EX-99.2 3 entg2q17slides992.htm EXHIBIT 99.2 entg2q17slides992
JULY 27, 2017 Earnings Summary Second Quarter 2017 Exhibit 99.2


 
2 SAFE HARBOR Certain information contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intends,” “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 those about future period guidance; future sales, net income, net income per diluted share, non-GAAP EPS, non-GAAP net income, expenses and other financial metrics; our performance relative to our markets; market and technology trends; the development of new products and the success of their introductions; the Company's capital allocation strategy; our ability to execute on our strategies; and other matters. These forward-looking statements are based on current management expectations and assumptions only as of the date of this press release, 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 our products and solutions; our ability to meet rapid demand shifts; our ability to continue technological innovation and introduce new products to meet our customers' rapidly changing requirements; our concentrated customer base; our ability to identify, effect and integrate acquisitions, joint ventures or other transactions; our ability to protect and enforce intellectual property rights; operational, political and legal risks of our international operations; our dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages and price increases; changes in government regulations of the countries in which we operate; fluctuation of currency exchange rates; fluctuations in the market price of Entegris’ stock; the level of, and obligations associated with, our indebtedness; and other risk factors and additional information described in our filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed on February 17, 2017, and in our other periodic filings. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update publicly any forward-looking statements contained herein.


 
3 2Q17 AND 1H17 HIGHLIGHTS ◦ Achieved record second quarter sales of $329.0 million, up 9% from the prior year and up 4% from 1Q17 ◦ 1H17 sales of $646.4 million grew 13% from the prior year, reflecting strong growth in Asia, particularly in Korea ◦ Sales strength reflected robust demand for filtration, specialty gas, and advanced deposition materials solutions ◦ Outlook for full year FY2017 is for sales growth in excess of 10%; with expectations for continued positive momentum for FY2018 ◦ Generated record quarterly adjusted EBITDA of $88.2 million, or 26.8% of sales; Year-to-date adjusted EBITDA of $164.1 million, was 25.4% of sales and grew 30% from the same period a year ago ◦ Generated GAAP EPS of $0.28 and non-GAAP EPS of $0.34, above the high end of our guidance ◦ For the trailing four quarters, GAAP EPS was $0.84 and non-GAAP EPS was $1.11 ◦ Repaid $25 million of long-term debt, reducing net leverage ratio to 0.4 times ◦ Repurchased $4 million of stock as part of ongoing share repurchase program ◦ The acquisition of Gore’s microelectronics filtration product line is on track to meet or exceed expectations ◦ The product line will be commercialized under the TrinzikTM product name


 
$ in millions, except per share data 2Q17 2Q17 Guidance 1Q17 2Q16 2Q17 over 2Q16 2Q17 over 1Q17 Net Revenue $329.0 $315 to $330 $317.4 $303.1 8.5% 3.7% Gross Margin 45.7% 44.0% 45.9% Operating Expenses $91.2 $90 to $92 $88.7 $92.8 (1.7%) 2.8% Operating Income $59.1 $50.9 $46.4 27.4% 16.1% Operating Margin 18.0% 16.0% 15.3% Tax Rate 21.6% 21.9% 14.4% Net Income $40.0 $32 to $37 $32.5 $32.9 21.6% 23.1% EPS $0.28 $0.22 to $0.26 $0.23 $0.23 21.7% 21.7% 4 SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)


 
$ in millions, except per share data 2Q17 2Q17 Guidance 1Q17 2Q16 2Q17 over 2Q16 2Q17 over 1Q17 Net Revenue $329.0 $315 to $330 $317.4 $303.1 8.5% 3.7% Adjusted Gross Margin2 46.3% 44.0% 45.9% Non-GAAP Operating Expenses3 $78.4 $79 to $81 $77.7 $81.7 (4.0%) 0.9% Adjusted Operating Income $73.8 $61.9 $57.5 28.3% 19.2% Adjusted Operating Margin 22.4% 19.5% 19.0% Non-GAAP Tax Rate4 25.6% 22.5% 18.5% Non-GAAP Net Income $48.9 $39 to $44 $40.8 $40.3 21.3% 19.9% Non-GAAP EPS $0.34 $0.27 to $0.31 $0.28 $0.28 21.4% 21.4% 5 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 2. Adjusted gross margin excludes certain impairment of equipment. 3. Non-GAAP Operating Expenses exclude amortization expense, impairment of equipment and severance charges. 4. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1


 
$ in millions, except per share data 1H17 1H16 1H17 over 1H16 Net Revenue $646.4 $570.1 13.4% Gross Margin 44.8% 44.5% Operating Expenses $179.9 $178.0 1.1% Operating Income $110.0 $76.0 44.7% Operating Margin 17.0% 13.3% Tax Rate 21.7% 17.5% Net Income $72.5 $49.1 47.7% EPS $0.51 $0.35 45.7% 6 SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP) – YEAR TO DATE


 
$ in millions, except per share data 1H17 1H16 1H17 over 1H16 Net Revenue $646.4 $570.1 13.4% Adjusted Gross Margin2 45.2% 44.5% Non-GAAP Operating Expenses3 $156.2 $155.6 0.4% Adjusted Operating Income $135.7 $98.3 38.0% Adjusted Operating Margin 21.0% 17.2% Non-GAAP Tax Rate4 24.2% 21.8% Non-GAAP Net Income $89.7 $63.9 40.4% Non-GAAP EPS $0.63 $0.45 40.0% 7 SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP) – YEAR TO DATE 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 2. Adjusted gross margin excludes certain impairment of equipment. 3. Non-GAAP Operating Expenses exclude amortization expense, impairment of equipment and severance charges. 4. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes.


 
8 1. Represents diluted earnings per share. See Reconciliation of GAAP Net Income to Non-GAAP Earnings per Share in the appendix of this presentation. EARNINGS PER SHARE1 $0.23 $0.28 $0.28 $0.34 $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 1Q17 2Q17 EPS: 2Q17 vs. 1Q17 GAAP Non-GAAP $0.80 $0.84 $1.05 $1.11 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 1Q17 2Q17 EPS: Trailing 4 Quarters GAAP Non-GAAP


 
RESULTS BY SEGMENT1 9 1. Adjusted segment operating margin excludes amortization of intangibles and unallocated expenses. 2. Segment profit for SCEM for 3Q16 includes a charge for severance of $699K. 3. Segment profit for MC for 3Q16 includes a charge for severance of $737K. Segment profit for MC for 2Q17 includes charges for impairment of equipment and severance of $884K and $559K, respectively. 4. Segment profit for AMH for 3Q16 includes charges for impairment of equipment and severance totaling $6,795K. Segment profit for AMH for 2Q17 includes charges for impairment of equipment of $2,286K. 0% 10% 20% 30% 40% $0 $20 $40 $60 $80 $100 $120 2Q16 3Q16 4Q16 1Q17 2Q17 Specialty Chemicals and Engineered Materials Segment2 Sales Adj. Op. margin 0% 10% 20% 30% 40% $0 $20 $40 $60 $80 $100 $120 2Q16 3Q16 4Q16 1Q17 2Q17 Microcontamination Control Segment3 Sales Adj. Op. margin 0% 10% 20% 30% 40% $0 $20 $40 $60 $80 $100 $120 2Q16 3Q16 4Q16 1Q17 2Q17 Advanced Materials Handling Segment4 Sales Adj. Op. margin $ in millions


 
REVENUE BY GEOGRAPHY: STRONG GROWTH IN ASIA AND EUROPE 10 N. America Asia Japan Europe 1H17 Revenue by Geography 1H17 Revenue = $646.4 million 4% 21% -2% 13% N. America Asia Japan Europe -10% 0% 10% 20% 30% 1H17 vs. 1H16 Growth Rate $59.7M $374.9M $135.7M $76.1M


 
$ in millions 2Q17 1Q17 2Q16 $ Amount % Total $ Amount % Total $ Amount % Total Cash & Cash Equivalents $405.6 23.5% $391.2 23.1% $373.7 22.0% Accounts Receivable, net $171.1 9.9% $176.0 10.4% $180.6 10.7% Inventories $194.2 11.2% $188.3 11.1% $181.1 10.7% Net PP&E $341.1 19.7% $330.9 19.5% $322.7 19.0% Total Assets $1,727.4 $1,696.1 $1,695.5 Current Liabilities1 $251.0 14.5% $236.2 13.9% $187.1 11.0% Long-term debt, excluding current maturities $435.9 25.2% $460.3 27.1% $582.2 34.3% Total Liabilities $745.1 43.1% $751.0 44.3% $834.3 49.2% Total Shareholders’ Equity $982.3 56.9% $945.1 55.7% $861.2 50.8% AR - DSOs 47.5 50.6 54.4 Inventory Turns 3.7 3.8 3.6 11 1. Current Liabilities in 2Q17, 1Q17 and 2Q16 includes $100 million of current maturities of long term debt, respectively. SUMMARY – BALANCE SHEET ITEMS


 
12 1. See Reconciliation of GAAP Income to Adjusted Operating Income and Adjusted EBITDA in the appendix of this presentation. ADJUSTED EBITDA MARGIN1 23.2% 24.1% 0 50 100 150 200 250 300 TTM-1Q17 TTM-2Q17 Adjusted EBITDA TTM Adj. EBITDA in $M Adj. EBITDA as % of Sales $285M $302M 23.9% 26.8% 0 10 20 30 40 50 60 70 80 90 1Q17 2Q17 Adjusted EBITDA Adj. EBITDA in $M Adj. EBITDA as % of Sales $76M $88M


 
$ in millions 2Q17 1Q17 2Q16 Beginning Cash Balance $391.2 $406.4 $344.4 Cash from operating activities $85.2 $33.4 $61.2 Capital expenditures ($20.3) ($22.2) ($14.3) Payments on long-term debt ($25.0) ($25.0) ($25.0) Acquisition of business ($20.0) - - Other investing activities - $0.2 $0.8 Other financing activities ($3.8) ($7.8) $2.3 Effect of exchange rates ($1.7) $6.1 $4.3 Ending Cash Balance $405.6 $391.2 $373.7 Free Cash Flow1 $64.9 $11.2 $46.9 Adjusted EBITDA $88.2 $75.8 $71.3 CASH FLOWS 13 1. Free cash flow equals cash from operations less capital expenditures.


 
OUTLOOK 14 1. Non-GAAP operating expenses exclude amortization. In 3Q17, amortization is estimated to be approximately $11 million, or $0.05 per share. $ in millions, except per share data 3Q17 Guidance 2Q17 3Q16 Net Revenue $325 to $340 $329.0 $296.7 Operating Expenses $90 to $92 $91.2 $88.3 Net Income $36 to $43 $40.0 $21.9 EPS $0.25 to $0.30 $0.28 $0.15 $ in millions, except per share data 3Q17 Guidance 2Q17 3Q16 Net Revenue $325 to $340 $329.0 $296.7 Non-GAAP Operating Expenses1 $79 to $81 $78.4 $75.4 Non-GAAP Net Income $43 to $50 $48.9 $34.6 Non-GAAP EPS $0.30 to $0.35 $0.34 $0.24 Non-GAAP GAAP


 
Entegris®, the Entegris Rings Design™ and Pure Advantage™ are trademarks of Entegris, Inc. ©2016 Entegris, Inc. All rights reserved. 15


 
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT 16 Three months ended Six months ended July 1, 2017 July 2, 2016 April 1, 2017 July 1, 2017 July 2, 2016 Net Sales $329,002 $303,052 $317,377 $646,379 $570,076 Gross profit-GAAP $150,303 $139,205 $139,596 $289,899 $253,911 Adjustments to gross profit: Impairment of equipment 1,966 - - 1,966 - Non-GAAP net income $152,269 $139,205 $139,596 $291,865 $253,911 Gross margin - as a % of net sales 45.7% 45.9% 44.0% 44.8% 44.5% Adjusted gross margin - as a % of net sales 46.3% 45.9% 44.0% 45.2% 44.5% $ in thousands


 
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP SEGMENT PROFIT TO ADJUSTED OPERATING INCOME 17 Three months ended Six months ended Segment profit-GAAP July 1, 2017 July 2, 2016 April 1, 2017 July 1, 2017 July 2, 2016 Specialty Chemicals and Engineered Materials $34,174 $28,914 $28,140 $62,314 $51,330 Microcontamination Control 36,484 28,566 35,581 72,065 46,706 Advanced Materials Handling 19,573 22,519 18,276 37,849 41,430 Total segment profit 90,231 79,999 81,997 172,228 139,466 Amortization of intangible assets 11,007 11,062 10,945 21,952 22,351 Unallocated expenses 20,134 22,537 20,132 40,266 41,156 Total operating income $59,090 $46,400 $50,920 $110,010 $75,959 $ in thousands Three months ended Six months ended Adjusted segment profit July 1, 2017 July 2, 2016 April 1, 2017 July 1, 2017 July 2, 2016 Specialty Chemicals and Engineered Materials $34,174 $28,914 $28,140 $62,314 $51,330 Microcontamination Control1 37,927 28,566 35,581 73,508 46,706 Advanced Materials Handling2 21,859 22,519 18,276 40,135 41,430 Total segment profit 93,960 79,999 81,997 175,957 139,466 Amortization of intangible assets3 - - - - - Unallocated expenses 20,134 22,537 20,132 40,266 41,156 Total operating income $73,826 $57,462 $61,865 $135,691 $98,310 1 Adjusted segment profit for Microcontamination Control for the three and six months ended July 1, 2017 excludes charges for impairment of equipment and severance of $884K and $559K, respectively. 2 Adjusted segment profit for Advanced Material Handling for the three and six months ended July 1, 2017 excludes charges for impairment of equipment of $2,286K. 3 Adjusted amortization of intangible assets excludes amortization expense of $11,007, $11,062, and $10,945 for the three months ended July 1, 2017, July 2, 2016, and April 1, 2017, respectively and $21,952 and $22,351 for the six months ended July 1, 2017 and July 2, 2016, respectively.


 
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA 18 Three months ended Six months ended July 1, 2017 July 2, 2016 April 1, 2017 July 1, 2017 July 2, 2016 Net sales $329,002 $303,052 $317,377 $646,379 $570,076 Net income $39,991 $32,890 $32,514 $72,505 $49,102 Adjustments to net income: Income tax expense 11,042 5,513 9,111 20,153 10,386 Interest expense, net 8,103 9,051 8,393 16,496 18,200 Other (income) expense, net (46) (1,054) 902 856 (1,729) GAAP - Operating income 59,090 46,400 50,920 110,010 75,959 Severance 559 - - 559 - Impairment of equipment 3,170 - - 3,170 - Amortization of intangible assets 11,007 11,062 10,945 21,952 22,351 Adjusted operating income 73,826 57,462 61,865 135,691 98,310 Depreciation 14,411 13,825 13,977 28,388 27,525 Adjusted EBITDA $88,237 $71,287 $75,842 $164,079 $125,835 Adjusted operating margin 22.4% 19.0% 19.5% 21.0% 17.2% Adjusted EBITDA - as a % of net sales 26.8% 23.5% 23.9% 25.4% 22.1% $ in thousands


 
NON-GAAP RECONCILIATION TABLE RECONCILIATION OF GAAP TO NON-GAAP EARNINGS PER SHARE 19 Three months ended Six months ended July 1, 2017 July 2, 2016 April 1, 2017 July 1, 2017 July 2, 2016 GAAP net income $39,991 $32,890 $32,514 $72,505 $49,102 Adjustments to net income: Severance 559 - - 559 - Impairment of equipment 3,170 - - 3,170 - Gain on sale of equity investment - (38) - - (156) Amortization of intangible assets 11,007 11,062 10,945 21,952 22,351 Tax effect of adjustments to net income and discrete items (5,821) (3,624) (2,705) (8,526) (7,390) Non-GAAP net income $48,906 $40,290 $40,754 $89,660 $63,907 Diluted earnings per common share $0.28 $0.23 $0.23 $0.51 $0.35 Effect of adjustments to net income $0.06 $0.05 $0.06 $0.12 $0.10 Diluted non-GAAP earnings per common share $0.34 $0.28 $0.28 $0.63 $0.45 $ in thousands, except per share data


 
20 GAAP SEGMENT TREND DATA Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Sales SCEM 99,897$ 110,569$ 105,285$ 103,127$ 101,107$ 111,782$ 104,494$ 110,945$ 114,435$ 121,174$ MC 75,947 79,293 78,485 82,092 77,619 91,584 94,738 98,717 100,055 104,407 AMH 87,529 90,847 86,483 81,567 88,298 99,686 97,460 98,840 102,887 103,421 Total Sales 263,373$ 280,709$ 270,253$ 266,786$ 267,024$ 303,052$ 296,692$ 308,502$ 317,377$ 329,002$ Segment Profit SCEM 22,010$ 30,826$ 23,316$ 24,218$ 22,416$ 28,914$ 18,811$ 25,919$ 28,140$ 34,174$ MC 19,874 20,605 21,926 20,671 18,140 28,566 31,617 31,719 35,581 36,484 AMH 19,679 20,860 15,786 10,094 18,911 22,519 15,378 16,644 18,276 19,573 Total Segment Profit 61,563$ 72,291$ 61,028$ 54,983$ 59,467$ 79,999$ 65,806$ 74,282$ 81,997$ 90,231$ Segment Profit Margin SCEM 22.0% 27.9% 22.1% 23.5% 22.2% 25.9% 18.0% 23.4% 24.6% 28.2% MC 26.2% 26.0% 27.9% 25.2% 23.4% 31.2% 33.4% 32.1% 35.6% 34.9% AMH 22.5% 23.0% 18.3% 12.4% 21.4% 22.6% 15.8% 16.8% 17.8% 18.9% $ in thousands


 
NON-GAAP SEGMENT TREND DATA 21 1 Adjusted segment profit for SCEM for Q316 excludes charges for severance of $699K. 2 Adjusted segment profit for MC for Q316 excludes charges for severance of $737K. Adjusted segment profit for MC for 2Q17 excludes charges for impairment of equipment and severance of $884K and $559K, respectively. 3 Adjusted segment profit for AMH for Q316 excludes charges for impairment of equipment and severance related to organizational realignment of $5,826K and $969K, respectively. Adjusted segment profit for AMH for 2Q17 excludes charges for impairment of equipment of $2,286K. Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Sales SCEM 99,897$ 110,569$ 105,285$ 103,127$ 101,107$ 111,782$ 104,494$ 110,945$ 114,435$ 121,174$ MC 75,947 79,293 78,485 82,092 77,619 91,584 94,738 98,717 100,055 104,407 AMH 87,529 90,847 86,483 81,567 88,298 99,686 97,460 98,840 102,887 103,421 Total Sales 263,373$ 280,709$ 270,253$ 266,786$ 267,024$ 303,052$ 296,692$ 308,502$ 317,377$ 329,002$ Adjusted Segment Profit SCEM1 22,010$ 30,826$ 23,316$ 24,218$ 22,416$ 28,914$ 19,510$ 25,919$ 28,140$ 34,174$ MC2 19,874 20,605 21,926 20,671 18,140 28,566 32,354 31,719 35,581 37,927 AMH3 19,679 20,860 15,786 10,094 18,911 22,519 22,173 16,644 18,276 21,859 Total Adj. Segment Profit 61,563$ 72,291$ 61,028$ 54,983$ 59,467$ 79,999$ 74,037$ 74,282$ 81,997$ 93,960$ Adjusted Segment Profit Margin SCEM 22.0% 27.9% 22.1% 23.5% 22.2% 25.9% 18.7% 23.4% 24.6% 28.2% MC 26.2% 26.0% 27.9% 25.2% 23.4% 31.2% 34.2% 32.1% 35.6% 36.3% AMH 22.5% 23.0% 18.3% 12.4% 21.4% 22.6% 22.8% 16.8% 17.8% 21.1% $ in thousands