ENTG 8-K
Entegris Inc (ENTG)
8-K
2020-07-23
For: 2020-07-23
View Original
Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
FORM 8-K
________________________________________
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 23, 2020
 | ||
_______________________________________
Entegris, Inc.
(Exact name of registrant as specified in its charter)
_______________________________________
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
(978 ) 436-6500
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
___________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On July 23, 2020, Entegris, Inc. issued a press release to announce results for the second quarter of 2020 and will hold a conference call to discuss such results. A copy of this press release and the supplemental slides to which management will refer during the conference call are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.
In accordance with General Instructions B.2 of Form 8-K, the information in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. The information set forth herein will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
EXHIBIT INDEX
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ENTEGRIS, INC. | ||||||||
| Dated: July 23, 2020 | By: | /s/ Gregory B. Graves | ||||||
| Name: | Gregory B. Graves | |||||||
| Title: | Executive Vice President and Chief Financial Officer | |||||||
 | PRESS RELEASE Bill Seymour VP of Investor Relations T + 1 952 556 1844 | |||||||||||||
Exhibit 99.1
FOR RELEASE AT 6:00 AM EST
ENTEGRIS REPORTS RESULTS FOR SECOND QUARTER OF 2020
•Second-quarter revenue of $448.4 million, increased 18% from prior year
•Second-quarter GAAP diluted EPS of $0.50, decreased 45%
•Second-quarter Non-GAAP diluted EPS of $0.60, increased 54%
BILLERICA, Mass., July 23, 2020 - Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s second quarter ended June 27, 2020.
Second-quarter sales were $448.4 million, an increase of 18% from the same quarter last year. GAAP second-quarter net income was $68.0 million, or $0.50 per diluted share, which included $13.2 million of amortization of intangible assets and $2.0 million of severance and restructuring costs. Non-GAAP net income was $81.6 million and non-GAAP earnings per diluted share was $0.60.
Bertrand Loy, president and chief executive officer, said: “I am very pleased with our second quarter results, especially in light of the operational risks and business uncertainty we faced coming into the quarter related to the pandemic. This stronger than expected performance was particularly driven by accelerated demand of our leading-edge solutions.”
Mr. Loy added: “While risks related to the ongoing impact of the pandemic still exist, we are optimistic about our prospects for the rest of 2020. We expect to continue to significantly outperform the market, driven by additional product wins in advanced technology nodes. We feel confident that our disciplined execution and strong liquidity will allow us to navigate this period of uncertainty, while continuing to invest in the future.”
Quarterly Financial Results Summary
(in thousands, except percentages and per share data)
| GAAP Results | June 27, 2020 | June 29, 2019 | March 28, 2020 | ||||||||
| Net sales | $448,405 | $378,874 | $412,327 | ||||||||
| Operating income | $94,712 | $54,909 | $80,744 | ||||||||
| Operating margin - as a % of net sales | 21.1 | % | 14.5% | 19.6% | |||||||
| Net income | $68,036 | $123,997 | $61,006 | ||||||||
| Diluted earnings per common share | $0.50 | $0.91 | $0.45 | ||||||||
| Non-GAAP Results | |||||||||||
| Non-GAAP adjusted operating income | $110,835 | $76,793 | $99,638 | ||||||||
| Non-GAAP adjusted operating margin - as a % of net sales | 24.7 | % | 20.3 | % | 24.2 | % | |||||
| Non-GAAP net income | $81,581 | $53,432 | $75,571 | ||||||||
| Diluted non-GAAP earnings per common share | $0.60 | $0.39 | $0.55 | ||||||||
Third-Quarter Outlook
For the third quarter ending September 26, 2020, the Company expects sales of $450 million to $475 million, net income of $70 million to $78 million and diluted earnings per common share between $0.51 and $0.57. On a non-GAAP basis, diluted earnings per common share is expected to range from $0.60 to $0.66, which reflects net income on a non-GAAP basis in the range of $82 million to $90 million.
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, and safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.
Microcontamination Control (MC): MC offers solutions to filter and 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, wafers, and substrates for a broad set of applications in the semiconductor industry and other high-technology industries.
Entegris’ 2020 Investor and Analyst Day
Entegris will be hosting an Investor and Analyst Day on November 17, 2020 in New York City (or virtually if necessary). More information on this event will be made available in the near future. If you have any questions please reach out to Bill Seymour, V.P. Investor Relations.
Second-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for the second quarter on Thursday, July 23, 2020, at 9:00 a.m. Eastern Time. Participants should dial 888-254-3590 or +1 323-994-2093, referencing confirmation code 4374647. 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 4374647.
The call can also be accessed live and on-demand from the Entegris website. Point your web browser to
http://investor.entegris.com/events.cfm and follow the link to the webcast. The on-demand playback will be available for six weeks after the conclusion of the teleconference.
Management’s slide presentation concerning the results for the second quarter, 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.
Entegris, Inc. - page 2 of 14
ABOUT ENTEGRIS
Entegris is a world-class supplier of advanced materials and process solutions for the semiconductor and other high-tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, Canada, China, France, Germany, Israel, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at www.entegris.com.
Non-GAAP Information
The Company’s condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA, Adjusted Gross Profit, Adjusted Segment Profit, and Adjusted Operating Income, together with related measures thereof, and non-GAAP net income, non-GAAP adjusted operating margin and diluted non-GAAP earnings per common share, 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 the Company’s competitors' operating results. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance and liquidity by excluding certain items that may not be indicative of the Company’s recurring business operating results, such as amortization, depreciation and discrete cash charges that may vary significantly from period to period. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing and understanding the Company’s results and performance and when planning, forecasting, and analyzing future periods. The Company believes 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 the Company’s institutional investors and the analyst community to help them analyze the Company’s business. 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.
Forward-Looking Statements
This press 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 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; the Company’s performance relative to its markets, including the drivers of such performance; the impact, financial or otherwise, of any organizational changes; market and technology trends, including the expected impact of the Covid-19 pandemic; the development of new products and the success of their introductions; the Company's capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the impact of the acquisitions the Company has made and commercial partnerships the Company has established; the Company’s ability to execute on its strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the Covid-19 pandemic on the global economy and financial markets, as well as on the Company, our customers and suppliers, which may impact our sales, gross margin, customer demand and our ability to supply our products to our customers; 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 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; the Company’s concentrated customer base; the Company’s ability to identify, effect and integrate acquisitions, joint ventures or other transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages, supply constraints and price increases; changes in government regulations of the countries in which the Company operates; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; the level of, and obligations associated with, the Company’s indebtedness; and other risk factors and additional information described in the Company’s
Entegris, Inc. - page 3 of 14
filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed on February 7, 2020, and in the Company’s other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Entegris, Inc. - page 4 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||||||
| June 27, 2020 | June 29, 2019 | March 28, 2020 | ||||||||||||
| Net sales | $448,405 | $378,874 | $412,327 | |||||||||||
| Cost of sales | 241,033 | 212,600 | 226,849 | |||||||||||
| Gross profit | 207,372 | 166,274 | 185,478 | |||||||||||
| Selling, general and administrative expenses | 66,872 | 64,150 | 58,891 | |||||||||||
| Engineering, research and development expenses | 32,572 | 30,624 | 29,632 | |||||||||||
| Amortization of intangible assets | 13,216 | 16,591 | 16,211 | |||||||||||
| Operating income | 94,712 | 54,909 | 80,744 | |||||||||||
| Interest expense, net | 12,792 | 9,692 | 10,238 | |||||||||||
| Other (income) expense, net | (477) | (122,015) | 878 | |||||||||||
| Income before income tax expense | 82,397 | 167,232 | 69,628 | |||||||||||
| Income tax expense | 14,361 | 43,235 | 8,622 | |||||||||||
| Net income | $68,036 | $123,997 | $61,006 | |||||||||||
| Basic earnings per common share: | $0.51 | $0.92 | $0.45 | |||||||||||
| Diluted earnings per common share: | $0.50 | $0.91 | $0.45 | |||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 134,700 | 135,378 | 134,745 | |||||||||||
| Diluted | 136,007 | 136,581 | 136,369 | |||||||||||
Entegris, Inc. - page 5 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Six months ended | |||||||||||
| June 27, 2020 | June 29, 2019 | ||||||||||
| Net sales | $860,732 | $769,921 | |||||||||
| Cost of sales | 467,882 | 426,254 | |||||||||
| Gross profit | 392,850 | 343,667 | |||||||||
| Selling, general and administrative expenses | 125,763 | 146,404 | |||||||||
| Engineering, research and development expenses | 62,204 | 59,615 | |||||||||
| Amortization of intangible assets | 29,427 | 35,248 | |||||||||
| Operating income | 175,456 | 102,400 | |||||||||
| Interest expense, net | 23,030 | 19,351 | |||||||||
| Other expense (income), net | 401 | (122,263) | |||||||||
| Income before income tax expense | 152,025 | 205,312 | |||||||||
| Income tax expense | 22,983 | 48,657 | |||||||||
| Net income | $129,042 | $156,655 | |||||||||
| Basic earnings per common share: | $0.96 | $1.16 | |||||||||
| Diluted earnings per common share: | $0.95 | $1.15 | |||||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 134,722 | 135,338 | |||||||||
| Diluted | 136,188 | 136,637 | |||||||||
Entegris, Inc. - page 6 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| June 27, 2020 | December 31, 2019 | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $532,667 | $351,911 | ||||||||||||||||||
| Trade accounts and notes receivable, net | 275,557 | 234,409 | ||||||||||||||||||
| Inventories, net | 332,885 | 287,098 | ||||||||||||||||||
| Deferred tax charges and refundable income taxes | 20,291 | 24,552 | ||||||||||||||||||
| Other current assets | 27,447 | 34,427 | ||||||||||||||||||
| Total current assets | 1,188,847 | 932,397 | ||||||||||||||||||
| Property, plant and equipment, net | 475,202 | 479,544 | ||||||||||||||||||
| Other assets: | ||||||||||||||||||||
| Right-of-use assets | 47,911 | 50,160 | ||||||||||||||||||
| Goodwill | 725,678 | 695,044 | ||||||||||||||||||
| Intangible assets, net | 342,258 | 333,952 | ||||||||||||||||||
| Deferred tax assets and other noncurrent tax assets | 11,772 | 11,245 | ||||||||||||||||||
| Other | 12,372 | 13,744 | ||||||||||||||||||
| Total assets | $2,804,040 | $2,516,086 | ||||||||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| Long-term debt, current maturities | $— | $4,000 | ||||||||||||||||||
| Accounts payable | 80,359 | 84,207 | ||||||||||||||||||
| Accrued liabilities | 133,117 | 150,118 | ||||||||||||||||||
| Income tax payable | 24,479 | 26,108 | ||||||||||||||||||
| Total current liabilities | 237,955 | 264,433 | ||||||||||||||||||
| Long-term debt, excluding current maturities | 1,183,992 | 932,484 | ||||||||||||||||||
| Long-term lease liability | 41,704 | 43,827 | ||||||||||||||||||
| Other liabilities | 108,600 | 109,453 | ||||||||||||||||||
| Shareholders’ equity | 1,231,789 | 1,165,889 | ||||||||||||||||||
| Total liabilities and equity | $2,804,040 | $2,516,086 | ||||||||||||||||||
Entegris, Inc. - page 7 of 14
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||
| June 27, 2020 | June 29, 2019 | June 27, 2020 | June 29, 2019 | |||||||||||
| Operating activities: | ||||||||||||||
| Net income | $68,036 | $123,997 | $129,042 | $156,655 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation | 20,639 | 18,596 | 41,287 | 35,317 | ||||||||||
| Amortization | 13,216 | 16,591 | 29,427 | 35,248 | ||||||||||
| Stock-based compensation expense | 5,655 | 4,936 | 10,649 | 9,589 | ||||||||||
| Other | 7,332 | 446 | 12,895 | 6,140 | ||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||||
| Trade accounts and notes receivable | 1,908 | 14,545 | (42,087) | 5,436 | ||||||||||
| Inventories | (37,157) | 5,840 | (55,362) | 3,709 | ||||||||||
| Accounts payable and accrued liabilities | 43,663 | (7,688) | 5,643 | (52,707) | ||||||||||
| Income taxes payable, refundable income taxes and noncurrent taxes payable | 4,637 | 58,264 | 4,412 | 15,391 | ||||||||||
| Other | 2,092 | (4,626) | 5,518 | 13,585 | ||||||||||
| Net cash provided by operating activities | 130,021 | 230,901 | 141,424 | 228,363 | ||||||||||
| Investing activities: | ||||||||||||||
| Acquisition of property and equipment | (24,288) | (25,636) | (46,873) | (60,101) | ||||||||||
| Acquisition of business, net of cash acquired | (15) | 522 | (75,645) | (49,267) | ||||||||||
| Other | 206 | — | 211 | 197 | ||||||||||
| Net cash used in investing activities | (24,097) | (25,114) | (122,307) | (109,171) | ||||||||||
| Financing activities: | ||||||||||||||
| Proceeds from short-term borrowings and long-term debt | 400,000 | — | 617,000 | — | ||||||||||
| Payments of long-term debt | (293,000) | (1,000) | (368,000) | (2,000) | ||||||||||
| Payments for dividends | (10,805) | (9,494) | (21,652) | (18,964) | ||||||||||
| Issuance of common stock | 1,198 | — | 1,749 | 917 | ||||||||||
| Taxes paid related to net share settlement of equity awards | (1,280) | (574) | (12,720) | (8,301) | ||||||||||
| Repurchase and retirement of common stock | — | (15,000) | (29,564) | (50,321) | ||||||||||
| Deferred acquisition payments | — | — | (16,125) | — | ||||||||||
| Other | (3,965) | (247) | (6,855) | (497) | ||||||||||
| Net cash provided by (used in) financing activities | 92,148 | (26,315) | 163,833 | (79,166) | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (482) | (450) | (2,194) | (706) | ||||||||||
| Increase in cash and cash equivalents | 197,590 | 179,022 | 180,756 | 39,320 | ||||||||||
| Cash and cash equivalents at beginning of period | 335,077 | 342,360 | 351,911 | 482,062 | ||||||||||
| Cash and cash equivalents at end of period | $532,667 | $521,382 | $532,667 | $521,382 | ||||||||||
Entegris, Inc. - page 8 of 14
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
| Three months ended | Six months ended | ||||||||||||||||
| Net sales | June 27, 2020 | June 29, 2019 | March 28, 2020 | June 27, 2020 | June 29, 2019 | ||||||||||||
| Specialty Chemicals and Engineered Materials | $146,213 | $127,552 | $144,214 | $290,427 | $252,022 | ||||||||||||
| Microcontamination Control | 183,758 | 150,185 | 159,261 | 343,019 | 307,891 | ||||||||||||
| Advanced Materials Handling | 126,434 | 107,515 | 116,137 | 242,571 | 223,579 | ||||||||||||
| Inter-segment elimination | (8,000) | (6,378) | (7,285) | (15,285) | (13,571) | ||||||||||||
| Total net sales | $448,405 | $378,874 | $412,327 | $860,732 | $769,921 | ||||||||||||
| Three months ended | Six months ended | ||||||||||||||||
| Segment profit | June 27, 2020 | June 29, 2019 | March 28, 2020 | June 27, 2020 | June 29, 2019 | ||||||||||||
| Specialty Chemicals and Engineered Materials | $32,938 | $24,000 | $32,670 | $65,608 | $48,431 | ||||||||||||
| Microcontamination Control | 62,137 | 43,126 | 50,167 | 112,304 | 90,449 | ||||||||||||
| Advanced Materials Handling | 22,809 | 15,043 | 20,632 | 43,441 | 37,410 | ||||||||||||
| Total segment profit | 117,884 | 82,169 | 103,469 | 221,353 | 176,290 | ||||||||||||
| Amortization of intangibles | 13,216 | 16,591 | 16,211 | 29,427 | 35,248 | ||||||||||||
| Unallocated expenses | 9,956 | 10,669 | 6,514 | 16,470 | 38,642 | ||||||||||||
| Total operating income | $94,712 | $54,909 | $80,744 | $175,456 | $102,400 | ||||||||||||
Entegris, Inc. - page 9 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit
(In thousands)
(Unaudited)
| Three months ended | Six months ended | ||||||||||||||||
| June 27, 2020 | June 29, 2019 | March 28, 2020 | June 27, 2020 | June 29, 2019 | |||||||||||||
| Net sales | $448,405 | $378,874 | $412,327 | $860,732 | $769,921 | ||||||||||||
| Gross profit-GAAP | $207,372 | $166,274 | $185,478 | $392,850 | $343,667 | ||||||||||||
| Adjustments to gross profit: | |||||||||||||||||
| Integration costs | (1,557) | — | — | (1,557) | — | ||||||||||||
| Severance and restructuring costs | 465 | — | — | 465 | 358 | ||||||||||||
| Charge for fair value mark-up of acquired inventory sold | — | 695 | 361 | 361 | 2,850 | ||||||||||||
| Adjusted gross profit | $206,280 | $166,969 | $185,839 | $392,119 | $346,875 | ||||||||||||
| Gross margin - as a % of net sales | 46.2 | % | 43.9 | % | 45.0 | % | 45.6 | % | 44.6 | % | |||||||
| Adjusted gross margin - as a % of net sales | 46.0 | % | 44.1 | % | 45.1 | % | 45.6 | % | 45.1 | % | |||||||
Entegris, Inc. - page 10 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Segment Profit to Adjusted Operating Income
(In thousands)
(Unaudited)
| Three months ended | Six months ended | ||||||||||||||||
| Segment profit-GAAP | June 27, 2020 | June 29, 2019 | March 28, 2020 | June 27, 2020 | June 29, 2019 | ||||||||||||
| Specialty Chemicals and Engineered Materials (SCEM) | $32,938 | $24,000 | $32,670 | $65,608 | $48,431 | ||||||||||||
| Microcontamination Control (MC) | 62,137 | 43,126 | 50,167 | 112,304 | 90,449 | ||||||||||||
| Advanced Materials Handling (AMH) | 22,809 | 15,043 | 20,632 | 43,441 | 37,410 | ||||||||||||
| Total segment profit | 117,884 | 82,169 | 103,469 | 221,353 | 176,290 | ||||||||||||
| Amortization of intangible assets | 13,216 | 16,591 | 16,211 | 29,427 | 35,248 | ||||||||||||
| Unallocated expenses | 9,956 | 10,669 | 6,514 | 16,470 | 38,642 | ||||||||||||
| Total operating income | $94,712 | $54,909 | $80,744 | $175,456 | $102,400 | ||||||||||||
| Three months ended | Six months ended | ||||||||||||||||
| Adjusted segment profit | June 27, 2020 | June 29, 2019 | March 28, 2020 | June 27, 2020 | June 29, 2019 | ||||||||||||
| SCEM segment profit | $32,938 | $24,000 | $32,670 | $65,608 | $48,431 | ||||||||||||
| Integration costs | (1,557) | — | — | (1,557) | — | ||||||||||||
| Severance and restructuring costs | 455 | — | 174 | 629 | 519 | ||||||||||||
| Charge for fair value write-up of acquired inventory sold | — | 695 | 235 | 235 | 815 | ||||||||||||
| SCEM adjusted segment profit | $31,836 | $24,695 | $33,079 | $64,915 | $49,765 | ||||||||||||
| MC segment profit | $62,137 | $43,126 | $50,167 | $112,304 | $90,449 | ||||||||||||
| Severance and restructuring costs | 494 | — | 190 | 684 | 724 | ||||||||||||
| Charge for fair value write-up of acquired inventory sold | — | — | 126 | 126 | 2,035 | ||||||||||||
| MC adjusted segment profit | $62,631 | $43,126 | $50,483 | $113,114 | $93,208 | ||||||||||||
| AMH segment profit | $22,809 | $15,043 | $20,632 | $43,441 | $37,410 | ||||||||||||
| Severance and restructuring costs | 814 | — | 135 | 949 | 578 | ||||||||||||
| AMH adjusted segment profit | $23,623 | $15,043 | $20,767 | $44,390 | $37,988 | ||||||||||||
| Unallocated general and administrative expenses | $9,956 | $10,669 | $6,514 | $16,470 | $38,642 | ||||||||||||
| Unallocated deal and integration costs | (2,415) | (2,428) | (1,479) | (3,894) | (24,484) | ||||||||||||
| Unallocated severance and restructuring costs | (286) | (2,170) | (344) | (630) | (2,170) | ||||||||||||
| Adjusted unallocated general and administrative expenses | $7,255 | $6,071 | $4,691 | $11,946 | $11,988 | ||||||||||||
| Total adjusted segment profit | $118,090 | $82,864 | $104,329 | $222,419 | $180,961 | ||||||||||||
| Adjusted amortization of intangible assets | — | — | — | — | — | ||||||||||||
| Adjusted unallocated general and administrative expenses | 7,255 | 6,071 | 4,691 | 11,946 | 11,988 | ||||||||||||
| Total adjusted operating income | $110,835 | $76,793 | $99,638 | $210,473 | $168,973 | ||||||||||||
Entegris, Inc. - page 11 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
(In thousands)
(Unaudited)
| Three months ended | Six months ended | ||||||||||||||||
| June 27, 2020 | June 29, 2019 | March 28, 2020 | June 27, 2020 | June 29, 2019 | |||||||||||||
| Net sales | $448,405 | $378,874 | $412,327 | $860,732 | $769,921 | ||||||||||||
| Net income | $68,036 | $123,997 | $61,006 | $129,042 | $156,655 | ||||||||||||
| Net income - as a % of net sales | 15.2 | % | 32.7 | % | 14.8 | % | 15.0 | % | 20.3 | % | |||||||
| Adjustments to net income: | |||||||||||||||||
| Income tax expense | 14,361 | 43,235 | 8,622 | 22,983 | 48,657 | ||||||||||||
| Interest expense, net | 12,792 | 9,692 | 10,238 | 23,030 | 19,351 | ||||||||||||
| Other (income) expense, net | (477) | (122,015) | 878 | 401 | (122,263) | ||||||||||||
| GAAP - Operating income | 94,712 | 54,909 | 80,744 | 175,456 | 102,400 | ||||||||||||
| Operating margin - as a % of net sales | 21.1 | % | 14.5 | % | 19.6 | % | 20.4 | % | 13.3 | % | |||||||
| Charge for fair value write-up of acquired inventory sold | — | 695 | 361 | 361 | 2,850 | ||||||||||||
| Deal and transaction costs | 503 | 1,164 | 1,431 | 1,934 | 20,300 | ||||||||||||
| Integration costs | 355 | 1,264 | 48 | 403 | 4,184 | ||||||||||||
| Severance and restructuring costs | 2,049 | 2,170 | 843 | 2,892 | 3,991 | ||||||||||||
| Amortization of intangible assets | 13,216 | 16,591 | 16,211 | 29,427 | 35,248 | ||||||||||||
| Adjusted operating income | 110,835 | 76,793 | 99,638 | 210,473 | 168,973 | ||||||||||||
| Adjusted operating margin - as a % of net sales | 24.7 | % | 20.3 | % | 24.2 | % | 24.5 | % | 21.9 | % | |||||||
| Depreciation | 20,639 | 18,596 | 20,648 | 41,287 | 35,317 | ||||||||||||
| Adjusted EBITDA | $131,474 | $95,389 | $120,286 | $251,760 | $204,290 | ||||||||||||
| Adjusted EBITDA - as a % of net sales | 29.3 | % | 25.2 | % | 29.2 | % | 29.2 | % | 26.5 | % | |||||||
Entegris, Inc. - page 12 of 14
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 | Six months ended | ||||||||||||||||
| June 27, 2020 | June 29, 2019 | March 28, 2020 | June 27, 2020 | June 29, 2019 | |||||||||||||
| GAAP net income | $68,036 | $123,997 | $61,006 | $129,042 | $156,655 | ||||||||||||
| Adjustments to net income: | |||||||||||||||||
| Charge for fair value write-up of inventory acquired | — | 695 | 361 | 361 | 2,850 | ||||||||||||
| Deal and transaction costs | 503 | 1,164 | 1,431 | 1,934 | 20,711 | ||||||||||||
| Integration costs | 355 | 1,264 | 48 | 403 | 4,184 | ||||||||||||
| Severance and restructuring costs | 2,049 | 2,170 | 843 | 2,892 | 3,991 | ||||||||||||
| Loss on debt extinguishment and modification | 1,470 | — | — | 1,470 | — | ||||||||||||
| Versum termination fee, net | — | (122,000) | — | — | (122,000) | ||||||||||||
| Amortization of intangible assets | 13,216 | 16,591 | 16,211 | 29,427 | 35,248 | ||||||||||||
| Tax effect of legal entity restructuring | — | 9,398 | — | — | 9,398 | ||||||||||||
Tax effect of adjustments to net income and discrete items1 | (4,048) | 20,153 | (4,329) | (8,377) | 10,289 | ||||||||||||
| Non-GAAP net income | $81,581 | $53,432 | $75,571 | $157,152 | $121,326 | ||||||||||||
| Diluted earnings per common share | $0.50 | $0.91 | $0.45 | $0.95 | $1.15 | ||||||||||||
| Effect of adjustments to net income | $0.10 | $(0.52) | $0.11 | $0.21 | $(0.26) | ||||||||||||
| Diluted non-GAAP earnings per common share | $0.60 | $0.39 | $0.55 | $1.15 | $0.89 | ||||||||||||
1The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.
Entegris, Inc. - page 13 of 14
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Outlook to Non-GAAP Outlook
(In millions, except per share data)
(Unaudited)
| Third-Quarter Outlook | |||||
| Reconciliation GAAP net income to non-GAAP net income | September 26, 2020 | ||||
| GAAP net income | $70 - $78 | ||||
| Adjustments to net income: | |||||
| Restructuring and integration costs | 3 | ||||
| Amortization of intangible assets | 12 | ||||
| Income tax effect | (3) | ||||
| Non-GAAP net income | $82 - $90 | ||||
| Third-Quarter Outlook | |||||
| Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share | September 26, 2020 | ||||
| Diluted earnings per common share | $0.51 - $0.57 | ||||
| Adjustments to diluted earnings per common share: | |||||
| Restructuring and integration costs | 0.03 | ||||
| Amortization of intangible assets | 0.09 | ||||
| Income tax effect | (0.03) | ||||
| Diluted non-GAAP earnings per common share | $0.60 to $0.66 | ||||
### END ###
Entegris, Inc. - page 14 of 14
Exhibit 99.2 Earnings Summary Second Quarter 2020 July 23, 2020
Safe Harbor This presentation 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 include statements related to future period guidance; future net revenue, operating expenses, net income, diluted earnings per common share, non-GAAP operating expenses, non-GAAP net income, diluted non-GAAP earnings per common share, and other financial metrics; future repayments under the Company's credit facilities; the Company’s performance relative to its markets, including the drivers of such performance; the impact, financial or otherwise, of any organizational changes; market and technology trends, including the expected impact of the Covid-19 pandemic; the development of new products and the success of their introductions; the Company's capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments and potential acquisitions; the impact of the acquisitions the Company has made and commercial partnerships the Company has established; the Company’s ability to execute on its strategies; and other matters. These statements involve risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the Covid-19 pandemic on the global economy and financial markets, as well as on the Company, our customers and suppliers, which may impact our sales, gross margin, customer demand and our ability to supply our products to our customers; 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 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; the Company’s concentrated customer base; the Company’s ability to identify, effect and integrate acquisitions, joint ventures or other transactions; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; operational, political and legal risks of the Company’s international operations; the Company’s dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages, supply constraints and price increases; changes in government regulations of the countries in which the Company operates; fluctuation of currency exchange rates; fluctuations in the market price of the Company’s stock; the level of, and obligations associated with, the Company’s indebtedness; and other risk factors and additional information described in the Company’s filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed on February 7, 2020, and in the Company’s other periodic filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. This presentation contains references to “Adjusted EBITDA,” “Adjusted EBITDA – as a % of Net Sales,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Gross Profit,” “Adjusted Gross Margin – as a % of Net Sales,” “Adjusted Segment Profit,” “Adjusted Segment Profit Margin,” “Non-GAAP Operating Expenses,” "Non-GAAP Tax Rate," “Non-GAAP Net Income,” "Non-GAAP Earnings per Share," and “Diluted Non-GAAP Earnings per Common Share” that are not presented in accordance GAAP. The non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures but should instead be read in conjunction with the GAAP financial measures. Further information with respect to and reconciliations of such measures to the most directly comparable GAAP financial measure can be found attached to this presentation. 2
Second Quarter 2020 Financial Summary $0.50 -45% $448M +18%1 GAAP EPS REVENUE $0.60 +54% NON-GAAP EPS2 3 $95M 21.1% +660 bps OPERATING INCOME +72% OPERATING MARGIN $111M 24.7%3 +440 bps ADJUSTED OPERATING INCOME2 +44% ADJUSTED OPERATING MARGIN2 1. All growth data on this slide is year-on-year. 2. See appendix for GAAP to Non-GAAP reconciliations. 3. As a % of net sales. 3
Summary – Consolidated Statement of Operations (GAAP) 2Q20 over 2Q20 over $ in millions, except per share data 2Q20 2Q20 Guidance 1Q20 2Q19 2Q19 1Q20 Net Revenue $448.4 $410- $430 $412.3 $378.9 18.3% 8.8% Gross Margin 46.2% 45.0% 43.9% Operating Expenses $112.7 $102 - $104 $104.7 $111.4 1.2% 7.6% Operating Income $94.7 $80.7 $54.9 72.5% 17.3% Operating Margin 21.1% 19.6% 14.5% Tax Rate 17.4% 12.4% 25.9% Net Income $68.0 $50 - $59 $61.0 $124.0 (45.2%) 11.5% Diluted earnings per common share $0.50 $0.37 - $0.43 $0.45 $0.91 (45.1)% 11.1% 4
Summary – Consolidated Statement of Operations (Non-GAAP)1 2Q20 over 2Q20 over $ in millions, except per share data 2Q20 2Q20 Guidance 1Q20 2Q19 2Q19 1Q20 Net Revenue $448.4 $410- $430 $412.3 $378.9 18.3% 8.8% Adjusted Gross Margin – as a % of 46.0% 45.1% 44.1% Net Sales2 Non-GAAP Operating Expenses3 $95.4 $88 - $90 $86.2 $90.2 5.8% 10.7% Adjusted Operating Income $110.8 $99.6 $76.8 44.3% 11.2% Adjusted Operating Margin 24.7% 24.2% 20.3% Non-GAAP Tax Rate4 18.4% 14.6% 20.4% Non-GAAP Net Income5 $81.6 $61 - $70 $75.6 $53.4 52.8% 7.9% Diluted non-GAAP earnings per common share $0.60 $0.45 - $0.51 $0.55 $0.39 53.8% 9.1% 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 2. Adjusted Gross Margin – as a % of Net Sales excludes charges for fair value write-up of acquired inventory sold, integration costs and severance and restructuring costs. 3. Non-GAAP Operating Expenses exclude amortization expense, deal and transaction costs, integration costs and severance and restructuring costs. 4. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 5. Non-GAAP Net Income excludes the items noted in Adjusted Gross Margin – as a % of Net Sales, Non-GAAP operating expenses, the Versum termination fee, net, loss on debt extinguishment and modification and the tax effect of non-GAAP adjustments and 5 discrete tax items to GAAP taxes.
Specialty Chemicals and Engineered Materials (SCEM)1 2Q20 Highlights Sales growth (YOY): primarily driven by 2Q20 over 2Q20 over advanced deposition materials, cleaning $ in millions 2Q20 1Q20 2Q19 2Q19 1Q20 chemistries and the impact of Net Revenue $146.2 $144.2 $127.6 14.6% 1.4% acquisitions. Offset by declines in non- semi related sales. Segment Profit $32.9 $32.7 $24.0 37.2% 0.8% –––––– Adj. segment profit margin increase Segment Profit Margin 22.5% 22.7% 18.8% (YOY): driven primarily by higher volume. –––––– Adj. Segment Profit $31.8 $33.1 $24.7 28.9% (3.8%) Adj. segment profit margin decrease Adj. Segment Profit Margin 21.8% 22.9% 19.4% (SEQ): primarily driven by higher compensation costs. 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 6
Microcontamination Control (MC)1 2Q20 Highlights Sales growth (YOY): primarily driven by 2Q20 over 2Q20 over liquid filtration, gas filtration and the $ in millions 2Q20 1Q20 2Q19 2Q19 1Q20 impact of the Anow acquisition. Net Revenue $183.8 $159.3 $150.2 22.4% 15.4% –––––– Sales growth (SEQ): primarily driven by Segment Profit $62.1 $50.2 $43.1 44.1% 23.9% liquid filtration and gas filtration and Segment Profit Margin 33.8% 31.5% 28.7% purification. –––––– Adj. Segment Profit $62.6 $50.5 $43.1 45.2% 24.1% Adj. segment profit margin increase (SEQ & YOY): driven primarily by higher Adj. Segment Profit Margin 34.1% 31.7% 28.7% volumes and favorable mix. 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 7
Advanced Materials Handling (AMH)1 2Q20 Highlights 2Q20 over 2Q20 over Sales increase (YOY): primarily driven by $ in millions 2Q20 1Q20 2Q19 2Q19 1Q20 high purity liquid containers and wafer Net Revenue $126.4 $116.1 $107.5 17.6% 8.9% handling products. ––––– Segment Profit $22.8 $20.6 $15.0 51.6% 10.6% Sales increase (SEQ): primarily driven by high purity liquid container products. Segment Profit Margin 18.0% 17.8% 14.0% ––––– Adj. Segment Profit $23.6 $20.8 $15.0 57.0% 13.8% Adj. segment profit margin increase (YOY & SEQ): driven primarily by higher Adj. Segment Profit Margin 18.7% 17.9% 14.0% volumes and solid cost management. 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 8
Summary – Balance Sheet Items $ in millions 2Q20 1Q20 2Q19 $ Amount % Total $ Amount % Total $ Amount % Total Cash & Cash Equivalents $532.7 19.0 % $335.1 12.9 % $521.4 21.5 % Accounts Receivable, net $275.6 9.8 % $277.8 10.7 % $218.7 9.0 % Inventories $332.9 11.9 % $300.7 11.6 % $261.9 10.8 % Net PP&E $475.2 16.9 % $474.8 18.3 % $445.3 18.4 % Total Assets $2,804.0 $2,598.6 $2,424.7 Current Liabilities1 $238.0 8.5 % $202.0 7.8 % $215.1 8.9 % Long-term debt, excluding current maturities $1,184.0 42.2 % $1,074.9 41.4 % $933.7 38.5 % Total Liabilities $1,572.3 56.1 % $1,427.3 54.9 % $1,322.2 54.5 % Total Shareholders’ Equity $1,231.8 43.9 % $1,171.3 45.1 % $1,102.5 45.5 % AR – DSOs 56.1 61.5 52.7 Inventory Turns 3.0 3.1 3.2 1. Current Liabilities includes $4 million of current maturities of long-term debt in 1Q20 and 2Q19 9
Cash Flows $ in millions 2Q20 1Q20 2Q19 Beginning Cash Balance $335.1 $351.9 $342.4 Cash provided by operating activities $130.0 $11.4 $230.9 Capital expenditures ($24.3) ($22.6) ($25.6) Proceeds from short-term borrowings and long-term debt $400.0 $217.0 — Payments on long-term debt ($293.0) ($75.0) ($1.0) Acquisition of business, net of cash $— ($75.6) $0.5 Repurchase and retirement of common stock $— ($29.6) ($15.0) Payments for dividends ($10.8) ($10.8) ($9.5) Other investing activities 0.2 — — Other financing activities ($4.0) ($29.9) ($0.8) Effect of exchange rates ($0.5) ($1.7) ($0.5) Ending Cash Balance $532.7 $335.1 $521.4 Free Cash Flow1 $105.7 ($11.2) $205.3 Adjusted EBITDA $131.5 $120.3 $95.4 Adjusted EBITDA – as a % of net sales 29.3% 29.2% 25.2% 1. Free cash flow equals cash from operations less capital expenditures 10
Outlook GAAP $ in millions, except per share data 3Q20 Guidance 2Q20 Actual 1Q20 Actual Net Revenue $450 - $475 $448.4 $412.3 Operating Expenses $109 - $111 $112.7 $104.7 Net Income $70 - $78 $68.0 $61.0 Diluted Earnings per Common Share $0.51 - $0.57 $0.50 $0.45 Non-GAAP $ in millions, except per share data 3Q20 Guidance 2Q20 Actual 1Q20 Actual Net Revenue $450 - $475 $448.4 $412.3 Non-GAAP Operating Expenses1 $95 - $97 $95.4 $86.2 Non-GAAP Net Income1 $82 - $90 $81.6 $75.6 Diluted non-GAAP Earnings per Common Share1 $0.60 - $0.66 $0.60 $0.55 1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation. 11
Liquidity and Capital Structure $ in millions Liquidity 03/28/2020 06/27/2020 U.S. Cash $134 $313 Foreign Cash $201 $220 Total Cash $335 $533 Undrawn Revolving Credit Facility $158 $300 Total Liquidity $493 $833 Debt Structure 03/28/2020 06/27/2020 Covenants Senior Secured Term Loan (due 2025) $396 $245 No maintenance covenants Senior Unsecured Notes (due 2026) $550 $550 No maintenance covenants Revolving Credit Facility (drawn amount) $142 — 3.75x secured net leverage New Senior Unsecured Notes1 (due 2028) — $400 No maintenance covenants Total debt $1,088 $1,195 1. Offering closed April 30, 2020. The Company expects, based on current conditions subject to change, to use a portion of the net proceeds of the offering to repay approximately $100 million of 12 outstanding borrowings under its term loan facility in the second half of 2020.
Entegris®, the Entegris Rings Design®, and other product names are trademarks of Entegris, Inc. as listed on entegris.com/trademarks. All product names, logos, and company names are trademarks or registered trademarks of their respective owners. Use of them does not imply any affiliation, sponsorship, or endorsement by the trademark owner. ©2020 Entegris, Inc. All rights reserved. 13
Appendix 14
Reconciliation of GAAP Gross Profit to Adjusted Gross Profit Three months ended Six months ended $ in thousands June 27, 2020 June 29, 2019 March 28, 2020 June 27, 2020 June 29, 2019 Net sales $448,405 $378,874 $412,327 $860,732 $769,921 Gross profit-GAAP $207,372 $166,274 $185,478 $392,850 $343,667 Adjustments to gross profit: Integration costs (1,557) — — (1,557) — Severance and restructuring costs 465 — — 465 358 Charge for fair value mark-up of acquired inventory sold — 695 361 361 2,850 Adjusted gross profit $206,280 $166,969 $185,839 $392,119 $346,875 Gross margin – as a % of net sales 46.2 % 43.9 % 45.0 % 45.6 % 44.6 % Adjusted gross margin – as a % of net sales 46.0 % 44.1 % 45.1 % 45.6 % 45.1 % 15
Reconciliation of GAAP Operating Expenses and Tax Rate to Non-GAAP Operating Expenses and Tax Rate Three months ended $ in millions June 27, 2020 June 29, 2019 March 28, 2020 GAAP operating expenses $112.7 $111.4 $104.7 Adjustments to operating expenses: Deal and transaction costs 0.5 1.1 1.4 Integration costs 2.0 1.3 0.1 Severance and restructuring costs 1.6 2.2 0.8 Amortization of intangible assets 13.2 16.6 16.2 Non-GAAP operating expenses $95.4 $90.2 $86.2 GAAP tax rate 17.4 % 25.9 % 12.4 % Other 1.0 % (5.5)% 2.2 % Non-GAAP tax rate 18.4 % 20.4 % 14.6 % 16
Reconciliation of GAAP Segment Profit to Adjusted Operating Income $ in thousands Three Months Ended Six months ended Segment profit-GAAP June 27, 2020 June 29, 2019 March 28, 2020 June 27, 2020 June 29, 2019 Specialty Chemicals and Engineered Materials (SCEM) $32,938 $24,000 $32,670 $65,608 $48,431 Microcontamination Control (MC) 62,137 43,126 50,167 112,304 90,449 Advanced Materials Handling (AMH) 22,809 15,043 20,632 43,441 37,410 Total segment profit 117,884 82,169 103,469 221,353 176,290 Amortization of intangible assets 13,216 16,591 16,211 29,427 35,248 Unallocated expenses 9,956 10,669 6,514 16,470 38,642 Total operating income $94,712 $54,909 $80,744 $175,456 $102,400 $ in thousands Three months ended Six months ended Adjusted segment profit June 27, 2020 June 29, 2019 March 28, 2020 June 27, 2020 June 29, 2019 SCEM segment profit $32,938 $24,000 $32,670 $65,608 $48,431 Integration costs (1,557) — — (1,557) — Severance and restructuring costs 455 — 174 629 519 Charge for fair value write-up of acquired inventory sold — 695 235 235 815 SCEM adjusted segment profit $31,836 $24,695 $33,079 $64,915 $49,765 MC segment profit $62,137 $43,126 $50,167 $112,304 $90,449 Severance and restructuring costs 494 — 190 684 724 Charge for fair value write-up of acquired inventory sold — — 126 126 2,035 MC adjusted segment profit $62,631 $43,126 $50,483 $113,114 $93,208 AMH segment profit $22,809 $15,043 $20,632 $43,441 $37,410 Severance and restructuring costs 814 — 135 949 578 AMH adjusted segment profit $23,623 $15,043 $20,767 $44,390 $37,988 Unallocated general and administrative expenses $9,956 $10,669 $6,514 $16,470 $38,642 Unallocated deal and integration costs (2,415) (2,428) (1,479) (3,894) (24,484) Unallocated severance and restructuring costs (286) (2,170) (344) (630) (2,170) Adjusted unallocated general and administrative expenses $7,255 $6,071 $4,691 $11,946 $11,988 Total adjusted segment profit $118,090 $82,864 $104,329 $222,419 $180,961 Adjusted amortization of intangible assets — — — — — Adjusted unallocated general and administrative expenses 7,255 6,071 4,691 11,946 11,988 17 Total adjusted operating income $110,835 $76,793 $99,638 $210,473 $168,973
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA $ in thousands Three Months Ended Six months ended June 27, 2020 June 29, 2019 March 28, 2020 June 27, 2020 June 29, 2019 Net sales $448,405 $378,874 $412,327 $860,732 $769,921 Net income $68,036 $123,997 $61,006 $129,042 $156,655 Net income – as a % of net sales 15.2 % 32.7 % 14.8 % 15.0 % 20.3 % Adjustments to net income: Income tax expense 14,361 43,235 8,622 22,983 48,657 Interest expense, net 12,792 9,692 10,238 23,030 19,351 Other (income) expense, net (477) (122,015) 878 401 (122,263) GAAP - Operating income 94,712 54,909 80,744 175,456 102,400 Operating margin - as a % of net sales 21.1 % 14.5 % 19.6 % 20.4 % 13.3 % Charge for fair value write-up of acquired inventory sold — 695 361 361 2,850 Deal and transaction costs 503 1,164 1,431 1,934 20,300 Integration costs 355 1,264 48 403 4,184 Severance and restructuring costs 2,049 2,170 843 2,892 3,991 Amortization of intangible assets 13,216 16,591 16,211 29,427 35,248 Adjusted operating income 110,835 76,793 99,638 210,473 168,973 Adjusted operating margin - as a % of net sales 24.7 % 20.3 % 24.2 % 24.5 % 21.9 % Depreciation 20,639 18,596 20,648 41,287 35,317 Adjusted EBITDA $131,474 $95,389 $120,286 $251,760 $204,290 Adjusted EBITDA – as a % of net sales 29.3 % 25.2 % 29.2 % 29.2 % 26.5 % 18
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 Three months ended Six months ended June 27, 2020 June 29, 2019 March 28, 2020 June 27, 2020 June 29, 2019 GAAP net income $68,036 $123,997 $61,006 $129,042 $156,655 Adjustments to net income: Charge for fair value write-up of inventory acquired — 695 361 361 2,850 Deal and transaction costs 503 1,164 1,431 1,934 20,711 Integration costs 355 1,264 48 403 4,184 Severance and restructuring costs 2,049 2,170 843 2,892 3,991 Loss on debt extinguishment and modification 1,470 — — 1,470 — Versum termination fee, net — (122,000) — — (122,000) Amortization of intangible assets 13,216 16,591 16,211 29,427 35,248 Tax effect of legal entity restructuring — 9,398 — — 9,398 Tax effect of adjustments to net income and discrete items1 (4,048) 20,153 (4,329) (8,377) 10,289 Non-GAAP net income $81,581 $53,432 $75,571 $157,152 $121,326 Diluted earnings per common share $0.50 $0.91 $0.45 $0.95 $1.15 Effect of adjustments to net income $0.10 $(0.52) $0.11 $0.21 $(0.26) Diluted non-GAAP earnings per common share $0.60 $0.39 $0.55 $1.15 $0.89 1. The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years. 19
Reconciliation of GAAP Outlook to Non-GAAP Outlook $ in millions Third-Quarter Outlook Reconciliation GAAP operating expenses to non-GAAP operating expenses GAAP operating expenses $109 - $111 Adjustments to net income: Restructuring and integration costs 2 Amortization of intangible assets 12 Non-GAAP operating expenses $95 - $97 $ in millions Third-Quarter Outlook Reconciliation GAAP net income to non-GAAP net income GAAP net income $70 - $78 Adjustments to net income: Restructuring and integration costs 3 Amortization of intangible assets 12 Income tax effect (3) Non-GAAP net income $82 - $90 Third-Quarter Outlook Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share Diluted earnings per common share $0.51 - $0.57 Adjustments to diluted earnings per common share: Restructuring and integration costs 0.03 Amortization of intangible assets 0.09 Income tax effect (0.03) Diluted non-GAAP earnings per common share $0.60 to $0.66 20
GAAP Segment Trend Data1 $ in thousands Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 Q120 Q220 Sales SCEM $130,743 $134,336 $131,234 $133,928 $124,470 $127,552 $127,750 $146,747 $144,214 $146,213 MC 118,923 124,937 151,478 158,500 157,706 150,185 155,979 169,794 159,261 183,758 AMH 124,078 130,572 123,227 115,527 116,064 107,515 117,256 117,455 116,137 126,434 Inter-segment elimination (6,545) (6,786) (7,342) (6,313) (7,193) (6,378) (6,838) (6,998) (7,285) (8,000) Total Sales $367,199 $383,059 $398,597 $401,642 $391,047 $378,874 $394,147 $426,998 $412,327 $448,405 Segment Profit SCEM $30,921 $36,728 $31,210 $28,221 $24,431 $24,000 $17,074 $32,822 $32,670 $32,938 MC 40,311 37,214 42,448 46,879 47,323 43,126 46,792 57,157 50,167 62,139 AMH 25,463 25,542 22,226 19,096 22,367 15,043 17,077 20,686 20,632 22,809 Total Segment Profit $96,695 $99,484 $95,884 $94,196 $94,121 $82,169 $80,943 $110,665 $103,469 $117,886 Segment Profit Margin SCEM 23.7 % 27.3 % 23.8 % 21.1 % 19.6 % 18.8 % 13.4 % 22.4 % 22.7 % 22.5 % MC 33.9 % 29.8 % 28.0 % 29.6 % 30.0 % 28.7 % 30.0 % 33.7 % 31.5 % 33.8 % AMH 20.5 % 19.6 % 18.0 % 16.5 % 19.3 % 14.0 % 14.6 % 17.6 % 17.8 % 18.0 % 1. In 1Q19 the Company changed its definition of segment profit to include inter-segment sales. Prior period information has been recast to reflect the change. 21
Non-GAAP Segment Trend Data1 $ in thousands Q218 Q318 Q418 Q119 Q219 Q319 Q419 Q120 Q220 Sales SCEM $134,336 $131,234 $133,928 $124,470 $127,552 $127,750 $146,747 $144,214 $146,213 MC 124,937 151,478 158,500 157,706 150,185 155,979 169,794 159,261 183,758 AMH 130,572 123,227 115,527 116,064 107,515 117,256 117,455 116,137 126,434 Inter-segment elimination (6,786) (7,342) (6,313) (7,193) (6,378) (6,838) (6,998) (7,285) (8,000) Total Sales $383,059 $398,597 $401,642 $391,047 $378,874 $394,147 $426,998 $412,327 $448,405 Adjusted Segment Profit SCEM2 $36,728 $31,210 $28,221 $25,070 $24,695 $23,700 $32,530 $33,079 $31,836 MC3 37,422 45,729 50,258 50,082 43,126 49,769 58,039 50,483 62,631 AMH3 25,542 22,692 19,556 22,945 15,043 20,212 20,307 20,767 23,623 Total Segment Profit $99,692 $99,631 $98,035 $98,097 $82,864 $93,681 $110,876 $104,329 $118,090 Adjusted Segment Profit Margin SCEM 27.3% 23.8% 21.1% 20.1% 19.4% 18.6% 22.2% 22.9% 21.8 % MC 30.0% 30.2% 31.7% 31.8% 28.7% 31.9% 34.2% 31.7% 34.1 % AMH 19.6% 18.4% 16.9% 19.8% 14.0% 17.2% 17.3% 17.9% 18.7 % 1. In 1Q19 the Company changed its definition of segment profit to include inter-segment sales. Prior period information has been recast to reflect the change. Segment profit excludes amortization of intangibles and unallocated expenses. 2. Adjusted segment profit for SCEM for 3Q17, 1Q19, 3Q19,4Q19, 1Q20 and 2Q20 excludes charges for severance and restructuring of $14, $519, $2,143, $184, $174 and $455, respectively. Adjusted segment profit for SCEM for 1Q19, 2Q19, 3Q19, 4Q19 and 1Q20 excludes fair value mark-up of inventory and severance charges of $120, $695, $4,483, ($476) and $235, respectively. Adjusted segment profit for SCEM for 2Q20 excludes charges for integration costs ($1,557). 3. Adjusted segment profit for MC for 2Q17 excludes charges for impairment of equipment and severance of $884 and $559, respectively. Adjusted segment profit for MC for 3Q17, 1Q19, 3Q19, 4Q19, 1Q20 and 2Q20 excludes charges for severance of $196, $724, $2,977, $195, $190 and $494, respectively. Adjusted segment profit for MC for 2Q18, 3Q18, 4Q18, 1Q19, 4Q19 and 1Q20 excludes charges for fair value mark-up of acquired inventory sold of $208, $3,281, $3,379, $2,035, $687 and $126, respectively. 4. Adjusted segment profit for AMH for 2Q17 excludes charges for impairment of equipment of $2,286. Adjusted segment profit for AMH for 3Q17 excludes impairment of equipment and severance and restructuring of $3,364 and $1,857, respectively. Adjusted segment profit for AMH for 3Q18 excludes loss on sale of subsidiary of $466. Adjusted segment profit for AMH for 4Q18, 1Q19, 3Q19, 4Q19, 1Q20 and 2Q20 excludes severance and restructuring of $460, $578, $3,135, ($379), $135 and $814, respectively. 22