Entegris, Inc. (ENTG)

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Entegris Reports Financial Results for Third Quarter of Fiscal 2013

6:55 AM ET 10/22/13 | GlobeNewswire

-- Revenue of $164.6 million, down 7 percent sequentially

-- GAAP net income of $17.8 million, or $0.13 per share; Non-GAAP net income of $18.9 million, or $0.14 per share

-- Operating margin of 14.5 percent; Adjusted operating margin of 14.8 percent

-- Net cash generated from operations of $32.4 million

Entegris, Inc. (Nasdaq:ENTG) today reported its financial results for the Company's third quarter ended September 28, 2013.

The Company recorded third-quarter sales of $164.6 million, a decline of 7 percent sequentially, and an 11 percent decline from the prior year third quarter. Third-quarter operating margin was 14.5 percent, with an adjusted operating margin of 14.8 percent, excluding amortization of intangible assets of $2.3 million and a contingent consideration fair value adjustment of $1.8 million. Net income for the third quarter was $17.8 million, or $0.13 per share. Non-GAAP earnings per share of $0.14 in the third quarter of 2013 compared to $0.15 in the second quarter of 2013 and $0.16 in the third quarter of 2012. A reconciliation table of GAAP to non-GAAP earnings per share and operating margin is contained in this press release.

For the first nine months of fiscal 2013, sales were $507.2 million, down 7 percent from the first nine months of 2012. Net income for the first nine months of 2013 was $54.0 million, or $0.39 per share, compared to $57.6 million, or $0.42 per share, for the same period a year ago. Non-GAAP earnings per share for the first nine months of 2013 were $0.42 per share versus $0.46 per share a year ago.

Bertrand Loy, president and chief executive officer, said: "After a strong second quarter, our third quarter sales declined as we expected. The results reflect a mixed industry picture, as pockets of intensified technology spending by some semi makers were in contrast with slowing industry production rates for some high-end devices. Even so, order trends for our products were favorable through the end of the quarter and point to higher revenues in the fourth quarter."

"Despite the low revenue levels for the third quarter, I was pleased with the operating results. We reduced our operating expenses even as we increased our investment in R&D as planned to further the development of a variety of contamination control solutions for customers' advanced processes. Cash flow was strong as we generated $32 million of cash from operations," said Loy.

For the fiscal fourth quarter ending December 31, 2013, the Company expects sales to be approximately $165 million to $175 million, and EPS to range between $0.10 and $0.12 per share. On a non-GAAP basis, EPS is expected to range from $0.11 to $0.13 per share, which reflects net income on a non-GAAP basis in the range of $15 million to $18 million, which is adjusted for expected amortization expense of $2.3 million or $0.01 per share.

Third-Quarter Results Conference Call Details

Entegris will hold a conference call to discuss its results for the third quarter on Tuesday, October 22, 2013, at 10:00 a.m. Eastern Time. Participants should dial 719-325-2454 or toll-free 888-572-7034, referencing confirmation code 5517160. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. A replay of the call will be available starting October 22 at 1:00 p.m. (ET) until December 5, 2013. The replay can be accessed by using passcode 5517160 after dialing 719-457-0820 or 888-203-1112. 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.

Please also refer to Management's slide presentation concerning third quarter results which will be referred to during the call. This presentation will be posted on the investor relations section of www.entegris.com Tuesday morning before the call.

About Entegris

Entegris is a leading provider of a wide range of products for purifying, protecting and transporting critical materials used in processing and manufacturing in the semiconductor and other high-technology 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 consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA 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 SEC. These financial measures are provided as a complement to financial measures provided in accordance with GAAP. We provide non-GAAP financial measures in order to better assess and reflect operating performance. Management believes the non-GAAP measures help indicate 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 presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP. The calculations of Adjusted EBITDA margin, Adjusted Operating Income, and non-GAAP EPS 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," "Manufacturing Risks," "International Risks," and "Risks Related to Owning Our Securities" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, 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.

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Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three months ended September 28, September 29, June 29, 2013 2012 2013 Net sales $164,585 $184,449 $177,544 Cost of sales 94,453 102,517 99,974 Gross profit 70,132 81,932 77,570 Selling, general and administrative expenses 31,746 39,095 35,397 Engineering, research and development expenses 13,947 13,314 13,427 Amortization of intangible assets 2,343 2,389 2,359 Contingent consideration fair value adjustment (1,813) -- -- Operating income 23,909 27,134 26,387 Other expense (income), net 963 1,441 (910) Income before income taxes 22,946 25,693 27,297 Income tax expense 5,139 7,656 7,516 Net income $17,807 $18,037 $19,781 Basic net income per common share: $0.13 $0.13 $0.14 Diluted net income per common share: $0.13 $0.13 $0.14 Weighted average shares outstanding: Basic 138,904 137,453 139,255 Diluted 139,482 138,499 139,751

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Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Nine months ended September 28, September 29, 2013 2012 Net sales $507,199 $548,085 Cost of sales 292,369 307,163 Gross profit 214,830 240,922 Selling, general and administrative expenses 99,564 110,132 Engineering, research and development expenses 39,547 38,029 Amortization of intangible assets 6,989 7,259 Contingent consideration fair value adjustment (1,813) -- Operating income 70,543 85,502 Other (income) expense, net (1,295) 636 Income before income taxes 71,838 84,866 Income tax expense 17,853 27,300 Equity in net income of affiliates -- (3) Net income $53,985 $57,569 Basic net income per common share: $0.39 $0.42 Diluted net income per common share: $0.39 $0.42 Weighted average shares outstanding: Basic 139,061 137,119 Diluted 139,688 138,247

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Entegris, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) (Unaudited) September 28, December 31, 2013 2012 ASSETS Cash and cash equivalents $358,782 $330,419 Short-term investments -- 19,995 Accounts receivable, net 106,757 94,016 Inventories 97,426 99,144 Deferred tax assets, deferred tax charges and refundable income taxes 13,063 20,201 Other current assets and assets held for sale 9,878 15,549 Total current assets 585,906 579,324 Property, plant and equipment, net 179,178 157,021 Intangible assets 45,819 47,207 Deferred tax assets - non-current 15,833 17,167 Other assets 20,923 10,825 Total assets $847,659 $811,544 LIABILITIES AND EQUITY Accounts payable $37,094 $36,341 Accrued liabilities 48,710 51,263 Income tax payable and deferred tax liabilities 6,733 5,659 Total current liabilities 92,537 93,263 Other liabilities 21,036 23,482 Shareholders' equity 734,086 694,799 Total liabilities and shareholders' equity $847,659 $811,544

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Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three months ended Nine months ended September 28, 2013 September 29, 2012 September 28, 2013 September 29, 2012 Operating activities: Net income $17,807 $18,037 $53,985 $57,569 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,205 7,349 21,812 20,862 Amortization 2,343 2,389 6,989 7,259 Stock-based compensation expense 2,090 4,096 5,859 8,030 Other 1,388 (861) 4,148 515 Changes in operating assets and liabilities: Trade accounts and notes receivable 2,763 6,045 (16,722) (4,290) Inventories 580 1,374 (2,555) (9,623) Accounts payable and accrued liabilities 4,389 784 (970) 1,528 Income taxes payable and refundable income taxes (2,285) (3,225) 5,239 (546) Other (3,842) (2,673) (3,092) (4,483) Net cash provided by operating activities 32,438 33,315 74,693 76,821 Investing activities: Acquisition of property and equipment (14,899) (8,999) (49,030) (39,116) Acquisition of business, net of cash acquired -- -- (13,358) (2,961) Proceeds from maturities of short-term investments -- -- 20,000 -- Other 141 (7,995) 6,688 (7,812) Net cash used in investing activities (14,758) (16,994) (35,700) (49,889) Financing activities: Issuance of common stock 345 495 6,667 4,689 Repurchase and retirement of common stock (5,444) -- (14,826) (427) Other 184 509 1,125 1,336 Net cash (used in) provided by financing activities (4,915) 1,004 (7,034) 5,598 Effect of exchange rate changes on cash 2,606 3,640 (3,596) 1,707 Increase in cash and cash equivalents 15,371 20,965 28,363 34,237 Cash and cash equivalents at beginning of period 343,411 286,865 330,419 273,593 Cash and cash equivalents at end of period $358,782 $307,830 $358,782 $307,830

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Entegris, Inc. and Subsidiaries Segment Information (In thousands) (Unaudited) Three months ended Nine months ended Net sales September September June 29, September September 28, 2013 29, 2012 2013 28, 2013 29, 2012 Contamination Control Solutions $105,150 $112,876 $114,634 $323,745 $351,572 Microenvironments 42,520 54,421 45,869 132,521 139,691 Specialty Materials 16,915 17,152 17,041 50,933 56,822 Total net sales $164,585 $184,449 $177,544 $507,199 $548,085 Three months ended Nine months ended Segment profit September September June 29, September September 28, 2013 29, 2012 2013 28, 2013 29, 2012 Contamination Control Solutions $25,044 $27,166 $28,581 $75,703 $93,917 Microenvironments 8,635 16,771 9,364 27,324 30,823 Specialty Materials 2,001 2,112 1,900 6,117 11,184 Total segment profit 35,680 46,049 39,845 109,144 135,924 Amortization of intangibles (2,343) (2,389) (2,359) (6,989) (7,259) Contingent consideration fair value adjustment 1,813 -- -- 1,813 -- Unallocated expenses (11,241) (16,526) (11,099) (33,425) (43,163) Total operating income $23,909 $27,134 $26,387 $70,543 $85,502

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Entegris, Inc. and Subsidiaries Reconciliation of GAAP to Adjusted Operating Income and Adjusted EBITDA (In thousands) (Unaudited) Three months ended Nine months ended September September June 29, September September 28, 2013 29, 2012 2013 28, 2013 29, 2012 Net sales $164,585 $184,449 $177,544 $507,199 $548,085 Net income $17,807 $18,037 $19,781 $53,985 $57,569 Adjustments to net income: Equity in net income of affiliates -- -- -- -- (3) Income tax expense 5,139 7,656 7,516 17,853 27,300 Other expense (income), net 963 1,441 (910) (1,295) 636 GAAP - Operating income 23,909 27,134 26,387 70,543 85,502 Amortization of intangible assets 2,343 2,389 2,359 6,989 7,259 Contingent consideration fair value adjustment (1,813) -- -- (1,813) -- Charge associated with CEO succession and transition plan -- 3,928 -- -- 3,928 Adjusted operating income 24,439 33,451 28,746 75,719 96,689 Depreciation 7,205 7,349 7,311 21,812 20,862 Adjusted EBITDA $31,644 $40,800 $36,057 $97,531 $117,551 Adjusted operating margin 14.8% 18.1% 16.2% 14.9% 17.6% Adjusted EBITDA - as a % of net sales 19.2% 22.1% 20.3% 19.2% 21.4%

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Entegris, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Earnings per Share (In thousands) (Unaudited) Three months ended Nine months ended September September June 29, 2013 September September 28, 2013 29, 2012 28, 2013 29, 2012 GAAP net income $17,807 $18,037 $19,781 $53,985 $57,569 Adjustments to net income: Amortization of intangible assets 2,343 2,389 2,359 6,989 7,259 Charge associated with CEO succession and transition plan -- 3,928 -- -- 3,928 Gain associated with equity investments -- -- -- -- (1,522) Contingent consideration fair value adjustment (1,813) -- -- (1,813) -- Reclassification of cumulative translation adjustment associated with liquidated subsidiary 739 -- -- 739 -- Tax effect of adjustments to net income (190) (2,301) (851) (1,865) (3,802) Non-GAAP net income $18,886 $22,053 $21,289 $58,035 $63,432 Diluted earnings per common share $0.13 $0.13 $0.14 $0.39 $0.42 Effect of adjustments to net income $0.01 $0.03 $0.01 $0.03 $0.04 Diluted non-GAAP earnings per common share $0.14 $0.16 $0.15 $0.42 $0.46

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