EX-99.1 2 entg2018q2ex991.htm EXHIBIT 99.1 Exhibit
      entegrislogoa22.jpg
 
 
PRESS RELEASE

Steven Cantor
VP of Corporate Relations
T + 978 436 6500
irelations@entegris.com

Exhibit 99.1
FOR RELEASE AT 6:00 AM EST

ENTEGRIS REPORTS RECORD SALES AND EARNINGS IN SECOND QUARTER OF 2018

Second-quarter revenue of $383.1 million grew 16% from prior year
GAAP net income per diluted share of $0.38 increased 36% from a year ago
Non-GAAP net income per diluted share of $0.49 increased 44% from a year ago
First-half 2018 revenue of $750.2 million grew 16%
Completed acquisition of SAES Pure Gas on June 25, 2018

BILLERICA, Mass., July 26, 2018 - Entegris, Inc. (NasdaqGS: ENTG), a leader in specialty chemicals and advanced materials solutions for the microelectronics industry, today reported its financial results for the Company’s second quarter ended June 30, 2018.
Second-quarter sales were $383.1 million, an increase of 16% from the same quarter last year and a 4% increase sequentially. Second-quarter net income was $54.3 million, or $0.38 per diluted share, which included $12.0 million of amortization of intangible assets, $6.3 million of integration costs and transaction expenses associated with the purchase of SAES Pure Gas, as well as a $0.6 million tax charge related to the Tax Cuts and Jobs Act. Non-GAAP net income of $69.8 million, or $0.49 per diluted share, represented an increase of 43% and 44%, respectively, from the second quarter of 2017.
For the first half of fiscal 2018, sales of $750.3 million increased 16% from the same period a year ago. First-half 2018 net income was $111.9 million, or $0.78 per share, which included amortization of intangible assets of $23.7 million, $6.3 million of integration costs and transaction expenses associated with the purchase of SAES Pure Gas, as well as a $2.1 million tax charge related to the Tax Cuts and Jobs Act. Non-GAAP net income for the first half of 2018 of $137.9 million, or $0.96 per diluted share, represented an increase of 54% and 52%, respectively, from the first half of 2017.
Bertrand Loy, president and chief executive officer, said: "We are very pleased with our record second-quarter performance and the quality of our execution. Through the first half of 2018 we grew our sales by 16 percent from a year ago and achieved strong growth across all three divisions, outpacing our markets and demonstrating the increasing value of our solutions. Thus far this year we grew our profits faster than sales by a substantial margin, and generated adjusted EBITDA of $215 million, or 28.7 percent of sales."
Mr. Loy added: "Our conviction in the long-term growth trajectory of the industry is reaffirmed by continued healthy levels of demand for semiconductors across a broadening set of end-markets. We believe that our unique value proposition to solve complex materials and purity challenges, the diversity of our customer base and our strong balance sheet will enable us to continue to outpace our markets by taking advantage of a multitude of growth opportunities across the industry ecosystem. For the full year 2018, we expect to achieve sales of $1,545 million to $1,570 million, or approximately 16 percent above 2017, including the additional sales from the acquisition of SAES Pure Gas, which we completed on June 25, 2018."




_________________________________________________________________________
ENTEGRIS, INC.

129 Concord Road, Building 2

T + 1 978 436 6500
entegris.com

Billerica, MA 01821 USA
F + 1 978 436 6745



Quarterly Financial Results Summary
(in thousands, except per share data)
GAAP Results
Q2-2018
Q2-2017
Q1-2018
Net sales
$383,059
$329,002
$367,199
Operating income
$74,933
$59,090
$78,473
Operating margin
19.6
%
18.0
%
21.4
%
Net income
$54,349
$39,991
$57,562
Diluted earnings per share (EPS)
$0.38
$0.28
$0.40
Non-GAAP Results
Non-GAAP adjusted operating income
$93,473
$73,826
$90,142
Non-GAAP adjusted operating margin
24.4
%
22.4
%
24.5
%
Non-GAAP net income
$69,835
$48,906
$68,015
Non-GAAP EPS
$0.49
$0.34
$0.47
Third-Quarter Outlook
For the third quarter ending September 30, 2018, the Company expects sales of $395 million to $410 million, net income of $52 million to $59 million (excluding integration costs), and net income per diluted share between $0.36 and $0.41. On a non-GAAP basis, EPS is expected to range from $0.46 to $0.51 per diluted share, which reflects net income on a non-GAAP basis in the range of $66 million to $73 million, which is adjusted for expected amortization expense of approximately $18 million, or $0.10 per share.
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, as well as safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.
Microcontamination Control (MC): MC solutions 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 and substrates for a broad set of applications in the semiconductor industry and other high-technology industries.
Second-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the second quarter on Thursday, July 26, 2018, at 9:00 a.m. Eastern Time. Participants should dial 800-289-0438 or +1 323-794-2423, referencing confirmation code 4303185. 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 4303185. The replay will be available starting at 12:00 p.m. ET on Thursday, July 26 through September 8 at 12:00 p.m. ET.

The call can also be accessed live and on-demand from the Entegris website. Point your web browser to http://investor.entegris.com/events.cfm and follow the link to the webcast. The on-demand playback will be available for six weeks after the conclusion of the teleconference.

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


Entegris, Inc. | page 2 of 13


ABOUT ENTEGRIS
Entegris is a leader in specialty chemicals and advanced materials solutions for the microelectronics industry and other high-tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, China, France, Germany, Israel, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at www.entegris.com.
Non-GAAP Information
The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA, Adjusted Gross Profit, Adjusted Segment Profit, and Adjusted Operating Income together with related measures thereof, and non-GAAP EPS, 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 our competitors' operating results. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring business operating results, such as amortization, depreciation and discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing and understanding our results and performance and when planning, forecasting, and analyzing future periods. We believe 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 our institutional investors and the analyst community to help them analyze our business. The reconciliations of GAAP Net Income (Loss) to Adjusted Operating Income and Adjusted EBITDA, and GAAP Net Income (Loss) to Non-GAAP Earnings per Share are included elsewhere in this release.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intends,” “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; our performance relative to our markets; market and technology trends; the development of new products and the success of their introductions; 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 effect of the Tax Cuts and Jobs Act on our capital allocation strategy; the impact of the acquisitions we have made and commercial partnerships we have established; our ability to execute on our strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ. 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 our products and solutions; our ability to meet rapid demand shifts; our ability to continue technological innovation and introduce new products to meet our customers' rapidly changing requirements; our concentrated customer base; our ability to identify, effect and integrate acquisitions, joint ventures or other transactions; our ability to protect and enforce intellectual property rights; operational, political and legal risks of our international operations; our dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages and price increases; changes in government regulations of the countries in which we operate; fluctuation of currency exchange rates; fluctuations in the market price of Entegris’ stock; the level of, and obligations associated with, our indebtedness; and other risk factors and additional information described in our filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed on February 15,

Entegris, Inc. | page 3 of 13


2018, and in our other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.



Entegris, Inc. | page 4 of 13


Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
 
Three months ended
 
 
June 30, 2018
July 1, 2017
March 31, 2018
Net sales
$383,059
$329,002
$367,199
Cost of sales
200,681

178,699

191,202

 
Gross profit
182,378

150,303

175,997

Selling, general and administrative expenses
65,200

52,985

58,269

Engineering, research and development expenses
30,231

27,221

27,586

Amortization of intangible assets
12,014

11,007

11,669

 
Operating income
74,933

59,090

78,473

Interest expense, net
6,925

8,103

7,226

Other expense (income), net
3,877

(46
)
139

 
Income before income tax expense
64,131

51,033

71,108

Income tax expense
9,782

11,042

13,546

 
Net income
$54,349
$39,991
$57,562
 
 
 
 
 
 
 
 
Basic net income per common share:
$0.38
$0.28
$0.41
Diluted net income per common share:
$0.38
$0.28
$0.40
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
Basic
141,701

141,696

141,581

 
Diluted
143,238

143,508

143,652



Entegris, Inc. | page 5 of 13


Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
 
Six months ended
 
 
June 30, 2018
July 1, 2017
Net sales
$750,258
$646,379
Cost of sales
391,883

356,480

 
Gross profit
358,375

289,899

Selling, general and administrative expenses
123,469

103,477

Engineering, research and development expenses
57,817

54,460

Amortization of intangible assets
23,683

21,952

 
Operating income
153,406

110,010

Interest expense, net
14,151

16,496

Other expense, net
4,016

856

 
Income before income tax expense
135,239

92,658

Income tax expense
23,328

20,153

 
Net income
$111,911
$72,505
 
 
 
 
 
 
Basic net income per common share:
$0.79
$0.51
Diluted net income per common share:
$0.78
$0.51
 
 
 
 
Weighted average shares outstanding:
 
 
 
Basic
141,641

141,599

 
Diluted
143,445

143,411



Entegris, Inc. | page 6 of 13


Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

 
June 30, 2018
December 31, 2017
ASSETS
 
 
Cash and cash equivalents
$257,106
$625,408
Accounts receivable, net
200,395

183,434

Inventories
265,358

198,089

Deferred tax charges and refundable income taxes
21,647

18,012

Other current assets
29,720

32,665

      Total current assets
774,226

1,057,608

 
 
 
Property, plant and equipment, net
380,259

359,523

 
 
 
Goodwill
529,933

359,688

Intangible assets
361,429

182,430

Deferred tax assets
10,980

9,103

Other assets
9,281

7,820

      Total assets
$2,066,108
$1,976,172
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Long-term debt, current maturities

$100,000
Accounts payable
71,895

68,762

Accrued liabilities
113,659

99,374

Income tax payable
18,708

22,835

      Total current liabilities
204,262

290,971

 
 
 
Long-term debt, excluding current maturities
650,223

574,380

Other liabilities
158,718

117,803

Shareholders’ equity
1,052,905

993,018

      Total liabilities and shareholders’ equity
$2,066,108
$1,976,172


Entegris, Inc. | page 7 of 13


Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 
Three months ended
Six months ended
 
June 30, 2018
July 1, 2017
June 30, 2018
July 1, 2017
Operating activities:
 
 
 
 
Net income
$54,349
$39,991
$111,911
$72,505
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation
15,802

14,411

31,699

28,388

Amortization
12,014

11,007

23,683

21,952

Stock-based compensation expense
4,429

4,039

8,557

7,909

Provision for deferred income taxes
(1,036
)
(215
)
(1,757
)
3,207

Other
3,137

6,497

4,640

10,130

Changes in operating assets and liabilities:
 
 
 
 
Trade accounts and notes receivable
8,698

4,514

2,687

(3,032
)
Inventories
(7,517
)
(8,422
)
(22,472
)
(13,837
)
Accounts payable and accrued liabilities
19,019

10,177

(14,966
)
(13,313
)
Income taxes payable and refundable income taxes
(14,207
)
4,209

(7,515
)
2,957

Other
3,601

(1,049
)
639

1,725

Net cash provided by operating activities
98,289

85,159

137,106

118,591

Investing activities:
 
 
 
 
Acquisition of property and equipment
(26,390
)
(20,000
)
(47,437
)
(42,492
)
Acquisition of businesses, net of cash acquired
(342,569
)
(20,302
)
(380,225
)
(20,000
)
Other
1,759

25

1,905

211

Net cash used in investing activities
(367,200
)
(40,277
)
(425,757
)
(62,281
)
Financing activities:
 
 
 
 
Payments on long-term debt
(2,000
)
(25,000
)
(27,000
)
(50,000
)
Issuance of common stock
2,554

1,864

3,027

2,905

Taxes paid related to net share settlement of equity awards
(290
)
(664
)
(14,413
)
(5,239
)
Repurchase and retirement of common stock
(10,000
)
(4,000
)
(20,000
)
(8,000
)
Dividend payments
(9,919
)

(19,802
)

Other
1,750

(1,000
)
1,504

(1,270
)
Net cash used in financing activities
(17,905
)
(28,800
)
(76,684
)
(61,604
)
Effect of exchange rate changes on cash
(6,314
)
(1,606
)
(2,967
)
4,540

(Decrease) increase in cash and cash equivalents
(293,130
)
14,476

(368,302
)
(754
)
Cash and cash equivalents at beginning of period
550,236

391,159

625,408

406,389

Cash and cash equivalents at end of period
$257,106
$405,635
$257,106
$405,635


Entegris, Inc. | page 8 of 13


Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)

 
Three months ended
Six months ended
Net sales
June 30, 2018
July 1, 2017
March 31, 2018
June 30, 2018
July 1, 2017
Specialty Chemicals and Engineered Materials
$134,336
$121,174
$130,743
$265,079
$235,609
Microcontamination Control
124,681

104,407

118,637

243,318

204,462

Advanced Materials Handling
124,042

103,421

117,819

241,861

206,308

     Total net sales
$383,059
$329,002
$367,199
$750,258
$646,379

 
Three months ended
Six months ended
Segment profit1
June 30, 2018
July 1, 2017
March 31, 2018
June 30, 2018
July 1, 2017
Specialty Chemicals and Engineered Materials
$37,316
$29,060
$31,562
$68,878
$52,188
Microcontamination Control
39,054

31,796

41,991

81,045

62,783

Advanced Materials Handling
23,114

15,169

23,142

46,256

29,129

Total segment profit
99,484

76,025

96,695

196,179

144,100

Amortization of intangibles
12,014

11,007

11,669

23,683

21,952

Unallocated expenses
12,537

5,928

6,553

19,090

12,138

    Total operating income
$74,933
$59,090
$78,473
$153,406
$110,010


1Beginning in the first quarter of 2018, the Company has changed its definition of segment profit to include an allocation of certain general and administrative costs for the Company’s human resources, finance and information technology functions previously unallocated by the Company. Prior quarter information was recast to reflect the change in the Company's definition of segment profit.


Entegris, Inc. | page 9 of 13


Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
(Unaudited)

 
Three months ended
 
Six months ended
 
June 30, 2018
July 1, 2017
March 31, 2018
 
June 30, 2018
July 1, 2017
Net sales
$383,059
$329,002
$367,199
 
$750,258
$646,379
Gross profit-GAAP
$182,378
$150,303
$175,997
 
$358,375
$289,899
Adjustments to gross profit:
 
 
 
 
 
 
Charge for fair value mark-up of acquired inventory sold
208



 
208

Impairment of equipment

1,966


 

1,966

Adjusted gross profit
$182,586
$152,269
$175,997
 
$358,583
$291,865
 
 
 
 
 
 
 
Gross margin - as a % of net sales
47.6
%
45.7
%
47.9
%
 
47.8
%
44.8
%
Adjusted gross margin - as a % of net sales
47.7
%
46.3
%
47.9
%
 
47.8
%
45.2
%


Entegris, Inc. | page 10 of 13


Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Segment Profit to Adjusted Operating Income
(In thousands)
(Unaudited)

 
Three months ended
Six months ended
Segment profit-GAAP
June 30, 2018
July 1, 2017
March 31, 2018
June 30, 2018
July 1, 2017
Specialty Chemicals and Engineered Materials
$37,316
$29,060
$31,562
$68,878
$52,188
Microcontamination Control
39,054

31,796

41,991

81,045

62,783

Advanced Materials Handling
23,114

15,169

23,142

46,256

29,129

Total segment profit
99,484

76,025

96,695

196,179

144,100

Amortization of intangible assets
12,014

11,007

11,669

23,683

21,952

Unallocated expenses
12,537

5,928

6,553

19,090

12,138

    Total operating income
$74,933
$59,090
$78,473
$153,406
$110,010

 
Three months ended
Six months ended
Adjusted segment profit
June 30, 2018
July 1, 2017
March 31, 2018
June 30, 2018
July 1, 2017
Specialty Chemicals and Engineered Materials
$37,316
$29,060
$31,562
$68,878
$52,188
Microcontamination Control 1
39,262

33,239

41,991

81,253

64,226

Advanced Materials Handling 2
23,114

17,455

23,142

46,256

31,415

Total adjusted segment profit
99,692

79,754

96,695

196,387

147,829

Amortization of intangible assets3





Unallocated expenses4
6,219

5,928

6,553

12,772

12,138

    Total adjusted operating income
$93,473
$73,826
$90,142
$183,615
$135,691

1 Adjusted segment profit for Microcontamination Control for the three and six months ended July 1, 2017 excludes charges for impairment of equipment and severance of $884 and $559, respectively. Adjusted segment profit for Microcontamination Control for the three and six months ended June 30, 2018 excludes charges for fair value mark-up of acquired inventory sold of $208, respectively.
2 Adjusted segment profit for Advanced Material Handling for the three and six months ended July 1, 2017 excludes charges for impairment of equipment of $2,286.
3 Adjusted amortization of intangible assets excludes amortization expense of $12,014, $11,007, and $11,669 for the three months ended June 30, 2018, July 1, 2017, and March 31, 2018, respectively and $23,683 and $21,952 for the six months ended June 30, 2018 and July 1, 2017, respectively.
4 Adjusted unallocated expenses for the three and six months ended June 30, 2018 exclude deal costs and integration expenses of $5,121 and $1,197, respectively.







Entegris, Inc. | page 11 of 13


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
 
June 30, 2018
July 1, 2017
March 31, 2018
 
June 30, 2018
July 1, 2017
Net sales
$383,059
$329,002
$367,199
 
$750,258
$646,379
Net income
$54,349
$39,991
$57,562
 
$111,911
$72,505
Adjustments to net income:
 
 
 
 
 
 
Income tax expense
9,782
11,042
13,546
 
23,328
20,153
Interest expense, net
6,925
8,103
7,226
 
14,151
16,496
Other expense, net
3,877
(46)
139
 
4,016
856
GAAP - Operating income
74,933
59,090
78,473
 
153,406
110,010
Charge for fair value write-up of acquired inventory sold
208



 
208

Deal Costs
5,121



 
5,121

Integration Costs
1,197



 
1,197

Severance

559


 

559

Impairment of equipment

3,170


 

3,170

Amortization of intangible assets
12,014
11,007
11,669
 
23,683
21,952
Adjusted operating income
93,473
73,826
90,142
 
183,615
135,691
Depreciation
15,802
14,411
15,897
 
31,699
28,388
Adjusted EBITDA
$109,275
$88,237
$106,039
 
$215,314
$164,079
 
 
 
 
 
 
 
Adjusted operating margin
24.4
%
22.4
%
24.5
%
 
24.5
%
21.0
%
Adjusted EBITDA - as a % of net sales
28.5
%
26.8
%
28.9
%
 
28.7
%
25.4
%


Entegris, Inc. | page 12 of 13


Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)

 
Three months ended
 
Six months ended
 
June 30, 2018
July 1, 2017
March 31, 2018
 
June 30, 2018
July 1, 2017
GAAP net income
$54,349
$39,991
$57,562
 
$111,911
$72,505
Adjustments to net income:
 
 
 
 
 
 
Charge for fair value write-up of acquired inventory sold

208



 
208


Deal Costs
5,121



 
5,121


Integration Costs
1,197



 
1,197


Severance

559


 

559

Impairment of equipment

3,170


 

3,170

Amortization of intangible assets
12,014

11,007

11,669

 
23,683

21,952

Tax effect of adjustments to net income and discrete items1
(3,702
)
(5,821
)
(2,710
)
 
(6,412
)
(8,526
)
Tax effect of Tax Cuts and Jobs Act
648


$1,494
 
$2,142

Non-GAAP net income
$69,835
$48,906
$68,015
 
$137,850
$89,660
 
 
 
 
 
 
 
Diluted earnings per common share
$0.38
$0.28
$0.40
 
$0.78
$0.51
Effect of adjustments to net income
$0.11
$0.06
$0.07
 
$0.18
$0.12
Diluted non-GAAP earnings per common share
$0.49
$0.34
$0.47
 
$0.96
$0.63

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





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Entegris, Inc. | page 13 of 13