Entegris : ENTG Q124 Slides

Earnings Summary

First Quarter 2024

May 1, 2024

Safe Harbor

This news 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 may include statements about fluctuations in demand for semiconductors; global economic uncertainty and the risks inherent in operating a global business; supply chain matters; inflationary pressures; 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; 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 obtain, protect and enforce intellectual property rights; information technology risks; the Company's ability to execute on our business strategies, including with respect to manufacturing delays and the Company's expansion of its manufacturing presence in Taiwan and in Colorado Springs; the Company's capital allocation strategy, which may be modified at any time for any reason, including with respect to share repurchases, dividends, debt repayments and potential acquisitions; the impact of the acquisitions and divestitures the Company has made and commercial partnerships the Company has established, including the acquisition of CMC Materials, Inc. (now known as CMC Materials LLC) ("CMC Materials"); the amount of goodwill we carry on our balance sheets; key employee retention; future capital and other expenditures, including estimates thereof; the Company's expected tax rate; the impact, financial or otherwise, of any organizational changes or changes in the legal and regulatory environment in which we operate; the impact of accounting pronouncements; quantitative and qualitative disclosures about market risk; climate change and our environmental, social and governance commitments; and other matters. These forward-looking statements are based on current management expectations and assumptions only as of the date of this news release, 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, 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 level of, and obligations associated with, the Company's indebtedness, including the debts incurred in connection with the acquisition of CMC Materials; risks related to the acquisition and integration of CMC Materials, including unanticipated difficulties or expenditures relating thereto, the ability to achieve the anticipated synergies and value-creation contemplated by the acquisition of CMC Materials and the diversion of management time on transaction-related matters; raw material shortages, supply and labor constraints, price increases, inflationary pressures and rising interest rates; operational, political and legal risks of the Company's international operations; the Company's dependence on sole source and limited source suppliers; 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; substantial competition; the Company's concentrated customer base; the Company's ability to identify, complete and integrate acquisitions, joint ventures, divestitures or other similar transactions; the Company's ability to effectively implement any organizational changes; the Company's ability to protect and enforce intellectual property rights; the impact of regional and global instabilities, hostilities and geopolitical uncertainty, including, but not limited to, the ongoing conflicts between Ukraine and Russia, between Israel and Hamas and other tensions in the Middle East, as well as the global responses thereto; the increasing complexity of certain manufacturing processes; changes in government regulations of the countries in which the Company operates, including the imposition of tariffs, export controls and other trade laws, restrictions and changes to national security and international trade policy, especially as they relate to China; fluctuation of currency exchange rates; fluctuations in the market price of the Company's stock; and other risk factors and additional information described in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"), including under the heading "Risk Factors" in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on February 15, 2024, and in the Company's other SEC filings. Except as required under the federal securities laws and the rules and regulations of the SEC, the Company undertakes no obligation to update publicly any forward-looking statements or information contained herein, which speak as of their respective dates.

This presentation contains references to "Adjusted Net Sales ", "Adjusted EBITDA," "Adjusted EBITDA - as a % of Net Sales," "Adjusted Operating Income," "Adjusted Operating Margin," "Adjusted Gross Profit," "Adjusted Gross Margin - as a % of Net Sales," "Adjusted Segment Profit," "Adjusted Segment Profit Margin," "Non-GAAP Operating Expenses," "Non-GAAP Tax Rate," "Non-GAAP Net Income," "Diluted Non-GAAP Earnings per Common Share," "Free Cash Flow," and other measures that are not presented in accordance GAAP. The non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures but should instead be read in conjunction with the GAAP financial measures. Further information with respect to and reconciliations of such measures to the most directly comparable GAAP measure can be found attached to this presentation.

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Summary - Consolidated Statement of Operations GAAP

$ in millions, except per share data	1Q24	1Q23	4Q23	1Q24 over 1Q23 1Q24 over 4Q23
Net Sales	$771.0	$922.4	$812.3	(16.4%)	(5.1%)
Gross Margin	45.6%	43.5%	42.4%
Operating Expenses	$234.2	$388.2	$243.7	(39.7%)	(3.9%)
Operating Income	$117.6	$13.5	$101.0	771.1%	16.4%
Operating Margin	15.3%	1.5%	12.4%
Tax Rate	7.1%	(32.2%)	(41.9%)
Net Income (loss)	$45.3	($88.2)	$38.0	N/A*	19.2%
Diluted Earnings (loss) Per Common	$0.30	($0.59)	$0.25	N/A*	20.0%
Share

*Percent change is not provided as either the latest period or the year-ago period contains a net loss.

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Summary - Consolidated Statement of Operations Non-GAAP1

$ in millions, except per share data	1Q24	1Q23	4Q23	1Q24 over 1Q23 1Q24 over 4Q23
Net Sales	$771.0	$922.4	$812.3	(16.4%)	(5.1%)
Adjusted Gross Margin - as a % of	45.6%	44.3%	42.4%
Net Sales
Non-GAAP Operating Expenses2	$173.7	$204.3	$176.4	(15.0%)	(1.5%)
Adjusted Operating Income	$178.1	$204.8	$168.3	(13.0%)	5.8%
Adjusted Operating Margin	23.1%	22.2%	20.7%
Non-GAAP Tax Rate3	14.1%	16.9%	11.7%
Non-GAAP Net Income4	$103.8	$97.8	$97.9	6.1%	6.0%
Diluted Non-GAAP Earnings Per	$0.68	$0.65	$0.65	4.6%	4.6%
Common Share
Adjusted EBITDA	$223.4	$251.5	$210.8
Adjusted EBITDA - as a % of net sales	29.0%	27.3%	26.0%

1.See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. 2.Excludes amortization expense, deal and transaction costs, integration costs, goodwill impairment, restructuring costs, impairment of long-lived assets and loss (gain) on sale of certain businesses. 3.Reflects the tax effect of non-GAAP adjustments and discrete tax items to GAAP taxes. 4. Excludes the items noted in footnotes 2 and 3, interest expense, net, Infineum termination fee, loss on extinguishment of debt and modification, and the tax effect of non-GAAP adjustments. As a result of displaying amounts in millions, rounding differences may exist in the tables.

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Summary - Consolidated Statement of Operations (excluding divestitures)1,2 Non-GAAP

$ in millions	1Q24	1Q23	4Q23	1Q24 over 1Q23 1Q24 over 4Q23
Adjusted Net Sales	$737.1	$778.4	$765.4	(5.3%)	(3.7%)
Adjusted Gross Margin %	46.1%	48.3%	43.4%
Non-GAAP Operating Expenses	$171.8	$198.0	$174.0	(13.2%)	(1.3%)
Adjusted Operating Income	$167.7	$178.0	$157.9	(5.8%)	6.2%
Adjusted Operating Margin	22.8%	22.9%	20.6%
Adjusted EBITDA	$213.1	$218.4	$200.4	(2.4%)	6.3%
Adjusted EBITDA Margin	28.9%	28.1%	26.2%

1.Excludes the impact of divestitures of the Electronic Chemicals ("EC"), QED, and the Pipeline and Industrial Materials ("PIM") businesses and termination of Alliance Agreement with Macdermid Enthone. 2.See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. As a result of displaying amounts in millions, rounding differences may exist in the tables.

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Materials Solutions (MS)

1Q24 Highlights

				1Q24 over	1Q24 over
$ in millions	1Q24	1Q23	4Q23	1Q23	4Q23
Net Sales	$350.0	$448.3	$365.0	(21.9%)	(4.1%)
Adjusted Net Sales1	$316.1	$304.3	$318.1	3.9%	(0.6%)
Segment Profit (Loss)	$67.1	($29.5)	$53.2	N/A*	26.1%
Segment Profit (Loss) Margin	19.2%	(6.6%)	14.6%
Adj. Segment Profit 2	$75.2	$80.1	$61.0	(6.1%)	23.3%
Adj. Segment Profit Margin 2	21.5%	17.9%	16.7%

Sales1 decreased (SEQ) 1%, as MS benefited from the early-stage recovery in the memory market, offset by continued weakness in some mainstream end markets.

Segment profit margin (adjusted) increase (SEQ) was primarily driven by the positive impact of improved plant utilization.

1. Excludes the impact of divestitures of the Electronic Chemicals ("EC"), QED, and the Pipeline and Industrial Materials ("PIM") businesses and termination of the Alliance Agreement with Macdermid Enthone. 2. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. As a result of displaying amounts in millions, rounding differences may exist in the tables.

*Percent change is not provided if either the latest period or the year-ago period contains a segment loss.

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Microcontamination Control (MC)

1Q24 Highlights

				1Q24 over	1Q24 over
$ in millions	1Q24	1Q23	4Q23	1Q23	4Q23
Net Sales	$267.9	$269.3	$288.4	(0.5%)	(7.1%)
Segment Profit	$86.6	$96.0	$97.6	(9.8%)	(11.3%)
Segment Profit Margin	32.3%	35.6%	33.8%
Adj. Segment Profit1	$86.6	$98.8	$97.7	(12.3%)	(11.4%)
Adj. Segment Profit Margin1	32.3%	36.7%	33.9%

Sales decrease (SEQ) was by driven by lower revenue in all major product lines, consistent with our expectations.

Segment profit margin (adjusted) decline (SEQ) was primarily driven by lower volume

and steady investment in R&D. ​

1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. As a result of displaying amounts in millions, rounding differences may exist in the tables.

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Advanced Materials Handling (AMH)

1Q24 Highlights

				1Q24 over	1Q24 over
$ in millions	1Q24	1Q23	4Q23	1Q23	4Q23
Net Sales	$162.9	$218.9	$169.2	(25.6%)	(3.7%)
Segment Profit	$24.6	$48.2	$20.5	(49.0%)	20.0%
Segment Profit Margin	15.1%	22.0%	12.1%
Adj. Segment Profit1	$24.6	$49.4	$20.6	(50.2%)	19.4%
Adj. Segment Profit Margin1	15.1%	22.6%	12.2%

Sales decline (SEQ) was driven primarily by

lower sales of fluid handling products.​​

Segment profit margin (adjusted) increase

(SEQ) ​was primarily driven by ​the positive impact of improved plant utilization. ​

1. See GAAP to non-GAAP reconciliation tables in the appendix of this presentation. As a result of displaying amounts in millions, rounding differences may exist in the tables.

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Summary - Balance Sheet Items

$ in millions	1Q24		1Q23		4Q23
	$ Amount	% Total	$ Amount	% Total	$ Amount	% Total
Cash, Cash Equivalents & Restricted Cash	$340.7	4.1%	$709.0	7.0%	$456.9	5.2%
Accounts Receivable, net	$424.5	5.1%	$511.4	5.1%	$457.1	5.2%
Inventories	$625.7	7.5%	$830.9	8.3%	$607.1	6.9%
Net PP&E	$1,473.8	17.6%	$1,464.4	14.5%	$1,468.0	16.7%
Total Assets	$8,364.7		$10,067.1		$8,812.6
Current Liabilities	$470.0	5.6%	$781.6	7.8%	$514.0	5.8%
Long-term Debt, Excluding Current Maturities	$4,172.9	49.9%	$5,634.7	56.0%	$4,577.1	51.9%
Total Liabilities	$4,934.6	59.0%	$6,898.9	68.5%	$5,404.0	61.3%
Total Shareholders' Equity	$3,430.2	41.0%	$3,168.2	31.5%	$3,408.6	38.7%

As a result of displaying amounts in millions, rounding differences may exist in the tables.

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Cash Flows

$ in millions	1Q24	1Q23	4Q23
Beginning Cash Balance	$456.9	$563.4	$594.0
Cash provided by operating activities	147.2	151.9	150.7
Capital expenditures	(66.6)	(134.0)	(128.7)
Proceeds from long term debt	224.5	117.2	-
Payments on long term debt	(643.3)	(117.2)	(869.7)
Proceeds from sale of businesses	249.6	133.5	680.7
Payments for dividends	(15.3)	(15.2)	(15.0)
Proceeds from termination of Alliance Agreement	-	-	21.9
Other investing activities	(1.9)	0.1	1.9
Other financing activities	(5.8)	8.7	12.1
Effect of exchange rates	(4.6)	0.6	9.1
Ending Cash Balance	$340.7	$709.0	$456.9
Free Cash Flow 1	$80.6	$17.9	$22.0

1. Equals cash from operations less capital expenditures. As a result of displaying amounts in millions, rounding differences may exist in the tables.

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