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) November 2, 2023
 | ||
_______________________________________
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 November 2, 2023 , Entegris, Inc. issued a press release to announce results for the third quarter of 2023 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 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
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: November 2, 2023 | By: | /s/ Linda LaGorga | ||||||
| Name: | Linda LaGorga | |||||||
| Title: | Senior 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
ENTEGRIS REPORTS RESULTS FOR THIRD QUARTER OF 2023
•Third-quarter revenue of $888 million, decreased 11% from prior year and 1% sequentially
•Third-quarter GAAP diluted EPS of $0.22
•Third-quarter non-GAAP diluted EPS of $0.68
BILLERICA, Mass., November 2, 2023 - Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s third quarter ended September 30, 2023. Third-quarter sales were $888.2 million, a decrease of 11% from the same quarter last year. Third-quarter GAAP net income was $33.2 million, or $0.22 income per diluted share, which included $15.9 million of goodwill impairment related to the sale of the Electronic Chemicals business, $51.2 million of amortization of intangible assets, $10.3 million of integration costs related to the acquisition of CMC Materials and $5.7 million of other net costs. Non-GAAP net income was $103.6 million for the third quarter and non-GAAP earnings per diluted share was $0.68.
Bertrand Loy, Entegris’ president and chief executive officer, said: “The Entegris team delivered another quarter of solid results and execution, in what remains a challenging industry environment. Our revenue was down 1 percent sequentially, in line with expectations, and we continued to enjoy growth in product lines that are of increasing importance to our customers.”
Mr. Loy added: “During the quarter, we made great progress on key commitments and initiatives. The CMC Materials integration is largely complete, we have divested three non-core businesses so far this year, and we are focused on improving our cash flow to rapidly pay down our outstanding debt. In addition, last week, we submitted an application for Chips Act funding for our new Colorado Springs facility, which will be critical to strengthen the U.S. domestic semiconductor ecosystem.”
Mr. Loy added: "The semiconductor industry has likely reached a bottom in terms of utilization rates. However, the timing of the industry recovery continues to be uncertain. In this environment, we are effectively managing costs in the short-term, while making critical investments for the future. The long-term growth prospects for the semiconductor industry remain intact and the industry is entering a period of unprecedented technology change and device complexity. These trends are very favorable for Entegris, because our value proposition is unique and increasingly integral to our customers’ roadmaps, especially in the areas of materials science, materials purity, and end-to-end solutions. This will ultimately translate into rapidly expanding content per wafer and superior growth for Entegris.”
Quarterly Financial Results Summary
(in thousands, except percentages and per share data)
| GAAP Results | September 30, 2023 | October 1, 2022 | July 1, 2023 | ||||||||
| Net sales | $888,239 | $993,828 | $901,000 | ||||||||
| Operating income | $117,061 | $14,889 | $267,614 | ||||||||
| Operating margin - as a % of net sales | 13.2 | % | 1.5 | % | 29.7 | % | |||||
Net income (loss) | $33,212 | ($73,703) | $197,646 | ||||||||
| Diluted earnings (loss) per common share | $0.22 | ($0.50) | $1.31 | ||||||||
| Non-GAAP Results | |||||||||||
| Non-GAAP adjusted operating income | $195,715 | $253,207 | $200,917 | ||||||||
| Non-GAAP adjusted operating margin - as a % of net sales | 22.0 | % | 25.5 | % | 22.3 | % | |||||
| Non-GAAP net income | $103,588 | $127,770 | $99,605 | ||||||||
| Diluted non-GAAP earnings per common share | $0.68 | $0.85 | $0.66 | ||||||||
Fourth-Quarter Outlook
The Company’s guidance for the fourth quarter ending December 31, 2023, does not include the recently divested Electronic Chemicals business and only includes a minimal impact from the alliance agreement with Element Solutions, that was terminated earlier this year. Excluding the sales of these divested businesses for the third quarter 2023, fourth quarter 2023 sales are estimated to be down sequentially approximately 2% at the midpoint of the fourth quarter 2023 sales guidance range provided below.
For the fourth quarter ending December 31, 2023, the Company expects sales of $770 million to $790 million, GAAP net income of $37 million to $45 million and diluted earnings per common share between $0.25 and $0.30. On a non-GAAP basis, the Company expects diluted earnings per common share to range from $0.55 to $0.60, reflecting net income on a non-GAAP basis in the range of $83 million to $91 million. The Company also expects EBITDA of approximately 26% to 27% of sales, for the fourth quarter of 2023.
Segment Results
The Company operates in three segments (the Materials Solutions segment resulted from combining the Advanced Planarization Solutions and the Specialty Chemicals and Engineered Materials segments):
Materials Solutions (MS): MS provides advanced consumable materials, such as CMP slurries and pads, deposition materials, process chemistries and gases, formulated cleans, etchants and other specialty materials; that enable our customers’ technical roadmaps, improve device performance, lower their total cost of ownership and enhance their yields.
Microcontamination Control (MC): MC offers advanced filtration solutions that improve customers’ yield, device reliability and cost; by filtering and purifying critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.
Advanced Materials Handling (AMH): AMH develops solutions that improve customers’ yields by protecting critical materials during manufacturing, transportation, and storage; including products that monitor, protect, transport and deliver critical liquid chemistries, wafers, and other substrates for a broad set of applications in the semiconductor, life sciences and other high-technology industries.
Third-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the third quarter on Thursday, November 2, 2023, at 9:00 a.m. Eastern Time. Participants should dial 800-445-7795 or +1 785-424-1699, referencing confirmation ID: ENTGQ323. Participants are asked to dial in 10 minutes prior to the start of the call. For the live webcast and replay of the call, please Click Here.
Management’s slide presentation concerning the results for the third quarter will be posted on the Investor Relations section of www.entegris.com in the morning before the call.
Entegris, Inc. - page 2 of 16
About Entegris
Entegris is a leading supplier of advanced materials and process solutions for the semiconductor and other high-tech industries. Entegris has approximately 9,000 employees throughout its global operations and is ISO 9001 certified. It 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). Proforma net sales, 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.
Cautionary Note on Forward-Looking Statements
This news release contains “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements may include statements about supply chain matters; inflationary pressures; future period guidance or projections; the Company’s performance relative to its markets, including the drivers of such performance; market and technology trends, including the duration and drivers of any growth trends; the development of new products and the success of their introductions; the focus of the Company’s engineering, research and development projects; the Company’s ability to execute on our business strategies, including with respect to the Company’s expansion of its manufacturing presence in Taiwan and in Colorado Springs; 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 and divestitures the Company has made and commercial partnerships the Company has established, including the acquisition of CMC Materials, Inc. (now known as CMC Materials LLC) (“CMC Materials”); trends relating to the fluctuation of currency exchange rates; future capital and other expenditures, including estimates thereof; the Company’s expected tax rate; the impact, financial or otherwise, of any organizational changes; the impact of accounting pronouncements; quantitative and qualitative disclosures about market risk; and other matters. These forward-looking statements are based on current management expectations and assumptions only as of the date of this Quarterly Report, are not guarantees of future performance and involve substantial risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. These risks and uncertainties include, but are not limited to, 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 level of, and obligations associated with, the Company’s indebtedness, including the debts incurred in connection with the acquisition of CMC Materials; risks related to the acquisition and integration of CMC Materials, including unanticipated difficulties or expenditures relating thereto, the ability to achieve the anticipated synergies and value-creation contemplated by the acquisition of CMC Materials and the diversion of management time on transaction-related matters; raw material shortages, supply and labor constraints, price increases, inflationary pressures and rising interest rates; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; 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; substantial
Entegris, Inc. - page 3 of 16
competition; the Company’s concentrated customer base; the Company’s ability to identify, complete and integrate acquisitions, joint ventures, divestitures or other similar transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; the impact of regional and global instabilities, hostilities and geopolitical uncertainty, including, but not limited to, the ongoing conflicts between Ukraine and Russia and between Israel and Hamas, as well as the global responses thereto; the increasing complexity of certain manufacturing processes; changes in government regulations of the countries in which the Company operates, including the imposition of tariffs, export controls and other trade laws and restrictions and changes to national security and international trade policy, especially as they relate to China; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including under the heading “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on February 23, 2023, and in the Company’s other SEC filings. Except as required under the federal securities laws and the rules and regulations of the SEC, the Company undertakes no obligation to update publicly any forward-looking statements or information contained herein, which speak as of their respective dates.
Entegris, Inc. - page 4 of 16
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||||||
| September 30, 2023 | October 1, 2022 | July 1, 2023 | ||||||||||||
| Net sales | $888,239 | $993,828 | $901,000 | |||||||||||
| Cost of sales | 521,165 | 622,157 | 516,834 | |||||||||||
| Gross profit | 367,074 | 371,671 | 384,166 | |||||||||||
| Selling, general and administrative expenses | 116,051 | 226,446 | 145,596 | |||||||||||
| Engineering, research and development expenses | 66,810 | 64,990 | 71,030 | |||||||||||
| Amortization of intangible assets | 51,239 | 65,346 | 54,680 | |||||||||||
| Goodwill impairment | 15,913 | — | — | |||||||||||
| Gain on termination of alliance agreement | — | — | (154,754) | |||||||||||
| Operating income | 117,061 | 14,889 | 267,614 | |||||||||||
| Interest expense, net | 75,594 | 82,755 | 78,605 | |||||||||||
| Other expense, net | 10,243 | 12,852 | 7,724 | |||||||||||
| Income (loss) before income tax benefit | 31,224 | (80,718) | 181,285 | |||||||||||
| Income tax benefit | (2,127) | (7,015) | (16,491) | |||||||||||
| Equity in net loss of affiliates | 139 | — | 130 | |||||||||||
| Net income (loss) | $33,212 | ($73,703) | $197,646 | |||||||||||
| Basic earnings (loss) per common share: | $0.22 | ($0.50) | $1.32 | |||||||||||
| Diluted earnings (loss) per common share: | $0.22 | ($0.50) | $1.31 | |||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 150,127 | 148,570 | 149,825 | |||||||||||
| Diluted | 151,229 | 148,570 | 150,837 | |||||||||||
Entegris, Inc. - page 5 of 16
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Nine months ended | |||||||||||
| September 30, 2023 | October 1, 2022 | ||||||||||
| Net sales | $2,711,635 | $2,335,963 | |||||||||
| Cost of sales | 1,558,710 | 1,344,075 | |||||||||
| Gross profit | 1,152,925 | 991,888 | |||||||||
| Selling, general and administrative expenses | 431,514 | 404,239 | |||||||||
| Engineering, research and development expenses | 209,746 | 160,953 | |||||||||
| Amortization of intangible assets | 163,493 | 90,491 | |||||||||
| Goodwill impairment | 104,785 | — | |||||||||
| Gain on termination of alliance agreement | (154,754) | — | |||||||||
| Operating income | 398,141 | 336,205 | |||||||||
| Interest expense, net | 239,020 | 126,962 | |||||||||
| Other expense, net | 13,309 | 27,373 | |||||||||
| Income before income tax expense | 145,812 | 181,870 | |||||||||
| Income tax expense | 2,851 | 30,377 | |||||||||
| Equity in net loss of affiliates | 269 | — | |||||||||
| Net income | $142,692 | $151,493 | |||||||||
| Basic earnings per common share: | $0.95 | $1.08 | |||||||||
| Diluted earnings per common share: | $0.95 | $1.08 | |||||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 149,793 | 140,045 | |||||||||
| Diluted | 150,816 | 140,892 | |||||||||
Entegris, Inc. - page 6 of 16
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| September 30, 2023 | December 31, 2022 | ||||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash, cash equivalents and restricted cash | $594,020 | $563,439 | |||||||||||||||
| Trade accounts and notes receivable, net | 463,083 | 535,485 | |||||||||||||||
| Inventories, net | 662,169 | 812,815 | |||||||||||||||
| Deferred tax charges and refundable income taxes | 67,848 | 47,618 | |||||||||||||||
| Assets held-for-sale | 1,045,217 | 246,531 | |||||||||||||||
| Other current assets | 111,223 | 129,297 | |||||||||||||||
| Total current assets | 2,943,560 | 2,335,185 | |||||||||||||||
| Property, plant and equipment, net | 1,406,357 | 1,393,337 | |||||||||||||||
| Other assets: | |||||||||||||||||
| Right-of-use assets | 83,548 | 94,940 | |||||||||||||||
| Goodwill | 3,954,036 | 4,408,331 | |||||||||||||||
| Intangible assets, net | 1,368,363 | 1,841,955 | |||||||||||||||
| Deferred tax assets and other noncurrent tax assets | 30,211 | 28,867 | |||||||||||||||
| Other | 38,541 | 36,242 | |||||||||||||||
| Total assets | $9,824,616 | $10,138,857 | |||||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||
| Current liabilities | |||||||||||||||||
| Short-term debt, including current portion of long-term debt | — | 151,965 | |||||||||||||||
| Accounts payable | 139,637 | 172,488 | |||||||||||||||
| Accrued liabilities | 340,737 | 328,784 | |||||||||||||||
| Liabilities held-for-sale | 139,270 | 10,637 | |||||||||||||||
| Income tax payable | 63,515 | 98,057 | |||||||||||||||
| Total current liabilities | 683,159 | 761,931 | |||||||||||||||
| Long-term debt, excluding current maturities | 5,425,496 | 5,632,928 | |||||||||||||||
| Long-term lease liability | 71,347 | 80,716 | |||||||||||||||
| Other liabilities | 276,325 | 445,282 | |||||||||||||||
| Shareholders’ equity | 3,368,289 | 3,218,000 | |||||||||||||||
| Total liabilities and equity | $9,824,616 | $10,138,857 | |||||||||||||||
Entegris, Inc. - page 7 of 16
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||
| September 30, 2023 | October 1, 2022 | September 30, 2023 | October 1, 2022 | |||||||||||
| Operating activities: | ||||||||||||||
| Net income | $33,212 | ($73,703) | $142,692 | $151,493 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation | 39,631 | 45,203 | 130,125 | 93,489 | ||||||||||
| Amortization | 51,239 | 65,346 | 163,493 | 90,491 | ||||||||||
| Share-based compensation expense | 10,280 | 38,077 | 52,416 | 57,544 | ||||||||||
| Loss on extinguishment of debt and modification | 3,593 | 2,235 | 10,862 | 2,235 | ||||||||||
| Impairment of Goodwill | 15,913 | — | 104,785 | — | ||||||||||
| Gain on termination of alliance agreement | — | — | (154,754) | — | ||||||||||
| Loss on sale of business and held for sale assets | — | — | 28,579 | — | ||||||||||
| Other | (10,243) | 52,533 | (27,533) | 61,220 | ||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||||
| Trade accounts and notes receivable | (18,236) | 22,931 | (295) | (34,378) | ||||||||||
| Inventories | 68,349 | (55,394) | 63,340 | (180,335) | ||||||||||
| Accounts payable and accrued liabilities | 27,940 | 56,162 | 4,345 | 83,307 | ||||||||||
| Income taxes payable, refundable income taxes and noncurrent taxes payable | (21,204) | (12,089) | (36,774) | (15,637) | ||||||||||
| Other | (451) | 4,231 | (2,369) | 10,801 | ||||||||||
| Net cash provided by operating activities | 200,023 | 145,532 | 478,912 | 320,230 | ||||||||||
| Investing activities: | ||||||||||||||
| Acquisition of property and equipment | (78,139) | (126,739) | (328,182) | (318,836) | ||||||||||
| Acquisition of business, net of cash acquired | — | (4,474,925) | — | (4,474,925) | ||||||||||
| Proceeds from sale of business | — | — | 134,286 | — | ||||||||||
| Proceeds from termination of alliance agreement | — | — | 169,251 | — | ||||||||||
| Other | 1,553 | 1 | 1,919 | 1,124 | ||||||||||
| Net cash used in investing activities | (76,586) | (4,601,663) | (22,726) | (4,792,637) | ||||||||||
| Financing activities: | ||||||||||||||
| Proceeds from revolving credit facility, short-term debt and long-term debt | 100,279 | 2,810,439 | 217,449 | 5,416,753 | ||||||||||
| Payments of revolving credit facility, short-term debt and long-term debt | (175,279) | (223,000) | (603,950) | (416,000) | ||||||||||
| Payments for debt issuance costs | — | (88,910) | (3,475) | (99,489) | ||||||||||
| Payments for dividends | (15,052) | (14,929) | (45,202) | (42,413) | ||||||||||
| Issuance of common stock | 866 | 1,787 | 37,633 | 10,764 | ||||||||||
| Taxes paid related to net share settlement of equity awards | (1,894) | (6,430) | (11,540) | (22,747) | ||||||||||
| Other | (345) | (272) | (923) | (859) | ||||||||||
| Net cash (used in) provided by financing activities | (91,425) | 2,478,685 | (410,008) | 4,846,009 | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (5,009) | (11,118) | (15,597) | (21,500) | ||||||||||
| Increase (Decrease) in cash, cash equivalents and restricted cash | 27,003 | (1,988,564) | 30,581 | 352,102 | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 567,017 | 2,743,231 | 563,439 | 402,565 | ||||||||||
| Cash, cash equivalents and restricted cash at end of period | $594,020 | $754,667 | $594,020 | $754,667 | ||||||||||
Entegris, Inc. - page 8 of 16
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||||||
| Net sales | September 30, 2023 | October 1, 2022 | July 1, 2023 | September 30, 2023 | October 1, 2022 | |||||||||||||||
| Materials Solutions | $435,538 | $518,046 | $440,634 | $1,324,502 | $922,196 | |||||||||||||||
| Microcontamination Control | 286,217 | 280,550 | 283,614 | 839,128 | 821,320 | |||||||||||||||
| Advanced Materials Handling | 180,248 | 210,405 | 190,356 | 589,457 | 632,602 | |||||||||||||||
| Inter-segment elimination | (13,764) | (15,173) | (13,604) | (41,452) | (40,155) | |||||||||||||||
| Total net sales | $888,239 | $993,828 | $901,000 | $2,711,635 | $2,335,963 | |||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||
| Segment profit | September 30, 2023 | October 1, 2022 | July 1, 2023 | September 30, 2023 | October 1, 2022 | |||||||||||||||
| Materials Solutions | $56,955 | $53,131 | $215,738 | $243,171 | $147,700 | |||||||||||||||
| Microcontamination Control | 101,132 | 105,335 | 100,661 | 297,790 | 304,062 | |||||||||||||||
| Advanced Materials Handling | 31,642 | 42,077 | 35,830 | 115,637 | 135,693 | |||||||||||||||
| Total segment profit | 189,729 | 200,543 | 352,229 | 656,598 | 587,455 | |||||||||||||||
| Amortization of intangibles | 51,239 | 65,346 | 54,680 | 163,493 | 90,491 | |||||||||||||||
| Unallocated expenses | 21,429 | 120,308 | 29,935 | 94,964 | 160,759 | |||||||||||||||
| Total operating income | $117,061 | $14,889 | $267,614 | $398,141 | $336,205 | |||||||||||||||
Entegris, Inc. - page 9 of 16
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, 2023 | October 1, 2022 | July 1, 2023 | September 30, 2023 | October 1, 2022 | ||||||||||||||||
| Net Sales | $888,239 | $993,828 | $901,000 | $2,711,635 | $2,335,963 | |||||||||||||||
| Gross profit-GAAP | $367,074 | $371,671 | $384,166 | $1,152,925 | $991,888 | |||||||||||||||
| Adjustments to gross profit: | ||||||||||||||||||||
Restructuring costs 1 | 789 | — | — | 8,166 | — | |||||||||||||||
Charge for fair value mark-up of acquired inventory sold 2 | — | 61,932 | — | — | 61,932 | |||||||||||||||
| Adjusted gross profit | $367,863 | $433,603 | $384,166 | $1,161,091 | $1,053,820 | |||||||||||||||
| Gross margin - as a % of net sales | 41.3 | % | 37.4 | % | 42.6 | % | 42.5 | % | 42.5 | % | ||||||||||
| Adjusted gross margin - as a % of net sales | 41.4 | % | 43.6 | % | 42.6 | % | 42.8 | % | 45.1 | % | ||||||||||
1 Restructuring charges resulting from cost saving initiatives.
2 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.
Entegris, Inc. - page 10 of 16
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Segment Profit to Adjusted Operating Income
(In thousands)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||||||
| Adjusted segment profit | September 30, 2023 | October 1, 2022 | July 1, 2023 | September 30, 2023 | October 1, 2022 | |||||||||||||||
| MS segment profit | $56,955 | $53,131 | $215,738 | $243,171 | $147,700 | |||||||||||||||
Restructuring costs 1 | 519 | — | — | 7,627 | — | |||||||||||||||
Loss from the sale of QED and held for sales assets of EC 2 | — | — | 14,936 | 28,578 | — | |||||||||||||||
Goodwill impairment 3 | 15,913 | — | — | 104,785 | — | |||||||||||||||
Gain on termination of alliance agreement4 | — | — | (154,754) | (154,754) | — | |||||||||||||||
Charge for fair value write-up of acquired inventory sold 5 | — | 61,932 | — | — | 61,932 | |||||||||||||||
| MS adjusted segment profit | $73,387 | $115,063 | $75,920 | $229,407 | $209,632 | |||||||||||||||
| MC segment profit | $101,132 | $105,335 | $100,661 | $297,790 | $304,062 | |||||||||||||||
Restructuring costs 1 | 215 | — | — | 3,010 | — | |||||||||||||||
| MC adjusted segment profit | $101,347 | $105,335 | $100,661 | $300,800 | $304,062 | |||||||||||||||
| AMH segment profit | $31,642 | $42,077 | $35,830 | $115,637 | $135,693 | |||||||||||||||
Restructuring costs 1 | 467 | — | — | 1,721 | — | |||||||||||||||
| AMH adjusted segment profit | $32,109 | $42,077 | $35,830 | $117,358 | $135,693 | |||||||||||||||
| Unallocated general and administrative expenses | $21,429 | $120,308 | $29,935 | $94,964 | $160,759 | |||||||||||||||
| Less: unallocated deal and integration costs | (10,301) | (111,040) | (18,441) | (48,717) | (129,869) | |||||||||||||||
Less: unallocated restructuring costs 1 | — | — | — | (86) | — | |||||||||||||||
| Adjusted unallocated general and administrative expenses | $11,128 | $9,268 | $11,494 | $46,161 | $30,890 | |||||||||||||||
| Total adjusted segment profit | $206,843 | $262,475 | $212,411 | $647,565 | $649,387 | |||||||||||||||
| Less: adjusted unallocated general and administrative expenses | 11,128 | 9,268 | 11,494 | 46,161 | 30,890 | |||||||||||||||
| Total adjusted operating income | $195,715 | $253,207 | $200,917 | $601,404 | $618,497 | |||||||||||||||
1 Restructuring charges resulting from cost saving initiatives.
2 Loss from the sale of QED and held for sales assets of EC.
3 Non-cash impairment charges associated with goodwill.
4 Gain on termination of alliance agreement with MacDermid Enthone.
5 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.
Entegris, Inc. - page 11 of 16
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 30, 2023 | October 1, 2022 | July 1, 2023 | September 30, 2023 | October 1, 2022 | ||||||||||||||||
| Net sales | $888,239 | $993,828 | $901,000 | $2,711,635 | $2,335,963 | |||||||||||||||
| Net income (loss) | $33,212 | ($73,703) | $197,646 | $142,692 | $151,493 | |||||||||||||||
| Net income (loss) - as a % of net sales | 3.7 | % | (7.4 | %) | 21.9 | % | 5.3 | % | 6.5 | % | ||||||||||
| Adjustments to net income (loss): | ||||||||||||||||||||
| Equity in net loss of affiliates | 139 | — | 130 | 269 | — | |||||||||||||||
| Income tax (benefit) expense | (2,127) | (7,015) | (16,491) | 2,851 | 30,377 | |||||||||||||||
| Interest expense, net | 75,594 | 82,755 | 78,605 | 239,020 | 126,962 | |||||||||||||||
| Other expense, net | 10,243 | 12,852 | 7,724 | 13,309 | 27,373 | |||||||||||||||
| GAAP - Operating income | 117,061 | 14,889 | 267,614 | 398,141 | 336,205 | |||||||||||||||
| Operating margin - as a % of net sales | 13.2 | % | 1.5 | % | 29.7 | % | 14.7 | % | 14.4 | % | ||||||||||
Goodwill impairment 1 | 15,913 | — | — | 104,785 | — | |||||||||||||||
Deal and transaction costs 2 | — | 31,867 | — | 3,001 | 39,285 | |||||||||||||||
| Integration costs: | ||||||||||||||||||||
Professional fees 3 | 6,756 | 11,377 | 13,324 | 32,068 | 21,698 | |||||||||||||||
Severance costs 4 | (454) | 3,996 | 965 | 1,873 | 3,996 | |||||||||||||||
Retention costs 5 | 45 | 1,530 | 362 | 1,687 | 1,530 | |||||||||||||||
Other costs 6 | 3,953 | 3,859 | 3,789 | 10,087 | 4,949 | |||||||||||||||
| Contractual and non-cash integration costs: | ||||||||||||||||||||
CMC Retention 7 | — | 14,477 | — | — | 14,477 | |||||||||||||||
Stock-based compensation alignment 8 | — | 21,584 | — | — | 21,584 | |||||||||||||||
Change in control costs 9 | — | 22,350 | — | — | 22,350 | |||||||||||||||
Restructuring costs 10 | 1,202 | — | — | 12,444 | — | |||||||||||||||
Loss on sale of business and held for sale assets 11 | — | — | 14,937 | 28,579 | — | |||||||||||||||
Charge for fair value write-up of acquired inventory sold 12 | — | 61,932 | — | — | 61,932 | |||||||||||||||
Gain on termination of alliance agreement 13 | — | — | (154,754) | (154,754) | — | |||||||||||||||
Amortization of intangible assets 14 | 51,239 | 65,346 | 54,680 | 163,493 | 90,491 | |||||||||||||||
| Adjusted operating income | 195,715 | 253,207 | 200,917 | 601,404 | 618,497 | |||||||||||||||
| Adjusted operating margin - as a % of net sales | 22.0 | % | 25.5 | % | 22.3 | % | 22.2 | % | 26.5 | % | ||||||||||
| Depreciation | 39,631 | 45,203 | 43,719 | 130,125 | 93,489 | |||||||||||||||
| Adjusted EBITDA | $235,346 | $298,410 | $244,636 | $731,529 | $711,986 | |||||||||||||||
| Adjusted EBITDA - as a % of net sales | 26.5 | % | 30.0 | % | 27.2 | % | 27.0 | % | 30.5 | % | ||||||||||
1 Non-cash impairment charges associated with goodwill.
2 Deal and transaction costs associated with CMC Materials acquisition and completed and announced divestitures.
3 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations.
4 Represent severance charges related to the integration of the CMC Materials acquisition
5 Represents retention charges related directly to the CMC Materials acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses.
6 Represents other employee related costs and other costs incurred relating to the CMC Materials acquisition and the completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations.
7Represents non-recurring costs associated with the CMC Materials retention program that was agreed upon and set forth in the definitive acquisition agreement.
8 Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards.
Entegris, Inc. - page 12 of 16
9 Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition.
10 Restructuring charges resulting from cost saving initiatives.
11 Loss from the sale of QED and held-for-sale assets of EC.
12 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.
13 Gain on termination of the alliance agreement with MacDermid Enthone.
14 Non-cash amortization expense associated with intangibles acquired in acquisitions.
Entegris, Inc. - page 13 of 16
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 30, 2023 | October 1, 2022 | July 1, 2023 | September 30, 2023 | October 1, 2022 | ||||||||||||||||
| GAAP net income (loss) | $33,212 | ($73,703) | $197,646 | $142,692 | $151,493 | |||||||||||||||
| Adjustments to net income (loss): | ||||||||||||||||||||
Goodwill impairment 1 | 15,913 | — | — | 104,785 | — | |||||||||||||||
Deal and transaction costs 2 | — | 31,867 | — | 3,001 | 39,285 | |||||||||||||||
| Integration costs: | ||||||||||||||||||||
Professional fees 3 | 6,756 | 11,377 | 13,324 | 32,068 | 21,698 | |||||||||||||||
Severance costs 4 | (454) | 3,996 | 965 | 1,873 | 3,996 | |||||||||||||||
Retention costs 5 | 45 | 1,530 | 362 | 1,687 | 1,530 | |||||||||||||||
Other costs 6 | 3,953 | 3,859 | 3,789 | 10,087 | 4,949 | |||||||||||||||
| Contractual and non-cash integration costs: | — | — | — | — | ||||||||||||||||
CMC Retention 7 | — | 14,477 | — | — | 14,477 | |||||||||||||||
Stock-based compensation alignment 8 | — | 21,584 | — | — | 21,584 | |||||||||||||||
Change in control costs 9 | — | 22,350 | — | — | 22,350 | |||||||||||||||
Restructuring costs 10 | 1,202 | — | — | 12,444 | — | |||||||||||||||
Loss on extinguishment of debt and modification 11 | 4,532 | 2,235 | 4,481 | 12,893 | 2,235 | |||||||||||||||
Loss on sale of business and held for sale assets 12 | — | — | 14,937 | 28,579 | — | |||||||||||||||
Gain on termination of alliance agreement 13 | — | — | (154,754) | (154,754) | — | |||||||||||||||
Infineum termination fee, net 14 | — | — | — | (10,877) | — | |||||||||||||||
Charge for fair value write-up of acquired inventory sold 15 | — | 61,932 | — | — | 61,932 | |||||||||||||||
Interest expense, net 16 | — | 2,397 | — | — | 29,822 | |||||||||||||||
Amortization of intangible assets 17 | 51,239 | 65,346 | 54,680 | 163,493 | 90,491 | |||||||||||||||
Tax effect of adjustments to net income and discrete tax items18 | (12,810) | (41,477) | (35,825) | (46,996) | (56,123) | |||||||||||||||
| Non-GAAP net income | $103,588 | $127,770 | $99,605 | $300,975 | $409,719 | |||||||||||||||
| Diluted earnings (loss) per common share | $0.22 | ($0.50) | $1.31 | $0.95 | $1.08 | |||||||||||||||
| Effect of adjustments to net income | $0.46 | $1.35 | ($0.65) | $1.05 | $1.83 | |||||||||||||||
| Diluted non-GAAP earnings per common share | $0.68 | $0.85 | $0.66 | $2.00 | $2.91 | |||||||||||||||
| Diluted weighted averages shares outstanding | 151,229 | 148,570 | 150,837 | 150,816 | 140,892 | |||||||||||||||
| Effect of adjustment to diluted weighted average shares outstanding | — | 1,099 | — | — | — | |||||||||||||||
| Diluted non-GAAP weighted average shares outstanding | 151,229 | 149,669 | 150,837 | 150,816 | 140,892 | |||||||||||||||
1 Non-cash impairment charges associated with goodwill.
2 Deal and transaction costs associated with the CMC Materials acquisition and completed and announced divestitures
3 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations. These fees arise outside of the ordinary course of our continuing operations.
4 Represent severance charges related to the integration of CMC Materials.
5 Represents retention charges related directly to the CMC Materials acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses.
6 Represents other employee-related costs and other costs incurred relating to the CMC Materials acquisition and completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations.
7Represents non-recurring costs associated with the CMC retention program that was agreed upon and set forth in the definitive acquisition agreement.
Entegris, Inc. - page 14 of 16
8Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards.
9 Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition.
10 Restructuring charges resulting from cost saving initiatives.
11 Non-recurring loss on extinguishment of debt and modification of our Credit Amendment.
12 Loss from the sale of QED and held for sales assets of EC.
13 Gain on termination of the alliance agreement with MacDermid Enthone.
14 Non-recurring gain from the termination fee with Infineum.
15Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.
16 Non-recurring interest costs related to the financing of the CMC Materials acquisition.
17 Non-cash amortization expense associated with intangibles acquired in acquisitions.
18 The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate for each respective year.
Entegris, Inc. - page 15 of 16
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Outlook to Non-GAAP Outlook
(In millions, except per share data)
(Unaudited)
| Fourth-Quarter Outlook | |||||
| Reconciliation GAAP Operating Margin to non-GAAP Operating Margin and Adjusted EBITDA Margin | December 31, 2023 | ||||
| Net sales | $770 - $790 | ||||
| GAAP - Operating income | $102 - $114 | ||||
| Operating margin - as a % of net sales | 13% - 14% | ||||
| Deal, transaction and integration costs | 5 | ||||
| Amortization of intangible assets | 51 | ||||
| Adjusted operating income | $158 - $170 | ||||
| Adjusted operating margin - as a % of net sales | 21% - 22% | ||||
| Depreciation | 42 | ||||
| Adjusted EBITDA | $200 - $212 | ||||
| Adjusted EBITDA - as a % of net sales | 26% - 27% | ||||
| Fourth-Quarter Outlook | |||||
| Reconciliation GAAP net income to non-GAAP net income | December 31, 2023 | ||||
| GAAP net income | $37 - $45 | ||||
| Adjustments to net income: | |||||
| Deal, transaction and integration costs | 5 | ||||
| Amortization of intangible assets | 51 | ||||
| Income tax effect | (10) | ||||
| Non-GAAP net income | $83 - $91 | ||||
| Fourth-Quarter Outlook | |||||
| Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share | December 31, 2023 | ||||
| Diluted earnings per common share | $0.25 - $0.30 | ||||
| Adjustments to diluted earnings per common share: | |||||
| Deal, transaction and integration costs | 0.03 | ||||
| Amortization of intangible assets | 0.34 | ||||
| Income tax effect | (0.07) | ||||
| Diluted non-GAAP earnings per common share | $0.55 - $0.60 | ||||
### END ###
Entegris, Inc. - page 16 of 16
Earnings Summary November 2, 2023 Third Quarter 2023 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 may include statements about supply chain matters; inflationary pressures; future period guidance or projections; the Company’s performance relative to its markets, including the drivers of such performance; market and technology trends, including the duration and drivers of any growth trends; the development of new products and the success of their introductions; the focus of the Company’s engineering, research and development projects; the Company’s ability to execute on our business strategies, including with respect to the Company’s expansion of its manufacturing presence in Taiwan and in Colorado Springs; 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 and divestitures the Company has made and commercial partnerships the Company has established, including the acquisition of CMC Materials, Inc. (now known as CMC Materials LLC) (“CMC Materials”); trends relating to the fluctuation of currency exchange rates; future capital and other expenditures, including estimates thereof; the Company’s expected tax rate; the impact, financial or otherwise, of any organizational changes; the impact of accounting pronouncements; quantitative and qualitative disclosures about market risk; and other matters. These forward-looking statements are based on current management expectations and assumptions only as of the date of this Quarterly Report, are not guarantees of future performance and involve substantial risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. These risks and uncertainties include, but are not limited to, 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 level of, and obligations associated with, the Company’s indebtedness, including the debts incurred in connection with the acquisition of CMC Materials; risks related to the acquisition and integration of CMC Materials, including unanticipated difficulties or expenditures relating thereto, the ability to achieve the anticipated synergies and value-creation contemplated by the acquisition of CMC Materials and the diversion of management time on transaction-related matters; raw material shortages, supply and labor constraints, price increases, inflationary pressures and rising interest rates; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; 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; substantial competition; the Company’s concentrated customer base; the Company’s ability to identify, complete and integrate acquisitions, joint ventures, divestitures or other similar transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; the impact of regional and global instabilities, hostilities and geopolitical uncertainty, including, but not limited to, the ongoing conflicts between Ukraine and Russia and between Israel and Hamas, as well as the global responses thereto; the increasing complexity of certain manufacturing processes; changes in government regulations of the countries in which the Company operates, including the imposition of tariffs, export controls and other trade laws and restrictions and changes to national security and international trade policy, especially as they relate to China; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including under the heading “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on February 23, 2023, and in the Company’s other SEC filings. Except as required under the federal securities laws and the rules and regulations of the SEC, the Company undertakes no obligation to update publicly any forward-looking statements or information contained herein, 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,” "Free Cash Flow" and other measures 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 measure can be found attached to this presentation. 2 Safe Harbor
3 $ in millions, except per share data 3Q23 3Q22 2Q23 3Q23 over 3Q22 3Q23 over 2Q23 Net Revenue $888.2 $993.8 $901.0 (10.6%) (1.4%) Gross Margin 41.3% 37.4% 42.6% Operating Expenses $250.0 $356.8 $116.6 (29.9%) 114.4% Operating Income $117.1 $14.9 $267.6 685.9% (56.2%) Operating Margin 13.2% 1.5% 29.7% Tax Rate (6.8%) 8.7% (9.1%) Net Income (Loss) $33.2 ($73.7) $197.6 (145.0%) (83.2%) Diluted Earnings (Loss) Per Common Share $0.22 ($0.50) $1.31 (144.0%) (83.2%) Summary – Consolidated Statement of Operations (GAAP)
4 $ in millions, except per share data 3Q23 3Q22 2Q23 3Q23 over 3Q22 3Q23 over 2Q23 Net Revenue $888.2 $993.8 $901.0 (10.6%) (1.4%) Adjusted Gross Margin – as a % of Net Sales 41.4% 43.6% 42.6% Non-GAAP Operating Expenses2 $172.1 $180.4 $183.2 (4.6%) (6.1%) Adjusted Operating Income $195.7 $253.2 $200.9 (22.7%) (2.6%) Adjusted Operating Margin 22.0% 25.5% 22.3% Non-GAAP Tax Rate3 9.3% 21.2% 16.3% Non-GAAP Net Income4 $103.6 $127.8 $99.6 (18.9%) 4.0% Diluted Non-GAAP Earnings Per Common Share $0.68 $0.85 $0.66 (20.0%) 3.0% Summary – Consolidated Statement of Operations (Non-GAAP)1 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. 2. Excludes amortization expense, deal and transaction costs, integration costs, goodwill impairment, restructuring costs and loss on sale of business and held for sale assets. 3. Reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 4. Excludes the items noted in footnotes 2 and 3, interest expense, net, Infineum termination fee, loss on extinguishment of debt and modification, and the tax effect of non-GAAP adjustments.
5 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. 2. 2022 is reported on a proforma basis, see proforma to proforma non-GAAP reconciliation tables in the appendix of this presentation. Sales decrease (SEQ) was driven primarily by lower volumes across certain product lines, particularly in memory applications. Offset by strong growth in SiC slurries and pads, advanced deposition materials and specialty coatings. –––––– Segment profit margin (adjusted) decline (SEQ) was driven primarily by the temporary impact of the termination of our distribution agreement with Element Solutions. $ in millions 3Q23 3Q22 2Q23 3Q23 over 3Q22 3Q23 over 2Q23 Net Revenue1 $435.5 $518.1 $440.7 (15.9%) (1.2%) Segment Profit1 $57.0 $115.0 $215.7 (50.4%) (73.6%) Segment Profit Margin 13.1% 22.2% 49.0% Adj. Segment Profit1 $73.4 $115.0 $75.8 (36.2%) (3.2%) Adj. Segment Profit Margin1 16.8% 22.2% 17.2% Materials Solutions (MS)2 3Q23 Highlights
6 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. Microcontamination Control (MC) $ in millions 3Q23 3Q22 2Q23 3Q23 over 3Q22 3Q23 over 2Q23 Net Revenue $286.2 $280.6 $283.6 2.0% 0.9% Segment Profit $101.1 $105.3 $100.7 (4.0%) 0.5% Segment Profit Margin 35.3% 37.5% 35.5% Adj. Segment Profit1 $101.3 $105.3 $100.7 (3.8%) 0.7% Adj. Segment Profit Margin1 35.4% 37.5% 35.5% Sales increase (SEQ) was primarily driven by wet etch and clean liquid filtration and gas purification solutions. 3Q23 Highlights
7 1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. Advanced Materials Handling (AMH) $ in millions 3Q23 3Q22 2Q23 3Q23 over 3Q22 3Q23 over 2Q23 Net Revenue $180.2 $210.4 $190.4 (14.3%) (5.3%) Segment Profit $31.6 $42.1 $35.8 (24.8%) (11.7%) Segment Profit Margin 17.6% 20.0% 18.8% Adj. Segment Profit1 $32.1 $42.1 $35.8 (23.7%) (10.3%) Adj. Segment Profit Margin1 17.8% 20.0% 18.8% Sales decline (SEQ) was driven primarily by products more tied to WFE, like FOUPs. This was partially offset by growth in sensing and control solutions, which is more tied to FAB construction. –––––– Segment profit margin (adjusted) decline (SEQ) was primarily driven by lower volumes. 3Q23 Highlights
8 $ in millions 3Q23 3Q22 2Q23 $ Amount % Total $ Amount % Total $ Amount % Total Cash, Cash Equivalents & Restricted Cash $594.0 6.0% $754.7 7.4% $567.0 5.7% Accounts Receivable, net $463.1 4.7% $519.8 5.1% $436.0 4.4% Inventories $662.2 6.7% $823.6 8.1% $740.4 7.5% Net PP&E $1,406.4 14.3% $1,383.7 13.7% $1,364.8 13.8% Total Assets $9,824.6 $10,133.4 $9,913.0 Current Liabilities $683.2 7.0% $841.0 8.3% $646.3 6.5% Long-term Debt, Excluding Current Maturities $5,425.5 55.2% $5,627.7 55.5% $5,492.0 55.4% Total Liabilities $6,456.3 65.7% $7,017.1 69.2% $6,560.8 66.2% Total Shareholders’ Equity $3,368.3 34.3% $3,116.3 30.8% $3,352.2 33.8% Summary – Balance Sheet Items
9 $ in millions 3Q23 3Q22 2Q23 Beginning Cash Balance $567.0 $2,743.2 $709.0 Cash provided by operating activities 200.0 145.5 127.0 Capital expenditures (78.1) (126.7) (116.1) Proceeds from revolving credit facilities and debt 100.3 2,810.4 — Payments on revolving credit facilities and debt (175.3) (223.0) (311.5) Acquisition of business, net of cash — (4,474.9) — Proceeds from sale of business — — 0.8 Payments for dividends (15.1) (14.9) (15.0) Proceeds from termination of alliance agreement — — 169.3 Other investing activities 1.6 — 0.3 Other financing activities (1.4) (93.8) 14.3 Effect of exchange rates (5.0) (11.1) (11.1) Ending Cash Balance $594.0 $754.7 $567.0 Free Cash Flow1 $121.9 $18.8 $11.0 Adjusted EBITDA2 $235.3 $298.4 $244.6 Adjusted EBITDA – as a % of net sales2 26.5% 30.0% 27.2% Cash Flows 1. Equals cash from operations less capital expenditures. 2. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation.
10 GAAP $ in millions, except per share data 4Q23 Guidance 3Q23 Actual 2Q23 Actual Net Revenue $770 - $790 $888.2 $901.0 Operating Expenses $221 - $226 $250.0 $116.6 Net Income $37 - $45 $33.2 $197.6 Diluted Earnings per Common Share $0.25 - $0.30 $0.22 $1.31 Operating Margin 13% - 14% 13.2% 29.7% Non-GAAP $ in millions, except per share data 4Q23 Guidance 3Q23 Actual 2Q23 Actual Net Revenue $770 - $790 $888.2 $901.0 Non-GAAP Operating Expenses1 $165 - $170 $172.1 $183.2 Non-GAAP Net Income1 $83 - $91 $103.6 $99.6 Diluted non-GAAP Earnings per Common Share1 $0.55 - $0.60 $0.68 $0.66 Adjusted EBITDA Margin 26% - 27% 26.5% 27.2% 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. 11
Appendix 12
13 $ in millions, except per share data 1Q22 2Q22 3Q22 4Q22 FY2022 1Q23 2Q23 3Q23 Net Revenue $969.1 $1,011.9 $993.8 $946.1 $3,920.9 $922.4 $901.0 $888.2 Gross Margin 45.2% 42.4% 37.4% 42.8% 41.9% 43.5% 42.6% 41.3% Operating Expenses $218.2 $227.0 $356.7 $260.7 $1,062.6 $388.2 $116.6 $250.0 Operating Income $219.9 $201.9 $14.9 $143.8 $580.5 $13.5 $267.7 $117.1 Operating Margin 22.7% 19.9% 1.5% 15.2% 14.8% 1.5% 29.7% 13.2% EBITDA $289.2 $271.3 $125.4 $239.1 $925.0 $117.9 $366.0 $207.9 Tax Rate 16.1% 24.8% 8.7% 11.9% 21.5% (32.2%) (9.1%) (6.8%) Net Income (Loss) $160.3 $140.1 ($73.7) $57.4 $284.1 ($88.2) $197.6 $33.2 Diluted Earnings (Loss) Per Common Share $1.06 $0.93 ($0.50) $0.38 $1.85 ($0.59) $1.31 $0.22 Summary - Consolidated Statement of Operations - Proforma1 (Includes CMC Materials results) 1.The above pro forma results include the addition of CMC Materials Inc.'s (now known as CMC Materials LLC) ("CMC Materials") financials recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported financials and are provided as a complement to, and should be read in conjunction with, the consolidated financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated. No other adjustments have been included.
14 $ in millions, except per share data 1Q22 2Q22 3Q22 4Q22 FY2022 1Q23 2Q23 3Q23 Net Revenue2 $958.2 $1,011.7 $993.8 $946.1 $3,909.8 $922.4 $901.0 $888.2 Adjusted Gross Margin – as a % of Net Sales3 44.5% 42.0% 43.6% 42.8% 43.2% 44.3% 42.6% 41.4% Non-GAAP Operating Expenses4 $177.4 $178.8 $180.4 $185.1 $721.7 $204.3 $183.2 $172.1 Adjusted Operating Income $248.8 $245.8 $253.2 $219.4 $967.2 $204.8 $200.9 $195.7 Adjusted Operating Margin 26.0% 24.3% 25.5% 23.2% 24.7% 22.2% 22.3% 22.0% Adjusted EBITDA $296.6 $294.0 $298.4 $261.3 $1,150.3 $251.5 $244.6 $235.3 Non-GAAP Tax Rate5 15.3% 22.9% 21.2% 12.3% 18.1% 16.9% 16.3% 9.3% Non-GAAP Net Income6 $137.6 $120.0 $127.6 $124.6 $509.8 $97.8 $99.6 $103.6 Diluted Non-GAAP Earnings Per Common Share $0.91 $0.80 $0.85 $0.83 $3.39 $0.65 $0.66 $0.68 Summary – Consolidated Statement of Operations (Non-GAAP) - Proforma 1 (Includes CMC Materials results) 1. See Proforma to non-GAAP Proforma reconciliation tables in the appendix of this presentation. 2. The adjustment relates to removal of net sales related to CMC’s wood treatment business. See Proforma reconciliation tables in the appendix. 3. 3Q22 excludes charges for fair value write-up of acquired inventory sold, wood treatment and incremental depreciation expense. 4. Excludes amortization and incremental depreciation expense, deal costs, integration costs, goodwill impairment, restructuring costs and loss on sale of business and held for sale assets. 5. Reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 6.Excludes the items noted in footnotes 2 and 3, interest expense, net, Infineum termination fee, loss on extinguishment of debt and modification, and the tax effect of non-GAAP adjustments.
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 15 $ in millions 1Q22 2Q22 3Q22 4Q22 FY2022 1Q23 2Q23 3Q23 Sales : MS $520.5 $530.7 $518.1 $458.0 $2,027.3 $448.3 $440.7 $435.5 MC 266.6 274.1 280.6 284.7 1,106.0 269.3 283.6 286.2 AMH 198.1 224.1 210.4 213.9 846.5 218.9 190.4 180.2 Inter-segment elimination (16.1) (17.0) (15.3) (10.5) (58.9) (14.1) (13.6) (13.8) Total Sales $969.1 $1,011.9 $993.8 $946.1 $3,920.9 $922.4 $901.1 $888.2 MS $141.1 $123.0 $53.1 $71.5 $388.7 ($29.5) $215.7 $57.0 Depreciation ³ (7.0) (7.0) — — (14.0) — — — FV Step-up ⁴ — — 61.9 — 61.9 — — — MS Segment Profit adjusted 134.1 116.0 115.0 71.5 436.6 (29.5) 215.7 57.0 MC 98.6 100.1 105.3 107.4 411.4 96.0 100.7 101.1 AMH 46.7 46.9 42.1 48.0 183.7 48.2 35.8 31.6 Total Segment Profit $279.4 $263.0 $262.4 $226.9 $1,031.7 $114.7 $352.2 $189.7 Segment Profit Margin: MS 25.8 % 21.9 % 22.2 % 15.6 % 21.5 % (6.6) % 49.0 % 13.1 % MC 37.0 % 36.5 % 37.5 % 37.7 % 37.2 % 35.6 % 35.5 % 35.3 % AMH 23.6 % 20.9 % 20.0 % 22.4 % 21.7 % 22.0 % 18.8 % 17.6 % Segment Profit Margin 28.8 % 26.0 % 26.4 % 24.0 % 26.3 % 12.4 % 39.1 % 21.4 % Segment Financials Proforma (Includes CMC Materials results) Unaudited¹ ² 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions (MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). The following prior year information has been recast to reflect this realignment. 2. The above pro forma results include the addition of CMC Materials, Inc.’s net sales and segment profit amounts recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported GAAP net sales and segment profit amounts related to businesses that were transferred to the above business segments after the effectiveness of the merger and are provided as a complement to, and should be read in conjunction with, the condensed financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated, see table below. 3. Represents the preliminary pro forma adjustment to recognize changes to straight-line depreciation expense resulting from the fair value adjustments to acquired property, plant, and equipment. The preliminary fair value of the property, plant and equipment may not represent the actual value of the property, plant and equipment when the Merger is completed resulting in a potential difference in straight-line depreciation expense, and that difference may be material. 4. Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation. Entegris will recognize the increased value of inventory in cost of sales as the inventory is sold, which for purposes of these pro forma presentation is assumed to occur within the first quarter of 2021 based on inventory turns and is non-recurring in nature.
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 16 $ in millions 1Q22 2Q22 3Q22 4Q22 FY2022 1Q23 2Q23 3Q23 Sales : MS 3 $509.6 $530.5 $518.1 $458.0 $2,016.2 $448.3 $440.7 $435.5 MC 266.6 274.1 280.6 284.7 1,106.0 269.3 283.6 286.2 AMH 198.1 224.1 210.4 213.9 846.5 218.9 190.3 180.2 Inter-segment elimination (16.1) (17.0) (15.3) (10.5) (58.9) (14.1) (13.6) (13.8) Total Sales $958.2 $1,011.7 $993.8 $946.1 $3,909.8 $922.4 $901.0 $888.2 Adjusted Segment Profit: MS $123.4 $116.3 $115.0 $71.2 $425.9 $80.1 $75.8 $73.4 MC 98.6 100.1 105.3 107.4 411.4 98.8 100.7 101.3 AMH 46.7 46.9 42.1 48.0 183.7 49.4 35.8 32.1 Total Adjusted Segment Profit $268.7 $263.3 $262.4 $226.6 $1,021.0 $228.3 $212.3 $206.8 Adjusted Segment Profit Margin: MS 24.2 % 21.9 % 22.2 % 15.5 % 21.1 % 17.9 % 17.2 % 16.8 % MC 37.0 % 36.5 % 37.5 % 37.7 % 37.2 % 36.7 % 35.5 % 35.4 % AMH 23.6 % 20.9 % 20.0 % 22.4 % 21.7 % 22.6 % 18.8 % 17.8 % Adjusted Segment Profit Margin 28.0 % 26.0 % 26.4 % 24.0 % 26.1 % 24.8 % 23.6 % 23.3 % Segment Financials Proforma Non-GAAP (Includes CMC Materials results) Unaudited¹ ² 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions (MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). The following prior year information has been recast to reflect this realignment 2. The above pro forma results include the addition of CMC Materials, Inc.’s net sales and segment profit amounts recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported GAAP net sales and segment profit amounts related to businesses that were transferred to the above business segments after the effectiveness of the merger and are provided as a complement to, and should be read in conjunction with, the condensed financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated, see table below. 3. The adjustment relates to removal of net sales related to CMC’s wood treatment business. See Proforma reconciliation tables in the appendix.
17 Reconciliation of GAAP Gross Profit to Adjusted Gross Profit Three months ended Nine months ended $ in millions September 30, 2023 October 1, 2022 July 1, 2023 September 30, 2023 October 1, 2022 Net sales $888.2 $993.8 $901.0 $2,711.6 $2,336.0 Gross profit-GAAP $367.1 $371.7 $384.2 $1,152.9 $991.9 Adjustments to gross profit: Charge for fair value mark-up of acquired inventory sold t* — 61.9 — — 61.9 Restructuring costs g * 0.8 — — 8.2 — Adjusted gross profit $367.9 $433.6 $384.2 $1,161.1 $1,053.8 Gross margin – as a % of net sales 41.3% 37.4% 42.6% 42.5% 42.5% Adjusted gross margin – as a % of net sales 41.4% 43.6% 42.6% 42.8% 45.1% *See footnotes section for reference
18 Reconciliation of GAAP Operating Expenses and Tax Rate to Non-GAAP Operating Expenses and Tax Rate Three months ended Nine months ended $ in millions September 30, 2023 October 1, 2022 July 1, 2023 September 30, 2023 October 1, 2022 GAAP operating expenses $250.0 $356.8 $116.6 $754.8 $655.7 Adjustments to operating expenses: Goodwill impairment a * 15.9 — — 104.8 — Deal and transaction costs b * — 31.9 — 3.0 39.3 Integration costs: — — Professional fees c * 6.8 11.4 13.3 32.1 21.7 Severance costs d * (0.5) 4.0 1.0 1.9 4.0 Retention costs e * — 1.5 0.4 1.7 1.5 Other costs f * 3.9 3.9 3.9 10.1 4.9 Contractual and non-cash integration costs - CMC retention costs : CMC Retention o* — 14.5 — — 14.5 Stock-based compensation alignment p* — 21.6 — — 21.6 Change in control costs q* — 22.4 — — 22.4 Restructuring costs g * 0.6 — — 4.2 — Loss from the sale of QED and held for sales assets of EC h * — — 14.9 28.6 — Amortization of intangible assets i * 51.2 65.3 54.7 163.5 90.5 Gain on termination of alliance agreement W * — — (154.8) (154.8) — Non-GAAP operating expenses $172.1 $180.4 $183.2 $559.7 $435.3 GAAP tax rate (6.8%) 8.7% (9.1%) 2.0% 16.7% Other 16.1% 12.5% 25.4% 12.2% 0.7% Non-GAAP tax rate 9.3% 21.2% 16.3% 14.2% 17.4% *See footnotes section for reference
19 $ in millions Three Months Ended Nine months ended September 30, 2023 October 1, 2022 July 1, 2023 September 30, 2023 October 1, 2022 Net sales $888.2 $993.8 $901.0 $2,711.6 $2,336.0 Net income (loss) 33.2 (73.7) 197.6 142.7 151.5 Net income (loss) – as a % of net sales 3.7% (7.4%) 21.9% 5.3% 6.5% Adjustments to net income (loss): Income tax (benefit) expense (2.1) (7.0) (16.5) 2.9 30.4 Interest expense, net 75.6 82.8 78.6 239.0 127.0 Other expense, net 10.2 12.9 7.9 13.3 27.4 Equity in net loss of affiliates 0.1 — 0.1 0.3 0.0 GAAP - Operating income $117.1 $14.9 $267.6 $398.1 $336.2 Operating margin - as a % of net sales 13.2% 1.5% 29.7% 14.7% 14.4% Charge for fair value write-up of acquired inventory sold t* — 61.9 — — 61.9 Goodwill impairment a * 15.9 — — 104.8 — Deal and transaction costs b * — 31.9 — 3.0 39.3 Integration costs: Professional fees c * 6.8 11.4 13.3 32.1 21.7 Severance costs d * (0.5) 4.0 1.0 1.9 4.0 Retention costs e * — 1.5 0.4 1.7 1.5 Other costs f * 4.0 3.9 3.8 10.1 4.9 Contractual and non-cash integration costs : CMC Retention o* — 14.5 — — 14.5 Stock-based compensation alignment p* — 21.6 — — 21.6 Change in control costs q* — 22.4 — — 22.4 Restructuring costs g * 1.2 — — 12.4 — Loss from the sale of QED and held for sales assets of EC h * — — 14.9 28.6 — Amortization of intangible assets i * 51.2 65.3 54.7 163.5 90.5 Gain on termination of alliance agreement W * — — (154.8) (154.8) — Adjusted operating income $195.7 $253.2 $200.9 $601.4 $618.5 Adjusted operating margin - as a % of net sales 22.0 % 25.5 % 22.3 % 22.2 % 26.5 % Depreciation 39.6 45.2 43.7 130.1 93.5 Adjusted EBITDA $235.3 $298.4 $244.6 $731.5 $712.0 Adjusted EBITDA – as a % of net sales 26.5 % 30.0 % 27.2 % 27.0 % 30.5 % Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA *See footnotes section for reference
20 $ in millions, except per share data Three months ended Nine months ended September 30, 2023 October 1, 2022 July 1, 2023 September 30, 2023 October 1, 2022 GAAP net income (loss) $33.2 ($73.7) $197.6 $142.7 $151.5 Adjustments to net income (loss): Charge for fair value write-up of inventory sold t* — 61.9 — — 61.9 Goodwill impairment a * 15.9 — — 104.8 — Deal and transaction costs b * — 31.9 — 3.0 39.3 Integration costs: Professional fees c * 6.8 11.4 13.3 32.1 21.7 Severance costs d * (0.5) 4.0 1.0 1.9 4.0 Retention costs e * — 1.5 0.4 1.7 1.5 Other costs f * 4.0 3.9 3.8 10.1 4.9 Contractual and non-cash integration costs : CMC Retention o* — 14.5 — — 14.5 Stock-based compensation alignment p* — 21.6 — — 21.6 Change in control costs q* — 22.4 — — 22.4 Restructuring costs g * 1.2 — — 12.4 — Loss from the sale of QED and held for sales assets of EC h * — — 14.9 28.6 — Amortization of intangible assets i * 51.2 65.3 54.7 163.5 90.5 Loss on extinguishment of debt and modification k * 4.5 2.2 4.5 12.9 2.2 Infineum termination fee, net l * — — — (10.9) — Interest expense, net m * — 2.4 — — 29.8 Tax effect of adjustments to net income (loss) and discrete itemsn * (12.8) (41.5) (35.8) (47.0) (56.1) Gain on sale of termination of alliance agreement w * — — (154.8) (154.8) — Non-GAAP net income $103.6 $127.8 $99.6 $301.0 $409.7 Diluted earnings (loss) per common share $0.22 ($0.50) $1.31 $0.95 $1.08 Effect of adjustments to net income $0.46 $1.35 ($0.65) $1.05 $1.83 Diluted non-GAAP earnings per common share $0.68 $0.85 $0.66 $2.00 $2.91 Weighted average diluted shares outstanding 151.2 148.6 150.8 150.8 140.9 Effect of adjustment to diluted weighted average shares outstanding — 1.1 — — — Diluted non-GAAP weighted average shares outstanding 151.2 149.7 150.8 150.8 140.9 Reconciliation of GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share *See footnotes section for reference
21 $ in millions Fourth-Quarter Outlook Reconciliation GAAP net income to non-GAAP net income: December 31, 2023 GAAP net income $37 - $45 Adjustments to net income: Deal, transaction and integration costs 5 Amortization of intangible assets 51 Income tax effect (10) Non-GAAP net income $83 - $91 Fourth-Quarter Outlook Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share: December 31, 2023 Diluted earnings per common share $0.25 - $0.30 Adjustments to diluted earnings per common share: Deal, transaction and integration costs 0.03 Amortization of intangible assets 0.34 Income tax effect (0.07) Diluted non-GAAP earnings per common share $0.55 - $0.60 $ in millions Fourth-Quarter Outlook Reconciliation GAAP operating expenses to non-GAAP operating expenses: December 31, 2023 GAAP operating expenses $221 - $226 Adjustments to net income: Deal, transaction and integration costs 5 Amortization of intangible assets 51 Non-GAAP operating expenses $165 - $170 Reconciliation of GAAP Outlook to Non-GAAP Outlook
22 Reconciliation of GAAP Outlook to Non-GAAP Outlook (continued) $ in millions Fourth-Quarter Outlook Reconciliation GAAP Operating Margin to non-GAAP Operating Margin and Adjusted EBITDA Margin December 31, 2023 Net sales $770 - $790 GAAP - Operating income $102 - $114 Operating margin - as a % of net sales 13% - 14% Deal, transaction and integration costs 5 Amortization of intangible assets 51 Adjusted operating income $158 - $170 Adjusted operating margin - as a % of net sales 21% - 22% Depreciation 42 Adjusted EBITDA $200 - $212 Adjusted EBITDA - as a % of net sales 26% - 27%
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 23 $ in millions Q122 Q222 Q322 Q422 FY 2022 Q123 Q223 Q323 Adjusted MS segment Sales: MS segment Sales $ 520.5 $ 530.7 $ 518.1 $ 458.0 $ 2,027.3 $ 448.3 $ 440.7 $ 435.5 Removal of wood treatment sales r * (10.9) (0.2) — — (11.1) — — — MS adjusted segment sales $ 509.6 $ 530.5 $ 518.1 $ 458.0 $ 2,016.2 $ 448.3 $ 440.7 $ 435.5 Reconciliation of Proforma Segment Trend Data to Non-GAAP Unaudited¹ ² 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions(MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). The following prior year information has been recast to reflect this realignment 2. The above pro forma results include the addition of CMC Materials Inc.'s (now known as CMC Materials LLC) ("CMC Materials") financials recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported financials and are provided as a complement to, and should be read in conjunction with, the consolidated financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated. No other adjustments have been included. *See footnotes section for reference
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 24 $ in millions Q122 Q222 Q322 Q422 FY 2022 Q123 Q223 Q323 Adjusted Segment Profit : MS segment profit $141.1 $123.0 $53.1 $71.5 $388.7 ($29.5) $215.7 $57.0 Adjustments for wood treatment r * (7.4) 0.3 — — (7.1) — — — Impairment of Goodwill a * — — — — — 88.9 — 15.9 Loss from the sale of QED and held for sales assets of EC h * — — — — — 13.6 14.9 — Charge for fair value write-up of acquired inventory sold t* 61.9 61.9 — — — Severance - Restructuring g * — — — — — 7.1 — 0.5 Gain on sale of termination of alliance agreement w * — — — — — — (154.8) — Other adjustments j* (10.3) (7.0) — (0.3) (17.6) — — — MS adjusted segment profit $123.4 $116.3 $115.0 $71.2 $425.9 $80.1 $75.8 $73.4 MC segment Profit 98.6 100.1 105.3 107.4 411.4 96.0 100.7 101.1 Severance - Restructuring g * — — — — — 2.8 — 0.2 MC adjusted segment profit $98.6 $100.1 $105.3 $107.4 $411.4 $98.8 $100.7 $101.3 AMH segment Profit 46.7 46.9 42.1 48.0 183.7 48.2 35.8 31.6 Severance - Restructuring g * — — — — — 1.2 — 0.5 AMH adjusted segment profit $46.7 $46.9 $42.1 $48.0 $183.7 $49.4 $35.8 $32.1 Reconciliation of Proforma Segment Trend Data to Non-GAAP Unaudited¹ ² (continued) 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions(MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). The following prior year information has been recast to reflect this realignment 2. The above pro forma results include the addition of CMC Materials Inc.'s (now known as CMC Materials LLC) ("CMC Materials") financials recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported financials and are provided as a complement to, and should be read in conjunction with, the consolidated financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated. No other adjustments have been included. *See footnotes section for reference
ENTEGRIS PROPRIETARY AND CONFIDENTIAL – INTERNAL 25 $ in millions Q122 Q222 Q322 Q422 FY 2022 Q123 Q223 Q323 Unallocated expenses $ 20.2 $ 17.6 $ 9.3 $ 7.3 $ 54.4 $ 43.6 $ 29.9 $ 21.4 Other adjustments j * 0.3 0.1 0.1 0.1 0.6 0.1 — (10.3) Deal, transaction & integration costs o * — — — — — 20.0 18.4 — Adjusted unallocated expenses $ 19.9 $ 17.5 $ 9.2 $ 7.2 $ 53.8 $ 23.5 $ 11.5 $ 11.1 Total Adjusted Segment Profit $ 268.7 $ 263.3 $ 262.4 $ 226.6 $ 1,021.0 $ 228.3 $ 212.4 $ 206.8 Adjusted unallocated expenses 19.9 17.5 9.2 7.2 53.8 23.5 11.5 11.1 Total adjusted operating Income $ 248.8 $ 245.8 $ 253.2 $ 219.4 $ 967.2 $ 204.8 $ 200.9 $ 195.7 Reconciliation of Proforma Segment Trend Data to Non-GAAP Unaudited¹ ² (continued) 1. During the three months ended September 30, 2023, the Company realigned its financial reporting structure reflecting management and organizational changes. The Company will report its financial performance based on three reportable segments: Materials Solutions(MS), Microcontamination Control (MC) and Advanced Material Handling (AMH). The following prior year information has been recast to reflect this realignment 2. The above pro forma results include the addition of CMC Materials Inc.'s (now known as CMC Materials LLC) ("CMC Materials") financials recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported financials and are provided as a complement to, and should be read in conjunction with, the consolidated financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated. No other adjustments have been included. *See footnotes section for reference
26 Reconciliation of Proforma Net Sales to Proforma Non-GAAP Net Sales $ in millions Q122 Q222 Q322 Q422 FY 2022 Q123 Q223 Q323 Proforma net sales 1 $969.1 $1,011.9 $993.8 $946.1 $3,920.9 $922.4 $901.0 $888.2 Removal of Wood treatmentr * (10.9) (0.2) — — (11.1) — — — Proforma Non-GAAP net sales $958.2 $1,011.7 $993.8 $946.1 $3,909.8 $922.4 $901.0 $888.2 Reconciliation of Proforma Gross Profit to Proforma Adjusted Gross Profit $ in millions Q122 Q222 Q322 Q422 FY 2022 Q123 Q223 Q323 Proforma Gross Margin $438.0 $428.8 $371.7 $404.5 $1,643.0 $401.7 $384.2 $367.1 Proforma Gross Margin -as a % of GAAP net sales 45.7 % 42.4 % 37.4 % 42.8 % 41.9 % 43.5 % 42.6 % 41.3 % Inventory step-up t * — — 61.9 — 61.9 — — — Wood treatment r * (7.4) 0.3 — — (7.1) — — — Incremental Depreciation expense s * (4.5) (4.5) — — (9.0) — — — Restructuring costs g * — — — — — 7.4 — 0.8 Proforma Non-GAAP gross margin $426.1 $424.6 $433.6 $404.5 $1,688.8 $409.1 $384.2 $367.9 Proforma Gross Margin - as a % of Non-GAAP net sales 44.5 % 42.0 % 43.6 % 42.8 % 43.2 % 44.3 % 42.6 % 41.4 % 1. The above pro forma results include the addition of CMC Materials Inc.'s (now known as CMC Materials LLC) ("CMC Materials") financials recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported financials and are provided as a complement to, and should be read in conjunction with, the consolidated financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated. No other adjustments have been included. *See footnotes section for reference
27 Reconciliation of Proforma Operating Expenses and Tax Rate to Proforma Non-GAAP Operating Expenses and Non-GAAP Tax Rate $ in millions Q122 Q222 Q322 Q422 FY 2022 Q123 Q223 Q323 Proforma Operating Expense 218.2 226.9 356.8 260.7 1,062.6 388.2 116.6 250.0 Goodwill impairment a * — — — — — 88.9 — 15.9 Deal and transaction costs b * 17.3 12.1 31.9 0.3 61.6 3.0 — — Integration costs: Professional fees c * 0.7 9.5 11.4 13.7 35.3 12.0 13.3 6.8 Severance costs d * — — 4.0 2.3 6.3 1.4 1.0 (0.5) Retention costs e * — — 1.5 0.5 2.0 1.3 0.4 — Other costs f * — 0.7 3.9 2.1 6.7 2.3 3.9 3.9 Contractual and non-cash integration costs: CMC Materials Retention o * — — 14.5 3.5 18.0 — — — Stock-based compensation alignment p * — — 21.6 — 21.6 — — — Change in control costs q * — — 22.3 — 22.3 — — — Restructuring costs g * — — — — — 3.8 — 0.6 Loss from the sale of QED and held for sales assets of — — — (0.3) (0.3) 13.6 14.9 — Amortization of intangible assets i * 28.5 28.3 65.3 53.5 175.6 57.6 54.7 51.2 Other j * (3.2) — — — (3.2) — — — Incremental depreciation expense s * (2.5) (2.5) — — (5.0) — — — Gain on termination of alliance agreement w * — — — — — — (154.8) — Proforma Non-GAAP Operating Expense $ 177.4 $ 178.8 $ 180.4 $ 185.1 $ 721.7 $ 204.3 $ 183.2 $ 172.1 GAAP tax rate 16.1% 24.8% 8.7% 11.9% 21.5% (32.2%) (9.1%) (6.8%) Other (0.8%) (1.9%) 12.5% 0.3% (3.4%) 49.1% 25.4% 16.1% Non-GAAP tax rate 15.3% 22.9% 21.2% 12.3% 18.1% 16.9% 16.3% 9.3% *See footnotes section for reference
28 $ in millions Q122 Q222 Q322 Q422 FY 2022 Q123 Q223 Q323 Net sales $969.1 $1,011.9 $993.8 $946.1 $3,920.9 $922.4 $901.0 $888.2 Net income (loss) 160.3 140.1 (73.7) 57.5 284.1 (88.2) 197.6 33.2 Net income (loss) – as a % of proforma GAAP net 16.5 % 13.8 % (7.4%) 6.1 % 7.2 % (9.6%) 21.9 % 3.7 % Adjustments to net income (loss): Income tax expense (benefit) 30.9 46.3 (7.0) 7.8 78.0 21.5 (16.5) (2.1) Interest expense, net 22.4 5.7 82.8 82.0 192.9 84.8 78.6 75.6 Other expense, net 6.3 9.8 12.9 (3.5) 25.5 (4.6) 8.0 10.3 Operating Income $219.9 $201.9 $14.9 $143.8 $580.5 $13.5 $267.6 $117.1 Operating Income - as a % of proforma net sales 22.7 % 20.0 % 1.5 % 15.2 % 14.8 % 1.5 % 29.7 % 13.2 % Amortization of intangible assets i* 28.5 28.3 65.3 53.5 175.6 57.6 54.7 51.2 Depreciation 40.8 41.1 45.2 41.8 168.9 46.8 43.8 39.6 Adjusted EBITDA $289.2 $271.3 $125.4 $239.1 $925.0 $117.9 $366.0 $207.9 Adjusted EBITDA as a % of proforma net sales 29.8 % 26.8 % 12.6 % 25.3 % 23.6 % 12.8 % 40.6 % 23.4 % Reconciliation of Proforma Net Income to Proforma Adjusted Operating Income and Adjusted EBITDA *See footnotes section for reference
29 $ in millions Q122 Q222 Q322 Q422 FY 2022 Q123 Q223 Q323 Proforma Operating Income $219.9 $201.9 $14.9 $143.8 $580.5 $13.5 $267.6 $117.1 Proforma Operating Income - as a % of proforma net sales 22.7 % 20.0 % 1.5 % 15.2 % 14.8 % 1.5 % 29.7 % 13.2 % Wood treatment (net margin impact) r* (7.4) 0.3 — — (7.1) — — — Charge for fair value write-up of acquired inventory sold t* — — 61.9 — 61.9 — — — Goodwill impairment a * — — — — — 88.9 — 15.9 Deal and transaction costs b * 17.3 12.1 31.9 0.3 61.6 3.0 — — Integration costs: Professional fees c * 0.7 9.5 11.4 13.7 35.3 12.0 13.3 6.8 Severance costs d * — — 4.0 2.3 6.3 1.4 1.0 (0.5) Retention costs e * — — 1.5 0.5 2.0 1.3 0.4 — Other costs f * — 0.7 3.9 2.1 6.7 2.3 3.8 4.0 Contractual and non-cash integration costs CMC Materials Retention o* — — 14.5 3.5 18.0 — — — Stock-based compensation alignment p* — — 21.6 — 21.6 — — — Change in control costs q* — — 22.3 — 22.3 — — — Restructuring costs g * — — — — — 11.2 — 1.2 Loss from the sale of QED and held for sales assets of EC h * — — — (0.3) (0.3) 13.6 14.9 — Amortization of intangible assets i * 28.5 28.3 65.3 53.5 175.6 57.6 54.7 51.2 Other j* (3.2) — — — (3.2) — — — Incremental depreciation expense s* (7.0) (7.0) — — (14.0) — — — Gain on sale of termination of alliance agreement w — — — — — — (154.8) — Proforma Operating Income - Non-GAAP $248.8 $245.8 $253.2 $219.4 $967.2 $204.8 $200.9 $195.7 Proforma Non-GAAP Operating Income - as a % of proforma Non-GAAP net sales 26.0 % 24.3 % 25.5 % 23.2 % 24.7 % 22.2 % 22.3 % 22.0 % Depreciation 47.8 48.2 45.2 41.9 183.1 46.8 43.7 39.6 Adjusted EBITDA $296.6 $294.0 $298.4 $261.3 $1,150.3 $251.6 $244.6 $235.3 Adjusted EBITDA as a % of proforma Non-GAAP net sales 30.6% 29.1% 30.0% 27.6% 29.3% 27.3% 27.2% 26.5% Reconciliation of Proforma Net Income to Proforma Adjusted Operating Income Non-GAAP and Adjusted EBITDA Non-GAAP *See footnotes section for reference
30 $ in millions, except per share data Q122 Q222 Q322 Q422 FY 2022 Q123 Q223 Q323 Proforma Net Income (Loss) $160.3 $140.1 ($73.7) $57.5 $284.1 ($88.2) $197.6 $33.2 Adjustments to Proforma Net Income (Loss): Charge for fair value write-up of acquired inventory sold t* — — 61.9 — 61.9 — — — Goodwill impairment a * — — — — — 88.9 — 15.9 Deal and transaction costs b * 17.3 12.1 31.9 0.3 61.6 3.0 — — Integration costs: Professional fees c * 0.7 9.5 11.4 13.7 35.3 12.0 13.3 6.8 Severance costs d * — — 4.0 2.3 6.3 1.4 1.0 (0.5) Retention costs e * — 1.5 0.5 2.0 1.3 0.4 — Other costs f * — 0.7 3.9 2.1 6.7 2.4 3.8 4.0 Contractual and non-cash integration costs CMC Materials Retention o* — — 14.5 3.5 18.0 — — — Stock-based compensation alignment p* — — 21.6 — 21.6 — — — Change in control costs q* — — 22.3 — 22.3 — — — Restructuring costs g * — — — — — 11.2 — 1.2 Loss from the sale of QED and held for sales assets of EC h * — — — — — 13.6 14.9 — Amortization of intangible assets i * 28.5 28.3 65.3 53.5 175.6 57.6 54.7 51.2 Loss on extinguishment of debt and modification k* — — 2.2 1.1 3.3 3.9 4.5 4.5 Infineum termination fee, net l* — — — — — (10.9) — — Interest expense, net m* 4.7 22.7 2.4 — 29.8 — — — Other j* (3.2) — — (0.3) (3.5) — — Interest rate swap gain v* — (35.0) — — (35.0) — — Wood treatment (net margin affect) r* (7.4) 0.3 — — (7.1) — — Incremental interest expense u* (62.3) (62.3) — — (124.6) — — Incremental depreciation expense s* (7.0) (7.0) — — (14.0) — — Gain on sale of termination of alliance agreement w * — — — — — — (154.8) — Tax effect of adjustments to net income (loss) and discrete itemsn* 6.0 10.6 (41.5) (9.6) (34.5) 1.6 (35.8) (12.8) Proforma Non-GAAP net income $137.6 $120.0 $127.8 $124.6 $509.8 $97.8 $99.6 $103.6 Diluted earnings per common share $1.06 $0.93 ($0.50) $0.38 $1.89 ($0.59) $1.31 $0.22 Effect of adjustments to net income ($0.15) ($0.13) $1.35 $0.45 $1.50 $1.24 ($0.65) $0.46 Diluted non-GAAP earnings per common share $0.91 $0.80 $0.85 $0.83 $3.39 $0.65 $0.66 $0.68 Weighted average diluted shares outstanding - Proforma 150.8 150.7 148.6 149.9 150.3 149.4 150.8 151.2 Weighted average diluted shares outstanding - Proforma Non-GAAP 150.8 150.7 149.7 149.9 150.3 150.4 150.8 151.2 Reconciliation of Proforma Net Income and Diluted EPS to Proforma Non-GAAP Net Income and Diluted Non-GAAP EPS *See footnotes section for reference
31 Footnotes a. Non-cash impairment charges associated with goodwill. b. Non-recurring deal and transaction costs associated with the CMC Materials acquisition and completed and announced divestitures. c. Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations. d. Represent severance charges related to the integration of the CMC Materials acquisition. e. Represents retention charges related directly to the CMC acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses. f. Represents other employee related costs and other costs incurred relating to the CMC acquisition and completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations. g. Restructuring charges resulting from cost-saving initiatives. h. Non-recurring loss from the sale of business and held for sale assets. i. Non-cash amortization expense associated with intangibles acquired in acquisitions. j. Other miscellaneous adjustments. k. Non-recurring loss on extinguishment of debt and modification of our debt. l. Non-recurring gain from the termination fee with Infineum. m. Non-recurring interest costs related to the financing of the CMC acquisition. n. The tax effect of pre-tax adjustments to net income (loss) was calculated using the applicable marginal tax rate for each respective year. o. Represents non-recurring costs associated with the CMC Materials retention program that was agreed upon and set forth in the definitive acquisition agreementt. p. Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards. q. Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition. r. The adjustment relates to removal of net sales or net margin related to CMC’s wood treatment business. Prior to the acquisition of CMC Materials, CMC operated a wood treatment business, which manufactured and sold wood treatment preservatives for utility poles and crossarms. CMC exited this business during the first half of 2022, prior to our acquisition of CMC Materials. The wood treatment business had no ongoing sales at the time of acquisition and removed for comparable purposes. s. Represents the preliminary pro forma adjustment to recognize changes to straight-line depreciation expense resulting from the fair value adjustments to acquired property, plant, and equipment. The preliminary fair value of the property, plant and equipment may not represent the actual value of the property, plant and equipment when the Merger is completed resulting in a potential difference in straight-line depreciation expense, and that difference may be material. t. Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation. Entegris will recognize the increased value of inventory in cost of sales as the inventory is sold, which for purposes of these pro forma presentation is assumed to occur within the first quarter of 2021 based on inventory turns and is non-recurring in nature. u. Interest expense on the new debt raised to fund in part the consideration paid to effect the Merger using the effective interest rates. v. The elimination of interest expense, net of the gain on the termination of two swap instruments which were terminated on June 24, 2022 associated with the extinguished CMC Materials debt outstanding. w. Gain on termination of alliance agreement with MacDermid Enthone.