Entegris reports results for third quarter of 2021
Billerica, mass.--(business wire)--entegris, inc. (nasdaq: entg), today reported its financial results for the company’s third quarter ended october 2, 2021. third-quarter sales were $579.5 million, an increase of 20% from the same quarter last year. third-quarter gaap net income was $117.5 million, or $0.86 per diluted share, which included $11.8 million of amortization of intangible assets and $1.3 million of integration costs. non-gaap net income was $125.4 million for the third quarter and non-gaap earnings per diluted share was $0.92. bertrand loy, entegris’ president and chief executive officer, said: “in the third quarter, we continued to deliver on our growth strategy in a very dynamic supply chain environment. i am proud that we have been able to achieve over 23 percent organic sales growth year-to-date.” mr. loy added: “while we expect some of the supply chain issues to linger, the record demand for our solution set continues and we are maintaining our outlook for the full year 2021. looking further ahead, we have a high degree of conviction in our growth prospects, driven by positive secular trends in the semiconductor market and the accelerating pace of transition to more complex device architectures. we believe this is uniquely favorable to our company, because the capabilities we have built around process materials and materials purity will be indispensable enablers of these new chip architectures and will translate into a steadily expanding entegris content per wafer.” quarterly financial results summary (in thousands, except percentages and per share data) gaap results october 2, 2021 september 26, 2020 july 3, 2021 net sales $579,493 $480,987 $571,352 operating income $139,357 $106,761 $138,889 operating margin - as a % of net sales 24.0% 22.2% 24.3% net income $117,461 $79,303 $88,770 diluted earnings per common share $0.86 $0.58 $0.65 non-gaap results non-gaap adjusted operating income $152,696 $121,612 $151,603 non-gaap adjusted operating margin - as a % of net sales 26.3% 25.3% 26.5% non-gaap net income $125,383 $91,460 $116,711 diluted non-gaap earnings per common share $0.92 $0.67 $0.85 fourth-quarter outlook for the fourth quarter ending december 31, 2021, the company expects sales of $580 million to $600 million, net income of $109 million to $116 million and diluted earnings per common share between $0.80 and $0.85. on a non-gaap basis, the company expects diluted earnings per common share to range from $0.87 to $0.92, reflecting net income on a non-gaap basis in the range of $119 million to $126 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. third-quarter results conference call details entegris will hold a conference call to discuss its results for the third quarter on tuesday, october 26, 2021, at 9:00 a.m. eastern time. participants should dial 800-437-2398 or +1 323-289-6576, referencing confirmation code 9127390. 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 9127390. the call can also be accessed live and on-demand from the entegris website. go here 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 third 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 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 the impact of the covid-19 pandemic on the company’s operations and markets, including supply chain issues related thereto; future period guidance; future sales, net income, diluted earnings per common share, non-gaap diluted 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 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; raw material shortages, supply and labor constraints and price increases; 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; 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; 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 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 october 2, 2021 september 26, 2020 july 3, 2021 net sales $579,493 $480,987 $571,352 cost of sales 315,289 254,987 305,968 gross profit 264,204 226,000 265,384 selling, general and administrative expenses 71,032 71,195 72,621 engineering, research and development expenses 41,972 36,295 41,972 amortization of intangible assets 11,843 11,749 11,902 operating income 139,357 106,761 138,889 interest expense, net 9,339 12,651 10,643 other expense (income), net 1,917 (1,752) 23,560 income before income tax expense 128,101 95,862 104,686 income tax expense 10,640 16,559 15,916 net income $117,461 $79,303 $88,770 basic earnings per common share: $0.87 $0.59 $0.66 diluted earnings per common share: $0.86 $0.58 $0.65 weighted average shares outstanding: basic 135,583 134,957 135,498 diluted 136,631 136,252 136,533 entegris, inc. and subsidiaries condensed consolidated statements of operations (in thousands, except per share data) (unaudited) nine months ended october 2, 2021 september 26, 2020 net sales $1,663,689 $1,341,719 cost of sales 899,115 722,869 gross profit 764,574 618,850 selling, general and administrative expenses 215,042 196,958 engineering, research and development expenses 121,692 98,499 amortization of intangible assets 35,616 41,176 operating income 392,224 282,217 interest expense, net 31,563 35,681 other expense (income), net 29,807 (1,351) income before income tax expense 330,854 247,887 income tax expense 39,947 39,542 net income $290,907 $208,345 basic earnings per common share: $2.15 $1.55 diluted earnings per common share: $2.13 $1.53 weighted average shares outstanding: basic 135,383 134,801 diluted 136,556 136,209 entegris, inc. and subsidiaries condensed consolidated balance sheets (in thousands) (unaudited) october 2, 2021 december 31, 2020 assets current assets: cash and cash equivalents $475,752 $580,893 trade accounts and notes receivable, net 315,073 264,392 inventories, net 429,016 323,944 deferred tax charges and refundable income taxes 21,760 21,136 other current assets 34,104 43,892 total current assets 1,275,705 1,234,257 property, plant and equipment, net 597,630 525,367 other assets: right-of-use assets 56,990 45,924 goodwill 749,933 748,037 intangible assets, net 302,487 337,632 deferred tax assets and other noncurrent tax assets 17,565 14,519 other 11,965 11,960 total assets $3,012,275 $2,917,696 liabilities and equity current liabilities accounts payable $120,611 $81,618 accrued liabilities 181,813 177,012 income tax payable 6,989 43,996 total current liabilities 309,413 302,626 long-term debt, excluding current maturities 936,704 1,085,783 long-term lease liability 52,486 39,730 other liabilities 102,892 110,063 shareholders’ equity 1,610,780 1,379,494 total liabilities and equity $3,012,275 $2,917,696 entegris, inc. and subsidiaries condensed consolidated statements of cash flows (in thousands) (unaudited) three months ended nine months ended october 2, 2021 september 26, 2020 october 2, 2021 september 26, 2020 operating activities: net income $117,461 $79,303 $290,907 $208,345 adjustments to reconcile net income to net cash provided by operating activities: depreciation 22,841 20,777 67,510 62,064 amortization 11,843 11,749 35,616 41,176 stock-based compensation expense 7,467 5,903 22,124 16,552 loss on extinguishment of debt and modification — 908 23,338 2,378 other (1,773) 19,302 (1,976) 30,727 changes in operating assets and liabilities, net of effects of acquisitions: trade accounts and notes receivable (5,127) (23,280) (53,358) (65,367) inventories (45,464) 1,084 (115,187) (54,278) accounts payable and accrued liabilities 52,924 4,433 37,577 10,076 income taxes payable, refundable income taxes and noncurrent taxes payable (8,833) (16,407) (35,275) (11,995) other (1,835) (2,540) 13,198 2,978 net cash provided by operating activities 149,504 101,232 284,474 242,656 investing activities: acquisition of property and equipment (48,885) (32,687) (133,986) (79,560) acquisition of business, net of cash acquired — (35,500) (2,250) (111,145) other 4,326 54 4,416 265 net cash used in investing activities (44,559) (68,133) (131,820) (190,440) financing activities: proceeds from revolving credit facility and long-term debt — — 451,000 617,000 payments of revolving credit facility and long-term debt — (100,000) (601,000) (468,000) payments for debt extinguishment costs — — (19,080) — payments for dividends (10,853) (10,794) (32,650) (32,446) issuance of common stock 1,055 3,150 17,872 4,899 taxes paid related to net share settlement of equity awards (275) (11,836) (15,368) (24,556) repurchase and retirement of common stock (20,000) — (50,000) (29,564) deferred acquisition payments — — — (16,125) other (486) (1) (5,287) (6,856) net cash (used in) provided by financing activities (30,559) (119,481) (254,513) 44,352 effect of exchange rate changes on cash and cash equivalents 333 1,687 (3,282) (507) increase (decrease) in cash and cash equivalents 74,719 (84,695) (105,141) 96,061 cash and cash equivalents at beginning of period 401,033 532,667 580,893 351,911 cash and cash equivalents at end of period $475,752 $447,972 $475,752 $447,972 entegris, inc. and subsidiaries segment information (in thousands) (unaudited) three months ended nine months ended net sales october 2, 2021 september 26, 2020 july 3, 2021 october 2, 2021 september 26, 2020 specialty chemicals and engineered materials $176,380 $150,480 $180,366 $523,287 $440,907 microcontamination control 225,877 193,541 227,521 660,497 536,560 advanced materials handling 186,200 144,370 172,502 507,243 386,941 inter-segment elimination (8,964) (7,404) (9,037) (27,338) (22,689) total net sales $579,493 $480,987 $571,352 $1,663,689 $1,341,719 three months ended nine months ended segment profit october 2, 2021 september 26, 2020 july 3, 2021 october 2, 2021 september 26, 2020 specialty chemicals and engineered materials $41,091 $32,600 $44,945 $120,592 $98,208 microcontamination control 78,399 64,915 78,132 227,097 177,219 advanced materials handling 40,503 33,266 42,093 114,691 76,707 total segment profit 159,993 130,781 165,170 462,380 352,134 amortization of intangibles 11,843 11,749 11,902 35,616 41,176 unallocated expenses 8,793 12,271 14,379 34,540 28,741 total operating income $139,357 $106,761 $138,889 $392,224 $282,217 entegris, inc. and subsidiaries reconciliation of gaap gross profit to adjusted gross profit (in thousands) (unaudited) three months ended nine months ended october 2, 2021 september 26, 2020 july 3, 2021 october 2, 2021 september 26, 2020 net sales $579,493 $480,987 $571,352 $1,663,689 $1,341,719 gross profit-gaap $264,204 $226,000 $265,384 $764,574 $618,850 adjustments to gross profit: integration costs — — — — (1,557) severance and restructuring costs — — — — 465 charge for fair value mark-up of acquired inventory sold — 229 — — 590 adjusted gross profit $264,204 $226,229 $265,384 $764,574 $618,348 gross margin - as a % of net sales 45.6% 47.0% 46.4% 46.0% 46.1% adjusted gross margin - as a % of net sales 45.6% 47.0% 46.4% 46.0% 46.1% entegris, inc. and subsidiaries reconciliation of gaap segment profit to adjusted operating income (in thousands) (unaudited) three months ended nine months ended segment profit-gaap october 2, 2021 september 26, 2020 july 3, 2021 october 2, 2021 september 26, 2020 specialty chemicals and engineered materials (scem) $41,091 $32,600 $44,945 $120,592 $98,208 microcontamination control (mc) 78,399 64,915 78,132 227,097 177,219 advanced materials handling (amh) 40,503 33,266 42,093 114,691 76,707 total segment profit 159,993 130,781 165,170 462,380 352,134 amortization of intangible assets 11,843 11,749 11,902 35,616 41,176 unallocated expenses 8,793 12,271 14,379 34,540 28,741 total operating income $139,357 $106,761 $138,889 $392,224 $282,217 three months ended nine months ended adjusted segment profit october 2, 2021 september 26, 2020 july 3, 2021 october 2, 2021 september 26, 2020 scem segment profit $41,091 $32,600 $44,945 $120,592 $98,208 integration costs — — — — (1,557) severance and restructuring costs 69 277 51 167 906 charge for fair value write-up of acquired inventory sold — — — — 235 scem adjusted segment profit $41,160 $32,877 $44,996 $120,759 $97,792 mc segment profit $78,399 $64,915 $78,132 $227,097 $177,219 severance and restructuring costs 75 301 55 181 985 charge for fair value write-up of acquired inventory sold — — — — 126 mc adjusted segment profit $78,474 $65,216 $78,187 $227,278 $178,330 amh segment profit $40,503 $33,266 $42,093 $114,691 $76,707 severance and restructuring costs 52 213 38 127 1,162 charge for fair value write-up of acquired inventory sold — 229 — — 229 amh adjusted segment profit $40,555 $33,708 $42,131 $114,818 $78,098 unallocated general and administrative expenses $8,793 $12,271 $14,379 $34,540 $28,741 unallocated deal and integration costs (1,290) (1,902) (632) (3,966) (5,796) unallocated severance and restructuring costs (10) (180) (36) (54) (810) adjusted unallocated general and administrative expenses $7,493 $10,189 $13,711 $30,520 $22,135 total adjusted segment profit $160,189 $131,801 $165,314 $462,855 $354,220 adjusted amortization of intangible assets — — — — — adjusted unallocated general and administrative expenses 7,493 10,189 13,711 30,520 22,135 total adjusted operating income $152,696 $121,612 $151,603 $432,335 $332,085 entegris, inc. and subsidiaries reconciliation of gaap net income to adjusted operating income and adjusted ebitda (in thousands) (unaudited) three months ended nine months ended october 2, 2021 september 26, 2020 july 3, 2021 october 2, 2021 september 26, 2020 net sales $579,493 $480,987 $571,352 $1,663,689 $1,341,719 net income $117,461 $79,303 $88,770 $290,907 $208,345 net income - as a % of net sales 20.3% 16.5% 15.5% 17.5% 15.5% adjustments to net income: income tax expense 10,640 16,559 15,916 39,947 39,542 interest expense, net 9,339 12,651 10,643 31,563 35,681 other expense (income), net 1,917 (1,752) 23,560 29,807 (1,351) gaap - operating income 139,357 106,761 138,889 392,224 282,217 operating margin - as a % of net sales 24.0% 22.2% 24.3% 23.6% 21.0% charge for fair value write-up of acquired inventory sold — 229 — — 590 deal and transaction costs — 642 — — 2,576 integration costs 1,290 1,260 632 3,966 1,663 severance and restructuring costs 206 971 180 529 3,863 amortization of intangible assets 11,843 11,749 11,902 35,616 41,176 adjusted operating income 152,696 121,612 151,603 432,335 332,085 adjusted operating margin - as a % of net sales 26.3% 25.3% 26.5% 26.0% 24.8% depreciation 22,841 20,777 22,574 67,510 62,064 adjusted ebitda $175,537 $142,389 $174,177 $499,845 $394,149 adjusted ebitda - as a % of net sales 30.3% 29.6% 30.5% 30.0% 29.4% 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 nine months ended october 2, 2021 september 26, 2020 july 3, 2021 october 2, 2021 september 26, 2020 gaap net income $117,461 $79,303 $88,770 $290,907 $208,345 adjustments to net income: charge for fair value write-up of inventory acquired — 229 — — 590 deal and transaction costs — 642 — — 2,576 integration costs 1,290 1,260 632 3,966 1,663 severance and restructuring costs 206 971 180 529 3,863 loss on extinguishment of debt and modification — 908 23,338 23,338 2,378 amortization of intangible assets 11,843 11,749 11,902 35,616 41,176 tax effect of adjustments to net income and discrete items1 (5,417) (3,602) (8,111) (16,749) (11,979) non-gaap net income $125,383 $91,460 $116,711 $337,607 $248,612 diluted earnings per common share $0.86 $0.58 $0.65 $2.13 $1.53 effect of adjustments to net income $0.06 $0.09 $0.20 $0.34 $0.30 diluted non-gaap earnings per common share $0.92 $0.67 $0.85 $2.47 $1.83 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) fourth-quarter outlook reconciliation gaap net income to non-gaap net income december 31, 2021 gaap net income $109 - $116 adjustments to net income: restructuring and integration costs 2 amortization of intangible assets 10 income tax effect (2) non-gaap net income $119 - $126 fourth-quarter outlook reconciliation gaap diluted earnings per share to non-gaap diluted earnings per share december 31, 2021 diluted earnings per common share $0.80 - $0.85 adjustments to diluted earnings per common share: restructuring and integration costs 0.01 amortization of intangible assets 0.08 income tax effect (0.02) diluted non-gaap earnings per common share $0.87 - $0.92
