Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - ENTEGRIS INC | entg2016ex991.htm |
| 8-K - 8-K - ENTEGRIS INC | entg2016q4.htm |
FEBRUARY 2, 2017
Earnings Summary
Fourth Quarter and Fiscal Year 2016
EXHIBIT 99.2
2
SAFE HARBOR
Certain information contained in this presentation may constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking statements 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 Related 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 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.
3
4Q16 AND FY2016 HIGHLIGHTS
◦ Achieved record sales of $1.2 billion in fiscal 2016, 9% organic growth and significant outperformance of markets
◦ Generated record EPS and EBITDA for fiscal 2016, and a record EBITDA margin of 22.4 percent
◦ Growth initiatives are on track with key design wins at 10 and 7 nanometer and 3D-NAND processes
◦ Continued pay down our debt, concluding the year with a net leverage ratio of 0.7
◦ Grew our quarterly revenue by 16 percent from a year ago and achieved non-GAAP EPS of $0.24
$ in millions, except per share data 4Q16 4Q16 Guidance 3Q16 4Q15
4Q16 over
3Q16
4Q16 over
4Q15
Net Revenue $308.5 $275 to $290 $296.7 $266.8 4.0% 15.6%
Gross Margin 42.7% 41.5% 41.0%
Operating Expenses $86.9 $88.3 $89.2 (1.6%) (2.6%)
Operating Income $44.9 $34.7 $20.1 29.4% 123.4%
Operating Margin 14.6% 11.7% 7.5%
Tax Rate 24.6% 15.2% (33.1)%
Net Income $26.1 $20 to $26 $21.9 $17.6 19.2% 48.3%
EPS $0.18 $0.14 to $0.18 $0.15 $0.12 20.0% 50.0%
4
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)
$ in millions, except per share data 4Q16 4Q16 Guidance 3Q16 4Q15
4Q16 over
3Q16
4Q16 over
4Q15
Net Revenue $308.5 $275 to $290 $296.7 $266.8 4.0% 15.6%
Adjusted Gross Margin2 42.7% 43.6% 41.0%
Non-GAAP Operating Expenses3 $76.0 $75.4 $72.2 0.8% 5.3%
Adjusted Operating Income $55.8 $53.9 $37.1 3.5% 50.4%
Adjusted Operating Margin 18.1% 18.2% 13.9%
Non-GAAP Tax Rate4 24.7% 23.2% (0.3)%
Non-GAAP Net Income $34.3 $27 to $33 $34.6 $28.8 (0.9%) 19.1%
Non-GAAP EPS $0.24 $0.19 to $0.23 $0.24 $0.20 - 20.0%
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1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation.
2. Adjusted Gross Margin excludes certain impairment of equipment and severance charges.
3. Non-GAAP Operating Expenses exclude amortization expense, severance and integration costs.
4. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments to GAAP taxes.
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1
$ in millions, except per share data
Fiscal Year
Ended
December 31,
2016
Fiscal Year
Ended
December 31,
2015 Year-over-Year
Net Revenue $1,175.3 $1,081.1 8.7%
Gross Margin 43.3% 43.5%
Operating Expenses $353.2 $352.2 0.3%
Operating Income $155.5 $118.1 31.7%
Operating Margin 13.2% 10.9%
Tax Rate 19.0% 11.1%
Net Income $97.1 $80.3 20.9%
EPS $0.68 $0.57 19.3%
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SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)
$ in millions, except per share data
Fiscal Year
Ended
December 31,
2016
Fiscal Year
Ended
December 31,
2015 Year-over-Year
Net Revenue $1,175.3 $1,081.1 8.7%
Adjusted Gross Margin2 43.8% 43.5%
Non-GAAP Operating Expenses3 $306.9 $292.1 5.1%
Adjusted Operating Income $208.0 $178.1 16.8%
Adjusted Operating Margin 17.7% 16.5%
Non-GAAP Tax Rate4 22.9% 19.0%
Non-GAAP Net Income $132.8 $120.6 10.1%
Non-GAAP EPS $0.94 $0.85 10.6%
7
1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation.
2. Adjusted Gross Margin excludes certain impairment of equipment and severance charges.
3. Non-GAAP Operating Expenses exclude amortization expense, severance related to organizational realignment, and integration costs.
4. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments to GAAP taxes.
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1
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RESULTS BY SEGMENT
Critical Materials Handling
◦ Liquid Filters and Purifiers
◦ Gas Filters/Diffusers/Purifiers
◦ Airborne Molecular Contamination
Control Products
◦ Microenvironments
◦ Fluid Handling
◦ Sensing & Control
◦ Liquid Packaging
◦ Graphite Products
◦ Specialty Coatings
Electronic Materials
◦ SDS and VAC Based Gases (SG)
◦ Post Etch/CMP Cleans
◦ Plating and CMP Components
◦ Advanced Deposition Products
Previous Segmentation New Segmentation
Microcontamination Control (MC)
◦ Liquid Filters and Purifiers
◦ Gas Filters/Diffusers/Purifiers
◦ Airborne Molecular Contamination Control Products
Specialty Chemicals and Engineered Materials (SCEM)
Advanced Materials Handling (AMH)
◦ Microenvironments
◦ Fluid Handling
◦ SDS and VAC Based Gases (SG)
◦ Post Etch/CMP Cleans
◦ Plating and CMP Components
◦ Advanced Deposition Products
◦ Graphite Products
◦ Specialty Coatings
◦ Sensing & Control
◦ Liquid Packaging
$73.5
$96.1
$110.0
MC4
RESULTS BY SEGMENT
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1. Excludes amortization of intangibles and unallocated expenses.
2. Segment profit for AMH for the three months ended October 1, 2016 includes charges for impairment of equipment and severance related to organizational realignment totaling $6,795.
3. Segment profit for SCEM for the three months ended October 1, 2016 includes a charge for severance related to organizational realignment of $699.
4. Segment profit for MC for the three months ended October 1, 2016 includes a charge for severance related to organizational realignment of $737.
Fiscal 2016 Sales by Segment
$384.3
$428.3
$362.7
$ in millions
Fiscal 2016 Profit Margin by Segment1
$ in millions
AMH2 SCEM3 MC AMH SCEM
22%
56%
13%
9%
REVENUE BY GEOGRAPHY
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Revenue By Geography
Asia Japan Europe U.S.
$60.1
$170.5
$40.4
$25.7
$63.0
$180.0
$38.3
$27.1
U.S. Asia Japan Europe
Quarter-to-Quarter Revenue by Geography
$ in millions
3Q16 4Q16 3Q16 4Q16 3Q16 4Q16
FY 2016
3Q16 4Q16
$ in millions 4Q16 3Q16 4Q15
$ Amount % Total $ Amount % Total $ Amount % Total
Cash & Cash Equivalents $406.4 23.9% $411.8 24.0% $349.8 21.2%
Accounts Receivable, net $165.7 9.7% $167.6 9.8% $141.4 8.6%
Inventories $183.5 10.8% $186.0 10.9% $173.2 10.5%
Net PP&E $321.6 18.9% $315.5 18.4% $321.3 19.5%
Total Assets $1,699.5 $1,713.6 $1,646.7
Current Liabilities1 $261.6 15.4% $237.7 13.9% $175.6 10.7%
Long-term debt, excluding
current maturities
$484.7 28.5% $508.8 29.7% $606.0 36.8%
Total Liabilities $800.3 47.1% $816.4 47.6% $843.8 51.2%
Total Shareholders’ Equity $899.2 52.9% $897.2 52.4% $802.9 48.8%
AR - DSOs 49.0 51.5 48.4
Inventory Turns 3.8 3.8 3.5
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1. Current Liabilities in 4Q16, 3Q16, 4Q15 includes $100 million, $100 million, and $50 million of current maturities of long term debt, respectively.
SUMMARY – BALANCE SHEET ITEMS
12
1. See Reconciliation of GAAP Income to Adjusted Operating Income and Adjusted EBITDA in the appendix of this presentation.
ADJUSTED EBITDA MARGIN1
$232
$264
21.5%
22.4%
0
0.05
0.1
0.15
0.2
0
50
100
150
200
250
2015 2016
Adjusted Annual EBITDA
Adj. EBITDA in $M Adj. EBITDA as % of Sales
$68
$70
22.8% 22.7%
0
0.05
0.1
0.15
0.2
0
10
20
30
40
50
60
70
80
3Q16 4Q16
Adjusted EBITDA
Adj. EBITDA in $M Adj. EBITDA as % of Sales
$ in millions 4Q16 3Q16 4Q15
Beginning Cash Balance $411.8 $373.7 $301.1
Cash from operating activities 57.1 71.9 52.2
Capital expenditures (20.0) (13.1) (16.3)
Payments on long-term debt (25.0) (25.0) -
Other investing activities 0.1 0.1 5.9
Other financing activities (3.2) (0.2) 6.4
Effect of exchange rates (14.3) 4.3 0.5
Ending Cash Balance $406.4 $411.8 $349.8
Free Cash Flow1 $37.1 $58.8 $35.9
Adjusted EBITDA $70.1 $67.7 $51.4
CASH FLOWS
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1. Free cash flow equals cash from operations less capital expenditures.
OUTLOOK
14
Non-GAAP operating expenses exclude amortization. In 4Q16, amortization is estimated to be approximately $11 million, or $0.05 per share.
$ in millions, except per share data 1Q17 Guidance 4Q16 4Q15
Net Revenue $295 to $310 $308.5 $266.8
Gross Margin 42.7% 41.0%
Operating Expenses $87 to $89 $86.9 $89.2
Net Income $25 to $31 $26.1 $17.6
EPS $0.18 to $0.22 $0.18 $0.12
$ in millions, except per share data 1Q17 Guidance 4Q16 4Q15
Net Revenue $295 to $310 $308.5 $266.8
Gross Margin 42.7% 41.0%
Non-GAAP Operating Expenses1 $76 to $78 $76.0 $72.2
Non-GAAP Net Income $32 to $38 $34.3 $28.8
Non-GAAP EPS $0.23 to $0.27 $0.24 $0.20
Non-GAAP
GAAP
Entegris®, the Entegris Rings Design™ and Pure Advantage™ are trademarks of Entegris, Inc. ©2016 Entegris, Inc. All rights reserved.
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APPENDIX: NON-GAAP RECONCILIATION TABLES
NON-GAAP RECONCILIATION TABLE
RECONCILIATION OF GAAP TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA
17
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 0 — 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%
$ in thousands (unaudited)
NON-GAAP RECONCILIATION TABLE
RECONCILIATION OF GAAP PROFIT TO ADJUSTED GROSS PROFIT
18
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%
$ in thousands (unaudited)
NON-GAAP RECONCILIATION TABLE
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS PER SHARE
19
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
$ in thousands except for per share data
(unaudited)