Entegris Reports Results for Fourth Quarter and Fiscal 2006
Entegris, Inc. (Nasdaq: ENTG), a global leader in materials
integrity management, today reported its financial results for the
fiscal fourth quarter and year ended December 31, 2006.
Fourth-quarter sales from continuing operations were $169.1
million, versus $171.3 million in the third quarter and up 15 percent
from $147.1 million for the same period a year ago. GAAP net income
was $16.1 million, or $0.12 per fully diluted share. This result
includes total pretax stock-based compensation of $3.0 million, or
$0.02 per fully diluted share after tax, of which $0.9 million was for
integration-related stock-based compensation.
On a non-GAAP basis, fourth-quarter income from continuing
operations was $21.1 million, or $0.16 per fully diluted share. The
non-GAAP result is adjusted to exclude the after-tax effects of
merger-related and other restructuring charges. On a pre-tax basis,
the adjustments include restructuring charges of $0.6 million,
integration expense of $0.6 million, merger-related amortization
expense of $3.5 million, and integration-related stock-based
compensation expense of $0.9 million. A reconciliation of GAAP to
non-GAAP results is provided elsewhere in this release.
For the year ended December 31, 2006, sales from continuing
operations totaled $678.7 million, versus $442.8 million for the prior
year. GAAP net income was $63.5 million, or $0.46 per fully diluted
share. On a non-GAAP basis, income from continuing operations for
fiscal 2006 was $86.0 million, or $0.62 per fully diluted share.
Gideon Argov, president and chief executive officer, said: "While
there were signs of softening in the industry, fourth-quarter sales
remained firm and reflected strong sales of our liquid systems.
Earnings per share exceeded our guidance, as lower selling, general,
and administrative expenses and a favorable tax rate offset a lower
gross margin. The fourth-quarter gross margin was impacted by
manufacturing inefficiencies identified after a comprehensive review
of all our operations worldwide. With this review completed, we are
confident we have aggressively addressed the causes of these
inefficiencies."
"All in all, it was a solid year for Entegris," said Argov. "Our
strong balance sheet and cash flow allows us to continue to invest in
technologies that address our semiconductor customers' contamination
control issues and meet their materials handling needs, which are
critical to their successful transition to 65 and 45 nanometer
processes." The Company ended the quarter with cash, cash equivalents,
and short-term investments of $275.0 million, up $46.5 million from
the third quarter.
Outlook
For its first fiscal quarter ending March 31, 2007, the Company
currently expects sales to be flat to down 5 percent sequentially, or
approximately $161 million to $169 million. GAAP net income per
diluted share is expected to range from $0.08 to $0.11. Non-GAAP net
income is expected to range from approximately $15 million to $19
million, reflecting pretax adjustments for integration and
restructuring charges of approximately $2.0 million, merger-related
amortization expense of $3.5 million, and integration-related
stock-based compensation expense of approximately $0.7 million.
Non-GAAP net income per diluted share is expected to range from $0.11
to $0.14.
Fourth-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its results for
the 2006 fourth quarter and full year on Tuesday, February 13, 2007,
at 10:00 a.m. Eastern Time. Participants should dial 800-811-0667
(domestic callers) or 913-981-4901 (for callers outside the U.S.); all
callers should use passcode 4783557. A replay of the call can be
accessed at 719-457-0820 using the same passcode. The call will also
be webcast on the investor relations portion of the Entegris website
at www.entegris.com.
About Entegris
Entegris is the global leader in materials integrity management,
delivering a wide range of products for purifying, protecting and
transporting critical materials used in processing and manufacturing
in semiconductor 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, Japan,
Malaysia, Singapore, South Korea and Taiwan. Additional information
can be found at www.entegris.com.
Non-GAAP Information
In addition to disclosing results that are determined in
accordance with generally accepted accounting principles in the U.S.
(GAAP), the Company also discloses non-GAAP results of operations that
exclude certain expenses and charges. These non-GAAP results are
provided as a complement to results provided in accordance with GAAP
in order to provide investors with relevant and useful information
about the Company's ongoing operations. As such, non-GAAP information
primarily excludes expenses and charges resulting from purchase
accounting and integration activities associated with the Company's
August 2005 merger with Mykrolis Corporation. Earnings guidance for
the quarter ending March 31, 2007, is disclosed on both a GAAP and a
non-GAAP basis. A reconciliation of GAAP to non-GAAP financial
information discussed in this release is contained in the attached
exhibits and on the Company's website at www.entegris.com.
Forward-Looking Statements
Certain information contained in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current management expectations only as of the
date of this press release, which involve substantial risks and
uncertainties that could cause actual results to differ materially
from the results expressed in, or implied by, these forward-looking
statements. Statements which are modified by words such as
"anticipate," "believe," "estimate," "expect," "forecast," "may,"
"will," "should" or the negative thereof and similar expressions as
they relate to Entegris or our management are intended to identify
such forward-looking statements. These statements are not guarantees
of future performance and involve risks, uncertainties and assumptions
which are difficult to predict. These risks include, but are not
limited to, fluctuations in the market price of Entegris' stock,
future operating results of Entegris, other acquisition and investment
opportunities available to Entegris, general business and market
conditions and other factors. Additional information concerning these
and other risk factors may be found in previous financial press
releases issued by Entegris and Entegris' periodic public filings with
the Securities and Exchange Commission, including the discussion
described under the headings "Risks Relating to our Business and
Industry," and "Risks Related to Securities Markets and Ownership of
Our Securities" in Item 7 of our Annual Report on Form 10-K for the
fiscal year ended August 27, 2005, as well as other matters and
important factors disclosed previously and from time to time in the
filings of Entegris with the U.S. Securities and Exchange Commission.
Except as required under the federal securities laws and the rules and
regulations of the Securities and Exchange Commission, we undertake no
obligation to update publicly any forward-looking statements contained
herein.
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Entegris, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended Twelve months ended
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2006 2005 2006 2005
--------- ------------------- ---------
Net sales $169,081 $147,144 $678,706 $442,834
Cost of sales(a) 99,260 95,172 372,557 281,569
--------- --------- --------- ---------
Gross profit 69,821 51,972 306,149 161,265
Selling, general and
administrative expenses(b) 42,056 59,295 189,772 157,583
Engineering, research and
development expenses 9,595 9,771 38,830 26,247
--------- --------- --------- ---------
Operating income (loss) 18,170 (17,094) 77,547 (22,565)
Interest income, net 2,439 2,029 9,205 4,519
Other (loss) income, net (637) 155 1,658 2,138
--------- --------- --------- ---------
Income (loss) before income
taxes 19,972 (14,910) 88,410 (15,908)
Income tax expense (benefit) 3,920 (7,440) 26,505 (10,941)
Equity in net (earnings) loss
of affiliates (243) (70) (531) 149
--------- --------- --------- ---------
Income (loss) from
continuing operations 16,295 (7,400) 62,436 (5,116)
(Loss) income from discontinued
operations, net of taxes (196) (2,794) 1,030 (10,385)
--------- --------- --------- ---------
Net income (loss) $16,099 $(10,194) $63,466 $(15,501)
========= ========= ========= =========
Basic income (loss) per common
share:
Continuing operations: $0.12 $(0.05) $0.46 $(0.05)
Discontinued operations --- (0.02) 0.01 (0.11)
Net income (loss) per common
share $0.12 $(0.08) $0.47 $(0.16)
Diluted income (loss) per
common share:
Continuing operations: $0.12 $(0.05) $0.45 $(0.05)
Discontinued operations --- (0.02) 0.01 (0.11)
Net income (loss) per common
share $0.12 $(0.08) $0.46 $(0.16)
Weighted average shares
outstanding:
Basic 130,594 135,467 135,116 98,495
Diluted 134,024 135,467 138,492 98,495
(a) Cost of sales for the three months ended December 31, 2006 include
$0.3 million of merger-related and other restructuring charges,
integration expenses, and integration-related stock-based
compensation expense. Cost of sales for the twelve months ended
December 31, 2006 include $2.5 million of merger-related and other
restructuring charges, integration expenses, and integration-related
stock-based compensation expense.
(b) Selling, general and administrative expenses for the three months
and twelve months ended December 31, 2006 include $5.3 million and
$31.1 million, respectively, of merger-related and other
restructuring charges, integration expense, integration-related
stock-based compensation expense, and merger-related amortization of
intangibles.
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Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Three Months Ended December 31, 2006
(In thousands, except per share data)
(Unaudited)
U.S. GAAP Adjustments Non-GAAP
--------- ----------- ---------
Net sales $169,081 $--- $169,081
Cost of sales(a) 99,260 (342) 98,918
--------- ----------- ---------
Gross profit 69,821 342 70,163
Selling, general and administrative
expenses(b) 42,056 (5,297) 36,759
Engineering, research and development
expenses 9,595 --- 9,595
--------- ----------- ---------
Operating income 18,170 5,639 23,809
Interest income, net 2,439 --- 2,439
Other (loss), net (637) --- (637)
--------- ----------- ---------
Income before income taxes 19,972 5,639 25,611
Income tax expense 3,920 851 4,771
Equity in net earnings of affiliates (243) --- (243)
--------- ----------- ---------
Income from continuing operations 16,295 4,788 21,083
Loss from discontinued operations, net
of taxes 196 --- 196
--------- ----------- ---------
Net income $16,099 $4,788 20,887
========= =========== =========
Basic income per common share:
Continuing operations: $0.12 $0.04 $0.16
Discontinued operations --- --- ---
Net income per common share $0.12 $0.04 $0.16
Diluted income per common share:
Continuing operations: $0.12 $0.04 $0.16
Discontinued operations --- --- ---
Net income per common share $0.12 $0.04 $0.16
Weighted average shares outstanding:
Basic 130,594 130,594
Diluted 134,024 134,024
(a) Non-GAAP cost of sales for the three months ended December 31,
2006 is adjusted for $0.3 million of merger-related and other
restructuring charges, integration expenses, and integration-related
stock-based compensation expense.
(b) Non-GAAP selling, general and administrative expenses for the
three months ended December 31, 2006 are adjusted for $0.4 million of
merger-related and other restructuring charges, $0.6 million of
integration expense, $0.8 million of integration-related stock-based
compensation expense, and $3.5 million of merger-related amortization
of intangibles.
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Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Twelve Months Ended December 31, 2006
(In thousands, except per share data)
(Unaudited)
U.S. GAAP Adjustments Non-GAAP
--------- ----------- ---------
Net sales $678,706 $--- $678,706
Cost of sales(a) 372,557 (2,506) 370,051
--------- ----------- ---------
Gross profit 306,149 2,506 308,655
Selling, general and administrative
expenses(b) 189,772 (31,121) 158,651
Engineering, research and development
expenses 38,830 --- 38,830
--------- ----------- ---------
Operating income 77,547 33,627 111,174
Interest income, net 9,205 --- 9,205
Other income, net 1,658 --- 1,658
--------- ----------- ---------
Income before income taxes 88,410 33,627 122,037
Income tax expense 26,505 10,089 36,594
Equity in net earnings of affiliates (531) --- (531)
--------- ----------- ---------
Income from continuing operations 62,436 23,538 85,974
Income from discontinued operations,
net of taxes 1,030 --- 1,030
--------- ----------- ---------
Net income $63,466 $23,538 $87,004
========= =========== =========
Basic income per common share:
Continuing operations: $0.46 $0.18 $0.64
Discontinued operations 0.01 --- 0.01
Net income per common share $0.47 $0.17 $0.64
Diluted income per common share:
Continuing operations: $0.45 $0.17 $0.62
Discontinued operations 0.01 --- 0.01
Net income per common share $0.46 $0.17 $0.63
Weighted average shares outstanding:
Basic 135,116 135,116
Diluted 138,492 138,492
(a) Non-GAAP cost of sales for the twelve months ended December 31,
2006 is adjusted for $3.2 million of merger-related and other
restructuring charges, integration expenses, and integration-related
stock-based compensation expense offset by a $0.7 million gain on the
sale of a facility.
(b) Non-GAAP selling, general and administrative expenses for the
twelve months ended December 31, 2006 are adjusted for $4.2 million
of merger-related and other restructuring charges, $7.8 million of
integration expense, $5.1 million of integration-related stock-based
compensation expense, and $14.0 million of merger-related
amortization of intangibles.
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Entegris, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, 2006 December 31, 2005
----------------- -----------------
ASSETS
Cash, cash equivalents and short-
term investments $274,974 $274,403
Accounts receivable 128,960 110,146
Inventories 94,697 69,535
Deferred tax assets 41,750 26,078
Other current assets and assets
held for sale 10,777 25,290
----------------- -----------------
Total current assets 551,158 505,452
Property, plant and equipment, net 120,254 120,323
Intangible assets 467,674 493,544
Deferred tax asset - non-current - 10,614
Other assets 11,745 12,301
----------------- -----------------
Total assets $1,150,831 $1,142,234
================= =================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current maturities of long-term
debt $401 $797
Short-term debt - 2,290
Accounts payable 25,202 33,585
Accrued liabilities 57,049 58,570
Income tax payable 16,926 15,775
----------------- -----------------
Total current liabilities 99,578 111,017
Long-term debt, less current
maturities 2,995 3,383
Other liabilities 32,278 15,015
Shareholders' equity 1,015,980 1,012,819
----------------- -----------------
Total liabilities and
shareholders' equity $1,150,831 $1,142,234
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