- Second-quarter revenue (as reported) of $901 million, increased
30% from prior year
- Second-quarter revenue (proforma), decreased 11% from prior
year
- Second-quarter GAAP diluted EPS of $1.31
- Second-quarter non-GAAP diluted EPS of $0.66
Entegris, Inc. (NASDAQ: ENTG), today reported its financial
results for the Company’s second quarter ended July 1, 2023.
Second-quarter sales were $901.0 million, an increase of 30% from
the same quarter last year. Second-quarter GAAP net income was
$197.6 million, or $1.31 income per diluted share, which included a
$154.8 million of gain on a termination of an alliance agreement,
$54.7 million of amortization of intangible assets, $18.4 million
of integration costs and $19.4 million of other net costs. Non-GAAP
net income was $99.6 million for the second quarter and non-GAAP
earnings per diluted share was $0.66. The results for the second
quarter of 2022 are shown on a “as reported” basis and not on a
“proforma” basis, and as a result do not include CMC Materials’
results.
Bertrand Loy, Entegris’ president and chief executive officer,
said: “Our performance and execution in the second quarter was
solid and showcased the resilience of our unit driven model. Sales
were down sequentially as expected, but we did see growth in
product lines that are of increasing importance to our customers’
technology roadmaps.
“We have made good progress on key initiatives. The CMC
Materials integration is proceeding very well, and we are on track
to achieve our $75 million run-rate cost synergy target by the
fourth quarter. Debt paydown is a high priority for us and
divestitures of non-core assets have been a significant lever to
reduce this debt. So far this year, we have entered into definitive
agreements for the sale of three businesses, totaling more than $1
billion in proceeds,” he said.
“While our expectations for an industry recovery in the short
term are modest,” Loy said, “we continue to be extremely optimistic
about the long-term secular growth of the semiconductor industry.
We have strong conviction in the growing importance of our value
proposition, our opportunity to grow our content per wafer, and our
ability to continue to outperform the market. During the second
half of the year, our focus will be on completing the CMC
integration and managing our cost structure, while making the
necessary investments in our future.”
Quarterly Financial Results
Summary
(in thousands, except percentages and per
share data)
GAAP Results
July 1,
2023
July 2,
2022
April 1,
2023
Net sales
$901,000
$692,489
$922,396
Operating income
$267,614
$157,970
$13,466
Operating margin - as a % of net sales
29.7%
22.8%
1.5%
Net income (loss)
$197,646
$99,491
$(88,166)
Diluted earnings (loss) per common
share
$1.31
$0.73
$(0.59)
Non-GAAP Results
Non-GAAP adjusted operating income
$200,917
$183,039
$204,772
Non-GAAP adjusted operating margin - as a
% of net sales
22.3%
26.4%
22.2%
Non-GAAP net income
$99,605
$136,816
$97,782
Diluted non-GAAP earnings per common
share
$0.66
$1.00
$0.65
Third-Quarter Outlook
For the third quarter ending September 30, 2023, the Company
expects sales of $875 million to $900 million, GAAP net income of
$34 million to $42 million and diluted earnings per common share
between $0.23 and $0.28. On a non-GAAP basis, the Company expects
diluted earnings per common share to range from $0.57 to $0.62,
reflecting net income on a non-GAAP basis in the range of $86
million to $94 million. The Company also expects EBITDA of
approximately 26% to 27% of sales, for the third quarter of
2023.
Segment Results
The Company operates in four segments:
Specialty Chemicals and Engineered
Materials (SCEM): SCEM provides advanced materials enabling
complex chip designs and improved device electrical performance;
including 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 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.
Advanced Planarization Solutions
(APS): APS develops an end-to-end chemical mechanical
planarization (CMP) solution and applications expertise delivered
through advanced materials and high purity chemicals; including CMP
slurries, pads, formulated cleans and other electronic chemicals
used in the semiconductor manufacturing processes.
Second-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for
the second quarter on Thursday, August 3, 2023, at 9:00 a.m.
Eastern Time. Participants should dial 800-245-3047 or +1
203-518-9765, referencing confirmation ID: ENTGQ223. 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
second quarter will be posted on the Investor Relations section of
www.entegris.com in the morning before the call.
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 and 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 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 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”); the closing of any announced
divestitures and the termination of strategic partnerships,
including the timing thereof; 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 and 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 consummate pending
transactions on a timely basis or at all and the satisfaction of
the conditions precedent to consummation of such pending
transactions, including the satisfaction of regulatory conditions
on the terms expected, at all or in a timely manner; the Company’s
ability to effectively implement any organizational changes; the
Company’s ability to protect and enforce intellectual property
rights; 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. and
Subsidiaries
Condensed Consolidated
Statements of Operations
(In thousands, except per share
data)
(Unaudited)
Three months ended
July 1, 2023
July 2, 2022
April 1, 2023
Net sales
$901,000
$692,489
$922,396
Cost of sales
516,834
382,092
520,711
Gross profit
384,166
310,397
401,685
Selling, general and administrative
expenses
145,596
90,685
169,867
Engineering, research and development
expenses
71,030
49,248
71,906
Amortization of intangible assets
54,680
12,494
57,574
Goodwill impairment
—
—
88,872
Gain on termination of alliance
agreement
(154,754)
—
—
Operating income
267,614
157,970
13,466
Interest expense, net
78,605
31,343
84,821
Other expense (income), net
7,724
9,619
(4,658)
Income (loss) before income tax
(benefit) expense
181,285
117,008
(66,697)
Income tax (benefit) expense
(16,491)
17,517
21,469
Equity in net loss of affiliates
130
—
—
Net income (loss)
$197,646
$99,491
$(88,166)
Basic earnings (loss) per common
share:
$1.32
$0.73
$(0.59)
Diluted earnings (loss) per common
share:
$1.31
$0.73
$(0.59)
Weighted average shares outstanding:
Basic
149,825
135,895
149,426
Diluted
150,837
136,454
149,426
Entegris, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Operations
(In thousands, except per share
data)
(Unaudited)
Six months ended
July 1, 2023
July 2, 2022
Net sales
$1,823,396
$1,342,135
Cost of sales
1,037,545
721,918
Gross profit
785,851
620,217
Selling, general and administrative
expenses
315,463
177,793
Engineering, research and development
expenses
142,936
95,963
Amortization of intangible assets
112,254
25,145
Goodwill impairment
88,872
—
Gain on termination of alliance
agreement
(154,754)
—
Operating income
281,080
321,316
Interest expense, net
163,426
44,877
Other expense, net
3,066
14,521
Income before income tax
expense
114,588
262,588
Income tax expense
4,978
37,392
Equity in net loss of affiliates
130
—
Net income
$109,480
$225,196
Basic earnings per common share:
$0.73
$1.66
Diluted earnings per common share:
$0.73
$1.65
Weighted average shares outstanding:
Basic
149,626
135,783
Diluted
150,609
136,503
Entegris, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
July 1, 2023
December 31, 2022
ASSETS
Current assets:
Cash, cash equivalents and restricted
cash
$567,017
$563,439
Trade accounts and notes receivable,
net
435,973
535,485
Inventories, net
740,351
812,815
Deferred tax charges and refundable income
taxes
55,461
47,618
Assets held-for-sale
1,051,947
246,531
Other current assets
117,799
129,297
Total current assets
2,968,548
2,335,185
Property, plant and equipment, net
1,364,760
1,393,337
Other assets:
Right-of-use assets
81,048
94,940
Goodwill
3,970,247
4,408,331
Intangible assets, net
1,421,710
1,841,955
Deferred tax assets and other noncurrent
tax assets
66,682
28,867
Other
40,029
36,242
Total assets
$9,913,024
$10,138,857
LIABILITIES AND EQUITY
Current liabilities
Short-term debt, including current portion
of long-term debt
—
151,965
Accounts payable
132,157
172,488
Accrued liabilities
311,784
328,784
Liabilities held-for-sale
115,784
10,637
Income tax payable
86,564
98,057
Total current liabilities
646,289
761,931
Long-term debt, excluding current
maturities
5,492,011
5,632,928
Long-term lease liability
69,405
80,716
Other liabilities
353,114
445,282
Shareholders’ equity
3,352,205
3,218,000
Total liabilities and equity
$9,913,024
$10,138,857
Entegris, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended
Six months ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Operating activities:
Net income
$197,646
$99,491
$109,480
$225,196
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
43,719
24,381
90,494
48,286
Amortization
54,680
12,494
112,254
25,145
Share-based compensation expense
11,458
10,182
42,136
19,467
Loss on extinguishment of debt and
modification
4,482
—
7,269
—
Impairment of Goodwill
—
—
88,872
—
Gain on termination of alliance
agreement
(154,754)
—
(154,754)
—
Loss on sale of business and held for sale
assets
14,935
—
28,577
—
Other
(10,318)
8,492
(17,288)
8,687
Changes in operating assets and
liabilities, net of effects of acquisitions:
Trade accounts and notes receivable
9,562
(26,138)
17,941
(57,309)
Inventories
29,843
(47,465)
(5,009)
(124,941)
Accounts payable and accrued
liabilities
(43,638)
49,468
(23,595)
27,145
Income taxes payable, refundable income
taxes and noncurrent taxes payable
(31,437)
(20,308)
(15,570)
(3,548)
Other
840
313
(1,918)
6,570
Net cash provided by operating
activities
127,018
110,910
278,889
174,698
Investing activities:
Acquisition of property and equipment
(116,051)
(107,692)
(250,043)
(192,097)
Proceeds from sale of business
759
—
134,286
—
Proceeds from termination of alliance
agreement
169,251
—
169,251
—
Other
258
—
366
1,123
Net cash provided by (used in)
investing activities
54,217
(107,692)
53,860
(190,974)
Financing activities:
Proceeds from revolving credit facility,
short-term debt and long-term debt
—
2,527,314
117,170
2,606,314
Payments of revolving credit facility,
short-term debt and long-term debt
(311,501)
(114,000)
(428,671)
(193,000)
Payments for debt issuance costs
(3,475)
(10,579)
(3,475)
(10,579)
Payments for dividends
(14,980)
(13,589)
(30,150)
(27,484)
Issuance of common stock
18,374
5,598
36,767
8,977
Taxes paid related to net share settlement
of equity awards
(240)
(200)
(9,646)
(16,317)
Other
(279)
375
(578)
(587)
Net cash (used in) provided by
financing activities
(312,101)
2,394,919
(318,583)
2,367,324
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
(11,149)
(7,638)
(10,588)
(10,382)
(Decrease) increase in cash, cash
equivalents and restricted cash
(142,015)
2,390,499
3,578
2,340,666
Cash, cash equivalents and restricted
cash at beginning of period
709,032
352,732
563,439
402,565
Cash, cash equivalents and restricted
cash at end of period
$567,017
$2,743,231
$567,017
$2,743,231
Entegris, Inc. and
Subsidiaries
Segment Information
(In thousands)
(Unaudited)
Three months ended
Six months ended
Net sales
July 1, 2023
July 2, 2022
April 1, 2023
July 1, 2023
July 2, 2022
Specialty Chemicals and Engineered
Materials
$200,073
$179,412
$198,004
$398,077
$345,188
Advanced Planarization Solutions
240,561
28,317
250,326
490,887
58,962
Microcontamination Control
283,614
274,133
269,297
552,911
540,770
Advanced Materials Handling
190,356
224,084
218,853
409,209
422,197
Inter-segment elimination
(13,604)
(13,457)
(14,084)
(27,688)
(24,982)
Total net sales
$901,000
$692,489
$922,396
$1,823,396
$1,342,135
Three months ended
Six months ended
Segment profit
July 1, 2023
July 2, 2022
April 1, 2023
July 1, 2023
July 2, 2022
Specialty Chemicals and Engineered
Materials
$173,319
$35,539
$3,268
$176,587
$73,231
Advanced Planarization Solutions
42,419
10,179
(32,790)
9,629
21,338
Microcontamination Control
100,661
100,107
95,997
196,658
198,725
Advanced Materials Handling
35,830
46,926
48,165
83,995
93,616
Total segment profit
352,229
192,751
114,640
466,869
386,910
Amortization of intangibles
54,680
12,494
57,574
112,254
25,145
Unallocated expenses
29,935
22,287
43,600
73,535
40,449
Total operating income
$267,614
$157,970
$13,466
$281,080
$321,316
Entegris, Inc. and
Subsidiaries
Reconciliation of GAAP Gross
Profit to Adjusted Gross Profit
(In thousands)
Three months ended
Six months ended
July 1, 2023
July 2, 2022
April 1, 2023
July 1, 2023
July 2, 2022
Net Sales
$901,000
$692,489
$922,396
$1,823,396
$1,342,135
Gross profit-GAAP
$384,166
$310,397
$401,685
$785,851
$620,217
Adjustments to gross profit:
Restructuring costs 1
—
—
7,377
7,377
—
Adjusted gross profit
$384,166
$310,397
$409,062
$793,228
$620,217
Gross margin - as a % of net sales
42.6 %
44.8 %
43.5 %
43.1 %
46.2 %
Adjusted gross margin - as a % of net
sales
42.6 %
44.8 %
44.3 %
43.5 %
46.2 %
1 Restructuring charges resulting from
cost saving initiatives.
Entegris, Inc. and
Subsidiaries
Reconciliation of GAAP Segment
Profit to Adjusted Operating Income
(In thousands)
(Unaudited)
Three months ended
Six months ended
Adjusted segment profit
July 1, 2023
July 2, 2022
April 1, 2023
July 1, 2023
July 2, 2022
SCEM segment profit
$173,319
$35,539
$3,268
$176,587
$73,231
Restructuring costs 1
—
—
6,523
6,523
—
Loss from the sale of QED and held for
sales assets of EC 2
1,304
—
13,642
14,946
—
Gain on termination of alliance
agreement4
(154,754)
—
—
(154,754)
—
SCEM adjusted segment profit
$19,869
$35,539
$23,433
$43,302
$73,231
APS segment profit
$42,419
$10,179
$(32,790)
$9,629
21,338
Goodwill impairment 3
—
—
88,872
88,872
—
Restructuring costs 1
—
—
585
585
—
Loss from the sale of QED and held for
sales assets of EC 2
13,632
—
—
13,632
—
APS adjusted segment profit
$56,051
$10,179
$56,667
$112,718
$21,338
MC segment profit
$100,661
$100,107
$95,997
$196,658
$198,725
Restructuring costs 1
—
—
2,795
2,795
—
MC adjusted segment profit
$100,661
$100,107
$98,792
$199,453
$198,725
AMH segment profit
$35,830
$46,926
$48,165
$83,995
$93,616
Restructuring costs 1
—
—
1,254
1,254
—
AMH adjusted segment profit
$35,830
$46,926
$49,419
$85,249
$93,616
Unallocated general and administrative
expenses
$29,935
$22,287
$43,600
$73,535
$40,449
Less: unallocated deal and integration
costs
(18,441)
(12,575)
(19,975)
(38,416)
(18,829)
Less: unallocated restructuring costs
1
—
—
(86)
(86)
—
Adjusted unallocated general and
administrative expenses
$11,494
$9,712
$23,539
$35,033
$21,620
Total adjusted segment profit
$212,411
$192,751
$228,311
$440,722
$386,910
Less: adjusted unallocated general and
administrative expenses
11,494
9,712
23,539
35,033
21,620
Total adjusted operating income
$200,917
$183,039
$204,772
$405,689
$365,290
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.
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 1, 2023
July 2, 2022
April 1, 2023
July 1, 2023
July 2, 2022
Net sales
$901,000
$692,489
$922,396
$1,823,396
$1,342,135
Net income (loss)
$197,646
$99,491
$(88,166)
$109,480
$225,196
Net income (loss) - as a % of net
sales
21.9%
14.4%
(9.6%)
6.0%
16.8%
Adjustments to net income (loss):
Equity in net loss of affiliates
130
—
—
130
—
Income tax (benefit) expense
(16,491)
17,517
21,469
4,978
37,392
Interest expense, net
78,605
31,343
84,821
163,426
44,877
Other expense (income), net
7,724
9,619
(4,658)
3,066
14,521
GAAP - Operating income
267,614
157,970
13,466
281,080
321,316
Operating margin - as a % of net sales
29.7%
22.8%
1.5%
15.4%
23.9%
Goodwill Impairment 1
—
—
88,872
88,872
—
Deal and transaction costs 2
—
2,410
3,001
3,001
7,418
Integration costs:
Professional fees 3
13,324
9,525
11,988
25,312
10,321
Severance costs 4
965
—
1,362
2,327
—
Retention costs 5
362
—
1,280
1,642
—
Other costs 6
3,789
640
2,345
6,134
1,090
Restructuring costs 7
—
—
11,242
11,242
—
Loss on sale of business and held for sale
assets 8
14,937
—
13,642
28,579
—
Gain on termination of alliance agreement
9
(154,754)
—
—
(154,754)
—
Amortization of intangible assets 10
54,680
12,494
57,574
112,254
25,145
Adjusted operating income
200,917
183,039
204,772
405,689
365,290
Adjusted operating margin - as a % of net
sales
22.3%
26.4%
22.2%
22.2%
27.2%
Depreciation
43,719
24,381
46,775
90,494
48,286
Adjusted EBITDA
$244,636
$207,420
$251,547
$496,183
$413,576
Adjusted EBITDA - as a % of net sales
27.2%
30.0%
27.3%
27.2%
30.8%
1 Non-cash impairment charges associated
with goodwill.
2 Deal and transaction costs associated
the CMC acquisition and completed and announced divestitures.
3 Represents professional and vendor fees
recorded in connection with services provided by consultants,
accountants, lawyers and other vendors to assist us in integrating
the recently acquired CMC into our operations. These fees arise
outside of the ordinary course of our continuing operations.
4 Represent severance charges resulting
from cost saving initiatives in connection with the CMC
acquisition.
5 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.
6 Represents other employee related costs
and other costs incurred relating to the CMC acquisition and the
completed and announced divestitures. These costs arise outside of
the ordinary course of our continuing operations.
7 Restructuring charges resulting from
cost saving initiatives.
8 Loss from the sale of QED and held for
sales assets of EC.
9 Gain on termination of alliance
agreement with MacDermid Enthone.
10 Non-cash amortization expense
associated with intangibles acquired in acquisitions.
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 1, 2023
July 2, 2022
April 1, 2023
July 1, 2023
July 2, 2022
GAAP net income (loss)
$197,646
$99,491
$(88,166)
$109,480
$225,196
Adjustments to net income (loss):
Goodwill Impairment 1
—
—
88,872
88,872
—
Deal and transaction costs 2
—
2,410
3,001
3,001
7,418
Integration costs:
Professional fees 3
13,324
9,525
11,988
25,312
10,321
Severance costs 4
965
—
1,362
2,327
—
Retention costs 5
362
—
1,280
1,642
—
Other costs 6
3,789
640
2,345
6,134
1,090
Restructuring costs 7
—
—
11,242
11,242
—
Loss on extinguishment of debt and
modification 8
4,481
—
3,880
8,361
—
Loss on sale of business and held for sale
assets9
14,937
—
13,642
28,579
—
Infineum termination fee, net 10
—
—
(10,877)
(10,877)
—
Interest expense, net 11
—
22,742
—
—
27,425
Amortization of intangible assets 12
54,680
12,494
57,574
112,254
25,145
Gain on termination of alliance agreement
13
(154,754)
—
—
(154,754)
—
Tax effect of adjustments to net income
(loss) and discrete items14
(35,825)
(10,486)
1,639
(34,186)
(14,646)
Non-GAAP net income
$99,605
$136,816
$97,782
$197,387
$281,949
Diluted earnings (loss) per common
share
$1.31
$0.73
$(0.59)
$0.73
$1.65
Effect of adjustments to net income
(loss)
$(0.65)
$0.27
$1.26
$0.58
$0.42
Diluted non-GAAP earnings per common
share
$0.66
$1.00
$0.65
$1.31
$2.07
Diluted weighted averages shares
outstanding
150,837
136,454
149,426
150,609
136,503
Effect of adjustment to diluted weighted
average shares
—
—
955
—
—
Diluted non-GAAP weighted average shares
outstanding
150,837
136,454
150,381
150,609
136,503
1 Non-cash impairment charges associated
with goodwill.
2 Deal and transaction costs associated
with the CMC acquisition and completed and announced
divestitures.
3 Represents professional and vendor fees
recorded in connection with services provided by consultants,
accountants, lawyers and other vendors to assist us in integrating
the recently acquired CMC into our operations. These fees arise
outside of the ordinary course of our continuing operations.
4 Represent severance charges resulting
from cost saving initiatives from the CMC acquisition.
5 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.
6 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.
7 Restructuring charges resulting from
cost saving initiatives.
8 Non-recurring loss on extinguishment of
debt and modification of our Credit Amendment.
9 Loss from the sale of QED and held for
sales assets of EC.
10 Non-recurring gain from the termination
fee with Infineum.
11 Non-recurring interest costs related to
the financing of the CMC acquisition.
12 Non-cash amortization expense
associated with intangibles acquired in acquisitions.
13 Gain on termination of alliance
agreement with MacDermid Enthone.
14 Tax effect of pre-tax adjustments to
net income was calculated using the applicable marginal tax rate
during the respective years.
Entegris, Inc. and
Subsidiaries
Reconciliation of GAAP Outlook
to Non-GAAP Outlook
(In millions, except per share
data)
(Unaudited)
Third-Quarter Outlook
Reconciliation GAAP Operating Margin to
non-GAAP Operating Margin and Adjusted EBITDA Margin
September 30,2023
Net sales
$875 - $900
GAAP - Operating income
$118 - $133
Operating margin - as a % of net sales
13% - 15%
Deal, transaction and integration
costs
12
Amortization of intangible assets
51
Adjusted operating income
$181 - $196
Adjusted operating margin - as a % of net
sales
21% - 22%
Depreciation
47
Adjusted EBITDA
$228 - $243
Adjusted EBITDA - as a % of net sales
26% - 27%
Third-Quarter Outlook
Reconciliation GAAP net income to
non-GAAP net income
September 30,2023
GAAP net income
$34 - $42
Adjustments to net income:
Deal, transaction and integration
costs
12
Amortization of intangible assets
51
Income tax effect
(11)
Non-GAAP net income
$86 - $94
Third-Quarter Outlook
Reconciliation GAAP diluted earnings
per share to non-GAAP diluted earnings per share
September 30,2023
Diluted earnings per common share
$0.23 - $0.28
Adjustments to diluted earnings per common
share:
Deal, transaction and integration
costs
0.09
Amortization of intangible assets
0.34
Income tax effect
(0.09)
Diluted non-GAAP earnings per common
share
$0.57 - $0.62
Entegris, Inc. and
Subsidiaries
Reconciliation of Proforma
Sales to Proforma Non-GAAP Net Sales
(In thousands)
(Unaudited)
Three months ended
Six months ended
July 1, 2022
April 1, 2022
July 1, 2022
Proforma Net Sales 1
$1,011,862
$969,091
$1,980,953
Less: Wood treatment 2
(200)
(10,907)
(11,107)
Proforma Net Sales - Non GAAP
$1,011,662
$958,184
$1,969,846
1 The above pro forma results include the
addition of CMC Materials, Inc.’s 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.
2 The adjustment relates to removal of net
sales related to CMC’s wood treatment business. Prior to the
acquisition, 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. The wood treatment
business had no ongoing sales at the time of acquisition and
removed for comparable purposes.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803159425/en/
Bill Seymour VP of Investor Relations T + 1 952 556 1844
bill.seymour@entegris.com
Entegris (NASDAQ:ENTG)
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