Document | | | | | | | | | | | | | | |
| | | PRESS RELEASE
Bill Seymour VP of Investor Relations T + 1 952 556 1844 bill.seymour@entegris.com
|
Exhibit 99.1
FOR RELEASE AT 6:00 AM EDT
ENTEGRIS REPORTS RESULTS FOR THIRD QUARTER OF 2022
•Third-quarter revenue (as reported) of $994 million, increased 71% from prior year
•Third-quarter revenue (proforma), increased 14%
•Third-quarter GAAP diluted EPS of ($0.50)
•Third-quarter non-GAAP diluted EPS of $0.85
BILLERICA, Mass., November 2, 2022 - Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s third quarter ended October 1, 2022. Third-quarter sales were $993.8 million, an increase of 71% from the same quarter last year. Third-quarter GAAP net loss was $73.7 million, or $0.50 loss per diluted share, which included $65.3 million of amortization of intangible assets, $20.8 million of integration costs, $31.9 million of deal and transaction costs, $58.4 million contractual and non-cash integration costs and $2.4 million interest expense, net. Non-GAAP net income was $127.8 million for the third quarter and non-GAAP earnings per diluted share was $0.85. All the results presented herein are shown on a “as reported” basis and not on a “proforma” basis, and as a result do not include CMC Materials’ results in prior periods.
Bertrand Loy, Entegris’ president and chief executive officer, said: “Our execution was solid in the third quarter, and we are pleased with our proforma 18 percent year-to-date top line growth, especially in light of the growing economic uncertainty and unfavorable impact of foreign currencies. During the quarter, we continued to benefit from strong demand for our advanced solutions, which are of growing importance to our customers’ leading-edge technology roadmaps and new facility investments.”
Mr. Loy added: “We are also pleased with our steady progress on the CMC Materials integration. As a part of our assessment of the various parts of the CMC portfolio, we recently announced that we entered into a definitive agreement for Infineum to acquire the Pipeline and Industrial Materials business. Going forward, our focus will be on driving revenue and cost synergies, and continuing to pay down the debt.”
Mr. Loy added: “For the full year 2022, despite softening in the semiconductor market and the impact of the new U.S. government export restrictions, we expect to achieve strong growth, well in excess of the market. Looking ahead, our differentiated unit-driven model and experienced team will be key as we navigate the uncertain environment.”
Quarterly Financial Results Summary
(in thousands, except percentages and per share data) | | | | | | | | | | | |
| GAAP Results | October 1, 2022 | October 2, 2021 | July 2, 2022 |
| Net sales | $993,828 | $579,493 | $692,489 |
| Operating income | $14,889 | $139,357 | $157,970 |
| Operating margin - as a % of net sales | 1.5 | % | 24.0 | % | 22.8 | % |
| Net (loss) income | ($73,703) | $117,461 | $99,491 |
| Diluted (loss) earnings per common share | ($0.50) | $0.86 | $0.73 |
| | | |
| Non-GAAP Results |
| Non-GAAP adjusted operating income | $253,207 | $152,696 | $183,039 |
| Non-GAAP adjusted operating margin - as a % of net sales | 25.5 | % | 26.3 | % | 26.4 | % |
| Non-GAAP net income | $127,770 | $125,383 | $136,816 |
| Diluted non-GAAP earnings per common share | $0.85 | $0.92 | $1.00 |
| | | |
Fourth-Quarter Outlook
For the fourth quarter ending December 31, 2022, the Company expects sales of $930 million to $970 million, net income of $42 million to $50 million and diluted earnings per common share between $0.28 and $0.33. On a non-GAAP basis, the Company expects diluted earnings per common share to range from $0.75 to $0.80, reflecting net income on a non-GAAP basis in the range of $112 million to $120 million. The company also expects EBITDA of approximately 29% of sales, for the fourth quarter of 2022. We estimate that the impact of the U.S. government’s announced new export controls restricting the sale of semiconductor technology to certain companies in China will reduce sales by approximately $40 million to $50 million in the fourth quarter of 2022 (reflected in the guidance above).
Segment Results
In connection with the completion of the CMC Materials acquisition, the company now operates in four segments (which include the new APS division):
Specialty Chemicals and Engineered Materials (SCEM): SCEM provides advanced materials enabling complex chip designs and improved device electrical performance; including 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 advanced filtration solutions that improve customers’ yield, device reliability and cost; by filtering and purifying critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.
Advanced Materials Handling (AMH): AMH develops solutions that improve customers’ yields by protecting critical materials during manufacturing, transportation, and storage; including products that 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.
Advanced Planarization Solutions (APS): APS develops an end-to-end chemical mechanical planarization (CMP) solution and applications expertise delivered through advanced materials and high purity chemicals; including CMP slurries, pads, formulated cleans and other electronic chemicals used in the semiconductor manufacturing processes.
Third-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the third quarter on Wednesday, November 2, 2022, at 9:00 a.m. Eastern Time. Participants should dial 888-882-4478 or +1 323-794-2591, referencing confirmation code 8055261. 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 8055261. The on-demand playback will be available for six weeks after the conclusion of the teleconference. The call can also be accessed live and on-demand from the Investor Relations section of www.entegris.com.
Management’s slide presentation concerning the results for the third quarter will be posted on the Investor Relations section of www.entegris.com Wednesday morning before the call.
Entegris, Inc. - page 2 of 15
About Entegris
Entegris is a world-class supplier of advanced materials and process solutions for the semiconductor and other high-tech industries. Entegris has approximately 10,000 employees throughout its global operations and is ISO 9001 certified. It 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.
Cautionary Note on Forward Looking Statements
This news 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 may include statements about the ongoing impacts of the COVID-19 pandemic and the conflict in Ukraine on the Company’s operations and markets, including supply chain issues and inflationary pressures related thereto; future period guidance or projections; the Company’s performance relative to its markets, including the drivers of such performance; market and technology trends, including the duration and drivers of any growth trends and the impact of the COVID-19 pandemic on such trends; the development of new products and the success of their introductions; the focus of the Company’s engineering, research and development projects; the Company’s ability to execute on our business strategies, including with respect to Company’s expansion of its manufacturing presence in Taiwan; 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, including the acquisition of CMC Materials, Inc. (“CMC Materials”); trends relating to the fluctuation of currency exchange rates; future capital and other expenditures, including estimates thereof; the Company’s expected tax rate; the impact, financial or otherwise, of any organizational changes; the impact of accounting pronouncements; quantitative and qualitative disclosures about market risk; and other matters. These forward looking statements are based on current management expectations and assumptions only as of the date of this Quarterly Report, 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 the Company’s products and solutions; the level of, and obligations associated with, the Company’s indebtedness, including the debts incurred in connection with the acquisition of CMC Materials; risks related to the acquisition and integration of CMC Materials, including unanticipated difficulties or expenditures relating thereto; the ability to achieve the anticipated synergies and value-creation contemplated by the acquisition of CMC Materials and the diversion of management time on transaction-related matters; risks related to the COVID-19 pandemic on the global economy and financial markets, as well as on the Company, its customers and suppliers, which may impact its sales, gross margin, customer demand and its ability to supply its products to its customers; raw material shortages, supply and labor constraints and price increases, pricing and inflationary pressures and
Entegris, Inc. - page 3 of 15
rising interest rates; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; 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; substantial competition; 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; the ongoing conflict in Ukraine and the global response thereto; 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 national security and international trade policy, especially as they relate to China; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including under the heading “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on February 4, 2022, and in the Company’s other SEC filings. Except as required under the federal securities laws and the rules and regulations of the SEC, the Company undertakes no obligation to update publicly any forward-looking statements or information contained herein, which speak as of their respective dates.
Entegris, Inc. - page 4 of 15
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited) | | | | | | | | | | | | | | |
| | Three months ended |
| | October 1, 2022 | October 2, 2021 | July 2, 2022 |
| Net sales | $993,828 | $579,493 | $692,489 |
| Cost of sales | 622,157 | 315,289 | 382,092 |
| Gross profit | 371,671 | 264,204 | 310,397 |
| Selling, general and administrative expenses | 226,446 | 71,032 | 90,685 |
| Engineering, research and development expenses | 64,990 | 41,972 | 49,248 |
| Amortization of intangible assets | 65,346 | 11,843 | 12,494 |
| Operating income | 14,889 | 139,357 | 157,970 |
| Interest expense, net | 82,755 | 9,339 | 31,343 |
| Other expense, net | 12,852 | 1,917 | 9,619 |
| (Loss) Income before income tax expense | (80,718) | 128,101 | 117,008 |
| Income tax (benefit) expense | (7,015) | 10,640 | 17,517 |
| Net (loss) income | $(73,703) | $117,461 | $99,491 |
| | | | |
| | |
| Basic (loss) earnings per common share: | $(0.50) | $0.87 | $0.73 |
| Diluted (loss) earnings per common share: | $(0.50) | $0.86 | $0.73 |
| | | |
| Weighted average shares outstanding: | | | |
| Basic | 148,570 | 135,583 | 135,895 |
| Diluted | 148,570 | 136,631 | 136,454 |
Entegris, Inc. - page 5 of 15
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited) | | | | | | | | | | | |
| | Nine months ended |
| | October 1, 2022 | October 2, 2021 |
| Net sales | $2,335,963 | $1,663,689 |
| Cost of sales | 1,344,075 | 899,115 |
| Gross profit | 991,888 | 764,574 |
| Selling, general and administrative expenses | 404,239 | 215,042 |
| Engineering, research and development expenses | 160,953 | 121,692 |
| Amortization of intangible assets | 90,491 | 35,616 |
| Operating income | 336,205 | 392,224 |
| Interest expense, net | 126,962 | 31,563 |
| Other expense, net | 27,373 | 29,807 |
| Income before income tax expense | 181,870 | 330,854 |
| Income tax expense | 30,377 | 39,947 |
| Net income | $151,493 | $290,907 |
| | | |
| |
| Basic earnings per common share: | $1.08 | $2.15 |
| Diluted earnings per common share: | $1.08 | $2.13 |
| | | |
| Weighted average shares outstanding: | | |
| Basic | 140,045 | 135,383 |
| Diluted | 140,892 | 136,556 |
Entegris, Inc. - page 6 of 15
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited) | | | | | | | | | | | | | | | | | |
| | | October 1, 2022 | December 31, 2021 |
| ASSETS | | | | |
| Current assets: | | | | | |
| Cash, cash equivalents and restricted cash | $754,667 | $402,565 |
| Trade accounts and notes receivable, net | 519,793 | 347,413 |
| Inventories, net | | 823,637 | 475,213 |
| Deferred tax charges and refundable income taxes | 22,024 | 35,312 |
| Other current assets | 102,155 | 52,867 |
| Total current assets | 2,222,276 | 1,313,370 |
| Property, plant and equipment, net | 1,383,693 | 654,098 |
| Other assets: | | | | |
| Right-of-use assets | 95,397 | 66,563 |
| Goodwill | 4,405,292 | 793,702 |
| Intangible assets, net | 1,969,729 | 335,113 |
| Deferred tax assets and other noncurrent tax assets | 18,637 | 17,671 |
| Other | | 38,380 | 11,379 |
| Total assets | | $10,133,404 | $3,191,896 |
| LIABILITIES AND EQUITY | |
| Current liabilities | | | |
| Short-term debt, including current portion of long-term debt | $219,787 | $— |
| Accounts payable | | 187,697 | 130,734 |
| Accrued liabilities | | 390,706 | 199,131 |
| Income tax payable | | 42,831 | 49,136 |
| Total current liabilities | 841,021 | 379,001 |
| Long-term debt, excluding current maturities | 5,627,698 | 937,027 |
| Long-term lease liability | | 82,870 | 60,101 |
| Other liabilities | | 465,498 | 101,986 |
| Shareholders’ equity | | 3,116,317 | 1,713,781 |
| Total liabilities and equity | $10,133,404 | $3,191,896 |
Entegris, Inc. - page 7 of 15
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | |
| Three months ended | Nine months ended |
| October 1, 2022 | October 2, 2021 | October 1, 2022 | October 2, 2021 |
| Operating activities: | | | | |
| Net (loss) income | $(73,703) | $117,461 | $151,493 | $290,907 |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | | | | |
| Depreciation | 45,203 | 22,841 | 93,489 | 67,510 |
| Amortization | 65,346 | 11,843 | 90,491 | 35,616 |
| Share-based compensation expense | 38,077 | 7,467 | 57,544 | 22,124 |
| Loss on extinguishment of debt and modification | 2,235 | — | 2,235 | 23,338 |
| Other | 52,533 | (1,773) | 61,220 | (1,976) |
| Changes in operating assets and liabilities, net of effects of acquisitions: | | | | |
| Trade accounts and notes receivable | 22,931 | (5,127) | (34,378) | (53,358) |
| Inventories | (55,394) | (45,464) | (180,335) | (115,187) |
| Accounts payable and accrued liabilities | 56,162 | 52,924 | 83,307 | 37,577 |
| Income taxes payable, refundable income taxes and noncurrent taxes payable | (12,089) | (8,833) | (15,637) | (35,275) |
| Other | 4,231 | (1,835) | 10,801 | 13,198 |
| Net cash provided by operating activities | 145,532 | 149,504 | 320,230 | 284,474 |
| Investing activities: | | | | |
| Acquisition of property and equipment | (126,739) | (48,885) | (318,836) | (133,986) |
| Acquisition of business, net of cash acquired | (4,474,925) | — | (4,474,925) | (2,250) |
| Other | 1 | 4,326 | 1,124 | 4,416 |
| Net cash used in investing activities | (4,601,663) | (44,559) | (4,792,637) | (131,820) |
| Financing activities: | | | | |
| Proceeds from revolving credit facility, short-term debt and long-term debt | 2,810,439 | — | 5,416,753 | 451,000 |
| Payments of revolving credit facility, short-term debt and long-term debt | (223,000) | — | (416,000) | (601,000) |
| Payments for debt extinguishment costs | — | — | — | (19,080) |
| Payments for dividends | (14,929) | (10,853) | (42,413) | (32,650) |
| Issuance of common stock | 1,787 | 1,055 | 10,764 | 17,872 |
| Taxes paid related to net share settlement of equity awards | (6,430) | (275) | (22,747) | (15,368) |
| Repurchase and retirement of common stock | — | (20,000) | — | (50,000) |
| | | | |
| Other | (89,182) | (486) | (100,348) | (5,287) |
| Net cash provided by (used in) financing activities | 2,478,685 | (30,559) | 4,846,009 | (254,513) |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (11,118) | 333 | (21,500) | (3,282) |
| (Decrease) increase in cash, cash equivalents and restricted cash | (1,988,564) | 74,719 | 352,102 | (105,141) |
| Cash, cash equivalents and restricted cash at beginning of period | 2,743,231 | 401,033 | 402,565 | 580,893 |
| Cash, cash equivalents and restricted cash at end of period | $754,667 | $475,752 | $754,667 | $475,752 |
Entegris, Inc. - page 8 of 15
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Nine months ended |
| Net sales | October 1, 2022 | October 2, 2021 | July 2, 2022 | | October 1, 2022 | October 2, 2021 |
| Specialty Chemicals and Engineered Materials | $224,192 | $154,605 | $179,412 | | $569,380 | $460,707 |
| Microcontamination Control | 280,550 | 225,877 | 274,133 | | 821,320 | 660,497 |
| Advanced Materials Handling | 210,405 | 186,200 | 224,084 | | 632,602 | 507,243 |
| Advanced Planarization Solutions | 293,854 | 21,775 | 28,317 | | 352,816 | 62,580 |
| Inter-segment elimination | (15,173) | (8,964) | (13,457) | | (40,155) | (27,338) |
| Total net sales | $993,828 | $579,493 | $692,489 | | $2,335,963 | $1,663,689 |
| | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Nine months ended |
| Segment profit | October 1, 2022 | October 2, 2021 | July 2, 2022 | | October 1, 2022 | October 2, 2021 |
| Specialty Chemicals and Engineered Materials | $34,228 | $33,552 | $35,539 | | $107,459 | $98,760 |
| Microcontamination Control | 105,335 | 78,399 | 100,109 | | 304,062 | 227,097 |
| Advanced Materials Handling | 42,077 | 40,503 | 46,926 | | 135,693 | 114,691 |
| Advanced Planarization Solutions | 18,903 | 7,539 | 10,179 | | 40,241 | 21,832 |
| Total segment profit | 200,543 | 159,993 | 192,753 | | 587,455 | 462,380 |
| Amortization of intangibles | 65,346 | 11,843 | 12,494 | | 90,491 | 35,616 |
| Unallocated expenses | 120,308 | 8,793 | 22,289 | | 160,759 | 34,540 |
| Total operating income | $14,889 | $139,357 | $157,970 | | $336,205 | $392,224 |
Entegris, Inc. - page 9 of 15
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
(Unaudited) | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Nine months ended |
| October 1, 2022 | October 2, 2021 | July 2, 2022 | | October 1, 2022 | October 2, 2021 |
| Net Sales | $993,828 | $579,493 | $692,489 | | $2,335,963 | $1,663,689 |
| Gross profit-GAAP | $371,671 | $264,204 | $310,397 | | $991,888 | $764,574 |
| Adjustments to gross profit: | | | | | | |
| Charge for fair value mark-up of acquired inventory sold | 61,932 | — | — | | 61,932 | — |
| Adjusted gross profit | $433,603 | $264,204 | $310,397 | | $1,053,820 | $764,574 |
| | | | | | |
| Gross margin - as a % of net sales | 37.4 | % | 45.6 | % | 44.8 | % | | 42.5 | % | 46.0 | % |
| Adjusted gross margin - as a % of net sales | 43.6 | % | 45.6 | % | 44.8 | % | | 45.1 | % | 46.0 | % |
| | | | | | |
Entegris, Inc. - page 10 of 15
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Segment Profit to Adjusted Operating Income
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Nine months ended | |
| Adjusted segment profit | October 1, 2022 | October 2, 2021 | July 2, 2022 | | October 1, 2022 | October 2, 2021 | |
| SCEM segment profit | $34,228 | $33,552 | $35,539 | | $107,459 | $98,760 | |
| Integration costs | — | — | — | | — | — | |
| Severance and restructuring costs | — | 69 | — | | — | 167 | |
| Charge for fair value write-up of acquired inventory sold | 5,104 | — | — | | 5,104 | — | |
| SCEM adjusted segment profit | $39,332 | $33,621 | $35,539 | | $112,563 | $98,927 | |
| | | | | | | |
| MC segment profit | $105,335 | $78,399 | $100,109 | | $304,062 | $227,097 | |
| Severance and restructuring costs | — | 75 | — | | — | 181 | |
| | | | | | | |
| MC adjusted segment profit | $105,335 | $78,474 | $100,109 | | $304,062 | $227,278 | |
| | | | | | | |
| AMH segment profit | $42,077 | $40,503 | $46,926 | | $135,693 | $114,691 | |
| Severance and restructuring costs | — | 52 | — | | — | 127 | |
| | | | | | | |
| AMH adjusted segment profit | $42,077 | $40,555 | $46,926 | | $135,693 | $114,818 | |
| | | | | | | |
| APS segment profit | $18,903 | $7,539 | $10,179 | | $40,241 | 21,832 | |
| APS Integration | 56,828 | — | — | | 56,828 | — | |
| APS adjusted segment profit | $75,731 | $7,539 | $10,179 | | $97,069 | $21,832 | |
| | | | | | | |
| Unallocated general and administrative expenses | $120,308 | $8,793 | $22,289 | | $160,759 | $34,540 | |
| Unallocated deal and integration costs | (111,040) | (1,290) | (12,575) | | (129,869) | (3,966) | |
| Unallocated severance and restructuring costs | — | (10) | — | | — | (54) | |
| Adjusted unallocated general and administrative expenses | $9,268 | $7,493 | $9,714 | | $30,890 | $30,520 | |
| | | | | | | |
| Total adjusted segment profit | $262,475 | $160,189 | $192,753 | | $649,387 | $462,855 | |
| Adjusted amortization of intangible assets | — | — | — | | — | — | |
| Adjusted unallocated general and administrative expenses | 9,268 | 7,493 | 9,714 | | 30,890 | 30,520 | |
| Total adjusted operating income | $253,207 | $152,696 | $183,039 | | $618,497 | $432,335 | |
Entegris, Inc. - page 11 of 15
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 1, 2022 | October 2, 2021 | July 2, 2022 | | October 1, 2022 | October 2, 2021 |
| Net sales | $993,828 | $579,493 | $692,489 | | $2,335,963 | $1,663,689 |
| Net (loss) income | $(73,703) | $117,461 | $99,491 | | $151,493 | $290,907 |
| Net (loss) income - as a % of net sales | (7.4 | %) | 20.3 | % | 14.4 | % | | 6.5 | % | 17.5 | % |
| Adjustments to net (loss) income: | | | | | | |
| Income tax (benefit) expense | (7,015) | 10,640 | 17,517 | | 30,377 | 39,947 |
| Interest expense, net | 82,755 | 9,339 | 31,343 | | 126,962 | 31,563 |
| Other expense, net | 12,852 | 1,917 | 9,619 | | 27,373 | 29,807 |
| GAAP - Operating income | 14,889 | 139,357 | 157,970 | | 336,205 | 392,224 |
| Operating margin - as a % of net sales | 1.5 | % | 24.0 | % | 22.8 | % | | 14.4 | % | 23.6 | % |
| Charge for fair value write-up of acquired inventory sold | 61,932 | — | — | | 61,932 | — |
| Deal and transaction costs | 31,867 | — | 2,410 | | 39,285 | — |
| Integration costs | 20,762 | 1,290 | 10,165 | | 32,173 | 3,966 |
| Contractual and non-cash integration costs | 58,411 | — | — | | 58,411 | — |
| Severance and restructuring costs | — | 206 | — | | — | 529 |
| | | | | | |
| Amortization of intangible assets | 65,346 | 11,843 | 12,494 | | 90,491 | 35,616 |
| Adjusted operating income | 253,207 | 152,696 | 183,039 | | 618,497 | 432,335 |
| Adjusted operating margin - as a % of net sales | 25.5 | % | 26.3 | % | 26.4 | % | | 26.5 | % | 26.0 | % |
| Depreciation | 45,203 | 22,841 | 24,381 | | 93,489 | 67,510 |
| Adjusted EBITDA | $298,410 | $175,537 | $207,420 | | $711,986 | $499,845 |
| Adjusted EBITDA - as a % of net sales | 30.0 | % | 30.3 | % | 30.0 | % | | 30.5 | % | 30.0 | % |
Entegris, Inc. - page 12 of 15
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 1, 2022 | October 2, 2021 | July 2, 2022 | | October 1, 2022 | October 2, 2021 |
| GAAP net (loss) income | $(73,703) | $117,461 | $99,491 | | $151,493 | $290,907 |
| Adjustments to net income: | | | | | | |
| Charge for fair value write-up of inventory acquired | 61,932 | — | — | | 61,932 | — |
| Deal and transaction costs | 31,867 | — | 2,410 | | 39,285 | — |
| Integration costs | 20,762 | 1,290 | 10,165 | | 32,173 | 3,966 |
| Contractual and non-cash integration costs | 58,411 | — | — | | 58,411 | — |
| Severance and restructuring costs | — | 206 | — | | — | 529 |
| Loss on extinguishment of debt and modification | 2,235 | — | — | | 2,235 | 23,338 |
| | | | | | |
| Interest expense, net | 2,397 | — | 22,742 | | 29,822 | — |
| Amortization of intangible assets | 65,346 | 11,843 | 12,494 | | 90,491 | 35,616 |
| | | | | | |
Tax effect of adjustments to net income and discrete items1 | (41,477) | (5,417) | (10,486) | | (56,123) | (16,749) |
| | | | | | |
| | | | | | |
| Non-GAAP net income | $127,770 | $125,383 | $136,816 | | $409,719 | $337,607 |
| | | | | | |
| Diluted (loss) earnings per common share | $(0.50) | $0.86 | $0.73 | | $1.08 | $2.13 |
| Effect of adjustments to net income | $1.35 | $0.06 | $0.27 | | $1.83 | $0.34 |
| Diluted non-GAAP earnings per common share | $0.85 | $0.92 | $1.00 | | $2.91 | $2.47 |
| | | | | | |
| Diluted weighted averages shares outstanding | 148,570 | 136,631 | 136,454 | | 140,892 | 136,556 |
| Effect of adjustment to diluted weighted average shares outstanding | 1,099 | — | | | — | — |
| Diluted non-GAAP weighted average shares outstanding | 149,669 | 136,631 | 136,454 | | 140,892 | 136,556 |
1The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.
Entegris, Inc. - page 13 of 15
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Outlook to Non-GAAP Outlook
(In millions, except per share data)
(Unaudited)
| | | | | |
| Fourth-Quarter Outlook |
| Reconciliation GAAP Operating Margin to non-GAAP Operating Margin and Adjusted EBITDA Margin | December 31, 2022 |
| Net sales | $930 - $970 |
| GAAP - Operating income | $132 - $153 |
| Operating margin - as a % of net sales | 14% - 16% |
| Deal, transaction and integration costs | 23 | |
| Amortization of intangible assets | 66 | |
| Adjusted operating income | $221 - $242 |
| Adjusted operating margin - as a % of net sales | 24% - 25% |
| Depreciation | 45 | |
| Adjusted EBITDA | $266 - $287 |
| Adjusted EBITDA - as a % of net sales | 29 | % |
| | | | | |
| Fourth-Quarter Outlook |
| Reconciliation GAAP net income to non-GAAP net income | December 31, 2022 |
| GAAP net income | $42 - $50 |
| Adjustments to net income: | |
| Deal, transaction and integration costs | 23 | |
| Amortization of intangible assets | 66 | |
| |
| Income tax effect | (19) | |
| Non-GAAP net income | $112 - $120 |
| | | | | |
| Fourth-Quarter Outlook |
| Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share | December 31, 2022 |
| Diluted earnings per common share | $0.28 - $0.33 |
| Adjustments to diluted earnings per common share: | |
| Deal, transaction and integration costs | 0.15 | |
| Amortization of intangible assets | 0.44 | |
| |
| Income tax effect | (0.12) | |
| Diluted non-GAAP earnings per common share | $0.75 - $0.80 |
Entegris, Inc. - page 14 of 15
Entegris, Inc. and Subsidiaries
Reconciliation of Proforma GAAP Net Sales to Proforma Non-GAAP Net Sales
(In thousands)
(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Nine months ended | | | |
| October 1, 2022 | October 2, 2021 | | October 1, 2022 | October 2, 2021 | | 3Q22 over 3Q21 | YTD 3Q22 over 3Q21 |
| Proforma GAAP Net Sales | $993.8 | $889.3 | | $2,974.8 | $2,568.7 | | 11.8 | % | 15.8 | % |
| Less: Wood treatment | — | | 21.2 | | | 11.1 | | 55.8 | | | | |
| Proforma Net Sales - Non GAAP | $993.8 | $868.1 | | $2,963.7 | $2,512.9 | | 14.5 | % | 17.9 | % |
### END ###
Entegris, Inc. - page 15 of 15
