BILLERICA, Mass.--(BUSINESS WIRE)--Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s fourth quarter ended December 31, 2020.

Fourth-quarter sales were $517.6 million, an increase of 21% from the same quarter last year. Fourth-quarter GAAP net income was $86.6 million, or $0.63 per diluted share, which included $11.9 million of amortization of intangible assets and $1.3 million of integration costs. Non-GAAP net income was $97.1 million for the fourth-quarter and non-GAAP earnings per diluted share was $0.71.

Bertrand Loy, Entegris’ president and chief executive officer, said: “Our fourth quarter results capped off a record year in sales, EBITDA and EPS for Entegris. In 2020, our performance above the market accelerated, driven by wins in new technology nodes and overall demand for our products and solutions. This performance showcased the strength of our team’s execution and our highly resilient, differentiated, unit-driven business model. I can’t say enough about how proud I am of the dedication, ingenuity and perseverance our team demonstrated in such a challenging year.”

Mr. Loy added: “We continue to be very optimistic about the long-term fundamentals of the semiconductor market. Accelerating chip demand and a higher amount of wafers produced at the leading edge, provide a great base for attractive secular industry growth. On top of this, at Entegris, we are benefiting from the growing impact to new device architectures of the intersecting themes of process materials and materials purity. We expect these key trends will continue to result in our rapidly expanding served markets and increased Entegris content per wafer.”

Quarterly Financial Results Summary

(in thousands, except percentages and per share data)

GAAP Results	December 31, 2020	December 31, 2019	September 26, 2020
Net sales	$517,594	$426,998	$480,987
Operating income	$113,228	$84,085	$106,761
Operating margin - as a % of net sales	21.9%	19.7%	22.2%
Net income	$86,624	$57,438	$79,303
Diluted earnings per common share	$0.63	$0.42	$0.58
Non-GAAP Results
Non-GAAP adjusted operating income	$126,945	$104,647	$121,612
Non-GAAP adjusted operating margin - as a % of net sales	24.5%	24.5%	25.3%
Non-GAAP net income	$97,123	$74,582	$91,460
Diluted non-GAAP earnings per common share	$0.71	$0.55	$0.67

First-Quarter Outlook

For the first quarter ending April 3, 2021, the Company expects sales of $510 million to $525 million, net income of $83 million to $90 million and diluted earnings per common share between $0.61 and $0.66. On a non-GAAP basis, the company expects diluted earnings per common share to range from $0.69 to $0.74, reflecting net income on a non-GAAP basis in the range of $94 million to $101 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 other substrates for a broad set of applications in the semiconductor industry, life sciences and other high-technology industries.

Fourth-Quarter Results Conference Call Details

Entegris will hold a conference call to discuss its results for the fourth quarter on Tuesday, February 2, 2021, at 9:00 a.m. Eastern Time. Participants should dial 800-437-2398 or +1 323-289-6576, referencing confirmation code 9608918. 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 9608918.

The call can also be accessed live and on-demand from the Entegris website. Go to https://investor.entegris.com/events-and-presentations 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 third quarter, which may be referred to during the call, will be posted on the Investor Relations section of www.entegris.com Tuesday morning before the call.

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, non-GAAP net income, non-GAAP adjusted operating margin and diluted non-GAAP earnings per common share, together with related measures thereof, 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 provides supplemental non-GAAP financial measures to better understand and manage its business and believes these measures provide investors and analysts additional and meaningful information for the assessment of the Company’s ongoing results. Management also uses these non-GAAP measures to assist in the evaluation of the performance of its business segments and to make operating decisions. Management believes that the Company’s non-GAAP measures help indicate the Company’s baseline performance before certain gains, losses or other charges that may not be indicative of the Company’s business or future outlook, and that non-GAAP measures offer a more consistent view of business performance. The Company believes the non-GAAP measures aid investors’ overall understanding of the Company’s results by providing a higher degree of transparency for such items and providing a level of disclosure that will help investors generally understand how management plans, measures and evaluates the Company’s business performance. Management believes that the inclusion of non-GAAP measures provides greater consistency in its financial reporting and facilitates investors’ understanding of the Company’s historical operating trends by providing an additional basis for comparisons to prior periods. 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, complete 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.

Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)

		Three months ended
		December 31, 2020			December 31, 2019		September 26, 2020
Net sales		$	517,594		$	426,998	$	480,987
Cost of sales			286,722			229,362		254,987
	Gross profit		230,872			197,636		226,000
Selling, general and administrative expenses			68,170			67,171		71,195
Engineering, research and development expenses			37,558			30,352		36,295
Amortization of intangible assets			11,916			16,028		11,749
	Operating income		113,228			84,085		106,761
Interest expense, net			12,133			12,743		12,651
Other (income) expense, net			(5,305	)		248		(1,752	)
	Income before income tax expense		106,400			71,094		95,862
Income tax expense			19,776			13,656		16,559
	Net income	$	86,624		$	57,438	$	79,303


Basic earnings per common share:		$	0.64		$	0.43	$	0.59
Diluted earnings per common share:		$	0.63		$	0.42	$	0.58

Weighted average shares outstanding:
	Basic		134,945			134,778		134,957
	Diluted		136,438			136,470		136,252

Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)

		Twelve months ended
		December 31, 2020			December 31, 2019
Net sales		$	1,859,313		$	1,591,066
Cost of sales			1,009,591			879,413
	Gross profit		849,722			711,653
Selling, general and administrative expenses			265,128			284,807
Engineering, research and development expenses			136,057			121,140
Amortization of intangible assets			53,092			66,428
	Operating income		395,445			239,278
Interest expense, net			47,814			42,310
Other (income), net			(6,656	)		(121,081	)
	Income before income tax expense		354,287			318,049
Income tax expense			59,318			63,189
	Net income	$	294,969		$	254,860


Basic earnings per common share:		$	2.19		$	1.89
Diluted earnings per common share:		$	2.16		$	1.87

Weighted average shares outstanding:
	Basic		134,837			135,137
	Diluted		136,266			136,568

Entegris, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) (Unaudited)

	December 31, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	580,893	$	351,911
Trade accounts and notes receivable, net		264,392		234,409
Inventories, net		323,944		287,098
Deferred tax charges and refundable income taxes		21,136		24,552
Other current assets		43,892		34,427
Total current assets		1,234,257		932,397
Property, plant and equipment, net		525,367		479,544
Other assets:
Right-of-use assets		45,924		50,160
Goodwill		748,037		695,044
Intangible assets, net		337,632		333,952
Deferred tax assets and other noncurrent tax assets		14,519		11,245
Other		11,960		13,744
Total assets	$	2,917,696	$	2,516,086
LIABILITIES AND EQUITY
Current liabilities
Long-term debt, current maturities	$	—	$	4,000
Accounts payable		81,618		84,207
Accrued liabilities		177,012		150,118
Income tax payable		43,996		26,108
Total current liabilities		302,626		264,433
Long-term debt, excluding current maturities		1,085,783		932,484
Long-term lease liability		39,730		43,827
Other liabilities		110,063		109,453
Shareholders’ equity		1,379,494		1,165,889
Total liabilities and equity	$	2,917,696	$	2,516,086

Entegris, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)

	Three months ended						Twelve months ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Operating activities:
Net income	$	86,624		$	57,438		$	294,969		$	254,860
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		21,366			20,352			83,430			74,975
Amortization		11,916			16,028			53,092			66,428
Stock-based compensation expense		6,368			4,714			22,920			19,629
Other		(21,500	)		(2,585	)		11,605			9,543
Changes in operating assets and liabilities, net of effects of acquisitions:
Trade accounts and notes receivable		37,906			27,241			(27,461	)		(3,164	)
Inventories		3,506			(15,665	)		(50,772	)		(21,354	)
Accounts payable and accrued liabilities		30,086			9,264			40,162			(22,647	)
Income taxes payable, refundable income taxes and noncurrent taxes payable		40,485			17,080			28,490			(3,494	)
Other		(12,739	)		(5,223	)		(9,761	)		7,522
*Net cash provided by operating activities*		204,018			128,644			446,674			382,298
Investing activities:
Acquisition of property and equipment		(52,192	)		(25,932	)		(131,752	)		(112,355	)
Acquisition of business, net of cash acquired		(767	)		(10,996	)		(111,912	)		(277,369	)
Other		73			1,069			338			3,884
*Net cash used in investing activities*		(52,886	)		(35,859	)		(243,326	)		(385,840	)
Financing activities:
Proceeds from short-term borrowings and long-term debt		—			—			617,000			—
Payments of short-term borrowings and long-term debt		—			(2,000	)		(468,000	)		(4,000	)
Payments for dividends		(10,799	)		(10,787	)		(43,245	)		(40,566	)
Issuance of common stock		3,839			2,940			8,738			7,291
Taxes paid related to net share settlement of equity awards		(244	)		(145	)		(24,800	)		(8,722	)
Repurchase and retirement of common stock		(14,999	)		(15,000	)		(44,563	)		(80,321	)
Deferred acquisition payments		—			—			(16,125	)		—
Other		—			—			(6,856	)		(502	)
*Net cash (used in) provided by financing activities*		(22,203	)		(24,992	)		22,149			(126,820	)
*Effect of exchange rate changes on cash and cash equivalents*		3,992			1,370			3,485			211
Increase (decrease) in cash and cash equivalents		132,921			69,163			228,982			(130,151	)
Cash and cash equivalents at beginning of period		447,972			282,748			351,911			482,062
Cash and cash equivalents at end of period	$	580,893		$	351,911		$	580,893		$	351,911

Entegris, Inc. and Subsidiaries Segment Information (In thousands) (Unaudited)

	Three months ended									Twelve months ended
Net sales	December 31, 2020			December 31, 2019			September 26, 2020			December 31, 2020			December 31, 2019
Specialty Chemicals and Engineered Materials	$	168,625		$	146,747		$	150,480		$	609,532		$	526,519
Microcontamination Control		205,626			169,794			193,541			742,186			633,664
Advanced Materials Handling		151,741			117,455			144,370			538,682			458,290
Inter-segment elimination		(8,398	)		(6,998	)		(7,404	)		(31,087	)		(27,407	)
Total net sales	$	517,594		$	426,998		$	480,987		$	1,859,313		$	1,591,066

	Three months ended						Twelve months ended
Segment profit	December 31, 2020		December 31, 2019		September 26, 2020		December 31, 2020		December 31, 2019
Specialty Chemicals and Engineered Materials	$	29,761	$	32,822	$	32,600	$	127,969	$	98,327
Microcontamination Control		71,691		57,157		64,915		248,910		194,398
Advanced Materials Handling		34,321		20,686		33,266		111,028		75,173
Total segment profit		135,773		110,665		130,781		487,907		367,898
Amortization of intangibles		11,916		16,028		11,749		53,092		66,428
Unallocated expenses		10,629		10,552		12,271		39,370		62,192
Total operating income	$	113,228	$	84,085	$	106,761	$	395,445	$	239,278

Entegris, Inc. and Subsidiaries Reconciliation of GAAP Gross Profit to Adjusted Gross Profit (In thousands) (Unaudited)

	Three months ended										Twelve months ended
	December 31, 2020			December 31, 2019				September 26, 2020			December 31, 2020				December 31, 2019
Net sales	$		517,594	$		426,998		$		480,987	$		1,859,313		$		1,591,066
Gross profit-GAAP	$		230,872	$		197,636		$		226,000	$		849,722		$		711,653
Adjustments to gross profit:
Integration costs			—			—				—			(1,557	)			—
Severance and restructuring costs			—			(12	)			—			465				1,336
Charge for fair value mark-up of acquired inventory sold			—			211				229			590				7,544
Adjusted gross profit	$		230,872	$		197,835		$		226,229	$		849,220		$		720,533

Gross margin - as a % of net sales	44.6	%		46.3	%			47.0	%		45.7	%			44.7	%
Adjusted gross margin - as a % of net sales	44.6	%		46.3	%			47.0	%		45.7	%			45.3	%

Entegris, Inc. and Subsidiaries Reconciliation of GAAP Segment Profit to Adjusted Operating Income (In thousands) (Unaudited)

	Three months ended						Twelve months ended
Segment profit-GAAP	December 31, 2020		December 31, 2019		September 26, 2020		December 31, 2020		December 31, 2019
Specialty Chemicals and Engineered Materials (SCEM)	$	29,761	$	32,822	$	32,600	$	127,969	$	98,327
Microcontamination Control (MC)		71,691		57,157		64,915		248,910		194,398
Advanced Materials Handling (AMH)		34,321		20,686		33,266		111,028		75,173
Total segment profit		135,773		110,665		130,781		487,907		367,898
Amortization of intangible assets		11,916		16,028		11,749		53,092		66,428
Unallocated expenses		10,629		10,552		12,271		39,370		62,192
Total operating income	$	113,228	$	84,085	$	106,761	$	395,445	$	239,278

	Three months ended									Twelve months ended
Adjusted segment profit	December 31, 2020			December 31, 2019			September 26, 2020			December 31, 2020			December 31, 2019
SCEM segment profit	$	29,761		$	32,822		$	32,600		$	127,969		$	98,327
Integration costs		—			—			—			(1,557	)		—
Severance and restructuring costs		155			184			277			1,061			2,846
Charge for fair value write-up of acquired inventory sold		—			(476	)		—			235			4,822
SCEM adjusted segment profit	$	29,916		$	32,530		$	32,877		$	127,708		$	105,995

MC segment profit	$	71,691		$	57,157		$	64,915		$	248,910		$	194,398
Severance and restructuring costs		167			195			301			1,152			3,896
Charge for fair value write-up of acquired inventory sold		—			687			—			126			2,722
MC adjusted segment profit	$	71,858		$	58,039		$	65,216		$	250,188		$	201,016

AMH segment profit	$	34,321		$	20,686		$	33,266		$	111,028		$	75,173
Severance and restructuring costs		121			(379	)		213			1,283			3,334
Charge for fair value write-up of acquired inventory sold	—			—			229			229			—
AMH adjusted segment profit	$	34,442		$	20,307		$	33,708		$	112,540		$	78,507

Unallocated general and administrative expenses	$	10,629		$	10,552		$	12,271		$	39,370		$	62,192
Unallocated deal and integration costs		(1,300	)		(4,323	)		(1,902	)		(7,096	)		(36,096	)
Unallocated severance and restructuring costs		(58	)		—			(180	)		(868	)		(2,418	)
Adjusted unallocated general and administrative expenses	$	9,271		$	6,229		$	10,189		$	31,406		$	23,678

Total adjusted segment profit	$	136,216		$	110,876		$	131,801		$	490,436		$	385,518
Adjusted amortization of intangible assets		—			—			—			—			—
Adjusted unallocated general and administrative expenses		9,271			6,229			10,189			31,406			23,678
Total adjusted operating income	$	126,945		$	104,647		$	121,612		$	459,030		$	361,840

Entegris, Inc. and Subsidiaries Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA (In thousands) (Unaudited)

	Three months ended									Twelve months ended
	December 31, 2020			December 31, 2019			September 26, 2020			December 31, 2020			December 31, 2019
Net sales	$	517,594		$	426,998		$	480,987		$	1,859,313		$	1,591,066
Net income	$	86,624		$	57,438		$	79,303		$	294,969		$	254,860
Net income - as a % of net sales		16.7	%		13.5	%		16.5	%		15.9	%		16.0	%
Adjustments to net income:
Income tax expense		19,776			13,656			16,559			59,318			63,189
Interest expense, net		12,133			12,743			12,651			47,814			42,310
Other (income) expense, net		(5,305	)		248			(1,752	)		(6,656	)		(121,081	)
GAAP - Operating income		113,228			84,085			106,761			395,445			239,278
Operating margin - as a % of net sales		21.9	%		19.7	%		22.2	%		21.3	%		15.0	%
Charge for fair value write-up of acquired inventory sold		—			211			229			590			7,544
Deal and transaction costs		—			973			642			2,576			26,164
Integration costs		1,300			3,350			1,260			2,963			9,932
Severance and restructuring costs		501			—			971			4,364			12,494
Amortization of intangible assets		11,916			16,028			11,749			53,092			66,428
Adjusted operating income		126,945			104,647			121,612			459,030			361,840
Adjusted operating margin - as a % of net sales		24.5	%		24.5	%		25.3	%		24.7	%		22.7	%
Depreciation		21,366			20,352			20,777			83,430			74,975
Adjusted EBITDA	$	148,311		$	124,999		$	142,389		$	542,460		$	436,815
Adjusted EBITDA - as a % of net sales		28.7	%		29.3	%		29.6	%		29.2	%		27.5	%

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									Twelve months ended
	December 31, 2020			December 31, 2019			September 26, 2020			December 31, 2020			December 31, 2019
GAAP net income	$	86,624		$	57,438		$	79,303		$	294,969		$	254,860
Adjustments to net income:
Charge for fair value write-up of inventory acquired		—			211			229			590			7,544
Deal and transaction costs		—			973			642			2,576			26,575
Integration costs		1,300			3,350			1,260			2,963			9,932
Severance and restructuring costs		501			—			971			4,364			12,494
Loss on debt extinguishment		—			1,980			908			2,378			1,980
Versum termination fee, net		—			—			—			—			(122,000	)
Amortization of intangible assets		11,916			16,028			11,749			53,092			66,428
Tax effect of legal entity restructuring		—			—			—			—			9,398
Tax effect of adjustments to net income and discrete items¹		(3,218	)		(5,398	)		(3,602	)		(15,197	)		(3,124	)
Non-GAAP net income	$	97,123		$	74,582		$	91,460		$	345,735		$	264,087

Diluted earnings per common share	$	0.63		$	0.42		$	0.58		$	2.16		$	1.87
Effect of adjustments to net income	$	0.08		$	0.13		$	0.09		$	0.37		$	0.07
Diluted non-GAAP earnings per common share	$	0.71		$	0.55		$	0.67		$	2.54		$	1.93

¹The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.

Entegris, Inc. and Subsidiaries Reconciliation of GAAP Outlook to Non-GAAP Outlook (In millions, except per share data) (Unaudited)

	First-Quarter Outlook
Reconciliation GAAP net income to non-GAAP net income	April 3, 2021
GAAP net income	$83 - $90
Adjustments to net income:
Restructuring and integration costs	2
Amortization of intangible assets	12
Income tax effect	(3	)
Non-GAAP net income	$94 - $101

	First-Quarter Outlook
Reconciliation GAAP diluted earnings per share to non-GAAP diluted earnings per share	April 3, 2021
Diluted earnings per common share	$0.61 - $0.66
Adjustments to diluted earnings per common share:
Restructuring and integration costs	0.01
Amortization of intangible assets	0.08
Income tax effect	(0.01	)
Diluted non-GAAP earnings per common share	$0.69 - $0.74

Entegris Reports Results for Fourth Quarter Of 2020