entg-20210403

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________________________

FORM 10-Q

______________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 3, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-32598

_______________________________________

Entegris, Inc.

(Exact name of registrant as specified in its charter)

_________________________________________

Delaware

41-1941551

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

129 Concord Road,

Billerica,

Massachusetts

01821

(Address of principal executive offices)

(Zip Code)

(978) 436-6500

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

_______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value per share

ENTG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

As of April 23, 2021, there were 135,500,992 shares of the registrant’s common stock outstanding.

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ENTEGRIS, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

FOR THE QUARTER ENDED APRIL 3, 2021


Description			Page
PART I Financial Information

Item 1. Financial Statements			4
Condensed Consolidated Balance Sheets as of April 3, 2021 and December 31, 2020			4
Condensed Consolidated Statements of Operations for the Three Months Ended April 3, 2021 and March 28, 2020			5
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended April 3, 2021 and March 28, 2020			6
Condensed Consolidated Statements of Equity for the Three Months Ended April 3, 2021 and March 28, 2020			7
Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 3, 2021 and March 28, 2020			8
Notes to Condensed Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures about Market Risk			31
Item 4. Controls and Procedures			31

PART II Other Information

Item 1. Legal Proceedings			32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 6. Exhibits			33
Signatures			34

Cautionary Statements

This Quarterly Report on Form 10-Q 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 may include statements about the impact of the COVID-19 pandemic on the Company’s operations and markets; future period guidance or projections; the Company’s performance relative to its markets, including the drivers of such performance; market and technology trends, including the duration and drivers of any growth trends and the impact of the COVID-19 pandemic on such trends; the development of new products and the success of their introductions; the focus of the Company’s engineering, research and development projects; the Company’s ability to execute on its business strategies; 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; future capital and other expenditures, including estimates thereof; the Company’s expected tax rate; the impact, financial or otherwise, of any organizational changes; the impact of accounting pronouncements; quantitative and qualitative disclosures about market risk; and other matters. These forward-looking statements are based on current management expectations and assumptions only as of the date of this Quarterly Report, are not guarantees of future performance and involve substantial risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from the results expressed in, or implied by, these 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, including the imposition of tariffs, export controls and other trade

Table of Contents

laws and restrictions and changes to foreign and national security policy, especially as they relate to China; 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, 2020, filed on February 5, 2021, under the heading “Risk Factors” in Item 1A of this Quarterly Report and in the Company’s other periodic filings. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, the Company undertakes no obligation to update publicly any forward-looking statements or information contained herein, which speak as of their respective dates.

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

ENTEGRIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In thousands, except share and per share data)	April 3, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	548,520	$	580,893
Trade accounts and notes receivable, net of allowance for doubtful accounts of $2,718 and $2,384	282,649		264,392
Inventories, net	358,819		323,944
Deferred tax charges and refundable income taxes	20,227		21,136
Other current assets	34,391		43,892
Total current assets	1,244,606		1,234,257
Property, plant and equipment, net of accumulated depreciation of $592,146 and $574,257	542,605		525,367
Other assets:
Right-of-use assets	48,057		45,924
Goodwill	747,518		748,037
Intangible assets, net of accumulated amortization of $457,862 and $445,795	325,454		337,632
Deferred tax assets and other noncurrent tax assets	14,684		14,519
Other	10,615		11,960
Total assets	$	2,933,539	$	2,917,696
LIABILITIES AND EQUITY
Current liabilities:

Accounts payable	$	93,045	$	81,618
Accrued payroll and related benefits	49,554		94,364

Other accrued liabilities	81,981		82,648
Income taxes payable	41,691		43,996
Total current liabilities	266,271		302,626
Long-term debt, excluding current maturities, net of unamortized discount and debt issuance costs of $8,814 and $9,217	1,086,186		1,085,783
Pension benefit obligations and other liabilities	36,663		36,457
Deferred tax liabilities and other noncurrent tax liabilities	73,133		73,606
Long-term lease liability	42,953		39,730
Commitments and contingent liabilities	—		—
Equity:
Preferred stock, par value $.01; 5,000,000 shares authorized; none issued and outstanding as of April 3, 2021 and December 31, 2020	—		—
Common stock, par value $.01; 400,000,000 shares authorized; issued and outstanding shares as of April 3, 2021: 135,395,571 and 135,193,171, respectively; issued and outstanding shares as of December 31, 2020: 135,148,774 and 134,946,374, respectively	1,354		1,351
Treasury stock, at cost: 202,400 shares held as of April 3, 2021 and December 31, 2020	(7,112)		(7,112)
Additional paid-in capital	837,622		844,850
Retained earnings	637,574		577,833
Accumulated other comprehensive loss	(41,105)		(37,428)
Total equity	1,428,333		1,379,494
Total liabilities and equity	$	2,933,539	$	2,917,696

See the accompanying notes to condensed consolidated financial statements.

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ENTEGRIS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended
(In thousands, except per share data)	April 3, 2021		March 28, 2020
Net sales	$	512,844	$	412,327
Cost of sales	277,858		226,849
Gross profit	234,986		185,478
Selling, general and administrative expenses	71,389		58,891
Engineering, research and development expenses	37,748		29,632
Amortization of intangible assets	11,871		16,211
Operating income	113,978		80,744
Interest expense	11,652		10,559
Interest income	(71)		(321)
Other expense, net	4,330		878
Income before income tax expense	98,067		69,628
Income tax expense

SEC Form 10-Q filed by Entegris, Inc.