Entegris Reports Results for First Quarter of 2023

• First-quarter revenue (as reported) of $922.4 million, increased 42% from prior year
• First-quarter revenue (proforma), decreased 3.7%
• First-quarter GAAP diluted EPS of $(0.59)
• First-quarter non-GAAP diluted EPS of $0.65

Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s first quarter ended April 1, 2023. First-quarter sales were $922.4 million, an increase of 42% from the same quarter last year. First-quarter GAAP net loss was $88.2 million, or $0.59 loss per diluted share, which included $88.9 million of goodwill impairment related to the sale of the Electronic Chemicals business, $57.6 million of amortization of intangible assets, $17.0 million of integration costs and $22.5 million of other net costs. Non-GAAP net income was $97.8 million for the first quarter and non-GAAP earnings per diluted share was $0.65. The results for the first quarter of 2022, are shown on a “as reported” basis and not on a “proforma” basis, and as a result do not include CMC Materials’ results.

Bertrand Loy, Entegris’ president and chief executive officer, said: “I am pleased with the quality of our execution and results in the first quarter, especially in light of the dynamic market environment. Sales were down sequentially in the quarter, but we believe we outperformed the market, driven in large part by our strong position at the leading-edge technology nodes.”

Mr. Loy added: “2023 continues to be an uncertain year for the semiconductor industry. Despite these challenges, we have made good progress on key initiatives. The CMC Materials integration is proceeding very well, and on track to hit important milestones. The recently announced agreement to sell the Electronic Chemicals business, along with the sale of the QED business, are critical steps to optimize our portfolio and are expected to result in more than $800 million of proceeds to be used for debt paydown. In addition, we have taken several actions to lower our cost structure.”

Mr. Loy added: “Looking further ahead, the semiconductor industry is poised for long-term growth, on the way to $1 trillion by 2030. At the same time, as device architectures become more complex, our leading capabilities in materials science and materials purity enable us to offer our customers unique mission critical solutions, which will translate into rapidly expanding content per wafer for Entegris.”

Quarterly Financial Results Summary

(in thousands, except percentages and per share data)

Second-Quarter Outlook

For the second quarter ending July 1, 2023, the Company expects sales of $870 million to $900 million, GAAP net income of $14 million to $21 million and diluted earnings per common share between $0.09 and $0.14. On a non-GAAP basis, the Company expects diluted earnings per common share to range from $0.53 to $0.58, reflecting net income on a non-GAAP basis in the range of $80 million to $87 million. The Company also expects EBITDA of approximately 27% to 28% of sales, for the second quarter of 2023.

Segment Results

In connection with the completion of the CMC Materials acquisition, the Company now operates in four segments (which include the new APS division):

Specialty Chemicals and Engineered Materials (SCEM): SCEM provides advanced materials enabling complex chip designs and improved device electrical performance; including 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 advanced filtration solutions that improve customers’ yield, device reliability and cost; by filtering and purifying critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.

Advanced Materials Handling (AMH): AMH develops solutions that improve customers’ yields by protecting critical materials during manufacturing, transportation, and storage; including products that monitor, protect, transport and deliver critical liquid chemistries, wafers, and other substrates for a broad set of applications in the semiconductor, life sciences and other high-technology industries.

Advanced Planarization Solutions (APS): APS develops an end-to-end chemical mechanical planarization (CMP) solution and applications expertise delivered through advanced materials and high purity chemicals; including CMP slurries, pads, formulated cleans and other electronic chemicals used in the semiconductor manufacturing processes.

First-Quarter Results Conference Call Details

Entegris will hold a conference call to discuss its results for the first quarter on Thursday, May 11, 2023, at 8:00 a.m. Eastern Time. Participants should dial 800-245-3047 or +1 203-518-9765, referencing confirmation ID: ENTGQ123. Participants are asked to dial in 5 to 10 minutes prior to the start of the call. For the live webcast and replay of the call, please Click Here.

Management’s slide presentation concerning the results for the first quarter will be posted on the Investor Relations section of www.entegris.com in the morning before the call.

About Entegris

Entegris is a leading supplier of advanced materials and process solutions for the semiconductor and other high-tech industries. Entegris has approximately 9,000 employees throughout its global operations and is ISO 9001 certified. It 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, 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.

Cautionary Note on Forward Looking Statements

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 supply chain matters and 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 execute on our business strategies, including with respect to 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 share repurchases, dividends, debt repayments and potential acquisitions; the impact of the acquisitions 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 closing of any announced divestitures, including the timing thereof; trends relating to the fluctuation of currency exchange rates; 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, 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 and 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 consummate pending transactions on a timely basis or at all and the satisfaction of the conditions precedent to consummation of such pending transactions, including the satisfaction of regulatory conditions on the terms expected, at all or in a timely manner; the Company’s ability to effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; 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 and 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 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, 2022, filed on February 23, 2023, 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.

¹ Restructuring charges resulting from cost saving initiatives.

¹ Restructuring charges resulting from cost saving initiatives.

² Loss (gain) from the sale of businesses.

³ Non-cash impairment charges associated with goodwill.

¹ Non-cash impairment charges associated with goodwill.

² Deal and transaction costs associated the CMC acquisition and completed and announced divestitures.

³ Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other vendors to assist us in integrating the recently acquired CMC into our operations. These fees arise outside of the ordinary course of our continuing operations.

⁴ Represent severance charges resulting from cost saving initiatives in connection with the CMC acquisition.

⁵ Represents retention charges related directly to the CMC acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses.

⁶ Represents other employee related costs and other costs incurred relating to the CMC acquisition and the completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations.

⁷ Represents non-recurring costs associated with the CMC retention program that was agreed upon and set forth in the definitive acquisition agreement.

⁸ Restructuring charges resulting from cost saving initiatives.

⁹ Loss (gain) from the sale of businesses.

¹⁰Non-cash amortization expense associated with intangibles acquired in acquisitions.

¹ Non-cash impairment charges associated with goodwill.

² Deal and transaction costs associated with the CMC acquisition and completed and announced divestitures.

³ Represents professional and vendor fees recorded in connection with services provided by consultants, accountants, lawyers and other vendors to assist us in integrating the recently acquired CMC into our operations. These fees arise outside of the ordinary course of our continuing operations.

⁴ Represent severance charges resulting from cost saving initiatives from the CMC acquisition.

⁵ Represents retention charges related directly to the CMC acquisition and completed and announced divestitures, and are not part of our normal, recurring cash operating expenses.

⁶ Represents other employee related costs and other costs incurred relating to the CMC acquisition and completed and announced divestitures. These costs arise outside of the ordinary course of our continuing operations.

⁷ Represents non-recurring costs associated with the CMC retention program that was agreed upon and set forth in the definitive acquisition agreement.

⁸ Restructuring charges resulting from cost saving initiatives.

⁹ Non-recurring loss on extinguishment of debt and modification of our Credit Amendment.

¹⁰ Loss (gain) from the sale of businesses.

¹¹ Non-recurring gain from the termination fee with Infineum.

¹² Non-recurring interest costs related to the financing of the CMC acquisition.

¹³ Non-cash amortization expense associated with intangibles acquired in acquisitions.

¹⁴ The tax effect of pre-tax adjustments to net income was calculated using the applicable marginal tax rate during the respective years.

¹ The above pro forma results include the addition of CMC Materials, Inc.’s financials recorded prior to the consummation of the merger with the Company on July 6, 2022 to the Company’s reported financials and are provided as a complement to, and should be read in conjunction with, the consolidated financial statements to better facilitate the assessment and measurement of the Company’s operating performance. Intercompany sales between the Company and CMC Materials, Inc have been eliminated. No other adjustments have been included.

² The adjustment relates to removal of net sales related to CMC’s wood treatment business. Prior to the acquisition, CMC operated a wood treatment business, which manufactured and sold wood treatment preservatives for utility poles and crossarms. CMC exited this business during the first half of 2022, prior to our acquisition of CMC. The wood treatment business had no ongoing sales at the time of acquisition and removed for comparable purposes.

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