Jul 27, 2017

Entegris Reports Strong Second-Quarter Results

- Record second-quarter revenue of $329.0 million
- GAAP net income of $40.0 million, or $0.28 per diluted share
- Non-GAAP net income of $48.9 million, or $0.34 per diluted share
- First-half 2017 revenue of $646.4 million grew 13.4 percent
- First-half 2017 adjusted EBITDA reached $164.1 million, or 25.4 percent of revenue

BILLERICA, Mass., July 27, 2017 /PRNewswire/ -- Entegris, Inc. (NasdaqGS: ENTG), a leading specialty materials provider, today reported its financial results for the Company's second quarter ended July 1, 2017.

Entegris, Inc.

Second-quarter sales were $329.0 million, an increase of 8.6% from the same quarter last year and a 3.7% increase sequentially.  Second-quarter net income was $40.0 million, or $0.28 per diluted share, which included amortization of intangible assets of $11.0 million, as well as an asset impairment charge and severance expense of $3.6 million. Non-GAAP net income was $48.9 million, or $0.34 per diluted share.

For the first half of fiscal 2017, sales of $646.4 million increased 13.4% from the same period a year ago.  First-half 2017 net income was $72.5 million, or $0.51 per share, which included amortization of intangible assets of $22.0 million, as well as an asset impairment charge and severance expense of $3.6 million.  Non-GAAP net income for the first half of 2017 was $89.7 million, or $0.63 per diluted share.

Bertrand Loy, president and chief executive officer, said: "I am very pleased with Entegris' performance thus far this year which puts us on a solid path to grow well in excess of our markets in 2017.  Our growth in the second-quarter was driven by positive industry trends and reflected strong performance across our portfolio of solutions, as well as successful product introductions to support the ongoing ramp of advanced semiconductor manufacturing technologies such as 3D NAND. Our first-half sales grew 13% from the prior year, driven by strong growth in Asia, particularly in Korea."

Mr. Loy added:  "The quality of our execution and financial performance in the second quarter demonstrates the strength of our business model and our operating leverage, as we generated strong cash flow from operations and achieved an adjusted EBITDA of $88.2 million, or 26.8% of sales."

Quarterly Financial Results Summary
(in thousands, except per share data)

GAAP Results

Q2-2017

Q2-2016

Q1-2017

Net sales

$329,002

$303,052

$317,377

Operating income

$59,090

$46,400

$50,920

Operating margin

18.0%

15.3%

16.0%

Net income

$39,991

$32,890

$32,514

Diluted earnings per share (EPS)

$0.28

$0.23

$0.23

Non-GAAP Results

Non-GAAP adjusted operating income

$73,826

$57,462

$61,865

Adjusted operating margin

22.4%

19.0%

19.5%

Non-GAAP net income

$48,906

$40,290

$40,754

Non-GAAP EPS

$0.34

$0.28

$0.28

 

Third-Quarter Outlook
For the third quarter ending September 30, 2017, the Company expects sales of $325 million to $340 million, net income of $36 million to $43 million, and net income per diluted share between $0.25 and $0.30.  On a non-GAAP basis, EPS is expected to range from $0.30 to $0.35 per diluted share, which reflects net income on a non-GAAP basis in the range of $43 million to $50 million, which is adjusted for expected amortization expense of approximately $11 million or $0.05 per share.

Segment Results
As of December 31, 2016, the Company changed its financial segment reporting to the following segments:

Specialty Chemicals and Engineered Materials (SCEM): SCEM provides high-performance and high-purity process chemistries, gases, and materials and safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.

Microcontamination Control (MC): MC solutions purify critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.

Advanced Materials Handling (AMH): AMH develops solutions to monitor, protect, transport, and deliver critical liquid chemistries and substrates for a broad set of applications in the semiconductor industry and other high-technology industries.

Second-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the second quarter on Thursday, July 27, 2017, at 9:00 a.m. Eastern Time.  Participants should dial 1-877-852-6583 or 1-719-325-2495, referencing confirmation code 1492733.  Participants are asked to dial in 5 to 10 minutes prior to the start of the call.  To access a telephonic replay of the call, please [Click Here]. The replay will be available starting at 12:00 p.m. ET on Thursday, July 27 until Saturday, September 9.  A live and on-demand webcast of the call can also be accessed from the investor relations section of Entegris' website at http://investor.entegris.com/.

Management's slide presentation concerning the results for the second quarter, which may be referred to during the call, will be posted on the investor relations section of http://investor.entegris.com/ Thursday morning before the call.

ABOUT ENTEGRIS
Entegris is a leading specialty materials provider for the microelectronics industry and other high-tech industries.  Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, China, France, Germany, Israel, Japan, Malaysia, Singapore, South Korea and Taiwan.  Additional information can be found at www.entegris.com.

Non-GAAP Information
The Company's condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA, Adjusted Gross Profit, Adjusted Segment Profit, and Adjusted Operating Income together with related measures thereof, and non-GAAP EPS, are considered "Non-GAAP financial measures" under the rules and regulations of the Securities and Exchange Commission. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision-making, as a means to evaluate period-to-period comparisons, as well as comparisons to our competitors' operating results. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring business operating results, such as amortization, depreciation and discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing and understanding our results and performance and when planning, forecasting, and analyzing future periods.  We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze our business.  The reconciliations of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA, GAAP Gross Profit to Adjusted Gross Profit, GAAP Segment Profit to Adjusted Operating Income, and GAAP to Non-GAAP Earnings per Share are included elsewhere in this release.

Forward-Looking Statements
Certain information contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  The words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," "should," "may," "will," "would" or the negative thereof and similar expressions are intended to identify such forward-looking statements.  These forward-looking statements include those about future period guidance; future sales, net income, net income per diluted share, non-GAAP EPS, non-GAAP net income, expenses and other financial metrics; our performance relative to our markets; market and technology trends; the development of new products and the success of their introductions; the Company's capital allocation strategy; our ability to execute on our strategies; and other matters. These forward-looking statements are based on current management expectations and assumptions only as of the date of this press 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 our products and solutions; our ability to meet rapid demand shifts; our ability to continue technological innovation and introduce new products to meet our customers' rapidly changing requirements; our concentrated customer base; our ability to identify, effect and integrate acquisitions, joint ventures or other transactions; our ability to protect and enforce intellectual property rights; operational, political and legal risks of our international operations; our dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages and price increases; changes in government regulations of the countries in which we operate; fluctuation of currency exchange rates; fluctuations in the market price of Entegris' stock; the level of, and obligations associated with, our indebtedness; and other risk factors and additional information described in our filings with the Securities and Exchange Commission, including under the heading "Risks Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed on February 17, 2017, and in our other periodic filings. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update publicly any forward-looking statements contained herein.

 

 

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)




Three months ended



July 1, 2017


July 2, 2016


April 1, 2017


Net sales

$329,002


$303,052


$317,377


Cost of sales

178,699


163,847


177,781



Gross profit

150,303


139,205


139,596


Selling, general and administrative expenses

52,985


53,597


50,492


Engineering, research and development expenses

27,221


28,146


27,239


Amortization of intangible assets

11,007


11,062


10,945



Operating income

59,090


46,400


50,920


Interest expense, net

8,103


9,051


8,393


Other (income) expense, net

(46)


(1,054)


902



Income before income tax expense

51,033


38,403


41,625


Income tax expense

11,042


5,513


9,111



Net income

$39,991


$32,890


$32,514
















Basic net income per common share:

$0.28


$0.23


$0.23


Diluted net income per common share:

$0.28


$0.23


$0.23









Weighted average shares outstanding:








Basic

141,696


140,953


141,501



Diluted

143,508


141,723


143,315


 

 

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)




Six months ended



July 1, 2017


July 2, 2016


Net sales

$646,379


$570,076


Cost of sales

356,480


316,165



Gross profit

289,899


253,911


Selling, general and administrative expenses

103,477


101,553


Engineering, research and development expenses

54,460


54,048


Amortization of intangible assets

21,952


22,351



Operating income

110,010


75,959


Interest expense, net

16,496


18,200


Other expense (income), net

856


(1,729)



Income before income tax expense

92,658


59,488


Income tax expense

20,153


10,386



Net income

$72,505


$49,102













Basic net income per common share:

$0.51


$0.35


Diluted net income per common share:

$0.51


$0.35








Weighted average shares outstanding:






Basic

141,599


140,867



Diluted

143,411


141,547


 

 

Entegris, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)



July 1, 2017


December 31, 2016


ASSETS





Cash and cash equivalents

$405,635


$406,389


Accounts receivable, net

171,113


165,675


Inventories

194,155


183,529


Deferred tax charges and refundable  income taxes

16,716


20,140


Other current assets

21,374


24,398


      Total current assets

808,993


800,131







Property, plant and equipment, net

341,146


321,562







Goodwill

355,178


345,269


Intangible assets

206,182


217,548


Deferred tax assets

8,622


8,022


Other assets

7,322


7,000


      Total assets

$1,727,443


$1,699,532







LIABILITIES AND SHAREHOLDERS' EQUITY





Long-term debt, current maturities

$100,000


$100,000


Accounts payable

56,961


61,617


Accrued liabilities

75,275


83,530


Income tax payable

18,786


16,424


      Total current liabilities

251,022


261,571







Long-term debt, excluding current maturities

435,910


484,677


Other liabilities

58,242


54,066


Shareholders' equity

982,269


899,218


      Total liabilities and shareholders' equity

$1,727,443


$1,699,532



 

 

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Three months ended


Six months ended


July 1, 2017


July 2, 2016


July 1, 2017


July 2, 2016


Operating activities:









Net  income

$39,991


$32,890


$72,505


$49,102


Adjustments to reconcile net income to net
cash provided by operating activities:









Depreciation

14,411


13,825


28,388


27,525


Amortization

11,007


11,062


21,952


22,351


Stock-based compensation expense

4,039


3,505


7,909


6,366


Provision for deferred income taxes

(215)


(720)


3,207


(931)


Other

6,497


4,408


10,130


9,204


Changes in operating assets and liabilities:









Trade accounts and notes receivable

4,514


(29,300)


(3,032)


(36,099)


Inventories

(8,422)


1,609


(13,837)


(11,389)


Accounts payable and accrued liabilities

10,177


23,065


(13,313)


13,555


Income taxes payable and refundable income taxes

4,209


1,133


2,957


407


Other

(1,049)


(278)


1,725


(1,553)


Net cash provided by operating activities

85,159


61,199


118,591


78,538


Investing activities:









Acquisition of business net of cash acquired

(20,000)



(20,000)



Acquisition of property and equipment

(20,302)


(14,325)


(42,492)


(32,144)


Other

25


837


211


(1,658)


Net cash used in investing activities

(40,277)


(13,488)


(62,281)


(33,802)


Financing activities:









Payments on long-term debt

(25,000)


(25,000)


(50,000)


(25,000)


Issuance of common stock

1,864


2,380


2,905


2,380


Taxes paid related to net share settlement of
equity awards

(664)


(136)


(5,239)


(2,203)


Other

(5,000)


42


(9,270)


(3,482)


Net cash used in financing activities

(28,800)


(22,714)


(61,604)


(28,305)


Effect of exchange rate changes on cash

(1,606)


4,343


4,540


7,487


Increase (decrease) in cash and cash equivalents

14,476


29,340


(754)


23,918


Cash and cash equivalents at beginning of period

391,159


344,403


406,389


349,825


Cash and cash equivalents at end of period

$405,635


$373,743


$405,635


$373,743



 

 

Entegris, Inc. and Subsidiaries

Segment Information

(In thousands)

(Unaudited)



Three months ended


Six months ended

Net sales

July 1, 2017


July 2, 2016


April 1, 2017


July 1, 2017


July 2, 2016


Specialty Chemicals and Engineered
Materials

$121,174


$111,782


$114,435


$235,609


$212,889


Microcontamination Control

104,407


91,584


100,055


204,462


169,203


Advanced Materials Handling

103,421


99,686


102,887


206,308


187,984


     Total net sales

$329,002


$303,052


$317,377


$646,379


$570,076


 


Three months ended


Six months ended

Segment profit

July 1, 2017


July 2, 2016


April 1, 2017


July 1, 2017


July 2, 2016


Specialty Chemicals and Engineered
Materials

$34,174


$28,914


$28,140


$62,314


$51,330


Microcontamination Control

36,484


28,566


35,581


72,065


46,706


Advanced Materials Handling

19,573


22,519


18,276


37,849


41,430


Total segment profit

90,231


79,999


81,997


172,228


139,466


Amortization of intangibles

11,007


11,062


10,945


21,952


22,351


Unallocated expenses

20,134


22,537


20,132


40,266


41,156


    Total operating income

$59,090


$46,400


$50,920


$110,010


$75,959



 

 

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Gross Profit to Adjusted Gross Profit

(In thousands)

(Unaudited)



Three months ended


Six months ended


July 1, 2017


July 2, 2016


April 1, 2017


July 1, 2017


July 2, 2016


Net sales

$329,002


$303,052


$317,377


$646,379


$570,076


Gross profit-GAAP

$150,303


$139,205


$139,596


$289,899


$253,911


Adjustments to gross profit:











Impairment of equipment

1,966




1,966



Adjusted gross profit

$152,269


$139,205


$139,596


$291,865


$253,911













Gross margin - as a % of net sales

45.7

%

45.9

%

44.0

%

44.8

%

44.5

%

Adjusted gross margin - as a % of net sales

46.3

%

45.9

%

44.0

%

45.2

%

44.5

%


 

 

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Segment Profit to Adjusted Operating Income

(In thousands)

(Unaudited)



Three months ended


Six months ended

Segment profit-GAAP

July 1, 2017


July 2, 2016


April 1, 2017


July 1, 2017


July 2, 2016


Specialty Chemicals and Engineered Materials

$34,174


$28,914


$28,140


$62,314


$51,330


Microcontamination Control

36,484


28,566


35,581


72,065


46,706


Advanced Materials Handling

19,573


22,519


18,276


37,849


41,430


Total segment profit

90,231


79,999


81,997


172,228


139,466


Amortization of intangible assets

11,007


11,062


10,945


21,952


22,351


Unallocated expenses

20,134


22,537


20,132


40,266


41,156


    Total operating income

$59,090


$46,400


$50,920


$110,010


$75,959













Segment profit margin-GAAP











Specialty Chemicals and Engineered Materials

28.2

%

25.9

%

24.6

%

26.4

%

24.1

%

Microcontamination Control

34.9

%

31.2

%

35.6

%

35.2

%

27.6

%

Advanced Materials Handling

18.9

%

22.6

%

17.8

%

18.3

%

22.0

%

 


Three months ended


Six months ended

Adjusted segment profit

July 1, 2017


July 2, 2016


April 1, 2017


July 1, 2017


July 2, 2016


Specialty Chemicals and Engineered Materials

$34,174


$28,914


$28,140


$62,314


$51,330


Microcontamination Control 1

37,927


28,566


35,581


73,508


46,706


Advanced Materials Handling 2

21,859


22,519


18,276


40,135


41,430


Total adjusted segment profit

93,960


79,999


81,997


175,957


139,466


Amortization of intangible assets 3






Unallocated expenses

20,134


22,537


20,132


40,266


41,156


    Total adjusted operating income

$73,826


$57,462


$61,865


$135,691


$98,310













Adjusted segment profit margin











Specialty Chemicals and Engineered Materials

28.2

%

25.9

%

24.6

%

26.4

%

24.1

%

Microcontamination Control

36.3

%

31.2

%

35.6

%

36.0

%

27.6

%

Advanced Materials Handling

21.1

%

22.6

%

17.8

%

19.5

%

22.0

%

 

1 Adjusted segment profit for Microcontamination Control for the three and six months ended July 1, 2017 excludes charges for impairment of equipment and severance of $884 and $559, respectively.

2 Adjusted segment profit for Advanced Material Handling for the three and six months ended July 1, 2017 excludes charges for impairment of equipment of $2,286.

3  Adjusted amortization of intangible assets excludes amortization expense of $11,007, $11,062, and $10,945 for the three months ended July 1, 2017, July 2, 2016, and April 1, 2017, respectively and $21,952 and $22,351 for the six months ended July 1, 2017 and July 2, 2016, respectively.


 

 

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA

(In thousands)

(Unaudited)



Three months ended


Six months ended


July 1, 2017


July 2, 2016


April 1, 2017


July 1, 2017


July 2, 2016


Net sales

$329,002


$303,052


$317,377


$646,379


$570,076


Net income

$39,991


$32,890


$32,514


$72,505


$49,102


Adjustments to net income:











Income tax expense

11,042


5,513


9,111


20,153


10,386


Interest expense, net

8,103


9,051


8,393


16,496


18,200


Other (income) expense, net

(46)


(1,054)


902


856


(1,729)


GAAP - Operating income

59,090


46,400


50,920


110,010


75,959


Severance

559




559



Impairment of equipment

3,170




3,170



Amortization of intangible assets

11,007


11,062


10,945


21,952


22,351


Adjusted operating income

73,826


57,462


61,865


135,691


98,310


Depreciation

14,411


13,825


13,977


28,388


27,525


Adjusted EBITDA

$88,237


$71,287


$75,842


$164,079


$125,835













Adjusted operating margin

22.4

%

19.0

%

19.5

%

21.0

%

17.2

%

Adjusted EBITDA - as a % of net sales

26.8

%

23.5

%

23.9

%

25.4

%

22.1

%


 

 

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Net Income to Non-GAAP Earnings per Share

(In thousands, except per share data)

(Unaudited)



Three months ended



Six months ended


July 1, 2017


July 2, 2016


April 1, 2017



July 1, 2017


July 2, 2016


GAAP net income

$39,991


$32,890


$32,514



$72,505


$49,102


Adjustments to net income:












Severance

559





559



Impairment of equipment

3,170





3,170



Gain on sale of equity investment


(38)





(156)


Amortization of intangible assets

11,007


11,062


10,945



21,952


22,351


Tax effect of adjustments to net income and discrete items

(5,821)


(3,624)


(2,705)



(8,526)


(7,390)


Non-GAAP net income

$48,906


$40,290


$40,754



$89,660


$63,907














Diluted earnings per common share

$0.28


$0.23


$0.23



$0.51


$0.35


Effect of adjustments to net income

$0.06


$0.05


$0.06



$0.12


$0.10


Diluted non-GAAP earnings per common share

$0.34


$0.28


$0.28



$0.63


$0.45


 

Contact:
Steven Cantor
VP of Corporate Relations
T + 978 436 6500
irelations@entegris.com

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SOURCE Entegris, Inc.

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