Entegris reports results for second quarter of 2021
Billerica, mass.--(business wire)--entegris, inc. (nasdaq: entg), today reported its financial results for the company’s second quarter ended july 3, 2021. second-quarter sales were $571.4 million, an increase of 27% from the same quarter last year. second-quarter gaap net income was $88.8 million, or $0.65 per diluted share, which included $11.9 million of amortization of intangible assets and $0.6 million of integration costs. non-gaap net income was $116.7 million for the second quarter and non-gaap earnings per diluted share was $0.85. bertrand loy, entegris’ president and chief executive officer, said: “our excellent second quarter results were highlighted by 27 percent sales growth and record profitability and eps. revenue growth was strong across all three divisions, as we benefited from accelerating demand for our leading unit driven and capex driven product lines. in an industry environment that continues to be very dynamic, our manufacturing and supply chain teams have performed exceptionally well and been instrumental in delivering 25% organic growth in the first half of this year.” mr. loy added: “our outlook for the full year 2021 has improved, as we benefit from an increasingly strong market environment and demand for our solution set that continues to be very good. looking further ahead, the long-term fundamentals of the semiconductor market are very encouraging. positive secular demand trends have become increasingly evident, the pace of node transitions for both logic and memory have quickened and device architectures are becoming much more complex. this is great news for entegris, because the unique set of capabilities we have built around process materials and materials purity will be key enablers of these new chip architectures. and this will translate into our rapidly expanding served market and increasing entegris content per wafer.” quarterly financial results summary (in thousands, except percentages and per share data) gaap results july 3, 2021 june 27, 2020 april 3, 2021 net sales $571,352 $448,405 $512,844 operating income $138,889 $94,712 $113,978 operating margin - as a % of net sales 24.3% 21.1% 22.2% net income $88,770 $68,036 $84,676 diluted earnings per common share $0.65 $0.50 $0.62 non-gaap results non-gaap adjusted operating income $151,603 $110,835 $128,036 non-gaap adjusted operating margin - as a % of net sales 26.5% 24.7% 25.0% non-gaap net income $116,711 $81,581 $95,513 diluted non-gaap earnings per common share $0.85 $0.60 $0.70 third-quarter outlook for the third quarter ending october 2, 2021, the company expects sales of $575 million to $590 million, net income of $104 million to $111 million and diluted earnings per common share between $0.76 and $0.81. on a non-gaap basis, the company expects diluted earnings per common share to range from $0.84 to $0.89, reflecting net income on a non-gaap basis in the range of $114 million to $121 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. second-quarter results conference call details entegris will hold a conference call to discuss its results for the second quarter on tuesday, july 27, 2021, at 9:00 a.m. eastern time. participants should dial 866-248-8441 or +1 323-289-6576, referencing confirmation code 5713272. 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 5713272. the call can also be accessed live and on-demand from the entegris website. go to https://investor.entegris.com/events-and-presentations 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 second 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 http://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 future period guidance; future sales, net income, net income per diluted share, non-gaap 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 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; 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; 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; raw material shortages, supply and labor constraints and price increases; changes in government regulations of the countries in which the company operates; 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, 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 3, 2021 june 27, 2020 april 3, 2021 net sales $571,352 $448,405 $512,844 cost of sales 305,968 241,033 277,858 gross profit 265,384 207,372 234,986 selling, general and administrative expenses 72,621 66,872 71,389 engineering, research and development expenses 41,972 32,572 37,748 amortization of intangible assets 11,902 13,216 11,871 operating income 138,889 94,712 113,978 interest expense, net 10,643 12,792 11,581 other expense (income), net 23,560 (477) 4,330 income before income tax expense 104,686 82,397 98,067 income tax expense 15,916 14,361 13,391 net income $88,770 $68,036 $84,676 basic earnings per common share: $0.66 $0.51 $0.63 diluted earnings per common share: $0.65 $0.50 $0.62 weighted average shares outstanding: basic 135,498 134,700 135,068 diluted 136,533 136,007 136,502 entegris, inc. and subsidiaries condensed consolidated statements of operations (in thousands, except per share data) (unaudited) six months ended july 3, 2021 june 27, 2020 net sales $1,084,196 $860,732 cost of sales 583,826 467,882 gross profit 500,370 392,850 selling, general and administrative expenses 144,010 125,763 engineering, research and development expenses 79,720 62,204 amortization of intangible assets 23,773 29,427 operating income 252,867 175,456 interest expense, net 22,224 23,030 other expense, net 27,890 401 income before income tax expense 202,753 152,025 income tax expense 29,307 22,983 net income $173,446 $129,042 basic earnings per common share: $1.28 $0.96 diluted earnings per common share: $1.27 $0.95 weighted average shares outstanding: basic 135,283 134,722 diluted 136,518 136,188 entegris, inc. and subsidiaries condensed consolidated balance sheets (in thousands) (unaudited) july 3, 2021 december 31, 2020 assets current assets: cash and cash equivalents $401,033 $580,893 trade accounts and notes receivable, net 309,936 264,392 inventories, net 387,605 323,944 deferred tax charges and refundable income taxes 22,622 21,136 other current assets 38,040 43,892 total current assets 1,159,236 1,234,257 property, plant and equipment, net 563,258 525,367 other assets: right-of-use assets 59,117 45,924 goodwill 749,566 748,037 intangible assets, net 314,496 337,632 deferred tax assets and other noncurrent tax assets 14,994 14,519 other 12,064 11,960 total assets $2,872,731 $2,917,696 liabilities and equity current liabilities accounts payable $92,969 $81,618 accrued liabilities 146,827 177,012 income tax payable 20,734 43,996 total current liabilities 260,530 302,626 long-term debt, excluding current maturities 936,382 1,085,783 long-term lease liability 53,747 39,730 other liabilities 106,741 110,063 shareholders’ equity 1,515,331 1,379,494 total liabilities and equity $2,872,731 $2,917,696 entegris, inc. and subsidiaries condensed consolidated statements of cash flows (in thousands) (unaudited) three months ended six months ended july 3, 2021 june 27, 2020 july 3, 2021 june 27, 2020 operating activities: net income $88,770 $68,036 $173,446 $129,042 adjustments to reconcile net income to net cash provided by operating activities: depreciation 22,574 20,639 44,669 41,287 amortization 11,902 13,216 23,773 29,427 stock-based compensation expense 7,519 5,655 14,657 10,649 loss on extinguishment of debt and modification 23,338 1,470 23,338 1,470 other (8,369) 5,862 (203) 11,425 changes in operating assets and liabilities, net of effects of acquisitions: trade accounts and notes receivable (26,667) 1,908 (48,231) (42,087) inventories (30,386) (37,157) (69,723) (55,362) accounts payable and accrued liabilities 13,244 43,663 (15,347) 5,643 income taxes payable, refundable income taxes and noncurrent taxes payable (22,854) 4,637 (26,442) 4,412 other 2,784 2,092 15,033 5,518 net cash provided by operating activities 81,855 130,021 134,970 141,424 investing activities: acquisition of property and equipment (41,771) (24,288) (85,101) (46,873) acquisition of business, net of cash acquired (2,250) (15) (2,250) (75,645) other 18 206 90 211 net cash used in investing activities (44,003) (24,097) (87,261) (122,307) financing activities: proceeds from revolving credit facility and long-term debt 451,000 400,000 451,000 617,000 payments of revolving credit facility and long-term debt (601,000) (293,000) (601,000) (368,000) payments for debt extinguishment costs (19,080) — (19,080) — payments for dividends (10,889) (10,805) (21,797) (21,652) issuance of common stock 15,245 1,198 16,817 1,749 taxes paid related to net share settlement of equity awards (55) (1,280) (15,093) (12,720) repurchase and retirement of common stock (15,000) — (30,000) (29,564) deferred acquisition payments — — — (16,125) other (4,800) (3,965) (4,801) (6,855) net cash (used in) provided by financing activities (184,579) 92,148 (223,954) 163,833 effect of exchange rate changes on cash and cash equivalents (760) (482) (3,615) (2,194) decrease (increase) in cash and cash equivalents (147,487) 197,590 (179,860) 180,756 cash and cash equivalents at beginning of period 548,520 335,077 580,893 351,911 cash and cash equivalents at end of period $401,033 $532,667 $401,033 $532,667 entegris, inc. and subsidiaries segment information (in thousands) (unaudited) three months ended six months ended net sales july 3, 2021 june 27, 2020 april 3, 2021 july 3, 2021 june 27, 2020 specialty chemicals and engineered materials $180,366 $146,213 $166,541 $346,907 $290,427 microcontamination control 227,521 183,758 207,099 434,620 343,019 advanced materials handling 172,502 126,434 148,541 321,043 242,571 inter-segment elimination (9,037) (8,000) (9,337) (18,374) (15,285) total net sales $571,352 $448,405 $512,844 $1,084,196 $860,732 three months ended six months ended segment profit july 3, 2021 june 27, 2020 april 3, 2021 july 3, 2021 june 27, 2020 specialty chemicals and engineered materials $44,945 $32,938 $34,556 $79,501 $65,608 microcontamination control 78,132 62,137 70,566 148,698 112,304 advanced materials handling 42,093 22,809 32,095 74,188 43,441 total segment profit 165,170 117,884 137,217 302,387 221,353 amortization of intangibles 11,902 13,216 11,871 23,773 29,427 unallocated expenses 14,379 9,956 11,368 25,747 16,470 total operating income $138,889 $94,712 $113,978 $252,867 $175,456 entegris, inc. and subsidiaries reconciliation of gaap gross profit to adjusted gross profit (in thousands) (unaudited) three months ended six months ended july 3, 2021 june 27, 2020 april 3, 2021 july 3, 2021 june 27, 2020 net sales $571,352 $448,405 $512,844 $1,084,196 $860,732 gross profit-gaap $265,384 $207,372 $234,986 $500,370 $392,850 adjustments to gross profit: integration costs — (1,557) — — (1,557) severance and restructuring costs — 465 — — 465 charge for fair value mark-up of acquired inventory sold — — — — 361 adjusted gross profit $265,384 $206,280 $234,986 $500,370 $392,119 gross margin - as a % of net sales 46.4% 46.2% 45.8% 46.2% 45.6% adjusted gross margin - as a % of net sales 46.4% 46.0% 45.8% 46.2% 45.6% 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 3, 2021 june 27, 2020 april 3, 2021 july 3, 2021 june 27, 2020 specialty chemicals and engineered materials (scem) $44,945 $32,938 $34,556 $79,501 $65,608 microcontamination control (mc) 78,132 62,137 70,566 148,698 112,304 advanced materials handling (amh) 42,093 22,809 32,095 74,188 43,441 total segment profit 165,170 117,884 137,217 302,387 221,353 amortization of intangible assets 11,902 13,216 11,871 23,773 29,427 unallocated expenses 14,379 9,956 11,368 25,747 16,470 total operating income $138,889 $94,712 $113,978 $252,867 $175,456 three months ended six months ended adjusted segment profit july 3, 2021 june 27, 2020 april 3, 2021 july 3, 2021 june 27, 2020 scem segment profit $44,945 $32,938 $34,556 $79,501 $65,608 integration costs — (1,557) — — (1,557) severance and restructuring costs 51 455 47 98 629 charge for fair value write-up of acquired inventory sold — — — — 235 scem adjusted segment profit $44,996 $31,836 $34,603 $79,599 $64,915 mc segment profit $78,132 $62,137 $70,566 $148,698 $112,304 severance and restructuring costs 55 494 51 106 684 charge for fair value write-up of acquired inventory sold — — — — 126 mc adjusted segment profit $78,187 $62,631 $70,617 $148,804 $113,114 amh segment profit $42,093 $22,809 $32,095 $74,188 $43,441 severance and restructuring costs 38 814 37 75 949 amh adjusted segment profit $42,131 $23,623 $32,132 $74,263 $44,390 unallocated general and administrative expenses $14,379 $9,956 $11,368 $25,747 $16,470 unallocated deal and integration costs (632) (2,415) (2,044) (2,676) (3,894) unallocated severance and restructuring costs (36) (286) (8) (44) (630) adjusted unallocated general and administrative expenses $13,711 $7,255 $9,316 $23,027 $11,946 total adjusted segment profit $165,314 $118,090 $137,352 $302,666 $222,419 adjusted amortization of intangible assets — — — — — adjusted unallocated general and administrative expenses 13,711 7,255 9,316 23,027 11,946 total adjusted operating income $151,603 $110,835 $128,036 $279,639 $210,473 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 3, 2021 june 27, 2020 april 3, 2021 july 3, 2021 june 27, 2020 net sales $571,352 $448,405 $512,844 $1,084,196 $860,732 net income $88,770 $68,036 $84,676 $173,446 $129,042 net income - as a % of net sales 15.5% 15.2% 16.5% 16.0% 15.0% adjustments to net income: income tax expense 15,916 14,361 13,391 29,307 22,983 interest expense, net 10,643 12,792 11,581 22,224 23,030 other expense (income), net 23,560 (477) 4,330 27,890 401 gaap - operating income 138,889 94,712 113,978 252,867 175,456 operating margin - as a % of net sales 24.3% 21.1% 22.2% 23.3% 20.4% charge for fair value write-up of acquired inventory sold — — — — 361 deal and transaction costs — 503 — — 1,934 integration costs 632 355 2,044 2,676 403 severance and restructuring costs 180 2,049 143 323 2,892 amortization of intangible assets 11,902 13,216 11,871 23,773 29,427 adjusted operating income 151,603 110,835 128,036 279,639 210,473 adjusted operating margin - as a % of net sales 26.5% 24.7% 25.0% 25.8% 24.5% depreciation 22,574 20,639 22,095 44,669 41,287 adjusted ebitda $174,177 $131,474 $150,131 $324,308 $251,760 adjusted ebitda - as a % of net sales 30.5% 29.3% 29.3% 29.9% 29.2% 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 3, 2021 june 27, 2020 april 3, 2021 july 3, 2021 june 27, 2020 gaap net income $88,770 $68,036 $84,676 $173,446 $129,042 adjustments to net income: charge for fair value write-up of inventory acquired — — — — 361 deal and transaction costs — 503 — — 1,934 integration costs 632 355 2,044 2,676 403 severance and restructuring costs 180 2,049 143 323 2,892 loss on extinguishment of debt and modification 23,338 1,470 — 23,338 1,470 amortization of intangible assets 11,902 13,216 11,871 23,773 29,427 tax effect of adjustments to net income and discrete items1 (8,111) (4,048) (3,221) (11,332) (8,377) non-gaap net income $116,711 $81,581 $95,513 $212,224 $157,152 diluted earnings per common share $0.65 $0.50 $0.62 $1.27 $0.95 effect of adjustments to net income $0.20 $0.10 $0.08 $0.28 $0.21 diluted non-gaap earnings per common share $0.85 $0.60 $0.70 $1.55 $1.15 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) third-quarter outlook reconciliation gaap net income to non-gaap net income october 2, 2021 gaap net income $104 - $111 adjustments to net income: restructuring and integration costs 2 amortization of intangible assets 11 income tax effect (3) non-gaap net income $114 - $121 third-quarter outlook reconciliation gaap diluted earnings per share to non-gaap diluted earnings per share october 2, 2021 diluted earnings per common share $0.76 - $0.81 adjustments to diluted earnings per common share: restructuring and integration costs 0.01 amortization of intangible assets 0.09 income tax effect (0.02) diluted non-gaap earnings per common share $0.84 - $0.89
