Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - ENTEGRIS INC | entg2018q1ex991.htm |
| 8-K - 8-K - ENTEGRIS INC | entg2018q1.htm |
APRIL 26, 2018
Earnings Summary
First Quarter 2018
R 2.5
EXHIBIT 99.2
2
SAFE HARBOR
This presentation contains, and management may make, forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof
and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include statements related to
future period guidance; projected sales, net income, net income per diluted share, non-GAAP EPS, non-GAAP net income, expenses and other financial
metrics; our performance relative to our markets; market and technology trends, including the duration and drivers of any growth trends; the
development of new products and the success of their introductions; the focus of our engineering, research and development projects; our business
strategies; our capital allocation strategy, which may be modified at any time for any reason, including share repurchases, dividends, debt repayments
and potential acquisitions; the effect of the Tax Cuts and Jobs Act on our capital allocation strategy; the Company’s expected tax rate; the impact of the
acquisitions we have made and commercial partnerships we have established; and other matters. These statements involve risks and uncertainties, and
actual results may differ. These risks and uncertainties include, but are not limited to, weakening of global and/or regional economic conditions,
generally or specifically in the semiconductor industry, which could decrease the demand for our products and solutions; our ability to meet rapid
demand shifts; our ability to continue technological innovation and introduce new products to meet our customers' rapidly changing requirements; our
ability to execute on our strategies; our concentrated customer base; our ability to identify, effect and integrate acquisitions, joint ventures or other
transactions; our ability to protect and enforce intellectual property rights; operational, political and legal risks of our international operations; our
dependence on sole source and limited source suppliers; the increasing complexity of certain manufacturing processes; raw material shortages and price
increases; changes in government regulations of the countries in which we operate; fluctuation of currency exchange rates; fluctuations in the market
price of Entegris’ stock; the level of, and obligations associated with, our indebtedness; and other risk factors and additional information described in our
filings with the Securities and Exchange Commission, including under the heading “Risks Factors" in Item 1A of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2017, filed on February 15, 2018, and in our other periodic filings. The Company assumes no obligation to update any
forward-looking statements or information, which speak as of their respective dates.
This presentation contains references to “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Adjusted Operating Income,” “Adjusted Operating Income
Margin” and “Non-GAAP Earnings per 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.
3
1Q18 HIGHLIGHTS
◦ 1Q18 sales of $367 million grew 16% from same quarter a year ago and 5% from 4Q17, outpacing Entegris’ markets
◦ Growth was across all divisions:
◦ Specialty Chemicals and Engineered Materials sales grew 14% from prior year and 4% sequentially
◦ Microcontamination Control sales grew 19% from prior year and 3% sequentially
◦ Advanced Materials Handling sales were 15% from prior year and 8% sequentially
◦ Demand trends reflected strength from memory fab customers, OEMs, chemical makers, and wafer growers
◦ Completed the acquisition of Particle Sizing Systems (PSS) in January
◦ 1Q18 GAAP Earnings Per Share of $0.40 increased 74% from prior year; non-GAAP EPS of $0.47 grew 68% from the
prior year
◦ Generated $106 million of adjusted EBITDA, or 29% of sales
◦ Deployed more than $100 million of capital consistent with stated strategy comprising growth-focused capex
investments, the acquisition of PSS, ongoing voluntary repayment of our term loan, and continued share buyback
and dividend quarterly programs
$ in millions, except per share data 1Q18 1Q18 Guidance 4Q17 1Q17
1Q18 over
1Q17
1Q18 over
4Q17
Net Revenue $367.2 $355 to $365 $350.6 $317.4 15.7% 4.7%
Gross Margin 47.9% 46.7% 44.0%
Operating Expenses $97.5 $94 to $96 $92.5 $88.7 9.9% 5.4%
Operating Income $78.5 $71.2 $50.9 54.2% 10.3%
Operating Margin 21.4% 20.3% 16.0%
Tax Rate 19.0% 167.6% 21.9%
Net Income (Loss) $57.6 $49 to $56 ($28.3) $32.5 77.2% N/M
Earnings (loss) per diluted share $0.40 $0.34 to $0.39 ($0.20) $0.23 73.9% N/M
4
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (GAAP)
$ in millions, except per share data 1Q18 1Q18 Guidance 4Q17 1Q17
1Q18 over
1Q17
1Q18 over
4Q17
Net Revenue $367.2 $355 to $365 $350.6 $317.4 15.7% 4.7%
Adjusted Gross Margin 47.9% 46.7% 44.0%
Non-GAAP Operating Expenses2 $85.9 $83 to $85 $81.5 $77.7 10.6% 5.4%
Adjusted Operating Income $90.1 $82.2 $61.9 45.6% 9.6%
Adjusted Operating Margin 24.5% 23.4% 19.5%
Non-GAAP Tax Rate3 17.8% 18.9% 22.5%
Non-GAAP Net Income4 $68.0 $56 to $63 $59.7 $40.8 66.7% 13.9%
Non-GAAP EPS $0.47 $0.39 to $0.44 $0.42 $0.28 67.9% 11.9%
5
1. See GAAP to Non-GAAP reconciliation tables in the appendix of this presentation.
2. Non-GAAP Operating Expenses exclude amortization expense.
3. Non-GAAP Tax Rate reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes.
4. Non-GAAP Net Income excludes amortization expense and loss on debt extinguishment.
SUMMARY – CONSOLIDATED STATEMENT OF OPERATIONS (NON-GAAP)1
6
1. Represents diluted earnings (loss) per share. See Reconciliation of GAAP Net Income to Non-GAAP Earnings per Share in the appendix of this presentation.
EARNINGS (LOSS) PER SHARE1
$0.23
$0.40
$0.28
$0.47
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
1Q17 1Q18
EPS: 1Q18 vs. 1Q17
GAAP Non-GAAP
($0.20)
$0.40$0.42
$0.47
-$0.30
-$0.20
-$0.10
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
4Q17 1Q18
EPS: 1Q18 vs. 4Q17
GAAP Non-GAAP
RESULTS BY SEGMENT1
7
1. Adjusted segment operating margin excludes amortization of intangibles and unallocated expenses. Corporate cost related to HR, Finance, and IT are charged back to the Segments starting 1Q18.
Prior quarter results are adjusted retrospectively using consistent allocation method.
2. Segment profit for SCEM for 3Q17 includes a charge for severance of $14K.
3. Segment profit for MC for Q317 includes a charge for severance of $196K. Segment profit for MC for 2Q17 includes charges for impairment of equipment and severance of $884K and $559K,
respectively.
4. Segment profit for AMH for 2Q17 includes charges for impairment of equipment of $2,286K. Segment profit for AMH for 3Q17 includes charges for impairment of equipment and severance totaling
$5,221K.
0%
10%
20%
30%
40%
$0
$20
$40
$60
$80
$100
$120
1Q17 2Q17 3Q17 4Q17 1Q18
Specialty Chemicals and
Engineered Materials
Segment2
Sales Adj. Op. margin
0%
10%
20%
30%
40%
$0
$20
$40
$60
$80
$100
$120
1Q17 2Q17 3Q17 4Q17 1Q18
Microcontamination
Control Segment3
Sales Adj. Op. margin
0%
10%
20%
30%
40%
$0
$20
$40
$60
$80
$100
$120
1Q17 2Q17 3Q17 4Q17 1Q18
Advanced Materials
Handling Segment4
Sales Adj. Op. margin
$ in millions
REVENUE BY GEOGRAPHY: STRONG GROWTH IN N. AMERICA, KOREA, JAPAN, AND CHINA
8
N. America
Europe
Japan
China
South Korea
Southeast
Asia
Taiwan
1Q18 Revenue by Geography
Revenue = $367.2 million
$51.5M
$32.9M
-8%
6%
39%
45%
33%
31%
-17%
Southeast Asia
Europe
China
Japan
South Korea
N. America
Taiwan
-25% -15% -5% 5% 15% 25% 35% 45% 55%
1Q18 vs. 1Q17 Growth Rate
$28.2M
$40.5M
$86.3M
$65.1M
$62.7M
$ in millions 1Q18 4Q17 1Q17
$ Amount % Total $ Amount % Total $ Amount % Total
Cash & Cash Equivalents $550.2 28.1% $625.4 31.6% $391.2 23.1%
Accounts Receivable, net $195.3 10.0% $183.4 9.3% $176.0 10.4%
Inventories $214.1 10.9% $198.1 10.0% $188.3 11.1%
Net PP&E $364.3 18.6% $359.5 18.2% $330.9 19.5%
Total Assets $1,961.3 $1,976.2 $1,696.1
Current Liabilities1 $266.5 13.6% $291.0 14.7% $236.2 13.9%
Long-term debt, excluding
current maturities
$549.8 28.0% $574.4 29.1% $460.3 27.1%
Total Liabilities $936.9 47.8% $983.2 49.8% $751.0 44.3%
Total Shareholders’ Equity $1,024.4 52.2% $993.0 50.2% $945.1 55.7%
AR – DSOs 48.5 47.7 50.6
Inventory Turns 3.7 3.8 3.8
9
1. Current Liabilities in 1Q18, 4Q17 and 1Q17 includes $100 million of current maturities of long term debt, respectively.
SUMMARY – BALANCE SHEET ITEMS
10
1. See Reconciliation of GAAP Income to Adjusted Operating Income and Adjusted EBITDA in the appendix of this presentation.
ADJUSTED EBITDA MARGIN1
$357
$387
26.6% 27.8%
0
50
100
150
200
250
300
350
400
TTM-4Q17 TTM-1Q18
Adjusted TTM EBITDA
Adj. EBITDA in $M Adj. EBITDA as % of Sales
$76
$88
$96 $97
$10623.9%
26.8% 27.7%
27.7%
28.9%
0
40
80
1Q17 2Q17 3Q17 4Q17 1Q18
Adjusted EBITDA and EBITDA Margin
Adj. EBITDA in $M Adj. EBITDA as % of Sales
$ in millions 1Q18 4Q17 1Q17
Beginning Cash Balance $625.4 $435.2 $406.4
Cash from operating activities $38.8 $85.7 $33.4
Capital expenditures ($21.0) ($25.7) ($22.2)
Acquisition of business ($37.7) - -
Proceeds from long-term debt - 550.0 -
Payments on long-term debt ($25.0) ($385.0) ($25.0)
Payments for debt extinguishment costs - ($16.2) -
Repurchase and retirement of common stock ($10.0) ($10.0) -
Dividend payments ($9.9) ($9.9) -
Other investing activities $0.1 $0.1 $0.2
Other financing activities ($13.9) ($5.5) ($7.8)
Effect of exchange rates $3.3 $6.7 $6.1
Ending Cash Balance $550.2 $625.4 $391.2
Free Cash Flow1 $17.8 $60.1 $11.2
Adjusted EBITDA $106.0 $97.2 $75.8
CASH FLOWS
11
1. Free cash flow equals cash from operations less capital expenditures.
OUTLOOK
12
1. Non-GAAP operating expenses exclude amortization. In 2Q18, amortization is estimated to be approximately $12 million, or $0.06 per share.
$ in millions, except per share data 2Q18 Guidance 1Q18 Actual 2Q17 Actual
Net Revenue $370 to $385 $367.2 $329.0
Operating Expenses $101 to $104 $97.5 $91.2
Net Income (Loss) $52 to $59 $57.6 $40.0
Earnings (Loss) Per Diluted Share $0.36 to $0.41 $0.40 $0.28
$ in millions, except per share data 2Q18 Guidance 1Q18 Actual 2Q17 Actual
Net Revenue $370 to $385 $367.2 $329.0
Non-GAAP Operating Expenses1 $89 to $92 $85.9 $78.4
Non-GAAP Net Income $60 to $68 $68.0 $48.9
Non-GAAP EPS $0.42 to $0.47 $0.47 $0.34
Non-GAAP
GAAP
Entegris®, the Entegris Rings Design™ and Pure Advantage™ are trademarks of Entegris, Inc. ©2016 Entegris, Inc. All rights reserved.
13
NON-GAAP RECONCILIATION TABLE
RECONCILIATION OF GAAP TO ADJUSTED OPERATING INCOME AND ADJUSTED EBITDA
14
Three months ended
March 31, 2018 December 31, 2017 April 1, 2017
Net sales $367,199 $350,562 $317,377
Net income (loss) $57,562 ($28,341) $32,514
Adjustments to net income (loss):
Income tax expense 13,546 70,264 9,111
Interest expense, net 7,226 7,533 8,393
Other expense, net 139 21,696 902
GAAP - Operating income 78,473 71,152 50,920
Amortization of intangible assets 11,669 11,020 10,945
Adjusted operating income 90,142 82,172 61,865
Depreciation 15,897 15,035 13,977
Adjusted EBITDA $106,039 $97,207 $75,842
Adjusted operating margin 24.5% 23.4% 19.5%
Adjusted EBITDA - as a % of net sales 28.9% 27.7% 23.9%
$ in thousands
NON-GAAP RECONCILIATION TABLE
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS (LOSS) PER SHARE
15
Three months ended
March 31, 2018
December 31,
2017 April 1, 2017
GAAP net income (loss) $57,562 ($28,341) $32,514
Adjustments to net income (loss):
Loss on debt extinguishment - 20,687 -
Amortization of intangible assets 11,669 11,020 10,945
Tax effect of adjustments to net income and discrete items (2,710) (10,385) (2,705)
Tax effect of Tax Cuts and Jobs Act 1,494 66,713 -
Non-GAAP net income $68,015 $59,694 $40,754
Diluted earnings (loss) per common share $0.40 ($0.20) $0.23
Effect of adjustments to net income (loss) $0.07 $0.61 $0.06
Diluted non-GAAP earnings per common share $0.47 $0.42 $0.28
$ in thousands, except per share data
16
GAAP SEGMENT TREND DATA
Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118
Sales
SCEM 101,107$ 111,782$ 104,494$ 110,945$ 114,435$ 121,174$ 124,522$ 125,339$ 130,743$
MC 77,619 91,584 94,738 98,717 100,055 104,407 116,113 115,650 118,637
AMH 88,298 99,686 97,460 98,840 102,887 103,421 104,956 109,573 117,819
Total Sa les 267,024$ 303,052$ 296,692$ 308,502$ 317,377$ 329,002$ 345,591$ 350,562$ 367,199$
Segment Profit1
SCEM 17,818$ 24,205$ 14,244$ 21,061$ 23,128$ 29,060$ 29,539$ 30,075$ 31,562$
MC 14,181 24,511 27,684 27,535 30,987 31,796 39,302 39,328 41,991
AMH 14,697 18,203 11,192 12,190 13,960 15,169 12,483 18,226 23,142
Total Segment Profi t 46,696$ 66,919$ 53,120$ 60,786$ 68,075$ 76,025$ 81,324$ 87,629$ 96,695$
Segment Profit Margin
SCEM 17.6% 21.7% 13.6% 19.0% 20.2% 24.0% 23.7% 24.0% 24.1%
MC 18.3% 26.8% 29.2% 27.9% 31.0% 30.5% 33.8% 34.0% 35.4%
AMH 16.6% 18.3% 11.5% 12.3% 13.6% 14.7% 11.9% 16.6% 19.6%
$ in thousands
1. Segment profit excludes amortization of intangibles and unallocated expenses. Corporate cost related to HR, Finance, and IT are charged back to the Segments starting 1Q18. Prior quarter results
are adjusted retrospectively using consistent allocation method.
NON-GAAP SEGMENT TREND DATA
17
1. Segment profit excludes amortization of intangibles and unallocated expenses. Corporate cost related to HR, Finance, and IT are charged back to the Segments starting 1Q18. Prior quarter results are adjusted
retrospectively using consistent allocation method.
2. Adjusted segment profit for SCEM for Q316 excludes charges for severance of $699K. Adjusted segment profit for SCEM for Q317 excludes charges for severance of $14K.
3 Adjusted segment profit for MC for Q316 excludes charges for severance of $737K. Adjusted segment profit for MC for 2Q17 excludes charges for impairment of equipment and severance of $884K and $559K,
respectively. Adjusted segment profit for MC for Q317 excludes charges for severance of $196K.
34. Adjusted segment profit for AMH for Q316 excludes charges for impairment of equipment and severance related to organizational realignment of $5,826K and $969K, respectively. Adjusted segment profit for AMH for
2Q17 excludes charges for impairment of equipment of $2,286K. Adjusted segment profit for AMH for Q317 excludes charges for impairment of equipment and severance related to organizational realignment of $3,364K
and $1,857K, respectively.
Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118
Sales
SCEM 101,107$ 111,782$ 104,494$ 110,945$ 114,435$ 121,174$ 124,522$ 125,339$ 130,743$
MC 77,619 91,584 94,738 98,717 100,055 104,407 116,113 115,650 118,637
AMH 88,298 99,686 97,460 98,840 102,887 103,421 104,956 109,573 117,819
Total Sa les 267,024$ 303,052$ 296,692$ 308,502$ 317,377$ 329,002$ 345,591$ 350,562$ 367,199$
Adjusted Segment Profit
1
SCEM
2
17,818$ 24,205$ 14,943$ 21,061$ 23,128$ 29,060$ 29,553$ 30,075$ 31,562$
MC3 14,181 24,511 28,421 27,535 30,987 33,239 39,498 39,328 41,991
AMH4 14,697 18,203 17,987 12,190 13,960 17,455 17,704 18,226 23,142
Total Adj. Segment Profi t 46,696$ 66,919$ 61,351$ 60,786$ 68,075$ 79,754$ 86,755$ 87,629$ 96,695$
Adjusted Segment Profit Margin
SCEM 17.6% 21.7% 14.3% 19.0% 20.2% 24.0% 23.7% 24.0% 24.1%
MC 18.3% 26.8% 30.0% 27.9% 31.0% 31.8% 34.0% 34.0% 35.4%
AMH 16.6% 18.3% 18.5% 12.3% 13.6% 16.9% 16.9% 16.6% 19.6%
$ in thousands