Entegris’ Strong Fourth-Quarter Caps Record Year
Entegris, Inc. (NasdaqGS: ENTG), a leader in specialty chemicals and advanced materials solutions for the microelectronics industry, today reported its financial results for the Company’s fourth quarter and the fiscal year ended December 31, 2018.
The Company reported sales of $1.55 billion for fiscal 2018, an increase of 15 percent from the prior year. Net income for the year was $240.8 million, or $1.69 per diluted share, which included amortization of intangible assets of $62.2 million, a $34.5 million tax benefit from legal entity restructuring, a $6.9 million charge for fair value write-up of acquired inventory sold, $8.4 million of integration costs and transaction expenses associated with the purchase of SAES Pure Gas, and a $2.3 million loss on debt extinguishment. Non-GAAP net income for fiscal 2018 was $270 million, or $1.89 per diluted share, which both increased 31 percent, compared to fiscal 2017.
Fourth-quarter sales were $401.6 million, an increase of 15 percent from the same quarter last year. Fourth-quarter net income was $80.8 million, or $0.57 per diluted share, which included amortization of intangible assets of $17.1 million, a $34.5 million tax benefit from legal entity restructuring, a $3.4 million charge for fair value write-up of acquired inventory sold, and a $2.3 million loss on debt extinguishment. Non-GAAP net income was $66.3 million, or $0.47 per diluted share, which increased 11 percent and 12 percent respectively, compared to the fourth quarter of 2017.
Bertrand Loy, president and chief executive officer, said: “Our fourth quarter results capped off another record year for Entegris. In 2018, we grew our sales 15 percent and increased adjusted EBITDA 22 percent, demonstrating the leverage of our model. Our results showcased the strength of our teams’ execution and the resilience of our unit-driven business model.”
Mr. Loy added: “We continue to see tremendous value in our ability to help our customers achieve higher yields, along with new levels of device reliability and performance. Entegris is uniquely positioned to achieve this, with our combination of global scale, world class technical capabilities and operational excellence. In 2019, we expect to leverage these capabilities and continue to outpace our markets.”
Quarterly Financial Results Summary
(in thousands, except
per share data)
GAAP Results |
Q4-2018 |
Q4-2017 |
Q3-2018 |
|||||||||
Net sales | $401,642 | $350,562 | $398,597 | |||||||||
Operating income | $71,308 | $71,152 | $67,975 | |||||||||
Operating margin | 17.8 | % | 20.3 | % | 17.1 | % | ||||||
Net income (loss) | $80,784 | $(28,341) | $48,060 | |||||||||
Diluted earnings (loss) per share (EPS) | $0.57 | $(0.20) | $0.34 | |||||||||
Non-GAAP Results | ||||||||||||
Non-GAAP adjusted operating income | $93,485 | $82,172 | $93,893 | |||||||||
Adjusted operating margin | 23.3 | % | 23.4 | % | 23.6 | % | ||||||
Non-GAAP net income | $66,300 | $59,694 | $65,621 | |||||||||
Non-GAAP EPS | $0.47 | $0.42 | $0.46 | |||||||||
First-Quarter Outlook
For the first quarter ending March 30, 2019, the Company expects sales will be approximately at the same level as the fourth quarter of 2018. The Company expects GAAP EPS will be approximately on the same level as the fourth quarter of 2018, excluding the one-time tax benefit (which impacted GAAP net income from the fourth quarter 2018). Non-GAAP EPS is expected to be approximately at the same level as the fourth quarter of 2018.
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, as well as safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.
Microcontamination Control (MC): MC solutions 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 and substrates for a broad set of applications in the semiconductor industry 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 5, 2019, at 9:00 a.m. Eastern Time. Participants should dial 888-254-3590 or +1 323-994-2093 referencing confirmation code 6919701. 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 6919701. The replay will be available February 5, 2019 12:00 Eastern Time through March 21, 2019 12:00 Eastern Time. A live and on-demand webcast of the call can also be accessed from the investor relations section of Entegris’ website at www.entegris.com.
Management’s slide presentation concerning the results for the fourth quarter and fiscal year, which may be referred to during the call, will be posted on the investor relations section of www.entegris.com Tuesday morning.
ABOUT ENTEGRIS
Entegris is a leader in specialty chemicals
and advanced materials solutions for the microelectronics industry and
other high-tech industries. Entegris is ISO 9001 certified and has
manufacturing, customer service and/or research facilities in the United
States, 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 together with related measures thereof, and non-GAAP
EPS, 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
uses these non-GAAP financial measures for financial and operational
decision-making, as a means to evaluate period-to-period comparisons, as
well as comparisons to our competitors’ operating results. Management
believes that these non-GAAP financial measures provide meaningful
supplemental information regarding our performance and liquidity by
excluding certain items that may not be indicative of our recurring
business operating results, such as amortization, depreciation and
discrete cash charges that are infrequent in nature. We believe that
both management and investors benefit from referring to these non-GAAP
financial measures in assessing and understanding our results and
performance and when planning, forecasting, and analyzing future
periods. We believe these non-GAAP financial measures are useful to
investors both because (1) they allow for greater transparency with
respect to key metrics used by management in its financial and
operational decision-making and (2) they are used by our institutional
investors and the analyst community to help them analyze our business.
The reconciliations of GAAP Net Income to Adjusted Operating Income and
Adjusted EBITDA, GAAP Gross Profit to Adjusted Gross Profit, GAAP
Segment Profit to Adjusted Operating Income, and GAAP to Non-GAAP
Earnings per Share are included elsewhere in this release.
Forward-Looking Statements
This press release contains
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 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;
our performance relative to our markets; market and technology trends;
the development of new products and the success of their introductions;
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 effect of the Tax Cuts and Jobs Act on
our capital allocation strategy; the impact of the acquisitions we have
made and commercial partnerships we have established; our ability to
execute on our strategies; the amount and timing of synergies from the
proposed transaction with Versum Materials, the closing date for the
proposed transaction with Versum Materials; and other matters. These
statements involve risks and uncertainties, and actual results may
differ. 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, 2017, filed on February 15, 2018, and in our other periodic
filings. The Company assumes no obligation to update any forward-looking
statements or information, which speak as of their respective dates.
Additional Information about the Merger and Where to Find It
This
communication does not constitute an offer to buy or sell or the
solicitation of an offer to buy or sell any securities or a solicitation
of any vote or approval. This communication relates to a proposed
business combination between Entegris and Versum Materials. In
connection with the proposed transaction, Entegris intends to file with
the Securities and Exchange Commission (the “SEC”) a registration
statement on Form S-4 that will include a joint proxy statement of
Entegris and Versum Materials that also constitutes a prospectus of
Entegris. Each of Entegris and Versum Materials also plan to file other
relevant documents with the SEC regarding the proposed transaction. No
offering of securities shall be made, except by means of a prospectus
meeting the requirements of Section 10 of the U.S. Securities Act of
1933, as amended. Any definitive joint proxy statement/prospectus (if
and when available) will be mailed to stockholders of Entegris and
Versum Materials. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT, JOINT PROXY STATEMENT/PROSPECTUS AND OTHER
DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security
holders will be able to obtain free copies of these documents (if and
when available) and other documents containing important information
about Entegris and Versum Materials, once such documents are filed with
the SEC through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by Entegris will be available
free of charge on Entegris’ website at http://www.entegris.com
or by contacting Entegris’ Investor Relations Department by email at irelations@entegris.com
or by phone at 978-436-6500. Copies of the documents filed with the SEC
by Versum Materials will be available free of charge on Versum
Materials’ website at investors.versummaterials.com or by phone at
484-275-5907.
Participants in the Solicitation
Entegris, Versum Materials
and certain of their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies in respect of
the proposed transaction. Information about the directors and executive
officers of Entegris is set forth in Entegris’ proxy statement for its
2018 annual meeting of shareholders, which was filed with the SEC on
March 28, 2018, and Entegris’ Annual Report on Form 10-K for the fiscal
year ended December 31, 2017, which was filed with the SEC on February
15, 2018. Information about the directors and executive officers of
Versum Materials is set forth in its proxy statement for its 2019 annual
meeting of shareholders, which was filed with the SEC on December 20,
2018, and Versum Materials’ Annual Report on Form 10-K for the fiscal
year ended September 30, 2018, which was filed with the SEC on November
21, 2018. Other information regarding the participants in the proxy
solicitations and a description of their direct and indirect interests,
by security holdings or otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with the
SEC regarding the proposed transaction when such materials become
available. Investors should read the joint proxy statement/prospectus
carefully when it becomes available before making any voting or
investment decisions. You may obtain free copies of these documents from
Entegris or Versum Materials using the sources indicated above.
Entegris, Inc. and Subsidiaries | ||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three months ended | ||||||||||||||
December 31, 2018 | December 31, 2017 | September 29, 2018 | ||||||||||||
Net sales | $ | 401,642 | $ | 350,562 | $ | 398,597 | ||||||||
Cost of sales | 221,902 | 186,883 | 216,881 | |||||||||||
Gross profit | 179,740 | 163,679 | 181,716 | |||||||||||
Selling, general and administrative expenses | 60,707 | 55,018 | 62,358 | |||||||||||
Engineering, research and development expenses | 30,675 | 26,489 | 29,964 | |||||||||||
Amortization of intangible assets | 17,050 | 11,020 | 21,419 | |||||||||||
Operating income | 71,308 | 71,152 | 67,975 | |||||||||||
Interest expense, net | 8,426 | 7,533 | 7,678 | |||||||||||
Other expense, net | 3,176 | 21,696 | 810 | |||||||||||
Income before income tax expense | 59,706 | 41,923 | 59,487 | |||||||||||
Income tax (benefit) expense | (21,078 | ) | 70,264 | 11,427 | ||||||||||
Net income (loss) | $ | 80,784 | $ | (28,341 | ) | $ | 48,060 | |||||||
Basic net income (loss) per common share: | $ | 0.58 | $ | (0.20 | ) | $ | 0.34 | |||||||
Diluted net income (loss) per common share: | $ | 0.57 | $ | (0.20 | ) | $ | 0.34 | |||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | 139,268 | 141,329 | 141,556 | |||||||||||
Diluted | 140,515 | 141,329 | 143,033 | |||||||||||
Entegris, Inc. and Subsidiaries | |||||||||
Condensed Consolidated Statements of Operations | |||||||||
(In thousands, except per share data) | |||||||||
(Unaudited) | |||||||||
|
Twelve months ended | ||||||||
December 31, 2018 | December 31, 2017 | ||||||||
Net sales | $ | 1,550,497 | $ | 1,342,532 | |||||
Cost of sales | 830,666 | 733,547 | |||||||
Gross profit | 719,831 | 608,985 | |||||||
Selling, general and administrative expenses | 246,534 | 216,194 | |||||||
Engineering, research and development expenses | 118,456 | 106,951 | |||||||
Amortization of intangible assets | 62,152 | 44,023 | |||||||
Operating income | 292,689 | 241,817 | |||||||
Interest expense, net | 30,255 | 31,628 | |||||||
Other expense, net | 8,002 | 25,458 | |||||||
Income before income tax expense | 254,432 | 184,731 | |||||||
Income tax expense | 13,677 | 99,665 | |||||||
Net income | $ | 240,755 | $ | 85,066 | |||||
Basic net income per common share: | $ | 1.71 | $ | 0.60 | |||||
Diluted net income per common share: | $ | 1.69 | $ | 0.59 | |||||
Weighted average shares outstanding: | |||||||||
Basic | 141,026 | 141,553 | |||||||
Diluted | 142,610 | 143,518 | |||||||
Entegris, Inc. and Subsidiaries | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
December 31, 2018 | December 31, 2017 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 482,062 | $ | 625,408 | ||||||
Trade accounts and notes receivable, net | 222,055 | 183,434 | |||||||
Inventories, net | 268,140 | 198,089 | |||||||
Deferred tax charges and refundable income taxes | 17,393 | 18,012 | |||||||
Other current assets | 39,688 | 32,665 | |||||||
Total current assets | 1,029,338 | 1,057,608 | |||||||
Property, plant and equipment, net | 419,529 | 359,523 | |||||||
Other assets: | |||||||||
Goodwill | 550,202 | 359,688 | |||||||
Intangible assets, net | 295,687 | 182,430 | |||||||
Deferred tax assets and other noncurrent tax assets | 10,162 | 9,103 | |||||||
Other | 12,723 | 7,820 | |||||||
Total assets | $ | 2,317,641 | $ | 1,976,172 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities | |||||||||
Long-term debt, current maturities | 4,000 | 100,000 | |||||||
Accounts payable | 93,055 | 68,762 | |||||||
Accrued liabilities | 141,020 | 99,374 | |||||||
Income tax payable | 31,593 | 22,835 | |||||||
Total current liabilities | 269,668 | 290,971 | |||||||
Long-term debt, excluding current maturities | 934,863 | 574,380 | |||||||
Other liabilities | 101,085 | 117,803 | |||||||
Shareholders’ equity | 1,012,025 | 993,018 | |||||||
Total liabilities and equity | $ | 2,317,641 | $ | 1,976,172 | |||||
Entegris, Inc. and Subsidiaries | ||||||||||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, |
December 31, |
December 31, |
December 31, |
|||||||||||||||||
Operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 80,784 | $ | (28,341 | ) | $ | 240,755 | $ | 85,066 | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation | 16,880 | 15,035 | 65,116 | 58,208 | ||||||||||||||||
Amortization | 17,050 | 11,020 | 62,152 | 44,023 | ||||||||||||||||
Stock-based compensation expense | 4,385 | 3,849 | 17,112 | 15,306 | ||||||||||||||||
Provision for deferred income taxes | (10,810 | ) | 1,374 | (11,876 | ) | 1,628 | ||||||||||||||
Loss on extinguishment of debt | 2,319 | 20,687 | 2,429 | 20,687 | ||||||||||||||||
Other | 5,804 | 4,267 | 16,278 | 28,295 | ||||||||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||||||||||
Trade accounts and notes receivable | (8,760 | ) | (56 | ) | (17,473 | ) | (15,401 | ) | ||||||||||||
Inventories | (9,312 | ) | (5,330 | ) | (38,100 | ) | (20,214 | ) | ||||||||||||
Accounts payable and accrued liabilities | 29,390 | 8,377 | 19,950 | 15,975 | ||||||||||||||||
Income taxes payable, refundable income taxes and noncurrent taxes payable | (21,188 | ) | 62,852 | (30,381 | ) | 64,516 | ||||||||||||||
Other | (15,215 | ) | (7,993 | ) | (13,386 | ) | (4,716 | ) | ||||||||||||
Net cash provided by operating activities | 91,327 | 85,741 | 312,576 | 293,373 | ||||||||||||||||
Investing activities: | ||||||||||||||||||||
Acquisition of property and equipment | (34,816 | ) | (25,658 | ) | (110,153 | ) | (93,597 | ) | ||||||||||||
Acquisition of business, net of cash | (426 | ) | — | (380,694 | ) | (20,000 | ) | |||||||||||||
Other | (111 | ) | 68 | 4,903 | 1,142 | |||||||||||||||
Net cash used in investing activities | (35,353 | ) | (25,590 | ) | (485,944 | ) | (112,455 | ) | ||||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from long-term borrowings | 400,000 | 550,000 | 402,000 | 550,000 | ||||||||||||||||
Payments on long-term debt | (108,850 | ) | (385,000 | ) | (135,850 | ) | (460,000 | ) | ||||||||||||
Dividend payments | (9,890 | ) | (9,896 | ) | (39,591 | ) | (9,896 | ) | ||||||||||||
Payments for debt extinguishment costs | — | (16,200 | ) | — | (16,200 | ) | ||||||||||||||
Issuance of common stock | 2,548 | 1,984 | 5,577 | 5,566 | ||||||||||||||||
Taxes paid related to net share settlement of equity awards | (134 | ) | (480 | ) | (14,686 | ) | (5,887 | ) | ||||||||||||
Repurchase and retirement of common stock | (143,781 | ) | (10,000 | ) | (173,781 | ) | (28,000 | ) | ||||||||||||
Other | (8,512 | ) | (7,062 | ) | (9,258 | ) | (8,332 | ) | ||||||||||||
Net cash provided by financing activities | 131,381 | 123,346 | 34,411 | 27,251 | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (186 | ) | 6,714 | (4,389 | ) | 10,850 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | 187,169 | 190,211 | (143,346 | ) | 219,019 | |||||||||||||||
Cash and cash equivalents at beginning of period | 294,893 | 435,197 | 625,408 | 406,389 | ||||||||||||||||
Cash and cash equivalents at end of period | $ | 482,062 | $ | 625,408 | $ | 482,062 | $ | 625,408 | ||||||||||||
Entegris, Inc. and Subsidiaries | ||||||||||||||||||||||||
Segment Information | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||||||||||
Net sales |
December 31, |
December 31, |
September 29, |
December 31, |
December 31, |
|||||||||||||||||||
Specialty Chemicals and Engineered Materials | $ | 133,928 | $ | 125,339 | $ | 131,234 | $ | 530,241 | $ | 485,470 | ||||||||||||||
Microcontamination Control | 158,181 | 115,650 | 151,345 | 552,844 | 436,225 | |||||||||||||||||||
Advanced Materials Handling | 109,533 | 109,573 | 116,018 | 467,412 | 420,837 | |||||||||||||||||||
Total net sales | $ | 401,642 | $ | 350,562 | $ | 398,597 | $ | 1,550,497 | $ | 1,342,532 |
Three months ended | Twelve months ended | |||||||||||||||||||||||
Segment profit1 |
December 31, |
December 31, |
September 29, |
December 31, |
December 31, |
|||||||||||||||||||
Specialty Chemicals and Engineered Materials | $ | 29,016 | $ | 30,075 | $ | 31,860 | $ | 129,754 | $ | 111,802 | ||||||||||||||
Microcontamination Control | 48,389 | 39,328 | 44,530 | 173,964 | 141,413 | |||||||||||||||||||
Advanced Materials Handling | 16,791 | 18,226 | 19,494 | 82,541 | 59,838 | |||||||||||||||||||
Total segment profit | 94,196 | 87,629 | 95,884 | 386,259 | 313,053 | |||||||||||||||||||
Amortization of intangibles | 17,050 | 11,020 | 21,419 | 62,152 | 44,023 | |||||||||||||||||||
Unallocated expenses | 5,838 | 5,457 | 6,490 | 31,418 | 27,213 | |||||||||||||||||||
Total operating income | $ | 71,308 | $ | 71,152 | $ | 67,975 | $ | 292,689 | $ | 241,817 | ||||||||||||||
1 Beginning in the first quarter of 2018, the Company has changed its definition of segment profit to include an allocation of certain general and administrative costs for the Company’s human resources, finance and information technology functions previously unallocated by the Company. Prior quarter information was recast to reflect the change in the Company’s definition of segment profit.
Entegris, Inc. and Subsidiaries | |||||||||||||||||||||||||
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Three months ended | Twelve months ended | ||||||||||||||||||||||||
December 31, |
December 31, |
September 29, |
December 31, |
December 31, |
|||||||||||||||||||||
Net sales | $ | 401,642 | $ | 350,562 | $ | 398,597 | $ | 1,550,497 | $ | 1,342,532 | |||||||||||||||
Gross profit-GAAP | $ | 179,740 | $ | 163,679 | $ | 181,716 | $ | 719,831 | $ | 608,985 | |||||||||||||||
Adjustments to gross profit: | |||||||||||||||||||||||||
Severance related to organizational realignment | 460 | — | — | 460 | 740 | ||||||||||||||||||||
Charge for fair value mark-up of acquired inventory sold | 3,379 | — | 3,281 | 6,868 | — | ||||||||||||||||||||
Impairment of equipment | — | — | — | — | 5,330 | ||||||||||||||||||||
Adjusted gross profit | $183,579 | $163,679 | $184,997 | $727,159 | $615,055 | ||||||||||||||||||||
Gross margin - as a % of net sales | 44.8 | % | 46.7 | % | 45.6 | % | 46.4 | % | 45.4 | % | |||||||||||||||
Adjusted gross margin - as a % of net sales | 45.7 | % | 46.7 | % | 46.4 | % | 46.9 | % | 45.8 | % | |||||||||||||||
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, |
December 31, |
September 29, |
December 31, |
December 31, |
|||||||||||||||||||
Specialty Chemicals and Engineered Materials | $ | 29,016 | $ | 30,075 | $ | 31,860 | $ | 129,754 | $ | 111,802 | ||||||||||||||
Microcontamination Control | 48,389 | 39,328 | 44,530 | 173,964 | 141,413 | |||||||||||||||||||
Advanced Materials Handling | 16,791 | 18,226 | 19,494 | 82,541 | 59,838 | |||||||||||||||||||
Total segment profit | 94,196 | 87,629 | 95,884 | 386,259 | 313,053 | |||||||||||||||||||
Amortization of intangible assets | 17,050 | 11,020 | 21,419 | 62,152 | 44,023 | |||||||||||||||||||
Unallocated expenses | 5,838 | 5,457 | 6,490 | 31,418 | 27,213 | |||||||||||||||||||
Total operating income | $ | 71,308 | $ | 71,152 | $ | 67,975 | $ | 292,689 | $ | 241,817 | ||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||||||||||
Adjusted segment profit |
December 31, |
December 31, |
September 29, |
December 31, |
December 31, |
|||||||||||||||||||
Specialty Chemicals and Engineered Materials 1 | $ | 29,016 | $ | 30,075 | $ | 31,860 | $ | 129,754 | $ | 111,816 | ||||||||||||||
Microcontamination Control 2 | 51,768 | 39,328 | 47,811 | 180,832 | 143,052 | |||||||||||||||||||
Advanced Materials Handling 3 | 17,251 | 18,226 | 19,960 | 83,467 | 67,345 | |||||||||||||||||||
Total adjusted segment profit | 98,035 | 87,629 | 99,631 | 394,053 | 322,213 | |||||||||||||||||||
Amortization of intangible assets4 | — | — | — | — | — | |||||||||||||||||||
Unallocated expenses5 | 4,550 | 5,457 | 5,738 | 23,060 | 23,273 | |||||||||||||||||||
Total adjusted operating income | $ | 93,485 | $ | 82,172 | $ | 93,893 | $ | 370,993 | $ | 298,940 | ||||||||||||||
1 Adjusted segment profit for Specialty Chemicals and Engineered Materials for the twelve months ended December 31, 2017 excludes charges for severance related to organizational realignment of $14.
2 Adjusted segment profit for Microcontamination Control excludes charges for fair value mark-up of acquired inventory sold of $3,379 and$3,281 for the three months ended December 31, 2018 and September 29, 2018, respectively, and $6,868 for the twelve months ended December 31, 2018. Adjusted segment profit for Microcontamination Control excludes impairment of equipment and charges for severance related to organizational realignment of $1,639 for the twelve months ended December 31, 2017.
3 Adjusted segment profit for Advanced Material Handling excludes loss on sale of subsidiary $466 for the three months ended September 29, 2018 and the twelve months ended December 31, 2018. Adjusted segment profit for Advanced Material Handling excludes charges for impairment of equipment and severance related to organizational realignment of $460 for the three and twelve months ended December 31, 2018 and $7,507 for the twelve months ended December 31, 2017, respectively.
4 Adjusted amortization of intangible assets excludes amortization expense of $17,050, $11,020, and $21,419 for the three months ended December 31, 2018, December 31, 2017, and September 29, 2018, respectively, and $62,152 and $44,023 for the twelve months ended December 31, 2018 and December 31, 2017, respectively.
5 Adjusted unallocated expenses excludes integration expenses of $1,288, $752 and $3,237 for the three months ended December 31, 2018 and September 29, 2018 and the twelve months ended December 31, 2018, respectively. Adjusted unallocated expenses excludes deal costs of $5,121 for the twelve months ended December 31, 2018. Adjusted unallocated expenses excludes charges for impairment of intangibles and severance related to organizational realignment of $3,940 for the twelve months ended December 31, 2017.
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, |
December 31, |
September 29, |
December 31, |
December 31, |
|||||||||||||||||||||
Net sales | $ | 401,642 | $ | 350,562 | $ | 398,597 | $ | 1,550,497 | $ | 1,342,532 | |||||||||||||||
Net income (loss) | $ | 80,784 | $ | (28,341 | ) | $ | 48,060 | $ | 240,755 | $ | 85,066 | ||||||||||||||
Adjustments to net income (loss): | |||||||||||||||||||||||||
Income tax (benefit) expense | (21,078 | ) | 70,264 | 11,427 | 13,677 | 99,665 | |||||||||||||||||||
Interest expense, net | 8,426 | 7,533 | 7,678 | 30,255 | 31,628 | ||||||||||||||||||||
Other expense, net | 3,176 | 21,696 | 810 | 8,002 | 25,458 | ||||||||||||||||||||
GAAP - Operating income | 71,308 | 71,152 | 67,975 | 292,689 | 241,817 | ||||||||||||||||||||
Charge for fair value write-up of acquired inventory sold | 3,379 | — | 3,281 | 6,868 | — | ||||||||||||||||||||
Deal costs | — | — | — | 5,121 | — | ||||||||||||||||||||
Integration costs | 1,288 | — | 752 | 3,237 | — | ||||||||||||||||||||
Severance related to organizational realignment | 460 | — | — | 460 | 2,700 | ||||||||||||||||||||
Impairment of equipment and intangibles 1 | — | — | — | — | 10,400 | ||||||||||||||||||||
Loss on sale of subsidiary | — | 466 | 466 | — | |||||||||||||||||||||
Amortization of intangible assets | 17,050 | 11,020 | 21,419 | 62,152 | 44,023 | ||||||||||||||||||||
Adjusted operating income | 93,485 | 82,172 | 93,893 | 370,993 | 298,940 | ||||||||||||||||||||
Depreciation | 16,880 | 15,035 | 16,537 | 65,116 | 58,208 | ||||||||||||||||||||
Adjusted EBITDA | $ | 110,365 | $ | 97,207 | $ | 110,430 | $ | 436,109 | $ | 357,148 | |||||||||||||||
Adjusted operating margin | 23.3 | % | 23.4 | % | 23.6 | % | 23.9 | % | 22.3 | % | |||||||||||||||
Adjusted EBITDA - as a % of net sales | 27.5 | % | 27.7 | % | 27.7 | % | 28.1 | % | 26.6 | % | |||||||||||||||
1 Includes product line impairment charges of $5,330 classified as cost of sales for the twelve months ended December 31, 2017.
Includes intangible impairment charge of $3,866 classified as selling general and administrative expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $320 classified as selling general and administrative expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $884 classified as engineering, research and development expense for the twelve months ended December 31, 2017.
Entegris, Inc. and Subsidiaries | |||||||||||||||||||||||||
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Earnings per Share | |||||||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Three months ended | Twelve months ended | ||||||||||||||||||||||||
December 31, |
December 31, |
September 29, |
December 31, |
December 31, |
|||||||||||||||||||||
GAAP net income (loss) | $ | 80,784 | $ | (28,341 | ) | $ | 48,060 | $ | 240,755 | $ | 85,066 | ||||||||||||||
Adjustments to net income (loss): | |||||||||||||||||||||||||
Charge for fair value write-up of inventory acquired | 3,379 | — | 3,281 | 6,868 | — | ||||||||||||||||||||
Deal costs | — | — | — | 5,121 | — | ||||||||||||||||||||
Integration costs | 1,288 | — | 752 | 3,237 | — | ||||||||||||||||||||
Severance related to organizational realignment | 460 | — | — | 460 | 2,700 | ||||||||||||||||||||
Impairment of equipment and intangibles 1 | — | — | — | — | 13,200 | ||||||||||||||||||||
Loss on debt extinguishment | 2,319 | 20,687 | — | 2,319 | 20,687 | ||||||||||||||||||||
Loss on sale of subsidiary | — | — | 466 | 466 | — | ||||||||||||||||||||
Amortization of intangible assets | 17,050 | 11,020 | 21,419 | 62,152 | 44,023 | ||||||||||||||||||||
Tax effect of adjustments to net income and discrete items2 | (5,603 | ) | (10,385 | ) | (5,797 | ) | (17,812 | ) | (26,046 | ) | |||||||||||||||
Tax effect of legal entity restructuring | (34,478 | ) | — | — | (34,478 | ) | — | ||||||||||||||||||
Tax effect of Tax Cuts and Jobs Act | 1,101 | 66,713 | (2,560 | ) | 683 | 66,713 | |||||||||||||||||||
Non-GAAP net income | $ | 66,300 | $ | 59,694 | $ | 65,621 | $ | 269,771 | $ | 206,343 | |||||||||||||||
Diluted earnings (loss) per common share | $ | 0.57 | $ | (0.20 | ) | $ | 0.34 | $ | 1.69 | $ | 0.59 | ||||||||||||||
Effect of adjustments to net income | $ | (0.10 | ) | $ | 0.61 | $ | 0.12 | $ | 0.20 | $ | 0.85 | ||||||||||||||
Diluted non-GAAP earnings per common share | $ | 0.47 | $ | 0.42 | $ | 0.46 | $ | 1.89 | $ | 1.44 | |||||||||||||||
1Includes product line impairment charges of $5,330 classified as cost of sales for the twelve months ended December 31, 2017.
Includes intangible impairment charge of $3,866 classified as selling general and administrative expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $320 classified as selling general and administrative expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $884 classified as engineering, research and development expense for the twelve months ended December 31, 2017.
Includes product line impairment charge of $2,800 classified as other expense for the twelve months ended December 31, 2017.
2The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190205005299/en/