Jul 27, 2016

Entegris Reports Second-Quarter Results

BILLERICA, Mass., July 27, 2016 (GLOBE NEWSWIRE) -- Entegris, Inc. (Nasdaq:ENTG), a leader in specialty chemicals and advanced materials solutions for the microelectronics industry, today reported its financial results for the Company's second quarter ended July 2, 2016.

The Company reported record second-quarter sales of $303.1 million. Second-quarter net income was $32.9 million, or $0.23 per diluted share, which included amortization of intangible assets of $11.1 million. Non-GAAP net income was $40.3 million, or $0.28 per diluted share. 

For the first half of fiscal 2016, sales of $570.1 million increased 5 percent from the same period a year ago. First-half 2016 net income was $49.1 million, or $0.35 per share, which included amortization of intangible assets of $22.4 million. Non-GAAP net income for the first half of fiscal 2016 was $63.9 million, or $0.45 per diluted share.

Bertrand Loy, president and chief executive officer, said: "I am very pleased with the quality of our execution and the performance of a number of our new products, as we achieved record sales and earnings per share. Our revenue grew 13.5 percent sequentially, reflecting robust demand across our businesses and particular strength in filtration, wafer handling, and specialty materials. We generated a record $71.3 million in adjusted EBITDA, achieving an adjusted EBITDA margin of 23.5 percent. Our strong cash flow allowed us to increase our cash balance at quarter end to $373.7 million while repaying $25.0 million of our long-term debt."

Mr. Loy added: "2016 is a year of celebration for Entegris as we mark our 50th year as a company. We are proud of this milestone and the many successes we have achieved. Yet, we are even more excited about what lies ahead as we continue to create unique value for our customers by developing mission-critical solutions for their manufacturing processes."

Quarterly Financial Results Summary

(in millions, except per share data)

GAAP ResultsQ2-2016Q2-2015Q1-2016
Net sales$303,052 $280,709 $267,024 
Operating income 46,400  39,347  29,559 
Operating margin 15.3% 14.0% 11.1%
Net income$32,890 $24,448 $16,212 
Earnings per share (EPS)$0.23 $0.17 $0.11 
Non-GAAP Results
Non-GAAP adjusted operating income$57,462 $53,671 $40,848 
Adjusted operating margin 19.0% 19.1% 15.3%
Non-GAAP net income$40,290 $33,903 $23,617 
Non-GAAP EPS$0.28 $0.24 $0.17 

Third-Quarter Outlook

For the fiscal third quarter ending September 30, 2016, the Company expects sales of $285 million to $300 million, net income of $25 million to $30 million, and net income per diluted share between $0.18 to $0.21. On a non-GAAP basis, EPS is expected to range from $0.23 to $0.26 per diluted share, which reflects net income on a non-GAAP basis in the range of $32 million to $37 million, which is adjusted for expected amortization expense of approximately $11 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.

Second-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the second quarter on Wednesday, July 27, 2016, at 10:00 a.m. Eastern Time. Participants should dial 1-719-325-2435 or toll-free 1-888-455-2263, referencing confirmation code 4609432. 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 July 27, 2016 at 1:00 p.m. (ET) until Saturday, September 10, 2016. The replay can be accessed by using passcode 4609432 after dialing 1-719-325-2435. 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 second-quarter results which may be referred to during the call. This presentation will be posted on the investor relations section of www.entegris.com Wednesday morning before the call.

ABOUT ENTEGRIS
Entegris is a leader in specialty chemicals and advanced materials solutions 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 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. These financial measures are provided as a supplement to financial measures provided in accordance with GAAP. We provide non-GAAP financial measures in order to further assess and measure operating performance. Management believes the non-GAAP measures provide meaningful supplemental information regarding 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 Net Income 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
  July 2, 2016June 27, 2015April 2, 2016
Net sales$303,052 $280,709 $267,024 
Cost of sales 163,847  152,622  152,318 
 Gross profit 139,205  128,087  114,706 
Selling, general and administrative expenses 53,597  50,270  47,956 
Engineering, research and development expenses 28,146  26,542  25,902 
Amortization of intangible assets 11,062  11,928  11,289 
Operating income 46,400  39,347  29,559 
Interest expense, net 9,051  9,715  9,149 
Other income, net (1,054) (1,109) (675)
 Income before income tax expense and equity in net loss of affiliate 38,403  30,741  21,085 
Income tax expense 5,513  6,245  4,873 
Equity in net loss of affiliates  -  48  - 
 Net income$32,890 $24,448 $16,212 
     
       
Basic net income per common share:$0.23 $0.17 $0.12 
Diluted net income per common share:$0.23 $0.17 $0.11 
    
Weighted average shares outstanding:   
 Basic 140,953  140,307  140,780 
 Diluted 141,723  140,993  141,371 
           

Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

  Six months ended
  July 2, 2016June 27, 2015
Net sales$570,076 $544,082 
Cost of sales 316,165  299,459 
 Gross profit 253,911  244,623 
Selling, general and administrative expenses 101,553  101,160 
Engineering, research and development expenses 54,048  52,342 
Amortization of intangible assets 22,351  24,235 
 Operating income   75,959  66,886 
Interest expense, net 18,200  19,343 
Other income, net (1,729) (2,842)
 Income before income tax expense and equity in net loss of affiliate 59,488  50,385 
Income tax expense 10,386  10,915 
Equity in net loss of affiliates -  150 
 Net income$49,102 $39,320 
    
  
Basic net income per common share:$0.35 $0.28 
Diluted net income per common share:$0.35 $0.28 
    
Weighted average shares outstanding: 140,867  140,146 
 Basic 141,547  140,866 
 Diluted  
    

Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

   July 2, 2016 December 31, 2015
ASSETS     
Cash and cash equivalents$373,743  $349,825 
Short-term investments  -   2,181 
Accounts receivable, net  180,596   141,409 
Inventories  181,086   173,176 
Deferred tax charges and refundable  income taxes 18,971   18,943 
Other current assets 17,777   23,253 
Total current assets 772,173   708,787 
      
Property, plant and equipment, net 322,720   321,301 
      
Goodwill 343,261   342,111 
Intangible assets, net 240,688   258,942 
Deferred tax assets — non-current 8,848   7,771 
Other  7,792   7,785 
Total assets $1,695,482  $1,646,697 
      
LIABILITIES AND SHAREHOLDERS' EQUITY  
Long-term debt, current maturities $50,000  $50,000 
Accounts payable  49,637   36,916 
Accrued liabilities  73,964   75,859 
Income tax payable and deferred tax liabilities  13,538   12,775 
Total current liabilities 187,139   175,550 
      
Long-term debt, excluding current maturities  582,235   606,044 
Other liabilities and deferred tax liabilities 64,878   62,220 
Shareholders' equity  861,230   802,883 
Total liabilities and shareholders' equity$1,695,482  $1,646,697 
        

Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 Three months endedSix months ended
 July 2, 2016June 27, 2015July 2, 2016June 27, 2015 
Operating activities:     
Net income$32,890 $24,448 $49,102 $39,320  
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation 13,825  13,405  27,525  26,724  
Amortization 11,062  11,928  22,351  24,235  
Share-based compensation expense 3,505  2,887  6,366  5,145  
Provision for deferred income taxes (720) 5,868  (931) 3,035  
Other 4,408  3,706  9,204  (8,136) 
Changes in operating assets and liabilities:     
Trade accounts and notes receivable (29,300) 3,652  (36,099) (28,594) 
Inventories 1,609  (20,988) (11,389) (28,500) 
Accounts payable and accrued liabilities 23,065  (3,164) 13,555  (9,126) 
Income taxes payable and refundable income taxes 1,133  (3,605) 407  (364) 
Other (278) (1,891) (1,553) 12,375  
Net cash provided by operating activities 61,199  36,246  78,538  36,114  
Investing activities:     
Acquisition of property and equipment (14,325) (13,742) (32,144) (34,230) 
Other 837  865  (1,658) 1,925  
Net cash used in investing activities (13,488) (12,877) (33,802) (32,305) 
Financing activities:     
Payments on long-term debt (25,000) (50,000) (25,000) (75,000) 
Issuance of common stock 2,380  454  2,380  974  
Repurchase and retirement of common stock -  -  (3,573) -  
Taxes paid related to net share settlement of equity awards (136) (350) (2,203) (2,403) 
Other 42  217  91  352  
Net cash used in provided by financing activities (22,714) (49,679) (28,305) (76,077) 
Effect of exchange rate changes on cash  4,343  (1,335) 7,487  (3,689) 
Increase (decrease) in cash and cash equivalents 29,340  (27,645) 23,918  (75,957) 
Cash and cash equivalents at beginning of period 344,403  341,387  349,825  389,699  
Cash and cash equivalents at end of period$373,743 $313,742 $373,743 $313,742  
              

Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)

 Three months endedSix months ended
Net salesJuly 2, 2016June 27, 2015April 2, 2016July 2, 2016June 27, 2015
Critical Materials Handling$194,880 $174,253 $166,229 $361,109 $341,721 
Electronic Materials 108,172  106,456  100,795  208,967  202,361 
Total net sales$303,052 $280,709 $267,024 $570,076 $544,082 
                


 Three months endedSix months ended
Segment profitJuly 2, 2016June 27, 2015April 2, 2016July 2, 2016June 27, 2015
Critical Materials Handling$52,524 $43,732 $37,892 $90,416 $85,073 
Electronic Materials 27,475  28,559  21,575  49,050  48,781 
Total segment profit 79,999  72,291  59,467  139,466  133,854 
Amortization of intangibles 11,062  11,928  11,289  22,351  24,235 
Unallocated expenses 22,537  21,016  18,619  41,156  42,733 
Total operating income$46,400 $39,347 $29,559 $75,959 $66,886 
                

Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
(In thousands, except per share data)
(Unaudited)

 Three months ended Six months ended
 July 2, 2016June 27, 2015April 2, 2016 July 2, 2016June 27, 2015
Net sales$303,052 $280,709 $267,024  $570,076 $544,082 
Net income$32,890 $24,448 $16,212  $49,102 $39,320 
Adjustments to net income:      
Equity in net loss of affiliates -  48  -   -  150 
Income tax expense 5,513  6,245  4,873   10,386  10,915 
Interest expense, net 9,051  9,715  9,149   18,200  19,343 
Other income, net (1,054) (1,109) (675)  (1,729) (2,842)
GAAP — Operating income 46,400  39,347  29,559   75,959  66,886 
Integration costs -  2,396  -   -  5,008 
Amortization of intangible assets 11,062  11,928  11,289   22,351  24,235 
Adjusted operating income  57,462  53,671  40,848   98,310  96,129 
  Depreciation 13,825  13,405  13,700   27,525  26,724 
Adjusted EBITDA$71,287 $67,076 $54,548  $125,835 $122,853 
       
Adjusted operating margin 19.0% 19.1% 15.3%  17.2% 17.7%
Adjusted EBITDA — as a % of net sales 23.5% 23.9% 20.4%  22.1% 22.6%
                 

Entegris, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)

 Three months ended Six months ended
 July 2, 2016June 27, 2015April 2, 2016 July 2, 2016June 27, 2015
Net income$32,890 $24,448 $16,212  $49,102 $39,320 
Adjustments to net income:      
Integration costs -  2,396  -   -  5,008 
(Gain) loss on impairment or sale of equity investment (38) (56) (118)  (156) 617 
Amortization of intangible assets 11,062  11,928  11,289   22,351  24,235 
Tax effect of adjustments of net income (3,624) (4,813) (3,766)  (7,390) (9,831)
Non-GAAP net income$40,290 $33,903 $23,617  $63,907 $59,349 
       
Diluted income per common share$0.23 $0.17 $0.11  $0.35 $0.28 
Effect of adjustments to net income 0.05  0.07  0.05   0.10  0.14 
Diluted non-GAAP income per common share$0.28 $0.24 $0.17  $0.45 $0.42 
                 


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