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) July 27, 2021
 | ||
_______________________________________
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 July 27, 2021, Entegris, Inc. issued a press release to announce results for the second quarter of 2021 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: July 27, 2021 | 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 SECOND QUARTER OF 2021
•Second-quarter revenue of $571 million, increased 27% from prior year
•Second-quarter GAAP diluted EPS of $0.65, increased 30%
•Second-quarter non-GAAP diluted EPS of $0.85, increased 42%
BILLERICA, Mass., July 27, 2021 - Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s second quarter ended July 3, 2021.
Second-quarter sales were $571.4 million, an increase of 27% from the same quarter last year. Second-quarter GAAP net income was $88.8 million, or $0.65 per diluted share, which included $11.9 million of amortization of intangible assets and $0.6 million of integration costs. Non-GAAP net income was $116.7 million for the second quarter and non-GAAP earnings per diluted share was $0.85.
Bertrand Loy, Entegris’ president and chief executive officer, said: “Our excellent second quarter results were highlighted by 27 percent sales growth and record profitability and EPS. Revenue growth was strong across all three divisions, as we benefited from accelerating demand for our leading unit driven and CAPEX driven product lines. In an industry environment that continues to be very dynamic, our manufacturing and supply chain teams have performed exceptionally well and been instrumental in delivering 25% organic growth in the first half of this year.”
Mr. Loy added: “Our outlook for the full year 2021 has improved, as we benefit from an increasingly strong market environment and demand for our solution set that continues to be very good. Looking further ahead, the long-term fundamentals of the semiconductor market are very encouraging. Positive secular demand trends have become increasingly evident, the pace of node transitions for both logic and memory have quickened and device architectures are becoming much more complex. This is great news for Entegris, because the unique set of capabilities we have built around process materials and materials purity will be key enablers of these new chip architectures. And this will translate into our rapidly expanding served market and increasing Entegris content per wafer.”
Quarterly Financial Results Summary
(in thousands, except percentages and per share data)
| GAAP Results | July 3, 2021 | June 27, 2020 | April 3, 2021 | ||||||||
| Net sales | $571,352 | $448,405 | $512,844 | ||||||||
| Operating income | $138,889 | $94,712 | $113,978 | ||||||||
| Operating margin - as a % of net sales | 24.3 | % | 21.1 | % | 22.2 | % | |||||
| Net income | $88,770 | $68,036 | $84,676 | ||||||||
| Diluted earnings per common share | $0.65 | $0.50 | $0.62 | ||||||||
| Non-GAAP Results | |||||||||||
| Non-GAAP adjusted operating income | $151,603 | $110,835 | $128,036 | ||||||||
| Non-GAAP adjusted operating margin - as a % of net sales | 26.5 | % | 24.7 | % | 25.0 | % | |||||
| Non-GAAP net income | $116,711 | $81,581 | $95,513 | ||||||||
| Diluted non-GAAP earnings per common share | $0.85 | $0.60 | $0.70 | ||||||||
Third-Quarter Outlook
For the third quarter ending October 2, 2021, the Company expects sales of $575 million to $590 million, net income of $104 million to $111 million and diluted earnings per common share between $0.76 and $0.81. On a non-GAAP basis, the Company
expects diluted earnings per common share to range from $0.84 to $0.89, reflecting net income on a non-GAAP basis in the range of $114 million to $121 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 other substrates for a broad set of applications in the semiconductor, life sciences and other high-technology industries.
Second-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the second quarter on Tuesday, July 27, 2021, at 9:00 a.m. Eastern Time. Participants should dial 866-248-8441 or +1 323-289-6576, referencing confirmation code 5713272. 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 5713272.
The call can also be accessed live and on-demand from the Entegris website. Go to
https://investor.entegris.com/events-and-presentations 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 second quarter will be posted on the Investor Relations section of www.entegris.com Tuesday 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, 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 provides supplemental non-GAAP financial measures to better understand and manage its business and believes these measures provide investors and analysts additional and meaningful information for the assessment of the Company’s ongoing results. Management also uses these non-GAAP measures to assist in the evaluation of the performance of its business segments and to make operating decisions. Management believes that the Company’s non-GAAP measures help indicate the Company’s baseline performance before certain gains, losses or other charges that may not be indicative of the Company’s business or future outlook, and that non-GAAP measures offer a more consistent view of business performance. The Company believes the non-GAAP measures aid investors’ overall understanding of the Company’s results by providing a higher degree of transparency for such items and providing a level of disclosure that will help investors generally understand how management plans, measures and evaluates the Company’s business performance. Management believes that the inclusion of non-GAAP measures provides greater consistency in its financial reporting and facilitates investors’ understanding of the Company’s historical operating trends by providing an additional basis for comparisons to prior periods. 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 earnings per share, 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 and labor 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
Entegris, Inc. - page 3 of 14
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, 2020, filed on February 5, 2021, 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 | ||||||||||||||
| July 3, 2021 | June 27, 2020 | April 3, 2021 | ||||||||||||
| Net sales | $571,352 | $448,405 | $512,844 | |||||||||||
| Cost of sales | 305,968 | 241,033 | 277,858 | |||||||||||
| Gross profit | 265,384 | 207,372 | 234,986 | |||||||||||
| Selling, general and administrative expenses | 72,621 | 66,872 | 71,389 | |||||||||||
| Engineering, research and development expenses | 41,972 | 32,572 | 37,748 | |||||||||||
| Amortization of intangible assets | 11,902 | 13,216 | 11,871 | |||||||||||
| Operating income | 138,889 | 94,712 | 113,978 | |||||||||||
| Interest expense, net | 10,643 | 12,792 | 11,581 | |||||||||||
| Other expense (income), net | 23,560 | (477) | 4,330 | |||||||||||
| Income before income tax expense | 104,686 | 82,397 | 98,067 | |||||||||||
| Income tax expense | 15,916 | 14,361 | 13,391 | |||||||||||
| Net income | $88,770 | $68,036 | $84,676 | |||||||||||
| Basic earnings per common share: | $0.66 | $0.51 | $0.63 | |||||||||||
| Diluted earnings per common share: | $0.65 | $0.50 | $0.62 | |||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 135,498 | 134,700 | 135,068 | |||||||||||
| Diluted | 136,533 | 136,007 | 136,502 | |||||||||||
Entegris, Inc. - page 5 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Six months ended | |||||||||||
| July 3, 2021 | June 27, 2020 | ||||||||||
| Net sales | $1,084,196 | $860,732 | |||||||||
| Cost of sales | 583,826 | 467,882 | |||||||||
| Gross profit | 500,370 | 392,850 | |||||||||
| Selling, general and administrative expenses | 144,010 | 125,763 | |||||||||
| Engineering, research and development expenses | 79,720 | 62,204 | |||||||||
| Amortization of intangible assets | 23,773 | 29,427 | |||||||||
| Operating income | 252,867 | 175,456 | |||||||||
| Interest expense, net | 22,224 | 23,030 | |||||||||
| Other expense, net | 27,890 | 401 | |||||||||
| Income before income tax expense | 202,753 | 152,025 | |||||||||
| Income tax expense | 29,307 | 22,983 | |||||||||
| Net income | $173,446 | $129,042 | |||||||||
| Basic earnings per common share: | $1.28 | $0.96 | |||||||||
| Diluted earnings per common share: | $1.27 | $0.95 | |||||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 135,283 | 134,722 | |||||||||
| Diluted | 136,518 | 136,188 | |||||||||
Entegris, Inc. - page 6 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| July 3, 2021 | December 31, 2020 | ||||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and cash equivalents | $401,033 | $580,893 | |||||||||||||||
| Trade accounts and notes receivable, net | 309,936 | 264,392 | |||||||||||||||
| Inventories, net | 387,605 | 323,944 | |||||||||||||||
| Deferred tax charges and refundable income taxes | 22,622 | 21,136 | |||||||||||||||
| Other current assets | 38,040 | 43,892 | |||||||||||||||
| Total current assets | 1,159,236 | 1,234,257 | |||||||||||||||
| Property, plant and equipment, net | 563,258 | 525,367 | |||||||||||||||
| Other assets: | |||||||||||||||||
| Right-of-use assets | 59,117 | 45,924 | |||||||||||||||
| Goodwill | 749,566 | 748,037 | |||||||||||||||
| Intangible assets, net | 314,496 | 337,632 | |||||||||||||||
| Deferred tax assets and other noncurrent tax assets | 14,994 | 14,519 | |||||||||||||||
| Other | 12,064 | 11,960 | |||||||||||||||
| Total assets | $2,872,731 | $2,917,696 | |||||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||
| Current liabilities | |||||||||||||||||
| Accounts payable | $92,969 | $81,618 | |||||||||||||||
| Accrued liabilities | 146,827 | 177,012 | |||||||||||||||
| Income tax payable | 20,734 | 43,996 | |||||||||||||||
| Total current liabilities | 260,530 | 302,626 | |||||||||||||||
| Long-term debt, excluding current maturities | 936,382 | 1,085,783 | |||||||||||||||
| Long-term lease liability | 53,747 | 39,730 | |||||||||||||||
| Other liabilities | 106,741 | 110,063 | |||||||||||||||
| Shareholders’ equity | 1,515,331 | 1,379,494 | |||||||||||||||
| Total liabilities and equity | $2,872,731 | $2,917,696 | |||||||||||||||
Entegris, Inc. - page 7 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||
| July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | |||||||||||
| Operating activities: | ||||||||||||||
| Net income | $88,770 | $68,036 | $173,446 | $129,042 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation | 22,574 | 20,639 | 44,669 | 41,287 | ||||||||||
| Amortization | 11,902 | 13,216 | 23,773 | 29,427 | ||||||||||
| Stock-based compensation expense | 7,519 | 5,655 | 14,657 | 10,649 | ||||||||||
| Loss on extinguishment of debt and modification | 23,338 | 1,470 | 23,338 | 1,470 | ||||||||||
| Other | (8,369) | 5,862 | (203) | 11,425 | ||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||||
| Trade accounts and notes receivable | (26,667) | 1,908 | (48,231) | (42,087) | ||||||||||
| Inventories | (30,386) | (37,157) | (69,723) | (55,362) | ||||||||||
| Accounts payable and accrued liabilities | 13,244 | 43,663 | (15,347) | 5,643 | ||||||||||
| Income taxes payable, refundable income taxes and noncurrent taxes payable | (22,854) | 4,637 | (26,442) | 4,412 | ||||||||||
| Other | 2,784 | 2,092 | 15,033 | 5,518 | ||||||||||
| Net cash provided by operating activities | 81,855 | 130,021 | 134,970 | 141,424 | ||||||||||
| Investing activities: | ||||||||||||||
| Acquisition of property and equipment | (41,771) | (24,288) | (85,101) | (46,873) | ||||||||||
| Acquisition of business, net of cash acquired | (2,250) | (15) | (2,250) | (75,645) | ||||||||||
| Other | 18 | 206 | 90 | 211 | ||||||||||
| Net cash used in investing activities | (44,003) | (24,097) | (87,261) | (122,307) | ||||||||||
| Financing activities: | ||||||||||||||
| Proceeds from revolving credit facility and long-term debt | 451,000 | 400,000 | 451,000 | 617,000 | ||||||||||
| Payments of revolving credit facility and long-term debt | (601,000) | (293,000) | (601,000) | (368,000) | ||||||||||
| Payments for debt extinguishment costs | (19,080) | — | (19,080) | — | ||||||||||
| Payments for dividends | (10,889) | (10,805) | (21,797) | (21,652) | ||||||||||
| Issuance of common stock | 15,245 | 1,198 | 16,817 | 1,749 | ||||||||||
| Taxes paid related to net share settlement of equity awards | (55) | (1,280) | (15,093) | (12,720) | ||||||||||
| Repurchase and retirement of common stock | (15,000) | — | (30,000) | (29,564) | ||||||||||
| Deferred acquisition payments | — | — | — | (16,125) | ||||||||||
| Other | (4,800) | (3,965) | (4,801) | (6,855) | ||||||||||
| Net cash (used in) provided by financing activities | (184,579) | 92,148 | (223,954) | 163,833 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (760) | (482) | (3,615) | (2,194) | ||||||||||
| Decrease (increase) in cash and cash equivalents | (147,487) | 197,590 | (179,860) | 180,756 | ||||||||||
| Cash and cash equivalents at beginning of period | 548,520 | 335,077 | 580,893 | 351,911 | ||||||||||
| Cash and cash equivalents at end of period | $401,033 | $532,667 | $401,033 | $532,667 | ||||||||||
Entegris, Inc. - page 8 of 14
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||||||
| Net sales | July 3, 2021 | June 27, 2020 | April 3, 2021 | July 3, 2021 | June 27, 2020 | |||||||||||||||
| Specialty Chemicals and Engineered Materials | $180,366 | $146,213 | $166,541 | $346,907 | $290,427 | |||||||||||||||
| Microcontamination Control | 227,521 | 183,758 | 207,099 | 434,620 | 343,019 | |||||||||||||||
| Advanced Materials Handling | 172,502 | 126,434 | 148,541 | 321,043 | 242,571 | |||||||||||||||
| Inter-segment elimination | (9,037) | (8,000) | (9,337) | (18,374) | (15,285) | |||||||||||||||
| Total net sales | $571,352 | $448,405 | $512,844 | $1,084,196 | $860,732 | |||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||||
| Segment profit | July 3, 2021 | June 27, 2020 | April 3, 2021 | July 3, 2021 | June 27, 2020 | |||||||||||||||
| Specialty Chemicals and Engineered Materials | $44,945 | $32,938 | $34,556 | $79,501 | $65,608 | |||||||||||||||
| Microcontamination Control | 78,132 | 62,137 | 70,566 | 148,698 | 112,304 | |||||||||||||||
| Advanced Materials Handling | 42,093 | 22,809 | 32,095 | 74,188 | 43,441 | |||||||||||||||
| Total segment profit | 165,170 | 117,884 | 137,217 | 302,387 | 221,353 | |||||||||||||||
| Amortization of intangibles | 11,902 | 13,216 | 11,871 | 23,773 | 29,427 | |||||||||||||||
| Unallocated expenses | 14,379 | 9,956 | 11,368 | 25,747 | 16,470 | |||||||||||||||
| Total operating income | $138,889 | $94,712 | $113,978 | $252,867 | $175,456 | |||||||||||||||
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 | Six months ended | |||||||||||||||||||
| July 3, 2021 | June 27, 2020 | April 3, 2021 | July 3, 2021 | June 27, 2020 | ||||||||||||||||
| Net sales | $571,352 | $448,405 | $512,844 | $1,084,196 | $860,732 | |||||||||||||||
| Gross profit-GAAP | $265,384 | $207,372 | $234,986 | $500,370 | $392,850 | |||||||||||||||
| Adjustments to gross profit: | ||||||||||||||||||||
| Integration costs | — | (1,557) | — | — | (1,557) | |||||||||||||||
| Severance and restructuring costs | — | 465 | — | — | 465 | |||||||||||||||
| Charge for fair value mark-up of acquired inventory sold | — | — | — | — | 361 | |||||||||||||||
| Adjusted gross profit | $265,384 | $206,280 | $234,986 | $500,370 | $392,119 | |||||||||||||||
| Gross margin - as a % of net sales | 46.4 | % | 46.2 | % | 45.8 | % | 46.2 | % | 45.6 | % | ||||||||||
| Adjusted gross margin - as a % of net sales | 46.4 | % | 46.0 | % | 45.8 | % | 46.2 | % | 45.6 | % | ||||||||||
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 | Six months ended | |||||||||||||||||||
| Segment profit-GAAP | July 3, 2021 | June 27, 2020 | April 3, 2021 | July 3, 2021 | June 27, 2020 | |||||||||||||||
| Specialty Chemicals and Engineered Materials (SCEM) | $44,945 | $32,938 | $34,556 | $79,501 | $65,608 | |||||||||||||||
| Microcontamination Control (MC) | 78,132 | 62,137 | 70,566 | 148,698 | 112,304 | |||||||||||||||
| Advanced Materials Handling (AMH) | 42,093 | 22,809 | 32,095 | 74,188 | 43,441 | |||||||||||||||
| Total segment profit | 165,170 | 117,884 | 137,217 | 302,387 | 221,353 | |||||||||||||||
| Amortization of intangible assets | 11,902 | 13,216 | 11,871 | 23,773 | 29,427 | |||||||||||||||
| Unallocated expenses | 14,379 | 9,956 | 11,368 | 25,747 | 16,470 | |||||||||||||||
| Total operating income | $138,889 | $94,712 | $113,978 | $252,867 | $175,456 | |||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||||
| Adjusted segment profit | July 3, 2021 | June 27, 2020 | April 3, 2021 | July 3, 2021 | June 27, 2020 | |||||||||||||||
| SCEM segment profit | $44,945 | $32,938 | $34,556 | $79,501 | $65,608 | |||||||||||||||
| Integration costs | — | (1,557) | — | — | (1,557) | |||||||||||||||
| Severance and restructuring costs | 51 | 455 | 47 | 98 | 629 | |||||||||||||||
| Charge for fair value write-up of acquired inventory sold | — | — | — | — | 235 | |||||||||||||||
| SCEM adjusted segment profit | $44,996 | $31,836 | $34,603 | $79,599 | $64,915 | |||||||||||||||
| MC segment profit | $78,132 | $62,137 | $70,566 | $148,698 | $112,304 | |||||||||||||||
| Severance and restructuring costs | 55 | 494 | 51 | 106 | 684 | |||||||||||||||
| Charge for fair value write-up of acquired inventory sold | — | — | — | — | 126 | |||||||||||||||
| MC adjusted segment profit | $78,187 | $62,631 | $70,617 | $148,804 | $113,114 | |||||||||||||||
| AMH segment profit | $42,093 | $22,809 | $32,095 | $74,188 | $43,441 | |||||||||||||||
| Severance and restructuring costs | 38 | 814 | 37 | 75 | 949 | |||||||||||||||
| AMH adjusted segment profit | $42,131 | $23,623 | $32,132 | $74,263 | $44,390 | |||||||||||||||
| Unallocated general and administrative expenses | $14,379 | $9,956 | $11,368 | $25,747 | $16,470 | |||||||||||||||
| Unallocated deal and integration costs | (632) | (2,415) | (2,044) | (2,676) | (3,894) | |||||||||||||||
| Unallocated severance and restructuring costs | (36) | (286) | (8) | (44) | (630) | |||||||||||||||
| Adjusted unallocated general and administrative expenses | $13,711 | $7,255 | $9,316 | $23,027 | $11,946 | |||||||||||||||
| Total adjusted segment profit | $165,314 | $118,090 | $137,352 | $302,666 | $222,419 | |||||||||||||||
| Adjusted amortization of intangible assets | — | — | — | — | — | |||||||||||||||
| Adjusted unallocated general and administrative expenses | 13,711 | 7,255 | 9,316 | 23,027 | 11,946 | |||||||||||||||
| Total adjusted operating income | $151,603 | $110,835 | $128,036 | $279,639 | $210,473 | |||||||||||||||
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 | Six months ended | |||||||||||||||||||
| July 3, 2021 | June 27, 2020 | April 3, 2021 | July 3, 2021 | June 27, 2020 | ||||||||||||||||
| Net sales | $571,352 | $448,405 | $512,844 | $1,084,196 | $860,732 | |||||||||||||||
| Net income | $88,770 | $68,036 | $84,676 | $173,446 | $129,042 | |||||||||||||||
| Net income - as a % of net sales | 15.5 | % | 15.2 | % | 16.5 | % | 16.0 | % | 15.0 | % | ||||||||||
| Adjustments to net income: | ||||||||||||||||||||
| Income tax expense | 15,916 | 14,361 | 13,391 | 29,307 | 22,983 | |||||||||||||||
| Interest expense, net | 10,643 | 12,792 | 11,581 | 22,224 | 23,030 | |||||||||||||||
| Other expense (income), net | 23,560 | (477) | 4,330 | 27,890 | 401 | |||||||||||||||
| GAAP - Operating income | 138,889 | 94,712 | 113,978 | 252,867 | 175,456 | |||||||||||||||
| Operating margin - as a % of net sales | 24.3 | % | 21.1 | % | 22.2 | % | 23.3 | % | 20.4 | % | ||||||||||
| Charge for fair value write-up of acquired inventory sold | — | — | — | — | 361 | |||||||||||||||
| Deal and transaction costs | — | 503 | — | — | 1,934 | |||||||||||||||
| Integration costs | 632 | 355 | 2,044 | 2,676 | 403 | |||||||||||||||
| Severance and restructuring costs | 180 | 2,049 | 143 | 323 | 2,892 | |||||||||||||||
| Amortization of intangible assets | 11,902 | 13,216 | 11,871 | 23,773 | 29,427 | |||||||||||||||
| Adjusted operating income | 151,603 | 110,835 | 128,036 | 279,639 | 210,473 | |||||||||||||||
| Adjusted operating margin - as a % of net sales | 26.5 | % | 24.7 | % | 25.0 | % | 25.8 | % | 24.5 | % | ||||||||||
| Depreciation | 22,574 | 20,639 | 22,095 | 44,669 | 41,287 | |||||||||||||||
| Adjusted EBITDA | $174,177 | $131,474 | $150,131 | $324,308 | $251,760 | |||||||||||||||
| Adjusted EBITDA - as a % of net sales | 30.5 | % | 29.3 | % | 29.3 | % | 29.9 | % | 29.2 | % | ||||||||||
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 | Six months ended | |||||||||||||||||||
| July 3, 2021 | June 27, 2020 | April 3, 2021 | July 3, 2021 | June 27, 2020 | ||||||||||||||||
| GAAP net income | $88,770 | $68,036 | $84,676 | $173,446 | $129,042 | |||||||||||||||
| Adjustments to net income: | ||||||||||||||||||||
| Charge for fair value write-up of inventory acquired | — | — | — | — | 361 | |||||||||||||||
| Deal and transaction costs | — | 503 | — | — | 1,934 | |||||||||||||||
| Integration costs | 632 | 355 | 2,044 | 2,676 | 403 | |||||||||||||||
| Severance and restructuring costs | 180 | 2,049 | 143 | 323 | 2,892 | |||||||||||||||
| Loss on extinguishment of debt and modification | 23,338 | 1,470 | — | 23,338 | 1,470 | |||||||||||||||
| Amortization of intangible assets | 11,902 | 13,216 | 11,871 | 23,773 | 29,427 | |||||||||||||||
Tax effect of adjustments to net income and discrete items1 | (8,111) | (4,048) | (3,221) | (11,332) | (8,377) | |||||||||||||||
| Non-GAAP net income | $116,711 | $81,581 | $95,513 | $212,224 | $157,152 | |||||||||||||||
| Diluted earnings per common share | $0.65 | $0.50 | $0.62 | $1.27 | $0.95 | |||||||||||||||
| Effect of adjustments to net income | $0.20 | $0.10 | $0.08 | $0.28 | $0.21 | |||||||||||||||
| Diluted non-GAAP earnings per common share | $0.85 | $0.60 | $0.70 | $1.55 | $1.15 | |||||||||||||||
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)
| Third-Quarter Outlook | |||||
| Reconciliation GAAP net income to non-GAAP net income | October 2, 2021 | ||||
| GAAP net income | $104 - $111 | ||||
| Adjustments to net income: | |||||
| Restructuring and integration costs | 2 | ||||
| Amortization of intangible assets | 11 | ||||
| Income tax effect | (3) | ||||
| Non-GAAP net income | $114 - $121 | ||||
| Third-Quarter Outlook | |||||
| Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share | October 2, 2021 | ||||
| Diluted earnings per common share | $0.76 - $0.81 | ||||
| Adjustments to diluted earnings per common share: | |||||
| Restructuring and integration costs | 0.01 | ||||
| Amortization of intangible assets | 0.09 | ||||
| Income tax effect | (0.02) | ||||
| Diluted non-GAAP earnings per common share | $0.84 - $0.89 | ||||
### END ###
Entegris, Inc. - page 14 of 14
Earnings Summary July 27, 2021 Second Quarter 2021 Exhibit 99.2
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, 2020, filed with the Securities and Exchange Commission on February 5, 2021, 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 Safe Harbor
+27%1$571M REVENUE +47%$139M OPERATING INCOME +30% $0.85 DILUTED NON-GAAP EPS 2 +320 bps24.3%3 OPERATING MARGIN 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 $0.65 DILUTED GAAP EPS +42% Second Quarter 2021 Financial Summary $152M ADJUSTED OPERATING INCOME 2 +37% 26.5%3 ADJUSTED OPERATING MARGIN 2 +180 bps
4 $ in millions, except per share data 2Q21 2Q21 Guidance 1Q21 2Q20 2Q21 over 2Q20 2Q21 over 1Q21 Net Revenue $571.4 $530 - $545 $512.8 $448.4 27.4% 11.4% Gross Margin 46.4% 45.8% 46.2% Operating Expenses $126.5 $122 - $124 $121.0 $112.7 12.3% 4.5% Operating Income $138.9 $114.0 $94.7 46.6% 21.9% Operating Margin 24.3% 22.2% 21.1% Tax Rate 15.2% 13.7% 17.4% Net Income $88.8 $77 - $84 $84.7 $68.0 30.5% 4.8% Diluted Earnings Per Common Share $0.65 $0.56 - $0.61 $0.62 $0.50 30.0% 4.8% Summary – Consolidated Statement of Operations (GAAP)
5 $ in millions, except per share data 2Q21 2Q21 Guidance 1Q21 2Q20 2Q21 over 2Q20 2Q21 over 1Q21 Net Revenue $571.4 $530 - $545 $512.8 $448.4 27.4% 11.4% Adjusted Gross Margin – as a % of Net Sales2 46.4% 45.8% 46.0% Non-GAAP Operating Expenses3 $113.8 $108 - $110 $107.0 $95.4 19.2% 6.4% Adjusted Operating Income $151.6 $128.0 $110.8 36.8% 18.4% Adjusted Operating Margin 26.5% 25.0% 24.7% Non-GAAP Tax Rate4 17.1% 14.8% 18.4% Non-GAAP Net Income5 $116.7 $106 - $113 $95.5 $81.6 43.1% 22.2% Diluted Non-GAAP Earnings Per Common Share $0.85 $0.77 - $0.82 $0.70 $0.60 41.7% 21.4% Summary – Consolidated Statement of Operations (Non-GAAP)1 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. 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 and the tax effect of non-GAAP adjustments.
6 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. Sales growth was primarily driven by specialty gases, advanced deposition materials and advanced coatings. –––––– The increase in segment profit margin (adjusted) was primarily related to higher sales volume and a benefit from the sale of some non-core intellectual property. $ in millions 2Q21 1Q21 2Q20 2Q21 over 2Q20 2Q21 over 1Q21 Net Revenue $180.4 $166.5 $146.2 23.4% 8.3% Segment Profit $44.9 $34.6 $32.9 36.5% 30.1% Segment Profit Margin 24.9% 20.7% 22.5% Adj. Segment Profit1 $45.0 $34.6 $31.8 41.3% 30.0% Adj. Segment Profit Margin1 24.9% 20.8% 21.8% Specialty Chemicals and Engineered Materials (SCEM) 2Q21 Highlights
7 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. Microcontamination Control (MC) 2Q21 Highlights $ in millions 2Q21 1Q21 2Q20 2Q21 over 2Q20 2Q21 over 1Q21 Net Revenue $227.5 $207.1 $183.8 23.8% 9.9% Segment Profit $78.1 $70.6 $62.1 25.7% 10.7% Segment Profit Margin 34.3% 34.1% 33.8% Adj. Segment Profit1 $78.2 $70.6 $62.6 24.8% 10.7% Adj. Segment Profit Margin1 34.4% 34.1% 34.1% Good performance across all product lines year-to-date, with growth especially strong in liquid filtration and gas microcontamination.
8 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. Advanced Materials Handling (AMH) 2Q21 Highlights $ in millions 2Q21 1Q21 2Q20 2Q21 over 2Q20 2Q21 over 1Q21 Net Revenue $172.5 $148.5 $126.4 36.4% 16.1% Segment Profit $42.1 $32.1 $22.8 84.5% 31.2% Segment Profit Margin 24.4% 21.6% 18.0% Adj. Segment Profit1 $42.1 $32.1 $23.6 78.3% 31.1% Adj. Segment Profit Margin1 24.4% 21.6% 18.7% Strong sales of wafer handling products, fluid handling products and Aramus high purity bags (for Covid vaccine). –––––– Segment profit margin (adjusted) increase was primarily driven by the higher sales volume.
9 $ in millions 2Q21 1Q21 2Q20 $ Amount % Total $ Amount % Total $ Amount % Total Cash & Cash Equivalents $401.0 14.0% $548.5 18.7% $532.7 19.0% Accounts Receivable, net $309.9 10.8% $282.6 9.6% $275.6 9.8% Inventories $387.6 13.5% $358.8 12.2% $332.9 11.9% Net PP&E $563.3 19.6% $542.6 18.5% $475.2 16.9% Total Assets $2,872.7 $2,933.5 $2,804.0 Current Liabilities $260.5 9.1% $266.3 9.1% $238.0 8.5% Long-term Debt, Excluding Current Maturities $936.4 32.6% $1,086.2 37.0% $1,184.0 42.2% Total Liabilities $1,357.4 47.3% $1,505.2 51.3% $1,572.3 56.1% Total Shareholders’ Equity $1,515.3 52.7% $1,428.3 48.7% $1,231.8 43.9% AR – DSOs 49.5 50.3 56.1 Inventory Turns 3.3 3.3 3.0 Summary – Balance Sheet Items
10 $ in millions 2Q21 1Q21 2Q20 Beginning Cash Balance $548.5 $580.9 $335.1 Cash provided by operating activities $81.9 $53.1 $130.0 Capital expenditures ($41.8) ($43.3) ($24.3) Proceeds from revolving credit facilities and long-term debt 451.0 — $400.0 Payments on revolving credit facilities and long-term debt (601.0) — ($293.0) Acquisition of business, net of cash (2.3) — — Repurchase and retirement of common stock ($15.0) ($15.0) — Payments for dividends ($10.9) ($10.9) ($10.8) Other investing activities — $0.1 0.2 Other financing activities ($8.7) ($13.5) ($4.0) Effect of exchange rates ($0.8) ($2.9) ($0.5) Ending Cash Balance $401.0 $548.5 $532.7 Free Cash Flow1 $40.1 $9.8 $105.7 Adjusted EBITDA2 $174.2 $150.1 $131.5 Adjusted EBITDA – as a % of net sales2 30.5% 29.3% 29.3% Cash Flows 1. Equals cash from operations less capital expenditures. 2. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation.
11 GAAP $ in millions, except per share data 3Q21 Guidance 2Q21 Actual 1Q21 Actual Net Revenue $575 - $590 $571.4 $512.8 Operating Expenses $129 - $131 $126.5 $121.0 Net Income $104 - $111 $88.8 $84.7 Diluted Earnings per Common Share $0.76 - $0.81 $0.65 $0.62 Non-GAAP $ in millions, except per share data 3Q21 Guidance 2Q21 Actual 1Q21 Actual Net Revenue $575 - $590 $571.4 $512.8 Non-GAAP Operating Expenses1 $116 - $118 $113.8 $107.0 Non-GAAP Net Income1 $114 - $121 $116.7 $95.5 Diluted non-GAAP Earnings per Common Share1 $0.84 - $0.89 $0.85 $0.70 Outlook 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation.
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
14 Reconciliation of GAAP Gross Profit to Adjusted Gross Profit Three months ended Six months ended $ in thousands July 3, 2021 June 27, 2020 April 3, 2021 July 3, 2021 June 27, 2020 Net sales $571,352 $448,405 $512,844 $1,084,196 $860,732 Gross profit-GAAP $265,384 $207,372 $234,986 $500,370 $392,850 Adjustments to gross profit: Integration costs — (1,557) — — (1,557) Severance and restructuring costs — 465 — — 465 Charge for fair value mark-up of acquired inventory sold — — — — 361 Adjusted gross profit $265,384 $206,280 $234,986 $500,370 $392,119 Gross margin – as a % of net sales 46.4% 46.2% 45.8% 46.2% 45.6% Adjusted gross margin – as a % of net sales 46.4% 46.0% 45.8% 46.2% 45.6%
15 Reconciliation of GAAP Operating Expenses and Tax Rate to Non-GAAP Operating Expenses and Tax Rate Three months ended $ in millions July 3, 2021 June 27, 2020 April 3, 2021 GAAP operating expenses $126.5 $112.7 $121.0 Adjustments to operating expenses: Deal and transaction costs — 0.5 — Integration costs 0.6 2.0 2.0 Severance and restructuring costs 0.2 1.6 0.1 Amortization of intangible assets 11.9 13.2 11.9 Non-GAAP operating expenses $113.8 $95.4 $107.0 GAAP tax rate 15.2% 17.4% 13.7% Other 1.9% 1.0% 1.1% Non-GAAP tax rate 17.1% 18.4% 14.8%
16 $ in thousands Three months ended Six months ended Adjusted segment profit July 3, 2021 June 27, 2020 April 3, 2021 July 3, 2021 June 27, 2020 SCEM segment profit $44,945 $32,938 $34,556 $79,501 $65,608 Integration costs — (1,557) — — (1,557) Severance and restructuring costs 51 455 47 98 629 Charge for fair value write-up of acquired inventory sold — — — — 235 SCEM adjusted segment profit $44,996 $31,836 $34,603 $79,599 $64,915 MC segment profit $78,132 $62,137 $70,566 $148,698 $112,304 Severance and restructuring costs 55 494 51 106 684 Charge for fair value write-up of acquired inventory sold — — — — 126 MC adjusted segment profit $78,187 $62,631 $70,617 $148,804 $113,114 AMH segment profit $42,093 $22,809 $32,095 $74,188 $43,441 Severance and restructuring costs 38 814 37 75 949 AMH adjusted segment profit $42,131 $23,623 $32,132 $74,263 $44,390 Unallocated general and administrative expenses $14,379 $9,956 $11,368 $25,747 $16,470 Unallocated deal and integration costs (632) (2,415) (2,044) (2,676) (3,894) Unallocated severance and restructuring costs (36) (286) (8) (44) (630) Adjusted unallocated general and administrative expenses $13,711 $7,255 $9,316 $23,027 $11,946 Total adjusted segment profit $165,314 $118,090 $137,352 $302,666 $222,419 Adjusted amortization of intangible assets — — — — — Adjusted unallocated general and administrative expenses 13,711 7,255 9,316 23,027 11,946 Total adjusted operating income $151,603 $110,835 $128,036 $279,639 $210,473 $ in thousands Three Months Ended Six months ended Segment profit-GAAP July 3, 2021 June 27, 2020 April 3, 2021 July 3, 2021 June 27, 2020 Specialty Chemicals and Engineered Materials (SCEM) $44,945 $32,938 $34,556 $79,501 $65,608 Microcontamination Control (MC) 78,132 62,137 70,566 148,698 112,304 Advanced Materials Handling (AMH) 42,093 22,809 32,095 74,188 43,441 Total segment profit 165,170 117,884 137,217 302,387 221,353 Amortization of intangible assets 11,902 13,216 11,871 23,773 29,427 Unallocated expenses 14,379 9,956 11,368 25,747 16,470 Total operating income $138,889 $94,712 $113,978 $252,867 $175,456 Reconciliation of GAAP Segment Profit to Adjusted Operating Income and Adjusted Segment Profit
17 $ in thousands Three Months Ended Six months ended July 3, 2021 June 27, 2020 April 3, 2021 July 3, 2021 June 27, 2020 Net sales $571,352 $448,405 $512,844 $1,084,196 $860,732 Net income $88,770 $68,036 $84,676 $173,446 $129,042 Net income – as a % of net sales 15.5% 15.2% 16.5% 16.0% 15.0% Adjustments to net income: Income tax expense 15,916 14,361 13,391 29,307 22,983 Interest expense, net 10,643 12,792 11,581 22,224 23,030 Other expense (income), net 23,560 (477) 4,330 27,890 401 GAAP - Operating income 138,889 94,712 113,978 252,867 175,456 Operating margin - as a % of net sales 24.3% 21.1% 22.2% 23.3% 20.4% Charge for fair value write-up of acquired inventory sold — — — — 361 Deal and transaction costs — 503 — — 1,934 Integration costs 632 355 2,044 2,676 403 Severance and restructuring costs 180 2,049 143 323 2,892 Amortization of intangible assets 11,902 13,216 11,871 23,773 29,427 Adjusted operating income 151,603 110,835 128,036 279,639 210,473 Adjusted operating margin - as a % of net sales 26.5% 24.7% 25.0% 25.8% 24.5% Depreciation 22,574 20,639 22,095 44,669 41,287 Adjusted EBITDA $174,177 $131,474 $150,131 $324,308 $251,760 Adjusted EBITDA – as a % of net sales 30.5% 29.3% 29.3% 29.9% 29.2% Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
18 $ in thousands, except per share data Three months ended Six months ended July 3, 2021 June 27, 2020 April 3, 2021 July 3, 2021 June 27, 2020 GAAP net income $88,770 $68,036 $84,676 $173,446 $129,042 Adjustments to net income: Charge for fair value write-up of inventory acquired — — — — 361 Deal and transaction costs — 503 — — 1,934 Integration costs 632 355 2,044 2,676 403 Severance and restructuring costs 180 2,049 143 323 2,892 Loss on extinguishment of debt and modification 23,338 1,470 — 23,338 1,470 Amortization of intangible assets 11,902 13,216 11,871 23,773 29,427 Tax effect of adjustments to net income and discrete items1 (8,111) (4,048) (3,221) (11,332) (8,377) Non-GAAP net income $116,711 $81,581 $95,513 $212,224 $157,152 Diluted earnings per common share $0.65 $0.50 $0.62 $1.27 $0.95 Effect of adjustments to net income $0.20 $0.10 $0.08 $0.28 $0.21 Diluted non-GAAP earnings per common share $0.85 $0.60 $0.70 $1.55 $1.15 Weighted average diluted shares outstanding 136,533 136,007 136,502 136,518 136,188 Reconciliation of GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share 1. The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.
19 $ in millions Third-Quarter Outlook Reconciliation GAAP net income to non-GAAP net income GAAP net income $104 - $111 Adjustments to net income: Restructuring costs 2 Amortization of intangible assets 11 Income tax effect (3) Non-GAAP net income $114 - $121 Third-Quarter Outlook Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share Diluted earnings per common share $0.76 - $0.81 Adjustments to diluted earnings per common share: Restructuring costs 0.01 Amortization of intangible assets 0.09 Income tax effect (0.02) Diluted non-GAAP earnings per common share $0.84 - $0.89 $ in millions Third-Quarter Outlook Reconciliation GAAP operating expenses to non-GAAP operating expenses GAAP operating expenses $129 - $131 Adjustments to net income: Restructuring costs 2 Amortization of intangible assets 11 Non-GAAP operating expenses $116 - $118 Reconciliation of GAAP Outlook to Non-GAAP Outlook
20 $ in thousands Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121 Q221 Sales SCEM $127,552 $127,750 $146,747 $144,214 $146,213 $150,480 $168,625 $166,541 $180,366 MC 150,185 155,979 169,794 159,261 183,758 193,541 205,626 207,099 227,521 AMH 107,515 117,256 117,455 116,137 126,434 144,370 151,741 148,541 172,502 Inter-segment elimination (6,378) (6,838) (6,998) (7,285) (8,000) (7,404) (8,398) (9,337) (9,037) Total Sales $378,874 $394,147 $426,998 $412,327 $448,405 $480,987 $517,594 $512,844 $571,352 Segment Profit SCEM $24,000 $17,074 $32,822 $32,670 $32,938 $32,600 $29,761 $34,556 $44,945 MC 43,126 46,792 57,157 50,167 62,137 64,915 71,691 70,566 78,132 AMH 15,043 17,077 20,686 20,632 22,809 33,266 34,321 32,095 42,093 Total Segment Profit $82,169 $80,943 $110,665 $103,469 $117,884 $130,781 $135,773 $137,217 $165,170 Segment Profit Margin SCEM 18.8% 13.4% 22.4% 22.7% 22.5% 21.7% 17.6% 20.7% 24.9% MC 28.7% 30.0% 33.7% 31.5% 33.8% 33.5% 34.9% 34.1% 34.3% AMH 14.0% 14.6% 17.6% 17.8% 18.0% 23.0% 22.6% 21.6% 24.4% GAAP Segment Trend Data
21 $ in thousands Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121 Q221 Sales SCEM $127,552 $127,750 $146,747 $144,214 $146,213 $150,480 $168,625 $166,541 $180,366 MC 150,185 155,979 169,794 159,261 183,758 193,451 205,626 207,099 227,521 AMH 107,515 117,256 117,455 116,137 126,434 144,370 151,741 148,541 172,502 Inter-segment elimination (6,378) (6,838) (6,998) (7,285) (8,000) (7,404) (8,398) (9,337) (9,037) Total Sales $378,874 $394,147 $426,998 $412,327 $448,405 $480,897 $517,594 $512,844 $571,352 Adjusted Segment Profit SCEM segment profit $24,000 $17,074 $32,822 $32,670 $32,938 $32,600 $29,761 $34,556 $44,945 Integration costs — — — — (1,557) — — — — Severance and restructuring costs — 2,143 184 174 455 277 155 47 51 Charge for fair value write-up of acquired inventory sold 695 4,483 (476) 235 — — — — — SCEM adjusted segment profit $24,695 $23,700 $32,530 $33,079 $31,836 $32,877 $29,916 $34,603 $44,996 MC segment profit $43,126 $46,792 $57,157 $50,167 $62,137 $64,915 $71,691 $70,566 $78,132 Severance and restructuring costs — 2,977 195 190 494 301 167 51 55 Charge for fair value write-up of acquired inventory sold — — 687 126 — — — — — MC adjusted segment profit $43,126 $49,769 $58,039 $50,483 $62,631 $65,216 $71,858 $70,617 $78,187 AMH segment profit $15,043 $17,077 $20,686 $20,632 $22,809 $33,266 $34,321 $32,095 $42,093 Severance and restructuring costs — 3,135 (379) 135 814 213 121 37 38 Charge for fair value write-up of acquired inventory sold — — — — — 229 — — — AMH adjusted segment profit $15,043 $20,212 $20,307 $20,767 $23,623 $33,708 $34,442 $32,132 $42,131 Adjusted Segment Profit Margin SCEM 19.4% 18.6% 22.2% 22.9% 21.8% 21.8% 17.7% 20.8% 24.9% MC 28.7% 31.9% 34.2% 31.7% 34.1% 33.7% 34.9% 34.1% 34.4% AMH 14.0% 17.2% 17.3% 17.9% 18.7% 23.3% 22.7% 21.6% 24.4% Non-GAAP Segment Trend Data