Apr 26, 2016

Entegris Reports First-Quarter Results

BILLERICA, Mass., April 26, 2016 (GLOBE NEWSWIRE) -- Entegris, Inc. (Nasdaq:ENTG), a leading provider of yield-enhancing materials and solutions for advanced manufacturing processes, today reported its financial results for the Company's first quarter ended April 2, 2016.

The Company recorded first-quarter sales of $267.0 million.  First-quarter net income of $16.2 million, or $0.11 per diluted share, included amortization of intangible assets of $11.3 million.  Non-GAAP net income was $23.6 million, or $0.17 per diluted share. 

Bertrand Loy, president and chief executive officer, said: "I am very pleased with the quality of our execution as our first quarter sales exceeded the high end of our expectations and we generated solid cash flow from operations. During the first quarter we saw strong demand for our advanced microenvironment and liquid packaging product platforms. These products are part of a broad portfolio of solutions that are addressing the semiconductor industry's increasing requirements for higher degrees of purity and cleanliness in their process chemistries and manufacturing processes."

Mr. Loy added:  "These emerging requirements represent incremental opportunities across the semiconductor ecosystem that we believe will be important growth drivers for Entegris in the future. Looking ahead, continued demand trends for our solutions position us for a strong second quarter."

Quarterly Financial Results Summary

(in millions, except per share data)

GAAP ResultsQ1-2016Q1-2015Q4-2015
Net sales$267,024 $263,373 $266,786 
Operating income $29,559 $27,539 $20,116 
Operating margin 11.1% 10.5% 7.5%
Net income$16,212 $14,872 $17,573 
Earnings per share (EPS)$0.11 $0.11 $0.12 
 
Non-GAAP adjusted operating income$40,848 $42,458 $37,141 
Adjusted operating margin 15.3% 16.1% 13.9%
Non-GAAP net income$23,617 $25,446 $28,822 
Non-GAAP EPS$0.17 $0.18 $0.20 

Second-Quarter Outlook

For the fiscal second quarter ending July 2, 2016 the Company expects sales of $270 million to $285 million, net income of $19 million to $24 million, and net income per diluted share between $0.13 to $0.17 per share.  On a non-GAAP basis, EPS is expected to range from $0.18 to $0.22 per diluted share, which reflects net income on a non-GAAP basis in the range of $26 million to $31 million, which is adjusted for expected amortization expense of approximately $11.0 million or $0.05 per share.

Segment Results

The Company reports its results in two business segments: Critical Materials Handling (CMH) and Electronic Materials (EM).  Summary results by segment are contained in this press release.

CMH provides a broad range of products that filter, handle, dispense, and protect critical materials used in the semiconductor manufacturing process and in other high-technology manufacturing.  CMH's products and subsystems include high-purity materials packaging, fluid-handling and dispensing systems, liquid filters, as well as microenvironments that protect critical substrates such as wafers during shipping and manufacturing.  CMH also provides specialized graphite components and specialty coatings for use in high temperature applications.

EM provides high performance materials and specialty gas management solutions that enable high yield, cost effective semiconductor manufacturing.  EM's products consist of specialized chemistries and performance materials, gas microcontamination control solutions, and sub-atmospheric pressure gas delivery systems for the efficient handling of hazardous gases to semiconductor process equipment.

First-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the first quarter on Tuesday, April 26, 2016, at 10:00 a.m. Eastern Time.  Participants should dial 785-424-1666 or toll-free 877-876-9177, referencing confirmation code 4849122.  Participants are asked to dial in 5 to 10 minutes prior to the start of the call.  A replay of the call will be available starting April 26, 2016 at 1:00 p.m. (ET) until Thursday, June 9, 2016.  The replay can be accessed by using passcode 4849122 after dialing 1-719-457-0820 or 1-888-203-1112. A live and on-demand webcast of the call can also be accessed from the investor relations section of Entegris' website at www.entegris.com.  

Please also refer to Management's slide presentation concerning first-quarter results which may be referred to during the call. This presentation will be posted on the investor relations section of www.entegris.com Tuesday morning before the call.

ABOUT ENTEGRIS
Entegris is a leading provider of yield-enhancing materials and solutions for advanced manufacturing processes in the semiconductor and other high-technology 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 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 SEC. These financial measures are provided as a complement to financial measures provided in accordance with GAAP. We provide non-GAAP financial measures in order to better assess and measure operating performance. Management believes the non-GAAP measures better portray our baseline performance before certain gains, losses or other charges that may not be indicative of our business or future outlook. We believe these non-GAAP measures will aid investors' overall understanding of our results by providing a higher degree of transparency for certain expenses and providing a level of disclosure that will help investors understand how we plan and measure our business. The reconciliations of GAAP to non-GAAP Statements of Operations, GAAP to Adjusted Operating Income and Adjusted EBITDA, 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.  These forward-looking statements are based on current management expectations only as of the date of this press release, and 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 that include such words 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 that are difficult to predict.  These risks include, but are not limited to, fluctuations in the market price of Entegris' stock, Entegris' future operating results, 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 discussions appearing under the headings "Risks Relating to our Business and Industry," "Risks Relating to Our Indebtedness," "Manufacturing Risks," "International Risks," and "Risks Related to Owning Our Common Stock" in Item 1A of our Annual Report on Form 10—K for the fiscal year ended December 31, 2015, filed with the U.S Securities and Exchange Commission on February 29, 2016, as well as other matters and important factors disclosed previously and from time to time in the filings of Entegris with the U.S. Securities and Exchange Commission.  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
    April 2, 2016
  March 28, 2015
  December 31, 2015
 
 Net sales$267,024 $263,373 $266,786 
 Cost of sales 152,318  146,837  157,488 
  Gross profit 114,706  116,536  109,298 
 Selling, general and administrative expenses 47,956  50,890  51,024 
 Engineering, research and development expenses 25,902  25,800  26,717 
 Amortization of intangible assets 11,289  12,307  11,441 
  Operating income 29,559  27,539  20,116 
 Interest expense, net 9,149  9,628  9,694 
 Other income, net (675) (1,733) (3,889)
  Income before income tax expense (benefit) and equity in net loss of affiliates 21,085  19,644  14,311 
 Income tax expense (benefit) 4,873  4,670  (4,731)
 Equity in net loss of affiliates -  102  1,469 
  Net income$16,212 $14,872 $17,573 
      
    
 Basic net income per common share:$0.12 $0.11 $0.13 
 Diluted net income per common share:$0.11 $0.11 $0.12 


Weighted average shares outstanding:
      
 Basic  140,780  139,984  140,567  
 Diluted   141,371
   140,740
  141,433  


Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
   April 2, 2016 December 31, 2015
ASSETS     
Cash and cash equivalents$344,403  $349,825 
Short-term investments  1,140   2,181 
Accounts receivable, net  149,824   141,409 
Inventories  184,030   173,176 
Deferred tax charges and refundable  income taxes 18,762   18,943 
Other current assets 21,622   23,253 
Total current assets 719,781   708,787 
      
Property, plant and equipment, net 322,729   321,301 
      
Goodwill 343,286   342,111 
Intangible assets 251,803   258,942 
Deferred tax assets 8,241   7,771 
Other assets  7,990   7,785 
Total assets $1,653,830  $1,646,697 
      
LIABILITIES AND SHAREHOLDERS' EQUITY  
Long-term debt, current maturities $50,000  $50,000 
Accounts payable  47,550   36,916 
Accrued liabilities  52,528   75,859 
Income tax payable  11,625   12,775 
Total current liabilities 161,703   175,550 
      
Long-term debt, excluding
current maturities
  606,630   606,044 
Other liabilities  63,743   62,220 
Shareholders' equity  821,754   802,883 
Total liabilities and shareholders' equity$1,653,830  $1,646,697 



Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
  
 Three months ended
  April 2, 2016  March 28, 2015 
Operating activities:  
Net  income$16,212 $14,872 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation 13,700  13,319 
Amortization 11,289  12,307 
Stock-based compensation expense 2,861  2,258 
Provision for deferred income taxes (211) (2,833)
Other 4,796  2,908 
Changes in operating assets and liabilities:  
Trade accounts and notes receivable (6,799) (32,246)
Inventories (12,998) (7,512)
Accounts payable and accrued liabilities (9,510) (5,962)
Income taxes payable and refundable income taxes (726) 3,241 
Other (1,275) (484)
Net cash provided by (used in) operating activities 17,339  (132)
Investing activities:  
Acquisition of property and equipment (17,819) (20,488)
Other (2,495) 1,060 
Net cash used in investing activities (20,314) (19,428)
Financing activities:  
Payments on long-term debt -  (25,000)
Issuance of common stock -  520 
Repurchase and retirement of common stock (3,573) - 
Taxes paid related to net share settlement of equity awards (2,067) (2,053)
Other 49  135 
Net cash used in financing activities (5,591) (26,398)
Effect of exchange rate changes on cash  3,144  (2,354)
Decrease in cash and cash equivalents (5,422) (48,312)
Cash and cash equivalents at beginning of year 349,825  389,699 
Cash and cash equivalents at end of year$344,403 $341,387 


Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
  
 Three months ended 
Net salesApril 2,
2016
March 28,
2015
December 31,
2015
  
Critical Materials Handling$166,229 $167,468 $163,567   
Electronic Materials 100,795  95,905  103,219   
Total net sales$267,024 $263,373 $266,786   


 Three months ended 
Segment profitApril 2,
2016
March 28,
2015
December 31,
2015
  
Critical Materials Handling$37,892 $41,341 $33,030   
Electronic Materials 21,575  20,222  21,953   
Total segment profit 59,467  61,563  54,983   
Amortization of intangibles 11,289  12,307  11,441   
Unallocated expenses 18,619  21,717  23,426   
Total operating income$29,559 $27,539 $20,116   


Entegris, Inc. and Subsidiaries
GAAP to Non-GAAP Reconciliation of Statement of Operations
(In thousands, except per share data)
(Unaudited)
 
  Three months ended
 April 2, 2016
  
   U.S.
GAAP
  Adjustments  Non-
GAAP
     
Net sales$267,024 $- $267,024     
Cost of sales 152,318  -  152,318     
 Gross profit 114,706  -  114,706     
Selling, general and administrative expenses 47,956  -  47,956     
Engineering, research and development expenses 25,902  -  25,902     
Amortization of intangible assets (a) 11,289  (11,289) -     
 Operating income 29,559  11,289  40,848     
Interest expense, net 9,149  -  9,149     
Other income, net (b) (675) 118  (557)    
 Income before income tax expense
and equity in net loss of affiliates
 21,085  11,171  32,256     
Income tax expense (c) 4,873  3,766  8,639     
 Net income$16,212 $7,405 $23,617     
         
Basic income per common share:$0.12 $0.05 $0.17     
Diluted income per common share:$0.11 $0.05 $0.17     
Weighted average shares outstanding:       
 Basic 140,780  140,780  140,780     
 Diluted 141,371  141,371  141,371     


The above GAAP to Non-GAAP Reconciliation of Statement of Operations is provided as a complement to and should be read in conjunction with the Condensed Consolidated Statements of Operations.  The above GAAP to Non-GAAP Reconciliation of Statement of Operations is provided to better facilitate the assessment and measurement of the Company's operating performance.

a)  Amortization expense for the three months ended April 2, 2016 is adjusted for $11.3 million for amortization expense related to acquisitions.
b)  Other income, net for the three months ended April 2, 2016 is adjusted for a $0.1 million gain on the sale of an equity investment. 
c)  Income tax expense for the three months ended April 2, 2016 is adjusted for $3.8 million related to the adjustments noted above.

Entegris, Inc. and Subsidiaries
Reconciliation of GAAP to Adjusted Operating Income and Adjusted EBITDA
(In thousands)
(Unaudited)
 
 Three months ended  
 April 2,
2016
March 28,
2015
December 31,
2015
   
Net sales$267,024 $263,373 $266,786    
Net income$16,212 $14,872 $17,573    
Adjustments to net income:      
Equity in net loss of affiliates -  102  1,469    
Income tax expense (benefit) 4,873  4,670  (4,731)   
Interest expense, net 9,149  9,628  9,694    
Other income, net (675) (1,733) (3,889)   
GAAP — Operating income 29,559  27,539  20,116    
Integration costs -  2,612  5,584    
Amortization of intangible assets 11,289  12,307  11,441    
Adjusted operating income 40,848  42,458  37,141    
Depreciation 13,700  13,319  14,225    
Adjusted EBITDA$54,548 $55,777 $51,366    
       
Adjusted operating margin 15.3% 16.1% 13.9%   
Adjusted EBITDA — as a % of net sales 20.4% 21.2% 19.3%   


Entegris, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)
 
 Three months ended
  
 April 2,
2016
March 28,
2015
December 31,
2015
GAAP net income$16,212$14,872$17,573  
Adjustments to net income:     
Integration costs-2,6125,584  
Net (gain) loss on impairment or sale of investment(118)673(2,016)  
Amortization of intangible assets11,28912,30711,441  
Tax effect of adjustments to net income(3,766)(5,018)(3,760)  
Non-GAAP net income$23,617$25,446$28,822  
      
Diluted earnings per common share$0.11$0.11$0.12  
Effect of adjustments to net income0.050.080.08  
Diluted non-GAAP earnings per common share$0.17$0.18$0.20  


Steven Cantor
VP of Corporate Relations
T +1 978 436 6750
irelations@entegris.com