News Release Details
Entegris Reports Results for Fiscal Third Quarter of 2006
CHASKA, Minn., Nov 02, 2006 (BUSINESS WIRE) -- Entegris, Inc. (Nasdaq:ENTG), a global leader in materials integrity management, today reported its financial results for the fiscal third quarter ended September 30, 2006. Sales from continuing operations were $171.3 million, versus sales of $121.3 million for the comparable three-month period a year ago and $180.7 million for the quarter ended July 1, 2006.
Third-quarter GAAP net income was $17.8 million, or $0.13 per diluted share. This result includes total pretax stock-based compensation of $3.4 million, or $0.02 per diluted share after tax, of which $1.1 million was for integration-related stock-based compensation.
On a non-GAAP basis, third-quarter net income from continuing operations was $21.9 million, or $0.16 per fully diluted share. The non-GAAP result is adjusted for merger-related and other restructuring charges. These pretax adjustments include restructuring charges of $0.3 million, integration expense of $0.9 million, merger-related amortization expense of $3.5 million, and integration-related stock-based compensation expense of $1.1 million. A reconciliation of GAAP to non-GAAP results is provided elsewhere in this release.
For the nine months ended September 30, 2006, sales from continuing operations were $509.6 million and GAAP net income was $47.4 million, or $0.34 per fully diluted share. On a non-GAAP basis, net income from continuing operations for the first nine months of the year was $64.9 million, or $0.46 per fully diluted share.
"Sales for the third quarter remained at healthy levels, despite signs of softening in the semiconductor industry. Unit-driven sales, which were 61 percent of total sales, were about even with the June quarter, reflecting continuing demand for our liquid filtration products used for advanced semiconductor applications, as well as for our wafer and disk shippers," said Gideon Argov, president and chief executive officer of Entegris. "Capital-driven sales, which were 39 percent of total sales, declined as expected from a particularly strong second quarter, which had been boosted by higher-than-average sales levels of our liquid systems. Sales of our gas microcontamination control products, which are increasingly being used in leading-edge lithography applications, reached an all-time high for the sixth consecutive quarter."
Argov added: "We achieved an operating margin on an adjusted basis of 16.7 percent, but our success in controlling our operating costs and the benefits from the full realization of merger-related cost synergies were partially offset by a lower-than-expected gross margin, caused primarily by isolated manufacturing inefficiencies at a North American facility as well as by lower production levels.
"Our strong balance sheet and cash flow allow us to pursue key growth initiatives in our core markets as well as to repurchase our shares," Argov said. The Company ended the quarter with cash, cash equivalents, and short-term investments of $228.5 million, which reflects the execution in September 2006 of a $100 million accelerated stock buyback program that is part of the Company's $150 million stock buyback authorization announced in August 2006.
Third-quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) was $35.5 million, reflecting non-GAAP operating income of $28.5 million, depreciation of approximately $5.9 million, and non-merger-related amortization of approximately $1.1 million.
Outlook
For its fourth fiscal quarter ending December 31, 2006, the Company currently expects sales of approximately $155 million to $163 million. GAAP net income per diluted share is expected to range from $0.09 to $0.12. Non-GAAP net income is expected to range from approximately $15 million to $19 million, reflecting pretax adjustments for integration and restructuring charges of approximately $1.0 million, merger-related amortization expense of $3.5 million, and integration-related stock-based compensation expense of approximately $0.9 million. Non-GAAP net income per diluted share is expected to range from $0.11 to $0.14.
Third-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its third-quarter results on Thursday, November 2, 2006, at 10:00 a.m. Eastern Time. Participants should dial 1-800-811-0667 (domestic callers) or 1-913-981-4901 (for callers outside the U.S.); all callers should use passcode 5377248. A replay of the call can be accessed at 1-719-457-0820 using the same passcode. The call will also be webcast on the investor relations portion of the Entegris website at www.entegris.com.
EBITDA and Non-GAAP Discussion
The financial results discussed in this release include references to a non-GAAP measure called "EBITDA," which is defined as earnings before interest, taxes, depreciation, and amortization. We believe this measure provides relevant and useful information to our investors since it provides a meaningful view of the Company's ongoing operating results and as such is one of the measures used by management to assess the Company's financial results and cash flow. We intend to continue to use this measure in the future, particularly since we expect the active exploration and selective pursuit of mergers and acquisitions to continue to be a key part of our growth and value-creation strategy. EBITDA should be considered in conjunction with, not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the U.S. EBITDA, as we have defined it, may not be comparable to similarly named measures reported by other companies.
In addition to disclosing results that are determined in accordance with generally accepted accounting principles in the U.S. (GAAP), the Company also discloses non-GAAP results of operations that exclude certain expenses and charges. These non-GAAP results are provided as a complement to results provided in accordance with GAAP in order to provide investors with relevant and useful information about the Company's ongoing operations. As such, non-GAAP information primarily excludes expenses and charges resulting from purchase accounting and integration activities associated with the Company's August 2005 merger with Mykrolis Corporation. Earnings guidance for the quarter ending December 31, 2006 is disclosed on both a GAAP and a non-GAAP basis. A reconciliation of GAAP to non-GAAP financial information discussed in this release is contained in the attached exhibits and on the Company's website at www.entegris.com.
Forward-Looking Statements
Certain information contained in this press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current management expectations only as of the date of this press release, which involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Statements which are modified by words such as "anticipate," "believe," "estimate," "expect," "forecast," "may," "will," "should" or the negative thereof and similar expressions as they relate to Entegris or our management are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris' stock, future operating results of Entegris, other acquisition and investment opportunities available to Entegris, general business and market conditions and other factors. Additional information concerning these and other risk factors may be found in previous financial press releases issued by Entegris and Entegris' periodic public filings with the Securities and Exchange Commission, including the discussion described under the headings "Risks Relating to our Business and Industry," and "Risks Related to Securities Markets and Ownership of Our Securities" in Item 7 of our Annual Report on Form 10-K for the fiscal year ended August 27, 2005. 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.
About Entegris
Entegris is the global leader in materials integrity management, delivering a wide range of products for purifying, protecting and transporting critical materials used in processing and manufacturing in semiconductor 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, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at www.entegris.com.
Entegris, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
---------------------- ----------------------
Sept. 30, Oct. 1, 2005 Sept. 30, Oct. 1, 2005
2006 2006
---------------------------------------------
Net sales $171,262 $121,264 $509,625 $295,690
Cost of sales(a) 95,000 83,903 273,296 186,398
---------------------- ----------------------
Gross profit 76,262 37,361 236,329 109,292
Selling, general and
administrative
expenses(b) 43,672 50,652 147,717 98,288
Engineering, research
and development
expenses 9,840 8,045 29,235 16,476
---------------------- ----------------------
Operating income (loss) 22,750 (21,336) 59,377 (5,472)
Interest income, net 2,846 1,244 6,765 2,490
Other income (loss), net 702 (926) 2,296 1,984
---------------------- ----------------------
Income (loss) before
income taxes 26,298 (21,018) 68,438 (998)
Income tax expense
(benefit) 8,468 (9,122) 22,585 (3,501)
Equity in net (earnings)
loss of affiliates (93) 49 (288) 219
---------------------- ----------------------
Income (loss) from
continuing operations 17,923 (11,945) 46,141 2,284
(Loss) income from
discontinued
operations, net of
taxes (102) (6,100) 1,226 (7,591)
---------------------- ----------------------
Net income (loss) $17,821 $(18,045) $47,367 $(5,307)
====================== ======================
Basic income (loss) per
common share:
Continuing operations: $0.13 $(0.11) $0.34 $0.03
Discontinued operations --- (0.05) 0.01 (0.09)
---------------------- ----------------------
Net income (loss) per
common share $0.13 $(0.16) $0.35 $(0.06)
====================== ======================
Diluted income (loss)
per common share:
Continuing operations: $0.13 $(0.11) $0.33 $0.03
Discontinued operations --- (0.05) 0.01 (0.09)
---------------------- ----------------------
Net income (loss) per
common share $0.13 $(0.16) $0.34 $(0.06)
====================== ======================
Weighted average shares
outstanding:
Basic 135,538 111,542 136,624 86,170
Diluted 138,921 111,542 139,981 86,170
a) Cost of sales for the three months ended September 30, 2006 include
$0.1 million of merger-related and other restructuring charges,
integration expenses, and integration-related stock-based
compensation expense. Cost of sales for the nine months ended
September 30, 2006 include $2.9 million for merger-related and other
restructuring charges, integration expenses, and integration-related
stock-based compensation expense and a $0.7 million gain on the sale
of a facility.
b) Selling, general and administrative expenses for the three months
and nine months ended September 30, 2006 include $5.7 million and
$25.8 million, respectively, of merger-related and other
restructuring charges, integration expense, integration-related
stock-based compensation expense, and merger-related amortization of
intangibles.
Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Three Months Ended September 30, 2006
(In thousands, except per share data)
(Unaudited)
U.S. GAAP Adjustments Non-GAAP
-------------------------------
Net sales $171,262 $--- $171,262
Cost of sales(a) 95,000 (51) 94,949
-------------------------------
Gross profit 76,262 51 76,313
Selling, general and administrative
expenses(b) 43,672 (5,720) 37,952
Engineering, research and development
expenses 9,840 --- 9,840
-------------------------------
Operating income 22,750 5,771 28,521
Interest income, net 2,846 --- 2,846
Other income, net 702 --- 702
-------------------------------
Income before income taxes 26,298 5,771 32,069
Income tax expense 8,468 1,794 10,262
Equity in net earnings of affiliates (93) --- (93)
-------------------------------
Income from continuing operations 17,923 3,977 21,900
Loss from discontinued operations, net
of taxes (102) --- (102)
-------------------------------
Net income $17,821 $3,977 $21,798
===============================
Basic income per common share:
Continuing operations: $0.13 $0.03 $0.16
Discontinued operations --- --- ---
-------------------------------
Net income per common share $0.13 $0.03 $0.16
===============================
Diluted income per common share:
Continuing operations: $0.13 $0.03 $0.16
Discontinued operations --- --- ---
-------------------------------
Net income per common share $0.13 $0.03 $0.16
===============================
Weighted average shares outstanding:
Basic 135,538 135,538
Diluted 138,921 138,921
a) Non-GAAP cost of sales for the three months ended September 30,
2006 is adjusted for $0.1 million of merger-related and other
restructuring charges, integration expenses, and integration-related
stock-based compensation expense.
b) Non-GAAP selling, general and administrative expenses for the three
months ended September 30, 2006 are adjusted for $0.4 million of
merger-related and other restructuring charges, $0.8 million of
integration expense, $1.0 million of integration-related stock-based
compensation expense, and $3.5 million of merger-related amortization
of intangibles.
Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Nine Months Ended September 30, 2006
(In thousands, except per share data)
(Unaudited)
U.S. GAAP Adjustments Non-GAAP
-------------------------------
Net sales $509,625 $--- $509,625
Cost of sales(a) 273,296 (2,163) 271,133
-------------------------------
Gross profit 236,329 2,163 238,492
Selling, general and administrative
expenses(b) 147,717 (25,825) 121,892
Engineering, research and development
expenses 29,235 --- 29,235
-------------------------------
Operating income 59,377 27,988 87,365
Interest income, net 6,765 --- 6,765
Other income, net 2,296 --- 2,296
-------------------------------
Income before income taxes 68,438 27,988 96,426
Income tax expense 22,585 9,237 31,822
Equity in net earnings of affiliates (288) --- (288)
-------------------------------
Income from continuing operations 46,141 18,751 64,892
Income from discontinued operations,
net of taxes 1,226 --- 1,226
-------------------------------
Net income $47,367 $18,751 $66,118
===============================
Basic income per common share:
Continuing operations: $0.34 $0.14 $0.47
Discontinued operations 0.01 --- 0.01
-------------------------------
Net income per common share $0.35 $0.14 $0.48
===============================
Diluted income per common share:
Continuing operations: $0.33 $0.13 $0.46
Discontinued operations 0.01 --- 0.01
-------------------------------
Net income per common share $0.34 $0.13 $0.47
===============================
Weighted average shares outstanding:
Basic 136,624 136,624
Diluted 139,981 139,981
a) Non-GAAP cost of sales for the nine months ended September 30, 2006
is adjusted for $2.9 million of merger-related and other
restructuring charges, integration expenses, and integration-related
stock-based compensation expense offset by a $0.7 million gain on the
sale of a facility.
b) Non-GAAP selling, general and administrative expenses for the nine
months ended September 30, 2006 are adjusted for $3.8 million of
merger-related and other restructuring charges, $7.2 million of
integration expense, $4.3 million of integration-related stock-based
compensation expense, and $10.5 million of merger-related
amortization of intangibles.
Entegris, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, 2006 December 31, 2005
------------------------------------
ASSETS
Cash, cash equivalents and short-
term investments $228,517 $274,403
Accounts receivable 130,443 111,058
Inventories 104,816 69,535
Deferred tax assets 26,657 26,078
Other current assets and assets
held for sale 9,313 25,290
------------------------------------
Total current assets 499,746 506,364
Property, plant and equipment,
net 118,906 120,323
Intangible assets 477,962 493,544
Deferred tax asset - non-current 9,982 10,614
Other assets 12,117 12,301
------------------------------------
Total assets $1,118,713 $1,143,146
====================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term
debt $540 $797
Short-term debt - 2,290
Accounts payable 23,931 33,585
Accrued liabilities 54,170 59,482
Income tax payable 32,509 15,775
------------------------------------
Total current liabilities 111,150 111,929
Long-term debt, less current
maturities 3,094 3,383
Other liabilities 16,566 15,015
Shareholders' equity 987,903 1,012,819
------------------------------------
Total liabilities and
shareholders' equity $1,118,713 $1,143,146
====================================
SOURCE: Entegris, Inc.
Entegris, Inc., Chaska
Steve Cantor, 978-436-6750
VP of Corporate Relations
irelations@entegris.com