Entegris Reports Results for Second Quarter of 2021

Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s second quarter ended July 3, 2021.

Second-quarter sales were $571.4 million, an increase of 27% from the same quarter last year. Second-quarter GAAP net income was $88.8 million, or $0.65 per diluted share, which included $11.9 million of amortization of intangible assets and $0.6 million of integration costs. Non-GAAP net income was $116.7 million for the second quarter and non-GAAP earnings per diluted share was $0.85.

Bertrand Loy, Entegris’ president and chief executive officer, said: “Our excellent second quarter results were highlighted by 27 percent sales growth and record profitability and EPS. Revenue growth was strong across all three divisions, as we benefited from accelerating demand for our leading unit driven and CAPEX driven product lines. In an industry environment that continues to be very dynamic, our manufacturing and supply chain teams have performed exceptionally well and been instrumental in delivering 25% organic growth in the first half of this year.”

Mr. Loy added: “Our outlook for the full year 2021 has improved, as we benefit from an increasingly strong market environment and demand for our solution set that continues to be very good. Looking further ahead, the long-term fundamentals of the semiconductor market are very encouraging. Positive secular demand trends have become increasingly evident, the pace of node transitions for both logic and memory have quickened and device architectures are becoming much more complex. This is great news for Entegris, because the unique set of capabilities we have built around process materials and materials purity will be key enablers of these new chip architectures. And this will translate into our rapidly expanding served market and increasing Entegris content per wafer.”

Quarterly Financial Results Summary

(in thousands, except percentages and per share data)

GAAP Results

July 3, 2021

June 27, 2020

April 3, 2021

Net sales

$571,352

$448,405

$512,844

Operating income

$138,889

$94,712

$113,978

Operating margin - as a % of net sales

24.3%

21.1%

22.2%

Net income

$88,770

$68,036

$84,676

Diluted earnings per common share

$0.65

$0.50

$0.62

Non-GAAP Results

Non-GAAP adjusted operating income

$151,603

$110,835

$128,036

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

26.5%

24.7%

25.0%

Non-GAAP net income

$116,711

$81,581

$95,513

Diluted non-GAAP earnings per common share

$0.85

$0.60

$0.70

Third-Quarter Outlook

For the third quarter ending October 2, 2021, the Company expects sales of $575 million to $590 million, net income of $104 million to $111 million and diluted earnings per common share between $0.76 and $0.81. On a non-GAAP basis, the Company expects diluted earnings per common share to range from $0.84 to $0.89, reflecting net income on a non-GAAP basis in the range of $114 million to $121 million.

Segment Results

The Company reports its results in the following segments:

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

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

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

Second-Quarter Results Conference Call Details

Entegris will hold a conference call to discuss its results for the second quarter on Tuesday, July 27, 2021, at 9:00 a.m. Eastern Time. Participants should dial 866-248-8441 or +1 323-289-6576, referencing confirmation code 5713272. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. For a replay of the call, please Click Here using passcode 5713272.

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

Management’s slide presentation concerning the results for the second quarter will be posted on the Investor Relations section of www.entegris.com Tuesday morning before the call.

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 http://www.entegris.com.

Non-GAAP Information

The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA, adjusted gross profit, adjusted segment profit, adjusted operating income, non-GAAP net income, non-GAAP adjusted operating margin and diluted non-GAAP earnings per common share, together with related measures thereof, are considered “non-GAAP financial measures” under the rules and regulations of the Securities and Exchange Commission. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company provides supplemental non-GAAP financial measures to better understand and manage its business and believes these measures provide investors and analysts additional and meaningful information for the assessment of the Company’s ongoing results. Management also uses these non-GAAP measures to assist in the evaluation of the performance of its business segments and to make operating decisions. Management believes that the Company’s non-GAAP measures help indicate the Company’s baseline performance before certain gains, losses or other charges that may not be indicative of the Company’s business or future outlook, and that non-GAAP measures offer a more consistent view of business performance. The Company believes the non-GAAP measures aid investors’ overall understanding of the Company’s results by providing a higher degree of transparency for such items and providing a level of disclosure that will help investors generally understand how management plans, measures and evaluates the Company’s business performance. Management believes that the inclusion of non-GAAP measures provides greater consistency in its financial reporting and facilitates investors’ understanding of the Company’s historical operating trends by providing an additional basis for comparisons to prior periods. The reconciliations of GAAP gross profit to adjusted gross profit, GAAP segment profit to adjusted operating income, GAAP net income to adjusted operating income and adjusted EBITDA, GAAP net income and diluted earnings per common share to non-GAAP net income and diluted non-GAAP earnings per common share and GAAP outlook to non-GAAP outlook are included elsewhere in this release.

Forward-Looking Statements

This press release contains forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include statements related to future period guidance; future sales, net income, net income per diluted share, non-GAAP earnings per share, non-GAAP net income, expenses and other financial metrics; the Company’s performance relative to its markets, including the drivers of such performance; the impact, financial or otherwise, of any organizational changes; market and technology trends, including the expected impact of the COVID-19 pandemic; the development of new products and the success of their introductions; the Company's capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the impact of the acquisitions the Company has made and commercial partnerships the Company has established; the Company’s ability to execute on its strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the COVID-19 pandemic on the global economy and financial markets, as well as on the Company, our customers and suppliers, which may impact our sales, gross margin, customer demand and our ability to supply our products to our customers; weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for the Company’s products and solutions; the Company’s ability to meet rapid demand shifts; the Company’s ability to continue technological innovation and introduce new products to meet customers' rapidly changing requirements; the Company’s concentrated customer base; the Company’s ability to identify, complete and integrate acquisitions, joint ventures or other transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages, supply and labor constraints and price increases; changes in government regulations of the countries in which the Company operates; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; the level of, and obligations associated with, the Company’s indebtedness; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed on February 5, 2021, and in the Company’s other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

Three months ended

July 3, 2021

June 27, 2020

April 3, 2021

Net sales

$571,352

$448,405

$512,844

Cost of sales

305,968

241,033

277,858

Gross profit

265,384

207,372

234,986

Selling, general and administrative expenses

72,621

66,872

71,389

Engineering, research and development expenses

41,972

32,572

37,748

Amortization of intangible assets

11,902

13,216

11,871

Operating income

138,889

94,712

113,978

Interest expense, net

10,643

12,792

11,581

Other expense (income), net

23,560

(477)

4,330

Income before income tax expense

104,686

82,397

98,067

Income tax expense

15,916

14,361

13,391

Net income

$88,770

$68,036

$84,676

Basic earnings per common share:

$0.66

$0.51

$0.63

Diluted earnings per common share:

$0.65

$0.50

$0.62

Weighted average shares outstanding:

Basic

135,498

134,700

135,068

Diluted

136,533

136,007

136,502

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

Six months ended

July 3, 2021

June 27, 2020

Net sales

$1,084,196

$860,732

Cost of sales

583,826

467,882

Gross profit

500,370

392,850

Selling, general and administrative expenses

144,010

125,763

Engineering, research and development expenses

79,720

62,204

Amortization of intangible assets

23,773

29,427

Operating income

252,867

175,456

Interest expense, net

22,224

23,030

Other expense, net

27,890

401

Income before income tax expense

202,753

152,025

Income tax expense

29,307

22,983

Net income

$173,446

$129,042

Basic earnings per common share:

$1.28

$0.96

Diluted earnings per common share:

$1.27

$0.95

Weighted average shares outstanding:

Basic

135,283

134,722

Diluted

136,518

136,188

Entegris, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

July 3, 2021

December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents

$401,033

$580,893

Trade accounts and notes receivable, net

309,936

264,392

Inventories, net

387,605

323,944

Deferred tax charges and refundable income taxes

22,622

21,136

Other current assets

38,040

43,892

Total current assets

1,159,236

1,234,257

Property, plant and equipment, net

563,258

525,367

Other assets:

Right-of-use assets

59,117

45,924

Goodwill

749,566

748,037

Intangible assets, net

314,496

337,632

Deferred tax assets and other noncurrent tax assets

14,994

14,519

Other

12,064

11,960

Total assets

$2,872,731

$2,917,696

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

$92,969

$81,618

Accrued liabilities

146,827

177,012

Income tax payable

20,734

43,996

Total current liabilities

260,530

302,626

Long-term debt, excluding current maturities

936,382

1,085,783

Long-term lease liability

53,747

39,730

Other liabilities

106,741

110,063

Shareholders’ equity

1,515,331

1,379,494

Total liabilities and equity

$2,872,731

$2,917,696

Entegris, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Three months ended

Six months ended

July 3, 2021

June 27, 2020

July 3, 2021

June 27, 2020

Operating activities:

Net income

$88,770

$68,036

$173,446

$129,042

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

Depreciation

22,574

20,639

44,669

41,287

Amortization

11,902

13,216

23,773

29,427

Stock-based compensation expense

7,519

5,655

14,657

10,649

Loss on extinguishment of debt and modification

23,338

1,470

23,338

1,470

Other

(8,369)

5,862

(203)

11,425

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

Trade accounts and notes receivable

(26,667)

1,908

(48,231)

(42,087)

Inventories

(30,386)

(37,157)

(69,723)

(55,362)

Accounts payable and accrued liabilities

13,244

43,663

(15,347)

5,643

Income taxes payable, refundable income taxes and noncurrent taxes payable

(22,854)

4,637

(26,442)

4,412

Other

2,784

2,092

15,033

5,518

Net cash provided by operating activities

81,855

130,021

134,970

141,424

Investing activities:

Acquisition of property and equipment

(41,771)

(24,288)

(85,101)

(46,873)

Acquisition of business, net of cash acquired

(2,250)

(15)

(2,250)

(75,645)

Other

18

206

90

211

Net cash used in investing activities

(44,003)

(24,097)

(87,261)

(122,307)

Financing activities:

Proceeds from revolving credit facility and long-term debt

451,000

400,000

451,000

617,000

Payments of revolving credit facility and long-term debt

(601,000)

(293,000)

(601,000)

(368,000)

Payments for debt extinguishment costs

(19,080)

(19,080)

Payments for dividends

(10,889)

(10,805)

(21,797)

(21,652)

Issuance of common stock

15,245

1,198

16,817

1,749

Taxes paid related to net share settlement of equity awards

(55)

(1,280)

(15,093)

(12,720)

Repurchase and retirement of common stock

(15,000)

(30,000)

(29,564)

Deferred acquisition payments

(16,125)

Other

(4,800)

(3,965)

(4,801)

(6,855)

Net cash (used in) provided by financing activities

(184,579)

92,148

(223,954)

163,833

Effect of exchange rate changes on cash and cash equivalents

(760)

(482)

(3,615)

(2,194)

Decrease (increase) in cash and cash equivalents

(147,487)

197,590

(179,860)

180,756

Cash and cash equivalents at beginning of period

548,520

335,077

580,893

351,911

Cash and cash equivalents at end of period

$401,033

$532,667

$401,033

$532,667

Entegris, Inc. and Subsidiaries

Segment Information

(In thousands)

(Unaudited)

 

Three months ended

Six months ended

Net sales

July 3, 2021

June 27, 2020

April 3, 2021

July 3, 2021

June 27, 2020

Specialty Chemicals and Engineered Materials

$180,366

$146,213

$166,541

$346,907

$290,427

Microcontamination Control

227,521

183,758

207,099

434,620

343,019

Advanced Materials Handling

172,502

126,434

148,541

321,043

242,571

Inter-segment elimination

(9,037)

(8,000)

(9,337)

(18,374)

(15,285)

Total net sales

$571,352

$448,405

$512,844

$1,084,196

$860,732

 

Three months ended

Six months ended

Segment profit

July 3, 2021

June 27, 2020

April 3, 2021

July 3, 2021

June 27, 2020

Specialty Chemicals and Engineered Materials

$44,945

$32,938

$34,556

$79,501

$65,608

Microcontamination Control

78,132

62,137

70,566

148,698

112,304

Advanced Materials Handling

42,093

22,809

32,095

74,188

43,441

Total segment profit

165,170

117,884

137,217

302,387

221,353

Amortization of intangibles

11,902

13,216

11,871

23,773

29,427

Unallocated expenses

14,379

9,956

11,368

25,747

16,470

Total operating income

$138,889

$94,712

$113,978

$252,867

$175,456

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Gross Profit to Adjusted Gross Profit

(In thousands)

(Unaudited)

 

Three months ended

Six months ended

July 3, 2021

June 27, 2020

April 3, 2021

July 3, 2021

June 27, 2020

Net sales

$571,352

$448,405

$512,844

$1,084,196

$860,732

Gross profit-GAAP

$265,384

$207,372

$234,986

$500,370

$392,850

Adjustments to gross profit:

Integration costs

(1,557)

(1,557)

Severance and restructuring costs

465

465

Charge for fair value mark-up of acquired inventory sold

361

Adjusted gross profit

$265,384

$206,280

$234,986

$500,370

$392,119

Gross margin - as a % of net sales

46.4%

46.2%

45.8%

46.2%

45.6%

Adjusted gross margin - as a % of net sales

46.4%

46.0%

45.8%

46.2%

45.6%

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Segment Profit to Adjusted Operating Income

(In thousands)

(Unaudited)

 

Three months ended

Six months ended

Segment profit-GAAP

July 3, 2021

June 27, 2020

April 3, 2021

July 3, 2021

June 27, 2020

Specialty Chemicals and Engineered Materials (SCEM)

$44,945

$32,938

$34,556

$79,501

$65,608

Microcontamination Control (MC)

78,132

62,137

70,566

148,698

112,304

Advanced Materials Handling (AMH)

42,093

22,809

32,095

74,188

43,441

Total segment profit

165,170

117,884

137,217

302,387

221,353

Amortization of intangible assets

11,902

13,216

11,871

23,773

29,427

Unallocated expenses

14,379

9,956

11,368

25,747

16,470

Total operating income

$138,889

$94,712

$113,978

$252,867

$175,456

 

Three months ended

Six months ended

Adjusted segment profit

July 3, 2021

June 27, 2020

April 3, 2021

July 3, 2021

June 27, 2020

SCEM segment profit

$44,945

$32,938

$34,556

$79,501

$65,608

Integration costs

(1,557)

(1,557)

Severance and restructuring costs

51

455

47

98

629

Charge for fair value write-up of acquired inventory sold

235

SCEM adjusted segment profit

$44,996

$31,836

$34,603

$79,599

$64,915

MC segment profit

$78,132

$62,137

$70,566

$148,698

$112,304

Severance and restructuring costs

55

494

51

106

684

Charge for fair value write-up of acquired inventory sold

126

MC adjusted segment profit

$78,187

$62,631

$70,617

$148,804

$113,114

AMH segment profit

$42,093

$22,809

$32,095

$74,188

$43,441

Severance and restructuring costs

38

814

37

75

949

AMH adjusted segment profit

$42,131

$23,623

$32,132

$74,263

$44,390

Unallocated general and administrative expenses

$14,379

$9,956

$11,368

$25,747

$16,470

Unallocated deal and integration costs

(632)

(2,415)

(2,044)

(2,676)

(3,894)

Unallocated severance and restructuring costs

(36)

(286)

(8)

(44)

(630)

Adjusted unallocated general and administrative expenses

$13,711

$7,255

$9,316

$23,027

$11,946

Total adjusted segment profit

$165,314

$118,090

$137,352

$302,666

$222,419

Adjusted amortization of intangible assets

Adjusted unallocated general and administrative expenses

13,711

7,255

9,316

23,027

11,946

Total adjusted operating income

$151,603

$110,835

$128,036

$279,639

$210,473

Entegris, Inc. and Subsidiaries

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

(In thousands)

(Unaudited)

 

Three months ended

Six months ended

July 3, 2021

June 27, 2020

April 3, 2021

July 3, 2021

June 27, 2020

Net sales

$571,352

$448,405

$512,844

$1,084,196

$860,732

Net income

$88,770

$68,036

$84,676

$173,446

$129,042

Net income - as a % of net sales

15.5%

15.2%

16.5%

16.0%

15.0%

Adjustments to net income:

Income tax expense

15,916

14,361

13,391

29,307

22,983

Interest expense, net

10,643

12,792

11,581

22,224

23,030

Other expense (income), net

23,560

(477)

4,330

27,890

401

GAAP - Operating income

138,889

94,712

113,978

252,867

175,456

Operating margin - as a % of net sales

24.3%

21.1%

22.2%

23.3%

20.4%

Charge for fair value write-up of acquired inventory sold

361

Deal and transaction costs

503

1,934

Integration costs

632

355

2,044

2,676

403

Severance and restructuring costs

180

2,049

143

323

2,892

Amortization of intangible assets

11,902

13,216

11,871

23,773

29,427

Adjusted operating income

151,603

110,835

128,036

279,639

210,473

Adjusted operating margin - as a % of net sales

26.5%

24.7%

25.0%

25.8%

24.5%

Depreciation

22,574

20,639

22,095

44,669

41,287

Adjusted EBITDA

$174,177

$131,474

$150,131

$324,308

$251,760

Adjusted EBITDA - as a % of net sales

30.5%

29.3%

29.3%

29.9%

29.2%

Entegris, Inc. and Subsidiaries

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

(In thousands, except per share data)

(Unaudited)

 

Three months ended

Six months ended

July 3, 2021

June 27, 2020

April 3, 2021

July 3, 2021

June 27, 2020

GAAP net income

$88,770

$68,036

$84,676

$173,446

$129,042

Adjustments to net income:

Charge for fair value write-up of inventory acquired

361

Deal and transaction costs

503

1,934

Integration costs

632

355

2,044

2,676

403

Severance and restructuring costs

180

2,049

143

323

2,892

Loss on extinguishment of debt and modification

23,338

1,470

23,338

1,470

Amortization of intangible assets

11,902

13,216

11,871

23,773

29,427

Tax effect of adjustments to net income and discrete items1

(8,111)

(4,048)

(3,221)

(11,332)

(8,377)

Non-GAAP net income

$116,711

$81,581

$95,513

$212,224

$157,152

Diluted earnings per common share

$0.65

$0.50

$0.62

$1.27

$0.95

Effect of adjustments to net income

$0.20

$0.10

$0.08

$0.28

$0.21

Diluted non-GAAP earnings per common share

$0.85

$0.60

$0.70

$1.55

$1.15

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

Entegris, Inc. and Subsidiaries

Reconciliation of GAAP Outlook to Non-GAAP Outlook

(In millions, except per share data)

(Unaudited)

 

Third-Quarter Outlook

Reconciliation GAAP net income to non-GAAP net income

October 2, 2021

GAAP net income

$104 - $111

Adjustments to net income:

Restructuring and integration costs

2

Amortization of intangible assets

11

Income tax effect

(3)

Non-GAAP net income

$114 - $121

 

Third-Quarter Outlook

Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share

October 2, 2021

Diluted earnings per common share

$0.76 - $0.81

Adjustments to diluted earnings per common share:

Restructuring and integration costs

0.01

Amortization of intangible assets

0.09

Income tax effect

(0.02)

Diluted non-GAAP earnings per common share

$0.84 - $0.89

Contacts:

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

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