- Record Company Revenue of
$324.1 Million , 11.6% Higher than Last Year and 2.2% Higher Sequentially - Electronic Materials Segment Revenue of
$274.5 Million , 13.2% Higher than Last Year and 2.6% Higher Sequentially - Net Income of
$34.6 Million ; Adjusted Net Income of$56.4 Million , 11.1% Higher Than Last Year - Adjusted EBITDA of
$96.3 Million , 13.6% Higher Than Last Year
“We are very pleased to report strong results for our second fiscal quarter, which represents our sixth consecutive quarter of record revenue, driven by continued robust demand for our Electronic Materials offerings and improving demand for our Performance Materials solutions,” said
Regarding the company’s previously announced pending transaction with Entegris, Inc. (Nasdaq: ENTG), under which Entegris will acquire the company in a cash and stock transaction (“Entegris Transaction”),
Key Financial Information for the Second Quarter
- Revenue was
$324.1 million , 11.6% higher than the same quarter last year with an increase of 13.2% in Electronic Materials and 3.4% in Performance Materials.- Revenue was up 2.2% sequentially, driven by both volume and price.
- Gross margin was 39.6% versus 42.6% in the prior year. Adjusted gross margin1 was 40.8%, versus 43.3% in the prior year.
- This decline was primarily due to the exit of the wood treatment business and an increase in the cost of a key raw material in the pipeline and industrial materials (PIM) business.
- Net income was
$34.6 million compared to a net loss of$149.8 million in the same quarter last year.- In the second quarter of fiscal year 2022, the company recorded
$12.2 million in transaction expenses related to the Entegris Transaction. - In the second quarter of fiscal year 2021, the company recorded
$208 .2 million of non-cash, pre-tax goodwill impairment charges for the PIM and wood treatment businesses.
- In the second quarter of fiscal year 2022, the company recorded
- Adjusted net income1 was
$56.4 million , 11.1% higher compared to the prior year driven by higher revenue and lower operating expenses.- Benefits from the company’s previously announced Future Forward cost optimization program resulted in a 10.5% year-over-year decline in adjusted operating expenses1. The company remains committed to continued investment in product development, operations, and quality across its businesses.
- Diluted EPS was
$1.19 compared to loss per diluted share of$5.13 in the same quarter last year. Adjusted diluted EPS1 was$1.94 , 13.5% higher compared to the same quarter last year.
- Adjusted EBITDA1 was
$96.3 million , 13.6% higher compared to the same quarter last year. Adjusted EBITDA margin1 for the quarter was 29.7%, compared to 29.2% in the same quarter last year due to higher revenue and lower adjusted operating expenses.
1Refer to financial tables and “Use of Certain GAAP, non-GAAP Adjusted Financial Information” below for information about these non-GAAP financial measures and reconciliations of these non-GAAP measures to their most comparable GAAP measure.
Electronic Materials – Revenue was
- CMP slurries increased 4.5% compared to the second fiscal quarter of 2021 due to a continued healthy semiconductor environment and strong demand from both logic and memory customers.
- CMP pads increased 20.5% year-over-year due to robust market growth and new position wins.
- Electronic chemicals increased 18.7% compared to the same quarter last year driven by strong customer demand.
Adjusted EBITDA was
Performance Materials – Revenue was
- PIM revenue increased 17.0% compared to the same quarter last year, and 14.1% sequentially. The PIM business reached its highest quarter revenue since the second quarter of fiscal year 2020 and benefited from stronger customer demand, including the ramp of new domestic and international orders.
- The PIM business continues to execute against its strategic initiatives by pursuing new customer opportunities and achieving additional R&D progress to drive profitability improvement.
- During the second quarter of fiscal year 2022, the company successfully completed its exit of the wood treatment business.
Adjusted EBITDA was
Please refer to the financial table below titled “Segment Revenue and Adjusted EBITDA” for more information.
Current Financial Guidance
The company currently expects Electronic Materials revenue in the third quarter of fiscal 2022 to be up low single digits compared to revenue in the second quarter of fiscal 2022.
Primarily because the company completed its exit of the wood treatment business in the second quarter of 2022, Performance Materials revenue is expected to be down approximately 20% in the third quarter of fiscal 2022 compared to revenue in the second quarter of fiscal 2022. Excluding the wood treatment business, Performance Materials revenue is expected to be up low single digits sequentially.
Company revenue is expected to be approximately flat sequentially. Excluding the wood treatment business, company revenue is expected to be up low single digits sequentially.
The company is reiterating full fiscal year 2022 guidance, which includes Adjusted EBITDA1 to be between
The company’s outlook includes its completed exit of the wood treatment business, which is expected to negatively impact Adjusted EBITDA by approximately
Additionally, for fiscal year 2022, the global pricing actions taken are expected to largely offset the increased costs for raw materials, freight and logistics. The company continues to evaluate further pricing actions to mitigate additional inflationary headwinds as needed.
For additional details on the company’s exit of the wood treatment business, please refer to the company’s fourth quarter and full year fiscal 2021 earnings slides and remarks document, which can be accessed here, or by visiting the Investor Relations Quarterly Results section of the company’s website.
Future Forward Strategic Cost Optimization Program
The Future Forward program is proceeding as planned, and the company continues to expect the program to drive savings of approximately
Entegris Transaction
Please refer to www.EntegrisCMCTransaction.com for more information about the Entegris Transaction.
Conference Call
In light of the Entegris Transaction, the company has not scheduled a conference call to discuss its quarterly financial results.
ABOUT
USE OF CERTAIN GAAP AND NON-GAAP ADJUSTED FINANCIAL INFORMATION
The company’s financial results are provided in accordance with accounting principles generally accepted in
The non-GAAP financial measures provided in this press release are a supplement to, and not a substitute for, the company’s financial results presented in accordance with
Adjusted EBITDA for the Electronic Materials and Performance Materials segments is presented in conformity with Accounting Standards Codification Topic 280, Segment Reporting. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For these reasons, this measure is excluded from the definition of non-GAAP financial measures under the SEC Regulation G and Item 10(e) of Regulation S-K.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements, which address a variety of subjects including, for example, the proposed Entegris Transaction, including expected timing, completion and effects of the proposed transaction; expected savings from our Future Forward strategic cost optimization program, future sales and operating results; growth or contraction, and trends in the industries and markets in which the company participates such as the semiconductor, and oil and gas, industries; the acquisition of, investment in, or collaboration with other entities, and the expected benefits and synergies of such transactions; divestment or disposition, or cessation of investment, in certain of the company’s businesses; new product introductions; development of new products, technologies and markets; product performance; the financial conditions of the company's customers; the competitive landscape that relates to the company’s business; the company's supply chain; the targeted benefits of company cost reduction or optimization initiatives; natural disasters; various economic or political factors and international or national events, including related to global public health crises such as the Pandemic, the ongoing conflict between the
ADDITIONAL INFORMATION ABOUT THE ENTEGRIS TRANSACTION AND WHERE TO FIND IT
This press release 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 press release relates to a proposed business combination between Entegris and CMC. In connection with the proposed transaction, on
PARTICIPANTS IN THE SOLICITATION
Entegris, CMC and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the Entegris Transaction. Information about the directors and executive officers of Entegris is set forth in Entegris’ in the definitive proxy statement/prospectus included in the Registration Statement, and Entegris’ Annual Report on Form 10-K for the fiscal year ended
Contact:
Vice President, Communications and Marketing
(630) 499-2600
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and amounts in thousands, except per share amounts)
Three Months Ended | Six Months Ended | ||||||||||||||||||
2022 | 2021 | 2021 | 2022 | 2021 | |||||||||||||||
Revenue | $ | 324,127 | $ | 317,046 | $ | 290,528 | $ | 641,173 | $ | 578,391 | |||||||||
Cost of sales | 195,904 | 191,210 | 166,782 | 387,114 | 331,741 | ||||||||||||||
Gross profit | 128,223 | 125,836 | 123,746 | 254,059 | 246,650 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Research, development and technical | 12,337 | 13,328 | 12,925 | 25,665 | 25,353 | ||||||||||||||
Selling, general and administrative | 47,111 | 56,483 | 58,538 | 103,594 | 114,458 | ||||||||||||||
Impairment charges | — | 9,435 | 208,221 | 9,435 | 215,568 | ||||||||||||||
Entegris Transaction-related expenses | 12,243 | 6,050 | — | 18,293 | — | ||||||||||||||
Total operating expenses | 71,691 | 85,296 | 279,684 | 156,987 | 355,379 | ||||||||||||||
Operating income (loss) | 56,532 | 40,540 | (155,938 | ) | 97,072 | (108,729 | ) | ||||||||||||
Interest expense, net | 9,537 | 9,743 | 9,495 | 19,280 | 19,080 | ||||||||||||||
Other (expense) income, net | (1,445 | ) | (152 | ) | (484 | ) | (1,597 | ) | 968 | ||||||||||
Income (loss) before income taxes | 45,550 | 30,645 | (165,917 | ) | 76,195 | (126,841 | ) | ||||||||||||
Provision for (benefit from) income taxes | 10,979 | 3,217 | (16,109 | ) | 14,196 | (8,563 | ) | ||||||||||||
Net income (loss) | $ | 34,571 | $ | 27,428 | $ | (149,808 | ) | $ | 61,999 | $ | (118,278 | ) | |||||||
Basic earnings (loss) per share | $ | 1.21 | $ | 0.96 | $ | (5.13 | ) | $ | 2.17 | $ | (4.06 | ) | |||||||
Diluted earnings (loss) per share | $ | 1.19 | $ | 0.95 | $ | (5.13 | ) | $ | 2.14 | $ | (4.06 | ) | |||||||
Weighted average basic shares outstanding | 28,609 | 28,451 | 29,210 | 28,526 | 29,164 | ||||||||||||||
Weighted average diluted shares outstanding | 28,999 | 28,821 | 29,210 | 28,909 | 29,164 |
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 237,685 | $ | 185,979 | |
Accounts receivable, net | 169,345 | 150,099 | |||
Inventories | 184,730 | 173,464 | |||
Prepaid expenses and other current assets | 35,460 | 25,439 | |||
Total current assets | 627,220 | 534,981 | |||
Property, plant and equipment, net | 346,344 | 354,771 | |||
Other long-term assets | 1,227,042 | 1,261,133 | |||
Total assets | $ | 2,200,606 | $ | 2,150,885 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $ | 55,540 | $ | 52,748 | |
Current portion of long-term debt | 10,650 | 13,313 | |||
Accrued expenses and other current liabilities | 132,738 | 139,797 | |||
Total current liabilities | 198,928 | 205,858 | |||
Long-term debt, net of current portion | 899,153 | 903,031 | |||
Other long-term liabilities | 158,444 | 163,059 | |||
Total liabilities | 1,256,525 | 1,271,948 | |||
Stockholders' equity | 944,081 | 878,937 | |||
Total liabilities and stockholders' equity | $ | 2,200,606 | $ | 2,150,885 |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited and amounts in thousands)
Six Months Ended | |||||||
2022 | 2021 | ||||||
Net cash provided by operating activities | $ | 110,207 | $ | 123,508 | |||
Cash flows from investing activities: | |||||||
Additions to property, plant and equipment | (23,310 | ) | (21,119 | ) | |||
Proceeds from the sale of assets | 10 | 363 | |||||
Net cash used in investing activities | (23,300 | ) | (20,756 | ) | |||
Cash flows from financing activities: | |||||||
Dividends paid | (26,524 | ) | (26,115 | ) | |||
Proceeds from issuance of stock | 16,834 | 10,279 | |||||
Repurchases of common stock under Share Repurchase Program | (10,600 | ) | (10,002 | ) | |||
Repurchases of common stock withheld for taxes | (3,724 | ) | (5,436 | ) | |||
Repayment of long-term debt | (7,987 | ) | (5,325 | ) | |||
Other financing activities | (264 | ) | (72 | ) | |||
Net cash used in financing activities | (32,265 | ) | (36,671 | ) | |||
Effect of exchange rate changes on cash | (2,936 | ) | 1,401 | ||||
Increase in cash and cash equivalents | 51,706 | 67,482 | |||||
Cash and cash equivalents at beginning of period | 185,979 | 257,354 | |||||
Cash and cash equivalents at end of period | $ | 237,685 | $ | 324,836 |
SEGMENT REVENUE AND ADJUSTED EBITDA
(Unaudited and amounts in thousands)
Three Months Ended | Six Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Segment Revenue: | |||||||||||||||
Electronic Materials: | |||||||||||||||
CMP slurries | $ | 146,540 | $ | 140,194 | $ | 292,681 | $ | 274,915 | |||||||
Electronic chemicals | 95,111 | 80,098 | 186,250 | 160,104 | |||||||||||
CMP pads | 26,815 | 22,255 | 50,854 | 44,326 | |||||||||||
Materials technologies | 6,045 | — | 12,377 | — | |||||||||||
Total Electronic Materials | 274,511 | 242,547 | 542,162 | 479,345 | |||||||||||
Performance Materials: | |||||||||||||||
PIM | 30,394 | 25,987 | 57,029 | 51,894 | |||||||||||
Wood treatment | 10,907 | 15,546 | 25,865 | 32,869 | |||||||||||
QED | 8,315 | 6,448 | 16,117 | 14,283 | |||||||||||
Total Performance Materials | 49,616 | 47,981 | 99,011 | 99,046 | |||||||||||
Consolidated Revenue | $ | 324,127 | $ | 290,528 | $ | 641,173 | $ | 578,391 | |||||||
Segment adjusted EBITDA: | |||||||||||||||
Electronic Materials | $ | 93,957 | $ | 81,315 | $ | 182,039 | $ | 162,071 | |||||||
Performance Materials | 13,901 | 18,750 | 28,902 | 41,725 | |||||||||||
Unallocated corporate expenses | (11,542 | ) | (15,261 | ) | (22,738 | ) | (27,436 | ) | |||||||
Consolidated adjusted EBITDA | $ | 96,316 | $ | 84,804 | $ | 188,203 | $ | 176,360 |
Unaudited Reconciliation of Certain GAAP Financial Measures to Certain Non-GAAP Financial Measures
(Unaudited and amounts in thousands, except per share and percentage amounts)
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income and GAAP Diluted Earnings (Loss) Per Share to Non-GAAP Adjusted Diluted Earnings Per Share | |||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||
Net income (loss) | $ | 34,571 | $ | 1.19 | $ | (149,808 | ) | $ | (5.13 | ) | $ | 61,999 | $ | 2.14 | $ | (118,278 | ) | $ | (4.06 | ) | |||||||||||
Amortization of acquisition related intangibles | 19,618 | 0.68 | 19,695 | 0.67 | 39,263 | 1.36 | 39,896 | 1.35 | |||||||||||||||||||||||
Entegris Transaction-related expenses | 12,243 | 0.42 | — | — | 18,293 | 0.63 | — | — | |||||||||||||||||||||||
Impairment charges | — | — | 208,221 | 7.02 | 9,435 | 0.33 | 215,568 | 7.27 | |||||||||||||||||||||||
Future Forward-related expenses | 45 | — | — | — | 3,024 | 0.10 | — | — | |||||||||||||||||||||||
Net costs related to restructuring of wood treatment business | 219 | 0.01 | 46 | — | 245 | 0.01 | 72 | — | |||||||||||||||||||||||
Costs related to Pandemic, net of grants received | — | — | (421 | ) | (0.01 | ) | — | — | 841 | 0.03 | |||||||||||||||||||||
Acquisition and integration-related expenses | (540 | ) | (0.02 | ) | 2,167 | 0.07 | (233 | ) | (0.01 | ) | 4,536 | 0.15 | |||||||||||||||||||
Costs related to | (3,500 | ) | (0.12 | ) | (1,076 | ) | (0.04 | ) | (3,500 | ) | (0.12 | ) | (1,076 | ) | (0.04 | ) | |||||||||||||||
Tax effect on adjustments to net income1 | (6,291 | ) | (0.22 | ) | (28,109 | ) | (0.95 | ) | (12,789 | ) | (0.44 | ) | (34,057 | ) | (1.15 | ) | |||||||||||||||
Adjustment for the dilutive impact of securities | — | 0.08 | — | 0.08 | |||||||||||||||||||||||||||
Adjusted net income | $ | 56,365 | $ | 1.94 | $ | 50,715 | $ | 1.71 | $ | 115,737 | $ | 4.00 | $ | 107,502 | $ | 3.63 | |||||||||||||||
Diluted common shares outstanding | 28,999 | 29,210 | 28,909 | 29,164 | |||||||||||||||||||||||||||
Effect of dilutive securities | — | 444 | — | 458 | |||||||||||||||||||||||||||
Adjusted diluted common shares outstanding | 28,999 | 29,654 | 28,909 | 29,622 |
Reconciliation of GAAP Revenue to Non-GAAP Adjusted Gross Profit and Gross Margin | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Revenue | $ | 324,127 | $ | 290,528 | $ | 641,173 | $ | 578,391 | |||||||
Cost of sales | 195,904 | 166,782 | 387,114 | 331,741 | |||||||||||
Gross profit | $ | 128,223 | $ | 123,746 | $ | 254,059 | $ | 246,650 | |||||||
Gross margin | 39.6 | % | 42.6 | % | 39.6 | % | 42.6 | % | |||||||
Adjustments: | |||||||||||||||
Amortization of acquisition related intangibles | 3,762 | 3,130 | 7,525 | 6,362 | |||||||||||
Future Forward-related expenses | 2 | — | 971 | — | |||||||||||
Net costs related to restructuring of wood treatment business | 219 | 46 | 245 | 72 | |||||||||||
Costs related to | — | (1,076 | ) | — | (1,076 | ) | |||||||||
Costs related to the Pandemic, net of grants received | — | 8 | — | 1,184 | |||||||||||
Adjusted gross profit | $ | 132,206 | $ | 125,854 | $ | 262,800 | $ | 253,192 | |||||||
Adjusted gross margin | 40.8 | % | 43.3 | % | 41.0 | % | 43.8 | % |
Reconciliation of GAAP Operating expenses to Non-GAAP Adjusted Operating expenses | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Research, development and technical | $ | 12,337 | $ | 12,925 | $ | 25,665 | $ | 25,353 | |||||||
Selling, general, and administrative | 47,111 | 58,538 | 103,594 | 114,458 | |||||||||||
Impairment charges | — | 208,221 | 9,435 | 215,568 | |||||||||||
Entegris Transaction-related expenses | 12,243 | — | 18,293 | — | |||||||||||
Operating expenses | $ | 71,691 | $ | 279,684 | $ | 156,987 | $ | 355,379 | |||||||
Adjustments: | |||||||||||||||
Amortization of acquisition related intangibles2 | (15,856 | ) | (16,565 | ) | (31,738 | ) | (33,534 | ) | |||||||
Entegris Transaction-related expenses | (12,243 | ) | — | (18,293 | ) | — | |||||||||
Impairment charges | — | (208,221 | ) | (9,435 | ) | (215,568 | ) | ||||||||
Future Forward-related expenses2 | (43 | ) | — | (2,053 | ) | — | |||||||||
Costs related to the Pandemic, net of grants received2 | — | 429 | — | 343 | |||||||||||
Acquisition and integration-related expenses2 | 540 | (2,167 | ) | 233 | (4,536 | ) | |||||||||
Costs related to | 3,500 | — | 3,500 | — | |||||||||||
Adjusted operating expenses | $ | 47,589 | $ | 53,160 | $ | 99,201 | $ | 102,084 |
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA and EBITDA Margin | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income (loss) | $ | 34,571 | $ | (149,808 | ) | $ | 61,999 | $ | (118,278 | ) | ||||||
Interest expense, net | 9,537 | 9,495 | 19,280 | 19,080 | ||||||||||||
Provision for income taxes | 10,979 | (16,109 | ) | 14,196 | (8,563 | ) | ||||||||||
Depreciation & amortization | 32,762 | 32,289 | 65,464 | 64,180 | ||||||||||||
EBITDA | 87,849 | (124,133 | ) | 160,939 | (43,581 | ) | ||||||||||
EBITDA margin | 27.1 | % | (42.7 | %) | 25.1 | % | (7.5 | %) | ||||||||
Adjustments (pre-tax): | ||||||||||||||||
Entegris Transaction-related expenses | 12,243 | — | 18,293 | — | ||||||||||||
Impairment charges | — | 208,221 | 9,435 | 215,568 | ||||||||||||
Future Forward-related expenses | 45 | — | 3,024 | — | ||||||||||||
Net costs related to restructuring of wood treatment business | 219 | 46 | 245 | 72 | ||||||||||||
Costs related to the Pandemic, net of grants received | — | (421 | ) | — | 841 | |||||||||||
Acquisition and integration-related expenses | (540 | ) | 2,167 | (233 | ) | 4,536 | ||||||||||
Costs related to | (3,500 | ) | (1,076 | ) | (3,500 | ) | (1,076 | ) | ||||||||
Adjusted EBITDA | $ | 96,316 | $ | 84,804 | $ | 188,203 | $ | 176,360 | ||||||||
Adjusted EBITDA margin | 29.7 | % | 29.2 | % | 29.4 | % | 30.5 | % |
Fiscal Year 2022 Guidance Reconciliation3 | |||||||
Fiscal Year 2022 | |||||||
Low | High | ||||||
Net income | $ | 107,000 | $ | 131,000 | |||
Interest expense, net4 | 39,000 | 39,000 | |||||
Provision for income taxes4 | 44,000 | 50,000 | |||||
Depreciation4 | 53,000 | 53,000 | |||||
Amortization | 85,000 | 85,000 | |||||
EBITDA (Consolidated) | $ | 328,000 | $ | 358,000 | |||
Entegris Transaction-related expenses5 | 18,293 | 18,293 | |||||
Impairment charges5 | 9,435 | 9,435 | |||||
Future Forward-related expenses5 | 3,024 | 3,024 | |||||
Net costs related to restructuring of wood treatment business5 | 245 | 245 | |||||
Acquisition and integration-related expenses5 | (233 | ) | (233 | ) | |||
Costs related to | (3,500 | ) | (3,500 | ) | |||
Adjusted EBITDA Guidance - Consolidated | $ | 355,264 | $ | 385,264 |
1 Tax effect on the adjustments were calculated using the
2 Adjustment is related to the Selling, general and administrative expenses.
3 This is a reconciliation of our indicated full year net income to our adjusted EBITDA. The amounts above may not reflect certain future charges costs and/or gains that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance.
4 Amounts represent the mid-point of the financial guidance provided on
5 Amounts represent actual Non-GAAP adjustments through the second quarter of fiscal 2022.
Source:
2022 GlobeNewswire, Inc., source