- Record quarterly revenue of $303.1 million
- GAAP net income of $32.9 million, or $0.23 per diluted share
- Non-GAAP net income of $40.3 million, or $0.28 per diluted share
BILLERICA, Mass., July 27, 2016 (GLOBE NEWSWIRE) — Entegris, Inc. (Nasdaq: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 July 2, 2016.
The Company reported record second-quarter sales of $303.1 million. Second-quarter net income was $32.9 million, or $0.23 per diluted share, which included amortization of intangible assets of $11.1 million. Non-GAAP net income was $40.3 million, or $0.28 per diluted share.
For the first half of fiscal 2016, sales of $570.1 million increased 5 percent from the same period a year ago. First-half 2016 net income was $49.1 million, or $0.35 per share, which included amortization of intangible assets of $22.4 million. Non-GAAP net income for the first half of fiscal 2016 was $63.9 million, or $0.45 per diluted share.
Bertrand Loy, president and chief executive officer, said: “I am very pleased with the quality of our execution and the performance of a number of our new products, as we achieved record sales and earnings per share. Our revenue grew 13.5 percent sequentially, reflecting robust demand across our businesses and particular strength in filtration, wafer handling, and specialty materials. We generated a record $71.3 million in adjusted EBITDA, achieving an adjusted EBITDA margin of 23.5 percent. Our strong cash flow allowed us to increase our cash balance at quarter end to $373.7 million while repaying $25.0 million of our long-term debt.”
Mr. Loy added: “2016 is a year of celebration for Entegris as we mark our 50th year as a company. We are proud of this milestone and the many successes we have achieved. Yet, we are even more excited about what lies ahead as we continue to create unique value for our customers by developing mission-critical solutions for their manufacturing processes.”
Quarterly Financial Results Summary
(in millions, except per share data)
| GAAP Results | Q2-2016 | Q2-2015 | Q1-2016 | ||||||
| Net sales | $ | 303,052 | $ | 280,709 | $ | 267,024 | |||
| Operating income | 46,400 | 39,347 | 29,559 | ||||||
| Operating margin | 15.3 | % | 14.0 | % | 11.1 | % | |||
| Net income | $ | 32,890 | $ | 24,448 | $ | 16,212 | |||
| Earnings per share (EPS) | $ | 0.23 | $ | 0.17 | $ | 0.11 | |||
| Non-GAAP Results | |||||||||
| Non-GAAP adjusted operating income | $ | 57,462 | $ | 53,671 | $ | 40,848 | |||
| Adjusted operating margin | 19.0 | % | 19.1 | % | 15.3 | % | |||
| Non-GAAP net income | $ | 40,290 | $ | 33,903 | $ | 23,617 | |||
| Non-GAAP EPS | $ | 0.28 | $ | 0.24 | $ | 0.17 | |||
Third-Quarter Outlook
For the fiscal third quarter ending September 30, 2016, the Company expects sales of $285 million to $300 million, net income of $25 million to $30 million, and net income per diluted share between $0.18 to $0.21. On a non-GAAP basis, EPS is expected to range from $0.23 to $0.26 per diluted share, which reflects net income on a non-GAAP basis in the range of $32 million to $37 million, which is adjusted for expected amortization expense of approximately $11 million or $0.05 per share.
Segment Results
The Company reports its results in two business segments: Critical Materials Handling (CMH) and Electronic Materials (EM). Summary results by segment are contained in this press release.
CMH provides a broad range of products that filter, handle, dispense, and protect critical materials used in the semiconductor manufacturing process and in other high-technology manufacturing. CMH’s products and subsystems include high-purity materials packaging, fluid-handling and dispensing systems, liquid filters, as well as microenvironments that protect critical substrates such as wafers during shipping and manufacturing. CMH also provides specialized graphite components and specialty coatings for use in high temperature applications.
EM provides high-performance materials and specialty gas management solutions that enable high yield, cost effective semiconductor manufacturing. EM’s products consist of specialized chemistries and performance materials, gas microcontamination control solutions, and sub-atmospheric pressure gas delivery systems for the efficient handling of hazardous gases to semiconductor process equipment.
Second-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the second quarter on Wednesday, July 27, 2016, at 10:00 a.m. Eastern Time. Participants should dial 1-719-325-2435 or toll-free 1-888-455-2263, referencing confirmation code 4609432. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. A replay of the call will be available starting July 27, 2016 at 1:00 p.m. (ET) until Saturday, September 10, 2016. The replay can be accessed by using passcode 4609432 after dialing 1-719-325-2435. A live and on-demand webcast of the call can also be accessed from the investor relations section of Entegris’ website at www.entegris.com.
Please also refer to Management’s slide presentation concerning second-quarter results which may be referred to during the call. This presentation will be posted on the investor relations section of www.entegris.com Wednesday morning before the call.
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 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. These financial measures are provided as a supplement to financial measures provided in accordance with GAAP. We provide non-GAAP financial measures in order to further assess and measure operating performance. Management believes the non-GAAP measures provide meaningful supplemental information regarding our baseline performance before certain gains, losses or other charges that may not be indicative of our business or future outlook. We believe these non-GAAP measures will aid investors’ overall understanding of our results by providing a higher degree of transparency for certain expenses and providing a level of disclosure that will help investors understand how we plan and measure our business. The reconciliations of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA, and GAAP to Non-GAAP Earnings per Share are included elsewhere in this release.
Forward-Looking Statements
Certain information contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current management expectations only as of the date of this press release, and involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Statements that include such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “will,” “should” or the negative thereof and similar expressions as they relate to Entegris or our management are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris’ stock, Entegris’ future operating results, other acquisition and investment opportunities available to Entegris, general business and market conditions and other factors. Additional information concerning these and other risk factors may be found in previous financial press releases issued by Entegris and Entegris’ periodic public filings with the Securities and Exchange Commission, including discussions appearing under the headings “Risks Relating to our Business and Industry,” “Risks Relating to Our Indebtedness,” “Manufacturing Risks,” “International Risks,” and “Risks Related to Owning Our Common Stock” in Item 1A of our Annual Report on Form 10–K for the fiscal year ended December 31, 2015, filed with the U.S Securities and Exchange Commission on February 29, 2016, as well as other matters and important factors disclosed previously and from time to time in the filings of Entegris with the U.S. Securities and Exchange Commission. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update publicly any forward-looking statements contained herein.
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||
| July 2, 2016 | June 27, 2015 | April 2, 2016 | ||||||||
| Net sales | $ | 303,052 | $ | 280,709 | $ | 267,024 | ||||
| Cost of sales | 163,847 | 152,622 | 152,318 | |||||||
| Gross profit | 139,205 | 128,087 | 114,706 | |||||||
| Selling, general and administrative expenses | 53,597 | 50,270 | 47,956 | |||||||
| Engineering, research and development expenses | 28,146 | 26,542 | 25,902 | |||||||
| Amortization of intangible assets | 11,062 | 11,928 | 11,289 | |||||||
| Operating income | 46,400 | 39,347 | 29,559 | |||||||
| Interest expense, net | 9,051 | 9,715 | 9,149 | |||||||
| Other income, net | (1,054 | ) | (1,109 | ) | (675 | ) | ||||
| Income before income tax expense and equity in net loss of affiliate | 38,403 | 30,741 | 21,085 | |||||||
| Income tax expense | 5,513 | 6,245 | 4,873 | |||||||
| Equity in net loss of affiliates | – | 48 | – | |||||||
| Net income | $ | 32,890 | $ | 24,448 | $ | 16,212 | ||||
| Basic net income per common share: | $ | 0.23 | $ | 0.17 | $ | 0.12 | ||||
| Diluted net income per common share: | $ | 0.23 | $ | 0.17 | $ | 0.11 | ||||
| Weighted average shares outstanding: | ||||||||||
| Basic | 140,953 | 140,307 | 140,780 | |||||||
| Diluted | 141,723 | 140,993 | 141,371 | |||||||
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Six months ended | |||||||
| July 2, 2016 | June 27, 2015 | ||||||
| Net sales | $ | 570,076 | $ | 544,082 | |||
| Cost of sales | 316,165 | 299,459 | |||||
| Gross profit | 253,911 | 244,623 | |||||
| Selling, general and administrative expenses | 101,553 | 101,160 | |||||
| Engineering, research and development expenses | 54,048 | 52,342 | |||||
| Amortization of intangible assets | 22,351 | 24,235 | |||||
| Operating income | 75,959 | 66,886 | |||||
| Interest expense, net | 18,200 | 19,343 | |||||
| Other income, net | (1,729 | ) | (2,842 | ) | |||
| Income before income tax expense and equity in net loss of affiliate | 59,488 | 50,385 | |||||
| Income tax expense | 10,386 | 10,915 | |||||
| Equity in net loss of affiliates | – | 150 | |||||
| Net income | $ | 49,102 | $ | 39,320 | |||
| Basic net income per common share: | $ | 0.35 | $ | 0.28 | |||
| Diluted net income per common share: | $ | 0.35 | $ | 0.28 | |||
| Weighted average shares outstanding: | 140,867 | 140,146 | |||||
| Basic | 141,547 | 140,866 | |||||
| Diluted | |||||||
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| July 2, 2016 | December 31, 2015 | |||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 373,743 | $ | 349,825 | ||||||
| Short-term investments | – | 2,181 | ||||||||
| Accounts receivable, net | 180,596 | 141,409 | ||||||||
| Inventories | 181,086 | 173,176 | ||||||||
| Deferred tax charges and refundable income taxes | 18,971 | 18,943 | ||||||||
| Other current assets | 17,777 | 23,253 | ||||||||
| Total current assets | 772,173 | 708,787 | ||||||||
| Property, plant and equipment, net | 322,720 | 321,301 | ||||||||
| Goodwill | 343,261 | 342,111 | ||||||||
| Intangible assets, net | 240,688 | 258,942 | ||||||||
| Deferred tax assets – non-current | 8,848 | 7,771 | ||||||||
| Other | 7,792 | 7,785 | ||||||||
| Total assets | $ | 1,695,482 | $ | 1,646,697 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Long-term debt, current maturities | $ | 50,000 | $ | 50,000 | ||||||
| Accounts payable | 49,637 | 36,916 | ||||||||
| Accrued liabilities | 73,964 | 75,859 | ||||||||
| Income tax payable and deferred tax liabilities | 13,538 | 12,775 | ||||||||
| Total current liabilities | 187,139 | 175,550 | ||||||||
| Long-term debt, excluding current maturities | 582,235 | 606,044 | ||||||||
| Other liabilities and deferred tax liabilities | 64,878 | 62,220 | ||||||||
| Shareholders’ equity | 861,230 | 802,883 | ||||||||
| Total liabilities and shareholders’ equity | $ | 1,695,482 | $ | 1,646,697 | ||||||
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Three months ended | Six months ended | ||||||||||||
| July 2, 2016 | June 27, 2015 | July 2, 2016 | June 27, 2015 | ||||||||||
| Operating activities: | |||||||||||||
| Net income | $ | 32,890 | $ | 24,448 | $ | 49,102 | $ | 39,320 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
| Depreciation | 13,825 | 13,405 | 27,525 | 26,724 | |||||||||
| Amortization | 11,062 | 11,928 | 22,351 | 24,235 | |||||||||
| Share-based compensation expense | 3,505 | 2,887 | 6,366 | 5,145 | |||||||||
| Provision for deferred income taxes | (720 | ) | 5,868 | (931 | ) | 3,035 | |||||||
| Other | 4,408 | 3,706 | 9,204 | (8,136 | ) | ||||||||
| Changes in operating assets and liabilities: | |||||||||||||
| Trade accounts and notes receivable | (29,300 | ) | 3,652 | (36,099 | ) | (28,594 | ) | ||||||
| Inventories | 1,609 | (20,988 | ) | (11,389 | ) | (28,500 | ) | ||||||
| Accounts payable and accrued liabilities | 23,065 | (3,164 | ) | 13,555 | (9,126 | ) | |||||||
| Income taxes payable and refundable income taxes | 1,133 | (3,605 | ) | 407 | (364 | ) | |||||||
| Other | (278 | ) | (1,891 | ) | (1,553 | ) | 12,375 | ||||||
| Net cash provided by operating activities | 61,199 | 36,246 | 78,538 | 36,114 | |||||||||
| Investing activities: | |||||||||||||
| Acquisition of property and equipment | (14,325 | ) | (13,742 | ) | (32,144 | ) | (34,230 | ) | |||||
| Other | 837 | 865 | (1,658 | ) | 1,925 | ||||||||
| Net cash used in investing activities | (13,488 | ) | (12,877 | ) | (33,802 | ) | (32,305 | ) | |||||
| Financing activities: | |||||||||||||
| Payments on long-term debt | (25,000 | ) | (50,000 | ) | (25,000 | ) | (75,000 | ) | |||||
| Issuance of common stock | 2,380 | 454 | 2,380 | 974 | |||||||||
| Repurchase and retirement of common stock | – | – | (3,573 | ) | – | ||||||||
| Taxes paid related to net share settlement of equity awards | (136 | ) | (350 | ) | (2,203 | ) | (2,403 | ) | |||||
| Other | 42 | 217 | 91 | 352 | |||||||||
| Net cash used in provided by financing activities | (22,714 | ) | (49,679 | ) | (28,305 | ) | (76,077 | ) | |||||
| Effect of exchange rate changes on cash | 4,343 | (1,335 | ) | 7,487 | (3,689 | ) | |||||||
| Increase (decrease) in cash and cash equivalents | 29,340 | (27,645 | ) | 23,918 | (75,957 | ) | |||||||
| Cash and cash equivalents at beginning of period | 344,403 | 341,387 | 349,825 | 389,699 | |||||||||
| Cash and cash equivalents at end of period | $ | 373,743 | $ | 313,742 | $ | 373,743 | $ | 313,742 | |||||
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
| Three months ended | Six months ended | ||||||||||||||
| Net sales | July 2, 2016 | June 27, 2015 | April 2, 2016 | July 2, 2016 | June 27, 2015 | ||||||||||
| Critical Materials Handling | $ | 194,880 | $ | 174,253 | $ | 166,229 | $ | 361,109 | $ | 341,721 | |||||
| Electronic Materials | 108,172 | 106,456 | 100,795 | 208,967 | 202,361 | ||||||||||
| Total net sales | $ | 303,052 | $ | 280,709 | $ | 267,024 | $ | 570,076 | $ | 544,082 | |||||
| Three months ended | Six months ended | ||||||||||||||
| Segment profit | July 2, 2016 | June 27, 2015 | April 2, 2016 | July 2, 2016 | June 27, 2015 | ||||||||||
| Critical Materials Handling | $ | 52,524 | $ | 43,732 | $ | 37,892 | $ | 90,416 | $ | 85,073 | |||||
| Electronic Materials | 27,475 | 28,559 | 21,575 | 49,050 | 48,781 | ||||||||||
| Total segment profit | 79,999 | 72,291 | 59,467 | 139,466 | 133,854 | ||||||||||
| Amortization of intangibles | 11,062 | 11,928 | 11,289 | 22,351 | 24,235 | ||||||||||
| Unallocated expenses | 22,537 | 21,016 | 18,619 | 41,156 | 42,733 | ||||||||||
| Total operating income | $ | 46,400 | $ | 39,347 | $ | 29,559 | $ | 75,959 | $ | 66,886 | |||||
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
(In thousands, except per share data)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| July 2, 2016 | June 27, 2015 | April 2, 2016 | July 2, 2016 | June 27, 2015 | ||||||||||||
| Net sales | $ | 303,052 | $ | 280,709 | $ | 267,024 | $ | 570,076 | $ | 544,082 | ||||||
| Net income | $ | 32,890 | $ | 24,448 | $ | 16,212 | $ | 49,102 | $ | 39,320 | ||||||
| Adjustments to net income: | ||||||||||||||||
| Equity in net loss of affiliates | – | 48 | – | – | 150 | |||||||||||
| Income tax expense | 5,513 | 6,245 | 4,873 | 10,386 | 10,915 | |||||||||||
| Interest expense, net | 9,051 | 9,715 | 9,149 | 18,200 | 19,343 | |||||||||||
| Other income, net | (1,054 | ) | (1,109 | ) | (675 | ) | (1,729 | ) | (2,842 | ) | ||||||
| GAAP – Operating income | 46,400 | 39,347 | 29,559 | 75,959 | 66,886 | |||||||||||
| Integration costs | – | 2,396 | – | – | 5,008 | |||||||||||
| Amortization of intangible assets | 11,062 | 11,928 | 11,289 | 22,351 | 24,235 | |||||||||||
| Adjusted operating income | 57,462 | 53,671 | 40,848 | 98,310 | 96,129 | |||||||||||
| Depreciation | 13,825 | 13,405 | 13,700 | 27,525 | 26,724 | |||||||||||
| Adjusted EBITDA | $ | 71,287 | $ | 67,076 | $ | 54,548 | $ | 125,835 | $ | 122,853 | ||||||
| Adjusted operating margin | 19.0 | % | 19.1 | % | 15.3 | % | 17.2 | % | 17.7 | % | ||||||
| Adjusted EBITDA – as a % of net sales | 23.5 | % | 23.9 | % | 20.4 | % | 22.1 | % | 22.6 | % | ||||||
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| July 2, 2016 | June 27, 2015 | April 2, 2016 | July 2, 2016 | June 27, 2015 | ||||||||||||
| Net income | $ | 32,890 | $ | 24,448 | $ | 16,212 | $ | 49,102 | $ | 39,320 | ||||||
| Adjustments to net income: | ||||||||||||||||
| Integration costs | – | 2,396 | – | – | 5,008 | |||||||||||
| (Gain) loss on impairment or sale of equity investment | (38 | ) | (56 | ) | (118 | ) | (156 | ) | 617 | |||||||
| Amortization of intangible assets | 11,062 | 11,928 | 11,289 | 22,351 | 24,235 | |||||||||||
| Tax effect of adjustments of net income | (3,624 | ) | (4,813 | ) | (3,766 | ) | (7,390 | ) | (9,831 | ) | ||||||
| Non-GAAP net income | $ | 40,290 | $ | 33,903 | $ | 23,617 | $ | 63,907 | $ | 59,349 | ||||||
| Diluted income per common share | $ | 0.23 | $ | 0.17 | $ | 0.11 | $ | 0.35 | $ | 0.28 | ||||||
| Effect of adjustments to net income | 0.05 | 0.07 | 0.05 | 0.10 | 0.14 | |||||||||||
| Diluted non-GAAP income per common share | $ | 0.28 | $ | 0.24 | $ | 0.17 | $ | 0.45 | $ | 0.42 | ||||||
CONTACT: Steven Cantor VP of Corporate Relations T +1 978 436 6750 [email protected]