Entegris, Inc. (NasdaqGS:ENTG), a leader in specialty chemicals and advanced materials solutions for the microelectronics industry, today announced selected preliminary financial results for the Company’s fourth quarter and the fiscal year ended December 31, 2018. Final results for the fourth quarter and full year 2018 are expected to be reported on Tuesday, February 5, 2019. The Company expects to provide guidance for the first quarter of 2019 when it reports its final results for the fourth quarter 2018 on February 5, 2019.
The Company expects to report sales of $1.55 billion for fiscal 2018, an increase of 15 percent from 2017. GAAP earnings per diluted share is expected to range from $1.68 to $1.70 for fiscal 2018. Non-GAAP earnings per diluted share is expected to range from $1.88 to $1.90. Non-GAAP EBITDA for fiscal 2018 is expected to be $436 million, an increase of 22 percent from 2017.
The Company expects to report sales of $402 million for fourth-quarter of 2018, an increase of 15 percent from the fourth quarter of 2017. GAAP earnings per diluted share is expected to range from $0.56 to $0.58 in the fourth quarter of 2018. Non-GAAP earnings per diluted share is expected to range from $0.46 to $0.48. Non-GAAP EBITDA for the fourth quarter of 2018 is expected to be $110 million, an increase of 13 percent from 2017.
Agreement to Combine with Versum Materials
In a separate
joint press release issued today, Entegris and Versum Materials
announced they have agreed to combine in a $9 billion merger of equals
to create the premier specialty materials company. Entegris and Versum
Materials will hold a conference call and audio webcast today, Monday,
January 28, 2019 at 8:00 a.m. ET (6:00 a.m. MT) to discuss the merger.
The conference call can be accessed by dialing (866) 610-1072 within the
U.S. and (973) 935-2840 for all other locations. The live webcast will
be available to interested parties via Entegris’ IR website at http://investor.entegris.com/investor-relations.
A presentation will accompany the conference call and can be accessed on
the Entegris website. A replay of the webcast will be available
following the call. To access the replay, please dial (800) 585-8367
within the U.S. or (404) 537-3406 for all other locations. The
Conference ID for the conference call and replay is 4264678.
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, 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; 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 | ||||||||||||||||
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
31-Dec-18 | 31-Dec-17 | 29-Sep-18 | 31-Dec-18 | 31-Dec-17 | ||||||||||||
Net sales | $401,642 | $350,562 | $398,597 | $1,550,497 | $1,342,532 | |||||||||||
Net income (loss) | $79,125 to $81,925 | ($28,341) | $48,060 | $239,096 to 241,896 | $85,066 | |||||||||||
Adjustments to net income (loss): | ||||||||||||||||
Equity in net loss of affiliates | 0 | 0 | 0 | 0 | 0 | |||||||||||
Income tax (benefit) expense | (19,419) to (22,219) | 70,264 | 11,427 | 12,536 to 15,336 | 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 | 0 | 3,281 | 6,868 | 0 | |||||||||||
Deal costs | 0 | 0 | 0 | 5,121 | 0 | |||||||||||
Integration costs | 1,288 | 0 | 752 | 3,237 | 0 | |||||||||||
Severance related to organizational realignment | 460 | 0 | 0 | 460 | 2,700 | |||||||||||
Impairment of equipment and intangibles 1 | 0 | 0 | 0 | 0 | 10,400 | |||||||||||
Loss on sale of subsidiary | 0 | 0 | 466 | 466 | 0 | |||||||||||
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 | 16,468 | 15,035 | 16,537 | 65,116 | 58,208 | |||||||||||
Adjusted EBITDA | $109,953 | $97,207 | $110,430 | $436,109 | $357,148 | |||||||||||
Adjusted operating margin | 23.30% | 23.40% | 23.60% | 23.90% | 22.30% | |||||||||||
Adjusted EBITDA - as a % of net sales | 27.40% | 27.70% | 27.70% | 28.10% | 26.60% |
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 (Loss) Income to Non-GAAP Earnings Per Share | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
31-Dec-18 | 31-Dec-17 | 29-Sep-18 | 31-Dec-18 | 31-Dec-17 | ||||||||||||
GAAP net income (loss) | $79,125 to $81,925 | ($28,341) | $48,060 | $239,096 to $241,896 | $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 items 2 | (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 | $64,641 to $67,441 | $59,694 | $65,621 | $268,112 to $270,912 | $206,343 | |||||||||||
Diluted (loss) earnings per common share | $0.56 to $0.58 | ($0.20) | $0.34 | $1.68 to $1.70 | $0.59 | |||||||||||
Effect of adjustments to net income | ($0.10) | $0.62 | $0.12 | $0.20 | $0.85 | |||||||||||
Diluted non-GAAP earnings per common share | $0.46 to $0.48 | $0.42 | $0.46 | $1.88 to $1.90 | $1.44 |
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. |
Includes product line impairment charge of $2,800 classified as other expense for the twelve months ended December 31, 2017. |
2 The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years. |
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