Entegris reports results for first quarter of 2021
Billerica, mass.--(business wire)--entegris, inc. (nasdaq: entg), today reported its financial results for the company’s first quarter ended april 3, 2021. first-quarter sales were $512.8 million, an increase of 24% from the same quarter last year. first-quarter gaap net income was $84.7 million, or $0.62 per diluted share, which included $11.9 million of amortization of intangible assets and $2.0 million of integration costs. non-gaap net income was $95.5 million for the first-quarter and non-gaap earnings per diluted share was $0.70. bertrand loy, entegris’ president and chief executive officer, said: “first quarter revenue growth was primarily driven by accelerating industry conditions and strong demand for our leading-edge solutions, especially in liquid filtration, advanced deposition materials and specialty coatings. we also continued to have strong demand for our aramus high purity bags, which are used for the distribution and storage of the covid-19 vaccine and other biologics.” mr. loy added: “the semiconductor market looks very healthy across all customer segments, bolstered by a robust global gdp outlook and strong overall chip demand, driven by accelerated digitalization, 5g and high-performance computing. in addition, more wafers are being produced at the more advanced nodes where we enjoy greater entegris content per wafer. consequently, our outlook for the full year 2021 has improved significantly, and our teams are intensely focused on meeting the record level of demand for our products.” quarterly financial results summary (in thousands, except percentages and per share data) gaap results april 03, 2021 march 28, 2020 december 31, 2020 net sales $512,844 $412,327 $517,594 operating income $113,978 $80,744 $113,228 operating margin - as a % of net sales 22.2% 19.6% 21.9% net income $84,676 $61,006 $86,624 diluted earnings per common share $0.62 $0.45 $0.63 non-gaap results non-gaap adjusted operating income $128,036 $99,638 $126,945 non-gaap adjusted operating margin - as a % of net sales 25.0% 24.2% 24.5% non-gaap net income $95,513 $75,571 $97,123 diluted non-gaap earnings per common share $0.70 $0.55 $0.71 second-quarter outlook for the second quarter ending july 3, 2021, the company expects sales of $530 million to $545 million, net income of $77 million to $84 million and diluted earnings per common share between $0.56 and $0.61. on a non-gaap basis, the company expects diluted earnings per common share to range from $0.77 to $0.82, reflecting net income on a non-gaap basis in the range of $106 million to $113 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 industry, life sciences and other high-technology industries. first-quarter results conference call details entegris will hold a conference call to discuss its results for the first quarter on tuesday, april 27, 2021, at 9:00 a.m. eastern time. participants should dial 800-437-2398 or +1 323-289-6576, referencing confirmation code 3813181. 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 3813181. 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 first quarter, which may be referred to during the call, 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 future period guidance; future sales, net income, net income per diluted share, non-gaap eps, 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 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 april 3, 2021 march 28, 2020 december 31, 2020 net sales $ 512,844 $ 412,327 $ 517,594 cost of sales 277,858 226,849 286,722 gross profit 234,986 185,478 230,872 selling, general and administrative expenses 71,389 58,891 68,170 engineering, research and development expenses 37,748 29,632 37,558 amortization of intangible assets 11,871 16,211 11,916 operating income 113,978 80,744 113,228 interest expense, net 11,581 10,238 12,133 other expense (income), net 4,330 878 (5,305 ) income before income tax expense 98,067 69,628 106,400 income tax expense 13,391 8,622 19,776 net income $ 84,676 $ 61,006 $ 86,624 basic earnings per common share: $ 0.63 $ 0.45 $ 0.64 diluted earnings per common share: $ 0.62 $ 0.45 $ 0.63 weighted average shares outstanding: basic 135,068 134,745 134,945 diluted 136,502 136,369 136,438 entegris, inc. and subsidiaries condensed consolidated balance sheets (in thousands) (unaudited) april 3, 2021 december 31, 2020 assets current assets: cash and cash equivalents $ 548,520 $ 580,893 trade accounts and notes receivable, net 282,649 264,392 inventories, net 358,819 323,944 deferred tax charges and refundable income taxes 20,227 21,136 other current assets 34,391 43,892 total current assets 1,244,606 1,234,257 property, plant and equipment, net 542,605 525,367 other assets: right-of-use assets 48,057 45,924 goodwill 747,518 748,037 intangible assets, net 325,454 337,632 deferred tax assets and other noncurrent tax assets 14,684 14,519 other 10,615 11,960 total assets $ 2,933,539 $ 2,917,696 liabilities and equity current liabilities accounts payable $ 93,045 $ 81,618 accrued liabilities 131,535 177,012 income tax payable 41,691 43,996 total current liabilities 266,271 302,626 long-term debt, excluding current maturities 1,086,186 1,085,783 long-term lease liability 42,953 39,730 other liabilities 109,796 110,063 shareholders’ equity 1,428,333 1,379,494 total liabilities and equity $ 2,933,539 $ 2,917,696 entegris, inc. and subsidiaries condensed consolidated statements of cash flows (in thousands) (unaudited) three months ended april 3, 2021 march 28, 2020 operating activities: net income $ 84,676 $ 61,006 adjustments to reconcile net income to net cash provided by operating activities: depreciation 22,095 20,648 amortization 11,871 16,211 stock-based compensation expense 7,138 4,994 other 8,166 5,563 changes in operating assets and liabilities, net of effects of acquisitions: trade accounts and notes receivable (21,564 ) (43,995 ) inventories (39,337 ) (18,205 ) accounts payable and accrued liabilities (28,591 ) (38,020 ) income taxes payable, refundable income taxes and noncurrent taxes payable (3,588 ) (225 ) other 12,249 3,426 net cash provided by operating activities 53,115 11,403 investing activities: acquisition of property and equipment (43,330 ) (22,585 ) acquisition of business, net of cash acquired — (75,630 ) other 72 5 net cash used in investing activities (43,258 ) (98,210 ) financing activities: proceeds from short-term borrowings and long-term debt — 217,000 payments of short-term borrowings and long-term debt — (75,000 ) payments for dividends (10,908 ) (10,847 ) issuance of common stock 1,572 551 taxes paid related to net share settlement of equity awards (15,038 ) (11,440 ) repurchase and retirement of common stock (15,000 ) (29,564 ) deferred acquisition payments — (16,125 ) other (1 ) (2,890 ) net cash (used in) provided by financing activities (39,375 ) 71,685 effect of exchange rate changes on cash and cash equivalents (2,855 ) (1,712 ) decrease in cash and cash equivalents (32,373 ) (16,834 ) cash and cash equivalents at beginning of period 580,893 351,911 cash and cash equivalents at end of period $ 548,520 $ 335,077 entegris, inc. and subsidiaries segment information (in thousands) (unaudited) three months ended net sales april 3, 2021 march 28, 2020 december 31, 2020 specialty chemicals and engineered materials $166,541 $144,214 $168,625 microcontamination control 207,099 159,261 205,626 advanced materials handling 148,541 116,137 151,741 inter-segment elimination (9,337) (7,285) (8,398) total net sales $512,844 $412,327 $517,594 three months ended segment profit april 3, 2021 march 28, 2020 december 31, 2020 specialty chemicals and engineered materials $ 34,556 $ 32,670 $ 29,761 microcontamination control 70,566 50,167 71,691 advanced materials handling 32,095 20,632 34,321 total segment profit 137,217 103,469 135,773 amortization of intangibles 11,871 16,211 11,916 unallocated expenses 11,368 6,514 10,629 total operating income $ 113,978 $ 80,744 $ 113,228 entegris, inc. and subsidiaries reconciliation of gaap gross profit to adjusted gross profit (in thousands) (unaudited) three months ended april 3, 2021 march 28, 2020 december 31, 2020 net sales $ 512,844 $ 412,327 $ 517,594 gross profit-gaap $ 234,986 $ 185,478 $ 230,872 adjustments to gross profit: charge for fair value mark-up of acquired inventory sold — 361 — adjusted gross profit $ 234,986 $ 185,839 $ 230,872 gross margin - as a % of net sales 45.8 % 45.0 % 44.6 % adjusted gross margin - as a % of net sales 45.8 % 45.1 % 44.6 % entegris, inc. and subsidiaries reconciliation of gaap segment profit to adjusted operating income (in thousands) (unaudited) three months ended segment profit-gaap april 3, 2021 march 28, 2020 december 31, 2020 specialty chemicals and engineered materials (scem) $ 34,556 $ 32,670 $ 29,761 microcontamination control (mc) 70,566 50,167 71,691 advanced materials handling (amh) 32,095 20,632 34,321 total segment profit 137,217 103,469 135,773 amortization of intangible assets 11,871 16,211 11,916 unallocated expenses 11,368 6,514 10,629 total operating income $ 113,978 $ 80,744 $ 113,228 three months ended adjusted segment profit april 3, 2021 march 28, 2020 december 31, 2020 scem segment profit $ 34,556 $ 32,670 $ 29,761 severance and restructuring costs 47 174 155 charge for fair value write-up of acquired inventory sold — 235 — scem adjusted segment profit $ 34,603 $ 33,079 $ 29,916 mc segment profit $ 70,566 $ 50,167 $ 71,691 severance and restructuring costs 51 190 167 charge for fair value write-up of acquired inventory sold — 126 — mc adjusted segment profit $ 70,617 $ 50,483 $ 71,858 amh segment profit $ 32,095 $ 20,632 $ 34,321 severance and restructuring costs 37 135 121 amh adjusted segment profit $ 32,132 $ 20,767 $ 34,442 unallocated general and administrative expenses $ 11,368 $ 6,514 $ 10,629 unallocated deal and integration costs (2,044 ) (1,479 ) (1,300 ) unallocated severance and restructuring costs (8 ) (344 ) (58 ) adjusted unallocated general and administrative expenses $ 9,316 $ 4,691 $ 9,271 total adjusted segment profit $ 137,352 $ 104,329 $ 136,216 adjusted amortization of intangible assets — — — adjusted unallocated general and administrative expenses 9,316 4,691 9,271 total adjusted operating income $ 128,036 $ 99,638 $ 126,945 entegris, inc. and subsidiaries reconciliation of gaap net income to adjusted operating income and adjusted ebitda (in thousands) (unaudited) three months ended april 3, 2021 march 28, 2020 december 31, 2020 net sales $ 512,844 $ 412,327 $ 517,594 net income $ 84,676 $ 61,006 $ 86,624 net income - as a % of net sales 16.5 % 14.8 % 16.7 % adjustments to net income: income tax expense 13,391 8,622 19,776 interest expense, net 11,581 10,238 12,133 other expense (income), net 4,330 878 (5,305 ) gaap - operating income 113,978 80,744 113,228 operating margin - as a % of net sales 22.2 % 19.6 % 21.9 % charge for fair value write-up of acquired inventory sold — 361 — deal and transaction costs — 1,431 — integration costs 2,044 48 1,300 severance and restructuring costs 143 843 501 amortization of intangible assets 11,871 16,211 11,916 adjusted operating income 128,036 99,638 126,945 adjusted operating margin - as a % of net sales 25.0 % 24.2 % 24.5 % depreciation 22,095 20,648 21,366 adjusted ebitda $ 150,131 $ 120,286 $ 148,311 adjusted ebitda - as a % of net sales 29.3 % 29.2 % 28.7 % 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 april 3, 2021 march 28, 2020 december 31, 2020 gaap net income $ 84,676 $ 61,006 $ 86,624 adjustments to net income: charge for fair value write-up of inventory acquired — 361 — deal and transaction costs — 1,431 — integration costs 2,044 48 1,300 severance and restructuring costs 143 843 501 amortization of intangible assets 11,871 16,211 11,916 tax effect of adjustments to net income and discrete items1 (3,221 ) (4,329 ) (3,218 ) non-gaap net income $ 95,513 $ 75,571 $ 97,123 diluted earnings per common share $ 0.62 $ 0.45 $ 0.63 effect of adjustments to net income $ 0.08 $ 0.11 $ 0.08 diluted non-gaap earnings per common share $ 0.70 $ 0.55 $ 0.71 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) second-quarter outlook reconciliation gaap net income to non-gaap net income july 3, 2021 gaap net income $77 - $84 adjustments to net income: restructuring and integration costs 2 amortization of intangible assets 12 loss on extinguishment of debt 23 income tax effect (8) non-gaap net income $106 - $113 second-quarter outlook reconciliation gaap diluted earnings per share to non-gaap diluted earnings per share july 3, 2021 diluted earnings per common share $0.56 - $0.61 adjustments to diluted earnings per common share: restructuring and integration costs 0.01 amortization of intangible assets 0.09 loss on extinguishment of debt 0.17 income tax effect (0.06) diluted non-gaap earnings per common share $0.77 - $0.82
