Entegris’ Strong Fourth-Quarter Caps Record Year

  • Fourth-quarter revenue of $401.6 million grew 15 percent from prior year
  • Fourth-quarter GAAP diluted EPS of $0.57; Non-GAAP diluted EPS $0.47 increased 12% from a year ago
  • Fiscal 2018 revenue of $1.6 billion increased 15 percent
  • Fiscal 2018 GAAP diluted EPS of $1.69; Non-GAAP diluted EPS of $1.89 increased 31% from a year ago

BILLERICA, Mass.--()--Entegris, Inc. (NasdaqGS: ENTG), a leader in specialty chemicals and advanced materials solutions for the microelectronics industry, today reported its financial results for the Company’s fourth quarter and the fiscal year ended December 31, 2018.

The Company reported sales of $1.55 billion for fiscal 2018, an increase of 15 percent from the prior year. Net income for the year was $240.8 million, or $1.69 per diluted share, which included amortization of intangible assets of $62.2 million, a $34.5 million tax benefit from legal entity restructuring, a $6.9 million charge for fair value write-up of acquired inventory sold, $8.4 million of integration costs and transaction expenses associated with the purchase of SAES Pure Gas, and a $2.3 million loss on debt extinguishment. Non-GAAP net income for fiscal 2018 was $270 million, or $1.89 per diluted share, which both increased 31 percent, compared to fiscal 2017.

Fourth-quarter sales were $401.6 million, an increase of 15 percent from the same quarter last year. Fourth-quarter net income was $80.8 million, or $0.57 per diluted share, which included amortization of intangible assets of $17.1 million, a $34.5 million tax benefit from legal entity restructuring, a $3.4 million charge for fair value write-up of acquired inventory sold, and a $2.3 million loss on debt extinguishment. Non-GAAP net income was $66.3 million, or $0.47 per diluted share, which increased 11 percent and 12 percent respectively, compared to the fourth quarter of 2017.

Bertrand Loy, president and chief executive officer, said: “Our fourth quarter results capped off another record year for Entegris. In 2018, we grew our sales 15 percent and increased adjusted EBITDA 22 percent, demonstrating the leverage of our model. Our results showcased the strength of our teams’ execution and the resilience of our unit-driven business model.”

Mr. Loy added: “We continue to see tremendous value in our ability to help our customers achieve higher yields, along with new levels of device reliability and performance. Entegris is uniquely positioned to achieve this, with our combination of global scale, world class technical capabilities and operational excellence. In 2019, we expect to leverage these capabilities and continue to outpace our markets.”

Quarterly Financial Results Summary
(in thousands, except per share data)

                   
GAAP Results    

Q4-2018

   

Q4-2017

   

Q3-2018

Net sales     $401,642     $350,562     $398,597
Operating income     $71,308     $71,152     $67,975
Operating margin     17.8 %     20.3 %     17.1 %
Net income (loss)     $80,784     $(28,341)     $48,060
Diluted earnings (loss) per share (EPS)     $0.57     $(0.20)     $0.34
Non-GAAP Results
Non-GAAP adjusted operating income     $93,485     $82,172     $93,893
Adjusted operating margin     23.3 %     23.4 %     23.6 %
Non-GAAP net income     $66,300     $59,694     $65,621
Non-GAAP EPS     $0.47     $0.42     $0.46
           

First-Quarter Outlook

For the first quarter ending March 30, 2019, the Company expects sales will be approximately at the same level as the fourth quarter of 2018. The Company expects GAAP EPS will be approximately on the same level as the fourth quarter of 2018, excluding the one-time tax benefit (which impacted GAAP net income from the fourth quarter 2018). Non-GAAP EPS is expected to be approximately at the same level as the fourth quarter of 2018.

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, as well as safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.

Microcontamination Control (MC): MC solutions 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 and substrates for a broad set of applications in the semiconductor industry 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 5, 2019, at 9:00 a.m. Eastern Time. Participants should dial 888-254-3590 or +1 323-994-2093 referencing confirmation code 6919701. 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 6919701. The replay will be available February 5, 2019 12:00 Eastern Time through March 21, 2019 12:00 Eastern Time. 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.

Management’s slide presentation concerning the results for the fourth quarter and fiscal year, which may be referred to during the call, will be posted on the investor relations section of www.entegris.com Tuesday morning.

ABOUT ENTEGRIS
Entegris is a leader in specialty chemicals and advanced materials solutions for the microelectronics industry and other high-tech 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 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 together with related measures thereof, and non-GAAP EPS, 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 uses these non-GAAP financial measures for financial and operational decision-making, as a means to evaluate period-to-period comparisons, as well as comparisons to our competitors’ operating results. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring business operating results, such as amortization, depreciation and discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing and understanding our results and performance and when planning, forecasting, and analyzing future periods. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze our business. The reconciliations of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA, GAAP Gross Profit to Adjusted Gross Profit, GAAP Segment Profit to Adjusted Operating Income, and GAAP to Non-GAAP Earnings per Share are included elsewhere in this release.

Forward-Looking Statements
This press release contains 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; future 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; the development of new products and the success of their introductions; 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 effect of the Tax Cuts and Jobs Act on our capital allocation strategy; the impact of the acquisitions we have made and commercial partnerships we have established; our ability to execute on our strategies; the amount and timing of synergies from the proposed transaction with Versum Materials, the closing date for the proposed transaction with Versum Materials; 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 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.

Additional Information about the Merger and Where to Find It
This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. This communication relates to a proposed business combination between Entegris and Versum Materials. In connection with the proposed transaction, Entegris intends to file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 that will include a joint proxy statement of Entegris and Versum Materials that also constitutes a prospectus of Entegris. Each of Entegris and Versum Materials also plan to file other relevant documents with the SEC regarding the proposed transaction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. Any definitive joint proxy statement/prospectus (if and when available) will be mailed to stockholders of Entegris and Versum Materials. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of these documents (if and when available) and other documents containing important information about Entegris and Versum Materials, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Entegris will be available free of charge on Entegris’ website at http://www.entegris.com or by contacting Entegris’ Investor Relations Department by email at irelations@entegris.com or by phone at 978-436-6500. Copies of the documents filed with the SEC by Versum Materials will be available free of charge on Versum Materials’ website at investors.versummaterials.com or by phone at 484-275-5907.

Participants in the Solicitation
Entegris, Versum Materials and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Entegris is set forth in Entegris’ proxy statement for its 2018 annual meeting of shareholders, which was filed with the SEC on March 28, 2018, and Entegris’ Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 15, 2018. Information about the directors and executive officers of Versum Materials is set forth in its proxy statement for its 2019 annual meeting of shareholders, which was filed with the SEC on December 20, 2018, and Versum Materials’ Annual Report on Form 10-K for the fiscal year ended September 30, 2018, which was filed with the SEC on November 21, 2018. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction when such materials become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Entegris or Versum Materials using the sources indicated above.

 
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
    Three months ended
December 31, 2018     December 31, 2017     September 29, 2018
Net sales $ 401,642     $ 350,562     $ 398,597
Cost of sales 221,902       186,883       216,881
Gross profit 179,740 163,679 181,716
Selling, general and administrative expenses 60,707 55,018 62,358
Engineering, research and development expenses 30,675 26,489 29,964
Amortization of intangible assets 17,050       11,020       21,419
Operating income 71,308 71,152 67,975
Interest expense, net 8,426 7,533 7,678
Other expense, net 3,176       21,696       810
Income before income tax expense 59,706 41,923 59,487
Income tax (benefit) expense (21,078 )     70,264       11,427
Net income (loss) $ 80,784       $ (28,341 )     $ 48,060
 
 
Basic net income (loss) per common share: $ 0.58 $ (0.20 ) $ 0.34
Diluted net income (loss) per common share: $ 0.57 $ (0.20 ) $ 0.34
 
Weighted average shares outstanding:
Basic 139,268 141,329 141,556
Diluted 140,515 141,329 143,033
 
 
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 

 

    Twelve months ended
December 31, 2018     December 31, 2017
Net sales $ 1,550,497     $ 1,342,532
Cost of sales 830,666       733,547
Gross profit 719,831 608,985
Selling, general and administrative expenses 246,534 216,194
Engineering, research and development expenses 118,456 106,951
Amortization of intangible assets 62,152       44,023
Operating income 292,689 241,817
Interest expense, net 30,255 31,628
Other expense, net 8,002       25,458
Income before income tax expense 254,432 184,731
Income tax expense 13,677       99,665
Net income $ 240,755       $ 85,066
 
 
Basic net income per common share: $ 1.71 $ 0.60
Diluted net income per common share: $ 1.69 $ 0.59
 
Weighted average shares outstanding:
Basic 141,026 141,553
Diluted 142,610 143,518
 
 
Entegris, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
   
December 31, 2018     December 31, 2017
ASSETS    
Current assets:
Cash and cash equivalents 482,062 $ 625,408
Trade accounts and notes receivable, net 222,055 183,434
Inventories, net 268,140 198,089
Deferred tax charges and refundable income taxes 17,393 18,012
Other current assets 39,688       32,665
Total current assets 1,029,338 1,057,608
Property, plant and equipment, net 419,529 359,523
Other assets:
Goodwill 550,202 359,688
Intangible assets, net 295,687 182,430
Deferred tax assets and other noncurrent tax assets 10,162 9,103
Other 12,723       7,820
Total assets $ 2,317,641       $ 1,976,172
LIABILITIES AND EQUITY
Current liabilities
Long-term debt, current maturities 4,000 100,000
Accounts payable 93,055 68,762
Accrued liabilities 141,020 99,374
Income tax payable 31,593       22,835
Total current liabilities 269,668 290,971
Long-term debt, excluding current maturities 934,863 574,380
Other liabilities 101,085 117,803
Shareholders’ equity 1,012,025       993,018
Total liabilities and equity $ 2,317,641       $ 1,976,172
 
 
Entegris, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
    Three months ended     Twelve months ended
           

December 31,
2018

   

December 31,
2017

   

December 31,
2018

   

December 31,
2017

Operating activities:
Net income (loss) $ 80,784 $ (28,341 ) $ 240,755 $ 85,066
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation 16,880 15,035 65,116 58,208
Amortization 17,050 11,020 62,152 44,023
Stock-based compensation expense 4,385 3,849 17,112 15,306
Provision for deferred income taxes (10,810 ) 1,374 (11,876 ) 1,628
Loss on extinguishment of debt 2,319 20,687 2,429 20,687
Other 5,804 4,267 16,278 28,295
Changes in operating assets and liabilities, net of effects of acquisitions:
Trade accounts and notes receivable (8,760 ) (56 ) (17,473 ) (15,401 )
Inventories (9,312 ) (5,330 ) (38,100 ) (20,214 )
Accounts payable and accrued liabilities 29,390 8,377 19,950 15,975
Income taxes payable, refundable income taxes and noncurrent taxes payable (21,188 ) 62,852 (30,381 ) 64,516
Other     (15,215 )     (7,993 )     (13,386 )     (4,716 )
Net cash provided by operating activities     91,327       85,741       312,576       293,373  
Investing activities:
Acquisition of property and equipment (34,816 ) (25,658 ) (110,153 ) (93,597 )
Acquisition of business, net of cash (426 ) (380,694 ) (20,000 )
Other     (111 )     68       4,903       1,142  
Net cash used in investing activities     (35,353 )     (25,590 )     (485,944 )     (112,455 )
Financing activities:
Proceeds from long-term borrowings 400,000 550,000 402,000 550,000
Payments on long-term debt (108,850 ) (385,000 ) (135,850 ) (460,000 )
Dividend payments (9,890 ) (9,896 ) (39,591 ) (9,896 )
Payments for debt extinguishment costs (16,200 ) (16,200 )
Issuance of common stock 2,548 1,984 5,577 5,566
Taxes paid related to net share settlement of equity awards (134 ) (480 ) (14,686 ) (5,887 )
Repurchase and retirement of common stock (143,781 ) (10,000 ) (173,781 ) (28,000 )
Other     (8,512 )     (7,062 )     (9,258 )     (8,332 )
Net cash provided by financing activities     131,381       123,346       34,411       27,251  
Effect of exchange rate changes on cash and cash equivalents     (186 )     6,714       (4,389 )     10,850  
Increase (decrease) in cash and cash equivalents 187,169 190,211 (143,346 ) 219,019
Cash and cash equivalents at beginning of period     294,893       435,197       625,408       406,389  
Cash and cash equivalents at end of period     $ 482,062       $ 625,408       $ 482,062       $ 625,408  
 
 
Entegris, Inc. and Subsidiaries
Segment Information
(In thousands)
(Unaudited)
 
    Three months ended     Twelve months ended
Net sales    

December 31,
2018

   

December 31,
2017

   

September 29,
2018

   

December 31,
2018

   

December 31,
2017

Specialty Chemicals and Engineered Materials $ 133,928     $ 125,339     $ 131,234     $ 530,241     $ 485,470
Microcontamination Control 158,181 115,650 151,345 552,844 436,225
Advanced Materials Handling 109,533       109,573       116,018       467,412       420,837
Total net sales $ 401,642       $ 350,562       $ 398,597       $ 1,550,497       $ 1,342,532
       
Three months ended     Twelve months ended
Segment profit1    

December 31,
2018

   

December 31,
2017

   

September 29,
2018

   

December 31,
2018

   

December 31,
2017

Specialty Chemicals and Engineered Materials $ 29,016     $ 30,075     $ 31,860 $ 129,754     $ 111,802
Microcontamination Control 48,389 39,328 44,530 173,964 141,413
Advanced Materials Handling 16,791       18,226       19,494       82,541       59,838
Total segment profit 94,196 87,629 95,884 386,259 313,053
Amortization of intangibles 17,050 11,020 21,419 62,152 44,023
Unallocated expenses 5,838       5,457       6,490       31,418       27,213
Total operating income $ 71,308       $ 71,152       $ 67,975       $ 292,689       $ 241,817
 

1 Beginning in the first quarter of 2018, the Company has changed its definition of segment profit to include an allocation of certain general and administrative costs for the Company’s human resources, finance and information technology functions previously unallocated by the Company. Prior quarter information was recast to reflect the change in the Company’s definition of segment profit.

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

December 31,
2018

   

December 31,
2017

   

September 29,
2018

   

December 31,
2018

   

December 31,
2017

Net sales     $ 401,642       $ 350,562       $ 398,597       $ 1,550,497       $ 1,342,532  
Gross profit-GAAP $ 179,740     $ 163,679     $ 181,716     $ 719,831     $ 608,985
Adjustments to gross profit:
Severance related to organizational realignment 460 460 740
Charge for fair value mark-up of acquired inventory sold 3,379 3,281 6,868
Impairment of equipment                         5,330  
Adjusted gross profit $183,579     $163,679     $184,997     $727,159     $615,055
 
Gross margin - as a % of net sales 44.8 % 46.7 % 45.6 % 46.4 % 45.4 %
Adjusted gross margin - as a % of net sales     45.7 %     46.7 %     46.4 %     46.9 %     45.8 %
 
 
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,
2018

   

December 31,
2017

   

September 29,
2018

   

December 31,
2018

   

December 31,
2017

Specialty Chemicals and Engineered Materials $ 29,016     $ 30,075     $ 31,860     $ 129,754     $ 111,802
Microcontamination Control 48,389 39,328 44,530 173,964 141,413
Advanced Materials Handling 16,791       18,226       19,494       82,541       59,838
Total segment profit 94,196 87,629 95,884 386,259 313,053
Amortization of intangible assets 17,050 11,020 21,419 62,152 44,023
Unallocated expenses 5,838       5,457       6,490       31,418       27,213
Total operating income $ 71,308       $ 71,152       $ 67,975       $ 292,689       $ 241,817
 
    Three months ended     Twelve months ended
Adjusted segment profit    

December 31,
2018

   

December 31,
2017

   

September 29,
2018

   

December 31,
2018

   

December 31,
2017

Specialty Chemicals and Engineered Materials 1 $ 29,016     $ 30,075     $ 31,860     $ 129,754     $ 111,816
Microcontamination Control 2 51,768 39,328 47,811 180,832 143,052
Advanced Materials Handling 3 17,251       18,226       19,960       83,467       67,345
Total adjusted segment profit 98,035 87,629 99,631 394,053 322,213
Amortization of intangible assets4
Unallocated expenses5 4,550       5,457       5,738       23,060       23,273
Total adjusted operating income $ 93,485       $ 82,172       $ 93,893       $ 370,993       $ 298,940
 

1 Adjusted segment profit for Specialty Chemicals and Engineered Materials for the twelve months ended December 31, 2017 excludes charges for severance related to organizational realignment of $14.

2 Adjusted segment profit for Microcontamination Control excludes charges for fair value mark-up of acquired inventory sold of $3,379 and$3,281 for the three months ended December 31, 2018 and September 29, 2018, respectively, and $6,868 for the twelve months ended December 31, 2018. Adjusted segment profit for Microcontamination Control excludes impairment of equipment and charges for severance related to organizational realignment of $1,639 for the twelve months ended December 31, 2017.

3 Adjusted segment profit for Advanced Material Handling excludes loss on sale of subsidiary $466 for the three months ended September 29, 2018 and the twelve months ended December 31, 2018. Adjusted segment profit for Advanced Material Handling excludes charges for impairment of equipment and severance related to organizational realignment of $460 for the three and twelve months ended December 31, 2018 and $7,507 for the twelve months ended December 31, 2017, respectively.

4 Adjusted amortization of intangible assets excludes amortization expense of $17,050, $11,020, and $21,419 for the three months ended December 31, 2018, December 31, 2017, and September 29, 2018, respectively, and $62,152 and $44,023 for the twelve months ended December 31, 2018 and December 31, 2017, respectively.

5 Adjusted unallocated expenses excludes integration expenses of $1,288, $752 and $3,237 for the three months ended December 31, 2018 and September 29, 2018 and the twelve months ended December 31, 2018, respectively. Adjusted unallocated expenses excludes deal costs of $5,121 for the twelve months ended December 31, 2018. Adjusted unallocated expenses excludes charges for impairment of intangibles and severance related to organizational realignment of $3,940 for the twelve months ended December 31, 2017.

 
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,
2018

   

December 31,
2017

   

September 29,
2018

   

December 31,
2018

   

December 31,
2017

Net sales $ 401,642       $ 350,562       $ 398,597       $ 1,550,497       $ 1,342,532  
Net income (loss) $ 80,784     $ (28,341 )     $ 48,060     $ 240,755     $ 85,066
Adjustments to net income (loss):
Income tax (benefit) expense (21,078 ) 70,264 11,427 13,677 99,665
Interest expense, net 8,426 7,533 7,678 30,255 31,628
Other expense, net 3,176       21,696       810       8,002       25,458  
GAAP - Operating income 71,308 71,152 67,975 292,689 241,817
Charge for fair value write-up of acquired inventory sold 3,379 3,281 6,868
Deal costs 5,121
Integration costs 1,288 752 3,237
Severance related to organizational realignment 460 460 2,700
Impairment of equipment and intangibles 1 10,400
Loss on sale of subsidiary 466 466
Amortization of intangible assets 17,050       11,020       21,419       62,152       44,023  
Adjusted operating income 93,485 82,172 93,893 370,993 298,940
Depreciation 16,880       15,035       16,537       65,116       58,208  
Adjusted EBITDA $ 110,365       $ 97,207       $ 110,430       $ 436,109       $ 357,148  
 
Adjusted operating margin 23.3 % 23.4 % 23.6 % 23.9 % 22.3 %
Adjusted EBITDA - as a % of net sales     27.5 %     27.7 %     27.7 %     28.1 %     26.6 %
 

1 Includes product line impairment charges of $5,330 classified as cost of sales for the twelve months ended December 31, 2017.

Includes intangible impairment charge of $3,866 classified as selling general and administrative expense for the twelve months ended December 31, 2017.

Includes product line impairment charge of $320 classified as selling general and administrative expense for the twelve months ended December 31, 2017.

Includes product line impairment charge of $884 classified as engineering, research and development expense for the twelve months ended December 31, 2017.

 
Entegris, Inc. and Subsidiaries
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Earnings per Share
(In thousands, except per share data)
(Unaudited)
 
    Three months ended     Twelve months ended
     

December 31,
2018

   

December 31,
2017

   

September 29,
2018

   

December 31,
2018

   

December 31,
2017

GAAP net income (loss) $ 80,784   $ (28,341 )     $ 48,060     $ 240,755     $ 85,066
Adjustments to net income (loss):
Charge for fair value write-up of inventory acquired 3,379 3,281 6,868
Deal costs 5,121
Integration costs 1,288 752 3,237
Severance related to organizational realignment 460 460 2,700
Impairment of equipment and intangibles 1 13,200
Loss on debt extinguishment 2,319 20,687 2,319 20,687
Loss on sale of subsidiary 466 466
Amortization of intangible assets 17,050 11,020 21,419 62,152 44,023
Tax effect of adjustments to net income and discrete items2 (5,603 ) (10,385 ) (5,797 ) (17,812 ) (26,046 )
Tax effect of legal entity restructuring (34,478 ) (34,478 )
Tax effect of Tax Cuts and Jobs Act 1,101       66,713       (2,560 )     683       66,713  
Non-GAAP net income $ 66,300       $ 59,694       $ 65,621       $ 269,771       $ 206,343  
 
Diluted earnings (loss) per common share $ 0.57 $ (0.20 ) $ 0.34 $ 1.69 $ 0.59
Effect of adjustments to net income $ (0.10 ) $ 0.61 $ 0.12 $ 0.20 $ 0.85
Diluted non-GAAP earnings per common share     $ 0.47       $ 0.42       $ 0.46       $ 1.89       $ 1.44  
 

1Includes product line impairment charges of $5,330 classified as cost of sales for the twelve months ended December 31, 2017.

Includes intangible impairment charge of $3,866 classified as selling general and administrative expense for the twelve months ended December 31, 2017.

Includes product line impairment charge of $320 classified as selling general and administrative expense for the twelve months ended December 31, 2017.

Includes product line impairment charge of $884 classified as engineering, research and development expense for the twelve months ended December 31, 2017.

Includes product line impairment charge of $2,800 classified as other expense for the twelve months ended December 31, 2017.

2The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.

Contacts

Bill Seymour
VP of Investor Relations
T +1 978 436 6500
irelations@entegris.com

Contacts

Bill Seymour
VP of Investor Relations
T +1 978 436 6500
irelations@entegris.com