Entegris reports results for fourth quarter of 2020
Billerica, mass.--(business wire)--entegris, inc. (nasdaq: entg), today reported its financial results for the company’s fourth quarter ended december 31, 2020. fourth-quarter sales were $517.6 million, an increase of 21% from the same quarter last year. fourth-quarter gaap net income was $86.6 million, or $0.63 per diluted share, which included $11.9 million of amortization of intangible assets and $1.3 million of integration costs. non-gaap net income was $97.1 million for the fourth-quarter and non-gaap earnings per diluted share was $0.71. bertrand loy, entegris’ president and chief executive officer, said: “our fourth quarter results capped off a record year in sales, ebitda and eps for entegris. in 2020, our performance above the market accelerated, driven by wins in new technology nodes and overall demand for our products and solutions. this performance showcased the strength of our team’s execution and our highly resilient, differentiated, unit-driven business model. i can’t say enough about how proud i am of the dedication, ingenuity and perseverance our team demonstrated in such a challenging year.” mr. loy added: “we continue to be very optimistic about the long-term fundamentals of the semiconductor market. accelerating chip demand and a higher amount of wafers produced at the leading edge, provide a great base for attractive secular industry growth. on top of this, at entegris, we are benefiting from the growing impact to new device architectures of the intersecting themes of process materials and materials purity. we expect these key trends will continue to result in our rapidly expanding served markets and increased entegris content per wafer.” quarterly financial results summary (in thousands, except percentages and per share data) gaap results december 31, 2020 december 31, 2019 september 26, 2020 net sales $517,594 $426,998 $480,987 operating income $113,228 $84,085 $106,761 operating margin - as a % of net sales 21.9% 19.7% 22.2% net income $86,624 $57,438 $79,303 diluted earnings per common share $0.63 $0.42 $0.58 non-gaap results non-gaap adjusted operating income $126,945 $104,647 $121,612 non-gaap adjusted operating margin - as a % of net sales 24.5% 24.5% 25.3% non-gaap net income $97,123 $74,582 $91,460 diluted non-gaap earnings per common share $0.71 $0.55 $0.67 first-quarter outlook for the first quarter ending april 3, 2021, the company expects sales of $510 million to $525 million, net income of $83 million to $90 million and diluted earnings per common share between $0.61 and $0.66. on a non-gaap basis, the company expects diluted earnings per common share to range from $0.69 to $0.74, reflecting net income on a non-gaap basis in the range of $94 million to $101 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. fourth-quarter results conference call details entegris will hold a conference call to discuss its results for the fourth quarter on tuesday, february 2, 2021, at 9:00 a.m. eastern time. participants should dial 800-437-2398 or +1 323-289-6576, referencing confirmation code 9608918. 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 9608918. 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 third 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, and 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, 2019, filed on february 7, 2020, 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 december 31, 2020 december 31, 2019 september 26, 2020 net sales $ 517,594 $ 426,998 $ 480,987 cost of sales 286,722 229,362 254,987 gross profit 230,872 197,636 226,000 selling, general and administrative expenses 68,170 67,171 71,195 engineering, research and development expenses 37,558 30,352 36,295 amortization of intangible assets 11,916 16,028 11,749 operating income 113,228 84,085 106,761 interest expense, net 12,133 12,743 12,651 other (income) expense, net (5,305 ) 248 (1,752 ) income before income tax expense 106,400 71,094 95,862 income tax expense 19,776 13,656 16,559 net income $ 86,624 $ 57,438 $ 79,303 basic earnings per common share: $ 0.64 $ 0.43 $ 0.59 diluted earnings per common share: $ 0.63 $ 0.42 $ 0.58 weighted average shares outstanding: basic 134,945 134,778 134,957 diluted 136,438 136,470 136,252 entegris, inc. and subsidiaries condensed consolidated statements of operations (in thousands, except per share data) (unaudited) twelve months ended december 31, 2020 december 31, 2019 net sales $ 1,859,313 $ 1,591,066 cost of sales 1,009,591 879,413 gross profit 849,722 711,653 selling, general and administrative expenses 265,128 284,807 engineering, research and development expenses 136,057 121,140 amortization of intangible assets 53,092 66,428 operating income 395,445 239,278 interest expense, net 47,814 42,310 other (income), net (6,656 ) (121,081 ) income before income tax expense 354,287 318,049 income tax expense 59,318 63,189 net income $ 294,969 $ 254,860 basic earnings per common share: $ 2.19 $ 1.89 diluted earnings per common share: $ 2.16 $ 1.87 weighted average shares outstanding: basic 134,837 135,137 diluted 136,266 136,568 entegris, inc. and subsidiaries condensed consolidated balance sheets (in thousands) (unaudited) december 31, 2020 december 31, 2019 assets current assets: cash and cash equivalents $ 580,893 $ 351,911 trade accounts and notes receivable, net 264,392 234,409 inventories, net 323,944 287,098 deferred tax charges and refundable income taxes 21,136 24,552 other current assets 43,892 34,427 total current assets 1,234,257 932,397 property, plant and equipment, net 525,367 479,544 other assets: right-of-use assets 45,924 50,160 goodwill 748,037 695,044 intangible assets, net 337,632 333,952 deferred tax assets and other noncurrent tax assets 14,519 11,245 other 11,960 13,744 total assets $ 2,917,696 $ 2,516,086 liabilities and equity current liabilities long-term debt, current maturities $ — $ 4,000 accounts payable 81,618 84,207 accrued liabilities 177,012 150,118 income tax payable 43,996 26,108 total current liabilities 302,626 264,433 long-term debt, excluding current maturities 1,085,783 932,484 long-term lease liability 39,730 43,827 other liabilities 110,063 109,453 shareholders’ equity 1,379,494 1,165,889 total liabilities and equity $ 2,917,696 $ 2,516,086 entegris, inc. and subsidiaries condensed consolidated statements of cash flows (in thousands) (unaudited) three months ended twelve months ended december 31, 2020 december 31, 2019 december 31, 2020 december 31, 2019 operating activities: net income $ 86,624 $ 57,438 $ 294,969 $ 254,860 adjustments to reconcile net income to net cash provided by operating activities: depreciation 21,366 20,352 83,430 74,975 amortization 11,916 16,028 53,092 66,428 stock-based compensation expense 6,368 4,714 22,920 19,629 other (21,500 ) (2,585 ) 11,605 9,543 changes in operating assets and liabilities, net of effects of acquisitions: trade accounts and notes receivable 37,906 27,241 (27,461 ) (3,164 ) inventories 3,506 (15,665 ) (50,772 ) (21,354 ) accounts payable and accrued liabilities 30,086 9,264 40,162 (22,647 ) income taxes payable, refundable income taxes and noncurrent taxes payable 40,485 17,080 28,490 (3,494 ) other (12,739 ) (5,223 ) (9,761 ) 7,522 net cash provided by operating activities 204,018 128,644 446,674 382,298 investing activities: acquisition of property and equipment (52,192 ) (25,932 ) (131,752 ) (112,355 ) acquisition of business, net of cash acquired (767 ) (10,996 ) (111,912 ) (277,369 ) other 73 1,069 338 3,884 net cash used in investing activities (52,886 ) (35,859 ) (243,326 ) (385,840 ) financing activities: proceeds from short-term borrowings and long-term debt — — 617,000 — payments of short-term borrowings and long-term debt — (2,000 ) (468,000 ) (4,000 ) payments for dividends (10,799 ) (10,787 ) (43,245 ) (40,566 ) issuance of common stock 3,839 2,940 8,738 7,291 taxes paid related to net share settlement of equity awards (244 ) (145 ) (24,800 ) (8,722 ) repurchase and retirement of common stock (14,999 ) (15,000 ) (44,563 ) (80,321 ) deferred acquisition payments — — (16,125 ) — other — — (6,856 ) (502 ) net cash (used in) provided by financing activities (22,203 ) (24,992 ) 22,149 (126,820 ) effect of exchange rate changes on cash and cash equivalents 3,992 1,370 3,485 211 increase (decrease) in cash and cash equivalents 132,921 69,163 228,982 (130,151 ) cash and cash equivalents at beginning of period 447,972 282,748 351,911 482,062 cash and cash equivalents at end of period $ 580,893 $ 351,911 $ 580,893 $ 351,911 entegris, inc. and subsidiaries segment information (in thousands) (unaudited) three months ended twelve months ended net sales december 31, 2020 december 31, 2019 september 26, 2020 december 31, 2020 december 31, 2019 specialty chemicals and engineered materials $ 168,625 $ 146,747 $ 150,480 $ 609,532 $ 526,519 microcontamination control 205,626 169,794 193,541 742,186 633,664 advanced materials handling 151,741 117,455 144,370 538,682 458,290 inter-segment elimination (8,398 ) (6,998 ) (7,404 ) (31,087 ) (27,407 ) total net sales $ 517,594 $ 426,998 $ 480,987 $ 1,859,313 $ 1,591,066 three months ended twelve months ended segment profit december 31, 2020 december 31, 2019 september 26, 2020 december 31, 2020 december 31, 2019 specialty chemicals and engineered materials $ 29,761 $ 32,822 $ 32,600 $ 127,969 $ 98,327 microcontamination control 71,691 57,157 64,915 248,910 194,398 advanced materials handling 34,321 20,686 33,266 111,028 75,173 total segment profit 135,773 110,665 130,781 487,907 367,898 amortization of intangibles 11,916 16,028 11,749 53,092 66,428 unallocated expenses 10,629 10,552 12,271 39,370 62,192 total operating income $ 113,228 $ 84,085 $ 106,761 $ 395,445 $ 239,278 entegris, inc. and subsidiaries reconciliation of gaap gross profit to adjusted gross profit (in thousands) (unaudited) three months ended twelve months ended december 31, 2020 december 31, 2019 september 26, 2020 december 31, 2020 december 31, 2019 net sales $ 517,594 $ 426,998 $ 480,987 $ 1,859,313 $ 1,591,066 gross profit-gaap $ 230,872 $ 197,636 $ 226,000 $ 849,722 $ 711,653 adjustments to gross profit: integration costs — — — (1,557 ) — severance and restructuring costs — (12 ) — 465 1,336 charge for fair value mark-up of acquired inventory sold — 211 229 590 7,544 adjusted gross profit $ 230,872 $ 197,835 $ 226,229 $ 849,220 $ 720,533 gross margin - as a % of net sales 44.6 % 46.3 % 47.0 % 45.7 % 44.7 % adjusted gross margin - as a % of net sales 44.6 % 46.3 % 47.0 % 45.7 % 45.3 % entegris, inc. and subsidiaries reconciliation of gaap segment profit to adjusted operating income (in thousands) (unaudited) three months ended twelve months ended segment profit-gaap december 31, 2020 december 31, 2019 september 26, 2020 december 31, 2020 december 31, 2019 specialty chemicals and engineered materials (scem) $ 29,761 $ 32,822 $ 32,600 $ 127,969 $ 98,327 microcontamination control (mc) 71,691 57,157 64,915 248,910 194,398 advanced materials handling (amh) 34,321 20,686 33,266 111,028 75,173 total segment profit 135,773 110,665 130,781 487,907 367,898 amortization of intangible assets 11,916 16,028 11,749 53,092 66,428 unallocated expenses 10,629 10,552 12,271 39,370 62,192 total operating income $ 113,228 $ 84,085 $ 106,761 $ 395,445 $ 239,278 three months ended twelve months ended adjusted segment profit december 31, 2020 december 31, 2019 september 26, 2020 december 31, 2020 december 31, 2019 scem segment profit $ 29,761 $ 32,822 $ 32,600 $ 127,969 $ 98,327 integration costs — — — (1,557 ) — severance and restructuring costs 155 184 277 1,061 2,846 charge for fair value write-up of acquired inventory sold — (476 ) — 235 4,822 scem adjusted segment profit $ 29,916 $ 32,530 $ 32,877 $ 127,708 $ 105,995 mc segment profit $ 71,691 $ 57,157 $ 64,915 $ 248,910 $ 194,398 severance and restructuring costs 167 195 301 1,152 3,896 charge for fair value write-up of acquired inventory sold — 687 — 126 2,722 mc adjusted segment profit $ 71,858 $ 58,039 $ 65,216 $ 250,188 $ 201,016 amh segment profit $ 34,321 $ 20,686 $ 33,266 $ 111,028 $ 75,173 severance and restructuring costs 121 (379 ) 213 1,283 3,334 charge for fair value write-up of acquired inventory sold — — 229 229 — amh adjusted segment profit $ 34,442 $ 20,307 $ 33,708 $ 112,540 $ 78,507 unallocated general and administrative expenses $ 10,629 $ 10,552 $ 12,271 $ 39,370 $ 62,192 unallocated deal and integration costs (1,300 ) (4,323 ) (1,902 ) (7,096 ) (36,096 ) unallocated severance and restructuring costs (58 ) — (180 ) (868 ) (2,418 ) adjusted unallocated general and administrative expenses $ 9,271 $ 6,229 $ 10,189 $ 31,406 $ 23,678 total adjusted segment profit $ 136,216 $ 110,876 $ 131,801 $ 490,436 $ 385,518 adjusted amortization of intangible assets — — — — — adjusted unallocated general and administrative expenses 9,271 6,229 10,189 31,406 23,678 total adjusted operating income $ 126,945 $ 104,647 $ 121,612 $ 459,030 $ 361,840 entegris, inc. and subsidiaries reconciliation of gaap net income to adjusted operating income and adjusted ebitda (in thousands) (unaudited) three months ended twelve months ended december 31, 2020 december 31, 2019 september 26, 2020 december 31, 2020 december 31, 2019 net sales $ 517,594 $ 426,998 $ 480,987 $ 1,859,313 $ 1,591,066 net income $ 86,624 $ 57,438 $ 79,303 $ 294,969 $ 254,860 net income - as a % of net sales 16.7 % 13.5 % 16.5 % 15.9 % 16.0 % adjustments to net income: income tax expense 19,776 13,656 16,559 59,318 63,189 interest expense, net 12,133 12,743 12,651 47,814 42,310 other (income) expense, net (5,305 ) 248 (1,752 ) (6,656 ) (121,081 ) gaap - operating income 113,228 84,085 106,761 395,445 239,278 operating margin - as a % of net sales 21.9 % 19.7 % 22.2 % 21.3 % 15.0 % charge for fair value write-up of acquired inventory sold — 211 229 590 7,544 deal and transaction costs — 973 642 2,576 26,164 integration costs 1,300 3,350 1,260 2,963 9,932 severance and restructuring costs 501 — 971 4,364 12,494 amortization of intangible assets 11,916 16,028 11,749 53,092 66,428 adjusted operating income 126,945 104,647 121,612 459,030 361,840 adjusted operating margin - as a % of net sales 24.5 % 24.5 % 25.3 % 24.7 % 22.7 % depreciation 21,366 20,352 20,777 83,430 74,975 adjusted ebitda $ 148,311 $ 124,999 $ 142,389 $ 542,460 $ 436,815 adjusted ebitda - as a % of net sales 28.7 % 29.3 % 29.6 % 29.2 % 27.5 % 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 twelve months ended december 31, 2020 december 31, 2019 september 26, 2020 december 31, 2020 december 31, 2019 gaap net income $ 86,624 $ 57,438 $ 79,303 $ 294,969 $ 254,860 adjustments to net income: charge for fair value write-up of inventory acquired — 211 229 590 7,544 deal and transaction costs — 973 642 2,576 26,575 integration costs 1,300 3,350 1,260 2,963 9,932 severance and restructuring costs 501 — 971 4,364 12,494 loss on debt extinguishment — 1,980 908 2,378 1,980 versum termination fee, net — — — — (122,000 ) amortization of intangible assets 11,916 16,028 11,749 53,092 66,428 tax effect of legal entity restructuring — — — — 9,398 tax effect of adjustments to net income and discrete items1 (3,218 ) (5,398 ) (3,602 ) (15,197 ) (3,124 ) non-gaap net income $ 97,123 $ 74,582 $ 91,460 $ 345,735 $ 264,087 diluted earnings per common share $ 0.63 $ 0.42 $ 0.58 $ 2.16 $ 1.87 effect of adjustments to net income $ 0.08 $ 0.13 $ 0.09 $ 0.37 $ 0.07 diluted non-gaap earnings per common share $ 0.71 $ 0.55 $ 0.67 $ 2.54 $ 1.93 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) first-quarter outlook reconciliation gaap net income to non-gaap net income april 3, 2021 gaap net income $83 - $90 adjustments to net income: restructuring and integration costs 2 amortization of intangible assets 12 income tax effect (3 ) non-gaap net income $94 - $101 first-quarter outlook reconciliation gaap diluted earnings per share to non-gaap diluted earnings per share april 3, 2021 diluted earnings per common share $0.61 - $0.66 adjustments to diluted earnings per common share: restructuring and integration costs 0.01 amortization of intangible assets 0.08 income tax effect (0.01 ) diluted non-gaap earnings per common share $0.69 - $0.74
