27.07.2017 12:00:00
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Entegris Reports Strong Second-Quarter Results
BILLERICA, Mass., July 27, 2017 /PRNewswire/ -- Entegris, Inc. (NasdaqGS: ENTG), a leading specialty materials provider, today reported its financial results for the Company's second quarter ended July 1, 2017.
Second-quarter sales were $329.0 million, an increase of 8.6% from the same quarter last year and a 3.7% increase sequentially. Second-quarter net income was $40.0 million, or $0.28 per diluted share, which included amortization of intangible assets of $11.0 million, as well as an asset impairment charge and severance expense of $3.6 million. Non-GAAP net income was $48.9 million, or $0.34 per diluted share.
For the first half of fiscal 2017, sales of $646.4 million increased 13.4% from the same period a year ago. First-half 2017 net income was $72.5 million, or $0.51 per share, which included amortization of intangible assets of $22.0 million, as well as an asset impairment charge and severance expense of $3.6 million. Non-GAAP net income for the first half of 2017 was $89.7 million, or $0.63 per diluted share.
Bertrand Loy, president and chief executive officer, said: "I am very pleased with Entegris' performance thus far this year which puts us on a solid path to grow well in excess of our markets in 2017. Our growth in the second-quarter was driven by positive industry trends and reflected strong performance across our portfolio of solutions, as well as successful product introductions to support the ongoing ramp of advanced semiconductor manufacturing technologies such as 3D NAND. Our first-half sales grew 13% from the prior year, driven by strong growth in Asia, particularly in Korea."
Mr. Loy added: "The quality of our execution and financial performance in the second quarter demonstrates the strength of our business model and our operating leverage, as we generated strong cash flow from operations and achieved an adjusted EBITDA of $88.2 million, or 26.8% of sales."
Quarterly Financial Results Summary
(in thousands, except per share data)
GAAP Results | Q2-2017 | Q2-2016 | Q1-2017 | |||
Net sales | $329,002 | $303,052 | $317,377 | |||
Operating income | $59,090 | $46,400 | $50,920 | |||
Operating margin | 18.0% | 15.3% | 16.0% | |||
Net income | $39,991 | $32,890 | $32,514 | |||
Diluted earnings per share (EPS) | $0.28 | $0.23 | $0.23 | |||
Non-GAAP Results | ||||||
Non-GAAP adjusted operating income | $73,826 | $57,462 | $61,865 | |||
Adjusted operating margin | 22.4% | 19.0% | 19.5% | |||
Non-GAAP net income | $48,906 | $40,290 | $40,754 | |||
Non-GAAP EPS | $0.34 | $0.28 | $0.28 |
Third-Quarter Outlook
For the third quarter ending September 30, 2017, the Company expects sales of $325 million to $340 million, net income of $36 million to $43 million, and net income per diluted share between $0.25 and $0.30. On a non-GAAP basis, EPS is expected to range from $0.30 to $0.35 per diluted share, which reflects net income on a non-GAAP basis in the range of $43 million to $50 million, which is adjusted for expected amortization expense of approximately $11 million or $0.05 per share.
Segment Results
As of December 31, 2016, the Company changed its financial segment reporting to 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 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.
Second-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the second quarter on Thursday, July 27, 2017, at 9:00 a.m. Eastern Time. Participants should dial 1-877-852-6583 or 1-719-325-2495, referencing confirmation code 1492733. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. To access a telephonic replay of the call, please [Click Here]. The replay will be available starting at 12:00 p.m. ET on Thursday, July 27 until Saturday, September 9. A live and on-demand webcast of the call can also be accessed from the investor relations section of Entegris' website at http://investor.entegris.com/.
Management's slide presentation concerning the results for the second quarter, which may be referred to during the call, will be posted on the investor relations section of http://investor.entegris.com/ Thursday morning before the call.
ABOUT ENTEGRIS
Entegris is a leading specialty materials provider 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 to Adjusted Operating Income and Adjusted EBITDA, GAAP Gross Profit to Adjusted Gross Profit, GAAP Segment Profit to Adjusted Operating Income, 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. 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 those about 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; the Company's capital allocation strategy; our ability to execute on our strategies; and other matters. These forward-looking statements are based on current management expectations and assumptions only as of the date of this press release, 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 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, 2016, filed on February 17, 2017, and in our other periodic filings. 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 1, 2017 | July 2, 2016 | April 1, 2017 | |||||
Net sales | $329,002 | $303,052 | $317,377 | ||||
Cost of sales | 178,699 | 163,847 | 177,781 | ||||
Gross profit | 150,303 | 139,205 | 139,596 | ||||
Selling, general and administrative expenses | 52,985 | 53,597 | 50,492 | ||||
Engineering, research and development expenses | 27,221 | 28,146 | 27,239 | ||||
Amortization of intangible assets | 11,007 | 11,062 | 10,945 | ||||
Operating income | 59,090 | 46,400 | 50,920 | ||||
Interest expense, net | 8,103 | 9,051 | 8,393 | ||||
Other (income) expense, net | (46) | (1,054) | 902 | ||||
Income before income tax expense | 51,033 | 38,403 | 41,625 | ||||
Income tax expense | 11,042 | 5,513 | 9,111 | ||||
Net income | $39,991 | $32,890 | $32,514 | ||||
Basic net income per common share: | $0.28 | $0.23 | $0.23 | ||||
Diluted net income per common share: | $0.28 | $0.23 | $0.23 | ||||
Weighted average shares outstanding: | |||||||
Basic | 141,696 | 140,953 | 141,501 | ||||
Diluted | 143,508 | 141,723 | 143,315 |
Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) | |||||
Six months ended | |||||
July 1, 2017 | July 2, 2016 | ||||
Net sales | $646,379 | $570,076 | |||
Cost of sales | 356,480 | 316,165 | |||
Gross profit | 289,899 | 253,911 | |||
Selling, general and administrative expenses | 103,477 | 101,553 | |||
Engineering, research and development expenses | 54,460 | 54,048 | |||
Amortization of intangible assets | 21,952 | 22,351 | |||
Operating income | 110,010 | 75,959 | |||
Interest expense, net | 16,496 | 18,200 | |||
Other expense (income), net | 856 | (1,729) | |||
Income before income tax expense | 92,658 | 59,488 | |||
Income tax expense | 20,153 | 10,386 | |||
Net income | $72,505 | $49,102 | |||
Basic net income per common share: | $0.51 | $0.35 | |||
Diluted net income per common share: | $0.51 | $0.35 | |||
Weighted average shares outstanding: | |||||
Basic | 141,599 | 140,867 | |||
Diluted | 143,411 | 141,547 |
Entegris, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) (Unaudited) | ||||
July 1, 2017 | December 31, 2016 | |||
ASSETS | ||||
Cash and cash equivalents | $405,635 | $406,389 | ||
Accounts receivable, net | 171,113 | 165,675 | ||
Inventories | 194,155 | 183,529 | ||
Deferred tax charges and refundable income taxes | 16,716 | 20,140 | ||
Other current assets | 21,374 | 24,398 | ||
Total current assets | 808,993 | 800,131 | ||
Property, plant and equipment, net | 341,146 | 321,562 | ||
Goodwill | 355,178 | 345,269 | ||
Intangible assets | 206,182 | 217,548 | ||
Deferred tax assets | 8,622 | 8,022 | ||
Other assets | 7,322 | 7,000 | ||
Total assets | $1,727,443 | $1,699,532 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Long-term debt, current maturities | $100,000 | $100,000 | ||
Accounts payable | 56,961 | 61,617 | ||
Accrued liabilities | 75,275 | 83,530 | ||
Income tax payable | 18,786 | 16,424 | ||
Total current liabilities | 251,022 | 261,571 | ||
Long-term debt, excluding current maturities | 435,910 | 484,677 | ||
Other liabilities | 58,242 | 54,066 | ||
Shareholders' equity | 982,269 | 899,218 | ||
Total liabilities and shareholders' equity | $1,727,443 | $1,699,532 |
Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) | ||||||||
Three months ended | Six months ended | |||||||
July 1, 2017 | July 2, 2016 | July 1, 2017 | July 2, 2016 | |||||
Operating activities: | ||||||||
Net income | $39,991 | $32,890 | $72,505 | $49,102 | ||||
Adjustments to reconcile net income to net | ||||||||
Depreciation | 14,411 | 13,825 | 28,388 | 27,525 | ||||
Amortization | 11,007 | 11,062 | 21,952 | 22,351 | ||||
Stock-based compensation expense | 4,039 | 3,505 | 7,909 | 6,366 | ||||
Provision for deferred income taxes | (215) | (720) | 3,207 | (931) | ||||
Other | 6,497 | 4,408 | 10,130 | 9,204 | ||||
Changes in operating assets and liabilities: | ||||||||
Trade accounts and notes receivable | 4,514 | (29,300) | (3,032) | (36,099) | ||||
Inventories | (8,422) | 1,609 | (13,837) | (11,389) | ||||
Accounts payable and accrued liabilities | 10,177 | 23,065 | (13,313) | 13,555 | ||||
Income taxes payable and refundable income taxes | 4,209 | 1,133 | 2,957 | 407 | ||||
Other | (1,049) | (278) | 1,725 | (1,553) | ||||
Net cash provided by operating activities | 85,159 | 61,199 | 118,591 | 78,538 | ||||
Investing activities: | ||||||||
Acquisition of business net of cash acquired | (20,000) | — | (20,000) | — | ||||
Acquisition of property and equipment | (20,302) | (14,325) | (42,492) | (32,144) | ||||
Other | 25 | 837 | 211 | (1,658) | ||||
Net cash used in investing activities | (40,277) | (13,488) | (62,281) | (33,802) | ||||
Financing activities: | ||||||||
Payments on long-term debt | (25,000) | (25,000) | (50,000) | (25,000) | ||||
Issuance of common stock | 1,864 | 2,380 | 2,905 | 2,380 | ||||
Taxes paid related to net share settlement of | (664) | (136) | (5,239) | (2,203) | ||||
Other | (5,000) | 42 | (9,270) | (3,482) | ||||
Net cash used in financing activities | (28,800) | (22,714) | (61,604) | (28,305) | ||||
Effect of exchange rate changes on cash | (1,606) | 4,343 | 4,540 | 7,487 | ||||
Increase (decrease) in cash and cash equivalents | 14,476 | 29,340 | (754) | 23,918 | ||||
Cash and cash equivalents at beginning of period | 391,159 | 344,403 | 406,389 | 349,825 | ||||
Cash and cash equivalents at end of period | $405,635 | $373,743 | $405,635 | $373,743 |
Entegris, Inc. and Subsidiaries Segment Information (In thousands) (Unaudited) | ||||||||||
Three months ended | Six months ended | |||||||||
Net sales | July 1, 2017 | July 2, 2016 | April 1, 2017 | July 1, 2017 | July 2, 2016 | |||||
Specialty Chemicals and Engineered | $121,174 | $111,782 | $114,435 | $235,609 | $212,889 | |||||
Microcontamination Control | 104,407 | 91,584 | 100,055 | 204,462 | 169,203 | |||||
Advanced Materials Handling | 103,421 | 99,686 | 102,887 | 206,308 | 187,984 | |||||
Total net sales | $329,002 | $303,052 | $317,377 | $646,379 | $570,076 |
Three months ended | Six months ended | |||||||||
Segment profit | July 1, 2017 | July 2, 2016 | April 1, 2017 | July 1, 2017 | July 2, 2016 | |||||
Specialty Chemicals and Engineered | $34,174 | $28,914 | $28,140 | $62,314 | $51,330 | |||||
Microcontamination Control | 36,484 | 28,566 | 35,581 | 72,065 | 46,706 | |||||
Advanced Materials Handling | 19,573 | 22,519 | 18,276 | 37,849 | 41,430 | |||||
Total segment profit | 90,231 | 79,999 | 81,997 | 172,228 | 139,466 | |||||
Amortization of intangibles | 11,007 | 11,062 | 10,945 | 21,952 | 22,351 | |||||
Unallocated expenses | 20,134 | 22,537 | 20,132 | 40,266 | 41,156 | |||||
Total operating income | $59,090 | $46,400 | $50,920 | $110,010 | $75,959 |
Entegris, Inc. and Subsidiaries Reconciliation of GAAP Gross Profit to Adjusted Gross Profit (In thousands) (Unaudited) | ||||||||||
Three months ended | Six months ended | |||||||||
July 1, 2017 | July 2, 2016 | April 1, 2017 | July 1, 2017 | July 2, 2016 | ||||||
Net sales | $329,002 | $303,052 | $317,377 | $646,379 | $570,076 | |||||
Gross profit-GAAP | $150,303 | $139,205 | $139,596 | $289,899 | $253,911 | |||||
Adjustments to gross profit: | ||||||||||
Impairment of equipment | 1,966 | — | — | 1,966 | — | |||||
Adjusted gross profit | $152,269 | $139,205 | $139,596 | $291,865 | $253,911 | |||||
Gross margin - as a % of net sales | 45.7 | % | 45.9 | % | 44.0 | % | 44.8 | % | 44.5 | % |
Adjusted gross margin - as a % of net sales | 46.3 | % | 45.9 | % | 44.0 | % | 45.2 | % | 44.5 | % |
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 1, 2017 | July 2, 2016 | April 1, 2017 | July 1, 2017 | July 2, 2016 | |||||
Specialty Chemicals and Engineered Materials | $34,174 | $28,914 | $28,140 | $62,314 | $51,330 | |||||
Microcontamination Control | 36,484 | 28,566 | 35,581 | 72,065 | 46,706 | |||||
Advanced Materials Handling | 19,573 | 22,519 | 18,276 | 37,849 | 41,430 | |||||
Total segment profit | 90,231 | 79,999 | 81,997 | 172,228 | 139,466 | |||||
Amortization of intangible assets | 11,007 | 11,062 | 10,945 | 21,952 | 22,351 | |||||
Unallocated expenses | 20,134 | 22,537 | 20,132 | 40,266 | 41,156 | |||||
Total operating income | $59,090 | $46,400 | $50,920 | $110,010 | $75,959 | |||||
Segment profit margin-GAAP | ||||||||||
Specialty Chemicals and Engineered Materials | 28.2 | % | 25.9 | % | 24.6 | % | 26.4 | % | 24.1 | % |
Microcontamination Control | 34.9 | % | 31.2 | % | 35.6 | % | 35.2 | % | 27.6 | % |
Advanced Materials Handling | 18.9 | % | 22.6 | % | 17.8 | % | 18.3 | % | 22.0 | % |
Three months ended | Six months ended | |||||||||
Adjusted segment profit | July 1, 2017 | July 2, 2016 | April 1, 2017 | July 1, 2017 | July 2, 2016 | |||||
Specialty Chemicals and Engineered Materials | $34,174 | $28,914 | $28,140 | $62,314 | $51,330 | |||||
Microcontamination Control 1 | 37,927 | 28,566 | 35,581 | 73,508 | 46,706 | |||||
Advanced Materials Handling 2 | 21,859 | 22,519 | 18,276 | 40,135 | 41,430 | |||||
Total adjusted segment profit | 93,960 | 79,999 | 81,997 | 175,957 | 139,466 | |||||
Amortization of intangible assets 3 | — | — | — | — | — | |||||
Unallocated expenses | 20,134 | 22,537 | 20,132 | 40,266 | 41,156 | |||||
Total adjusted operating income | $73,826 | $57,462 | $61,865 | $135,691 | $98,310 | |||||
Adjusted segment profit margin | ||||||||||
Specialty Chemicals and Engineered Materials | 28.2 | % | 25.9 | % | 24.6 | % | 26.4 | % | 24.1 | % |
Microcontamination Control | 36.3 | % | 31.2 | % | 35.6 | % | 36.0 | % | 27.6 | % |
Advanced Materials Handling | 21.1 | % | 22.6 | % | 17.8 | % | 19.5 | % | 22.0 | % |
1 Adjusted segment profit for Microcontamination Control for the three and six months ended July 1, 2017 excludes charges for impairment of equipment and severance of $884 and $559, respectively. |
2 Adjusted segment profit for Advanced Material Handling for the three and six months ended July 1, 2017 excludes charges for impairment of equipment of $2,286. |
3 Adjusted amortization of intangible assets excludes amortization expense of $11,007, $11,062, and $10,945 for the three months ended July 1, 2017, July 2, 2016, and April 1, 2017, respectively and $21,952 and $22,351 for the six months ended July 1, 2017 and July 2, 2016, respectively. |
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, 2017 | July 2, 2016 | April 1, 2017 | July 1, 2017 | July 2, 2016 | ||||||
Net sales | $329,002 | $303,052 | $317,377 | $646,379 | $570,076 | |||||
Net income | $39,991 | $32,890 | $32,514 | $72,505 | $49,102 | |||||
Adjustments to net income: | ||||||||||
Income tax expense | 11,042 | 5,513 | 9,111 | 20,153 | 10,386 | |||||
Interest expense, net | 8,103 | 9,051 | 8,393 | 16,496 | 18,200 | |||||
Other (income) expense, net | (46) | (1,054) | 902 | 856 | (1,729) | |||||
GAAP - Operating income | 59,090 | 46,400 | 50,920 | 110,010 | 75,959 | |||||
Severance | 559 | — | — | 559 | — | |||||
Impairment of equipment | 3,170 | — | — | 3,170 | — | |||||
Amortization of intangible assets | 11,007 | 11,062 | 10,945 | 21,952 | 22,351 | |||||
Adjusted operating income | 73,826 | 57,462 | 61,865 | 135,691 | 98,310 | |||||
Depreciation | 14,411 | 13,825 | 13,977 | 28,388 | 27,525 | |||||
Adjusted EBITDA | $88,237 | $71,287 | $75,842 | $164,079 | $125,835 | |||||
Adjusted operating margin | 22.4 | % | 19.0 | % | 19.5 | % | 21.0 | % | 17.2 | % |
Adjusted EBITDA - as a % of net sales | 26.8 | % | 23.5 | % | 23.9 | % | 25.4 | % | 22.1 | % |
Entegris, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Non-GAAP Earnings per Share (In thousands, except per share data) (Unaudited) | |||||||||||
Three months ended | Six months ended | ||||||||||
July 1, 2017 | July 2, 2016 | April 1, 2017 | July 1, 2017 | July 2, 2016 | |||||||
GAAP net income | $39,991 | $32,890 | $32,514 | $72,505 | $49,102 | ||||||
Adjustments to net income: | |||||||||||
Severance | 559 | — | — | 559 | — | ||||||
Impairment of equipment | 3,170 | — | — | 3,170 | — | ||||||
Gain on sale of equity investment | — | (38) | — | — | (156) | ||||||
Amortization of intangible assets | 11,007 | 11,062 | 10,945 | 21,952 | 22,351 | ||||||
Tax effect of adjustments to net income and discrete items | (5,821) | (3,624) | (2,705) | (8,526) | (7,390) | ||||||
Non-GAAP net income | $48,906 | $40,290 | $40,754 | $89,660 | $63,907 | ||||||
Diluted earnings per common share | $0.28 | $0.23 | $0.23 | $0.51 | $0.35 | ||||||
Effect of adjustments to net income | $0.06 | $0.05 | $0.06 | $0.12 | $0.10 | ||||||
Diluted non-GAAP earnings per common share | $0.34 | $0.28 | $0.28 | $0.63 | $0.45 |
Contact:
Steven Cantor
VP of Corporate Relations
T + 978 436 6500
irelations@entegris.com
View original content:http://www.prnewswire.com/news-releases/entegris-reports-strong-second-quarter-results-300495010.html
SOURCE Entegris, Inc.
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