Entegris reports results for second quarter of 2022
Billerica, mass.--(business wire)--entegris, inc. (nasdaq: entg), today reported its financial results for the company’s second quarter ended july 2, 2022. second-quarter sales were $692.5 million, an increase of 21% from the same quarter last year. second-quarter gaap net income was $99.5 million, or $0.73 per diluted share, which included $12.5 million of amortization of intangible assets, $10.2 million of integration costs, $2.4 million of deal and transaction costs and $22.7 million interest expense, net. non-gaap net income was $136.8 million for the second quarter and non-gaap earnings per diluted share was $1.00. entegris’ acquisition of cmc materials closed on july 6, 2022. as a result, entegris’ second quarter 2022 results do not include results from cmc materials third fiscal quarter of 2022 (ending june 30). bertrand loy, entegris’ president and chief executive officer, said: “sales growth and operational execution were once again very strong in the second quarter. growth was significant across all three divisions, driven by demand for our solutions and great execution by our supply chain teams. in particular, we saw robust activity at the advanced nodes, where we enjoy greater entegris content per wafer. non-gaap eps was slightly below our expectations in the second quarter, primarily due to a significant decline in a few major currencies versus the u.s. dollar.” mr. loy added: “we are very excited about our combination with cmc materials, which uniquely positions entegris to address our customers’ most demanding process challenges and helps them achieve a faster time-to-solution. our focus going forward, will be rapidly and effectively completing the integration of cmc materials, driving revenue and cost synergies, and paying down the debt.” mr. loy added: “for the full year 2022, we expect to achieve strong growth on a proforma basis. looking further ahead, we will be pragmatic, closely monitoring industry developments, and ready to make adjustments as needed. and with 80 percent of our revenue now unit driven, our model should prove to be even more resilient, regardless of the macro environment.” quarterly financial results summary (in thousands, except percentages and per share data) gaap results july 2, 2022 july 3, 2021 april 2, 2022 net sales $692,489 $571,352 $649,646 operating income $157,970 $138,889 $163,346 operating margin - as a % of net sales 22.8% 24.3% 25.1% net income $99,491 $88,770 $125,705 diluted earnings per common share $0.73 $0.65 $0.92 non-gaap results non-gaap adjusted operating income $183,039 $151,603 $182,251 non-gaap adjusted operating margin - as a % of net sales 26.4% 26.5% 28.1% non-gaap net income $136,816 $116,711 $145,133 diluted non-gaap earnings per common share $1.00 $0.85 $1.06 third-quarter outlook for the third quarter ending october 1, 2022, the company expects sales (for the combined company) of $1.00 billion to $1.04 billion and ebitda of approximately 30 percent of sales. the foregoing forward looking guidance measures (other than revenue) are provided on a non-gaap basis without a reconciliation to the most directly comparable gaap measure because the company is unable to predict with a reasonable degree of certainty certain items contained in the forward looking gaap measures without unreasonable efforts. such items include, but are not limited to, acquisition related expenses, restructuring and related expenses, share-based compensation and other items not reflective of the company's ongoing operations. 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, august 2, 2022, at 9:00 a.m. eastern time. participants should dial 888-220-8451 or +1 323-794-2588, referencing confirmation code 8913803. 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 8913803. the on-demand playback will be available for six weeks after the conclusion of the teleconference. the call can also be accessed live and on-demand from the investor relations section of www.entegris.com. 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 the global leader in electronic materials for the semiconductor market. with approximately 8,800 employees across its global operations, entegris offers the industry’s most comprehensive and innovative unit-driven end-to-end offering for semiconductor customers, in addition to solutions for the life sciences and other advanced manufacturing environments. entegris’ solutions help customers improve their performance, productivity and yields to enable technologies that transform the world. 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. for more information about entegris, visit us at www.entegris.com, or follow us on linkedin, twitter, facebook, and instagram. 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. 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 the ongoing impacts of the covid-19 pandemic and the conflict in ukraine on the company’s operations and markets, including supply chain issues and inflationary pressures related thereto; 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 and the impact of the covid-19 pandemic on such 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; 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. (“cmc materials”); 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; risks related to the covid-19 pandemic on the global economy and financial markets, as well as on the company, its customers and suppliers, which much impact its sales, gross margin, customer demand and its ability to supply its products to its customers; raw material shortages, supply and labor constraints and price increases or pricing and inflationary pressures; 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 or other transactions; the company’s ability to effectively implement any organizational changes; the company’s ability to protect and enforce intellectual property rights; the ongoing conflict in ukraine and the global response thereto; 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 foreign and national security 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, 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, 2021, filed on february 4, 2022, in item 1a of the company’s quarterly report on form 10-q for the period ended april 2, 2022, filed on april 26, 2022, and in the company’s other periodic filings. except as required under the federal securities laws and the rules and regulations of the securities and exchange commission, 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 2, 2022 july 3, 2021 april 2, 2022 net sales $692,489 $571,352 $649,646 cost of sales 382,092 305,968 339,826 gross profit 310,397 265,384 309,820 selling, general and administrative expenses 90,685 72,621 87,108 engineering, research and development expenses 49,248 41,972 46,715 amortization of intangible assets 12,494 11,902 12,651 operating income 157,970 138,889 163,346 interest expense, net 31,343 10,643 12,864 other expense, net 9,619 23,560 4,902 income before income tax expense 117,008 104,686 145,580 income tax expense 17,517 15,916 19,875 net income $99,491 $88,770 $125,705 basic earnings per common share: $0.73 $0.66 $0.93 diluted earnings per common share: $0.73 $0.65 $0.92 weighted average shares outstanding: basic 135,895 135,498 135,670 diluted 136,454 136,533 136,552 entegris, inc. and subsidiaries condensed consolidated statements of operations (in thousands, except per share data) (unaudited) six months ended july 2, 2022 july 3, 2021 net sales $1,342,135 $1,084,196 cost of sales 721,918 583,826 gross profit 620,217 500,370 selling, general and administrative expenses 177,793 144,010 engineering, research and development expenses 95,963 79,720 amortization of intangible assets 25,145 23,773 operating income 321,316 252,867 interest expense, net 44,207 22,224 other expense, net 14,521 27,890 income before income tax expense 262,588 202,753 income tax expense 37,392 29,307 net income $225,196 $173,446 basic earnings per common share: $1.66 $1.28 diluted earnings per common share: $1.65 $1.27 weighted average shares outstanding: basic 135,783 135,283 diluted 136,503 136,518 entegris, inc. and subsidiaries condensed consolidated balance sheets (in thousands) (unaudited) july 2, 2022 december 31, 2021 assets current assets: cash, cash equivalents and restricted cash $2,743,231 $402,565 trade accounts and notes receivable, net 381,251 347,413 inventories, net 583,766 475,213 deferred tax charges and refundable income taxes 38,907 35,312 other current assets 129,003 52,867 total current assets 3,876,158 1,313,370 property, plant and equipment, net 779,631 654,098 other assets: right-of-use assets 68,389 66,563 goodwill 789,540 793,702 intangible assets, net 308,871 335,113 deferred tax assets and other noncurrent tax assets 26,549 17,671 other 12,033 11,379 total assets $5,861,171 $3,191,896 liabilities and equity current liabilities accounts payable $146,441 $130,734 accrued liabilities 198,171 199,131 income tax payable 48,523 49,136 total current liabilities 393,135 379,001 long-term debt, excluding current maturities 3,408,801 937,027 long-term lease liability 60,893 60,101 other liabilities 85,628 101,986 shareholders’ equity 1,912,714 1,713,781 total liabilities and equity $5,861,171 $3,191,896 entegris, inc. and subsidiaries condensed consolidated statements of cash flows (in thousands) (unaudited) three months ended six months ended july 2, 2022 july 3, 2021 july 2, 2022 july 3, 2021 operating activities: net income $99,491 $88,770 $225,196 $173,446 adjustments to reconcile net income to net cash provided by operating activities: depreciation 24,381 22,574 48,286 44,669 amortization 12,494 11,902 25,145 23,773 share-based compensation expense 10,182 7,519 19,467 14,657 loss on extinguishment of debt and modification — 23,338 — 23,338 other 8,492 (8,369) 8,687 (203) changes in operating assets and liabilities, net of effects of acquisitions: trade accounts and notes receivable (26,138) (26,667) (57,309) (48,231) inventories (47,465) (30,386) (124,941) (69,723) accounts payable and accrued liabilities 49,468 13,244 27,145 (15,347) income taxes payable, refundable income taxes and noncurrent taxes payable (20,308) (22,854) (3,548) (26,442) other 313 2,784 6,570 15,033 net cash provided by operating activities 110,910 81,855 174,698 134,970 investing activities: acquisition of property and equipment (107,692) (41,771) (192,097) (85,101) acquisition of business, net of cash acquired — (2,250) — (2,250) other — 18 1,123 90 net cash used in investing activities (107,692) (44,003) (190,974) (87,261) financing activities: proceeds from revolving credit facility and long-term debt 2,527,314 451,000 2,606,314 451,000 payments of revolving credit facility and long-term debt (114,000) (601,000) (193,000) (601,000) payments for debt extinguishment costs — (19,080) — (19,080) payments for dividends (13,589) (10,889) (27,484) (21,797) issuance of common stock 5,598 15,245 8,977 16,817 taxes paid related to net share settlement of equity awards (200) (55) (16,317) (15,093) repurchase and retirement of common stock — (15,000) — (30,000) other (10,204) (4,800) (11,166) (4,801) net cash provided by (used in) financing activities 2,394,919 (184,579) 2,367,324 (223,954) effect of exchange rate changes on cash, cash equivalents and restricted cash (7,638) (760) (10,382) (3,615) increase (decrease) in cash, cash equivalents and restricted cash 2,390,499 (147,487) 2,340,666 (179,860) cash, cash equivalents and restricted cash at beginning of period 352,732 548,520 402,565 580,893 cash, cash equivalents and restricted cash at end of period $2,743,231 $401,033 $2,743,231 $401,033 entegris, inc. and subsidiaries segment information (in thousands) (unaudited) three months ended six months ended net sales july 2, 2022 july 3, 2021 april 2, 2022 july 2, 2022 july 3, 2021 specialty chemicals and engineered materials $207,729 $180,366 $196,421 $404,150 $346,907 microcontamination control 274,133 227,521 266,637 540,770 434,620 advanced materials handling 224,084 172,502 198,113 422,197 321,043 inter-segment elimination (13,457) (9,037) (11,525) (24,982) (18,374) total net sales $692,489 $571,352 $649,646 $1,342,135 $1,084,196 three months ended six months ended segment profit july 2, 2022 july 3, 2021 april 2, 2022 july 2, 2022 july 3, 2021 specialty chemicals and engineered materials $45,718 $44,945 $48,851 $94,569 $79,501 microcontamination control 100,107 78,132 98,618 198,725 148,698 advanced materials handling 46,926 42,093 46,690 93,616 74,188 total segment profit 192,751 165,170 194,159 386,910 302,387 amortization of intangibles 12,494 11,902 12,651 25,145 23,773 unallocated expenses 22,287 14,379 18,162 40,449 25,747 total operating income $157,970 $138,889 $163,346 $321,316 $252,867 entegris, inc. and subsidiaries reconciliation of gaap gross profit to adjusted gross profit (in thousands) (unaudited) three months ended six months ended july 2, 2022 july 3, 2021 april 2, 2022 july 2, 2022 july 3, 2021 net sales $692,489 $571,352 $649,646 $1,342,135 $1,084,196 gross profit-gaap $310,397 $265,384 $309,820 $620,217 $500,370 adjusted gross profit $310,397 $265,384 $309,820 $620,217 $500,370 gross margin - as a % of net sales 44.8% 46.4% 47.7% 46.2% 46.2% adjusted gross margin - as a % of net sales 44.8% 46.4% 47.7% 46.2% 46.2% 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 2, 2022 july 3, 2021 april 2, 2022 july 2, 2022 july 3, 2021 specialty chemicals and engineered materials (scem) $45,718 $44,945 $48,851 $94,569 $79,501 microcontamination control (mc) 100,107 78,132 98,618 198,725 148,698 advanced materials handling (amh) 46,926 42,093 46,690 93,616 74,188 total segment profit 192,751 165,170 194,159 386,910 302,387 amortization of intangible assets 12,494 11,902 12,651 25,145 23,773 unallocated expenses 22,287 14,379 18,162 40,449 25,747 total operating income $157,970 $138,889 $163,346 $321,316 $252,867 three months ended six months ended adjusted segment profit july 2, 2022 july 3, 2021 april 2, 2022 july 2, 2022 july 3, 2021 scem segment profit $45,718 $44,945 $48,851 $94,569 $79,501 severance and restructuring costs — 51 — — 98 charge for fair value write-up of acquired inventory sold — — — — — scem adjusted segment profit $45,718 $44,996 $48,851 $94,569 $79,599 mc segment profit $100,107 $78,132 $98,618 $198,725 $148,698 severance and restructuring costs — 55 — — 106 mc adjusted segment profit $100,107 $78,187 $98,618 $198,725 $148,804 amh segment profit $46,926 $42,093 $46,690 $93,616 $74,188 severance and restructuring costs — 38 — — 75 amh adjusted segment profit $46,926 $42,131 $46,690 $93,616 $74,263 unallocated general and administrative expenses $22,287 $14,379 $18,162 $40,449 $25,747 unallocated deal and integration costs (12,575) (632) (6,254) (18,829) (2,676) unallocated severance and restructuring costs — (36) — — (44) adjusted unallocated general and administrative expenses $9,712 $13,711 $11,908 $21,620 $23,027 total adjusted segment profit $192,751 $165,314 $194,159 $386,910 $302,666 adjusted amortization of intangible assets — — — — — adjusted unallocated general and administrative expenses 9,712 13,711 11,908 21,620 23,027 total adjusted operating income $183,039 $151,603 $182,251 $365,290 $279,639 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 2, 2022 july 3, 2021 april 2, 2022 july 2, 2022 july 3, 2021 net sales $692,489 $571,352 $649,646 $1,342,135 $1,084,196 net income $99,491 $88,770 $125,705 $225,196 $173,446 net income - as a % of net sales 14.4% 15.5% 19.3% 16.8% 16.0% adjustments to net income: income tax expense 17,517 15,916 19,875 37,392 29,307 interest expense, net 31,343 10,643 12,864 44,207 22,224 other expense, net 9,619 23,560 4,902 14,521 27,890 gaap - operating income 157,970 138,889 163,346 321,316 252,867 operating margin - as a % of net sales 22.8% 24.3% 25.1% 23.9% 23.3% deal and transaction costs 2,410 — 5,008 7,418 — integration costs 10,165 632 1,246 11,411 2,676 severance and restructuring costs — 180 — — 323 amortization of intangible assets 12,494 11,902 12,651 25,145 23,773 adjusted operating income 183,039 151,603 182,251 365,290 279,639 adjusted operating margin - as a % of net sales 26.4% 26.5% 28.1% 27.2% 25.8% depreciation 24,381 22,574 23,905 48,286 44,669 adjusted ebitda $207,420 $174,177 $206,156 $413,576 $324,308 adjusted ebitda - as a % of net sales 30.0% 30.5% 31.7% 30.8% 29.9% 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 2, 2022 july 3, 2021 april 2, 2022 july 2, 2022 july 3, 2021 gaap net income $99,491 $88,770 $125,705 $225,196 $173,446 adjustments to net income: deal and transaction costs 2,410 — 5,008 7,418 — integration costs 10,165 632 1,246 11,411 2,676 severance and restructuring costs — 180 — — 323 loss on extinguishment of debt and modification — 23,338 — — 23,338 interest expense, net 22,742 — 4,683 27,425 — amortization of intangible assets 12,494 11,902 12,651 25,145 23,773 tax effect of adjustments to net income and discrete items1 (10,486) (8,111) (4,160) (14,646) (11,332) non-gaap net income $136,816 $116,711 $145,133 $281,949 $212,224 diluted earnings per common share $0.73 $0.65 $0.92 $1.65 $1.27 effect of adjustments to net income $0.27 $0.20 $0.14 $0.42 $0.28 diluted non-gaap earnings per common share $1.00 $0.85 $1.06 $2.07 $1.55 1the tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.
