BILLERICA, Mass.—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 first quarter ended March 31, 2018.
First-quarter sales were $367.2 million, an increase of 16% from the same quarter last year and a 5% increase sequentially. First-quarter net income was $57.6 million, or $0.40 per diluted share, which include $11.7 million of amortization of intangible assets, and a $1.5 million tax charge related to the Tax Cuts and Jobs Act. Non-GAAP net income was $68.0 million, or $0.47 per diluted share.
Bertrand Loy, president and chief executive officer, said: “We are very pleased with our record results in the first quarter. We grew our revenue faster than our markets and expanded our profits faster than our top line growth — both of which are key ongoing goals. Industry trends continue to be positive for Entegris, as the semiconductor industry’s intersecting needs for new materials and increasing purity requirements are driving new market opportunities for our unique solutions set.”
Mr. Loy added: “We generated record quarterly adjusted EBITDA of $106 million, or 28.9% of revenue. Our strong operational execution supported the deployment of $104 million of capital in the quarter consistent with our strategy, which included capital investments to support future growth, an accretive acquisition, additional debt pay down, and our continued share repurchase and quarterly dividend programs.”
Quarterly Financial Results Summary
(in thousands, except per share data)
| GAAP Results |
Q1-2018 |
Q1-2017 |
Q4-2017 |
|||||||||||||||
| Net sales | $367,199 | $317,377 | $350,562 | |||||||||||||||
| Operating income | $78,473 | $50,920 | $71,152 | |||||||||||||||
| Operating margin | 21.4% | 16.0% | 20.3% | |||||||||||||||
| Net income (loss) | $57,562 | $32,514 | $(28,341) | |||||||||||||||
| Diluted earnings (loss) per share (EPS) | $0.40 | $0.23 | $(0.20) | |||||||||||||||
| Non-GAAP Results | ||||||||||||||||||
| Non-GAAP adjusted operating income | $90,142 | $61,865 | $82,172 | |||||||||||||||
| Adjusted operating margin | 24.5% | 19.5% | 23.4% | |||||||||||||||
| Non-GAAP net income | $68,015 | $40,754 | $59,694 | |||||||||||||||
| Non-GAAP EPS | $0.47 | $0.28 | $0.42 | |||||||||||||||
Second-Quarter Outlook
For the second quarter ending June 30, 2018, the Company expects sales of $370 million to $385 million, net income of $52 million to $59 million, and net income per diluted share between $0.36 and $0.41. On a non-GAAP basis, EPS is expected to range from $0.42 to $0.47 per diluted share, which reflects net income on a non-GAAP basis in the range of $60 million to $68 million, which is adjusted for expected amortization expense of approximately $12 million or $0.06 per share.
Segment Results
The Company reports its results in the following segments:
Specialty Chemicals and Engineered Materials (SCEM): SCEM provides high-performance and high-purity process chemistries, gases and materials, as well as safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.
Microcontamination Control (MC): MC solutions purify critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.
Advanced Materials Handling (AMH): AMH develops solutions to monitor, protect, transport, and deliver critical liquid chemistries and substrates for a broad set of applications in the semiconductor industry and other high-technology industries.
First-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the first quarter on Thursday, April 26, 2018, at 9:00 a.m. Eastern Time. Participants should dial 888-394-8218 or +1 323-701-0225, referencing confirmation code 3750785. 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 3750785. The replay will be available starting at 12:00 p.m. ET on Thursday, April 26 through June 9 at 12:00 p.m. ET.
The call can also be accessed live and on-demand from the Entegris website. Point your web browser to http://investor.entegris.com/events.cfm and follow the link to the webcast. The on-demand playback will be available for six weeks after the conclusion of the teleconference.
Management’s slide presentation concerning the results for the first quarter, which may be referred to during the call, will be posted on the investor relations section of www.entegris.com Thursday morning before the call.
ABOUT ENTEGRIS
Entegris is a leader in specialty chemicals and advanced materials solutions for the microelectronics industry and other high-tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, China, France, Germany, Israel, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at www.entegris.com.
Non-GAAP Information
The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA, Adjusted Gross Profit, Adjusted Segment Profit, and Adjusted Operating Income together with related measures thereof, and non-GAAP EPS, are considered “Non-GAAP financial measures” under the rules and regulations of the Securities and Exchange Commission. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision-making, as a means to evaluate period-to-period comparisons, as well as comparisons to our competitors’ operating results. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring business operating results, such as amortization, depreciation and discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing and understanding our results and performance and when planning, forecasting, and analyzing future periods. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze our business. The reconciliations of GAAP Net Income (Loss) to Adjusted Operating Income and Adjusted EBITDA, and GAAP Net Income (Loss) to Non-GAAP Earnings per Share are included elsewhere in this release.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include statements related to future period guidance; future sales, net income, net income per diluted share, non-GAAP EPS, non-GAAP net income, expenses and other financial metrics; our performance relative to our markets; market and technology trends; the development of new products and the success of their introductions; Company’s capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the effect of the Tax Cuts and Jobs Act on our capital allocation strategy; the impact of the acquisitions we have made and commercial partnerships we have established; our ability to execute on our strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ. These risks and uncertainties include, but are not limited to, weakening of global and/or regional economic conditions, generally or specifically in the semiconductor industry, which could decrease the demand for our products and solutions; our ability to meet rapid demand shifts; our ability to continue technological innovation and introduce new products to meet our customers’ rapidly changing requirements; our concentrated customer base; our ability to identify, effect and integrate acquisitions, joint ventures or other transactions; our ability to protect and enforce intellectual property rights; operational, political and legal risks of our international operations; our dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages and price increases; changes in government regulations of the countries in which we operate; fluctuation of currency exchange rates; fluctuations in the market price of Entegris’ stock; the level of, and obligations associated with, our indebtedness; and other risk factors and additional information described in our filings with the Securities and Exchange Commission, including under the heading “Risks Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed on February 15, 2018, and in our other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
|
Entegris, Inc. and Subsidiaries |
||||||||||||||||
| Three months ended | ||||||||||||||||
| March 31, 2018 | April 1, 2017 | December 31, 2017 | ||||||||||||||
| Net sales | $367,199 | $317,377 | $350,562 | |||||||||||||
| Cost of sales | 191,202 | 177,781 | 186,883 | |||||||||||||
| Gross profit | 175,997 | 139,596 | 163,679 | |||||||||||||
| Selling, general and administrative expenses | 58,269 | 50,492 | 55,018 | |||||||||||||
| Engineering, research and development expenses | 27,586 | 27,239 | 26,489 | |||||||||||||
| Amortization of intangible assets | 11,669 | 10,945 | 11,020 | |||||||||||||
| Operating income | 78,473 | 50,920 | 71,152 | |||||||||||||
| Interest expense, net | 7,226 | 8,393 | 7,533 | |||||||||||||
| Other expense, net | 139 | 902 | 21,696 | |||||||||||||
| Income before income tax expense | 71,108 | 41,625 | 41,923 | |||||||||||||
| Income tax expense | 13,546 | 9,111 | 70,264 | |||||||||||||
| Net income (loss) | $57,562 | $32,514 | $(28,341) | |||||||||||||
| Basic net income (loss) per common share: | $0.41 | $0.23 | $(0.20) | |||||||||||||
| Diluted net income (loss) per common share: | $0.40 | $0.23 | $(0.20) | |||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 141,581 | 141,501 | 141,329 | |||||||||||||
| Diluted | 143,652 | 143,315 | 141,329 | |||||||||||||
|
Entegris, Inc. and Subsidiaries |
||||||||||
| March 31, 2018 | December 31, 2017 | |||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $550,236 | $625,408 | ||||||||
| Accounts receivable, net | 195,284 | 183,434 | ||||||||
| Inventories | 214,145 | 198,089 | ||||||||
| Deferred tax charges and refundable income taxes | 17,373 | 18,012 | ||||||||
| Other current assets | 34,012 | 32,665 | ||||||||
| Total current assets | 1,011,050 | 1,057,608 | ||||||||
| Property, plant and equipment, net | 364,301 | 359,523 | ||||||||
| Goodwill | 375,340 | 359,688 | ||||||||
| Intangible assets | 190,814 | 182,430 | ||||||||
| Deferred tax assets | 10,186 | 9,103 | ||||||||
| Other assets | 9,639 | 7,820 | ||||||||
| Total assets | $1,961,330 | $1,976,172 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Long-term debt, current maturities | $100,000 | $100,000 | ||||||||
| Accounts payable | 68,406 | 68,762 | ||||||||
| Accrued liabilities | 70,066 | 99,374 | ||||||||
| Income tax payable | 27,996 | 22,835 | ||||||||
| Total current liabilities | 266,468 | 290,971 | ||||||||
| Long-term debt, excluding current maturities | 549,821 | 574,380 | ||||||||
| Other liabilities | 120,647 | 117,803 | ||||||||
| Shareholders’ equity | 1,024,394 | 993,018 | ||||||||
| Total liabilities and shareholders’ equity | $1,961,330 | $1,976,172 | ||||||||
|
Entegris, Inc. and Subsidiaries
|
||||||||||||||||
| Three months ended | ||||||||||||||||
| March 31, 2018 | April 1, 2017 | |||||||||||||||
| Operating activities: | ||||||||||||||||
| Net income | $57,562 | $32,514 | ||||||||||||||
|
Adjustments to reconcile net income to net cash |
||||||||||||||||
| Depreciation | 15,897 | 13,977 | ||||||||||||||
| Amortization | 11,669 | 10,945 | ||||||||||||||
| Stock-based compensation expense | 4,128 | 3,870 | ||||||||||||||
| Provision for deferred income taxes | (721 | ) | 3,422 | |||||||||||||
| Other | 1,503 | 3,633 | ||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Trade accounts and notes receivable | (6,011 | ) | (7,546 | ) | ||||||||||||
| Inventories | (14,955 | ) | (5,415 | ) | ||||||||||||
| Accounts payable and accrued liabilities | (33,985 | ) | (23,490 | ) | ||||||||||||
| Income taxes payable and refundable income taxes | 6,692 | (1,252 | ) | |||||||||||||
| Other | (2,962 | ) | 2,774 | |||||||||||||
| Net cash provided by operating activities | 38,817 | 33,432 | ||||||||||||||
| Investing activities: | ||||||||||||||||
| Acquisition of property and equipment | (21,047 | ) | (22,190 | ) | ||||||||||||
| Acquisition of business | (37,656 | ) | — | |||||||||||||
| Other | 146 | 186 | ||||||||||||||
| Net cash used in investing activities | (58,557 | ) | (22,004 | ) | ||||||||||||
| Financing activities: | ||||||||||||||||
| Payments on long-term debt | (25,000 | ) | (25,000 | ) | ||||||||||||
| Issuance of common stock | 473 | 1,041 | ||||||||||||||
| Taxes paid related to net share settlement of equity awards | (14,123 | ) | (4,575 | ) | ||||||||||||
| Repurchase and retirement of common stock | (10,000 | ) | (4,000 | ) | ||||||||||||
| Dividend payments | (9,883 | ) | — | |||||||||||||
| Other | (246 | ) | (270 | ) | ||||||||||||
| Net cash used in financing activities | (58,779 | ) | (32,804 | ) | ||||||||||||
| Effect of exchange rate changes on cash | 3,347 | 6,146 | ||||||||||||||
| Decrease in cash and cash equivalents | (75,172 | ) | (15,230 | ) | ||||||||||||
| Cash and cash equivalents at beginning of period | 625,408 | 406,389 | ||||||||||||||
| Cash and cash equivalents at end of period | $550,236 | $391,159 | ||||||||||||||
|
Entegris, Inc. and Subsidiaries
|
|||||||||||||||
| Three months ended | |||||||||||||||
| Net sales | March 31, 2018 | April 1, 2017 | December 31, 2017 | ||||||||||||
| Specialty Chemicals and Engineered Materials | $130,743 | $114,435 | $125,339 | ||||||||||||
| Microcontamination Control | 118,637 | 102,887 | 115,650 | ||||||||||||
| Advanced Materials Handling | 117,819 | 100,055 | 109,573 | ||||||||||||
| Total net sales | $367,199 | $317,377 | $350,562 | ||||||||||||
| Three months ended | ||||||||||||||
| Segment profit1 | March 31, 2018 | April 1, 2017 | December 31, 2017 | |||||||||||
| Specialty Chemicals and Engineered Materials | $31,562 | $23,128 | $30,075 | |||||||||||
| Microcontamination Control | 41,991 | 30,987 | 39,328 | |||||||||||
| Advanced Materials Handling | 23,142 | 13,960 | 18,226 | |||||||||||
| Total segment profit | 96,695 | 68,075 | 87,629 | |||||||||||
| Amortization of intangibles | 11,669 | 10,945 | 11,020 | |||||||||||
| Unallocated expenses | 6,553 | 6,210 | 5,457 | |||||||||||
| Total operating income | $78,473 | $50,920 | $71,152 | |||||||||||
1Beginning in the first quarter of 2018, the Company has changed its definition of segment profit to include an allocation of certain general and administrative costs for the Company’s human resources, finance and information technology functions previously unallocated by the Company. Prior quarter information was recast to reflect the change in the Company’s definition of segment profit.
|
Entegris, Inc. and Subsidiaries
|
||||||||||||||||||
| Three months ended | ||||||||||||||||||
| March 31, 2018 | April 1, 2017 | December 31, 2017 | ||||||||||||||||
| Net sales | $367,199 | $317,377 | $350,562 | |||||||||||||||
| Net income (loss) | $57,562 | $32,514 | $(28,341) | |||||||||||||||
| Adjustments to net income (loss): | ||||||||||||||||||
| Income tax expense | 13,546 | 9,111 | 70,264 | |||||||||||||||
| Interest expense, net | 7,226 | 8,393 | 7,533 | |||||||||||||||
| Other expense, net | 139 | 902 | 21,696 | |||||||||||||||
| GAAP – Operating income | 78,473 | 50,920 | 71,152 | |||||||||||||||
| Amortization of intangible assets | 11,669 | 10,945 | 11,020 | |||||||||||||||
| Adjusted operating income | 90,142 | 61,865 | 82,172 | |||||||||||||||
| Depreciation | 15,897 | 13,977 | 15,035 | |||||||||||||||
| Adjusted EBITDA | $106,039 | $75,842 | $97,207 | |||||||||||||||
| Adjusted operating margin | 24.5% | 19.5% | 23.4% | |||||||||||||||
| Adjusted EBITDA – as a % of net sales | 28.9% | 23.9% | 27.7% | |||||||||||||||
|
Entegris, Inc. and Subsidiaries |
||||||||||||
| Three months ended | ||||||||||||
| March 31, 2018 | April 1, 2017 | December 31, 2017 | ||||||||||
| GAAP net income (loss) | $57,562 | $32,514 | $(28,341) | |||||||||
| Adjustments to net income (loss): | ||||||||||||
| Loss on debt extinguishment | — | — | 20,687 | |||||||||
| Amortization of intangible assets | 11,669 | 10,945 | 11,020 | |||||||||
|
Tax effect of adjustments to net income (loss) |
(2,710) | (2,705) | (10,385 | ) | ||||||||
| Tax effect of Tax Cuts and Jobs Act | 1,494 | — | $66,713 | |||||||||
| Non-GAAP net income | $68,015 | $40,754 | $59,694 | |||||||||
| Diluted earnings (loss) per common share | $0.40 | $0.23 | $(0.20) | |||||||||
| Effect of adjustments to net income (loss) | $0.07 | $0.06 | $0.61 | |||||||||
|
Diluted non-GAAP earnings per common |
$0.47 | $0.28 | $0.42 | |||||||||
1The tax effect of pre-tax adjustments to net income (loss) was calculated using the applicable marginal tax rate during the respective years.
Contacts
Entegris, Inc.
Steven Cantor, 978-436-6500
VP of Corporate Relations
irelations@entegris.com