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Entegris Reports Results for Second Quarter of 2023

  • 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.

 

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