News Release Details
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
Quarterly Financial Results Summary
(in thousands, except percentages and per share data)
GAAP Results |
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Net sales |
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Operating income |
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Operating margin - as a % of net sales |
12.4% |
15.2% |
13.2% |
Net income |
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Diluted earnings per common share |
|
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Non-GAAP Results |
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Non-GAAP adjusted operating income |
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Non-GAAP adjusted operating margin - as a % of net sales |
20.7% |
23.2% |
22.0% |
Non-GAAP net income |
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Diluted non-GAAP earnings per common share |
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First-Quarter Outlook
For the Company’s guidance for the first quarter ending
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
Management’s slide presentation concerning the results for the fourth quarter will be posted on the Investor Relations section of www.entegris.com.
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
Non-GAAP Information
The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in
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
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Three months ended |
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Net sales |
|
|
|
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 |
|
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 |
|
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|
|
|
|
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Basic earnings per common share: |
|
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Diluted earnings per common share: |
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Weighted average shares outstanding: |
|
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Basic |
150,223 |
149,039 |
150,127 |
Diluted |
151,331 |
149,909 |
151,229 |
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Twelve months ended |
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Net sales |
|
|
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 |
|
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 |
|
|
|
|
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Basic earnings per common share: |
|
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Diluted earnings per common share: |
|
|
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Weighted average shares outstanding: |
|
|
Basic |
149,900 |
142,294 |
Diluted |
150,945 |
143,146 |
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ASSETS |
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Current assets: |
|
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Cash, cash equivalents and restricted cash |
|
|
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 |
|
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 |
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|
LIABILITIES AND EQUITY |
|
|
Current liabilities |
|
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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 |
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Three months ended |
Twelve months ended |
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Operating activities: |
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Net income |
|
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Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
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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 |
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: |
|
|
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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 |
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Three months ended |
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Twelve months ended |
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Net sales |
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Materials Solutions |
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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 |
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Three months ended |
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Twelve months ended |
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Segment profit |
|
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Materials Solutions |
|
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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 |
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Three months ended |
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Twelve months ended |
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Gross profit-GAAP |
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Adjustments to gross profit: |
|
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|
|
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|
Restructuring costs 1 |
28 |
— |
789 |
|
8,194 |
— |
Charge for fair value mark-up of acquired inventory sold 2 |
— |
— |
— |
|
— |
61,932 |
Adjusted gross profit |
|
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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
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Three months ended |
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Twelve months ended |
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Adjusted segment profit |
|
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MS segment profit |
|
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|
|
|
|
Restructuring costs 1 |
1,635 |
— |
519 |
|
9,261 |
— |
(Gain) loss from the sale of businesses 2 |
(4,740) |
(254) |
— |
|
23,839 |
(254) |
|
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 |
|
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MC segment profit |
|
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|
Restructuring costs 1 |
173 |
— |
215 |
|
3,183 |
— |
MC adjusted segment profit |
|
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AMH segment profit |
|
|
|
|
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Restructuring costs 1 |
105 |
— |
467 |
|
1,826 |
— |
AMH adjusted segment profit |
|
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|
|
|
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Unallocated general and administrative expenses |
|
|
|
|
|
|
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 |
|
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|
|
|
|
|
|
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Total adjusted segment profit |
|
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Less: adjusted unallocated general and administrative expenses |
11,026 |
7,340 |
11,128 |
|
57,187 |
38,230 |
Total adjusted operating income |
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|
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
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Three months ended |
Twelve months ended |
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Net sales |
|
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Net income |
|
|
|
|
|
|
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% |
|
|
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: |
|
|
|
|
|
|
|
— |
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 |
|
|
|
|
|
|
Adjusted EBITDA - as a % of net sales |
26.0% |
27.6% |
26.5% |
26.7% |
29.7% |
1 Non-cash impairment charges associated with goodwill.
2 Deal and transaction costs associated with
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
4 Represents severance charges related to the integration of the
5 Represents retention charges related directly to the
6 Represents other employee related costs and other costs incurred relating to the
7Represents non-recurring costs associated with the
8 Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of
9 Relates to the change in control agreements that were in place with management of
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
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.
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Three months ended |
Twelve months ended |
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GAAP net income |
|
|
|
|
|
|
Adjustments to net income: |
|
|
|
|
|
|
|
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: |
|
|
|
|
|
|
|
— |
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) |
— |
|
|
— |
— |
— |
(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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
|
|
|
|
|
Effect of adjustments to net income |
|
|
|
|
|
|
Diluted non-GAAP earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
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
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
4 Represents severance charges related to the integration of
5 Represents retention charges related directly to the
6 Represents other employee-related costs and other costs incurred relating to the
7 Represents non-recurring costs associated with the CMC 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
9 Relates to the change in control agreements that were in place with management of
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
15 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the
16 Non-recurring interest costs related to the financing of the
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.
|
||
|
Three months ended |
|
|
|
|
Net sales |
|
|
Less: Divestitures 1 |
(1,264) |
(93,170) |
Adjusted Net sales (excluding divestitures) Non-GAAP |
|
|
1 Adjusted for the quarterly impact of net sales from divestitures of EC and termination of Alliance Agreement.
|
|
|
First-Quarter Outlook |
Reconciliation GAAP Operating Margin to non-GAAP Operating Margin and Adjusted EBITDA Margin |
|
Net sales |
|
GAAP - Operating income |
|
Operating margin - as a % of net sales |
13% - 15% |
Deal, transaction and integration costs |
8 |
Amortization of intangible assets |
51 |
Adjusted operating income |
|
Adjusted operating margin - as a % of net sales |
21% - 22% |
Depreciation |
44 |
Adjusted EBITDA |
|
Adjusted EBITDA - as a % of net sales |
26.5% - 27.5% |
|
First-Quarter Outlook |
Reconciliation GAAP net income to non-GAAP net income |
|
GAAP net income |
|
Adjustments to net income: |
|
Deal, transaction and integration costs |
8 |
Amortization of intangible assets |
51 |
Income tax effect |
(10) |
Non-GAAP net income |
|
|
First-Quarter Outlook |
Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share |
|
Diluted earnings per common share |
|
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 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240213226938/en/
VP of Investor Relations
T + 1 952 556 1844
bill.seymour@entegris.com
Source: