Entegris Reports Results for Third Quarter Of 2020

  • Third-quarter revenue of $481.0 million, increased 22% from prior year
  • Third-quarter GAAP diluted EPS of $0.58, increased 93%
  • Third-quarter Non-GAAP diluted EPS of $0.67, increased 34%

BILLERICA, Mass.--(BUSINESS WIRE)--Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s third quarter ended September 26, 2020.


Third-quarter sales were $481.0 million, an increase of 22% from the same quarter last year. GAAP third-quarter net income was $79.3 million, or $0.58 per diluted share, which included $11.7 million of amortization of intangible assets and $1.3 million of integration costs. Non-GAAP net income was $91.5 million and non-GAAP earnings per diluted share was $0.67.

Bertrand Loy, president and chief executive officer, said: “Our better than expected third quarter results showcased the strength of our value proposition, the resilience of our unit-driven business model and the execution of our teams. This performance was driven by the accelerated demand of our leading-edge solutions in advanced technology nodes. Another highlight of the quarter was our acquisition of GMTI, which provides high precision analytical instruments critical to the complex CMP process.”

Mr. Loy added: “At Entegris, we are benefiting from the two intersecting themes of growing importance of process materials and materials purity, and the impact they have on semiconductor performance, cost and reliability. Our position is bolstered by our technology leadership, global scale, and world class operational excellence. We are looking forward to a strong close to the year and expect to deliver record sales and non-GAAP EPS in 2020.”

Quarterly Financial Results Summary

(in thousands, except percentages and per share data)

GAAP Results

September 26, 2020

September 28, 2019

June 27, 2020

Net sales

$480,987

$394,147

$448,405

Operating income

$106,761

$52,793

$94,712

Operating margin - as a % of net sales

22.2%

13.4%

21.1%

Net income

$79,303

$40,767

$68,036

Diluted earnings per common share

$0.58

$0.30

$0.50

Non-GAAP Results

Non-GAAP adjusted operating income

$121,612

$88,220

$110,835

Non-GAAP adjusted operating margin - as a % of net sales

25.3%

22.4 %

24.7%

Non-GAAP net income

$91,460

$68,179

$81,581

Diluted non-GAAP earnings per common share

$0.67

$0.50

$0.60

Fourth-Quarter Outlook

For the fourth quarter ending December 31, 2020, the Company expects sales of $480 million to $495 million, net income of $75 million to $82 million and diluted earnings per common share between $0.55 and $0.60. On a non-GAAP basis, diluted earnings per common share is expected to range from $0.62 to $0.67, which reflects net income on a non-GAAP basis in the range of $84 million to $91 million.

Segment Results

The Company reports its results in the following segments:

Specialty Chemicals and Engineered Materials (SCEM): SCEM provides high-performance and high-purity process chemistries, gases and materials, and safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.

Microcontamination Control (MC): MC offers solutions to filter and purify critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.

Advanced Materials Handling (AMH): AMH develops solutions to monitor, protect, transport, and deliver critical liquid chemistries, wafers, and substrates for a broad set of applications in the semiconductor industry and other high-technology industries.

Entegris’ 2020 Investor and Analyst Day

Entegris will be hosting a virtual Investor and Analyst Day on November 17, 2020. If you have any questions or need any additional information please reach out to Bill Seymour, V.P. Investor Relations.

Third-Quarter Results Conference Call Details

Entegris will hold a conference call to discuss its results for the third quarter on Thursday, October 22, 2020, at 9:00 a.m. Eastern Time. Participants should dial 800-437-2398 or +1 323-289-6576, referencing confirmation code 2871729. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. For a replay of the call, please Click Here using passcode 2871729.

The call can also be accessed live and on-demand from the Entegris website. Go to https://investor.entegris.com/ and follow the link to the webcast. The on-demand playback will be available for six weeks after the conclusion of the teleconference.

Management’s slide presentation concerning the results for the third quarter, which may be referred to during the call, will be posted on the investor relations section of https://www.entegris.com Thursday morning before the call.

ABOUT ENTEGRIS

Entegris is a world-class supplier of advanced materials and process solutions for the semiconductor and other high-tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, Canada, China, France, Germany, Israel, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at https://www.entegris.com.

Non-GAAP Information

The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA, Adjusted Gross Profit, Adjusted Segment Profit, and Adjusted Operating Income, non-GAAP net income, non-GAAP adjusted operating margin and diluted non-GAAP earnings per common share, together with related measures thereof, are considered “Non-GAAP financial measures” under the rules and regulations of the Securities and Exchange Commission. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision-making, as a means to evaluate period-to-period comparisons, as well as comparisons to the Company’s competitors' operating results. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance and liquidity by excluding certain items that may not be indicative of the Company’s recurring business operating results, such as amortization, depreciation and discrete cash charges that may vary significantly from period to period. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing and understanding the Company’s results and performance and when planning, forecasting, and analyzing future periods. The Company believes these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by the Company’s institutional investors and the analyst community to help them analyze the Company’s business. The reconciliations of GAAP Gross Profit to Adjusted Gross Profit, GAAP Segment Profit to Adjusted Operating Income, GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA, GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share and GAAP Outlook to Non-GAAP Outlook are included elsewhere in this release.

Forward-Looking Statements

This press release contains forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include statements related to future period guidance; future sales, net income, net income per diluted share, non-GAAP EPS, non-GAAP net income, expenses and other financial metrics; the Company’s performance relative to its markets, including the drivers of such performance; the impact, financial or otherwise, of any organizational changes; market and technology trends, including the expected impact of the Covid-19 pandemic; the development of new products and the success of their introductions; the Company's capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the impact of the acquisitions the Company has made and commercial partnerships the Company has established; the Company’s ability to execute on its strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the Covid-19 pandemic on the global economy and financial markets, as well as on the Company, our customers and suppliers, which may impact our sales, gross margin, customer demand and our ability to supply our products to our customers; weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for the Company’s products and solutions; the Company’s ability to meet rapid demand shifts; the Company’s ability to continue technological innovation and introduce new products to meet customers' rapidly changing requirements; the Company’s concentrated customer base; the Company’s ability to identify, complete and integrate acquisitions, joint ventures or other transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages, supply constraints and price increases; changes in government regulations of the countries in which the Company operates; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; the level of, and obligations associated with, the Company’s indebtedness; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed on February 7, 2020, and in the Company’s other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

 

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

 

 

Three months ended

 

 

September 26,

2020

September 28,

2019

June 27,

2020

Net sales

$480,987

$394,147

$448,405

Cost of sales

254,987

223,797

241,033

 

Gross profit

226,000

170,350

207,372

Selling, general and administrative expenses

71,195

71,232

66,872

Engineering, research and development expenses

36,295

31,173

32,572

Amortization of intangible assets

11,749

15,152

13,216

 

Operating income

106,761

52,793

94,712

Interest expense, net

12,651

10,216

12,792

Other (income) expense, net

(1,752)

934

(477)

 

Income before income tax expense

95,862

41,643

82,397

Income tax expense

16,559

876

14,361

 

Net income

$79,303

$40,767

$68,036

 

 

 

 

 

 

 

 

Basic earnings per common share:

$0.59

$0.30

$0.51

Diluted earnings per common share:

$0.58

$0.30

$0.50

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

134,957

135,092

134,700

 

Diluted

136,252

136,530

136,007

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

 

 

Nine months ended

 

 

September 26,

2020

September 28,

2019

Net sales

$1,341,719

$1,164,068

Cost of sales

722,869

650,051

 

Gross profit

618,850

514,017

Selling, general and administrative expenses

196,958

217,636

Engineering, research and development expenses

98,499

90,788

Amortization of intangible assets

41,176

50,400

 

Operating income

282,217

155,193

Interest expense, net

35,681

29,567

Other (income), net

(1,351)

(121,329)

 

Income before income tax expense

247,887

246,955

Income tax expense

39,542

49,533

 

Net income

$208,345

$197,422

 

 

 

 

 

 

Basic earnings per common share:

$1.55

$1.46

Diluted earnings per common share:

$1.53

$1.45

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic

134,801

135,256

 

Diluted

136,209

136,601

Entegris, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

 

September 26,

2020

 

December 31,

2019

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$447,972

 

$351,911

Trade accounts and notes receivable, net

300,489

 

234,409

Inventories, net

 

329,741

 

287,098

Deferred tax charges and refundable income taxes

38,100

 

24,552

Other current assets

30,148

 

34,427

Total current assets

1,146,450

 

932,397

Property, plant and equipment, net

490,298

 

479,544

Other assets:

 

 

 

 

 

Right-of-use assets

46,655

 

50,160

Goodwill

744,470

 

695,044

Intangible assets, net

349,066

 

333,952

Deferred tax assets and other noncurrent tax assets

12,179

 

11,245

Other

 

12,510

 

13,744

Total assets

 

$2,801,628

 

$2,516,086

LIABILITIES AND EQUITY

 

 

Current liabilities

 

 

 

 

Long-term debt, current maturities

 

$—

 

$4,000

Accounts payable

 

69,918

 

84,207

Accrued liabilities

 

151,849

 

150,118

Income tax payable

 

25,606

 

26,108

Total current liabilities

247,373

 

264,433

Long-term debt, excluding current maturities

1,085,380

 

932,484

Long-term lease liability

 

40,407

 

43,827

Other liabilities

 

126,167

 

109,453

Shareholders’ equity

 

1,302,301

 

1,165,889

Total liabilities and equity

$2,801,628

 

$2,516,086

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Three months ended

Nine months ended

 

September 26,

2020

September 28,

2019

September 26,

2020

September 28,

2019

Operating activities:

 

 

 

 

Net income

$79,303

$40,767

$208,345

$197,422

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

20,777

19,306

62,064

54,623

Amortization

11,749

15,152

41,176

50,400

Stock-based compensation expense

5,903

5,326

16,552

14,915

Other

20,210

5,988

33,105

12,128

Changes in operating assets and liabilities, net of effects of acquisitions:

 

 

 

 

Trade accounts and notes receivable

(23,280)

(35,841)

(65,367)

(30,405)

Inventories

1,084

(9,398)

(54,278)

(5,689)

Accounts payable and accrued liabilities

4,433

20,796

10,076

(31,911)

Income taxes payable, refundable income taxes and noncurrent taxes payable

(16,407)

(35,965)

(11,995)

(20,574)

Other

(2,540)

(840)

2,978

12,745

Net cash provided by operating activities

101,232

25,291

242,656

253,654

Investing activities:

 

 

 

 

Acquisition of property and equipment

(32,687)

(26,322)

(79,560)

(86,423)

Acquisition of business, net of cash acquired

(35,500)

(217,106)

(111,145)

(266,373)

Other

54

2,618

265

2,815

Net cash used in investing activities

(68,133)

(240,810)

(190,440)

(349,981)

Financing activities:

 

 

 

 

Proceeds from short-term borrowings and long-term debt

617,000

Payments of short-term borrowings and long-term debt

(100,000)

(468,000)

(2,000)

Payments for dividends

(10,794)

(10,815)

(32,446)

(29,779)

Issuance of common stock

3,150

3,434

4,899

4,351

Taxes paid related to net share settlement of equity awards

(11,836)

(276)

(24,556)

(8,577)

Repurchase and retirement of common stock

(15,000)

(29,564)

(65,321)

Deferred acquisition payments

(16,125)

Other

(1)

(5)

(6,856)

(502)

Net cash (used in) provided by financing activities

(119,481)

(22,662)

44,352

(101,828)

Effect of exchange rate changes on cash and cash equivalents

1,687

(453)

(507)

(1,159)

(Decrease) increase in cash and cash equivalents

(84,695)

(238,634)

96,061

(199,314)

Cash and cash equivalents at beginning of period

532,667

521,382

351,911

482,062

Cash and cash equivalents at end of period

$447,972

$282,748

$447,972

$282,748

Entegris, Inc. and Subsidiaries

Segment Information

(In thousands)

(Unaudited)

 

 

Three months ended

Nine months ended

Net sales

September 26,

2020

September 28,

2019

June 27,

2020

September 26,

2020

September 28,

2019

Specialty Chemicals and Engineered Materials

$150,480

$127,750

$146,213

$440,907

$379,772

Microcontamination Control

193,541

155,979

183,758

536,560

463,870

Advanced Materials Handling

144,370

117,256

126,434

386,941

340,835

Inter-segment elimination

(7,404)

(6,838)

(8,000)

(22,689)

(20,409)

Total net sales

$480,987

$394,147

$448,405

$1,341,719

$1,164,068

 

Three months ended

Nine months ended

Segment profit

September 26,

2020

September 28,

2019

June 27,

2020

September 26,

2020

September 28,

2019

Specialty Chemicals and Engineered Materials

$32,600

$17,074

$32,938

$98,208

$65,505

Microcontamination Control

64,915

46,792

62,137

177,219

137,241

Advanced Materials Handling

33,266

17,077

22,809

76,707

54,487

Total segment profit

130,781

80,943

117,884

352,134

257,233

Amortization of intangibles

11,749

15,152

13,216

41,176

50,400

Unallocated expenses

12,271

12,998

9,956

28,741

51,640

Total operating income

$106,761

$52,793

$94,712

$282,217

$155,193

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Gross Profit to Adjusted Gross Profit

(In thousands)

(Unaudited)

 

 

Three months ended

Nine months ended

 

September 26,

2020

September 28,

2019

June 27,

2020

September 26,

2020

September 28,

2019

Net sales

$480,987

$394,147

$448,405

$1,341,719

$1,164,068

Gross profit-GAAP

$226,000

$170,350

$207,372

$618,850

$514,017

Adjustments to gross profit:

 

 

 

 

 

Integration costs

(1,557)

(1,557)

Severance and restructuring costs

990

465

465

1,348

Charge for fair value mark-up of acquired inventory sold

229

4,483

590

7,333

Adjusted gross profit

$226,229

$175,823

$206,280

$618,348

$522,698

 

 

 

 

 

 

Gross margin - as a % of net sales

47.0%

43.2%

46.2%

46.1%

44.2%

Adjusted gross margin - as a % of net sales

47.0%

44.6%

46.0%

46.1%

44.9%

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Segment Profit to Adjusted Operating Income

(In thousands)

(Unaudited)

 

 

Three months ended

Nine months ended

Segment profit-GAAP

September 26,

2020

September 28,

2019

June 27,

2020

September 26,

2020

September 28,

2019

Specialty Chemicals and Engineered Materials (SCEM)

$32,600

$17,074

$32,938

$98,208

$65,505

Microcontamination Control (MC)

64,915

46,792

62,137

177,219

137,241

Advanced Materials Handling (AMH)

33,266

17,077

22,809

76,707

54,487

Total segment profit

130,781

80,943

117,884

352,134

257,233

Amortization of intangible assets

11,749

15,152

13,216

41,176

50,400

Unallocated expenses

12,271

12,998

9,956

28,741

51,640

    Total operating income

$106,761

$52,793

$94,712

$282,217

$155,193

 

 

Three months ended

Nine months ended

Adjusted segment profit

September 26,

2020

September 28,

2019

June 27,

2020

September 26,

2020

September 28,

2019

SCEM segment profit

$32,600

$17,074

$32,938

$98,208

$65,505

Integration costs

(1,557)

(1,557)

Severance and restructuring costs

277

2,143

455

906

2,662

Charge for fair value write-up of acquired inventory sold

4,483

235

5,298

SCEM adjusted segment profit

$32,877

$23,700

$31,836

$97,792

$73,465

 

 

 

 

 

 

MC segment profit

$64,915

$46,792

$62,137

$177,219

$137,241

Severance and restructuring costs

301

2,977

494

985

3,701

Charge for fair value write-up of acquired inventory sold

126

2,035

MC adjusted segment profit

$65,216

$49,769

$62,631

$178,330

$142,977

 

 

 

 

 

 

AMH segment profit

$33,266

$17,077

$22,809

$76,707

$54,487

Severance and restructuring costs

213

3,135

814

1,162

3,713

Charge for fair value write-up of acquired inventory sold

229 

 

— 

 

— 

 

229 

 

— 

 

AMH adjusted segment profit

$33,708

$20,212

$23,623

$78,098

$58,200

 

 

 

 

 

 

Unallocated general and administrative expenses

$12,271

$12,998

$9,956

$28,741

$51,640

Unallocated deal and integration costs

(1,902)

(7,289)

(2,415)

(5,796)

(31,773)

Unallocated severance and restructuring costs

(180)

(248)

(286)

(810)

(2,418)

Adjusted unallocated general and administrative expenses

$10,189

$5,461

$7,255

$22,135

$17,449

 

 

 

 

 

 

Total adjusted segment profit

$131,801

$93,681

$118,090

$354,220

$274,642

Adjusted amortization of intangible assets

Adjusted unallocated general and administrative expenses

10,189

5,461

7,255

22,135

17,449

    Total adjusted operating income

$121,612

$88,220

$110,835

$332,085

$257,193

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA

(In thousands)

(Unaudited)

 

 

Three months ended

Nine months ended

 

September 26,

2020

September 28,

2019

June 27,

2020

September 26,

2020

September 28,

2019

Net sales

$480,987

$394,147

$448,405

$1,341,719

$1,164,068

Net income

$79,303

$40,767

$68,036

$208,345

$197,422

Net income - as a % of net sales

16.5%

10.3%

15.2%

15.5%

17.0%

Adjustments to net income:

 

 

 

 

 

Income tax expense

16,559

876

14,361

39,542

49,533

Interest expense, net

12,651

10,216

12,792

35,681

29,567

Other (income) expense, net

(1,752)

934

(477)

(1,351)

(121,329)

GAAP - Operating income

106,761

52,793

94,712

282,217

155,193

Operating margin - as a % of net sales

22.2%

13.4%

21.1%

21.0%

13.3%

Charge for fair value write-up of acquired inventory sold

229

4,483

590

7,333

Deal and transaction costs

642

4,891

503

2,576

25,191

Integration costs

1,260

2,398

355

1,663

6,582

Severance and restructuring costs

971

8,503

2,049

3,863

12,494

Amortization of intangible assets

11,749

15,152

13,216

41,176

50,400

Adjusted operating income

121,612

88,220

110,835

332,085

257,193

Adjusted operating margin - as a % of net sales

25.3%

22.4%

24.7%

24.8%

22.1%

Depreciation

20,777

19,306

20,639

62,064

54,623

Adjusted EBITDA

$142,389

$107,526

$131,474

$394,149

$311,816

Adjusted EBITDA - as a % of net sales

29.6%

27.3%

29.3%

29.4%

26.8%

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share

(In thousands, except per share data)

(Unaudited)

 

 

Three months ended

Nine months ended

 

September 26,

2020

September 28,

2019

June 27,

2020

September 26,

2020

September 28,

2019

GAAP net income

$79,303

$40,767

$68,036

$208,345

$197,422

Adjustments to net income:

 

 

 

 

 

Charge for fair value write-up of inventory acquired

229

4,483

590

7,333

Deal and transaction costs

642

4,891

503

2,576

25,602

Integration costs

1,260

2,398

355

1,663

6,582

Severance and restructuring costs

971

8,503

2,049

3,863

12,494

Loss on debt extinguishment

908

1,470

2,378

Versum termination fee, net

(122,000)

Amortization of intangible assets

11,749

15,152

13,216

41,176

50,400

Tax effect of legal entity restructuring

9,398

Tax effect of adjustments to net income and discrete items1

(3,602)

(8,015)

(4,048)

(11,979)

2,274

Non-GAAP net income

$91,460

$68,179

$81,581

$248,612

$189,505

 

 

 

 

 

 

Diluted earnings per common share

$0.58

$0.30

$0.50

$1.53

$1.45

Effect of adjustments to net income

$0.09

$0.20

$0.10

$0.30

$(0.06)

Diluted non-GAAP earnings per common share

$0.67

$0.50

$0.60

$1.83

$1.39

1The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.


Contacts

Bill Seymour
VP of Investor Relations
T + 1 952 556 1844
bill.seymour@entegris.com


Read full story here