yield. We believe these trends and our increasingly mission critical solutions will translate into rapidly expanding content per wafer for Entegris.”
Quarterly Financial Results Summary
(in thousands, except percentages and per share data)
| GAAP Results | December 31, 2022 | December 31, 2021 | October 1, 2022 | ||||||||
| Net sales | $946,070 | $635,204 | $993,828 | ||||||||
| Operating income | $143,776 | $159,544 | $14,889 | ||||||||
| Operating margin - as a % of net sales | 15.2 | % | 25.1 | % | 1.5 | % | |||||
| Net income (loss) | $57,427 | $118,219 | $(73,703) | ||||||||
| Diluted earnings (loss) per common share | $0.38 | $0.87 | $(0.50) | ||||||||
| Non-GAAP Results | |||||||||||
| Non-GAAP adjusted operating income | $219,353 | $176,770 | $253,207 | ||||||||
| Non-GAAP adjusted operating margin - as a % of net sales | 23.2 | % | 27.8 | % | 25.5 | % | |||||
| Non-GAAP net income | $124,451 | $131,783 | $127,770 | ||||||||
| Diluted non-GAAP earnings per common share | $0.83 | $0.96 | $0.85 | ||||||||
First-Quarter Outlook
For the first quarter ending April 1, 2023, the Company expects sales of $880 million to $910 million, net income of $8 million to $16 million and diluted earnings per common share between $0.05 and $0.10. On a non-GAAP basis, the Company expects diluted earnings per common share to range from $0.50 to $0.55, reflecting net income on a non-GAAP basis in the range of $75 million to $83 million. The company also expects EBITDA of approximately 25% to 26% of sales, for the first quarter of 2023. First quarter non-GAAP guidance includes an approximately $20 million increase (or $0.11 of non-GAAP EPS) in non-cash equity compensation expense compared to the fourth quarter of 2022, resulting from the alignment of CMC Material’s and Entegris’ equity benefit plans. The increase is the result of changes in award features and the related accounting, not a significant increase in overall equity grants. In addition, a higher expected tax rate in the first quarter of 2023, is expected to result in an approximately $0.05 impact to non-GAAP EPS, compared to the fourth quarter of 2022.
Segment Results
In connection with the completion of the CMC Materials acquisition, the company now operates in four segments (which include the new APS division):
Specialty Chemicals and Engineered Materials (SCEM): SCEM provides advanced materials enabling complex chip designs and improved device electrical performance; including high-performance and high-purity process chemistries, gases and materials and safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.
Microcontamination Control (MC): MC offers advanced filtration solutions that improve customers’ yield, device reliability and cost; by filtering and purifying critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.
Advanced Materials Handling (AMH): AMH develops solutions that improve customers’ yields by protecting critical materials during manufacturing, transportation, and storage; including products that monitor, protect, transport and deliver critical liquid chemistries, wafers, and other substrates for a broad set of applications in the semiconductor, life sciences and other high-technology industries.
Advanced Planarization Solutions (APS): APS develops an end-to-end chemical mechanical planarization (CMP) solution and applications expertise delivered through advanced materials and high purity chemicals; including CMP slurries, pads, formulated cleans and other electronic chemicals used in the semiconductor manufacturing processes.
Fourth-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the fourth quarter on Tuesday, February 14, 2023, at 10:00 a.m. Eastern Time. Participants should dial 888-204-4368 or +1 323-994-2093, referencing confirmation code 3262739. 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 3262739. The on-demand playback will be available after the conclusion of the teleconference. The call can also be accessed live and on-demand from the Investor Relations section of www.entegris.com.
Management’s slide presentation concerning the results for the fourth quarter will be posted on the Investor Relations section of www.entegris.com in the morning before the call.
Entegris, Inc. - page 2 of 15
About Entegris
Entegris is a world-class supplier of advanced materials and process solutions for the semiconductor and other high-tech industries. Entegris has approximately 10,000 employees throughout its global operations and is ISO 9001 certified. It has manufacturing, customer service and/or research facilities in the United States, Canada, 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, adjusted operating income, non-GAAP net income, non-GAAP adjusted operating margin and diluted non-GAAP earnings per common share, together with related measures thereof, 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 provides supplemental non-GAAP financial measures to better understand and manage its business and believes these measures provide investors and analysts additional and meaningful information for the assessment of the Company’s ongoing results. Management also uses these non-GAAP measures to assist in the evaluation of the performance of its business segments and to make operating decisions. Management believes that the Company’s non-GAAP measures help indicate the Company’s baseline performance before certain gains, losses or other charges that may not be indicative of the Company’s business or future outlook, and that non-GAAP measures offer a more consistent view of business performance. The Company believes the non-GAAP measures aid investors’ overall understanding of the Company’s results by providing a higher degree of transparency for such items and providing a level of disclosure that will help investors generally understand how management plans, measures and evaluates the Company’s business performance. Management believes that the inclusion of non-GAAP measures provides greater consistency in its financial reporting and facilitates investors’ understanding of the Company’s historical operating trends by providing an additional basis for comparisons to prior periods. The reconciliations of GAAP gross profit to adjusted gross profit, GAAP segment profit to adjusted operating income, GAAP net income to adjusted operating income and adjusted EBITDA, GAAP net income and diluted earnings per common share to non-GAAP net income and diluted non-GAAP earnings per common share and GAAP outlook to non-GAAP outlook are included elsewhere in this release.
Cautionary Note on Forward Looking Statements
This news release contains forward looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “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 may include statements about the ongoing impacts of the COVID-19 pandemic and the conflict in Ukraine on the Company’s operations and markets, including supply chain issues and inflationary pressures related thereto; future period guidance or projections; the Company’s performance relative to its markets, including the drivers of such performance; market and technology trends, including the duration and drivers of any growth trends and the impact of the COVID-19 pandemic on such trends; the development of new products and the success of their introductions; the focus of the Company’s engineering, research and development projects; the Company’s ability to execute on our business strategies, including with respect to Company’s expansion of its manufacturing presence in Taiwan and in Colorado Springs; the 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 impact of the acquisitions the Company has made and commercial partnerships the Company has established, including the acquisition of CMC Materials, Inc. (“CMC Materials”); the closing of any announced divestitures, including the timing thereof; trends relating to the fluctuation of currency exchange rates; future capital and other expenditures, including estimates thereof; the Company’s expected tax rate; the impact, financial or otherwise, of any organizational changes; the impact of accounting pronouncements; quantitative and qualitative disclosures about market risk; and other matters. These forward looking statements are based on current management expectations and assumptions only as of the date of this Quarterly Report, are not guarantees of future performance and involve substantial risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from the results expressed in, or implied by, these forward looking statements. 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 the Company’s products and solutions; the level of, and obligations associated with, the Company’s indebtedness, including the debts incurred in connection with the acquisition of CMC Materials; risks related to the acquisition and integration of CMC Materials, including unanticipated difficulties or expenditures relating thereto; the ability to achieve the anticipated synergies and value-creation contemplated by the acquisition of CMC Materials and the diversion of management time on transaction-related matters; risks related to the COVID-19 pandemic and the conflict in Ukraine on the global economy and financial markets, as well as on
Entegris, Inc. - page 3 of 15
the Company, its customers and suppliers, which may impact its sales, gross margin, customer demand and its ability to supply its products to its customers; raw material shortages, supply and labor constraints and price increases, pricing and inflationary pressures and rising interest rates; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the Company’s ability to meet rapid demand shifts; the Company’s ability to continue technological innovation and introduce new products to meet customers’ rapidly changing requirements; substantial competition; the Company’s concentrated customer base; the Company’s ability to identify, complete and integrate acquisitions, joint ventures, divestitures or other similar transactions; the Company’s ability to consummate pending transactions on a timely basis or at all and the satisfaction of the conditions precedent to consummation of such pending transactions, including the satisfaction of regulatory conditions on the terms expected, at all or in a timely manner; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; the increasing complexity of certain manufacturing processes; changes in government regulations of the countries in which the Company operates, including the imposition of tariffs, export controls and other trade laws and restrictions and changes to national security and international trade policy, especially as they relate to China; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including under the heading “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on February 4, 2022, and in the Company’s other SEC filings. Except as required under the federal securities laws and the rules and regulations of the SEC, the Company undertakes no obligation to update publicly any forward-looking statements or information contained herein, which speak as of their respective dates.
Entegris, Inc. - page 4 of 15
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||||||
| December 31, 2022 | December 31, 2021 | October 1, 2022 | ||||||||||||
| Net sales | $946,070 | $635,204 | $993,828 | |||||||||||
| Cost of sales | 541,545 | 340,114 | 622,157 | |||||||||||
| Gross profit | 404,525 | 295,090 | 371,671 | |||||||||||
| Selling, general and administrative expenses | 139,246 | 77,366 | 226,446 | |||||||||||
| Engineering, research and development expenses | 68,041 | 45,940 | 64,990 | |||||||||||
| Amortization of intangible assets | 53,462 | 12,240 | 65,346 | |||||||||||
| Operating income | 143,776 | 159,544 | 14,889 | |||||||||||
| Interest expense, net | 82,013 | 9,434 | 82,755 | |||||||||||
| Other (income) expense, net | (3,447) | 1,888 | 12,852 | |||||||||||
| Income (loss) before income tax expense | 65,210 | 148,222 | (80,718) | |||||||||||
| Income tax expense (benefit) | 7,783 | 30,003 | (7,015) | |||||||||||
| Net income (loss) | $57,427 | $118,219 | $(73,703) | |||||||||||
| Basic earnings (loss) per common share: | $0.39 | $0.87 | $(0.50) | |||||||||||
| Diluted earnings (loss) per common share: | $0.38 | $0.87 | $(0.50) | |||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 149,039 | 135,495 | 148,570 | |||||||||||
| Diluted | 149,909 | 136,629 | 148,570 | |||||||||||
Entegris, Inc. - page 5 of 15
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Twelve months ended | |||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||
| Net sales | $3,282,033 | $2,298,893 | |||||||||
| Cost of sales | 1,885,620 | 1,239,229 | |||||||||
| Gross profit | 1,396,413 | 1,059,664 | |||||||||
| Selling, general and administrative expenses | 543,485 | 292,408 | |||||||||
| Engineering, research and development expenses | 228,994 | 167,632 | |||||||||
| Amortization of intangible assets | 143,953 | 47,856 | |||||||||
| Operating income | 479,981 | 551,768 | |||||||||
| Interest expense, net | 208,975 | 40,997 | |||||||||
| Other expense, net | 23,926 | 31,695 | |||||||||
| Income before income tax expense | 247,080 | 479,076 | |||||||||
| Income tax expense | 38,160 | 69,950 | |||||||||
| Net income | $208,920 | $409,126 | |||||||||
| Basic earnings per common share: | $1.47 | $3.02 | |||||||||
| Diluted earnings per common share: | $1.46 | $3.00 | |||||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 142,294 | 135,411 | |||||||||
| Diluted | 143,146 | 136,574 | |||||||||
Entegris, Inc. - page 6 of 15
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| December 31, 2022 | December 31, 2021 | ||||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash, cash equivalents and restricted cash | $563,439 | $402,565 | |||||||||||||||
| Trade accounts and notes receivable, net | 535,485 | 347,413 | |||||||||||||||
| Inventories, net | 812,815 | 475,213 | |||||||||||||||
| Deferred tax charges and refundable income taxes | 47,618 | 35,312 | |||||||||||||||
| Assets held-for-sale | 246,531 | — | |||||||||||||||
| Other current assets | 129,297 | 52,867 | |||||||||||||||
| Total current assets | 2,335,185 | 1,313,370 | |||||||||||||||
| Property, plant and equipment, net | 1,393,337 | 654,098 | |||||||||||||||
| Other assets: | |||||||||||||||||
| Right-of-use assets | 94,940 | 66,563 | |||||||||||||||
| Goodwill | 4,408,331 | 793,702 | |||||||||||||||
| Intangible assets, net | 1,841,955 | 335,113 | |||||||||||||||
| Deferred tax assets and other noncurrent tax assets | 28,867 | 17,671 | |||||||||||||||
| Other | 36,242 | 11,379 | |||||||||||||||
| Total assets | $10,138,857 | $3,191,896 | |||||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||
| Current liabilities | |||||||||||||||||
| Short-term debt, including current portion of long-term debt | $151,965 | — | |||||||||||||||
| Accounts payable | 172,488 | 130,734 | |||||||||||||||
| Accrued liabilities | 328,784 | 199,131 | |||||||||||||||
| Liabilities held-for-sale | 10,637 | — | |||||||||||||||
| Income tax payable | 98,057 | 49,136 | |||||||||||||||
| Total current liabilities | 761,931 | 379,001 | |||||||||||||||
| Long-term debt, excluding current maturities | 5,632,928 | 937,027 | |||||||||||||||
| Long-term lease liability | 80,716 | 60,101 | |||||||||||||||
| Other liabilities | 445,282 | 101,986 | |||||||||||||||
| Shareholders’ equity | 3,218,000 | 1,713,781 | |||||||||||||||
| Total liabilities and equity | $10,138,857 | $3,191,896 | |||||||||||||||
Entegris, Inc. - page 7 of 15
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Three months ended | Twelve months ended | |||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||
| Operating activities: | ||||||||||||||
| Net income | $57,427 | $118,219 | $208,920 | $409,126 | ||||||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||
| Depreciation | 41,882 | 22,801 | 135,371 | 90,311 | ||||||||||
| Amortization | 53,462 | 12,240 | 143,953 | 47,856 | ||||||||||
| Share-based compensation expense | 9,033 | 7,760 | 66,577 | 29,884 | ||||||||||
| Loss on extinguishment of debt and modification | 1,052 | — | 3,287 | 23,338 | ||||||||||
| Other | (28,678) | (1,354) | 32,542 | (3,330) | ||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||||
| Trade accounts and notes receivable | (25,265) | (33,408) | (59,643) | (86,766) | ||||||||||
| Inventories | (23,000) | (53,185) | (203,335) | (168,372) | ||||||||||
| Accounts payable and accrued liabilities | (78,788) | 16,000 | 4,519 | 53,577 | ||||||||||
| Income taxes payable, refundable income taxes and noncurrent taxes payable | 37,388 | 31,983 | 21,751 | (3,292) | ||||||||||
| Other | (12,460) | (5,076) | (1,659) | 8,122 | ||||||||||
| Net cash provided by operating activities | 32,053 | 115,980 | 352,283 | 400,454 | ||||||||||
| Investing activities: | ||||||||||||||
| Acquisition of property and equipment | (147,356) | (76,640) | (466,192) | (210,626) | ||||||||||
| Acquisition of business, net of cash acquired | — | (89,692) | (4,474,925) | (91,942) | ||||||||||
| Other | (5,716) | 34 | (4,592) | 4,450 | ||||||||||
| Net cash used in investing activities | (153,072) | (166,298) | (4,945,709) | (298,118) | ||||||||||
| Financing activities: | ||||||||||||||
| Proceeds from revolving credit facility, short-term debt and long-term debt | — | 50,000 | 5,416,753 | 501,000 | ||||||||||
| Payments of revolving credit facility, short-term debt and long-term debt | (70,000) | (50,000) | (486,000) | (651,000) | ||||||||||
| Payments for debt issuance costs | 1 | — | (99,488) | (5,069) | ||||||||||
| Payments for dividends | (14,896) | (10,895) | (57,309) | (43,545) | ||||||||||
| Issuance of common stock | 5,404 | 6,872 | 16,168 | 24,744 | ||||||||||
| Taxes paid related to net share settlement of equity awards | (73) | (722) | (22,820) | (16,090) | ||||||||||
| Repurchase and retirement of common stock | — | (17,109) | — | (67,109) | ||||||||||
| Other | (242) | (130) | (1,101) | (19,428) | ||||||||||
| Net cash (used in) provided by financing activities | (79,806) | (21,984) | 4,766,203 | (276,497) | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 9,597 | (885) | (11,903) | (4,167) | ||||||||||
| (Decrease) increase in cash, cash equivalents and restricted cash | (191,228) | (73,187) | 160,874 | (178,328) | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 754,667 | 475,752 | 402,565 | 580,893 | ||||||||||
| Cash, cash equivalents and restricted cash at end of period | $563,439 | $402,565 | $563,439 | $402,565 | ||||||||||
Entegris, Inc. - page 8 of 15
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
| Three months ended | Twelve months ended | |||||||||||||||||||
| Net sales | December 31, 2022 | December 31, 2021 | October 1, 2022 | December 31, 2022 | December 31, 2021 | |||||||||||||||
| Specialty Chemicals and Engineered Materials | $204,214 | $164,963 | $224,192 | $773,594 | $625,670 | |||||||||||||||
| Microcontamination Control | 284,676 | 258,866 | 280,550 | 1,105,996 | 919,363 | |||||||||||||||
| Advanced Materials Handling | 213,890 | 197,703 | 210,405 | 846,492 | 704,946 | |||||||||||||||
| Advanced Planarization Solutions | 253,798 | 23,041 | 293,854 | 606,614 | 85,621 | |||||||||||||||
| Inter-segment elimination | (10,508) | (9,369) | (15,173) | (50,663) | (36,707) | |||||||||||||||
| Total net sales | $946,070 | $635,204 | $993,828 | $3,282,033 | $2,298,893 | |||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||||
| Segment profit | December 31, 2022 | December 31, 2021 | October 1, 2022 | December 31, 2022 | December 31, 2021 | |||||||||||||||
| Specialty Chemicals and Engineered Materials | $14,828 | $38,632 | $34,228 | $122,287 | $137,392 | |||||||||||||||
| Microcontamination Control | 107,413 | 94,203 | 105,335 | 411,475 | 321,300 | |||||||||||||||
| Advanced Materials Handling | 48,045 | 45,304 | 42,077 | 183,738 | 159,995 | |||||||||||||||
| Advanced Planarization Solutions | 56,661 | 8,583 | 18,903 | 96,902 | 30,415 | |||||||||||||||
| Total segment profit | 226,947 | 186,722 | 200,543 | 814,402 | 649,102 | |||||||||||||||
| Amortization of intangibles | 53,462 | 12,240 | 65,346 | 143,953 | 47,856 | |||||||||||||||
| Unallocated expenses | 29,709 | 14,938 | 120,308 | 190,468 | 49,478 | |||||||||||||||
| Total operating income | $143,776 | $159,544 | $14,889 | $479,981 | $551,768 | |||||||||||||||
Entegris, Inc. - page 9 of 15
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
(Unaudited)
| Three months ended | Twelve months ended | |||||||||||||||||||
| December 31, 2022 | December 31, 2021 | October 1, 2022 | December 31, 2022 | December 31, 2021 | ||||||||||||||||
| Net Sales | $946,070 | $635,204 | $993,828 | $3,282,033 | $2,298,893 | |||||||||||||||
| Gross profit-GAAP | $404,525 | $295,090 | $371,671 | $1,396,413 | $1,059,664 | |||||||||||||||
| Adjustments to gross profit: | ||||||||||||||||||||
| Charge for fair value mark-up of acquired inventory sold | — | 428 | 61,932 | 61,932 | 428 | |||||||||||||||
| Adjusted gross profit | $404,525 | $295,518 | $433,603 | $1,458,345 | $1,060,092 | |||||||||||||||
| Gross margin - as a % of net sales | 42.8 | % | 46.5 | % | 37.4 | % | 42.5 | % | 46.1 | % | ||||||||||
| Adjusted gross margin - as a % of net sales | 42.8 | % | 46.5 | % | 43.6 | % | 44.4 | % | 46.1 | % | ||||||||||
Entegris, Inc. - page 10 of 15
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Segment Profit to Adjusted Operating Income
(In thousands)
(Unaudited)
| Three months ended | Twelve months ended | |||||||||||||||||||
| Adjusted segment profit | December 31, 2022 | December 31, 2021 | October 1, 2022 | December 31, 2022 | December 31, 2021 | |||||||||||||||
| SCEM segment profit | $14,828 | $38,632 | $34,228 | $122,287 | $137,392 | |||||||||||||||
| Severance and restructuring costs | — | — | — | — | 167 | |||||||||||||||
| Charge for fair value write-up of acquired inventory sold | — | 428 | 5,104 | 5,104 | 428 | |||||||||||||||
| SCEM adjusted segment profit | $14,828 | $39,060 | $39,332 | $127,391 | $137,987 | |||||||||||||||
| MC segment profit | $107,413 | $94,203 | $105,335 | $411,475 | $321,300 | |||||||||||||||
| Severance and restructuring costs | — | — | — | — | 181 | |||||||||||||||
| MC adjusted segment profit | $107,413 | $94,203 | $105,335 | $411,475 | $321,481 | |||||||||||||||
| AMH segment profit | $48,045 | $45,304 | $42,077 | $183,738 | $159,995 | |||||||||||||||
| Severance and restructuring costs | — | — | — | — | 127 | |||||||||||||||
| AMH adjusted segment profit | $48,045 | $45,304 | $42,077 | $183,738 | $160,122 | |||||||||||||||
| APS segment profit | $56,661 | $8,583 | $18,903 | $96,902 | 30,415 | |||||||||||||||
| APS Charge for fair value write-up of acquired inventory sold | — | — | 56,828 | 56,828 | — | |||||||||||||||
| APS Gain on sale | (254) | — | — | (254) | — | |||||||||||||||
| APS adjusted segment profit | $56,407 | $8,583 | $75,731 | $153,476 | $30,415 | |||||||||||||||
| Unallocated general and administrative expenses | $29,709 | $14,938 | $120,308 | $190,468 | $49,478 | |||||||||||||||
| Unallocated deal and integration costs | (22,369) | (4,558) | (111,040) | (152,238) | (8,524) | |||||||||||||||
| Unallocated severance and restructuring costs | — | — | — | — | (54) | |||||||||||||||
| Adjusted unallocated general and administrative expenses | $7,340 | $10,380 | $9,268 | $38,230 | $40,900 | |||||||||||||||
| Total adjusted segment profit | $226,693 | $187,150 | $262,475 | $876,080 | $650,005 | |||||||||||||||
| Adjusted unallocated general and administrative expenses | (7,340) | (10,380) | (9,268) | (38,230) | (40,900) | |||||||||||||||
| Total adjusted operating income | $219,353 | $176,770 | $253,207 | $837,850 | $609,105 | |||||||||||||||
Entegris, Inc. - page 11 of 15
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, 2022 | December 31, 2021 | October 1, 2022 | December 31, 2022 | December 31, 2021 | ||||||||||||||||
| Net sales | $946,070 | $635,204 | $993,828 | $3,282,033 | $2,298,893 | |||||||||||||||
| Net income (loss) | $57,427 | $118,219 | $(73,703) | $208,920 | $409,126 | |||||||||||||||
| Net income (loss) - as a % of net sales | 6.1 | % | 18.6 | % | (7.4 | %) | 6.4 | % | 17.8 | % | ||||||||||
| Adjustments to net income (loss): | ||||||||||||||||||||
| Income tax expense (benefit) | 7,783 | 30,003 | (7,015) | 38,160 | 69,950 | |||||||||||||||
| Interest expense, net | 82,013 | 9,434 | 82,755 | 208,975 | 40,997 | |||||||||||||||
| Other expense, net | (3,447) | 1,888 | 12,852 | 23,926 | 31,695 | |||||||||||||||
| GAAP - Operating income | 143,776 | 159,544 | 14,889 | 479,981 | 551,768 | |||||||||||||||
| Operating margin - as a % of net sales | 15.2 | % | 25.1 | % | 1.5 | % | 14.6 | % | 24.0 | % | ||||||||||
| Charge for fair value write-up of acquired inventory sold | — | 428 | 61,932 | 61,932 | 428 | |||||||||||||||
| Deal and transaction costs | 258 | 4,744 | 31,867 | 39,543 | 4,744 | |||||||||||||||
| Integration costs | 18,558 | (186) | 20,762 | 50,731 | 3,780 | |||||||||||||||
| Contractual and non-cash integration costs | 3,553 | — | 58,411 | 61,964 | — | |||||||||||||||
| Severance and restructuring costs | — | — | — | — | 529 | |||||||||||||||
| Gain on sale of subsidiary | (254) | — | (254) | — | ||||||||||||||||
| Amortization of intangible assets | 53,462 | 12,240 | 65,346 | 143,953 | 47,856 | |||||||||||||||
| Adjusted operating income | 219,353 | 176,770 | 253,207 | 837,850 | 609,105 | |||||||||||||||
| Adjusted operating margin - as a % of net sales | 23.2 | % | 27.8 | % | 25.5 | % | 25.5 | % | 26.5 | % | ||||||||||
| Depreciation | 41,882 | 22,801 | 45,203 | 135,371 | 90,311 | |||||||||||||||
| Adjusted EBITDA | $261,235 | $199,571 | $298,410 | $973,221 | $699,416 | |||||||||||||||
| Adjusted EBITDA - as a % of net sales | 27.6 | % | 31.4 | % | 30.0 | % | 29.7 | % | 30.4 | % | ||||||||||
Entegris, Inc. - page 12 of 15
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share
(In thousands, except per share data)
(Unaudited)
| Three months ended | Twelve months ended | |||||||||||||||||||
| December 31, 2022 | December 31, 2021 | October 1, 2022 | December 31, 2022 | December 31, 2021 | ||||||||||||||||
| GAAP net income (loss) | $57,427 | $118,219 | (73,703) | $208,920 | $409,126 | |||||||||||||||
| Adjustments to net income: | ||||||||||||||||||||
| Charge for fair value write-up of inventory acquired | — | 428 | 61,932 | 61,932 | 428 | |||||||||||||||
| Deal and transaction costs | 258 | 4,744 | 31,867 | 39,543 | 4,744 | |||||||||||||||
| Integration costs | 18,558 | (186) | 20,762 | 50,731 | 3,780 | |||||||||||||||
| Contractual and non-cash integration costs | 3,553 | — | 58,411 | 61,964 | — | |||||||||||||||
| Severance and restructuring costs | — | — | — | — | 529 | |||||||||||||||
| Loss on extinguishment of debt and modification | 1,052 | — | 2,235 | 3,287 | 23,338 | |||||||||||||||
| Gain on Sale | (254) | — | — | (254) | — | |||||||||||||||
| Interest expense, net | — | — | 2,397 | 29,822 | — | |||||||||||||||
| Amortization of intangible assets | 53,462 | 12,240 | 65,346 | 143,953 | 47,856 | |||||||||||||||
Tax effect of adjustments to net income and discrete items1 | (9,605) | (3,662) | (41,477) | (65,728) | (20,411) | |||||||||||||||
| Non-GAAP net income | $124,451 | $131,783 | $127,770 | $534,170 | $469,390 | |||||||||||||||
| Diluted earnings (loss) per common share | $0.38 | $0.87 | $(0.50) | $1.46 | $3.00 | |||||||||||||||
| Effect of adjustments to net income (loss) | $0.45 | $0.10 | $1.35 | $2.27 | $0.44 | |||||||||||||||
| Diluted non-GAAP earnings per common share | $0.83 | $0.96 | $0.85 | $3.73 | $3.44 | |||||||||||||||
| Diluted weighted averages shares outstanding | 149,909 | 136,629 | 148,570 | 143,146 | 136,574 | |||||||||||||||
| Effect of adjustment to diluted weighted average shares outstanding | — | — | 1,099 | — | — | |||||||||||||||
| Diluted non-GAAP weighted average shares outstanding | 149,909 | 136,629 | 149,669 | 143,146 | 136,574 | |||||||||||||||
1The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.
Entegris, Inc. - page 13 of 15
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Outlook to Non-GAAP Outlook
(In millions, except per share data)
(Unaudited)
| First -Quarter Outlook | |||||
| Reconciliation GAAP Operating Margin to non-GAAP Operating Margin and Adjusted EBITDA Margin | April 1, 2023 | ||||
| Net sales | $880 - $910 | ||||
| GAAP - Operating income | $89 - $106 | ||||
| Operating margin - as a % of net sales | 10% - 12% | ||||
| Deal, transaction and integration costs | 20 | ||||
| Amortization of intangible assets | 65 | ||||
| Adjusted operating income | $174 - 191 | ||||
| Adjusted operating margin - as a % of net sales | 20% - 21% | ||||
| Depreciation | 40 | ||||
| Adjusted EBITDA | $214 - $231 | ||||
| Adjusted EBITDA - as a % of net sales | 25% - 26% | ||||
| First -Quarter Outlook | |||||
| Reconciliation GAAP net income to non-GAAP net income | April 1, 2023 | ||||
| GAAP net income | $8 - $16 | ||||
| Adjustments to net income: | |||||
| Deal, transaction and integration costs | 20 | ||||
| Amortization of intangible assets | 65 | ||||
| Income tax effect | (18) | ||||
| Non-GAAP net income | $75 - $83 | ||||
| First -Quarter Outlook | |||||
| Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share | April 1, 2023 | ||||
| Diluted earnings per common share | $0.05 - $0.10 | ||||
| Adjustments to diluted earnings per common share: | |||||
| Deal, transaction and integration costs | 0.14 | ||||
| Amortization of intangible assets | 0.43 | ||||
| Income tax effect | (0.12) | ||||
| Diluted non-GAAP earnings per common share | $0.50 - $0.55 | ||||
Entegris, Inc. - page 14 of 15
Entegris, Inc. and Subsidiaries
Reconciliation of Proforma GAAP Net Sales to Proforma Non-GAAP Net Sales
(In thousands)
(Unaudited)
| Three months ended | Twelve months ended | |||||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | 4Q22 over 4Q21 | YTD 4Q22 over 4Q21 | |||||||||||||||||||||
| Proforma GAAP Net Sales | $946,070 | $950,228 | $3,920,850 | $3,518,893 | (0.4) | % | 11.4 | % | ||||||||||||||||||
| Less: Wood treatment | — | 14,958 | 11,107 | 70,823 | ||||||||||||||||||||||
| Proforma Net Sales - Non GAAP | $946,070 | $935,270 | $3,909,743 | $3,448,070 | 1.2 | % | 13.4 | % | ||||||||||||||||||
### END ###
Entegris, Inc. - page 15 of 15
Earnings Summary February 14, 2023 Fourth Quarter 2022 Exhibit 99.2
This presentation contains forward looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “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 may include statements about the ongoing impacts of the COVID-19 pandemic and the conflict in Ukraine on the Company’s operations and markets, including supply chain issues and inflationary pressures related thereto; future period guidance or projections; the Company’s performance relative to its markets, including the drivers of such performance; market and technology trends, including the duration and drivers of any growth trends and the impact of the COVID-19 pandemic on such trends; the development of new products and the success of their introductions; the focus of the Company’s engineering, research and development projects; the Company’s ability to execute on our business strategies, including with respect to Company’s expansion of its manufacturing presence in Taiwan and in Colorado Springs; the 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 impact of the acquisitions the Company has made and commercial partnerships the Company has established, including the acquisition of CMC Materials, Inc. (“CMC Materials”); the closing of any announced divestitures, including the timing thereof; trends relating to the fluctuation of currency exchange rates; future capital and other expenditures, including estimates thereof; the Company’s expected tax rate; the impact, financial or otherwise, of any organizational changes; the impact of accounting pronouncements; quantitative and qualitative disclosures about market risk; and other matters. These forward looking statements are based on current management expectations and assumptions only as of the date of this Quarterly Report, are not guarantees of future performance and involve substantial risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from the results expressed in, or implied by, these forward looking statements. 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 the Company’s products and solutions; the level of, and obligations associated with, the Company’s indebtedness, including the debts incurred in connection with the acquisition of CMC Materials; risks related to the acquisition and integration of CMC Materials, including unanticipated difficulties or expenditures relating thereto; the ability to achieve the anticipated synergies and value-creation contemplated by the acquisition of CMC Materials and the diversion of management time on transaction-related matters; risks related to the COVID-19 pandemic and the conflict in Ukraine on the global economy and financial markets, as well as on the Company, its customers and suppliers, which may impact its sales, gross margin, customer demand and its ability to supply its products to its customers; raw material shortages, supply and labor constraints and price increases, pricing and inflationary pressures and rising interest rates; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the Company’s ability to meet rapid demand shifts; the Company’s ability to continue technological innovation and introduce new products to meet customers’ rapidly changing requirements; substantial competition; the Company’s concentrated customer base; the Company’s ability to identify, complete and integrate acquisitions, joint ventures, divestitures or other similar transactions; the Company’s ability to consummate pending transactions on a timely basis or at all and the satisfaction of the conditions precedent to consummation of such pending transactions, including the satisfaction of regulatory conditions on the terms expected, at all or in a timely manner; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; the increasing complexity of certain manufacturing processes; changes in government regulations of the countries in which the Company operates, including the imposition of tariffs, export controls and other trade laws and restrictions and changes to national security and international trade policy, especially as they relate to China; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including under the heading “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on February 4, 2022, and in the Company’s other SEC filings. Except as required under the federal securities laws and the rules and regulations of the SEC, the Company undertakes no obligation to update publicly any forward-looking statements or information contained herein, which speak as of their respective dates. This presentation contains references to “Adjusted EBITDA,” “Adjusted EBITDA – as a % of Net Sales,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Gross Profit,” “Adjusted Gross Margin – as a % of Net Sales,” “Adjusted Segment Profit,” “Adjusted Segment Profit Margin,” “Non-GAAP Operating Expenses,” "Non-GAAP Tax Rate," “Non-GAAP Net Income,” “Diluted Non- GAAP Earnings per Common Share,” "Free Cash Flow" and other measures 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 measure can be found attached to this presentation. 2 Safe Harbor
3 $ in millions, except per share data 4Q22 3Q22 4Q21 4Q22 over 4Q21 4Q22 over 3Q22 Net Revenue $946.1 $993.8 $635.2 48.9% (4.8%) Gross Margin 42.8% 37.4% 46.5% Operating Expenses $260.7 $356.8 $135.5 92.4% (26.9%) Operating Income $143.8 $14.9 $159.5 (9.9%) 865.7% Operating Margin 15.2% 1.5% 25.1% Tax Rate 11.9% 8.7% 20.2% Net Income (Loss) $57.4 $(73.7) $118.2 (51.4%) (177.9%) Diluted Earnings (Loss) Per Common Share $0.38 $(0.50) $0.87 (56.3%) (176.0%) Summary – Consolidated Statement of Operations (GAAP)
4 $ in millions, except per share data 4Q22 3Q22 4Q21 4Q22 over 4Q21 4Q22 over 3Q22 Net Revenue $946.1 $993.8 $635.2 48.9% (4.8%) Adjusted Gross Margin – as a % of Net Sales2 42.8% 43.6% 46.5% Non-GAAP Operating Expenses3 $185.2 $180.4 $118.7 55.9% 2.6% Adjusted Operating Income $219.4 $253.2 $176.8 24.1% (13.4%) Adjusted Operating Margin 23.2% 25.5% 27.8% Non-GAAP Tax Rate4 12.3% 21.2% 20.3% Non-GAAP Net Income5 $124.5 $127.8 $131.8 (5.6%) (2.6%) Diluted Non-GAAP Earnings Per Common Share $0.83 $0.85 $0.96 (13.5%) (2.4%) Summary – Consolidated Statement of Operations (Non-GAAP)1 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. 2. Excludes charges for fair value write-up of acquired inventory sold. 3. Excludes amortization expense, deal and transaction costs, integration costs and severance and restructuring costs. 4. Reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 5. Excludes the items noted in footnotes 2 and 3, interest expense, net and the tax effect of non-GAAP adjustments.
5 $ in millions, except per share data Year ended December 31, 2022 Year ended December 31, 2021 Year-over-Year Net Revenue $3,282.0 $2,298.9 42.8% Gross Margin 42.5% 46.1% Operating Expenses $916.4 $507.9 80.4% Operating Income $480.0 $551.8 (13.0%) Operating Margin 14.6% 24.0% Tax Rate 15.4% 14.6% Net Income $208.9 $409.1 (48.9%) Diluted Earnings Per Common Share $1.46 $3.00 (51.3%) Summary – Consolidated Statement of Operations (GAAP)
6 $ in millions, except per share data Year ended December 31, 2022 Year ended December 31, 2021 Year-over-Year Net Revenue $3,282.0 $2,298.9 42.8% Adjusted Gross Margin – as a % of Net Sales2 44.4% 46.1% Non-GAAP Operating Expenses3 $620.5 $451.0 37.6% Adjusted Operating Income $837.9 $609.1 37.6% Adjusted Operating Margin 25.5% 26.5% Non-GAAP Tax Rate4 16.3% 16.1% Non-GAAP Net Income5 $534.2 $469.4 13.8% Diluted Non-GAAP Earnings Per Common Share $3.73 $3.44 8.4% Summary – Consolidated Statement of Operations (Non-GAAP)1 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 2. Excludes charges for fair value write-up of acquired inventory sold, integration costs and severance and restructuring costs. 3. Excludes amortization expense, deal and transaction costs, integration costs and severance and restructuring costs. 4. Reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 5. Excludes the items noted in footnotes 2 and 3, the loss on debt extinguishment and the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes.
7 $ in millions, except per share data 1Q22 2Q22 3Q22 4Q22 FY2022 Net Revenue $969.1 $1,011.9 $993.8 $946.1 $3,920.9 Gross Margin 45.2% 42.4% 37.4% 42.8% 41.9% Operating Expenses $218.2 $226.9 $356.8 $260.7 $1,062.6 Operating Income $219.9 $201.9 $14.9 $143.8 $580.5 Operating Margin 22.7% 19.9% 1.5% 15.2% 14.8% EBITDA $289.2 $271.3 $125.4 $239.1 $925.0 Tax Rate 16.1% 24.8% 8.7% 11.9% 21.5% Net Income (Loss) $160.3 $140.1 $(73.7) $57.4 $284.1 Diluted Earnings (Loss) Per Common Share $1.06 $0.93 $(0.50) $0.38 $1.85 Summary Consolidated Statement of Operations (GAAP)- Proforma The above pro forma results include the addition of CMC Materials, Inc.’s financials recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported financials and are provided as a complement to, and should be read in conjunction with, the consolidated financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated. No other adjustments have been included.
8 $ in millions, except per share data 1Q22 2Q22 3Q22 4Q22 FY2022 Net Revenue $958.2 $1,011.7 $993.8 $946.1 $3,909.8 Adjusted Gross Margin – as a % of Net Sales2 44.5% 42.0% 43.6% 42.8% 43.2% Non-GAAP Operating Expenses3 $177.4 $178.8 $180.4 $185.1 $721.7 Adjusted Operating Income $248.8 $245.8 $253.2 $219.4 $967.2 Adjusted Operating Margin 26.0% 24.3% 25.5% 23.2% 24.7% Adjusted EBITDA $296.6 $294.0 $298.4 $261.3 $1,150.3 Non-GAAP Tax Rate4 15.3% 22.9% 21.2% 12.3% 18.1% Non-GAAP Net Income5 $137.6 $120.0 $127.6 $124.6 $509.8 Diluted Non-GAAP Earnings Per Common Share $0.91 $0.80 $0.85 $0.83 $3.39 Summary – Consolidated Statement of Operations (Non-GAAP)- Proforma 1 1. See GAAP Proforma to non-GAAP Proforma reconciliation tables in the appendix of this presentation. 2. Excludes charges for fair value write-up of acquired inventory sold, wood treatment and incremental depreciation expense 3. Excludes amortization and incremental depreciation expense, deal costs, and integration costs. 4. Reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 5. Excludes the items noted in footnotes 2 and 3,incremental interest expense, interest rate swap gain, loss on extinguishment of debt, net and the tax effect of non-GAAP adjustments.
9 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. Microcontamination Control (MC) $ in millions 4Q22 3Q22 4Q21 4Q22 over 4Q21 4Q22 over 3Q22 Net Revenue $284.7 $280.6 $258.9 10.0% 1.5% Segment Profit $107.4 $105.3 $94.2 14.0% 2.0% Segment Profit Margin 37.7% 37.5% 36.4% Adj. Segment Profit1 $107.4 $105.3 $94.2 14.0% 2.0% Adj. Segment Profit Margin1 37.7% 37.5% 36.4% Sales growth (YOY) was strong in gas purification and liquid filtration. –––––– Segment profit margin (adjusted) increase was driven primarily by higher volumes and solid execution, offset in part by higher ER&D investment. 4Q22 Highlights
10 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. Advanced Materials Handling (AMH) $ in millions 4Q22 3Q22 4Q21 4Q22 over 4Q21 4Q22 over 3Q22 Net Revenue $213.9 $210.4 $197.7 8.2% 1.7% Segment Profit $48.0 $42.1 $45.3 6.0% 14.0% Segment Profit Margin 22.5% 20.0% 22.9% Adj. Segment Profit1 $48.0 $42.1 $45.3 6.0% 14.0% Adj. Segment Profit Margin1 22.5% 20.0% 22.9% Sales growth (YOY) was strongest in wafer and fluid handling and liquid packaging solutions. –––––– Segment profit margin (adjusted) decline (YOY) was primarily driven by additional ER&D investment. Segment profit margin (adjusted) increase (SEQ) was primarily the result of certain inventory charges in Q3 not recurring and favorable product mix 4Q22 Highlights
11 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. 2. 4Q21 is reported on a proforma basis, see proforma GAAP to proforma non-GAAP reconciliation tables in the appendix of this presentation. Sales decline was seen across most product lines and was primarily driven by the softening in the semi market and the impact from the export restrictions in China. –––––– Segment profit margin (adjusted) decline was driven primarily by greater investment in ER&D, lower volumes and unfavorable mix. $ in millions 4Q22 3Q22 4Q21 4Q22 over 4Q21 4Q22 over 3Q22 Net Revenue1 $204.2 $224.2 $205.7 (0.7%) (8.9%) Segment Profit1 $14.8 $34.2 $41.4 (64.3%) (56.7%) Segment Profit Margin 7.3% 15.3% 20.1% Adj. Segment Profit1 $14.8 $39.3 $40.2 (63.2%) (62.3%) Adj. Segment Profit Margin1 7.3% 17.5% 19.5% Specialty Chemicals and Engineered Materials (SCEM)2 4Q22 Highlights
12 Advanced Planarization Solutions (APS)2 $ in millions 4Q22 3Q22 4Q21 4Q22 over 4Q21 4Q22 over 3Q22 Net Revenue $253.8 $293.9 $284.4 (10.8%) (13.6%) Segment Profit1 $56.7 $18.9 $80.2 (29.3%) 200.0% Segment Profit Margin 22.3% 6.4% 28.2% Adj. Segment Profit1 $56.4 $75.7 $73.7 (23.5%) (25.5%) Adj. Segment Profit Margin1 22.2% 25.8% 25.9% Sales decline was primarily driven by the impact of the softening semi market. –––––– Segment profit margin (adjusted) decline was driven primarily by lower volumes and unfavorable product mix. 4Q22 Highlights 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. 2. 4Q21 is reported on a proforma basis, see proforma GAAP to proforma non-GAAP reconciliation tables in the appendix of this presentation.
13 $ in millions 4Q22 3Q22 4Q21 $ Amount % Total $ Amount % Total $ Amount % Total Cash, Cash Equivalents & Restricted Cash $563.4 5.6% $754.7 7.4% $402.6 12.6% Accounts Receivable, net $535.5 5.3% $519.8 5.1% $347.4 10.9% Inventories $812.8 8.0% $823.6 8.1% $475.2 14.9% Net PP&E $1,393.3 13.7% $1,383.7 13.7% $654.1 20.5% Total Assets $10,138.9 $10,133.4 $3,191.9 Current Liabilities $761.9 7.5% $841.0 8.3% $379.0 11.9% Long-term Debt, Excluding Current Maturities $5,632.9 55.6% $5,627.7 55.5% $937.0 29.4% Total Liabilities $6,920.9 68.3% $7,017.1 69.2% $1,478.1 46.3% Total Shareholders’ Equity $3,218.0 31.7% $3,116.3 30.8% $1,713.8 53.7% AR – DSOs 51.6 47.7 49.9 Inventory Turns 2.6 2.8 1 3.0 Summary – Balance Sheet Items 1.Excludes inventory step-up amortization
14 $ in millions 4Q22 3Q22 4Q21 Beginning Cash Balance $754.7 $2,743.2 $475.8 Cash provided by operating activities 32.1 145.5 116.0 Capital expenditures (147.4) (126.7) (76.6) Proceeds from revolving credit facilities and debt — 2,810.4 50.0 Payments on revolving credit facilities and debt (70.0) (223.0) (50.0) Acquisition of business, net of cash — (4,474.9) (89.7) Repurchase and retirement of common stock — — (17.1) Payments for dividends (14.9) (14.9) (10.9) Other investing activities (5.7) — — Other financing activities 5.1 (93.8) 6.0 Effect of exchange rates 9.6 (11.1) (0.9) Ending Cash Balance $563.4 $754.7 $402.6 Free Cash Flow1 ($115.3) $18.8 $39.3 Adjusted EBITDA2 $261.2 $298.4 $199.6 Adjusted EBITDA – as a % of net sales2 27.6% 30.0% 31.4% Cash Flows 1. Equals cash from operations less capital expenditures. 2. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation.
15 GAAP $ in millions, except per share data 1Q23 Guidance 4Q22 Actual 3Q22 Actual Net Revenue $880 - $910 $946.1 $993.8 Operating Expenses $285 - $290 $260.7 $356.8 Net Income (Loss) $8 - $16 $57.4 -$73.7 Diluted Earnings (Loss) per Common Share $0.05 - $0.10 $0.38 -$0.50 Operating Margin 10% - 12% 15.2% 1.5% Non-GAAP $ in millions, except per share data 1Q23 Guidance 4Q22 Actual 3Q22 Actual Net Revenue $880 - $910 $946.1 $993.8 Non-GAAP Operating Expenses1 $200 - $205 $185.2 $180.4 Non-GAAP Net Income1 $75 - $83 $124.5 $127.8 Diluted non-GAAP Earnings per Common Share1 $0.50 - $0.55 $0.83 $0.85 Adjusted EBITDA Margin 25% - 26% 27.6% 30.0% Outlook 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation.
Entegris®, the Entegris Rings Design®, and other product names are trademarks of Entegris, Inc. as listed on entegris.com/trademarks. All product names, logos, and company names are trademarks or registered trademarks of their respective owners. Use of them does not imply any affiliation, sponsorship, or endorsement by the trademark owner. ©2020 Entegris, Inc. All rights reserved. 16
Appendix 17
18 Reconciliation of GAAP Gross Profit to Adjusted Gross Profit Three months ended Twelve months ended $ in thousands December 31, 2022 December 31, 2021 October 1, 2022 December 31, 2022 December 31, 2021 Net sales $946,070 $635,204 $993,828 $3,282,033 $2,298,893 Gross profit-GAAP $404,525 $295,090 $371,671 $1,396,413 $1,059,664 Adjustments to gross profit: Charge for fair value mark-up of acquired inventory sold — 428 61,932 61,932 428 Adjusted gross profit $404,525 $295,518 $433,603 $1,458,345 $1,060,092 Gross margin – as a % of net sales 42.8% 46.5% 37.4% 42.5% 46.1% Adjusted gross margin – as a % of net sales 42.8% 46.5% 43.6% 44.4% 46.1%
19 Reconciliation of GAAP Operating Expenses and Tax Rate to Non-GAAP Operating Expenses and Tax Rate Three months ended $ in millions December 31, 2022 December 31, 2021 October 1, 2022 GAAP operating expenses $260.7 $135.5 $356.8 Adjustments to operating expenses: Deal and transaction costs 0.3 4.7 31.9 Integration costs 18.5 (0.1) 20.8 Contractual and non-cash integration costs 3.5 — 58.4 Gain on sale (0.3) — — Amortization of intangible assets 53.5 12.2 65.3 Non-GAAP operating expenses $185.2 $118.7 $180.4 GAAP tax rate 11.9% 20.2% 8.7% Other 0.4% 0.1% 12.5% Non-GAAP tax rate 12.3% 20.3% 21.2%
20 $ in thousands Three Months Ended Twelve months ended December 31, 2022 December 31, 2021 October 1, 2022 December 31, 2022 December 31, 2021 Net sales $946,070 $635,204 $993,828 $3,282,033 $2,298,893 Net (loss) income $57,427 $118,219 $(73,703) $208,920 $409,126 Net (loss) income – as a % of net sales 6.1% 18.6% (7.4%) 6.4% 17.8% Adjustments to net (loss) income: Income tax (benefit) expense 7,783 30,003 (7,015) 38,160 69,950 Interest expense, net 82,013 9,434 82,755 208,975 40,997 Other expense, net (3,447) 1,888 12,852 23,926 31,695 GAAP - Operating income 143,776 159,544 14,889 479,981 551,768 Operating margin - as a % of net sales 15.2% 25.1% 1.5% 14.6% 24.0% Charge for fair value write-up of acquired inventory sold — 428 61,932 61,932 428 Deal and transaction costs 258 4,744 31,867 39,543 4,744 Integration costs 18,558 (186) 20,762 50,731 3,780 Contractual and non-cash integration costs 3,553 — 58,411 61,964 — Gain on sale (254) — — (254) — Severance and restructuring costs — — — — 529 Amortization of intangible assets 53,462 12,240 65,346 143,953 47,856 Adjusted operating income 219,353 176,770 253,207 837,850 609,105 Adjusted operating margin - as a % of net sales 23.2% 27.8% 25.5% 25.5% 26.5% Depreciation 41,882 22,801 45,203 135,371 90,311 Adjusted EBITDA $261,235 $199,571 $298,410 $973,221 699,416 Adjusted EBITDA – as a % of net sales 27.6% 31.4% 30.0% 29.7% 30.4% Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
21 $ in thousands, except per share data Three months ended Twelve months ended December 31, 2022 December 31, 2021 October 1, 2022 December 31, 2022 December 31, 2021 GAAP net (loss) income $57,427 $118,219 $(73,703) $208,920 $409,126 Adjustments to net (loss) income: Charge for fair value write-up of inventory acquired — 428 61,932 61,932 428 Deal and transaction costs 258 4,744 31,867 39,543 4,744 Integration costs 18,558 (186) 20,762 50,731 3,780 Contractual and non-cash integration costs 3,553 — 58,411 61,964 — Severance and restructuring costs — — — — 529 Loss on extinguishment of debt and modification 1,052 — 2,235 3,287 23,338 Gain on sale (254) — (254) — Interest expense, net — — 2,397 29,822 — Amortization of intangible assets 53,462 12,240 65,346 143,953 47,856 Tax effect of adjustments to net income and discrete items1 (9,605) (3,662) (41,477) (65,728) (20,411) Non-GAAP net income $124,451 $131,783 $127,770 $534,170 $469,390 Diluted earnings per common share $0.38 $0.87 $(0.50) $1.46 $3.00 Effect of adjustments to net income $0.45 $0.10 $1.35 $2.27 $0.44 Diluted non-GAAP earnings per common share $0.83 $0.96 $0.85 $3.73 $3.44 Weighted average diluted shares outstanding 149,909 136,629 148,570 143,146 136,574 Effect of adjustment to diluted weighted average shares outstanding — — 1,099 — — Diluted non-GAAP weighted average shares outstanding 149,909 136,629 149,669 143,146 136,574 Reconciliation of GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share 1. The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.
22 $ in millions First-Quarter 2023 Outlook Reconciliation GAAP net income to non-GAAP net income GAAP net income $8 - $16 Adjustments to net income: Deal, transaction and integration costs 20 Amortization of intangible assets 65 Income tax effect (18) Non-GAAP net income $75 - $83 First-Quarter 2023 Outlook Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share Diluted earnings per common share $0.05 - $0.10 Adjustments to diluted earnings per common share: Deal, transaction and integration costs 0.14 Amortization of intangible assets 0.43 Income tax effect (0.12) Diluted non-GAAP earnings per common share $0.50 - $0.55 $ in millions First-Quarter 2023 Outlook Reconciliation GAAP operating expenses to non-GAAP operating expenses GAAP operating expenses $285 - $290 Adjustments to net income: Deal, transaction and integration costs 20 Amortization of intangible assets 65 Non-GAAP operating expenses $200 - $205 Reconciliation of GAAP Outlook to Non-GAAP Outlook
23 Reconciliation of GAAP Outlook to Non-GAAP Outlook Continued First -Quarter Outlook Reconciliation GAAP Operating Margin to non-GAAP Operating Margin and Adjusted EBITDA Margin April 1, 2023 Net sales $880 - $910 GAAP - Operating income $89 - $106 Operating margin - as a % of net sales 10% - 12% Deal, transaction and integration costs 20 Amortization of intangible assets 65 Adjusted operating income $174 - 191 Adjusted operating margin - as a % of net sales 20% - 21% Depreciation 40 Adjusted EBITDA $214 - $231 Adjusted EBITDA - as a % of net sales 25% - 26%
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 24 $ in millions Q120 Q220 Q320 Q420 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 FY 2020 FY 2021 FY 2022 Sales SCEM $ 190.9 $ 181.1 $ 181.6 $ 198.5 $ 193.8 $ 224.3 $ 218.5 $ 220.7 $ 221.4 $ 225.4 $ 224.2 $ 204.2 $ 752.1 $ 857.3 $ 875.2 MC 159.3 183.8 193.5 205.6 207.1 227.5 225.9 258.9 266.6 274.1 280.6 284.7 742.2 919.4 1106.0 AMH 116.1 126.4 144.4 151.7 148.5 172.5 186.2 197.7 198.1 224.1 210.4 213.9 538.6 704.9 846.5 APS 237.5 239.8 243.1 258.0 263.4 265.6 269.8 284.4 299.1 305.3 293.9 253.8 978.4 1,083.2 1152.1 Inter-segment elimination (8.9) (9.9) (8.9) (11.0) (11.7) (11.6) (11.1) (11.5) (16.1) (17.0) (15.3) (10.5) (38.7) (45.9) (58.9) Total Sales $ 694.9 $ 721.2 $ 753.7 $ 802.8 $ 801.1 $ 878.3 $ 889.3 $ 950.2 $ 969.1 $ 1,011.9 $ 993.8 $ 946.1 $ 2,972.6 $ 3,518.9 $ 3,920.9 Segment Profit (Loss) SCEM $ 53.3 $ 49.7 $ 43.3 $ 34.9 $ (165.4) $ 57.2 $ 36.9 $ 41.4 $ 52.2 $ 38.1 $ 34.2 $ 14.8 $ 181.2 $ (29.9) $ 139.3 FV Step-up — — — — (5.1) — — — — — 5.1 — — (5.1) 5.1 SCEM Segment Profit (Loss) Adjusted $ 53.3 $ 49.7 $ 43.3 $ 34.9 $ (170.5) $ 57.2 $ 36.9 $ 41.4 $ 52.2 $ 38.1 $ 39.3 $ 14.8 $ 181.2 $ (35.0) $ 144.4 MC 50.2 62.1 64.9 71.7 70.6 78.1 78.4 94.2 98.6 100.1 105.3 107.4 248.9 321.3 411.4 AMH 20.6 22.8 33.3 34.3 32.1 42.1 40.5 45.3 46.7 46.9 42.1 48.0 111.0 160.0 183.7 APS 60.6 69.2 67.1 72.6 72.8 71.9 68.5 80.2 88.9 84.9 18.9 56.7 269.5 293.4 249.4 Depreciation ³ (7.0) (7.0) (7.0) (7.0) (7.0) (7.0) (7.0) (7.0) (7.0) (7.0) — — (28.0) (28.0) (14.0) FV Step-up ⁴ — — — — (56.8) — — — — — 56.8 — — (56.8) 56.8 APS Segment Profit Adjusted $ 53.6 $ 62.2 $ 60.1 $ 65.6 $ 9.0 $ 64.9 $ 61.5 $ 73.2 $ 81.9 $ 77.9 $ 75.7 $ 56.7 $ 241.5 $ 208.6 $ 292.2 Total Segment Profit (Loss) $ 177.7 $ 196.8 $ 201.6 $ 206.5 $ (58.8) $ 242.3 $ 217.3 $ 254.1 $ 279.4 $ 263.0 $ 262.4 $ 226.9 $ 782.6 $ 654.9 $ 1,031.7 Proforma GAAP Segment Trend Data Unaudited¹ ² ¹ During the three months ended October 1, 2022, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on four reportable segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), Advanced Material Handling (AMH) and Advanced Planarization Solutions (APS). The following prior year information has been recast to reflect this realignment ² The above pro forma results include the addition of CMC Materials, Inc.’s net sales and segment profit amounts recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported GAAP net sales and segment profit amounts related to businesses that were transferred to the above business segments after the effectiveness of the merger and are provided as a complement to, and should be read in conjunction with, the condensed financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated, see table below. ³ Represents the preliminary pro forma adjustment to recognize changes to straight-line depreciation expense resulting from the fair value adjustments to acquired property, plant, and equipment. The preliminary fair value of the property, plant and equipment may not represent the actual value of the property, plant and equipment when the Merger is completed resulting in a potential difference in straight-line depreciation expense, and that difference may be material. ⁴ Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation. Entegris will recognize the increased value of inventory in cost of sales as the inventory is sold, which for purposes of these pro forma presentation is assumed to occur within the first quarter of 2021 based on inventory turns and is non-recurring in nature.
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 25 $ in millions Q120 Q220 Q320 Q420 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 FY 2020 FY 2021 FY 2022 Total Segment Profit (Loss) $ 177.7 $ 196.8 $ 201.6 $ 206.5 $ (58.8) $ 242.3 $ 217.3 $ 254.1 $ 279.4 $ 263.0 $ 262.4 $ 226.9 $ 782.6 $ 654.9 $ 1,031.7 Amortization of intangible assets 34.8 30.7 29.7 28.9 28.4 28.8 28.6 28.1 28.5 28.3 65.3 53.5 124.1 113.9 175.6 Additional Amortization ⁵ 31.4 31.4 31.4 31.4 31.4 31.4 31.4 31.4 31.4 31.4 — — 125.6 125.6 62.8 Stock based ⁶ compensation — — — — 6.1 — — — — — — — — 6.1 — Transaction Expenses ⁷ — — — — 184.6 — — (11.1) (17.8) (22.3) (111.0) (22.4) — 173.5 (173.5) Unallocated expenses 17.6 20.7 26.1 24.2 23.8 25.5 19.2 33.0 38.0 39.9 120.3 29.7 88.6 101.5 227.9 Total Operating Income (Loss) $ 93.9 $ 114.0 $ 114.4 $ 122.0 $ (333.1) $ 156.6 $ 138.1 $ 172.7 $ 199.3 $ 185.7 $ 187.8 $ 166.1 $ 444.3 $ 134.3 $ 738.9 Proforma GAAP Segment Trend Data Unaudited¹ ² (continued) ¹ During the three months ended October 1, 2022, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on four reportable segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), Advanced Material Handling (AMH) and Advanced Planarization Solutions (APS). The following prior year information has been recast to reflect this realignment ² The above pro forma results include the addition of CMC Materials, Inc.’s net sales and segment profit amounts recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported GAAP net sales and segment profit amounts related to businesses that were transferred to the above business segments after the effectiveness of the merger and are provided as a complement to, and should be read in conjunction with, the condensed financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated, see table below. ⁵ Represents estimated incremental straight-line amortization expense resulting from the allocation of purchase consideration to definite-lived intangible assets subject to amortization. ⁶ Represents the incremental pro forma stock-based compensation expense for accelerated vesting upon the change in control for stock options, restricted stock units, restricted stock shares, phantom units, and other deferred restricted stock units. ⁷ Represents one-time transaction-related costs for both Entegris and CMC that have yet to be expensed or accrued in the historical financial statements in connection with the Merger including bank fees, legal fees, consulting fees, severance payments, retention payments, CICSPA, and other transaction expenses.
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 26 $ in millions Q120 Q220 Q320 Q420 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 FY 2020 FY 2021 FY 2022 Sales - GAAP SCEM $ 190.9 $ 181.1 $ 181.6 $ 198.5 $ 193.8 $ 224.3 $ 218.5 $ 220.7 $ 221.4 $ 225.4 $ 224.2 $ 204.2 $ 752.1 $ 857.3 $ 875.2 MC 159.3 183.8 193.5 205.6 207.1 227.5 225.9 258.9 266.6 274.1 280.6 284.7 742.2 919.4 1106.0 AMH 116.1 126.4 144.4 151.7 148.5 172.5 186.2 197.7 198.1 224.1 210.4 213.9 538.6 704.9 846.5 APS 237.5 239.8 243.1 258.0 263.4 265.6 269.8 284.4 299.1 305.3 293.9 253.8 978.4 1083.2 1152.1 Inter-segment elimination (8.9) (9.9) (8.9) (11.0) (11.7) (11.6) (11.1) (11.5) (16.1) (17.0) (15.3) (10.5) (38.7) (45.9) (58.9) Total Sales $ 694.9 $ 721.2 $ 753.7 $ 802.8 $ 801.1 $ 878.3 $ 889.3 $ 950.2 $ 969.1 $ 1,011.9 $ 993.8 $ 946.1 $ 2,972.6 $ 3,518.9 $ 3,920.9 Adjusted Segment Sales SCEM $ 175.9 $ 162.3 $ 163.4 $ 181.2 $ 178.3 $ 205.2 $ 197.3 $ 205.7 $ 210.5 $ 225.2 $ 224.2 $ 204.2 $ 682.8 $ 786.5 $ 864.1 MC 159.26 183.8 193.5 205.6 207.1 227.5 225.9 258.9 266.6 274.1 280.6 284.7 742.2 919.4 1106.0 AMH 116.14 126.4 144.4 151.7 148.5 172.5 186.2 197.7 198.1 224.1 210.4 213.9 538.6 704.9 846.5 APS 237.5 239.8 243.1 258.0 263.4 265.6 269.8 284.4 299.1 305.3 293.9 253.8 978.4 1083.2 1152.1 Inter-segment elimination (8.9) (9.9) (8.9) (11.0) (11.7) (11.6) (11.1) (11.5) (16.1) (17.0) (15.3) (10.5) (38.7) (45.9) (58.9) Total Adjusted Sales $ 679.9 $ 702.4 $ 735.5 $ 785.5 $ 785.6 $ 859.2 $ 868.1 $ 935.2 $ 958.2 $ 1,011.7 $ 993.8 $ 946.1 $ 2,903.3 $ 3,448.1 $ 3,909.8 Adjusted SCEM segment Sales: SCEM segment Sales $ 190.9 $ 181.1 $ 181.6 $ 198.5 $ 193.8 $ 224.3 $ 218.5 $ 220.7 $ 221.4 $ 225.4 $ 224.2 $ 204.2 $ 752.1 $ 857.3 $ 875.2 Removal of wood treatment sales (15.0) (18.8) (18.2) (17.3) (15.5) (19.1) (21.2) (15.0) (10.9) (0.2) — — (69.3) (70.8) (11.1) SCEM adjusted segment sales $ 175.9 $ 162.3 $ 163.4 $ 181.2 $ 178.3 $ 205.2 $ 197.3 $ 205.7 $ 210.5 $ 225.2 $ 224.2 $ 204.2 $ 682.8 $ 786.5 $ 864.1 Proforma Non-GAAP Segment Trend Data Unaudited¹ ² ¹ During the three months ended October 1, 2022, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on four reportable segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), Advanced Material Handling (AMH) and Advanced Planarization Solutions (APS). The following prior year information has been recast to reflect this realignment ² The above pro forma results include the addition of CMC Materials, Inc.’s net sales and segment profit amounts recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported GAAP net sales and segment profit amounts related to businesses that were transferred to the above business segments after the effectiveness of the merger and are provided as a complement to, and should be read in conjunction with, the condensed financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated, see table below.
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 27 $ in millions Q120 Q220 Q320 Q420 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 FY 2020 FY 2021 FY 2022 Segment Profit - GAAP SCEM $ 53.3 $ 49.7 $ 43.3 $ 34.9 $ (170.5) $ 57.2 $ 36.9 $ 41.4 $ 52.2 $ 38.1 $ 39.3 $ 14.8 $ 181.2 $ (35.0) $ 144.4 MC 50.2 62.1 64.9 71.7 70.6 78.1 78.4 94.2 98.6 100.1 105.3 107.4 248.9 321.3 411.4 AMH 20.6 22.8 33.3 34.3 32.1 42.1 40.5 45.3 46.7 46.9 42.1 48.0 111.0 160.0 183.7 APS 53.6 62.2 60.1 65.6 9 64.9 61.5 73.2 81.9 77.9 75.7 56.7 241.5 208.6 292.2 Total Segment profit (loss) $ 177.7 $ 196.8 $ 201.6 $ 206.5 $ (58.8) $ 242.3 $ 217.3 $ 254.1 $ 279.4 $ 263.0 $ 262.4 $ 226.9 $ 782.6 $ 654.9 $ 1,031.7 Amortization of intangible assets 66.2 62.1 61.1 60.3 59.8 60.2 60 59.5 59.9 59.7 65.3 53.5 249.7 239.5 238.4 Unallocated expenses 17.6 20.7 26.1 24.2 214.5 25.5 19.2 21.9 20.2 17.6 9.3 7.3 88.6 281.1 54.4 Total Operating Income (Loss) $ 93.9 $ 114.0 $ 114.4 $ 122.0 $ (333.1) $ 156.6 $ 138.1 $ 172.7 $ 199.3 $ 185.7 $ 187.8 $ 166.1 $ 444.3 $ 134.3 $ 738.9 Adjusted Segment Profit (Loss) SCEM segment profit (loss) $ 53.3 $ 49.7 $ 43.3 $ 34.9 $ (170.5) $ 57.2 $ 36.9 $ 41.4 $ 52.2 $ 38.1 $ 39.3 $ 14.8 $ 181.2 $ (35.0) $ 144.4 Adjustments for wood treatment (10.6) (13.3) (12.9) (12.9) (11.5) (14.2) (15.7) (10.7) (7.4) 0.3 — — (49.7) (52.1) (7.1) Impairment charges — — 2.3 7.3 208.2 3.1 11.7 9.4 — — — — 9.6 232.4 — Integration Expenses — (1.6) — — — — — — — — — — (1.6) — — FV Mark-up of Inventory sold 0.2 — — — 5.1 — — 0.4 — — 0.2 5.5 — Other adjustments 0.1 0.3 — 0.1 (1.0) — 2.9 (0.3) (3.3) — — — 0.5 1.6 (3.3) Severance - Restructuring 0.2 0.5 0.3 0.2 — 0.1 0.1 — — — — — 1.2 0.2 — SCEM adjusted segment profit $ 43.2 $ 35.6 $ 33.0 $ 29.6 $ 30.3 $ 46.2 $ 35.9 $ 40.2 $ 41.5 $ 38.4 $ 39.3 $ 14.8 $ 141.4 $ 152.6 $ 134.0 MC segment Profit $ 50.2 $ 62.1 $ 64.9 $ 71.7 $ 70.6 $ 78.1 $ 78.4 $ 94.2 $ 98.6 $ 100.1 $ 105.3 $ 107.4 $ 248.9 $ 321.3 $ 411.4 FV Mark-up of Inventory sold 0.1 — — — — — — — — — — — 0.1 — — Severance - Restructuring 0.2 0.5 0.3 0.2 0.1 0.1 0.1 — — — — — 1.2 0.3 — MC adjusted segment profit $ 50.5 $ 62.6 $ 65.2 $ 71.9 $ 70.7 $ 78.2 $ 78.5 $ 94.2 $ 98.6 $ 100.1 $ 105.3 $ 107.4 $ 250.2 $ 321.6 $ 411.4 Proforma Non-GAAP Segment Trend Data Unaudited¹ ² (continued) ¹ During the three months ended October 1, 2022, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on four reportable segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), Advanced Material Handling (AMH) and Advanced Planarization Solutions (APS). The following prior year information has been recast to reflect this realignment ² The above pro forma results include the addition of CMC Materials, Inc.’s net sales and segment profit amounts recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported GAAP net sales and segment profit amounts related to businesses that were transferred to the above business segments after the effectiveness of the merger and are provided as a complement to, and should be read in conjunction with, the condensed financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated, see table below.
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 28 $ in millions Q120 Q220 Q320 Q420 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 FY 2020 FY 2021 FY 2022 Adjusted Segment Profit AMH segment Profit $ 20.6 $ 22.8 $ 33.3 $ 34.3 $ 32.1 $ 42.1 $ 40.5 $ 45.3 $ 46.7 $ 46.9 $ 42.1 $ 48.0 $ 111.0 $ 160.0 $ 183.7 FV Mark-up of Inventory sold — — 0.2 — — — — — — — — — 0.2 — — Severance - Restructuring 0.1 0.8 0.2 0.1 — — 0.1 — — — — — 1.2 0.1 — AMH adjusted segment profit $ 20.7 $ 23.6 $ 33.7 $ 34.4 $ 32.1 $ 42.1 $ 40.6 $ 45.3 $ 46.7 $ 46.9 $ 42.1 $ 48.0 $ 112.4 $ 160.1 $ 183.7 APS segment profit $ 53.6 $ 62.2 $ 60.1 $ 65.6 $ 9.0 $ 64.9 $ 61.5 $ 73.2 $ 81.9 $ 77.9 $ 75.7 $ 56.7 $ 241.5 $ 208.6 $ 292.2 FV Mark-up of Inventory sold APS — — — — 56.8 — — — — — — — — 56.8 — Other adjustments 0.2 0.1 0.1 0.1 — 1.5 (0.2) 0.5 — — — (0.3) 0.5 1.8 (0.3) APS adjusted segment profit $ 53.8 $ 62.3 $ 60.2 $ 65.7 $ 65.8 $ 66.4 $ 61.3 $ 73.7 $ 81.9 $ 77.9 $ 75.7 $ 56.4 $ 242.0 $ 267.2 $ 291.9 Unallocated expenses $ 17.6 $ 20.7 $ 26.1 $ 24.2 $ 214.5 $ 25.5 $ 19.2 $ 21.9 $ 20.2 $ 17.6 $ 9.3 $ 7.3 $ 88.6 $ 281.1 $ 54.4 Other adjustments 0.5 1.9 0.5 1.1 (0.4) (1.6) (0.3) 2.7 0.3 0.1 0.1 0.1 4.0 0.4 0.6 Deal, transaction & integration costs 3.8 3.6 5.5 3.7 194.9 4.0 3.5 — — — — — 16.6 202.4 — Adjusted unallocated expenses $ 13.3 $ 15.2 $ 20.1 $ 19.4 $ 20.0 $ 23.1 $ 16.0 $ 19.2 $ 19.9 $ 17.5 $ 9.2 $ 7.2 $ 68.0 $ 78.3 $ 53.8 Total Adjusted Segment Profit $ 168.2 $ 184.1 $ 192.1 $ 201.6 $ 198.9 $ 232.9 $ 216.3 $ 253.4 $ 268.7 $ 263.3 $ 262.4 $ 226.6 $ 746.0 $ 901.5 $ 1,021.0 Adjusted unallocated expenses 13.3 15.2 20.1 19.4 20.0 23.1 16.0 19.2 19.9 17.5 9.2 7.2 68.0 78.3 53.8 Total adjusted operating Income $ 154.9 $ 168.9 $ 172.0 $ 182.2 $ 178.9 $ 209.8 $ 200.3 $ 234.2 $ 248.8 $ 245.8 $ 253.2 $ 219.4 $ 678.0 $ 823.2 $ 967.2 Proforma Non-GAAP Segment Trend Data Unaudited¹ ² (continued) ¹ During the three months ended October 1, 2022, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on four reportable segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), Advanced Material Handling (AMH) and Advanced Planarization Solutions (APS). The following prior year information has been recast to reflect this realignment ² The above pro forma results include the addition of CMC Materials, Inc.’s net sales and segment profit amounts recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported GAAP net sales and segment profit amounts related to businesses that were transferred to the above business segments after the effectiveness of the merger and are provided as a complement to, and should be read in conjunction with, the condensed financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated, see table below. $ in millions Q120 Q220 Q320 Q420 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 FY 2020 FY 2021 FY 2022 Intercompany sales and COGS ² $ 1.6 $ 1.9 $ 1.5 $ 2.7 $ 2.3 $ 2.5 $ 2.1 $ 2.0 $ 4.7 $ 3.6 $ 3.0 $ 1.5 $ 7.7 $ 8.9 $ 12.8
29 Reconciliation of Proforma GAAP Net Sales to Proforma Non-GAAP Net Sales $ in millions 1Q22 2Q22 3Q22 4Q22 FY2022 Proforma GAAP net sales $969.1 $1,011.9 $993.8 $946.1 $3,920.9 Removal of Wood treatment 10.9 0.2 — — 11.1 Proforma Non-GAAP net sales $958.2 $1,011.7 $993.8 $946.1 $3,909.8 Reconciliation of Proforma GAAP Gross Profit to Proforma Adjusted Gross Profit $ in millions 1Q22 2Q22 3Q22 4Q22 FY2022 Proforma Gross Margin $438.0 $428.8 $371.7 $404.5 $1,643.0 Proforma Gross Margin -as a % of GAAP net sales 45.2 % 42.4 % 37.4 % 42.8 % 41.9 % Inventory step-up — — 61.9 — 61.9 Wood treatment (7.4) 0.3 — — (7.1) Incremental Depreciation expense (4.5) (4.5) — — (9.0) Proforma Non-GAAP gross margin $426.1 $424.6 $433.6 $404.5 $1,688.8 Proforma Gross Margin - as a % of Non-GAAP net sales 44.5 % 42.0 % 43.6 % 42.8 % 43.2 %
30 Reconciliation of Proforma GAAP Operating Expenses and GAAP Tax Rate to Proforma Non-GAAP Operating Expenses and Non- GAAP Tax Rate $ in millions 1Q22 2Q22 3Q22 4Q22 FY2022 Proforma GAAP Operating Expense $218.2 $226.9 $356.8 $260.7 $1,062.6 Deal costs 17.3 12.1 31.9 0.3 61.6 Integration costs 0.7 10.2 79.2 22.1 112.2 Other (3.2) — — (0.3) (3.5) Amortization of intangible assets 28.5 28.3 65.3 53.5 175.6 Incremental depreciation expense (2.5) (2.5) — — (5.0) Proforma Non-GAAP Operating Expense $177.4 $178.8 $180.4 $185.1 $721.7 GAAP tax rate 16.1% 24.8% 8.7% 11.9% 21.5% Other (0.8%) (1.9%) 12.6% 0.3% (3.4%) Non-GAAP tax rate 15.3% 22.9% 21.2% 12.3% 18.1%
31 $ in millions 1Q22 2Q22 3Q22 4Q22 FY2022 Net sales $969.1 $1,011.9 $993.8 $946.1 $3,920.9 Net income (loss) 160.3 140.1 (73.8) 57.5 284.1 Net income (loss) – as a % of proforma GAAP net sales 16.5 % 13.8 % (7.4) % 6.1 % 7.2 % Adjustments to net income (loss): Income tax expense (benefit) 30.9 46.3 (7.0) 7.8 78.0 Interest expense, net 22.4 5.7 82.8 82.0 192.9 Other expense, net 6.3 9.8 12.9 (3.5) 25.5 Proforma GAAP Operating Income $219.9 $201.9 $14.9 $143.8 $580.5 Proforma GAAP Operating Income - as a % of proforma GAAP net sales 22.7 % 20.0 % 1.5 % 15.2 % 14.8 % Amortization of intangible assets 28.5 28.3 65.3 53.5 175.6 Depreciation 40.8 41.1 45.2 41.8 168.9 Adjusted EBITDA $289.2 $271.3 $125.4 $239.1 $925.0 Adjusted EBITDA as a % of proforma GAAP net sales 29.8 % 26.8 % 12.6 % 25.3 % 23.6 % Reconciliation of Proforma GAAP Net Income to Proforma Adjusted Operating Income and Adjusted EBITDA
32 $ in millions 1Q22 2Q22 3Q22 4Q22 FY2022 Net sales $969.1 $1,011.9 $993.8 $946.1 $3,920.9 Net income (loss) 160.3 140.1 (73.8) 57.5 284.1 Net income (loss) – as a % of proforma GAAP net sales 16.5 % 13.8 % (7.4) % 6.1 % 7.2 % Adjustments to net income (loss): Income tax expense (benefit) 30.9 46.3 (7.0) 7.8 78.0 Interest expense, net 22.4 5.7 82.8 82.0 192.9 Other expense, net 6.3 9.8 12.9 (3.5) 25.5 Proforma GAAP Operating Income $219.9 $201.9 $14.9 $143.8 $580.5 Proforma GAAP Operating Income - as a % of proforma GAAP net sales 22.7 % 20.0 % 1.5 % 15.2 % 14.8 % Wood treatment (net margin impact) (7.4) 0.3 — — (7.1) Charge for fair value write-up of acquired inventory sold — — $61.9 — $61.9 Deal costs 17.3 12.1 31.9 0.3 61.6 Integration costs 0.7 10.2 79.2 22.1 112.2 Other (3.2) — — (0.3) (3.5) Amortization of intangible assets 28.5 28.3 65.3 53.5 175.6 Incremental depreciation expense (7.0) (7.0) — — (14.0) Proforma Operating Income - Non-GAAP $248.8 $245.8 $253.2 $219.4 $967.2 Proforma Non-GAAP Operating Income - as a % of proforma Non-GAAP net sales 26.0 % 24.3 % 25.5 % 23.2 % 24.7 % Depreciation 47.8 48.2 45.2 41.9 183.1 Adjusted EBITDA $296.6 $294.0 $298.4 $261.3 $1,150.3 Adjusted EBITDA as a % of proforma Non-GAAP net sales 31.0% 29.1% 30.0% 27.6% 29.3% Reconciliation of Proforma GAAP Net Income to Proforma Adjusted Operating Income and Adjusted EBITDA Non-GAAP
33 $ in millions, except per share data 1Q22 2Q22 3Q22 4Q22 FY2022 Proforma GAAP Net Income (Loss) $160.3 $140.1 $(73.8) $57.5 $284.1 Adjustments to Proforma GAAP Net Income (Loss): Charge for fair value write-up of acquired inventory sold — — 61.9 — 61.9 Deal costs 17.3 12.1 31.9 0.3 61.6 Integration costs 0.7 10.2 79.2 22.1 112.2 Other (3.2) — — (0.3) (3.5) Interest rate swap gain — (35.0) — — (35.0) Loss on extinguishment of debt — — 2.2 1.1 3.3 Interest expense, net 4.7 22.7 2.4 — 29.8 Amortization of intangible assets 28.5 28.3 65.3 53.5 175.6 Wood treatment (net margin affect) (7.4) 0.3 — — (7.1) Incremental interest expense (62.3) (62.3) — — (124.6) Incremental depreciation expense (7.0) (7.0) — — (14.0) Tax effect of adjustments to net income and discrete items1 6.0 10.6 (41.5) (9.6) (34.5) Proforma Non-GAAP net income $137.6 $120.0 $127.6 $124.6 $509.8 Diluted earnings per common share $1.06 $0.93 $(0.50) $0.38 $1.89 Effect of adjustments to net income $(0.15) $(0.13) $1.35 $0.45 $1.50 Diluted non-GAAP earnings per common share $0.91 $0.80 $0.85 $0.83 $3.39 Weighted average diluted shares outstanding - Proforma GAAP 150.8 150.7 148.6 149.9 150.3 Weighted average diluted shares outstanding - Proforma Non-GAAP 150.8 150.7 149.7 149.9 150.3 Reconciliation of Proforma GAAP Net Income(Loss) and Diluted Earnings(Loss) per Common Share to Proforma Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share 1. The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.