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 13, 2024
 | ||
_______________________________________
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 13, 2024 , Entegris, Inc. (the "Company") issued a press release to announce results for the fourth quarter of 2023. A copy of this press release and supplemental slides are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, attached hereto and are incorporated herein by reference.
The information furnished in this Item 2.02, and in Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended, nor shall such information be deemed automatically incorporated by reference into any filing under the Securities Act of 1933, as amended.
Item 7.01. Regulation FD Disclosure.
On February 14, 2024, Bertrand Loy, President, Chief Executive Officer and Chair of the Board of Directors of the Company, and Linda LaGorga, Senior Vice President and Chief Financial Officer of the Company, will provide a brief analyst update via a webcast hosted by the Company at 9:00 a.m. ET. In lieu of a webcast presentation regarding the Company's financial results for its fourth quarter of 2023, the Company has prepared the remarks furnished as Exhibit 99.3 attached hereto.
The information furnished in this Item 7.01, and in Exhibit 99.3, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended, nor shall such information be deemed automatically incorporated by reference into any filing under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| EXHIBIT INDEX | ||||||||
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 99.3 | ||||||||
| 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 13, 2024 | By: | /s/ Linda LaGorga | ||||||
| Name: | Linda LaGorga | |||||||
| Title: | Senior 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 2023
•Fourth-quarter net sales of $812 million, decreased 14% from prior year and 9% sequentially
•Fourth-quarter net sales increased 2% sequentially (excluding the impact of divestitures)
•Fourth-quarter GAAP diluted EPS of $0.25
•Fourth-quarter non-GAAP diluted EPS of $0.65
BILLERICA, Mass., February 13, 2024 - Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s fourth quarter ended December 31, 2023. Fourth-quarter sales were $812.3 million, a decrease of 14% from the same quarter last year. Fourth-quarter GAAP net income was $38.0 million, or $0.25 income per diluted share, which included $30.0 million of gain on termination of the Alliance Agreement with MacDermid Enthone, $10.4 million of goodwill impairment, $30.5 million of impairment of long-lived assets, $51.0 million of amortization of intangible assets, $7.8 million of integration costs related to the acquisition of CMC Materials and $14.6 million of other net costs. Non-GAAP net income was $97.9 million for the fourth quarter and non-GAAP earnings per diluted share was $0.65.
Bertrand Loy, Entegris’ president and chief executive officer, said: “Our unit driven model has displayed strong resilience during the current industry downturn. We closed 2023 with fourth quarter sales and non-GAAP EPS results above our guidance. For the year, we outperformed the market by 6 points, driven in large part by our strong position at the leading-edge technology nodes. In addition, we divested three non-core businesses and used the proceeds and free cash flow to pay off $1.3 billion of debt. We also continued to make significant R&D and capacity investments, which are vital for our long-term growth.”
Mr. Loy added: “As we enter 2024, inventories of semiconductors have largely normalized, end demand has stabilized in most segments, and we expect a gradual industry recovery to occur throughout the year. In addition, we expect Entegris will continue to outgrow the market and show leverage in our model.”
Mr. Loy concluded: “We remain as optimistic as ever about the long-term growth prospects for the semiconductor industry. The industry is entering a period of unprecedented technology change and device complexity. This means the market is moving toward Entegris. Our core value proposition in materials science, materials purity, and end-to-end solutions has become increasingly enabling and critical for our customers. This will translate into rapidly expanding Entegris content per wafer, strong outperformance and earnings growth for years to come.”
Quarterly Financial Results Summary
(in thousands, except percentages and per share data)
| GAAP Results | Dec 31, 2023 | Dec 31, 2022 | Sep 30, 2023 | ||||||||
| Net sales | $812,291 | $946,070 | $888,239 | ||||||||
| Operating income | $101,017 | $143,776 | $117,061 | ||||||||
| Operating margin - as a % of net sales | 12.4 | % | 15.2 | % | 13.2 | % | |||||
Net income | $37,977 | $57,427 | $33,212 | ||||||||
| Diluted earnings per common share | $0.25 | $0.38 | $0.22 | ||||||||
| Non-GAAP Results | |||||||||||
| Non-GAAP adjusted operating income | $168,268 | $219,353 | $195,715 | ||||||||
| Non-GAAP adjusted operating margin - as a % of net sales | 20.7 | % | 23.2 | % | 22.0 | % | |||||
| Non-GAAP net income | $97,943 | $124,451 | $103,588 | ||||||||
| Diluted non-GAAP earnings per common share | $0.65 | $0.83 | $0.68 | ||||||||
First-Quarter Outlook
For the Company’s guidance for the first quarter ending March 30, 2024, the Company expects sales of $770 million to $790 million, GAAP net income of $42 million to $49 million and diluted earnings per common share between $0.28 and $0.33. On a non-GAAP basis, the Company expects diluted earnings per common share to range from $0.60 to $0.65, reflecting net income on a non-GAAP basis in the range of $91 million to $98 million. The Company also expects Adjusted EBITDA of approximately 26.5% to 27.5% of sales.
Segment Results
The Company operates in three segments (the Materials Solutions segment resulted from combining the Advanced Planarization Solutions and the Specialty Chemicals and Engineered Materials segments):
Materials Solutions (MS): MS provides advanced consumable materials, such as CMP slurries and pads, deposition materials, process chemistries and gases, formulated cleans, etchants and other specialty materials; that enable our customers’ technical roadmaps, improve device performance, lower their total cost of ownership and enhance their yields.
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.
Fourth-Quarter Results and Analyst Update Webcast
Entegris will host a webcast on its fourth quarter 2023 results and provide a brief analyst update on Wednesday, February 14, 2024 at 9:00 a.m. Eastern Time. Participants can use this link to register and join the live webcast: https://app.webinar.net/OEr1gk1anQW. There will be no phone dial-in numbers for this event.
Management’s slide presentation concerning the results for the fourth quarter will be posted on the Investor Relations section of www.entegris.com.
Entegris, Inc. - page 2 of 17
About Entegris
Entegris is a leading supplier of advanced materials and process solutions for the semiconductor and other high-tech industries. Entegris has approximately 8,000 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). Proforma net sales, 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 supply chain matters; inflationary pressures; 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; the development of new products and the success of their introductions; the focus of the Company’s ER&D projects; the Company’s ability to execute on our business strategies, including with respect to the 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 and divestitures the Company has made and commercial partnerships the Company has established, including the acquisition of CMC Materials (now known as CMC Materials LLC) (“CMC Materials”); 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 news release, 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; raw material shortages, supply and labor constraints, price increases, 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
Entegris, Inc. - page 3 of 17
transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; the impact of regional and global instabilities, hostilities and geopolitical uncertainty, including, but not limited to, the ongoing conflicts between Ukraine and Russia, between Israel and Hamas and the current conflict in the Red Sea, as well as the global responses thereto; 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 U.S. 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, 2022, filed on February 23, 2023, 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 17
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||||||
| Dec 31, 2023 | Dec 31, 2022 | Sep 30, 2023 | ||||||||||||
| Net sales | $812,291 | $946,070 | $888,239 | |||||||||||
| Cost of sales | 467,611 | 541,545 | 521,165 | |||||||||||
| Gross profit | 344,680 | 404,525 | 367,074 | |||||||||||
| Selling, general and administrative expenses | 144,680 | 139,246 | 116,051 | |||||||||||
| Engineering, research and development expenses | 67,567 | 68,041 | 66,810 | |||||||||||
| Amortization of intangible assets | 50,984 | 53,462 | 51,239 | |||||||||||
| Goodwill impairment | 10,432 | — | 15,913 | |||||||||||
| Gain on termination of Alliance Agreement | (30,000) | — | — | |||||||||||
| Operating income | 101,017 | 143,776 | 117,061 | |||||||||||
| Interest expense, net | 62,101 | 82,013 | 75,594 | |||||||||||
| Other expense (income), net | 12,058 | (3,447) | 10,243 | |||||||||||
| Income before income tax (benefit) expense | 26,858 | 65,210 | 31,224 | |||||||||||
| Income tax (benefit) expense | (11,264) | 7,783 | (2,127) | |||||||||||
| Equity in net loss of affiliates | 145 | — | 139 | |||||||||||
| Net income | $37,977 | $57,427 | $33,212 | |||||||||||
| Basic earnings per common share: | $0.25 | $0.39 | $0.22 | |||||||||||
| Diluted earnings per common share: | $0.25 | $0.38 | $0.22 | |||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 150,223 | 149,039 | 150,127 | |||||||||||
| Diluted | 151,331 | 149,909 | 151,229 | |||||||||||
Entegris, Inc. - page 5 of 17
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Twelve months ended | |||||||||||
| Dec 31, 2023 | Dec 31, 2022 | ||||||||||
| Net sales | $3,523,926 | $3,282,033 | |||||||||
| Cost of sales | 2,026,321 | 1,885,620 | |||||||||
| Gross profit | 1,497,605 | 1,396,413 | |||||||||
| Selling, general and administrative expenses | 576,194 | 543,485 | |||||||||
| Engineering, research and development expenses | 277,313 | 228,994 | |||||||||
| Amortization of intangible assets | 214,477 | 143,953 | |||||||||
| Goodwill impairment | 115,217 | — | |||||||||
| Gain on termination of Alliance Agreement | (184,754) | — | |||||||||
| Operating income | 499,158 | 479,981 | |||||||||
| Interest expense, net | 301,121 | 208,975 | |||||||||
| Other expense, net | 25,367 | 23,926 | |||||||||
| Income before income tax (benefit) expense | 172,670 | 247,080 | |||||||||
| Income tax (benefit) expense | (8,413) | 38,160 | |||||||||
| Equity in net loss of affiliates | 414 | — | |||||||||
| Net income | $180,669 | $208,920 | |||||||||
| Basic earnings per common share: | $1.21 | $1.47 | |||||||||
| Diluted earnings per common share: | $1.20 | $1.46 | |||||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 149,900 | 142,294 | |||||||||
| Diluted | 150,945 | 143,146 | |||||||||
Entegris, Inc. - page 6 of 17
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| Dec 31, 2023 | Dec 31, 2022 | ||||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash, cash equivalents and restricted cash | $456,929 | $563,439 | |||||||||||||||
| Trade accounts and notes receivable, net | 457,052 | 535,485 | |||||||||||||||
| Inventories, net | 607,051 | 812,815 | |||||||||||||||
| Deferred tax charges and refundable income taxes | 63,879 | 47,618 | |||||||||||||||
| Assets held-for-sale | 278,753 | 246,531 | |||||||||||||||
| Other current assets | 113,663 | 129,297 | |||||||||||||||
| Total current assets | 1,977,327 | 2,335,185 | |||||||||||||||
| Property, plant and equipment, net | 1,468,043 | 1,393,337 | |||||||||||||||
| Other assets: | |||||||||||||||||
| Right-of-use assets | 80,399 | 94,940 | |||||||||||||||
| Goodwill | 3,945,860 | 4,408,331 | |||||||||||||||
| Intangible assets, net | 1,281,969 | 1,841,955 | |||||||||||||||
| Deferred tax assets and other noncurrent tax assets | 31,432 | 28,867 | |||||||||||||||
| Other | 27,561 | 36,242 | |||||||||||||||
| Total assets | $8,812,591 | $10,138,857 | |||||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||
| Current liabilities | |||||||||||||||||
| Short-term debt, including current portion of long-term debt | — | 151,965 | |||||||||||||||
| Accounts payable | 134,211 | 172,488 | |||||||||||||||
| Accrued liabilities | 283,158 | 328,784 | |||||||||||||||
| Liabilities held-for-sale | 19,223 | 10,637 | |||||||||||||||
| Income tax payable | 77,403 | 98,057 | |||||||||||||||
| Total current liabilities | 513,995 | 761,931 | |||||||||||||||
| Long-term debt, excluding current maturities | 4,577,141 | 5,632,928 | |||||||||||||||
| Long-term lease liability | 68,986 | 80,716 | |||||||||||||||
| Other liabilities | 243,875 | 445,282 | |||||||||||||||
| Shareholders’ equity | 3,408,594 | 3,218,000 | |||||||||||||||
| Total liabilities and equity | $8,812,591 | $10,138,857 | |||||||||||||||
Entegris, Inc. - page 7 of 17
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Three months ended | Twelve months ended | |||||||||||||
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2023 | Dec 31, 2022 | |||||||||||
| Operating activities: | ||||||||||||||
| Net income | $37,977 | $57,427 | $180,669 | $208,920 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation | 42,558 | 41,882 | 172,683 | 135,371 | ||||||||||
| Amortization | 50,984 | 53,462 | 214,477 | 143,953 | ||||||||||
| Share-based compensation expense | 8,955 | 9,033 | 61,371 | 66,577 | ||||||||||
| Loss on extinguishment of debt and modification | 17,003 | 1,052 | 27,865 | 3,287 | ||||||||||
| Impairment of Goodwill | 10,432 | — | 115,217 | — | ||||||||||
| Gain on termination of Alliance Agreement | (30,000) | — | (184,754) | — | ||||||||||
| (Gain) Loss on sale of business and held for sale assets | (4,740) | — | 23,839 | — | ||||||||||
| Other | (4,841) | (28,678) | (32,374) | 32,542 | ||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||||
| Trade accounts and notes receivable | 903 | (25,265) | 608 | (59,643) | ||||||||||
| Inventories | 39,411 | (23,000) | 102,751 | (203,335) | ||||||||||
| Accounts payable and accrued liabilities | (33,892) | (78,788) | (29,547) | 4,519 | ||||||||||
| Income taxes payable, refundable income taxes and noncurrent taxes payable | 26,597 | 37,388 | (10,177) | 21,751 | ||||||||||
| Other | (10,697) | (12,460) | (13,066) | (1,659) | ||||||||||
| Net cash provided by operating activities | 150,650 | 32,053 | 629,562 | 352,283 | ||||||||||
| Investing activities: | ||||||||||||||
| Acquisition of property and equipment | (128,665) | (147,356) | (456,847) | (466,192) | ||||||||||
| Acquisition of business, net of cash acquired | — | — | — | (4,474,925) | ||||||||||
| Proceeds from sale of businesses | 680,674 | — | 814,960 | — | ||||||||||
| Proceeds from termination of Alliance Agreement | 21,900 | — | 191,151 | — | ||||||||||
| Other | 1,888 | (5,716) | 3,807 | (4,592) | ||||||||||
| Net cash provided by (used in) investing activities | 575,797 | (153,072) | 553,071 | (4,945,709) | ||||||||||
| Financing activities: | ||||||||||||||
| Proceeds from revolving credit facility, short-term debt and long-term debt | — | — | 217,449 | 5,416,753 | ||||||||||
| Payments of revolving credit facility, short-term debt and long-term debt | (869,725) | (70,000) | (1,473,675) | (486,000) | ||||||||||
| Payments for debt issuance costs | — | 1 | (3,475) | (99,488) | ||||||||||
| Payments for dividends | (15,019) | (14,896) | (60,221) | (57,309) | ||||||||||
| Issuance of common stock | 13,159 | 5,404 | 50,792 | 16,168 | ||||||||||
| Taxes paid related to net share settlement of equity awards | (568) | (73) | (12,108) | (22,820) | ||||||||||
| Other | (468) | (242) | (1,391) | (1,101) | ||||||||||
| Net cash (used in) provided by financing activities | (872,621) | (79,806) | (1,282,629) | 4,766,203 | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 9,083 | 9,597 | (6,514) | (11,903) | ||||||||||
| (Decrease) increase in cash, cash equivalents and restricted cash | (137,091) | (191,228) | (106,510) | 160,874 | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 594,020 | 754,667 | 563,439 | 402,565 | ||||||||||
| Cash, cash equivalents and restricted cash at end of period | $456,929 | $563,439 | $456,929 | $563,439 | ||||||||||
Entegris, Inc. - page 8 of 17
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
| Three months ended | Twelve months ended | |||||||||||||||||||
| Net sales | Dec 31, 2023 | Dec 31, 2022 | Sep 30, 2023 | Dec 31, 2023 | Dec 31, 2022 | |||||||||||||||
| Materials Solutions | $364,965 | $458,012 | $435,538 | $1,689,467 | $1,380,208 | |||||||||||||||
| Microcontamination Control | 288,427 | 284,676 | 286,217 | 1,127,555 | 1,105,996 | |||||||||||||||
| Advanced Materials Handling | 169,191 | 213,890 | 180,248 | 758,648 | 846,492 | |||||||||||||||
| Inter-segment elimination | (10,292) | (10,508) | (13,764) | (51,744) | (50,663) | |||||||||||||||
| Total net sales | $812,291 | $946,070 | $888,239 | $3,523,926 | $3,282,033 | |||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||||
| Segment profit | Dec 31, 2023 | Dec 31, 2022 | Sep 30, 2023 | Dec 31, 2023 | Dec 31, 2022 | |||||||||||||||
| Materials Solutions | $53,204 | $71,489 | $56,955 | $296,375 | $219,189 | |||||||||||||||
| Microcontamination Control | 97,558 | 107,413 | 101,132 | 395,348 | 411,475 | |||||||||||||||
| Advanced Materials Handling | 20,463 | 48,045 | 31,642 | 136,100 | 183,738 | |||||||||||||||
| Total segment profit | 171,225 | 226,947 | 189,729 | 827,823 | 814,402 | |||||||||||||||
| Amortization of intangibles | 50,984 | 53,462 | 51,239 | 214,477 | 143,953 | |||||||||||||||
| Unallocated expenses | 19,224 | 29,709 | 21,429 | 114,188 | 190,468 | |||||||||||||||
| Total operating income | $101,017 | $143,776 | $117,061 | $499,158 | $479,981 | |||||||||||||||
Entegris, Inc. - page 9 of 17
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
| Three months ended | Twelve months ended | |||||||||||||||||||
| Dec 31, 2023 | Dec 31, 2022 | Sep 30, 2023 | Dec 31, 2023 | Dec 31, 2022 | ||||||||||||||||
| Net Sales | $812,291 | $946,070 | $888,239 | $3,523,926 | $3,282,033 | |||||||||||||||
| Gross profit-GAAP | $344,680 | $404,525 | $367,074 | $1,497,605 | $1,396,413 | |||||||||||||||
| Adjustments to gross profit: | ||||||||||||||||||||
Restructuring costs 1 | 28 | — | 789 | 8,194 | — | |||||||||||||||
Charge for fair value mark-up of acquired inventory sold 2 | — | — | — | — | 61,932 | |||||||||||||||
| Adjusted gross profit | $344,708 | $404,525 | $367,863 | $1,505,799 | $1,458,345 | |||||||||||||||
| Gross margin - as a % of net sales | 42.4 | % | 42.8 | % | 41.3 | % | 42.5 | % | 42.5 | % | ||||||||||
| Adjusted gross margin - as a % of net sales | 42.4 | % | 42.8 | % | 41.4 | % | 42.7 | % | 44.4 | % | ||||||||||
1 Restructuring charges resulting from cost saving initiatives.
2 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.
Entegris, Inc. - page 10 of 17
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 | Dec 31, 2023 | Dec 31, 2022 | Sep 30, 2023 | Dec 31, 2023 | Dec 31, 2022 | |||||||||||||||
| MS segment profit | $53,204 | $71,489 | $56,955 | $296,375 | $219,189 | |||||||||||||||
Restructuring costs 1 | 1,635 | — | 519 | 9,261 | — | |||||||||||||||
(Gain) loss from the sale of businesses 2 | (4,740) | (254) | — | 23,839 | (254) | |||||||||||||||
Goodwill impairment 3 | 10,432 | — | 15,913 | 115,217 | — | |||||||||||||||
Gain on termination of Alliance Agreement 4 | (30,000) | — | — | (184,754) | — | |||||||||||||||
Impairment on long-lived assets 5 | 30,464 | — | — | 30,464 | — | |||||||||||||||
Charge for fair value write-up of acquired inventory sold 6 | — | — | — | — | 61,932 | |||||||||||||||
| MS adjusted segment profit | $60,995 | $71,235 | $73,387 | $290,402 | $280,867 | |||||||||||||||
| MC segment profit | $97,558 | $107,413 | $101,132 | $395,348 | $411,475 | |||||||||||||||
Restructuring costs 1 | 173 | — | 215 | 3,183 | — | |||||||||||||||
| MC adjusted segment profit | $97,731 | $107,413 | $101,347 | $398,531 | $411,475 | |||||||||||||||
| AMH segment profit | $20,463 | $48,045 | $31,642 | $136,100 | $183,738 | |||||||||||||||
Restructuring costs 1 | 105 | — | 467 | 1,826 | — | |||||||||||||||
| AMH adjusted segment profit | $20,568 | $48,045 | $32,109 | $137,926 | $183,738 | |||||||||||||||
| Unallocated general and administrative expenses | $19,224 | $29,709 | $21,429 | $114,188 | $190,468 | |||||||||||||||
| Less: unallocated deal and integration costs | (7,810) | (22,369) | (10,301) | (56,526) | (152,238) | |||||||||||||||
Less: unallocated restructuring costs 1 | (388) | — | — | (475) | — | |||||||||||||||
| Adjusted unallocated general and administrative expenses | $11,026 | $7,340 | $11,128 | $57,187 | $38,230 | |||||||||||||||
| Total adjusted segment profit | $179,294 | $226,693 | $206,843 | $826,859 | $876,080 | |||||||||||||||
| Less: adjusted unallocated general and administrative expenses | 11,026 | 7,340 | 11,128 | 57,187 | 38,230 | |||||||||||||||
| Total adjusted operating income | $168,268 | $219,353 | $195,715 | $769,672 | $837,850 | |||||||||||||||
1 Restructuring charges resulting from cost saving initiatives.
2 (Gain) loss from the sale of our businesses.
3 Non-cash impairment charges associated with goodwill.
4 Gain on termination of Alliance Agreement with MacDermid Enthone.
5 Impairment of long-lived assets.
6 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.
Entegris, Inc. - page 11 of 17
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 | |||||||||||||||||||
| Dec 31, 2023 | Dec 31, 2022 | Sep 30, 2023 | Dec 31, 2023 | Dec 31, 2022 | ||||||||||||||||
| Net sales | $812,291 | $946,070 | $888,239 | $3,523,926 | $3,282,033 | |||||||||||||||
| Net income | $37,977 | $57,427 | $33,212 | $180,669 | $208,920 | |||||||||||||||
| Net income - as a % of net sales | 4.7 | % | 6.1 | % | 3.7 | % | 5.1 | % | 6.4 | % | ||||||||||
| Adjustments to net income: | ||||||||||||||||||||
| Equity in net loss of affiliates | 145 | — | 139 | 414 | — | |||||||||||||||
| Income tax (benefit) expense | (11,264) | 7,783 | (2,127) | (8,413) | 38,160 | |||||||||||||||
| Interest expense, net | 62,101 | 82,013 | 75,594 | 301,121 | 208,975 | |||||||||||||||
| Other expense (income), net | 12,058 | (3,447) | 10,243 | 25,367 | 23,926 | |||||||||||||||
| GAAP - Operating income | 101,017 | 143,776 | 117,061 | 499,158 | 479,981 | |||||||||||||||
| Operating margin - as a % of net sales | 12.4 | % | 15.2 | % | 13.2 | % | 14.2 | % | 14.6 | % | ||||||||||
Goodwill impairment 1 | 10,432 | — | 15,913 | 115,217 | — | |||||||||||||||
Deal and transaction costs 2 | — | 258 | — | 3,001 | 39,543 | |||||||||||||||
| Integration costs: | ||||||||||||||||||||
Professional fees 3 | 4,582 | 13,723 | 6,756 | 36,650 | 35,422 | |||||||||||||||
Severance costs 4 | (395) | 2,273 | (454) | 1,478 | 6,269 | |||||||||||||||
Retention costs 5 | — | 457 | 45 | 1,687 | 1,987 | |||||||||||||||
Other costs 6 | 3,623 | 2,105 | 3,953 | 13,710 | 7,053 | |||||||||||||||
| Contractual and non-cash integration costs: | ||||||||||||||||||||
CMC Materials retention costs 7 | — | 3,553 | — | — | 18,030 | |||||||||||||||
Stock-based compensation alignment 8 | — | — | — | — | 21,584 | |||||||||||||||
Change in control costs 9 | — | — | — | — | 22,350 | |||||||||||||||
Restructuring costs 10 | 2,301 | — | 1,202 | 14,745 | — | |||||||||||||||
(Gain) loss on sale of businesses 11 | (4,740) | (254) | — | 23,839 | (254) | |||||||||||||||
Charge for fair value write-up of acquired inventory sold 12 | — | — | — | — | 61,932 | |||||||||||||||
Gain on termination of Alliance Agreement 13 | (30,000) | — | — | (184,754) | — | |||||||||||||||
Impairment of long-lived assets14 | 30,464 | — | — | 30,464 | — | |||||||||||||||
Amortization of intangible assets 15 | 50,984 | 53,462 | 51,239 | 214,477 | 143,953 | |||||||||||||||
| Adjusted operating income | 168,268 | 219,353 | 195,715 | 769,672 | 837,850 | |||||||||||||||
| Adjusted operating margin - as a % of net sales | 20.7 | % | 23.2 | % | 22.0 | % | 21.8 | % | 25.5 | % | ||||||||||
| Depreciation | 42,558 | 41,882 | 39,631 | 172,683 | 135,371 | |||||||||||||||
| Adjusted EBITDA | $210,826 | $261,235 | $235,346 | $942,355 | $973,221 | |||||||||||||||
| Adjusted EBITDA - as a % of net sales | 26.0 | % | 27.6 | % | 26.5 | % | 26.7 | % | 29.7 | % | ||||||||||
Entegris, Inc. - page 12 of 17
1 Non-cash impairment charges associated with goodwill.
2 Deal and transaction costs associated with CMC Materials acquisition and completed and announced divestitures.
3 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations. These fees arise outside of the ordinary course of our continuing operations.
4 Represents severance charges related to the integration of the CMC Materials acquisition.
5 Represents retention charges related directly to the CMC Materials acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses.
6 Represents other employee related costs and other costs incurred relating to the CMC Materials acquisition and the completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations.
7Represents non-recurring costs associated with the CMC Materials retention program that was agreed upon and set forth in the definitive acquisition agreement.
8 Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards.
9 Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition.
10 Restructuring charges resulting from cost saving initiatives.
11 (Gain) loss from the sale of our businesses.
12 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.
13 Gain on termination of the Alliance Agreement with MacDermid Enthone.
14 Impairment of long-lived assets.
15 Non-cash amortization expense associated with intangibles acquired in acquisitions.
Entegris, Inc. - page 13 of 17
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 | |||||||||||||||||||
| Dec 31, 2023 | Dec 31, 2022 | Sep 30, 2023 | Dec 31, 2023 | Dec 31, 2022 | ||||||||||||||||
| GAAP net income | $37,977 | $57,427 | $33,212 | $180,669 | $208,920 | |||||||||||||||
| Adjustments to net income: | ||||||||||||||||||||
Goodwill impairment 1 | 10,432 | — | 15,913 | 115,217 | — | |||||||||||||||
Deal and transaction costs 2 | — | 258 | — | 3,001 | 39,543 | |||||||||||||||
| Integration costs: | ||||||||||||||||||||
Professional fees 3 | 4,582 | 13,723 | 6,756 | 36,650 | 35,422 | |||||||||||||||
Severance costs 4 | (395) | 2,273 | (454) | 1,478 | 6,269 | |||||||||||||||
Retention costs 5 | — | 457 | 45 | 1,687 | 1,987 | |||||||||||||||
Other costs 6 | 3,623 | 2,105 | 3,953 | 13,710 | 7,053 | |||||||||||||||
| Contractual and non-cash integration costs: | ||||||||||||||||||||
CMC Materials retention costs 7 | — | 3,553 | — | — | 18,030 | |||||||||||||||
Stock-based compensation alignment 8 | — | — | — | — | 21,584 | |||||||||||||||
Change in control costs 9 | — | — | — | — | 22,350 | |||||||||||||||
Restructuring costs 10 | 2,301 | — | 1,202 | 14,745 | — | |||||||||||||||
Loss on extinguishment of debt and modification 11 | 17,003 | 1,052 | 4,532 | 29,896 | 3,287 | |||||||||||||||
(Gain) loss on sale of businesses 12 | (4,740) | (254) | — | 23,839 | (254) | |||||||||||||||
Gain on termination of Alliance Agreement 13 | (30,000) | — | — | (184,754) | — | |||||||||||||||
Infineum termination fee, net 14 | — | — | — | (10,877) | — | |||||||||||||||
Charge for fair value write-up of acquired inventory sold 15 | — | — | — | — | 61,932 | |||||||||||||||
Interest expense, net 16 | — | — | — | — | 29,822 | |||||||||||||||
Impairment of long-lived assets 17 | 30,464 | — | — | 30,464 | — | |||||||||||||||
Amortization of intangible assets 18 | 50,984 | 53,462 | 51,239 | 214,477 | 143,953 | |||||||||||||||
Tax effect of adjustments to net income and discrete tax items19 | (24,288) | (9,605) | (12,810) | (71,284) | (65,728) | |||||||||||||||
| Non-GAAP net income | $97,943 | $124,451 | $103,588 | $398,918 | $534,170 | |||||||||||||||
| Diluted earnings per common share | $0.25 | $0.38 | $0.22 | $1.20 | $1.46 | |||||||||||||||
| Effect of adjustments to net income | $0.39 | $0.45 | $0.46 | $1.45 | $2.27 | |||||||||||||||
| Diluted non-GAAP earnings per common share | $0.65 | $0.83 | $0.68 | $2.64 | $3.73 | |||||||||||||||
| Diluted weighted averages shares outstanding | 151,331 | 149,909 | 151,229 | 150,945 | 143,146 | |||||||||||||||
1 Non-cash impairment charges associated with goodwill.
2 Deal and transaction costs associated with the CMC Materials acquisition and completed and announced divestitures.
3 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations. These fees arise outside of the ordinary course of our continuing operations.
4 Represents severance charges related to the integration of CMC Materials.
5 Represents retention charges related directly to the CMC Materials acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses.
6 Represents other employee-related costs and other costs incurred relating to the CMC Materials acquisition and completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations.
7Represents non-recurring costs associated with the CMC retention program that was agreed upon and set forth in the definitive acquisition agreement.
8Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards.
Entegris, Inc. - page 14 of 17
9 Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition.
10 Restructuring charges resulting from cost saving initiatives.
11 Non-recurring loss on extinguishment of debt and modification of our debt.
12 (Gain) loss from the sale of our businesses.
13 Gain on termination of the Alliance Agreement with MacDermid Enthone.
14 Non-recurring gain from the termination fee with Infineum.
15Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.
16 Non-recurring interest costs related to the financing of the CMC Materials acquisition.
17 Impairment of long-lived assets.
18 Non-cash amortization expense associated with intangibles acquired in acquisitions.
19 The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate for each respective year.
Entegris, Inc. - page 15 of 17
Entegris, Inc. and Subsidiaries
Reconciliation of reported Net Sales to Adjusted Net Sales (excluding divestitures) Non-GAAP
(In thousands)
(Unaudited)
| Three months ended | ||||||||
| Dec 31, 2023 | Sep 30, 2023 | |||||||
| Net sales | $812,291 | $888,239 | ||||||
Less: Divestitures 1 | (1,264) | (93,170) | ||||||
| Adjusted Net sales (excluding divestitures) Non-GAAP | $811,027 | $795,069 | ||||||
1 Adjusted for the quarterly impact of net sales from divestitures of EC and termination of Alliance Agreement.
Entegris, Inc. - page 16 of 17
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 | March 30, 2024 | ||||
| Net sales | $770 - $790 | ||||
| GAAP - Operating income | $101 - $115 | ||||
| Operating margin - as a % of net sales | 13% - 15% | ||||
| Deal, transaction and integration costs | 8 | ||||
| Amortization of intangible assets | 51 | ||||
| Adjusted operating income | $160 - $174 | ||||
| Adjusted operating margin - as a % of net sales | 21% - 22% | ||||
| Depreciation | 44 | ||||
| Adjusted EBITDA | $204 - $217 | ||||
| Adjusted EBITDA - as a % of net sales | 26.5% - 27.5% | ||||
| First-Quarter Outlook | |||||
| Reconciliation GAAP net income to non-GAAP net income | March 30, 2024 | ||||
| GAAP net income | $42 -$49 | ||||
| Adjustments to net income: | |||||
| Deal, transaction and integration costs | 8 | ||||
| Amortization of intangible assets | 51 | ||||
| Income tax effect | (10) | ||||
| Non-GAAP net income | $91 - $98 | ||||
| First-Quarter Outlook | |||||
| Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share | March 30, 2024 | ||||
| Diluted earnings per common share | $0.28 - $0.33 | ||||
| Adjustments to diluted earnings per common share: | |||||
| Deal, transaction and integration costs | 0.05 | ||||
| Amortization of intangible assets | 0.34 | ||||
| Income tax effect | (0.07) | ||||
| Diluted non-GAAP earnings per common share | $0.60 - $0.65 | ||||
### END ###
Entegris, Inc. - page 17 of 17
February 13, 2024 Earnings Summary: Fourth Quarter 2023 Exhibit 99.2
2 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 supply chain matters; inflationary pressures; future period guidance or projections; the Company’s performanc e relative to its markets, including the drivers of such performance; market and technology trends, including the duration and drivers of any growth trends; the development of new products and the success of their introductions; the focus of the Company’s ER&D projects; the Company’s ability to execute on our business strategies, including with respect to the 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 and divestitures the Company has made and commercial partnerships the Company has established, including the acquisition of CMC Materials (now known as CMC Materials LLC) (“CMC Materials”); 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 news release, 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; raw material shortages, supply and labor constraints, price inc reases, 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 effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; the impact of regional and global instabilities, hostilities and geopolitical uncertainty, including, but not limited to, the ongoing conflicts between Ukraine and Russia, between Israel and Hamas and the current conflict in the Red Sea, as well as the global responses thereto; 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 U.S. 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, 2022, filed on February 23, 2023, 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. Safe Harbor
3 $ in millions, except per share data 4Q23 4Q22 3Q23 4Q23 over 4Q22 4Q23 over 3Q23 Net Sales $812.3 $946.1 $888.2 (14.1%) (8.5%) Gross Margin 42.4% 42.8% 41.3% Operating Expenses $243.7 $260.7 $250.0 (6.5%) (2.5%) Operating Income $101.0 $143.8 $117.1 (29.8%) (13.7%) Operating Margin 12.4% 15.2% 13.2% Tax Rate (41.9%) 11.9% (6.8%) Net Income $38.0 $57.4 $33.2 (33.8%) 14.5% Diluted Earnings Per Common Share $0.25 $0.38 $0.22 (34.2%) 13.6% GAAP Summary – Consolidated Statement of Operations
4 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. 2. Excludes amortization expense, deal and transaction costs, integration costs, goodwill impairment, restructuring costs, impairment of long-lived assets and loss on sale of businesses. 3. Reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 4. Excludes the items noted in footnotes 2 and 3, interest expense, net, Infineum termination fee, loss on extinguishment of debt and modification, and the tax effect of non-GAAP adjustments. $ in millions, except per share data 4Q23 4Q22 3Q23 4Q23 over 4Q22 4Q23 over 3Q23 Net Sales $812.3 $946.1 $888.2 (14.1%) (8.5%) Adjusted Gross Margin – as a % of Net Sales 42.4% 42.8% 41.4% Non-GAAP Operating Expenses2 $176.4 $185.2 $172.1 (4.8%) 2.5% Adjusted Operating Income $168.3 $219.4 $195.7 (23.3%) (14.0%) Adjusted Operating Margin 20.7% 23.2% 22.0% Non-GAAP Tax Rate3 11.7% 12.3% 9.3% Non-GAAP Net Income4 $97.9 $124.5 $103.6 (21.4%) (5.5%) Diluted Non-GAAP Earnings Per Common Share $0.65 $0.83 $0.68 (21.7%) (4.4%) Non-GAAP1 Summary – Consolidated Statement of Operations
5 GAAP Summary – Consolidated Statement of Operations $ in millions, except per share data Year ended December 31, 2023 Year ended December 31, 2022 Year-over-Year Net Sales $3,523.9 $3,282.0 7.4% Gross Margin 42.5% 42.5% Operating Expenses $998.4 $916.4 8.9% Operating Income $499.2 $480.0 4.0% Operating Margin 14.2% 14.6% Tax Rate (4.9%) 15.4% Net Income $180.7 $208.9 (13.5%) Diluted Earnings Per Common Share $1.20 $1.46 (17.8%)
6 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, goodwill impairment, restructuring costs, impairment of long-lived assets and loss on sale of businesses. 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, Infineum termination fee, loss on extinguishment of debt and modification, and the tax effect of non-GAAP adjustments. $ in millions, except per share data Year ended December 31, 2023 Year ended December 31, 2022 Year-over-Year Net Sales $3,523.9 $3,282.0 7.4% Adjusted Gross Margin – as a % of Net Sales2 42.7% 44.4% Non-GAAP Operating Expenses3 $736.1 $620.5 18.6% Adjusted Operating Income $769.7 $837.9 (8.1%) Adjusted Operating Margin 21.8% 25.5% Non-GAAP Tax Rate4 13.6% 16.3% Non-GAAP Net Income5 $398.9 $534.2 (25.3%) Diluted Non-GAAP Earnings Per Common Share $2.64 $3.73 (29.2%) Non-GAAP1 Summary – Consolidated Statement of Operations
7 Materials Solutions (MS) 4Q23 highlights 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. $ in millions 4Q23 4Q22 3Q23 4Q23 over 4Q22 4Q23 over 3Q23 Net Sales1 $365.0 $458.0 $435.5 (20.3%) (16.2%) Segment Profit1 $53.2 $71.5 $57.0 (25.6%) (6.7%) Segment Profit Margin 14.6% 15.6% 13.1% Adj. Segment Profit1 $61.0 $71.2 $73.4 (14.3%) (16.9%) Adj. Segment Profit Margin1 16.7% 15.5% 16.9% Sales increased (SEQ) 6% (excluding the divestitures of Electronic Chemicals and the sale of the business to Element Solutions) driven primarily by higher sales of CMP slurries & pads and Advanced Deposition Materials.
8 Microcontamination Control (MC) 4Q23 highlights 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. $ in millions 4Q23 4Q22 3Q23 4Q23 over 4Q22 4Q23 over 3Q23 Net Sales $288.4 $284.7 $286.2 1.3% 0.8% Segment Profit $97.6 $107.4 $101.1 (9.1%) (3.5%) Segment Profit Margin 33.8% 37.7% 35.3% Adj. Segment Profit1 $97.7 $107.4 $101.3 (9.0%) (3.6%) Adj. Segment Profit Margin1 33.9% 37.7% 35.4% Sales increase (SEQ) was by driven by continuing strength in liquid filtration and in gas purification. — Segment profit margin (adjusted) decline (SEQ) was primarily driven by the impact of inventory reductions and the anticipated inefficiencies related to the ramp of our facility in Taiwan.
9 Advanced Materials Handling (AMH) 4Q23 highlights 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. $ in millions 4Q23 4Q22 3Q23 4Q23 over 4Q22 4Q23 over 3Q23 Net Sales $169.2 $213.9 $180.2 (20.9%) (6.1%) Segment Profit $20.5 $48.0 $31.6 (57.3%) (35.1%) Segment Profit Margin 12.1% 22.4% 17.5% Adj. Segment Profit1 $20.6 $48.0 $32.1 (57.1%) (35.8%) Adj. Segment Profit Margin1 12.2% 22.4% 17.8% Sales decline (SEQ) was driven primarily by lower sales of sensing and control solutions and fluid handling products. — Segment profit margin (adjusted) decline (SEQ) was primarily driven by lower sales and higher variable compensation expenses.
10 $ in millions 4Q23 4Q22 3Q23 $ Amount % Total $ Amount % Total $ Amount % Total Cash, Cash Equivalents, and Restricted Cash $456.9 5.2% $563.4 5.6% $594.0 6.0% Accounts Receivable, net $457.1 5.2% $535.5 5.3% $463.1 4.7% Inventories $607.1 6.9% $812.8 8.0% $662.2 6.7% Net PP&E $1,468.0 16.7% $1,393.3 13.7% $1,406.4 14.3% Total Assets $8,812.6 $10,138.9 $9,824.6 Current Liabilities $514.0 5.8% $761.9 7.5% $683.2 7.0% Long-term Debt, Excluding Current Maturities $4,577.1 51.9% $5,632.9 55.6% $5,425.5 55.2% Total Liabilities $5,404.0 61.3% $6,920.9 68.3% $6,456.3 65.7% Total Shareholders’ Equity $3,408.6 38.7% $3,218.0 31.7% $3,368.3 34.3% Summary – Balance Sheet Items
11 1. Equals cash from operations less capital expenditures. 2. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. $ in millions 4Q23 4Q22 3Q23 Beginning Cash Balance $594.0 $754.7 $567.0 Cash provided by operating activities 150.7 32.1 200.0 Capital expenditures (128.7) (147.4) (78.1) Proceeds from revolving credit facilities and debt — — 100.3 Payments on revolving credit facilities and debt (869.7) (70.0) (175.3) Proceeds from sale of businesses 680.7 — — Payments for dividends (15.0) (14.9) (15.1) Proceeds from termination of alliance agreement 21.9 — — Other investing activities 1.9 (5.7) 1.6 Other financing activities 12.1 5.1 (1.4) Effect of exchange rates 9.1 9.6 (5.0) Ending Cash Balance $456.9 $563.4 $594.0 Free Cash Flow1 $22.0 ($115.3) $121.9 Adjusted EBITDA2 $210.8 $261.2 $235.3 Adjusted EBITDA – as a % of net sales2 26.0% 27.6% 26.5% Cash Flows
12 $ in millions, except per share data 1Q24 Guidance 4Q23 Actual 3Q23 Actual Net Sales $770 – $790 $812.3 $888.2 Non-GAAP Operating Expenses1 $171 – $174 $176.4 $172.1 Non-GAAP Net Income1 $91 – $98 $97.9 $103.6 Diluted non-GAAP Earnings per Common Share1 $0.60 – $0.65 $0.65 $0.68 Adjusted EBITDA Margin 26.5% – 27.5% 26.0% 26.5% 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. $ in millions, except per share data 1Q24 Guidance 4Q23 Actual 3Q23 Actual Net Sales $770 – $790 $812.3 $888.2 Operating Expenses $230 – $233 $243.7 $250.0 Net Income $42 – $49 $38.0 $33.2 Diluted Earnings per Common Share $0.28 – $0.33 $0.25 $0.22 Operating Margin 13% – 15% 12.4% 13.2% Outlook GAAP Non-GAAP
13 Appendix
14 Summary – Consolidated Statement of Operations – Proforma1 (Includes CMC Materials results) 1The above pro forma results include the addition of CMC Materials Inc.'s (now known as CMC Materials LLC) ("CMC Materials") 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 have been eliminated. No other adjustments have been included. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. $ in millions, except per share data 1Q22 2Q22 3Q22 4Q22 FY2022 1Q23 2Q23 3Q23 4Q23 FY2023 Net Sales $969.1 $1,011.9 $993.8 $946.1 $3,920.9 $922.4 $901.0 $888.2 $812.3 $3,523.9 Gross Margin 45.2% 42.4% 37.4% 42.8% 41.9% 43.5% 42.6% 41.3% 42.4% 42.5% Operating Expenses $218.2 $227.0 $356.8 $260.7 $1,062.6 $388.2 $116.6 $250.0 $243.7 $998.4 Operating Income $219.9 $201.9 $14.9 $143.8 $580.5 $13.5 $267.7 $117.1 $101.0 $499.2 Operating Margin 22.7% 19.9% 1.5% 15.2% 14.8% 1.5% 29.7% 13.2% 12.4% 14.2% EBITDA $289.2 $271.3 $125.4 $239.1 $925.0 $117.9 $366.0 $207.9 $194.6 $886.4 Tax Rate 16.1% 24.8% 8.7% 11.9% 21.5% (32.2%) (9.1%) (6.8%) (41.9%) (4.9%) Net Income (Loss) $160.3 $140.1 ($73.7) $57.4 $284.1 ($88.2) $197.6 $33.2 $38.0 $180.7 Diluted Earnings (Loss) Per Common Share $1.06 $0.93 ($0.50) $0.38 $1.85 ($0.59) $1.31 $0.22 $0.25 $1.20
15 Summary – Consolidated Statement of Operations (Non-GAAP) – Proforma1 (Includes CMC Materials results) 1. See Proforma to non-GAAP Proforma reconciliation tables in the appendix of this presentation. 2. The adjustment relates to removal of net sales related to CMC Materials’ wood treatment business. See Proforma reconciliat ion tables in the appendix. 3. 3Q22 excludes charges for fair value write-up of acquired inventory sold, wood treatment and incremental depreciation expense. 4. Excludes amortization and incremental depreciation expense, deal costs, integration costs, goodwill impairment, restructuring cost, impairment of long-lived assets and loss on sale of businesses. 5. Reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 6.Excludes the items noted in footnotes 2 and 3, interest expense, net, Infineum termination fee, loss on extinguishment of debt and modification, and the tax effect of non-GAAP adjustments. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. $ in millions, except per share data 1Q22 2Q22 3Q22 4Q22 FY2022 1Q23 2Q23 3Q23 4Q23 FY2023 Net Sales2 $958.2 $1,011.7 $993.8 $946.1 $3,909.8 $922.4 $901.0 $888.2 $812.3 $3,523.9 Adjusted Gross Margin – as a % of Net Sales3 44.5% 42.0% 43.6% 42.8% 43.2% 44.3% 42.6% 41.4% 42.4% 42.7% Non-GAAP Operating Expenses4 $177.4 $178.8 $180.4 $185.1 $721.7 $204.3 $183.2 $172.1 $176.4 $736.1 Adjusted Operating Income $248.8 $245.8 $253.2 $219.4 $967.2 $204.8 $200.9 $195.7 $168.3 $769.7 Adjusted Operating Margin 26.0% 24.3% 25.5% 23.2% 24.7% 22.2% 22.3% 22.0% 20.7% 21.8% Adjusted EBITDA $296.6 $294.0 $298.4 $261.3 $1,150.3 $251.5 $244.6 $235.3 $210.8 $942.4 Non-GAAP Tax Rate5 15.3% 22.9% 21.2% 12.3% 18.1% 16.9% 16.3% 9.3% 11.7% 13.6% Non-GAAP Net Income6 $137.6 $120.0 $127.8 $124.5 $509.9 $97.8 $99.6 $103.6 $97.9 $398.9 Diluted Non-GAAP Earnings Per Common Share $0.91 $0.80 $0.85 $0.83 $3.39 $0.65 $0.66 $0.68 $0.65 $2.64
16 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions (MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). The following prior year information has been recast to reflect this realignment. 2. The above pro forma results include the addition of CMC Materials' 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 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. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. $ in millions 1Q22 2Q22 3Q22 4Q22 FY2022 1Q23 2Q23 3Q23 Q423 FY2023 Sales: MS $520.5 $530.7 $518.1 $458.0 $2,027.3 $448.3 $440.7 $435.5 $365.0 $1,689.5 MC 266.6 274.1 280.6 284.7 1,106.0 269.3 283.6 286.2 288.4 1,127.5 AMH 198.1 224.1 210.4 213.9 846.5 218.9 190.3 180.2 169.2 758.6 Inter-segment elimination (16.1) (17.0) (15.3) (10.5) (58.9) (14.1) (13.6) (13.8) (10.3) (51.7) Total Sales $969.1 $1,011.9 $993.8 $946.1 $3,920.9 $922.4 $901.0 $888.2 $812.3 $3,523.9 MS $141.1 $123.0 $53.1 $71.5 $388.7 ($29.5) $215.7 $57.0 $53.2 $296.4 Depreciation³ (7.0) (7.0) — — (14.0) — — — — — FV Step-up⁴ — — 61.9 — 61.9 — — — — — MS Segment Profit adjusted 134.1 116.0 115.0 71.5 436.6 (29.5) 215.7 57.0 53.2 296.4 MC 98.6 100.1 105.3 107.4 411.4 96.0 100.7 101.1 97.6 395.3 AMH 46.7 46.9 42.1 48.0 183.7 48.2 35.8 31.6 20.5 136.1 Total Segment Profit $279.4 $263.0 $262.4 $226.9 $1,031.7 $114.7 $352.2 $189.7 $171.3 $827.8 Segment Profit Margin: MS 25.8% 21.9% 22.2% 15.6% 21.5% (6.6%) 49.0% 13.1% 14.6% 17.5% MC 37.0% 36.5% 37.5% 37.7% 37.2% 35.6% 35.5% 35.3% 33.8% 35.1% AMH 23.6% 20.9% 20.0% 22.4% 21.7% 22.0% 18.8% 17.5% 12.1% 17.9% Segment Profit Margin 28.8% 26.0% 26.4% 24.0% 26.3% 12.4% 39.1% 21.4% 21.1% 23.5% Segment Financials Proforma (Includes CMC Materials Results) Unaudited1,2
17 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions (MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). The following prior year information has been recast to reflect this realignment 2. The above pro forma results include the addition of CMC Materials’ 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 have been eliminated, see table below. 3. The adjustment relates to removal of net sales related to CMC Materials’ wood treatment business. See Proforma reconciliation tables in the appendix. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. $ in millions 1Q22 2Q22 3Q22 4Q22 FY2022 1Q23 2Q23 3Q23 Q423 FY2023 Sales: MS 3 $509.6 $530.5 $518.1 $458.0 $2,016.2 $448.3 $440.7 $435.5 $365.0 $1,689.5 MC 266.6 274.1 280.6 284.7 1,106.0 269.3 283.6 286.2 288.4 1,127.5 AMH 198.1 224.1 210.4 213.9 846.5 218.9 190.3 180.2 169.2 758.6 Inter-segment elimination (16.1) (17.0) (15.3) (10.5) (58.9) (14.1) (13.6) (13.8) (10.3) (51.7) Total Sales $958.2 $1,011.7 $993.8 $946.1 $3,909.8 $922.4 $901.0 $888.2 $812.3 $3,523.9 Adjusted Segment Profit: MS $123.4 $116.3 $115.0 $71.2 $425.9 $80.1 $75.8 $73.4 $61.0 $290.4 MC 98.6 100.1 105.3 107.4 411.4 98.8 100.7 101.3 97.7 398.5 AMH 46.7 46.9 42.1 48.0 183.7 49.4 35.8 32.1 20.6 137.9 Total Adjusted Segment Profit $268.7 $263.3 $262.4 $226.6 $1,021.0 $228.3 $212.3 $206.8 $179.3 $826.8 Adjusted Segment Profit Margin: MS 24.2% 21.9% 22.2% 15.5% 21.1% 17.9% 17.2% 16.9% 16.7% 17.2% MC 37.0% 36.5% 37.5% 37.7% 37.2% 36.7% 35.5% 35.4% 33.9% 35.3% AMH 23.6% 20.9% 20.0% 22.4% 21.7% 22.6% 18.8% 17.8% 12.2% 18.2% Adjusted Segment Profit Margin 28.0% 26.0% 26.4% 24.0% 26.1% 24.8% 23.6% 23.3% 22.1% 23.5% Segment Financials Proforma Non-GAAP (Includes CMC Materials Results) Unaudited1,2
18 *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. Three months ended Twelve months ended $ in millions December 31, 2023 December 31, 2022 September 30, 2023 December 31, 2023 December 31, 2022 Net sales $812.3 $946.1 $888.2 $3,523.9 $3,282.0 Gross profit-GAAP $344.7 $404.5 $367.1 $1,497.6 $1,396.4 Adjustments to gross profit: Charge for fair value mark-up of acquired inventory sold t* — — — — 61.9 Restructuring costs g * — — 0.8 8.2 — Adjusted gross profit $344.7 $404.5 $367.9 $1,505.8 $1,458.3 Gross margin – as a % of net sales 42.4% 42.8% 41.3% 42.5% 42.5% Adjusted gross margin – as a % of net sales 42.4% 42.8% 41.4% 42.7% 44.4% Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
19 *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. Reconciliation of GAAP Operating Expenses and Tax Rate to Non-GAAP Operating Expenses and Tax Rate $ in millions Three months ended Twelve months ended December 31, 2023 December 31, 2022 September 30, 2023 December 31, 2023 December 31, 2022 GAAP operating expenses $243.7 $260.7 $250.0 $998.4 $916.4 Adjustments to operating expenses: Goodwill impairment a * 10.4 — 15.9 115.2 — Deal and transaction costs b * — 0.3 — 3.0 39.5 Integration costs: — Professional fees c * 4.6 13.7 6.8 36.7 35.4 Severance costs d * (0.4) 2.3 (0.5) 1.5 6.3 Retention costs e * — 0.5 — 1.7 2.0 Other costs f * 3.6 2.1 3.9 13.7 7.1 Contractual and non-cash integration costs: CMC Materials retention o * — 3.5 — — 18.0 Stock-based compensation alignment p * — — — — 21.6 Change in control costs q * — — — — 22.4 Restructuring costs g * 2.3 — 0.6 6.6 — (Gain) loss from the sale of businesses h * (4.7) (0.3) — 23.8 (0.3) Impairment on long-lived assets x * 30.5 — — 30.5 — Amortization of intangible assets i * 51.0 53.5 51.2 214.5 144.0 Gain on termination of Alliance Agreement w * (30.0) — — (184.8) — Non-GAAP operating expenses $176.4 $185.2 $172.1 $736.1 $620.5 GAAP tax rate (41.9%) 11.9% (6.8%) (4.9%) 15.4% Other 53.6% 0.4% 16.1% 18.5% 0.9% Non-GAAP tax rate 11.7% 12.3% 9.3% 13.6% 16.3%
20 *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. $ in millions Three months ended Twelve months ended December 31, 2023 December 31, 2022 September 30, 2023 December 31, 2023 December 31, 2022 Net sales $812.3 $946.1 $888.2 $3,523.9 $3,282.0 Net income 38.0 57.4 33.2 180.7 208.9 Net income – as a % of net sales 4.7% 6.1% 3.7% 5.1% 6.4% Adjustments to net income: Income tax (benefit) expense (11.3) 7.8 (2.1) (8.4) 38.2 Interest expense, net 62.1 82.0 75.6 301.1 209.0 Other expense (income), net 12.1 (3.4) 10.2 25.4 23.9 Equity in net loss of affiliates 0.1 — 0.1 0.4 — GAAP – Operating income $101.0 $143.8 $117.1 $499.2 $480.0 Operating margin – as a % of net sales 12.4% 15.2% 13.2% 14.2% 14.6% Charge for fair value write-up of acquired inventory sold t* — — — — 61.9 Goodwill impairment a * 10.4 — 15.9 115.2 — Deal and transaction costs b * — 0.3 — 3.0 39.5 Integration costs: Professional fees c * 4.6 13.7 6.8 36.7 35.4 Severance costs d * (0.4) 2.3 (0.5) 1.5 6.3 Retention costse * — 0.5 — 1.7 2.0 Other costs f * 3.6 2.1 4.0 13.7 7.1 Contractual and non-cash integration costs: CMC Materials retention o* — 3.5 — — 18.0 Stock-based compensation alignment p* — — — — 21.6 Change in control costs q* — — — — 22.4 Restructuring costs g * 2.3 — 1.2 14.7 — (Gain) loss from the sale of businesses h * (4.7) (0.3) — 23.8 (0.3) Impairment on long-lived assets x* 30.5 — — 30.5 — Amortization of intangible assets i * 51.0 53.5 51.2 214.5 144.0 Gain on termination of Alliance Agreement W * (30.0) — — (184.8) — Adjusted operating income $168.3 $219.4 $195.7 $769.7 $837.9 Adjusted operating margin – as a % of net sales 20.7% 23.2% 22.0% 21.8% 25.5% Depreciation 42.6 41.9 39.6 172.7 135.4 Adjusted EBITDA $210.8 $261.2 $235.3 $942.4 $973.2 Adjusted EBITDA – as a % of net sales 26.0% 27.6% 26.5% 26.7% 29.7% Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
21 *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. 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 millions, except per share data Three months ended Twelve months ended December 31, 2023 December 31, 2022 September 30, 2023 December 31, 2023 December 31, 2022 GAAP net income $38.0 $57.4 $33.2 $180.7 $208.9 Adjustments to net income: Charge for fair value write-up of inventory sold t* — — — — 61.9 Goodwill impairment a * 10.4 — 15.9 115.2 — Deal and transaction costs b * — 0.3 — 3.0 39.5 Integration costs: Professional fees c * 4.6 13.7 6.8 36.7 35.4 Severance costs d * (0.4) 2.3 (0.5) 1.5 6.3 Retention costs e * — 0.5 — 1.7 2.0 Other costs f * 3.6 2.1 4.0 13.7 7.1 Contractual and non-cash integration costs: CMC Materials retention o* — 3.5 — — 18.0 Stock-based compensation alignment p* — — — — 21.6 Change in control costs q* — — — — 22.4 Restructuring costs g * 2.3 — 1.2 14.7 — (Gain) loss from the sale of businesses h* (4.7) (0.3) — 23.8 (0.3) Impairment on long-lived asset x* 30.5 — — 30.5 — Amortization of intangible assets i * 51.0 53.5 51.2 214.5 144.0 Loss on extinguishment of debt and modification k * 17.0 1.1 4.5 29.9 3.3 Infineum termination fee, net l * — — — (10.9) — Interest expense, net m * — — — — 29.8 Tax effect of adjustments to net income (loss) and discrete items n * (24.3) (9.6) (12.8) (71.3) (65.7) Gain on sale of termination of Alliance Agreement w * (30.0) — — (184.8) — Non-GAAP net income $97.9 $124.5 $103.6 $398.9 $534.2 Diluted earnings per common share $0.25 $0.38 $0.22 $1.20 $1.46 Effect of adjustments to net income $0.39 $0.45 $0.46 $1.45 $2.27 Diluted non-GAAP earnings per common share $0.65 $0.83 $0.68 $2.64 $3.73 Weighted average diluted shares outstanding 151.3 149.9 151.2 150.9 143.1
22 $ in millions First-Quarter Outlook Reconciliation GAAP net income to non-GAAP net income: March 30, 2024 GAAP net income $42 – $49 Adjustments to net income: Deal, transaction and integration costs 8 Amortization of intangible assets 51 Income tax effect (10) Non-GAAP net income $91 – $98 First-Quarter Outlook Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share: March 30, 2024 Diluted earnings per common share $0.28 – $0.33 Adjustments to diluted earnings per common share: Deal, transaction and integration costs 0.05 Amortization of intangible assets 0.34 Income tax effect (0.07) Diluted non-GAAP earnings per common share $0.60 – $0.65 $ in millions First-Quarter Outlook Reconciliation GAAP operating expenses to non-GAAP operating expenses: March 30, 2024 GAAP operating expenses $230 – $233 Adjustments to net income: Deal, transaction and integration costs 8 Amortization of intangible assets 51 Non-GAAP operating expenses $171 – $174 Reconciliation of GAAP Outlook to Non-GAAP Outlook
23 $ in millions First-Quarter Outlook Reconciliation GAAP Operating Margin to non-GAAP Operating Margin and Adjusted EBITDA Margin March 30, 2024 Net sales $770 – $790 GAAP – Operating income $101 – $115 Operating margin – as a % of net sales 13% – 15% Deal, transaction and integration costs 8 Amortization of intangible assets 51 Adjusted operating income $160 – $174 Adjusted operating margin – as a % of net sales 21% – 22% Depreciation 44 Adjusted EBITDA $204 – $217 Adjusted EBITDA – as a % of net sales 26.5% – 27.5% Reconciliation of GAAP Outlook to Non-GAAP Outlook (continued)
24 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions (MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). 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 (now known as CMC Materials LLC) ("CMC Materials") 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 have been eliminated. No other adjustments have been included. *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. $ in millions Q122 Q222 Q322 Q422 FY2022 Q123 Q223 Q323 Q423 FY2023 Adjusted MS segment sales: MS segment Sales $520.5 $530.7 $518.1 $458.0 $2,027.3 $448.3 $440.7 $435.5 $365.0 $1,689.5 Removal of wood treatment sales r * (10.9) (0.2) — — (11.1) — — — — — MS adjusted segment sales $509.6 $530.5 $518.1 $458.0 $2,016.2 $448.3 $440.7 $435.5 $365.0 $1,689.5 Reconciliation of Proforma Segment Trend Data to Non-GAAP Unaudited1,2
25 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions (MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). 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 (now known as CMC Materials LLC) ("CMC Materials") 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 have been eliminated. No other adjustments have been included. *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. $ in millions Q122 Q222 Q322 Q422 FY2022 Q123 Q223 Q323 Q423 FY2023 Adjusted Segment Profit: MS segment profit $141.1 $123.0 $53.1 $71.5 $388.7 ($29.5) $215.7 $57.0 $53.2 $296.4 Adjustments for wood treatment r * (7.4) 0.3 — — (7.1) — — — — — Impairment of Goodwill a * — — — — — 88.9 — 15.9 $10.4 $115.2 (Gain) loss from the sale of businesses h * — — — — — 13.6 14.9 — (4.7) 23.8 Charge for fair value write-up of acquired inventory sold t* 61.9 61.9 — — — — — Severance – Restructuring g * — — — — — 7.1 — 0.5 1.6 9.3 Gain on sale of termination of alliance agreement w * — — — — — — (154.8) — (30.0) (184.8) Impairment on long-lived assets x* — — — — — — — — 30.5 30.5 Other adjustments j* (10.3) (7.0) — (0.3) (17.6) — — — 30.5 30.5 MS adjusted segment profit 123.4 116.3 115.0 71.2 425.9 80.1 75.8 73.4 61.0 290.4 MC segment Profit 98.6 100.1 105.3 107.4 411.4 96.0 100.7 101.1 97.6 395.3 Severance – Restructuring g * — — — — — 2.8 — 0.2 0.2 3.2 MC adjusted segment profit $98.6 $100.1 $105.3 $107.4 $411.4 $98.8 $100.7 $101.3 $97.7 $398.5 AMH segment Profit 46.7 46.9 42.1 48.0 183.7 48.2 35.8 31.6 20.5 136.1 Severance – Restructuring g * — — — — — 1.2 — 0.5 0.1 1.8 AMH adjusted segment profit $46.7 $46.9 $42.1 $48.0 $183.7 $49.4 $35.8 $32.1 $20.6 $137.9 Reconciliation of Proforma Segment Trend Data to Non-GAAP Unaudited1,2 (continued)
26 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions (MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). 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 (now known as CMC Materials LLC) ("CMC Materials") 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. *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. $ in millions Q122 Q222 Q322 Q422 FY2022 Q123 Q223 Q323 Q423 FY2023 Unallocated expenses $20.2 $17.6 $9.3 $7.3 $54.4 $43.6 $29.9 $21.4 $19.2 $114.2 Other adjustments j * (0.3) (0.1) (0.1) (0.1) (0.6) (0.1) — — (0.4) (0.5) Deal, transaction, and integration costs o * — — — — — (20.0) (18.4) (10.3) (7.8) (56.5) Adjusted unallocated expenses $19.9 $17.5 $9.2 $7.2 $53.8 $23.5 $11.5 $11.1 $11.0 $57.2 Total Adjusted Segment Profit $268.7 $263.3 $262.4 $226.6 $1,021.0 $228.3 $212.4 $206.8 $179.3 $826.9 Adjusted unallocated expenses 19.9 17.5 9.2 7.2 53.8 23.5 11.5 11.1 11.0 57.2 Total adjusted operating Income $248.8 $245.8 $253.2 $219.4 $967.2 $204.8 $200.9 $195.7 $168.3 $769.7 Reconciliation of Proforma Segment Trend Data to Non-GAAP Unaudited1,2 (continued)
27 $ in millions Q122 Q222 Q322 Q422 FY2022 Q123 Q223 Q323 Q423 FY2023 Proforma Gross Margin $438.0 $428.8 $371.7 $404.5 $1,643.0 $401.7 $384.2 $367.1 $344.7 $1,497.6 Proforma Gross Margin -as a % of GAAP net sales 45.7% 42.4% 37.4% 42.8% 41.9% 43.5% 42.6% 41.3% 42.4% 42.5% Inventory step-up t * — — 61.9 — 61.9 — — — — — Wood treatment r * (7.4) 0.3 — — (7.1) — — — — — Incremental Depreciation expense s * (4.5) (4.5) — — (9.0) — — — — — Restructuring costs g * — — — — — 7.4 — 0.8 — 8.2 Proforma Non-GAAP gross margin $426.1 $424.6 $433.6 $404.5 $1,688.8 $409.1 $384.2 $367.9 $344.7 $1,505.8 Proforma Gross Margin – as a % of Non-GAAP net sales 44.5% 42.0% 43.6% 42.8% 43.2% 44.3% 42.6% 41.4% 42.4% 42.7% 1. The above pro forma results include the addition of CMC Materials Inc.'s (now known as CMC Materials LLC) ("CMC Materials") 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 have been eliminated. No other adjustments have been included. *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. $ in millions Q122 Q222 Q322 Q422 FY2022 Q123 Q223 Q323 Q423 FY2023 Proforma net sales 1 $969.1 $1,011.9 $993.8 $946.1 $3,920.9 $922.4 $901.0 $888.2 $812.3 $3,523.9 Removal of Wood treatment r * (10.9) (0.2) — — (11.1) — — — — — Proforma Non-GAAP net sales $958.2 $1,011.7 $993.8 $946.1 $3,909.8 $922.4 $901.0 $888.2 $812.3 $3,523.9 Reconciliation of Proforma Net Sales to Proforma Non-GAAP Net Sales Reconciliation of Proforma Gross Profit to Proforma Adjusted Gross Profit
28 *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. Reconciliation of Proforma Operating Expenses and Tax Rate to Proforma Non-GAAP Operating Expenses and Non-GAAP Tax Rate $ in millions Q122 Q222 Q322 Q422 FY2022 Q123 Q223 Q323 Q423 FY2023 Proforma Operating Expense 218.2 226.9 356.8 260.7 1,062.6 388.2 116.6 250.0 243.7 998.4 Goodwill impairment a * — — — — — 88.9 — 15.9 10.4 115.2 Deal and transaction costs b * 17.3 12.1 31.9 0.3 61.6 3.0 — — — 3.0 Integration costs: Professional fees c * 0.7 9.5 11.4 13.7 35.3 12.0 13.3 6.8 4.6 36.7 Severance costs d * — — 4.0 2.3 6.3 1.4 1.0 (0.5) (0.4) 1.5 Retention costs e * — — 1.5 0.5 2.0 1.3 0.4 — — 1.7 Other costs f * — 0.7 3.9 2.1 6.7 2.3 3.9 3.9 3.6 13.7 Contractual and non-cash integration costs: CMC Materials retention o * — — 14.5 3.5 18.0 — — — — — Stock-based compensation alignment p * — — 21.6 — 21.6 — — — — — Change in control costs q * — — 22.3 — 22.3 — — — — — Restructuring costs g * — — — — — 3.8 — 0.6 2.3 6.6 (Gain) loss from the sale of businesses h* — — — (0.3) (0.3) 13.6 14.9 — (4.7) 23.8 Impairment on long-lived assets x* — — — — — 30.5 30.5 Amortization of intangible assets i * 28.5 28.3 65.3 53.5 175.6 57.6 54.7 51.2 51.0 214.5 Other j * (3.2) — — — (3.2) — — — — — Incremental depreciation expense s * (2.5) (2.5) — — (5.0) — — — — — Gain on termination of Alliance Agreement w * — — — — — — (154.8) — (30.0) (184.8) Proforma Non-GAAP Operating Expense $177.4 $178.8 $180.4 $185.2 $721.7 $204.3 $183.2 $172.1 $176.4 $736.1 GAAP tax rate 16.1% 24.8% 8.7% 11.9% 21.5% (32.2%) (9.1%) (6.8%) (41.9%) (4.9%) Other (0.8%) (1.9%) 12.5% 0.4% (3.4%) 49.1% 25.4% 16.1% 53.6% 18.5% Non-GAAP tax rate 15.3% 22.9% 21.2% 12.3% 18.1% 16.9% 16.3% 9.3% 11.7% 13.6%
29 *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. Reconciliation of Proforma Net Income to Proforma Adjusted Operating Income and Adjusted EBITDA $ in millions Q122 Q222 Q322 Q422 FY2022 Q123 Q223 Q323 Q423 FY2023 Net sales $969.1 $1,011.9 $993.8 $946.1 $3,920.9 $922.4 $901.0 $888.2 $812.3 $3,523.9 Net income (loss) 160.3 140.1 (73.7) 57.4 284.1 (88.2) 197.6 33.2 38.0 180.7 Net income (loss) – as a % of proforma GAAP net sales 16.5% 13.8% (7.4%) 6.1% 7.2% (9.6%) 21.9% 3.7% 4.7% 5.1% Adjustments to net income (loss): Income tax expense (benefit) 30.9 46.3 (7.0) 7.8 78.0 21.5 (16.5) (2.1) (11.3) (8.4) Interest expense, net 22.4 5.7 82.8 82.0 192.9 84.8 78.6 75.6 62.1 301.1 Other expense (income), net 6.3 9.8 12.9 (3.5) 25.5 (4.6) 8.0 10.3 12.1 25.4 Equity in net loss of affiliates — — — — — — 0.1 0.1 0.1 0.4 Operating Income $219.9 $201.9 $14.9 $143.8 $580.5 $13.5 $267.6 $117.1 $101.0 $499.2 Operating Income – as a % of proforma net sales 22.7% 20.0% 1.5% 15.2% 14.8% 1.5% 29.7% 13.2% 12.4% 14.2% Amortization of intangible assets i* 28.5 28.3 65.3 53.5 175.6 57.6 54.7 51.2 51.0 214.5 Depreciation 40.8 41.1 45.2 41.9 168.9 46.8 43.8 39.6 42.6 172.7 Adjusted EBITDA $289.2 $271.3 $125.4 $239.1 $925.0 $117.9 $366.0 $207.9 $194.6 $886.4 Adjusted EBITDA as a % of proforma net sales 29.8% 26.8% 12.6% 25.3% 23.6% 12.8% 40.6% 23.4% 24.0% 25.2%
30 *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. Reconciliation of Proforma Net Income to Proforma Adjusted Operating Income Non-GAAP and Adjusted EBITDA Non-GAAP $ in millions Q122 Q222 Q322 Q422 FY2022 Q123 Q223 Q323 Q423 FY2023 Proforma Operating Income $219.9 $201.9 $14.9 $143.8 $580.5 $13.5 $267.6 $117.1 $101.0 $499.2 Proforma Operating Income – as a % of proforma net sales 22.7% 20.0% 1.5% 15.2% 14.8% 1.5% 29.7% 13.2% 12.4% 14.2% Wood treatment (net margin impact) r * (7.4) 0.3 — — (7.1) — — — — — Charge for fair value write-up of acquired inventory sold t * — — 61.9 — 61.9 — — — — — Goodwill impairment a * — — — — — 88.9 — 15.9 10.4 115.2 Deal and transaction costs b * 17.3 12.1 31.9 0.3 61.6 3.0 — — — 3.0 Integration costs: Professional fees c * 0.7 9.5 11.4 13.7 35.3 12.0 13.3 6.8 4.6 36.7 Severance costs d * — — 4.0 2.3 6.3 1.4 1.0 (0.5) (0.4) 1.5 Retention costs e * — — 1.5 0.5 2.0 1.3 0.4 — — 1.7 Other costs f * — 0.7 3.9 2.1 6.7 2.3 3.8 4.0 3.6 13.7 Contractual and non-cash integration costs CMC Materials retention o* — — 14.5 3.5 18.0 — — — — — Stock-based compensation alignment p* — — 21.6 — 21.6 — — — — — Change in control costs q* — — 22.3 — 22.3 — — — — — Restructuring costs g * — — — — — 11.2 — 1.2 2.3 14.7 (Gain) loss from the sale of businesses h* — — — (0.3) (0.3) 13.6 14.9 — — 23.8 Impairment on long-lived assets x* 30.5 30.5 Amortization of intangible assets i * 28.5 28.3 65.3 53.5 175.6 57.6 54.7 51.2 51.0 214.5 Other j* (3.2) — — — (3.2) — — — — — Incremental depreciation expense s* (7.0) (7.0) — — (14.0) — — — — — Gain on sale of termination of Alliance Agreement w — — — — — — (154.8) — (30.0) (184.8) Proforma Operating Income – Non-GAAP $248.8 $245.8 $253.2 $219.4 $967.2 $204.8 $200.9 $195.7 $168.3 $769.7 Proforma Non-GAAP Operating Income – as a % of proforma Non-GAAP net sales 26.0% 24.3% 25.5% 23.2% 24.7% 22.2% 22.3% 22.0% 20.7% 21.8% Depreciation 47.8 48.2 45.2 41.9 183.1 46.8 43.7 39.6 42.6 172.7 Adjusted EBITDA $296.6 $294.0 $298.4 $261.3 $1,150.3 $251.6 $244.6 $235.3 $210.8 $942.4 Adjusted EBITDA as a % of proforma Non-GAAP net sales 30.6% 29.1% 30.0% 27.6% 29.3% 27.3% 27.2% 26.5% 26.0% 26.7%
31 *See footnotes section for reference. As a result of displaying amounts in millions, rounding differences may exist in the tables in this section. Reconciliation of Proforma Net Income and Diluted EPS to Proforma Non-GAAP Net Income and Diluted Non-GAAP EPS $ in millions, except per share data Q122 Q222 Q322 Q422 FY2022 Q123 Q223 Q323 Q423 FY2023 Proforma Net Income (Loss) $160.3 $140.1 ($73.7) $57.4 $284.1 ($88.2) $197.6 $33.2 $38.0 $180.7 Adjustments to Proforma Net Income (Loss): Charge for fair value write-up of acquired inventory sold t* — — 61.9 — 61.9 — — — — — Goodwill impairment a * — — — — — 88.9 — 15.9 10.4 115.2 Deal and transaction costs b * 17.3 12.1 31.9 0.3 61.6 3.0 — — — 3.0 Integration costs: Professional fees c * 0.7 9.5 11.4 13.7 35.3 12.0 13.3 6.8 4.6 36.7 Severance costs d * — — 4.0 2.3 6.3 1.4 1.0 (0.5) (0.4) 1.5 Retention costs e * — 1.5 0.5 2.0 1.3 0.4 — — 1.7 Other costs f * — 0.7 3.9 2.1 6.7 2.4 3.8 4.0 3.6 13.7 Contractual and non-cash integration costs — CMC Materials retention o* — — 14.5 3.5 18.0 — — — — — Stock-based compensation alignment p* — — 21.6 — 21.6 — — — — — Change in control costs q* — — 22.3 — 22.3 — — — — — Restructuring costs g * — — — — — 11.2 — 1.2 2.3 14.7 (Gain) loss from the sale of businesses h * — — — — — 13.6 14.9 — (4.7) 23.8 Impairment on long-lived assets x* — — — — — — — — 30.5 30.5 Amortization of intangible assets i * 28.5 28.3 65.3 53.5 175.6 57.6 54.7 51.2 51.0 214.5 Loss on extinguishment of debt and modification k* — — 2.2 1.1 3.3 3.9 4.5 4.5 17.0 29.9 Infineum termination fee, net l* — — — — — (10.9) — — — (10.9) Interest expense, net m* 4.7 22.7 2.4 — 29.8 — — — — — Other j* (3.2) — — (0.3) (3.5) — — — — — Interest rate swap gain v* — (35.0) — — (35.0) — — — — — Wood treatment (net margin affect) r* (7.4) 0.3 — — (7.1) — — — — — Incremental interest expense u* (62.3) (62.3) — — (124.6) — — — — — Incremental depreciation expense s* (7.0) (7.0) — — (14.0) — — — — — Gain on sale of termination of Alliance Agreement w * — — — — — — (154.8) — (30.0) (184.8) Tax effect of adjustments to net income (loss) and discrete items n* 6.0 10.6 (41.5) (9.6) (34.5) 1.6 (35.8) (12.8) (24.3) (71.3) Proforma Non-GAAP net income $137.6 $120.0 $127.8 $124.5 $509.9 $97.8 $99.6 $103.6 $97.9 $398.9 Diluted earnings (loss) per common share $1.06 $0.93 ($0.50) $0.38 $1.89 ($0.59) $1.31 $0.22 $0.25 $1.20 Effect of adjustments to net income ($0.15) ($0.13) $1.35 $0.45 $1.50 $1.24 ($0.65) $0.46 $0.39 $1.45 Diluted non-GAAP earnings per common share $0.91 $0.80 $0.85 $0.83 $3.39 $0.65 $0.66 $0.68 $0.65 $2.64 Weighted average diluted shares outstanding – Proforma 150.8 150.7 148.6 149.9 150.3 149.4 150.8 151.2 151.3 150.9 Weighted average diluted shares outstanding – Proforma Non-GAAP 150.8 150.7 149.7 149.9 150.3 150.4 150.8 151.2 151.3 150.9
32 a. Non-cash impairment charges associated with goodwill. b. Non-recurring deal and transaction costs associated with the CMC Materials acquisition and completed and announced divestitures. c. Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations. d. Represents severance charges related to the integration of the CMC Materials acquisition. e. Represents retention charges related directly to the CMC Materials acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses. f. Represents other employee related costs and other costs incurred relating to the CMC Materials acquisition and completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations. g. Restructuring charges resulting from cost-saving initiatives. h. Non-recurring loss (gain) from the sale of businesses. i. Non-cash amortization expense associated with intangibles acquired in acquisitions. j. Other miscellaneous adjustments. k. Non-recurring loss on extinguishment of debt and modification of our debt. l. Non-recurring gain from the termination fee with Infineum. m.Non-recurring interest costs related to the financing of the CMC Materials acquisition. n. The tax effect of pre-tax adjustments to net income (loss) was calculated using the applicable marginal tax rate for each respective year. o. Represents non-recurring costs associated with the CMC Materials retention program that was agreed upon and set forth in the definitive acquisition agreement. p. Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards. q. Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition. r. The adjustment relates to removal of net sales or net margin related to CMC Materials wood treatment business. Prior to the acquisition of CMC Materials, CMC Materials operated a wood treatment business, which manufactured and sold wood treatment preservatives for utility poles and crossarms. CMC Materials exited this business during the first half of 2022, prior to our acquisition of CMC Materials. The wood treatment business had no ongoing sales at the time of acquisition and removed for comparable purposes. s. 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. t. 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. u. Interest expense on the new debt raised to fund in part the consideration paid to effect the Merger using the effective interest rates. v. The elimination of interest expense, net of the gain on the termination of two swap instruments which were terminated on June 24, 2022 associated with the extinguished CMC Materials debt outstanding. w. Gain on termination of Alliance Agreement with MacDermid Enthone. x. Impairment of long-lived assets. Footnotes
1 Entegris Inc. Exhibit 99.3 Entegris Fourth Quarter 2023 Earnings Commentary February 13, 2024 SAFE HARBOR Comments within include some forward-looking statements. These statements involve a number of risks and uncertainties, and actual results could differ materially from those projected in the forward-looking statements. Additional information regarding these risks and uncertainties is contained in our most recent annual report and subsequent quarterly reports that we have filed with the SEC. Please also refer to the information on the disclaimer slide in the presentation. In this document we will also refer to non-GAAP financial measures as defined by the SEC in Regulation G. You can find a reconciliation table in today’s news release as well as on our IR page of our website at entegris.com. BERTRAND LOY (PRESIDENT AND CEO): FOURTH QUARTER HIGHLIGHTS In an industry environment that was challenging, the Entegris team delivered results that were in line with or better than our guidance, and we made good progress on all of our key commitments. For the fourth quarter: • Sales of $812 million were above our guidance. This strong performance was driven by our MS and MC divisions, and specifically by CMP slurries and pads and liquid filtration products. • Both gross margin and EBITDA margin were within our guidance. • And non-GAAP EPS was above our guidance. 2023 FINANCIAL HIGHLIGHTS We are very pleased with the quality of our execution in 2023. Looking at the full year 2023, we outperformed the market by 6 points. This above-market growth was driven in large part by our strong position at the leading-edge technology nodes and the backlog we had entering the year.
2 Entegris Inc. We were particularly pleased with the performance of our MC division, which was up 2 percent in 2023, despite a double-digit decline in the overall market. This strong performance was driven by our liquid filtration and gas purification product platforms, continuing to validate the increasing importance of materials purity for our customers. From a profitability point of view, our model showed strong resilience last year in a weak industry environment. EBITDA margin was 27 percent for the year even with our continued significant investments in R&D, which are critical to winning positions in new technology nodes and to sustaining our long-term outperformance. 2023 OTHER HIGHLIGHTS I would like to highlight other key accomplishments the team had in 2023: First was the integration of CMC Materials. Thanks to the great effort of our team, the integration was completed in record time, 13 months post close, resulting in achieving our $75 million cost synergy target. Debt paydown is a high priority for us and divestitures of non-core assets are a lever we have used to significantly reduce our debt levels. Last year we paid down $1.3 billion in debt, $1.1 billion of the debt reduction was from the proceeds of three divestitures: QED, Electronic Chemicals, and the business we sold to Element Solutions. As we mentioned last quarter, we are working on the sale of the PIM business. The sales process remains ongoing, and we will provide an update when we have more to share. In 2023, we started initial production at our new manufacturing facility in Taiwan, and we are on track to ramp up to higher volumes of production during the second half of 2024. Last year we also broke ground on our new Colorado facility. We believe that this project is squarely in-line with the goals of the U.S. CHIPS Act, and we look forward to continuing our engagement with the CHIPS Program Office. These two investments in capacity are vital for us to fully realize our long-term growth potential. In the second half of 2023, we combined the SCEM and APS divisions into one division called Materials Solutions. MS will provide our customers with the opportunity to leverage our end-to- end capabilities, which we believe will accelerate their roadmaps by reducing their time to yield, provide better device performance, and superior cost of ownership. 2024 OUTLOOK
3 Entegris Inc. As we enter 2024, inventories of semiconductors have largely normalized, end demand has stabilized in most segments, and we expect a gradual market recovery throughout the year. With this as a backdrop, and based on recent customers’ forecasts, for the full year 2024, we expect the market (based on the combination of our unit and CapEx mix) will be up 4 percent. We believe that this is a prudent view of the industry at this early stage of the year, until we see more concrete evidence of a sustained market recovery. In addition, given our strong position in new logic and memory nodes, we expect to outperform the market by 4 to 5 points, within our targeted outperformance range. Putting it all together, we expect our sales in 2024 will be approximately $3.5 billion, we expect EBITDA to be approximately 29 percent of revenue and non-GAAP EPS will be greater than $3.25. And to be clear, this guidance includes the PIM business for all of 2024. LINDA LAGORGA (CFO): FOURTH QUARTER P&L COMMENTARY Our sales in the fourth quarter were above our guidance at $812 million. Sales were down 14 percent year-over-year and down 9 percent sequentially, on an as-reported basis. As a reminder, Q4 sales did not include the Electronic Chemicals business that we sold on October 2nd, and only included a minimal amount from the business we sold to Element Solutions. Excluding the impact of those divestitures, Q4 sales were up 2 percent sequentially. Foreign exchange negatively impacted revenue by approximately $3 million year-over-year and negatively impacted revenue by $1 million sequentially in Q4. Gross margin on a GAAP and non-GAAP basis was 42.4 percent in the fourth quarter, in line with our guidance. The higher margin compared to Q3 reflects the positive impact of the divestitures. Operating expenses on a GAAP basis were $244 million in Q4. Operating expenses on a non- GAAP basis in Q4 were $176 million, above our guidance range. This was primarily driven by higher variable compensation expenses and a $3 million contribution made to the Entegris
4 Entegris Inc. Foundation, which funds STEM scholarships for women and individuals from underrepresented communities. Adjusted EBITDA in Q4 was $211 million or 26 percent of revenue, at the low end of our guidance range, driven by the higher OpEx that I outlined above. The negative GAAP tax rate in Q4 was driven by divestiture activity. The non-GAAP tax rate was 12 percent. GAAP diluted EPS was 25 cents per share in the fourth quarter. Non-GAAP EPS was 65 cents per share, above our guidance, driven primarily by higher sales. DIVISIONAL COMMENTARY Sales for Materials Solutions in Q4 were $365 million. Sales were down 16 percent sequentially, on an as reported basis. Excluding the impact of the divestiture of Electronic Chemicals and the sale of the business to Element Solutions, sales were up 6 percent. This growth was driven by higher sales of CMP slurries and pads and Advanced Deposition Materials. Adjusted (as reported) operating margin for MS was 16.7 percent for the quarter, essentially flat sequentially. AMH sales in Q4 of $169 million were down 6 percent sequentially. The primary drivers of the sequential sales decline in AMH were lower sales of sensing and control solutions and fluid handling products. Adjusted operating margin for AMH was 12.2 percent for the quarter. The sequential decline in margin was primarily driven by lower sales and higher variable compensation expenses. MC sales in the quarter of $288 million were up 1 percent sequentially. The sequential growth was driven by continuing strength in liquid filtration and another record quarter in gas purification. Adjusted operating margin for MC was 33.9 percent for the quarter. The sequential decline in margin was primarily driven by the impact of inventory reductions and the anticipated inefficiencies related to the ramp of our facility in Taiwan. CASH FLOW We continue to be committed to improving free cash flow and we have put a lot of focus on lowering inventory to that end. Excluding reductions from divestitures, we decreased our total inventory, by approximately $135 million, exceeding our $100 million goal for the year. CapEx for the quarter was $129 million and $457 million for all of 2023. We expect to spend approximately $350 million in total CapEx in 2024.
5 Entegris Inc. Driven by the higher CapEx, fourth quarter free cash flow was $14 million. Free cash flow was $165 million for all of 2023 and improved from a negative $114 million in 2022. We expect to further improve free cash flow in 2024. CAPITAL STRUCTURE During the fourth quarter, we paid down a total of $870 million in debt, more than our guidance of $730 million, through a combination of proceeds from the Electronic Chemicals divestiture, cash on hand, and the balance of the proceeds from the Element transaction. At the end of Q4, our gross debt was $4.7 billion, and our net debt was $4.2 billion. Gross leverage was 5.0 times and net leverage was 4.5 times. We expect our gross leverage will be below 4 times at the end of 2024. The blended interest rate on the debt portfolio is approximately 5.1 percent and the proportion of the portfolio that is variable is almost zero. FIRST QUARTER OUTLOOK Moving on to our Q1 outlook, which, to be clear, includes the PIM business: • We expect sales to range from $770 to $790 million. • We expect the EBITDA margin to be 26.5 to 27.5 percent. • We expect GAAP EPS to be 28 to 33 cents per share. • And non-GAAP EPS to be 60 to 65 cents per share. Let me provide some additional modeling items. For Q1, we expect: • Gross margin of 43 to 44 percent, both on a GAAP and non-GAAP basis. • GAAP operating expenses of $230 million to $233 million and non-GAAP operating expenses of $171 million to $174 million. • Depreciation of approximately $45 million. • Interest expense of approximately $60 million. • Non-GAAP tax rate of approximately 15 percent. BERTRAND LOY (PRESIDENT AND CEO): In closing, • We are very pleased with the quality of our execution in 2023.
6 Entegris Inc. • Our unit driven model displayed resilience, even during an industry downturn. We outperformed the market by approximately 6 points and maintained healthy EBITDA levels. • We continued to effectively balance short-term cost management, while making investments for future growth. • We significantly lowered our debt. • We maintain a strong conviction in the long-term growth potential of the industry, the growing importance of our value proposition, and our opportunity to significantly outperform the market for the years to come. As we close…what was a challenging yet rewarding year, I want to take a moment to thank our customers for the trust and confidence they place in Entegris. Additionally, I would also like to thank the Entegris teams around the world for their incredible customer focus and their commitment to excellence in everything we do.