UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
FORM 8-K
________________________________________
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 22, 2020
 | ||
_______________________________________
Entegris, Inc.
(Exact name of registrant as specified in its charter)
_______________________________________
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
(978 ) 436-6500
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
___________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 22, 2020, Entegris, Inc. issued a press release to announce results for the third quarter of 2020 and will hold a conference call to discuss such results. A copy of this press release and the supplemental slides to which management will refer during the conference call are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.
In accordance with General Instructions B.2 of Form 8-K, the information in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. The information set forth herein will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
EXHIBIT INDEX
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ENTEGRIS, INC. | ||||||||
| Dated: October 22, 2020 | By: | /s/ Gregory B. Graves | ||||||
| Name: | Gregory B. Graves | |||||||
| Title: | Executive Vice President and Chief Financial Officer | |||||||
 | PRESS RELEASE Bill Seymour VP of Investor Relations T + 1 952 556 1844 bill.seymour@entegris.com | |||||||||||||
Exhibit 99.1
FOR RELEASE AT 6:00 AM EDT
ENTEGRIS REPORTS RESULTS FOR THIRD QUARTER OF 2020
•Third-quarter revenue of $481.0 million, increased 22% from prior year
•Third-quarter GAAP diluted EPS of $0.58, increased 93%
•Third-quarter Non-GAAP diluted EPS of $0.67, increased 34%
BILLERICA, Mass., October 22, 2020 - Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s third quarter ended September 26, 2020.
Third-quarter sales were $481.0 million, an increase of 22% from the same quarter last year. GAAP third-quarter net income was $79.3 million, or $0.58 per diluted share, which included $11.7 million of amortization of intangible assets and $1.3 million of integration costs. Non-GAAP net income was $91.5 million and non-GAAP earnings per diluted share was $0.67.
Bertrand Loy, president and chief executive officer, said: “Our better than expected third quarter results showcased the strength of our value proposition, the resilience of our unit-driven business model and the execution of our teams. This performance was driven by the accelerated demand of our leading-edge solutions in advanced technology nodes. Another highlight of the quarter was our acquisition of GMTI, which provides high precision analytical instruments critical to the complex CMP process.”
Mr. Loy added: “At Entegris, we are benefiting from the two intersecting themes of growing importance of process materials and materials purity, and the impact they have on semiconductor performance, cost and reliability. Our position is bolstered by our technology leadership, global scale, and world class operational excellence. We are looking forward to a strong close to the year and expect to deliver record sales and non-GAAP EPS in 2020.”
Quarterly Financial Results Summary
(in thousands, except percentages and per share data)
| GAAP Results | September 26, 2020 | September 28, 2019 | June 27, 2020 | ||||||||
| Net sales | $480,987 | $394,147 | $448,405 | ||||||||
| Operating income | $106,761 | $52,793 | $94,712 | ||||||||
| Operating margin - as a % of net sales | 22.2 | % | 13.4% | 21.1% | |||||||
| Net income | $79,303 | $40,767 | $68,036 | ||||||||
| Diluted earnings per common share | $0.58 | $0.30 | $0.50 | ||||||||
| Non-GAAP Results | |||||||||||
| Non-GAAP adjusted operating income | $121,612 | $88,220 | $110,835 | ||||||||
| Non-GAAP adjusted operating margin - as a % of net sales | 25.3 | % | 22.4 | % | 24.7 | % | |||||
| Non-GAAP net income | $91,460 | $68,179 | $81,581 | ||||||||
| Diluted non-GAAP earnings per common share | $0.67 | $0.50 | $0.60 | ||||||||
Fourth-Quarter Outlook
For the fourth quarter ending December 31, 2020, the Company expects sales of $480 million to $495 million, net income of $75 million to $82 million and diluted earnings per common share between $0.55 and $0.60. On a non-GAAP basis, diluted earnings per common share is expected to range from $0.62 to $0.67, which reflects net income on a non-GAAP basis in the range of $84 million to $91 million.
Segment Results
The Company reports its results in 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 offers solutions to filter and 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, wafers, and substrates for a broad set of applications in the semiconductor industry and other high-technology industries.
Entegris’ 2020 Investor and Analyst Day
Entegris will be hosting a virtual Investor and Analyst Day on November 17, 2020. If you have any questions or need any additional information please reach out to Bill Seymour, V.P. Investor Relations.
Third-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the third quarter on Thursday, October 22, 2020, at 9:00 a.m. Eastern Time. Participants should dial 800-437-2398 or +1 323-289-6576, referencing confirmation code 2871729. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. For a replay of the call, please Click Here using passcode 2871729.
The call can also be accessed live and on-demand from the Entegris website. Go to
http://investor.entegris.com/events.cfm and follow the link to the webcast. The on-demand playback will be available for six weeks after the conclusion of the teleconference.
Management’s slide presentation concerning the results for the third quarter, which may be referred to during the call, will be posted on the investor relations section of www.entegris.com Thursday morning before the call.
Entegris, Inc. - page 2 of 14
ABOUT ENTEGRIS
Entegris is a world-class supplier of advanced materials and process solutions for the semiconductor and other high-tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, Canada, 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, non-GAAP net income, non-GAAP adjusted operating margin and diluted non-GAAP earnings per common share, together with related measures thereof, 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 the Company’s competitors' operating results. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance and liquidity by excluding certain items that may not be indicative of the Company’s recurring business operating results, such as amortization, depreciation and discrete cash charges that may vary significantly from period to period. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing and understanding the Company’s results and performance and when planning, forecasting, and analyzing future periods. The Company believes 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 the Company’s institutional investors and the analyst community to help them analyze the Company’s business. The reconciliations of GAAP Gross Profit to Adjusted Gross Profit, GAAP Segment Profit to Adjusted Operating Income, GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA, GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share and GAAP Outlook to Non-GAAP Outlook are included elsewhere in this release.
Forward-Looking Statements
This press 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 include statements related to future period guidance; future sales, net income, net income per diluted share, non-GAAP EPS, non-GAAP net income, expenses and other financial metrics; the Company’s performance relative to its markets, including the drivers of such performance; the impact, financial or otherwise, of any organizational changes; market and technology trends, including the expected impact of the Covid-19 pandemic; the development of new products and the success of their introductions; the Company's capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the impact of the acquisitions the Company has made and commercial partnerships the Company has established; the Company’s ability to execute on its strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the Covid-19 pandemic on the global economy and financial markets, as well as on the Company, our customers and suppliers, which may impact our sales, gross margin, customer demand and our ability to supply our products to our customers; weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for the Company’s products and solutions; the Company’s ability to meet rapid demand shifts; the Company’s ability to continue technological innovation and introduce new products to meet customers' rapidly changing requirements; the Company’s concentrated customer base; the Company’s ability to identify, complete and integrate acquisitions, joint ventures or other transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages, supply constraints and price increases; changes in government regulations of the countries in which the Company operates; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; the level of, and obligations associated with, the Company’s indebtedness; and other risk factors and additional information described in the Company’s
Entegris, Inc. - page 3 of 14
filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed on February 7, 2020, and in the Company’s other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Entegris, Inc. - page 4 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||||||
| September 26, 2020 | September 28, 2019 | June 27, 2020 | ||||||||||||
| Net sales | $480,987 | $394,147 | $448,405 | |||||||||||
| Cost of sales | 254,987 | 223,797 | 241,033 | |||||||||||
| Gross profit | 226,000 | 170,350 | 207,372 | |||||||||||
| Selling, general and administrative expenses | 71,195 | 71,232 | 66,872 | |||||||||||
| Engineering, research and development expenses | 36,295 | 31,173 | 32,572 | |||||||||||
| Amortization of intangible assets | 11,749 | 15,152 | 13,216 | |||||||||||
| Operating income | 106,761 | 52,793 | 94,712 | |||||||||||
| Interest expense, net | 12,651 | 10,216 | 12,792 | |||||||||||
| Other (income) expense, net | (1,752) | 934 | (477) | |||||||||||
| Income before income tax expense | 95,862 | 41,643 | 82,397 | |||||||||||
| Income tax expense | 16,559 | 876 | 14,361 | |||||||||||
| Net income | $79,303 | $40,767 | $68,036 | |||||||||||
| Basic earnings per common share: | $0.59 | $0.30 | $0.51 | |||||||||||
| Diluted earnings per common share: | $0.58 | $0.30 | $0.50 | |||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 134,957 | 135,092 | 134,700 | |||||||||||
| Diluted | 136,252 | 136,530 | 136,007 | |||||||||||
Entegris, Inc. - page 5 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Nine months ended | |||||||||||
| September 26, 2020 | September 28, 2019 | ||||||||||
| Net sales | $1,341,719 | $1,164,068 | |||||||||
| Cost of sales | 722,869 | 650,051 | |||||||||
| Gross profit | 618,850 | 514,017 | |||||||||
| Selling, general and administrative expenses | 196,958 | 217,636 | |||||||||
| Engineering, research and development expenses | 98,499 | 90,788 | |||||||||
| Amortization of intangible assets | 41,176 | 50,400 | |||||||||
| Operating income | 282,217 | 155,193 | |||||||||
| Interest expense, net | 35,681 | 29,567 | |||||||||
| Other (income), net | (1,351) | (121,329) | |||||||||
| Income before income tax expense | 247,887 | 246,955 | |||||||||
| Income tax expense | 39,542 | 49,533 | |||||||||
| Net income | $208,345 | $197,422 | |||||||||
| Basic earnings per common share: | $1.55 | $1.46 | |||||||||
| Diluted earnings per common share: | $1.53 | $1.45 | |||||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 134,801 | 135,256 | |||||||||
| Diluted | 136,209 | 136,601 | |||||||||
Entegris, Inc. - page 6 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| September 26, 2020 | December 31, 2019 | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $447,972 | $351,911 | ||||||||||||||||||
| Trade accounts and notes receivable, net | 300,489 | 234,409 | ||||||||||||||||||
| Inventories, net | 329,741 | 287,098 | ||||||||||||||||||
| Deferred tax charges and refundable income taxes | 38,100 | 24,552 | ||||||||||||||||||
| Other current assets | 30,148 | 34,427 | ||||||||||||||||||
| Total current assets | 1,146,450 | 932,397 | ||||||||||||||||||
| Property, plant and equipment, net | 490,298 | 479,544 | ||||||||||||||||||
| Other assets: | ||||||||||||||||||||
| Right-of-use assets | 46,655 | 50,160 | ||||||||||||||||||
| Goodwill | 744,470 | 695,044 | ||||||||||||||||||
| Intangible assets, net | 349,066 | 333,952 | ||||||||||||||||||
| Deferred tax assets and other noncurrent tax assets | 12,179 | 11,245 | ||||||||||||||||||
| Other | 12,510 | 13,744 | ||||||||||||||||||
| Total assets | $2,801,628 | $2,516,086 | ||||||||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| Long-term debt, current maturities | $— | $4,000 | ||||||||||||||||||
| Accounts payable | 69,918 | 84,207 | ||||||||||||||||||
| Accrued liabilities | 151,849 | 150,118 | ||||||||||||||||||
| Income tax payable | 25,606 | 26,108 | ||||||||||||||||||
| Total current liabilities | 247,373 | 264,433 | ||||||||||||||||||
| Long-term debt, excluding current maturities | 1,085,380 | 932,484 | ||||||||||||||||||
| Long-term lease liability | 40,407 | 43,827 | ||||||||||||||||||
| Other liabilities | 126,167 | 109,453 | ||||||||||||||||||
| Shareholders’ equity | 1,302,301 | 1,165,889 | ||||||||||||||||||
| Total liabilities and equity | $2,801,628 | $2,516,086 | ||||||||||||||||||
Entegris, Inc. - page 7 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||
| September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | |||||||||||
| Operating activities: | ||||||||||||||
| Net income | $79,303 | $40,767 | $208,345 | $197,422 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation | 20,777 | 19,306 | 62,064 | 54,623 | ||||||||||
| Amortization | 11,749 | 15,152 | 41,176 | 50,400 | ||||||||||
| Stock-based compensation expense | 5,903 | 5,326 | 16,552 | 14,915 | ||||||||||
| Other | 20,210 | 5,988 | 33,105 | 12,128 | ||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||||
| Trade accounts and notes receivable | (23,280) | (35,841) | (65,367) | (30,405) | ||||||||||
| Inventories | 1,084 | (9,398) | (54,278) | (5,689) | ||||||||||
| Accounts payable and accrued liabilities | 4,433 | 20,796 | 10,076 | (31,911) | ||||||||||
| Income taxes payable, refundable income taxes and noncurrent taxes payable | (16,407) | (35,965) | (11,995) | (20,574) | ||||||||||
| Other | (2,540) | (840) | 2,978 | 12,745 | ||||||||||
| Net cash provided by operating activities | 101,232 | 25,291 | 242,656 | 253,654 | ||||||||||
| Investing activities: | ||||||||||||||
| Acquisition of property and equipment | (32,687) | (26,322) | (79,560) | (86,423) | ||||||||||
| Acquisition of business, net of cash acquired | (35,500) | (217,106) | (111,145) | (266,373) | ||||||||||
| Other | 54 | 2,618 | 265 | 2,815 | ||||||||||
| Net cash used in investing activities | (68,133) | (240,810) | (190,440) | (349,981) | ||||||||||
| Financing activities: | ||||||||||||||
| Proceeds from short-term borrowings and long-term debt | — | — | 617,000 | — | ||||||||||
| Payments of short-term borrowings and long-term debt | (100,000) | — | (468,000) | (2,000) | ||||||||||
| Payments for dividends | (10,794) | (10,815) | (32,446) | (29,779) | ||||||||||
| Issuance of common stock | 3,150 | 3,434 | 4,899 | 4,351 | ||||||||||
| Taxes paid related to net share settlement of equity awards | (11,836) | (276) | (24,556) | (8,577) | ||||||||||
| Repurchase and retirement of common stock | — | (15,000) | (29,564) | (65,321) | ||||||||||
| Deferred acquisition payments | — | — | (16,125) | — | ||||||||||
| Other | (1) | (5) | (6,856) | (502) | ||||||||||
| Net cash (used in) provided by financing activities | (119,481) | (22,662) | 44,352 | (101,828) | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,687 | (453) | (507) | (1,159) | ||||||||||
| (Decrease) increase in cash and cash equivalents | (84,695) | (238,634) | 96,061 | (199,314) | ||||||||||
| Cash and cash equivalents at beginning of period | 532,667 | 521,382 | 351,911 | 482,062 | ||||||||||
| Cash and cash equivalents at end of period | $447,972 | $282,748 | $447,972 | $282,748 | ||||||||||
Entegris, Inc. - page 8 of 14
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
| Three months ended | Nine months ended | ||||||||||||||||
| Net sales | September 26, 2020 | September 28, 2019 | June 27, 2020 | September 26, 2020 | September 28, 2019 | ||||||||||||
| Specialty Chemicals and Engineered Materials | $150,480 | $127,750 | $146,213 | $440,907 | $379,772 | ||||||||||||
| Microcontamination Control | 193,541 | 155,979 | 183,758 | 536,560 | 463,870 | ||||||||||||
| Advanced Materials Handling | 144,370 | 117,256 | 126,434 | 386,941 | 340,835 | ||||||||||||
| Inter-segment elimination | (7,404) | (6,838) | (8,000) | (22,689) | (20,409) | ||||||||||||
| Total net sales | $480,987 | $394,147 | $448,405 | $1,341,719 | $1,164,068 | ||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||
| Segment profit | September 26, 2020 | September 28, 2019 | June 27, 2020 | September 26, 2020 | September 28, 2019 | ||||||||||||
| Specialty Chemicals and Engineered Materials | $32,600 | $17,074 | $32,938 | $98,208 | $65,505 | ||||||||||||
| Microcontamination Control | 64,915 | 46,792 | 62,137 | 177,219 | 137,241 | ||||||||||||
| Advanced Materials Handling | 33,266 | 17,077 | 22,809 | 76,707 | 54,487 | ||||||||||||
| Total segment profit | 130,781 | 80,943 | 117,884 | 352,134 | 257,233 | ||||||||||||
| Amortization of intangibles | 11,749 | 15,152 | 13,216 | 41,176 | 50,400 | ||||||||||||
| Unallocated expenses | 12,271 | 12,998 | 9,956 | 28,741 | 51,640 | ||||||||||||
| Total operating income | $106,761 | $52,793 | $94,712 | $282,217 | $155,193 | ||||||||||||
Entegris, Inc. - page 9 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
(Unaudited)
| Three months ended | Nine months ended | ||||||||||||||||
| September 26, 2020 | September 28, 2019 | June 27, 2020 | September 26, 2020 | September 28, 2019 | |||||||||||||
| Net sales | $480,987 | $394,147 | $448,405 | $1,341,719 | $1,164,068 | ||||||||||||
| Gross profit-GAAP | $226,000 | $170,350 | $207,372 | $618,850 | $514,017 | ||||||||||||
| Adjustments to gross profit: | |||||||||||||||||
| Integration costs | — | — | (1,557) | (1,557) | — | ||||||||||||
| Severance and restructuring costs | — | 990 | 465 | 465 | 1,348 | ||||||||||||
| Charge for fair value mark-up of acquired inventory sold | 229 | 4,483 | — | 590 | 7,333 | ||||||||||||
| Adjusted gross profit | $226,229 | $175,823 | $206,280 | $618,348 | $522,698 | ||||||||||||
| Gross margin - as a % of net sales | 47.0 | % | 43.2 | % | 46.2 | % | 46.1 | % | 44.2 | % | |||||||
| Adjusted gross margin - as a % of net sales | 47.0 | % | 44.6 | % | 46.0 | % | 46.1 | % | 44.9 | % | |||||||
Entegris, Inc. - page 10 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Segment Profit to Adjusted Operating Income
(In thousands)
(Unaudited)
| Three months ended | Nine months ended | ||||||||||||||||
| Segment profit-GAAP | September 26, 2020 | September 28, 2019 | June 27, 2020 | September 26, 2020 | September 28, 2019 | ||||||||||||
| Specialty Chemicals and Engineered Materials (SCEM) | $32,600 | $17,074 | $32,938 | $98,208 | $65,505 | ||||||||||||
| Microcontamination Control (MC) | 64,915 | 46,792 | 62,137 | 177,219 | 137,241 | ||||||||||||
| Advanced Materials Handling (AMH) | 33,266 | 17,077 | 22,809 | 76,707 | 54,487 | ||||||||||||
| Total segment profit | 130,781 | 80,943 | 117,884 | 352,134 | 257,233 | ||||||||||||
| Amortization of intangible assets | 11,749 | 15,152 | 13,216 | 41,176 | 50,400 | ||||||||||||
| Unallocated expenses | 12,271 | 12,998 | 9,956 | 28,741 | 51,640 | ||||||||||||
| Total operating income | $106,761 | $52,793 | $94,712 | $282,217 | $155,193 | ||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||
| Adjusted segment profit | September 26, 2020 | September 28, 2019 | June 27, 2020 | September 26, 2020 | September 28, 2019 | ||||||||||||
| SCEM segment profit | $32,600 | $17,074 | $32,938 | $98,208 | $65,505 | ||||||||||||
| Integration costs | — | — | (1,557) | (1,557) | — | ||||||||||||
| Severance and restructuring costs | 277 | 2,143 | 455 | 906 | 2,662 | ||||||||||||
| Charge for fair value write-up of acquired inventory sold | — | 4,483 | — | 235 | 5,298 | ||||||||||||
| SCEM adjusted segment profit | $32,877 | $23,700 | $31,836 | $97,792 | $73,465 | ||||||||||||
| MC segment profit | $64,915 | $46,792 | $62,137 | $177,219 | $137,241 | ||||||||||||
| Severance and restructuring costs | 301 | 2,977 | 494 | 985 | 3,701 | ||||||||||||
| Charge for fair value write-up of acquired inventory sold | — | — | — | 126 | 2,035 | ||||||||||||
| MC adjusted segment profit | $65,216 | $49,769 | $62,631 | $178,330 | $142,977 | ||||||||||||
| AMH segment profit | $33,266 | $17,077 | $22,809 | $76,707 | $54,487 | ||||||||||||
| Severance and restructuring costs | 213 | 3,135 | 814 | 1,162 | 3,713 | ||||||||||||
| Charge for fair value write-up of acquired inventory sold | 229 | — | — | 229 | — | ||||||||||||
| AMH adjusted segment profit | $33,708 | $20,212 | $23,623 | $78,098 | $58,200 | ||||||||||||
| Unallocated general and administrative expenses | $12,271 | $12,998 | $9,956 | $28,741 | $51,640 | ||||||||||||
| Unallocated deal and integration costs | (1,902) | (7,289) | (2,415) | (5,796) | (31,773) | ||||||||||||
| Unallocated severance and restructuring costs | (180) | (248) | (286) | (810) | (2,418) | ||||||||||||
| Adjusted unallocated general and administrative expenses | $10,189 | $5,461 | $7,255 | $22,135 | $17,449 | ||||||||||||
| Total adjusted segment profit | $131,801 | $93,681 | $118,090 | $354,220 | $274,642 | ||||||||||||
| Adjusted amortization of intangible assets | — | — | — | — | — | ||||||||||||
| Adjusted unallocated general and administrative expenses | 10,189 | 5,461 | 7,255 | 22,135 | 17,449 | ||||||||||||
| Total adjusted operating income | $121,612 | $88,220 | $110,835 | $332,085 | $257,193 | ||||||||||||
Entegris, Inc. - page 11 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
(In thousands)
(Unaudited)
| Three months ended | Nine months ended | ||||||||||||||||
| September 26, 2020 | September 28, 2019 | June 27, 2020 | September 26, 2020 | September 28, 2019 | |||||||||||||
| Net sales | $480,987 | $394,147 | $448,405 | $1,341,719 | $1,164,068 | ||||||||||||
| Net income | $79,303 | $40,767 | $68,036 | $208,345 | $197,422 | ||||||||||||
| Net income - as a % of net sales | 16.5 | % | 10.3 | % | 15.2 | % | 15.5 | % | 17.0 | % | |||||||
| Adjustments to net income: | |||||||||||||||||
| Income tax expense | 16,559 | 876 | 14,361 | 39,542 | 49,533 | ||||||||||||
| Interest expense, net | 12,651 | 10,216 | 12,792 | 35,681 | 29,567 | ||||||||||||
| Other (income) expense, net | (1,752) | 934 | (477) | (1,351) | (121,329) | ||||||||||||
| GAAP - Operating income | 106,761 | 52,793 | 94,712 | 282,217 | 155,193 | ||||||||||||
| Operating margin - as a % of net sales | 22.2 | % | 13.4 | % | 21.1 | % | 21.0 | % | 13.3 | % | |||||||
| Charge for fair value write-up of acquired inventory sold | 229 | 4,483 | — | 590 | 7,333 | ||||||||||||
| Deal and transaction costs | 642 | 4,891 | 503 | 2,576 | 25,191 | ||||||||||||
| Integration costs | 1,260 | 2,398 | 355 | 1,663 | 6,582 | ||||||||||||
| Severance and restructuring costs | 971 | 8,503 | 2,049 | 3,863 | 12,494 | ||||||||||||
| Amortization of intangible assets | 11,749 | 15,152 | 13,216 | 41,176 | 50,400 | ||||||||||||
| Adjusted operating income | 121,612 | 88,220 | 110,835 | 332,085 | 257,193 | ||||||||||||
| Adjusted operating margin - as a % of net sales | 25.3 | % | 22.4 | % | 24.7 | % | 24.8 | % | 22.1 | % | |||||||
| Depreciation | 20,777 | 19,306 | 20,639 | 62,064 | 54,623 | ||||||||||||
| Adjusted EBITDA | $142,389 | $107,526 | $131,474 | $394,149 | $311,816 | ||||||||||||
| Adjusted EBITDA - as a % of net sales | 29.6 | % | 27.3 | % | 29.3 | % | 29.4 | % | 26.8 | % | |||||||
Entegris, Inc. - page 12 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share
(In thousands, except per share data)
(Unaudited)
| Three months ended | Nine months ended | ||||||||||||||||
| September 26, 2020 | September 28, 2019 | June 27, 2020 | September 26, 2020 | September 28, 2019 | |||||||||||||
| GAAP net income | $79,303 | $40,767 | $68,036 | $208,345 | $197,422 | ||||||||||||
| Adjustments to net income: | |||||||||||||||||
| Charge for fair value write-up of inventory acquired | 229 | 4,483 | — | 590 | 7,333 | ||||||||||||
| Deal and transaction costs | 642 | 4,891 | 503 | 2,576 | 25,602 | ||||||||||||
| Integration costs | 1,260 | 2,398 | 355 | 1,663 | 6,582 | ||||||||||||
| Severance and restructuring costs | 971 | 8,503 | 2,049 | 3,863 | 12,494 | ||||||||||||
| Loss on debt extinguishment | 908 | — | 1,470 | 2,378 | — | ||||||||||||
| Versum termination fee, net | — | — | — | — | (122,000) | ||||||||||||
| Amortization of intangible assets | 11,749 | 15,152 | 13,216 | 41,176 | 50,400 | ||||||||||||
| Tax effect of legal entity restructuring | — | — | — | — | 9,398 | ||||||||||||
Tax effect of adjustments to net income and discrete items1 | (3,602) | (8,015) | (4,048) | (11,979) | 2,274 | ||||||||||||
| Non-GAAP net income | $91,460 | $68,179 | $81,581 | $248,612 | $189,505 | ||||||||||||
| Diluted earnings per common share | $0.58 | $0.30 | $0.50 | $1.53 | $1.45 | ||||||||||||
| Effect of adjustments to net income | $0.09 | $0.20 | $0.10 | $0.30 | $(0.06) | ||||||||||||
| Diluted non-GAAP earnings per common share | $0.67 | $0.50 | $0.60 | $1.83 | $1.39 | ||||||||||||
1The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.
Entegris, Inc. - page 13 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Outlook to Non-GAAP Outlook
(In millions, except per share data)
(Unaudited)
| Fourth-Quarter Outlook | |||||
| Reconciliation GAAP net income to non-GAAP net income | December 31, 2020 | ||||
| GAAP net income | $75 - $82 | ||||
| Adjustments to net income: | |||||
| Restructuring and integration costs | 1 | ||||
| Amortization of intangible assets | 12 | ||||
| Income tax effect | (4) | ||||
| Non-GAAP net income | $84 - $91 | ||||
| Fourth-Quarter Outlook | |||||
| Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share | December 31, 2020 | ||||
| Diluted earnings per common share | $0.55 - $0.60 | ||||
| Adjustments to diluted earnings per common share: | |||||
| Restructuring and integration costs | 0.01 | ||||
| Amortization of intangible assets | 0.08 | ||||
| Income tax effect | (0.02) | ||||
| Diluted non-GAAP earnings per common share | $0.62 to $0.67 | ||||
### END ###
Entegris, Inc. - page 14 of 14
Exhibit 99.2 Earnings Summary Third Quarter 2020 October 22, 2020
Safe Harbor This presentation 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 include statements related to future period guidance; future net revenue, operating expenses, net income, diluted earnings per common share, non-GAAP operating expenses, non-GAAP net income, diluted non-GAAP earnings per common share, and other financial metrics; future repayments under the Company's credit facilities; the Company’s performance relative to its markets, including the drivers of such performance; the impact, financial or otherwise, of any organizational changes; market and technology trends, including the expected impact of the Covid-19 pandemic; the development of new products and the success of their introductions; the Company's capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the impact of the acquisitions the Company has made and commercial partnerships the Company has established; the Company’s ability to execute on its strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the Covid-19 pandemic on the global economy and financial markets, as well as on the Company, our customers and suppliers, which may impact our sales, gross margin, customer demand and our ability to supply our products to our customers; weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for the Company’s products and solutions; the Company’s ability to meet rapid demand shifts; the Company’s ability to continue technological innovation and introduce new products to meet customers' rapidly changing requirements; the Company’s concentrated customer base; the Company’s ability to identify, complete and integrate acquisitions, joint ventures or other transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages, supply constraints and price increases; changes in government regulations of the countries in which the Company operates; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; the level of, and obligations associated with, the Company’s indebtedness; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed on February 7, 2020, and in the Company’s other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. This presentation contains references to “Adjusted EBITDA,” “Adjusted EBITDA – as a % of Net Sales,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Gross Profit,” “Adjusted Gross Margin – as a % of Net Sales,” “Adjusted Segment Profit,” “Adjusted Segment Profit Margin,” “Non-GAAP Operating Expenses,” "Non-GAAP Tax Rate," “Non-GAAP Net Income,” “Diluted Non-GAAP Earnings per Common Share” and "Free Cash Flow" that are not presented in accordance GAAP. The non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures but should instead be read in conjunction with the GAAP financial measures. Further information with respect to and reconciliations of such measures to the most directly comparable GAAP financial measure can be found attached to this presentation. 2
Third Quarter 2020 Financial Summary 1 $0.58 +93% $481M +22% DILUTED GAAP EPS REVENUE $0.67 +34% DILUTED NON-GAAP EPS2 3 $107M 22.2% +880 bps OPERATING INCOME +102% OPERATING MARGIN 3 $122M 25.3% +290 bps ADJUSTED OPERATING INCOME2 +38% ADJUSTED OPERATING MARGIN2 1. All growth data on this slide is year-on-year. 2. See appendix for GAAP to Non-GAAP reconciliations. 3. As a % of net sales. 3
Summary – Consolidated Statement of Operations (GAAP) 3Q20 over 3Q20 over $ in millions, except per share data 3Q20 3Q20 Guidance 2Q20 3Q19 3Q19 2Q20 Net Revenue $481.0 $450- $475 $448.4 $394.1 22.1% 7.3% Gross Margin 47.0% 46.2% 43.2% Operating Expenses $119.2 $109 - $111 $112.7 $117.6 1.4% 5.8% Operating Income $106.8 $94.7 $52.8 102.3% 12.8% Operating Margin 22.2% 21.1% 13.4% Tax Rate 17.3% 17.4% 2.1% Net Income $79.3 $70 - $78 $68.0 $40.8 94.4% 16.6% Diluted earnings per common share $0.58 $0.51 - $0.57 $0.50 $0.30 93.3% 16.0% 4
Summary – Consolidated Statement of Operations (Non-GAAP)1 3Q20 over 3Q20 over $ in millions, except per share data 3Q20 3Q20 Guidance 2Q20 3Q19 3Q19 2Q20 Net Revenue $481.0 $450- $475 $448.4 $394.1 22.1% 7.3% Adjusted Gross Margin – as a % of 47.0% 46.0% 44.6% Net Sales2 Non-GAAP Operating Expenses3 $104.6 $95 - $97 $95.4 $87.6 19.4% 9.6% Adjusted Operating Income $121.6 $110.8 $88.2 37.9% 9.7% Adjusted Operating Margin 25.3% 24.7% 22.4% Non-GAAP Tax Rate4 18.1% 18.4% 11.5% Non-GAAP Net Income5 $91.5 $82 - $90 $81.6 $68.2 34.2% 12.1% Diluted non-GAAP earnings per common share $0.67 $0.60 - $0.66 $0.60 $0.50 34.0% 11.7% 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 2. Excludes charges for fair value write-up of acquired inventory sold, integration costs and severance and restructuring costs. 3. Excludes amortization expense, deal and transaction costs, integration costs and severance and restructuring costs. 4. Reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 5. Excludes the items noted in footnotes 2 and 3, the loss on debt extinguishment and the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 5
Specialty Chemicals and Engineered Materials (SCEM) 3Q20 Highlights 3Q20 over 3Q20 over $ in millions 3Q20 2Q20 3Q19 3Q19 2Q20 Sales growth (YOY & SEQ): primarily driven by advanced deposition materials, Net Revenue $150.5 $146.2 $127.8 17.8% 2.9% advanced coatings and cleaning Segment Profit $32.6 $32.9 $17.1 90.9% (1.0%) chemistries. The Sinmat acquisition also had a modest positive impact on year- Segment Profit Margin 21.7% 22.5% 13.4% over-year growth. –––––– Adj. Segment Profit1 $32.9 $31.8 $23.7 38.7% 3.3% Adj. segment profit margin increase (YOY): driven primarily by higher volume. Adj. Segment Profit Margin1 21.8% 21.8% 18.6% 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 6
Microcontamination Control (MC) 3Q20 Highlights Sales growth (YOY): primarily driven by liquid filtration, gas filtration and the impact of the Anow acquisition. 3Q20 over 3Q20 over $ in millions 3Q20 2Q20 3Q19 3Q19 2Q20 –––––– Net Revenue $193.5 $183.8 $156.0 24.1% 5.3% Sales growth (SEQ): primarily driven by liquid filtration. Segment Profit $64.9 $62.1 $46.8 38.7% 4.5% –––––– Adj. segment profit margin increase Segment Profit Margin 33.5% 33.8% 30.0% (YOY): driven primarily by higher volumes and favorable mix. Adj. Segment Profit1 $65.2 $62.6 $49.8 31.0% 4.1% –––––– Adj. Segment Profit Margin1 33.7% 34.1% 31.9% Adj. segment profit margin decrease (SEQ): driven primarily by higher R&D investments and higher variable compensation costs. 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 7
Advanced Materials Handling (AMH) 3Q20 Highlights Sales increase (YOY): primarily driven by high purity liquid containers, fluid 3Q20 over 3Q20 over handling products, sensing and control $ in millions 3Q20 2Q20 3Q19 3Q19 2Q20 products, wafer handling products and Net Revenue $144.4 $126.4 $117.3 23.1% 14.2% the GMTI acquisition. ––––– Segment Profit $33.3 $22.8 $17.1 94.8% 45.8% Sales increase (SEQ): primarily driven by sensing and control products, fluid Segment Profit Margin 23.0% 18.0% 14.6% handling products and the GMTI acquisition. Adj. Segment Profit1 $33.7 $23.6 $20.2 66.8% 42.7% ––––– Adj. Segment Profit Margin1 23.3% 18.7% 17.2% Adj. segment profit margin increase (YOY & SEQ): driven primarily by higher volumes and solid cost management. 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 8
Summary – Balance Sheet Items $ in millions 3Q20 2Q20 3Q19 $ Amount % Total $ Amount % Total $ Amount % Total Cash & Cash Equivalents $448.0 16.0 % $532.7 19.0 % $282.7 11.5 % Accounts Receivable, net $300.5 10.7 % $275.6 9.8 % $261.3 10.6 % Inventories $329.7 11.8 % $332.9 11.9 % $290.3 11.8 % Net PP&E $490.3 17.5 % $475.2 16.9 % $470.0 19.0 % Total Assets $2,801.6 $2,804.0 $2,467.7 Current Liabilities1 $247.4 8.8 % $238.0 8.5 % $213.1 8.6 % Long-term debt, excluding current maturities $1,085.4 38.7 % $1,184.0 42.2 % $934.1 37.9 % Total Liabilities $1,499.3 53.5 % $1,572.3 56.1 % $1,347.8 54.6 % Total Shareholders’ Equity $1,302.3 46.5 % $1,231.8 43.9 % $1,119.9 45.4 % AR – DSOs 57.0 56.1 60.5 Inventory Turns 3.1 3.0 3.2 1. Current Liabilities includes $4 million of current maturities of long-term debt in 3Q19 9
Cash Flows $ in millions 3Q20 2Q20 3Q19 Beginning Cash Balance $532.7 $335.1 $521.4 Cash provided by operating activities $101.2 $130.0 $25.3 Capital expenditures ($32.7) ($24.3) ($26.3) Proceeds from long-term debt $— $400.0 — Payments on short-term borrowings and long-term debt ($100.0) ($293.0) — Acquisition of business, net of cash ($35.5) $— ($217.1) Repurchase and retirement of common stock $— $— ($15.0) Payments for dividends ($10.8) ($10.8) ($10.8) Other investing activities 0.1 0.2 2.6 Other financing activities ($8.7) ($29.9) $3.1 Effect of exchange rates $1.7 ($0.5) ($0.5) Ending Cash Balance $448.0 $532.7 $282.7 Free Cash Flow1 $68.5 $105.7 ($1.0) Adjusted EBITDA2 $142.4 $131.5 $107.5 Adjusted EBITDA – as a % of net sales2 29.6% 29.3% 27.3% 1. Free cash flow equals cash from operations less capital expenditures. 2. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 10
Outlook GAAP $ in millions, except per share data 4Q20 Guidance 3Q20 Actual 2Q20 Actual Net Revenue $480 - $495 $481.0 $448.4 Operating Expenses Approximately flat vs. Q320 $119.2 $112.7 Net Income $75 - $82 $79.3 $68.0 Diluted Earnings per Common Share $0.55 - $0.60 $0.58 $0.50 Non-GAAP $ in millions, except per share data 4Q20 Guidance 3Q20 Actual 2Q20 Actual Net Revenue $480 - $495 $481.0 $448.4 Non-GAAP Operating Expenses1 Approximately flat vs. Q320 $104.6 $95.4 Non-GAAP Net Income1 $84 - $91 $91.5 $81.6 Diluted non-GAAP Earnings per Common Share1 $0.62 - $0.67 $0.67 $0.60 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 11
Entegris®, the Entegris Rings Design®, and other product names are trademarks of Entegris, Inc. as listed on entegris.com/trademarks. All product names, logos, and company names are trademarks or registered trademarks of their respective owners. Use of them does not imply any affiliation, sponsorship, or endorsement by the trademark owner. ©2020 Entegris, Inc. All rights reserved. 12
Appendix 13
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit Three months ended Nine months ended September 26, September 28, September 26, September 28, $ in thousands 2020 2019 June 27, 2020 2020 2019 Net sales $480,987 $394,147 $448,405 $1,341,719 $1,164,068 Gross profit-GAAP $226,000 $170,350 $207,372 $618,850 $514,017 Adjustments to gross profit: Integration costs — — (1,557) (1,557) — Severance and restructuring costs — 990 465 465 1,348 Charge for fair value mark-up of acquired inventory sold 229 4,483 — 590 7,333 Adjusted gross profit $226,229 $175,823 $206,280 $618,348 $522,698 Gross margin – as a % of net sales 47.0 % 43.2 % 46.2 % 46.1 % 44.2 % Adjusted gross margin – as a % of net sales 47.0 % 44.6 % 46.0 % 46.1 % 44.9 % 14
Reconciliation of GAAP Operating Expenses and Tax Rate to Non-GAAP Operating Expenses and Tax Rate Three months ended $ in millions September 26, 2020 September 28, 2019 June 27, 2020 GAAP operating expenses $119.2 $117.6 $112.7 Adjustments to operating expenses: Deal and transaction costs 0.6 4.9 0.5 Integration costs 1.3 2.4 2.0 Severance and restructuring costs 1.0 7.5 1.6 Amortization of intangible assets 11.7 15.2 13.2 Non-GAAP operating expenses $104.6 $87.6 $95.4 GAAP tax rate 17.3 % 2.1 % 17.4 % Other 0.8 % 9.4 % 1.0 % Non-GAAP tax rate 18.1 % 11.5 % 18.4 % 15
Reconciliation of GAAP Segment Profit to Adjusted Operating Income and Adjusted Segment Profit $ in thousands Three Months Ended Nine months ended Segment profit-GAAP September 26, 2020 September 28, 2019 June 27, 2020 September 26, 2020 September 28, 2019 Specialty Chemicals and Engineered Materials (SCEM) $32,600 $17,074 $32,938 $98,208 $65,505 Microcontamination Control (MC) 64,915 46,792 62,137 177,219 137,241 Advanced Materials Handling (AMH) 33,266 17,077 22,809 76,707 54,487 Total segment profit 130,781 80,943 117,884 352,134 257,233 Amortization of intangible assets 11,749 15,152 13,216 41,176 50,400 Unallocated expenses 12,271 12,998 9,956 28,741 51,640 Total operating income $106,761 $52,793 $94,712 $282,217 $155,193 $ in thousands Three months ended Nine months ended Adjusted segment profit September 26, 2020 September 28, 2019 June 27, 2020 September 26, 2020 September 28, 2019 SCEM segment profit $32,600 $17,074 $32,938 $98,208 $65,505 Integration costs — — (1,557) (1,557) — Severance and restructuring costs 277 2,143 455 906 2,662 Charge for fair value write-up of acquired inventory sold — 4,483 — 235 5,298 SCEM adjusted segment profit $32,877 $23,700 $31,836 $97,792 $73,465 MC segment profit $64,915 $46,792 $62,137 $177,219 $137,241 Severance and restructuring costs 301 2,977 494 985 3,701 Charge for fair value write-up of acquired inventory sold — — — 126 2,035 MC adjusted segment profit $65,216 $49,769 $62,631 $178,330 $142,977 AMH segment profit $33,266 $17,077 $22,809 $76,707 $54,487 Severance and restructuring costs 213 3,135 814 1,162 3,713 Charge for fair value write-up of acquired inventory sold 229 — — 229 — AMH adjusted segment profit $33,708 $20,212 $23,623 $78,098 $58,200 Unallocated general and administrative expenses $12,271 $12,998 $9,956 $28,741 $51,640 Unallocated deal and integration costs (1,902) (7,289) (2,415) (5,796) (31,773) Unallocated severance and restructuring costs (180) (248) (286) (810) (2,418) Adjusted unallocated general and administrative expenses $10,189 $5,461 $7,255 $22,135 $17,449 Total adjusted segment profit $131,801 $93,681 $118,090 $354,220 $274,642 Adjusted amortization of intangible assets — — — — — Adjusted unallocated general and administrative expenses 10,189 5,461 7,255 22,135 17,449 Total adjusted operating income $121,612 $88,220 $110,835 $332,085 $257,193 16
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA $ in thousands Three Months Ended Nine months ended September 26, 2020 September 28, 2019 June 27, 2020 September 26, 2020 September 28, 2019 Net sales $480,987 $394,147 $448,405 $1,341,719 $1,164,068 Net income $79,303 $40,767 $68,036 $208,345 $197,422 Net income – as a % of net sales 16.5 % 10.3 % 15.2 % 15.5 % 17.0 % Adjustments to net income: Income tax expense 16,559 876 14,361 39,542 49,533 Interest expense, net 12,651 10,216 12,792 35,681 29,567 Other (income) expense, net (1,752) 934 (477) (1,351) (121,329) GAAP - Operating income 106,761 52,793 94,712 282,217 155,193 Operating margin - as a % of net sales 22.2 % 13.4 % 21.1 % 21.0 % 13.3 % Charge for fair value write-up of acquired inventory sold 229 4,483 — 590 7,333 Deal and transaction costs 642 4,891 503 2,576 25,191 Integration costs 1,260 2,398 355 1,663 6,582 Severance and restructuring costs 971 8,503 2,049 3,863 12,494 Amortization of intangible assets 11,749 15,152 13,216 41,176 50,400 Adjusted operating income 121,612 88,220 110,835 332,085 257,193 Adjusted operating margin - as a % of net sales 25.3 % 22.4 % 24.7 % 24.8 % 22.1 % Depreciation 20,777 19,306 20,639 62,064 54,623 Adjusted EBITDA $142,389 $107,526 $131,474 $394,149 $311,816 Adjusted EBITDA – as a % of net sales 29.6 % 27.3 % 29.3 % 29.4 % 26.8 % 17
Reconciliation of GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share $ in thousands, except per share data Three months ended Nine months ended September 26, 2020 September 28, 2019 June 27, 2020 September 26, 2020 September 28, 2019 GAAP net income $79,303 $40,767 $68,036 $208,345 $197,422 Adjustments to net income: Charge for fair value write-up of inventory acquired 229 4,483 — 590 7,333 Deal and transaction costs 642 4,891 503 2,576 25,602 Integration costs 1,260 2,398 355 1,663 6,582 Severance and restructuring costs 971 8,503 2,049 3,863 12,494 Loss on debt extinguishment 908 — 1,470 2,378 — Versum termination fee, net — — — — (122,000) Amortization of intangible assets 11,749 15,152 13,216 41,176 50,400 Tax effect of legal entity restructuring — — — — 9,398 Tax effect of adjustments to net income and discrete items1 (3,602) (8,015) (4,048) (11,979) 2,274 Non-GAAP net income $91,460 $68,179 $81,581 $248,612 $189,505 Diluted earnings per common share $0.58 $0.30 $0.50 $1.53 $1.45 Effect of adjustments to net income $0.09 $0.20 $0.10 $0.30 $(0.06) Diluted non-GAAP earnings per common share $0.67 $0.50 $0.60 $1.83 $1.39 Weighted average diluted shares outstanding $136,252 $136,530 $136,007 $136,209 $136,601 1. The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years. 18
Reconciliation of GAAP Outlook to Non-GAAP Outlook $ in millions Fourth-Quarter Outlook Reconciliation GAAP operating expenses to non-GAAP operating expenses GAAP operating expenses $115 - $117 Adjustments to net income: Restructuring and integration costs 1 Amortization of intangible assets 12 Non-GAAP operating expenses $102 - $104 $ in millions Fourth-Quarter Outlook Reconciliation GAAP net income to non-GAAP net income GAAP net income $75 - $82 Adjustments to net income: Restructuring and integration costs 1 Amortization of intangible assets 12 Income tax effect (4) Non-GAAP net income $84 - $91 Fourth-Quarter Outlook Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share Diluted earnings per common share $0.55 - $0.60 Adjustments to diluted earnings per common share: Restructuring and integration costs 0.01 Amortization of intangible assets 0.08 Income tax effect (0.02) Diluted non-GAAP earnings per common share $0.62 to $0.67 19
GAAP Segment Trend Data1 $ in thousands Q318 Q418 Q119 Q219 Q319 Q419 Q120 Q220 Q320 Sales SCEM $131,234 $133,928 $124,470 $127,552 $127,750 $146,747 $144,214 $146,213 $150,480 MC 151,478 158,500 157,706 150,185 155,979 169,794 159,261 183,758 193,541 AMH 123,227 115,527 116,064 107,515 117,256 117,455 116,137 126,434 144,370 Inter-segment elimination (7,342) (6,313) (7,193) (6,378) (6,838) (6,998) (7,285) (8,000) (7,404) Total Sales $398,597 $401,642 $391,047 $378,874 $394,147 $426,998 $412,327 $448,405 $480,987 Segment Profit SCEM $31,210 $28,221 $24,431 $24,000 $17,074 $32,822 $32,670 $32,938 $32,600 MC 42,448 46,879 47,323 43,126 46,792 57,157 50,167 62,137 64,915 AMH 22,226 19,096 22,367 15,043 17,077 20,686 20,632 22,809 33,266 Total Segment Profit $95,884 $94,196 $94,121 $82,169 $80,943 $110,665 $103,469 $117,884 $130,781 Segment Profit Margin SCEM 23.8 % 21.1 % 19.6 % 18.8 % 13.4 % 22.4 % 22.7 % 22.5 % 21.7 % MC 28.0 % 29.6 % 30.0 % 28.7 % 30.0 % 33.7 % 31.5 % 33.8 % 33.5 % AMH 18.0 % 16.5 % 19.3 % 14.0 % 14.6 % 17.6 % 17.8 % 18.0 % 23.0 % 1. In 1Q19 the Company changed its definition of segment profit to include inter-segment sales. Prior period information has been recast to reflect the change. 20
Non-GAAP Segment Trend Data1 $ in thousands Q318 Q418 Q119 Q219 Q319 Q419 Q120 Q220 Q320 Sales SCEM $131,234 $133,928 $124,470 $127,552 $127,750 $146,747 $144,214 $146,213 $150,480 MC 151,478 158,500 157,706 150,185 155,979 169,794 159,261 183,758 193,451 AMH 123,227 115,527 116,064 107,515 117,256 117,455 116,137 126,434 144,370 Inter-segment elimination (7,342) (6,313) (7,193) (6,378) (6,838) (6,998) (7,285) (8,000) (7,404) Total Sales $398,597 $401,642 $391,047 $378,874 $394,147 $426,998 $412,327 $448,405 $480,897 Adjusted Segment Profit SCEM2 $31,210 $28,221 $25,070 $24,695 $23,700 $32,530 $33,079 $31,836 $32,877 MC3 45,729 50,258 50,082 43,126 49,769 58,039 50,483 62,631 65,216 AMH4 22,692 19,556 22,945 15,043 20,212 20,307 20,767 23,623 33,708 Total Segment Profit $99,631 $98,035 $98,097 $82,864 $93,681 $110,876 $104,329 $118,090 $131,801 Adjusted Segment Profit Margin SCEM 23.8 % 21.1 % 20.1 % 19.4 % 18.6 % 22.2 % 22.9 % 21.8 % 21.8 % MC 30.2 % 31.7 % 31.8 % 28.7 % 31.9 % 34.2 % 31.7 % 34.1 % 33.7 % AMH 18.4 % 16.9 % 19.8 % 14.0 % 17.2 % 17.3 % 17.9 % 18.7 % 23.3 % 1. In 1Q19 the Company changed its definition of segment profit to include inter-segment sales. Prior period information has been recast to reflect the change. Segment profit excludes amortization of intangibles and unallocated expenses. 2. Adjusted segment profit for SCEM for 1Q19, 3Q19,4Q19, 1Q20, 2Q20 and 3Q20 excludes charges for severance and restructuring of $519, $2,143, $184, $174, 455 and $277, respectively. Adjusted segment profit for SCEM for 1Q19, 2Q19, 3Q19, 4Q19 and 1Q20 excludes fair value mark-up of inventory and severance charges of $120, $695, $4,483, ($476) and $235, respectively. Adjusted segment profit for SCEM for 2Q20 excludes charges for integration costs ($1,557). 3. Adjusted segment profit for MC for 1Q19, 3Q19, 4Q19, 1Q20, 2Q20 and 3Q20 excludes charges for severance of $724, $2,977, $195, $190, $494 and $301, respectively. Adjusted segment profit for MC for 3Q18, 4Q18, 1Q19, 4Q19 and 1Q20 excludes charges for fair value mark-up of acquired inventory sold of $3,281, $3,379, $2,035, $687 and $126, respectively. 4. Adjusted segment profit for AMH for 3Q18 excludes loss on sale of subsidiary of $466. Adjusted segment profit for AMH for 4Q18, 1Q19, 3Q19, 4Q19, 1Q20, 2Q20 and 3Q20 excludes severance and restructuring of $460, $578, $3,135, ($379), $135, $814 and $213, respectively. Adjusted segment profit for AMH for 3Q20 excludes fair value mark-up of acquired inventory of $229. 21