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Entegris Reports Strong Fourth-Quarter and Fiscal 2016 Results

  • Record annual revenue of $1.2 billion, up 9 percent
  • Record fourth-quarter revenue of $308.5 million
  • GAAP net income of $26.1 million, or $0.18 per diluted share
  • Non-GAAP net income of $34.3 million, or $0.24 per diluted share

BILLERICA, Mass., Feb. 02, 2017 (GLOBE NEWSWIRE) -- Entegris, Inc. (Nasdaq: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 fiscal year ended December 31, 2016.

The Company reported sales of $1.2 billion for the 2016 fiscal year, an increase of 9 percent from the prior year. Net income for fiscal 2016 was $97.1 million, or $0.68 per share, which included amortization of intangible assets of $44.3 million, asset impairment charges of $5.8 million related to certain production equipment and $2.4 million of severance expenses related to an organizational realignment. In the prior year, net income was $80.3 million, or $0.57 per share, which included amortization of intangible assets of $47.3 million and acquisition integration expenses of $12.7 million. Non-GAAP net income for fiscal 2016 was $132.8 million, or $0.94 per diluted share, which increased from $120.6 million, or $0.85 per diluted share, in the prior year.

Fourth-quarter sales were $308.5 million, an increase of 16 percent from the same quarter last year and a 4 percent increase sequentially. Fourth-quarter net income was $26.1 million, or $0.18 per diluted share, which included amortization of intangible assets of $10.9 million. Non-GAAP net income was $34.3 million, or $0.24 per diluted share. In the fourth quarter, the Company generated cash from operations less capital expenditures, or free cash flow, of $37.1 million.

Bertrand Loy, president and chief executive officer, said: "The strong results in the fourth quarter capped a record year in which we grew revenue 9 percent organically, well in excess of our markets. This performance demonstrates that our investments in R&D and innovation over the past few years are paying off, allowing us to expand our served markets and grow our market share. In 2016, we also achieved record non-GAAP earnings per share of $0.94 and generated an adjusted EBITDA of $264 million, an increase of 13 percent from the prior year. This is an all-time high and essentially twice the level we generated prior to the ATMI acquisition in 2014."

"In the fourth quarter, we achieved sales growth above our expectations driven in part by a rebound in our specialty gas products and record demand of our microfiltration, wafer handling, and advanced deposition solutions."

Mr. Loy added: "We believe the industry is in the midst of a multi-year period of wafer growth driven by the ramp of new technologies and expanding end-market demand for semiconductors. New materials are becoming increasingly important to deliver better semiconductor performance and we believe our broad portfolio of solutions puts us in an excellent position to holistically address our customers' needs for materials performance, purity and stability throughout their supply chains and manufacturing processes."

Quarterly Financial Results Summary
(in thousands, except per share data)

GAAP ResultsQ4-2016Q4-2015Q3-2016
Net sales$308,502$266,786$296,692
Operating income$44,905$20,116$34,672
Operating margin 14.6% 7.5% 11.7%
Net income$26,098$17,573$21,947
Diluted earnings per share (EPS)$0.18$0.12$0.15
Non-GAAP Results
Non-GAAP adjusted operating income$55,843$37,141$53,877
Adjusted operating margin 18.1% 13.9% 18.2%
Non-GAAP net income$34,294$28,822$34,647
Non-GAAP EPS$0.24$0.20$0.24

First-Quarter Outlook

For the first quarter ending April 1, 2017, the Company expects sales of $295 million to $310 million, net income of $25 million to $31 million, and net income per diluted share between $0.18 and $0.22. On a non-GAAP basis, EPS is expected to range from $0.23 to $0.27 per diluted share, which reflects net income on a non-GAAP basis in the range of $32 million to $38 million, which is adjusted for expected amortization expense of approximately $11 million or $0.05 per share.

Segment Results

The Company has changed its financial segment reporting, reflecting an organizational realignment intended to better leverage its unique portfolio of capabilities to create value for its customers by developing mission-critical solutions to maximize manufacturing yields and enable higher performance of devices. The Company's business is reported in the following segments:

Microcontamination Control (MC): MC solutions purify critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.

Specialty Chemicals and Engineered Materials (SCEM): SCEM provides high-performance and high-purity process chemistries, gases, and materials and safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.

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 and fiscal year on Thursday, February 2, 2017, at 10:00 a.m. Eastern Time. Participants should dial 1-888-600-4869 or 1-913-312-0936, referencing confirmation code 4935351. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. To access a telephonic replay of the call, please Click Here. The replay will be available starting at 1:00 p.m. ET on Thursday, February 2 until Saturday, March 18. 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 Thursday morning before the call.

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. These financial measures are provided as a supplement to financial measures provided in accordance with GAAP. We provide non-GAAP financial measures in order to further assess and measure operating performance. Management believes the non-GAAP measures provide meaningful supplemental information regarding our baseline performance before certain gains, losses or other charges that may not be indicative of our business or future outlook. We believe these non-GAAP measures will aid investors’ overall understanding of our results by providing a higher degree of transparency for certain expenses and providing a level of disclosure that will help investors understand how we plan and measure 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
Certain information contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current management expectations only as of the date of this press release, and involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Statements that include such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “will,” “should” or the negative thereof and similar expressions as they relate to Entegris or our management are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris’ stock, Entegris’ future operating results, other acquisition and investment opportunities available to Entegris, general business and market conditions and other factors. Additional information concerning these and other risk factors may be found in previous financial press releases issued by Entegris and Entegris’ periodic public filings with the Securities and Exchange Commission, including discussions appearing under the headings “Risks Relating to our Business and Industry,” “Risks Relating to Our Indebtedness,” “Manufacturing Risks,” “International Risks,” and “Risks Related to Owning Our Common Stock” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the U.S Securities and Exchange Commission on February 29, 2016, as well as other matters and important factors disclosed previously and from time to time in the filings of Entegris with the U.S. Securities and Exchange Commission. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update publicly any forward-looking statements contained herein.


Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended
December 31, 2016December 31, 2015October 1, 2016
Net sales$308,502 $266,786 $296,692
Cost of sales 176,702 157,488 173,712
Gross profit 131,800 109,298 122,980
Selling, general and administrative expenses 48,734 51,024 51,614
Engineering, research and development expenses 27,223 26,717 25,720
Amortization of intangible assets 10,938 11,441 10,974
Operating income 44,905 20,116 34,672
Interest expense, net 8,983 9,694 9,345
Other expense (income), net 1,303 (3,889) (565)
Income before income tax expense (benefit) and equity in net loss of affiliates 34,619 14,311 25,892
Income tax expense (benefit) 8,521 (4,731) 3,945
Equity in net loss of affiliates 1,469
Net income$26,098 $17,573 $21,947
Basic net income per common share:$0.18 $0.13 $0.16
Diluted net income per common share:$0.18 $0.12 $0.15
Weighted average shares outstanding:
Basic 141,315 140,567 141,324
Diluted 142,631 141,433 142,473


Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Twelve months ended
December 31, 2016December 31, 2015
Net sales$1,175,270 $1,081,121
Cost of sales 666,579 610,890
Gross profit 508,691 470,231
Selling, general and administrative expenses 201,901 198,914
Engineering, research and development expenses 106,991 105,900
Amortization of intangible assets 44,263 47,349
Operating income 155,536 118,068
Interest expense, net 36,528 38,238
Other income, net (991) (12,355)
Income before income tax expense and equity in net loss of affiliates 119,999 92,185
Income tax expense 22,852 10,202
Equity in net loss of affiliates 1,687
Net income$97,147 $80,296
Basic net income per common share:$0.69 $0.57
Diluted net income per common share:$0.68 $0.57
Weighted average shares outstanding:
Basic 141,093 140,353
Diluted 142,050 141,121


Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, 2016 December 31, 2015
ASSETS
Cash and cash equivalents$406,389 $349,825
Short-term investments 2,181
Accounts receivable, net 165,675 141,409
Inventories 183,529 173,176
Deferred tax assets, deferred tax charges and refundable income taxes 20,140 18,943
Other current assets 24,398 23,253
Total current assets 800,131 708,787
Property, plant and equipment, net 321,562 321,301
Goodwill 345,269 342,111
Intangible assets 217,548 258,942
Deferred tax assets - non-current 8,022 7,771
Other assets 7,000 7,785
Total assets$1,699,532 $1,646,697
LIABILITIES AND SHAREHOLDERS’ EQUITY
Long-term debt, current maturities$100,000 $50,000
Accounts payable 61,617 36,916
Accrued liabilities 83,530 75,859
Income tax payable and deferred tax liabilities 16,424 12,775
Total current liabilities 261,571 175,550
Long-term debt, excluding current maturities 484,677 606,044
Other liabilities 54,066 62,220
Shareholders’ equity 899,218 802,883
Total liabilities and shareholders’ equity$1,699,532 $1,646,697


Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months endedTwelve months ended
December 31,
2016
December 31,
2015
December 31,
2016
December 31,
2015
Operating activities:
Net income$26,098 $17,573 $97,147 $80,296
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 14,303 14,225 55,623 54,305
Amortization 10,938 11,441 44,263 47,349
Stock-based compensation expense 3,373 2,913 13,436 11,033
Provision for deferred income taxes (15,770) (15,907) (16,104) (13,313)
Other 3,326 (1,999) 22,993 (14,101)
Changes in operating assets and liabilities:
Trade accounts and notes receivable (3,046) 43,232 (25,298) 5,212
Inventories (2,575) 12,880 (19,871) (26,670)
Accounts payable and accrued liabilities 4,777 (41,262) 31,294 (28,686)
Income taxes payable and refundable income taxes 14,592 8,602 3,228 4,955
Other 1,063 520 844 538
Net cash provided by operating activities 57,079 52,218 207,555 120,918
Investing activities:
Acquisition of property and equipment (19,992) (16,281) (65,260) (71,977)
Proceeds from sale and maturities of investments 94 5,581 1,726 7,692
Other 300 (3,152) 647
Net cash used in investing activities (19,898) (10,400) (66,686) (63,638)
Financing activities:
Payments on long-term debt (25,000) (75,000) (100,000)
Issuance of common stock 1,952 1,656 4,844 4,264
Taxes paid related to net share settlement of equity awards (702) (50) (4,018) (2,508)
Other (4,493) 4,792 (7,573) 5,457
Net cash (used in) provided by financing activities (28,243) 6,398 (81,747) (92,787)
Effect of exchange rate changes on cash (14,326) 548 (2,558) (4,367)
(Decrease) increase in cash and cash equivalents (5,388) 48,764 56,564 (39,874)
Cash and cash equivalents at beginning of period 411,777 301,061 349,825 389,699
Cash and cash equivalents at end of period$406,389 $349,825 $406,389 $349,825


Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
Three months endedTwelve months ended
Net salesDecember 31,
2016
December 31,
2015
October 1,
2016
December 31,
2016
December 31,
2015
Specialty Chemicals and Engineered Materials$110,945 $103,127 $104,494 $428,328 $418,878
Advanced Materials Handling 98,840 81,567 97,460 384,284 346,426
Microcontamination Control 98,717 82,092 94,738 362,658 315,817
Total net sales$308,502 $266,786 $296,692 $1,175,270 $1,081,121


Three months endedTwelve months ended
Segment profitDecember 31,
2016
December 31,
2015
October 1,
2016
December 31,
2016
December 31,
2015
Specialty Chemicals and Engineered Materials$25,919 $24,218 $18,811 $96,060 $100,370
Advanced Materials Handling 16,644 10,094 15,378 73,452 66,419
Microcontamination Control 31,719 20,671 31,617 110,042 83,076
Total segment profit 74,282 54,983 65,806 279,554 249,865
Amortization of intangibles 10,938 11,441 10,974 44,263 47,349
Unallocated expenses 18,439 23,426 20,160 79,755 84,448
Total operating income$44,905 $20,116 $34,672 $155,536 $118,068


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,
2016
December 31,
2015
October 1,
2016
December 31,
2016
December 31,
2015
Net sales$308,502 $266,786 $296,692 $1,175,270 $1,081,121
Net income$26,098 $17,573 $21,947 $97,147 $80,296
Adjustments to net income:
Equity in net loss of affiliates 1,469 1,687
Income tax expense (benefit) 8,521 (4,731) 3,945 22,852 10,202
Interest expense, net 8,983 9,694 9,345 36,528 38,238
Other expense (income), net 1,303 (3,889) (565) (991) (12,355)
GAAP - Operating income 44,905 20,116 34,672 155,536 118,068
Severance related to organizational realignment 2,405 2,405
Impairment of equipment 5,826 5,826
Integration costs 5,584 12,667
Amortization of intangible assets 10,938 11,441 10,974 44,263 47,349
Adjusted operating income 55,843 37,141 53,877 208,030 178,084
Depreciation 14,303 14,225 13,795 55,623 54,305
Adjusted EBITDA$70,146 $51,366 $67,672 $263,653 $232,389
Adjusted operating margin 18.1% 13.9% 18.2% 17.7% 16.5%
Adjusted EBITDA - as a % of net sales 22.7% 19.3% 22.8% 22.4% 21.5%


Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
(Unaudited)
Three months ended Twelve months ended
December 31,
2016
December 31,
2015
October 1,
2016
December 31,
2016
December 31,
2015
Net sales$308,502 $266,786 $296,692 $1,175,270 $1,081,121
Gross profit-GAAP$131,800 $109,298 $122,980 $508,691 $470,231
Adjustments to gross profit:
Severance related to organizational realignment 431 431
Impairment of equipment 5,826 5,826
Adjusted gross profit$131,800 $109,298 $129,237 $514,948 $470,231
Gross margin - as a % of net sales 42.7% 41.0% 41.5% 43.3% 43.5%
Adjusted gross margin - as a % of net sales 42.7% 41.0% 43.6% 43.8% 43.5%


Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Segment Profit to Adjusted Operating Income
(In thousands)
(Unaudited)
Three months endedTwelve months ended
Segment profit-GAAPDecember 31,
2016
December 31,
2015
October 1,
2016
December 31,
2016
December 31,
2015
Specialty Chemicals and Engineered Materials$25,919 $24,218 $18,811 $96,060 $100,370
Advanced Materials Handling 16,644 10,094 15,378 73,452 66,419
Microcontamination Control 31,719 20,671 31,617 110,042 83,076
Total segment profit 74,282 54,983 65,806 279,554 249,865
Amortization of intangible assets 10,938 11,441 10,974 44,263 47,349
Unallocated expenses 18,439 23,426 20,160 79,755 84,448
Total operating income$44,905 $20,116 $34,672 $155,536 $118,068


Three months endedTwelve months ended
Adjusted segment profitDecember 31,
2016
December 31,
2015
October 1,
2016
December 31,
2016
December 31,
2015
Specialty Chemicals and Engineered Materials 1$25,919 $24,218 $19,510 $96,759 $100,370
Advanced Materials Handling 2 16,644 10,094 22,173 80,247 66,419
Microcontamination Control 3 31,719 20,671 32,354 110,779 83,076
Total adjusted segment profit 74,282 54,983 74,037 287,785 249,865
Amortization of intangible assets4
Unallocated expenses5 18,439 17,842 20,160 79,755 71,781
Total adjusted operating income$55,843 $37,141 $53,877 $208,030 $178,084

1 Adjusted segment profit for Specialty Chemicals and Engineered Materials for the three months ended October 1, 2016 and twelve months ended December 31, 2016 excludes charges for severance related to organizational realignment of $699.
2 Adjusted segment profit for Advanced Material Handling for the three months ended October 1, 2016 and twelve months ended December 31, 2016 excludes charges for impairment of equipment and severance related to organizational realignment of $5,826 and $969, respectively.
3 Adjusted segment profit for Microcontamination Control for the three months ended October 1, 2016 and twelve months ended December 31, 2016 excludes charges for severance related to organizational realignment of $737.
4 Adjusted amortization of intangible assets excludes amortization expense of $10,938, $11,441, and $10,974 for the three months ended December 31, 2016 and 2015, and October 1, 2016, respectively and $44,263 and $47,349 for the twelve months ended December 31, 2016 and 2015, respectively.
5 Adjusted unallocated expenses exclude integration costs of $5,584 for the three months ended December 31, 2015 and $12,667 for the twelve months ended December 31, 2015.


Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)
Three months ended Twelve months ended
December 31,
2016
December 31,
2015
October 1,
2016
December 31,
2016
December 31,
2015
GAAP net income$26,098 $17,573 $21,947 $97,147 $80,296
Adjustments to net income:
Severance related to organizational realignment 2,405 2,405
Impairment of equipment 5,826 5,826
Integration costs 5,584 12,667
Net gain on sale of investments (2,016) (156) (1,449)
Amortization of intangible assets 10,938 11,441 10,974 44,263 47,349
Tax effect of adjustments to net income and discrete items (2,742) (3,760) (6,505) (16,637) (18,248)
Non-GAAP net income$34,294 $28,822 $34,647 $132,848 $120,615
Diluted earnings per common share$0.18 $0.12 $0.15 $0.68 $0.57
Effect of adjustments to net income$0.06 $0.08 $0.09 $0.25 $0.29
Diluted non-GAAP earnings per common share$0.24 $0.20 $0.24 $0.94 $0.85


Contact: Steven Cantor VP of Corporate Relations T +1 978-436-6500 irelations@entegris.com

Source:Entegris, Inc.