ENTG Entegris Inc

• Fourth-quarter net sales of $812 million, decreased 14% from prior year and 9% sequentially
• Fourth-quarter net sales increased 2% sequentially (excluding the impact of divestitures)
• Fourth-quarter GAAP diluted EPS of $0.25
• Fourth-quarter non-GAAP diluted EPS of $0.65

Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s fourth quarter ended December 31, 2023. Fourth-quarter sales were $812.3 million, a decrease of 14% from the same quarter last year. Fourth-quarter GAAP net income was $38.0 million, or $0.25 income per diluted share, which included $30.0 million of gain on termination of the Alliance Agreement with MacDermid Enthone, $10.4 million of goodwill impairment, $30.5 million of impairment of long-lived assets, $51.0 million of amortization of intangible assets, $7.8 million of integration costs related to the acquisition of CMC Materials and $14.6 million of other net costs. Non-GAAP net income was $97.9 million for the fourth quarter and non-GAAP earnings per diluted share was $0.65.

Bertrand Loy, Entegris’ president and chief executive officer, said: “Our unit driven model has displayed strong resilience during the current industry downturn. We closed 2023 with fourth quarter sales and non-GAAP EPS results above our guidance. For the year, we outperformed the market by 6 points, driven in large part by our strong position at the leading-edge technology nodes. In addition, we divested three non-core businesses and used the proceeds and free cash flow to pay off $1.3 billion of debt. We also continued to make significant R&D and capacity investments, which are vital for our long-term growth.”

Mr. Loy added: “As we enter 2024, inventories of semiconductors have largely normalized, end demand has stabilized in most segments, and we expect a gradual industry recovery to occur throughout the year. In addition, we expect Entegris will continue to outgrow the market and show leverage in our model.”

Mr. Loy concluded: “We remain as optimistic as ever about the long-term growth prospects for the semiconductor industry. The industry is entering a period of unprecedented technology change and device complexity. This means the market is moving toward Entegris. Our core value proposition in materials science, materials purity, and end-to-end solutions has become increasingly enabling and critical for our customers. This will translate into rapidly expanding Entegris content per wafer, strong outperformance and earnings growth for years to come.”

Quarterly Financial Results Summary

(in thousands, except percentages and per share data)

GAAP Results

Dec 31, 2023

Dec 31, 2022

Sep 30, 2023

Net sales

$812,291

$946,070

$888,239

Operating income

$101,017

$143,776

$117,061

Operating margin - as a % of net sales

12.4%

15.2%

13.2%

Net income

$37,977

$57,427

$33,212

Diluted earnings per common share

$0.25

$0.38

$0.22

Non-GAAP Results

Non-GAAP adjusted operating income

$168,268

$219,353

$195,715

Non-GAAP adjusted operating margin - as a % of net sales

20.7%

23.2%

22.0%

Non-GAAP net income

$97,943

$124,451

$103,588

Diluted non-GAAP earnings per common share

$0.65

$0.83

$0.68

 

First-Quarter Outlook

For the Company’s guidance for the first quarter ending March 30, 2024, the Company expects sales of $770 million to $790 million, GAAP net income of $42 million to $49 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 $0.60 to $0.65, reflecting net income on a non-GAAP basis in the range of $91 million to $98 million. The Company also expects Adjusted EBITDA of approximately 26.5% to 27.5% of sales.

Segment Results

The Company operates in three segments (the Materials Solutions segment resulted from combining the Advanced Planarization Solutions and the Specialty Chemicals and Engineered Materials segments):

Materials Solutions (MS): MS provides advanced consumable materials, such as CMP slurries and pads, deposition materials, process chemistries and gases, formulated cleans, etchants and other specialty materials; that enable our customers’ technical roadmaps, improve device performance, lower their total cost of ownership and enhance their yields.

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.

Fourth-Quarter Results and Analyst Update Webcast

Entegris will host a webcast on its fourth quarter 2023 results and provide a brief analyst update on Wednesday, February 14, 2024 at 9:00 a.m. Eastern Time. Participants can use this link to register and join the live webcast: https://app.webinar.net/OEr1gk1anQW. There will be no phone dial-in numbers for this event.

Management’s slide presentation concerning the results for the fourth quarter will be posted on the Investor Relations section of www.entegris.com.

About Entegris

Entegris is a leading supplier of advanced materials and process solutions for the semiconductor and other high-tech industries. Entegris has approximately 8,000 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). Proforma net sales, 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 supply chain matters; inflationary pressures; 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; the development of new products and the success of their introductions; the focus of the Company’s ER&D projects; the Company’s ability to execute on our business strategies, including with respect to the Company’s expansion of its manufacturing presence in Taiwan and in Colorado Springs; 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 and divestitures the Company has made and commercial partnerships the Company has established, including the acquisition of CMC Materials (now known as CMC Materials LLC) (“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 news 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 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; raw material shortages, supply and labor constraints, price increases, inflationary pressures and 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, divestitures or other similar transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; the impact of regional and global instabilities, hostilities and geopolitical uncertainty, including, but not limited to, the ongoing conflicts between Ukraine and Russia, between Israel and Hamas and the current conflict in the Red Sea, as well as the global responses 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 U.S. 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, 2022, filed on February 23, 2023, 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. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)

   

 

Three months ended

 

Dec 31, 2023

Dec 31, 2022

Sep 30, 2023

Net sales

$812,291

$946,070

$888,239

Cost of sales

467,611

541,545

521,165

Gross profit

344,680

404,525

367,074

Selling, general and administrative expenses

144,680

139,246

116,051

Engineering, research and development expenses

67,567

68,041

66,810

Amortization of intangible assets

50,984

53,462

51,239

Goodwill impairment

10,432

—

15,913

Gain on termination of Alliance Agreement

(30,000)

—

—

Operating income

101,017

143,776

117,061

Interest expense, net

62,101

82,013

75,594

Other expense (income), net

12,058

(3,447)

10,243

Income before income tax (benefit) expense

26,858

65,210

31,224

Income tax (benefit) expense

(11,264)

7,783

(2,127)

Equity in net loss of affiliates

145

—

139

Net income

$37,977

$57,427

$33,212

 

 

 

 

 

 

 

Basic earnings per common share:

$0.25

$0.39

$0.22

Diluted earnings per common share:

$0.25

$0.38

$0.22

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic

150,223

149,039

150,127

Diluted

151,331

149,909

151,229

 

Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)

   

 

Twelve months ended

 

Dec 31, 2023

Dec 31, 2022

Net sales

$3,523,926

$3,282,033

Cost of sales

2,026,321

1,885,620

Gross profit

1,497,605

1,396,413

Selling, general and administrative expenses

576,194

543,485

Engineering, research and development expenses

277,313

228,994

Amortization of intangible assets

214,477

143,953

Goodwill impairment

115,217

—

Gain on termination of Alliance Agreement

(184,754)

—

Operating income

499,158

479,981

Interest expense, net

301,121

208,975

Other expense, net

25,367

23,926

Income before income tax (benefit) expense

172,670

247,080

Income tax (benefit) expense

(8,413)

38,160

Equity in net loss of affiliates

414

—

Net income

$180,669

$208,920

 

 

 

 

 

Basic earnings per common share:

$1.21

$1.47

Diluted earnings per common share:

$1.20

$1.46

 

 

 

Weighted average shares outstanding:

 

 

Basic

149,900

142,294

Diluted

150,945

143,146

 

Entegris, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) (Unaudited)

   

 

Dec 31, 2023

Dec 31, 2022

ASSETS

 

 

Current assets:

 

 

Cash, cash equivalents and restricted cash

$456,929

$563,439

Trade accounts and notes receivable, net

457,052

535,485

Inventories, net

607,051

812,815

Deferred tax charges and refundable income taxes

63,879

47,618

Assets held-for-sale

278,753

246,531

Other current assets

113,663

129,297

Total current assets

1,977,327

2,335,185

Property, plant and equipment, net

1,468,043

1,393,337

Other assets:

 

 

Right-of-use assets

80,399

94,940

Goodwill

3,945,860

4,408,331

Intangible assets, net

1,281,969

1,841,955

Deferred tax assets and other noncurrent tax assets

31,432

28,867

Other

27,561

36,242

Total assets

$8,812,591

$10,138,857

LIABILITIES AND EQUITY

 

Current liabilities

 

 

Short-term debt, including current portion of long-term debt

—

151,965

Accounts payable

134,211

172,488

Accrued liabilities

283,158

328,784

Liabilities held-for-sale

19,223

10,637

Income tax payable

77,403

98,057

Total current liabilities

513,995

761,931

Long-term debt, excluding current maturities

4,577,141

5,632,928

Long-term lease liability

68,986

80,716

Other liabilities

243,875

445,282

Shareholders’ equity

3,408,594

3,218,000

Total liabilities and equity

$8,812,591

$10,138,857

 

Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)

   

 

Three months ended

Twelve months ended

 

Dec 31, 2023

Dec 31, 2022

Dec 31, 2023

Dec 31, 2022

Operating activities:

 

 

 

 

Net income

$37,977

$57,427

$180,669

$208,920

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

42,558

41,882

172,683

135,371

Amortization

50,984

53,462

214,477

143,953

Share-based compensation expense

8,955

9,033

61,371

66,577

Loss on extinguishment of debt and modification

17,003

1,052

27,865

3,287

Impairment of Goodwill

10,432

—

115,217

—

Gain on termination of Alliance Agreement

(30,000)

—

(184,754)

—

(Gain) Loss on sale of business and held for sale assets

(4,740)

—

23,839

—

Other

(4,841)

(28,678)

(32,374)

32,542

Changes in operating assets and liabilities, net of effects of acquisitions:

 

 

 

 

Trade accounts and notes receivable

903

(25,265)

608

(59,643)

Inventories

39,411

(23,000)

102,751

(203,335)

Accounts payable and accrued liabilities

(33,892)

(78,788)

(29,547)

4,519

Income taxes payable, refundable income taxes and noncurrent taxes payable

26,597

37,388

(10,177)

21,751

Other

(10,697)

(12,460)

(13,066)

(1,659)

Net cash provided by operating activities

150,650

32,053

629,562

352,283

Investing activities:

 

 

 

 

Acquisition of property and equipment

(128,665)

(147,356)

(456,847)

(466,192)

Acquisition of business, net of cash acquired

—

—

—

(4,474,925)

Proceeds from sale of businesses

680,674

—

814,960

—

Proceeds from termination of Alliance Agreement

21,900

—

191,151

—

Other

1,888

(5,716)

3,807

(4,592)

Net cash provided by (used in) investing activities

575,797

(153,072)

553,071

(4,945,709)

Financing activities:

 

 

 

 

Proceeds from revolving credit facility, short-term debt and long-term debt

—

—

217,449

5,416,753

Payments of revolving credit facility, short-term debt and long-term debt

(869,725)

(70,000)

(1,473,675)

(486,000)

Payments for debt issuance costs

—

1

(3,475)

(99,488)

Payments for dividends

(15,019)

(14,896)

(60,221)

(57,309)

Issuance of common stock

13,159

5,404

50,792

16,168

Taxes paid related to net share settlement of equity awards

(568)

(73)

(12,108)

(22,820)

Other

(468)

(242)

(1,391)

(1,101)

Net cash (used in) provided by financing activities

(872,621)

(79,806)

(1,282,629)

4,766,203

Effect of exchange rate changes on cash, cash equivalents and restricted cash

9,083

9,597

(6,514)

(11,903)

(Decrease) increase in cash, cash equivalents and restricted cash

(137,091)

(191,228)

(106,510)

160,874

Cash, cash equivalents and restricted cash at beginning of period

594,020

754,667

563,439

402,565

Cash, cash equivalents and restricted cash at end of period

$456,929

$563,439

$456,929

$563,439

 

Entegris, Inc. and Subsidiaries Segment Information (In thousands) (Unaudited)

   

 

Three months ended

 

Twelve months ended

Net sales

Dec 31, 2023

Dec 31, 2022

Sep 30, 2023

 

Dec 31, 2023

Dec 31, 2022

Materials Solutions

$364,965

$458,012

$435,538

 

$1,689,467

$1,380,208

Microcontamination Control

288,427

284,676

286,217

 

1,127,555

1,105,996

Advanced Materials Handling

169,191

213,890

180,248

 

758,648

846,492

Inter-segment elimination

(10,292)

(10,508)

(13,764)

 

(51,744)

(50,663)

Total net sales

$812,291

$946,070

$888,239

 

$3,523,926

$3,282,033

 

 

Three months ended

 

Twelve months ended

Segment profit

Dec 31, 2023

Dec 31, 2022

Sep 30, 2023

 

Dec 31, 2023

Dec 31, 2022

Materials Solutions

$53,204

$71,489

$56,955

 

$296,375

$219,189

Microcontamination Control

97,558

107,413

101,132

 

395,348

411,475

Advanced Materials Handling

20,463

48,045

31,642

 

136,100

183,738

Total segment profit

171,225

226,947

189,729

 

827,823

814,402

Amortization of intangibles

50,984

53,462

51,239

 

214,477

143,953

Unallocated expenses

19,224

29,709

21,429

 

114,188

190,468

Total operating income

$101,017

$143,776

$117,061

 

$499,158

$479,981

 

Entegris, Inc. and Subsidiaries Reconciliation of GAAP Gross Profit to Adjusted Gross Profit (In thousands)

   

 

Three months ended

 

Twelve months ended

 

Dec 31, 2023

Dec 31, 2022

Sep 30, 2023

 

Dec 31, 2023

Dec 31, 2022

Net Sales

$812,291

$946,070

$888,239

 

$3,523,926

$3,282,033

Gross profit-GAAP

$344,680

$404,525

$367,074

 

$1,497,605

$1,396,413

Adjustments to gross profit:

 

 

 

 

 

 

Restructuring costs 1

28

—

789

 

8,194

—

Charge for fair value mark-up of acquired inventory sold 2

—

—

—

 

—

61,932

Adjusted gross profit

$344,708

$404,525

$367,863

 

$1,505,799

$1,458,345

 

 

 

 

 

 

 

Gross margin - as a % of net sales

42.4%

42.8%

41.3%

 

42.5%

42.5%

Adjusted gross margin - as a % of net sales

42.4%

42.8%

41.4%

 

42.7%

44.4%

1 Restructuring charges resulting from cost saving initiatives. 2 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.

   

Entegris, Inc. and Subsidiaries Reconciliation of GAAP Segment Profit to Adjusted Operating Income (In thousands) (Unaudited)

   

 

Three months ended

 

Twelve months ended

Adjusted segment profit

Dec 31, 2023

Dec 31, 2022

Sep 30, 2023

 

Dec 31, 2023

Dec 31, 2022

MS segment profit

$53,204

$71,489

$56,955

 

$296,375

$219,189

Restructuring costs 1

1,635

—

519

 

9,261

—

(Gain) loss from the sale of businesses 2

(4,740)

(254)

—

 

23,839

(254)

Goodwill impairment 3

10,432

—

15,913

 

115,217

—

Gain on termination of Alliance Agreement 4

(30,000)

—

—

 

(184,754)

—

Impairment on long-lived assets 5

30,464

—

—

 

30,464

—

Charge for fair value write-up of acquired inventory sold 6

—

—

—

 

—

61,932

MS adjusted segment profit

$60,995

$71,235

$73,387

 

$290,402

$280,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MC segment profit

$97,558

$107,413

$101,132

 

$395,348

$411,475

Restructuring costs 1

173

—

215

 

3,183

—

MC adjusted segment profit

$97,731

$107,413

$101,347

 

$398,531

$411,475

 

 

 

 

 

 

 

AMH segment profit

$20,463

$48,045

$31,642

 

$136,100

$183,738

Restructuring costs 1

105

—

467

 

1,826

—

AMH adjusted segment profit

$20,568

$48,045

$32,109

 

$137,926

$183,738

 

 

 

 

 

 

 

Unallocated general and administrative expenses

$19,224

$29,709

$21,429

 

$114,188

$190,468

Less: unallocated deal and integration costs

(7,810)

(22,369)

(10,301)

 

(56,526)

(152,238)

Less: unallocated restructuring costs 1

(388)

—

—

 

(475)

—

Adjusted unallocated general and administrative expenses

$11,026

$7,340

$11,128

 

$57,187

$38,230

 

 

 

 

 

 

 

Total adjusted segment profit

$179,294

$226,693

$206,843

 

$826,859

$876,080

Less: adjusted unallocated general and administrative expenses

11,026

7,340

11,128

 

57,187

38,230

Total adjusted operating income

$168,268

$219,353

$195,715

 

$769,672

$837,850

1 Restructuring charges resulting from cost saving initiatives. 2 (Gain) loss from the sale of our businesses. 3 Non-cash impairment charges associated with goodwill. 4 Gain on termination of Alliance Agreement with MacDermid Enthone. 5 Impairment of long-lived assets. 6 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition.

   

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

 

Dec 31, 2023

Dec 31, 2022

Sep 30, 2023

Dec 31, 2023

Dec 31, 2022

Net sales

$812,291

$946,070

$888,239

$3,523,926

$3,282,033

Net income

$37,977

$57,427

$33,212

$180,669

$208,920

Net income - as a % of net sales

4.7%

6.1%

3.7%

5.1%

6.4%

Adjustments to net income:

 

 

 

 

 

Equity in net loss of affiliates

145

—

139

414

—

Income tax (benefit) expense

(11,264)

7,783

(2,127)

(8,413)

38,160

Interest expense, net

62,101

82,013

75,594

301,121

208,975

Other expense (income), net

12,058

(3,447)

10,243

25,367

23,926

GAAP - Operating income

101,017

143,776

117,061

499,158

479,981

Operating margin - as a % of net sales

12.4%

15.2%

13.2%

14.2%

14.6%

Goodwill impairment 1

10,432

—

15,913

115,217

—

Deal and transaction costs 2

—

258

—

3,001

39,543

Integration costs:

 

 

 

 

 

Professional fees 3

4,582

13,723

6,756

36,650

35,422

Severance costs 4

(395)

2,273

(454)

1,478

6,269

Retention costs 5

—

457

45

1,687

1,987

Other costs 6

3,623

2,105

3,953

13,710

7,053

Contractual and non-cash integration costs:

 

 

 

 

 

CMC Materials retention costs 7

—

3,553

—

—

18,030

Stock-based compensation alignment 8

—

—

—

—

21,584

Change in control costs 9

—

—

—

—

22,350

Restructuring costs 10

2,301

—

1,202

14,745

—

(Gain) loss on sale of businesses 11

(4,740)

(254)

—

23,839

(254)

Charge for fair value write-up of acquired inventory sold 12

—

—

—

—

61,932

Gain on termination of Alliance Agreement 13

(30,000)

—

—

(184,754)

—

Impairment of long-lived assets14

30,464

—

—

30,464

—

Amortization of intangible assets 15

50,984

53,462

51,239

214,477

143,953

Adjusted operating income

168,268

219,353

195,715

769,672

837,850

Adjusted operating margin - as a % of net sales

20.7%

23.2%

22.0%

21.8%

25.5%

Depreciation

42,558

41,882

39,631

172,683

135,371

Adjusted EBITDA

$210,826

$261,235

$235,346

$942,355

$973,221

Adjusted EBITDA - as a % of net sales

26.0%

27.6%

26.5%

26.7%

29.7%

1 Non-cash impairment charges associated with goodwill. 2 Deal and transaction costs associated with CMC Materials acquisition and completed and announced divestitures. 3 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations. These fees arise outside of the ordinary course of our continuing operations. 4 Represents severance charges related to the integration of the CMC Materials acquisition. 5 Represents retention charges related directly to the CMC Materials acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses. 6 Represents other employee related costs and other costs incurred relating to the CMC Materials acquisition and the completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations. 7Represents non-recurring costs associated with the CMC Materials retention program that was agreed upon and set forth in the definitive acquisition agreement. 8 Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards. 9 Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition. 10 Restructuring charges resulting from cost saving initiatives. 11 (Gain) loss from the sale of our businesses. 12 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition. 13 Gain on termination of the Alliance Agreement with MacDermid Enthone. 14 Impairment of long-lived assets. 15 Non-cash amortization expense associated with intangibles acquired in acquisitions.

   

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

 

Dec 31, 2023

Dec 31, 2022

Sep 30, 2023

Dec 31, 2023

Dec 31, 2022

GAAP net income

$37,977

$57,427

$33,212

$180,669

$208,920

Adjustments to net income:

 

 

 

 

 

Goodwill impairment 1

10,432

—

15,913

115,217

—

Deal and transaction costs 2

—

258

—

3,001

39,543

Integration costs:

 

 

 

 

 

Professional fees 3

4,582

13,723

6,756

36,650

35,422

Severance costs 4

(395)

2,273

(454)

1,478

6,269

Retention costs 5

—

457

45

1,687

1,987

Other costs 6

3,623

2,105

3,953

13,710

7,053

Contractual and non-cash integration costs:

 

 

 

 

 

CMC Materials retention costs 7

—

3,553

—

—

18,030

Stock-based compensation alignment 8

—

—

—

—

21,584

Change in control costs 9

—

—

—

—

22,350

Restructuring costs 10

2,301

—

1,202

14,745

—

Loss on extinguishment of debt and modification 11

17,003

1,052

4,532

29,896

3,287

(Gain) loss on sale of businesses 12

(4,740)

(254)

—

23,839

(254)

Gain on termination of Alliance Agreement 13

(30,000)

—

—

(184,754)

—

Infineum termination fee, net 14

—

—

—

(10,877)

—

Charge for fair value write-up of acquired inventory sold 15

—

—

—

—

61,932

Interest expense, net 16

—

—

—

—

29,822

Impairment of long-lived assets 17

30,464

—

—

30,464

—

Amortization of intangible assets 18

50,984

53,462

51,239

214,477

143,953

Tax effect of adjustments to net income and discrete tax items19

(24,288)

(9,605)

(12,810)

(71,284)

(65,728)

Non-GAAP net income

$97,943

$124,451

$103,588

$398,918

$534,170

 

 

 

 

 

 

Diluted earnings per common share

$0.25

$0.38

$0.22

$1.20

$1.46

Effect of adjustments to net income

$0.39

$0.45

$0.46

$1.45

$2.27

Diluted non-GAAP earnings per common share

$0.65

$0.83

$0.68

$2.64

$3.73

 

 

 

 

 

 

Diluted weighted averages shares outstanding

151,331

149,909

151,229

150,945

143,146

1 Non-cash impairment charges associated with goodwill. 2 Deal and transaction costs associated with the CMC Materials acquisition and completed and announced divestitures. 3 Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other third-party service providers to assist us in integrating CMC Materials into our operations. These fees arise outside of the ordinary course of our continuing operations. 4 Represents severance charges related to the integration of CMC Materials. 5 Represents retention charges related directly to the CMC Materials acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses. 6 Represents other employee-related costs and other costs incurred relating to the CMC Materials acquisition and completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations. 7 Represents non-recurring costs associated with the CMC retention program that was agreed upon and set forth in the definitive acquisition agreement. 8 Represents the non-cash incremental expense associated with adopting retirement vesting obligations on Entegris equity awards, similar to those of CMC Materials equity awards. 9 Relates to the change in control agreements that were in place with management of CMC Materials prior to the acquisition and the associated expense post-acquisition. 10 Restructuring charges resulting from cost saving initiatives. 11 Non-recurring loss on extinguishment of debt and modification of our debt. 12 (Gain) loss from the sale of our businesses. 13 Gain on termination of the Alliance Agreement with MacDermid Enthone. 14 Non-recurring gain from the termination fee with Infineum. 15 Represents the additional cost of goods sold recognized in connection with the step-up of inventory valuation related to the CMC Materials acquisition. 16 Non-recurring interest costs related to the financing of the CMC Materials acquisition. 17 Impairment of long-lived assets. 18 Non-cash amortization expense associated with intangibles acquired in acquisitions. 19 The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate for each respective year.

   

Entegris, Inc. and Subsidiaries Reconciliation of reported Net Sales to Adjusted Net Sales (excluding divestitures) Non GAAP (In thousands) (Unaudited)

   

 

Three months ended

 

Dec 31, 2023

Sep 30, 2023

Net sales

$812,291

$888,239

Less: Divestitures 1

(1,264)

(93,170)

Adjusted Net sales (excluding divestitures) Non-GAAP

$811,027

$795,069

1 Adjusted for the quarterly impact of net sales from divestitures of EC and termination of Alliance Agreement.

   

Entegris, Inc. and Subsidiaries Reconciliation of GAAP Outlook to Non-GAAP Outlook (In millions, except per share data) (Unaudited)

   

 

First-Quarter Outlook

Reconciliation GAAP Operating Margin to non-GAAP Operating Margin and Adjusted EBITDA Margin

March 30, 2024

Net sales

$770 - $790

GAAP - Operating income

$101 - $115

Operating margin - as a % of net sales

13% - 15%

Deal, transaction and integration costs

8

Amortization of intangible assets

51

Adjusted operating income

$160 - $174

Adjusted operating margin - as a % of net sales

21% - 22%

Depreciation

44

Adjusted EBITDA

$204 - $217

Adjusted EBITDA - as a % of net sales

26.5% - 27.5%

 

 

First-Quarter Outlook

Reconciliation GAAP net income to non-GAAP net income

March 30, 2024

GAAP net income

$42 -$49

Adjustments to net income:

 

Deal, transaction and integration costs

8

Amortization of intangible assets

51

Income tax effect

(10)

Non-GAAP net income

$91 - $98

 

 

First-Quarter Outlook

Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share

March 30, 2024

Diluted earnings per common share

$0.28 - $0.33

Adjustments to diluted earnings per common share:

 

Deal, transaction and integration costs

0.05

Amortization of intangible assets

0.34

Income tax effect

(0.07)

Diluted non-GAAP earnings per common share

$0.60 - $0.65

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240213226938/en/

Bill Seymour VP of Investor Relations T + 1 952 556 1844 bill.seymour@entegris.com