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 [phone], 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

 

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