Entegris, Inc. · NASDAQ:ENTG
Entegris — Investor Day (September 2022)
35 slides from Entegris's investor day presentation, Sep 22, 2022
Slide 1: 2022 Investor and Analyst Update
2022 Investor and Analyst Update September 22, 2022
Slide 2: Safe Harbor
Safe Harbor This presentation contains, and management may make, 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 forwar
Slide 3: Agenda
Agenda Topic 1 Company Profile 2 Sales Growth Algorithm 3 CMC Materials Integration Bertrand Loy Greg Graves 4 Capital Structure President and CEO EVP, CFO 5 Financial Targets 3
Slide 4: Takeaways
Takeaways 1. Strong secular growth drivers for the semiconductor industry 2. Growing importance of new materials and contamination control 3. Entegris outperformance opportunities continue 4. Strong focus on unlocking full potential of combination with CMC Materials 5. Commitment to deleveraging and
Slide 5: Company Profile
Company Profile Entegris
Slide 6: Entegris at a Glance
Entegris at a Glance Our Mission To help our customers improve their productivity, performance and technology by providing 2022E Pro Founded Forma Revenue Headquarters Team Members enhanced materials and process 1966 ~ $4B Billerica, MA ~10,000 solutions for the most advanced manufacturing environme
Slide 7: Highly Differentiated and Resilient Business Model
Highly Differentiated and Resilient Business Model • Products spec’d into nodes “Sticky” Solutions • High switching costs Pro Forma Entegris • Long product tails • Highly diverse product portfolio ~80% Broad Product Offering • 10s of thousands of products UNIT DRIVEN • No single product platform >4%
Slide 8: Our Executive Leadership Team
Our Executive Leadership Team Bertrand Loy President and CEO 281 22 Years of Experience Entegris Semi Clint Haris Bill Shaner Stuart Tison Dann Woodland Olivier Blachier Greg Graves Sue Rice Joe Colella SVP and President, MC SVP and President, AMH SVP and President, SCEM SVP and President, APS SVP,
Slide 9: Sales Growth Algorithm
Sales Growth Algorithm Entegris
Slide 10: Confirming Our Growth Outperformance
Confirming Our Growth Outperformance Entegris organic sales growth algorithm Semi Unit Growth: 2x GDP • Multiple drivers of chip demand • Diverse end markets + Organic Sales Growth • Strong long-term fab investment CAGR 2022-2025 2x GDP Growth Above Market: 3 to 6 points + SAM Expansion 3 to 6 pts •
Slide 11: Strong Long-Term Semiconductor Growth Outlook
Strong Long-Term Semiconductor Growth Outlook The Path to $1T2 $1T Semiconductor Market by 20301 (7% CAGR) $ in billions $1,200 1,000 PC Internet Mobile 4th Industrial 800 Revolution 10K additional MSI/yr. 600 400 200 70+ new 100K wspm3 fabs 0 1982 1997 2008 2016 2022 1 SIA WSTS and Entegris estimat
Slide 12: Entegris is Increasingly Important to Our Customers' Roadmaps
Entegris is Increasingly Important to Our Customers’ Roadmaps Two Main Levers to Improve Chip Performance More complex chip architectures Miniaturization 60 Hydrogen atoms ~3 nm ~3 nm 3D NAND GAA Transistors FinFET More process steps to enable miniaturization and growing device complexity New deposi
Slide 13: Microcontamination Control (MC)
What Customer Problems Are We Trying to Solve? Our Solutions • Enable new materials susceptible to • Selective removal of new classes of new contaminants contaminants • Maximize yield • Sieving and non-sieving liquid filtration Microcontamination • Ensure a contamination free ecosystem and purificat
Slide 14: Advanced Materials Handling (AMH)
What Customer Problems Are We Trying to Solve? Our Solutions • Enable safe delivery and handling of • Industry standard wafer carriers chemicals • High purity and safe chemical packaging • Protect wafers from contamination and handling Advanced Materials and damage • Protect chemicals from contamina
Slide 15: Specialty Chemicals and Engineered Materials (SCEM)
What Customer Problems Are We Trying to Solve? Our Solutions • New interconnect metals for • New thin film deposition materials Specialty Chemicals faster performance to replace W and Cu • High aspect ratio 3D architectures • Selective etch chemicals for 3D structures and Engineered • New advanced c
Slide 16: Advanced Planarization Solutions (APS)
What Customer Problems Are We Trying to Solve? Our Solutions • Enable new difficult-to-polish materials • Complete CMP solution with IC slurries, pads Advanced for faster performance • Optimize polish rates with lower cost of and conditioners for metals and dielectrics • Si and SiC substrate slurrie
Slide 17: CMC Materials Integration
CMC Materials Integration 17
Slide 18: Acquisition Integration Guiding Principles
Acquisition Integration Guiding Principles Principles Focus on Common Speed over Focus on Customers Systems Perfection Core Portfolio Outcomes Finalize Orgü CMC Portfolio ü Cost ü Sales Synergies ü Structure Synergies Decisions Management team has proven track record of timely and effective integrat
Slide 19: Cost Synergies
Cost Synergies Resize SG&A-related cost structure • Eliminate duplicate public company costs Estimated Annual Run Rate Cost Savings1 • Functional teams redesigned $ in millions • Customer-facing organization realigned Org synergies >$75M Non-org synergies ~$60M Optimize supply chain costs • Faciliti
Slide 20: Revenue Synergies
Revenue Synergies Estimated Annual Run Rate Revenue Synergies $ in millions Leverage strong Entegris relationships Cross-selling to increase penetration of CMC Materials products and vice versa >$200M CMP Co-optimized new product introductions co-optimized across CMP module for IC and SiC solutions
Slide 21: Integrated CMP Solutions
Integrated CMP Solutions Faster time to co-optimized solutions and defect reduction Enabling the Extended CMP Module (Pre-CMP) Thin Film Deposition CMP Process Post-CMP Clean (pCMP) SOLUTIONS SOLUTIONS SOLUTIONS ALD1 precursor CMP slurries Formulated Cleans CVD2 precursor CMP pads Liquid filtration
Slide 22: CMC Materials Portfolio Analysis
CMC Materials Portfolio Analysis Guiding principles Strategic “Fit” Attractiveness Customer base Growth potential Applications served Financial profile Technology leverage Customers position Synergies enablement Technology differentiation YES/NO ü Portfolio simplification BALANCING Near-term debt re
Slide 23: Capital Structure
Capital Structure Entegris
Slide 24: Updated Capital Structure
Updated Capital Structure Increased debt levels – mitigated by low variable rate exposure Total Debt: ~$6.1B1 $ in millions Bridge 2023 (SOFR + 455 bps) Debt Facts Senior Notes 2030 (5.95%) $275 • Hedged ~80% term loan (Jan 2023) $895 • Variable interest rate exposure ~10%2 • Minimal required princi
Slide 25: Entegris Capital Allocation
Entegris Capital Allocation Priorities and principles Investments in Debt Paydown Cash Return to Value Accretive R&D and CapEx and Cash Levels Shareholders Acquisitions • ER&D target: trending up • Maintain debt ratings • Dividends continue • Large-scale acquisitions to 8-9% of sales • ~3.5x gross l
Slide 26: Driving Improved Free Cash Flow
Driving Improved Free Cash Flow Through lower CapEx and improved inventory turns Capital Expenditures (proforma)1 Inventory Turns (proforma)1 15% 4 % of sales 3.5 10% 3 5% 2.5 2021 2022 2023 2024 2025 2021 2022 2023 2024 2025 • CapEx peaks in 2022 reflecting large investment in • Invested in invento
Slide 27: Debt Paydown
Debt Paydown Committed to rapid paydown and deleveraging Drivers of Paydown • EBITDA • Lower CapEx Leverage (excluding potential divestitures)1 • Improved net working capital • Repatriation of cash to U.S. Net leverage • Any potential divestitures 5.1x Gross leverage 4.4x Track Record of Debt Reduct
Slide 28: Financial Targets
Financial Targets Entegris
Slide 29: Entegris is a Value Compounder
Entegris is a Value Compounder Growth algorithm: CAGR 2022–2025 Sales Growth EPS2 (organic/proforma) EBITDA1 Growth ~9% 1.3x revenue growth rate ~12% >$6.00 (2025) ~$5.2B 32% margin (2025) (2025) • Blended industry: ~4.5% • 40% EBITDA flowthrough • Debt paydown of ~$1B – MSI: ~+6% • Gross margin imp
Slide 30: Annual Target Model
Annual Target Model Continue to drive operating leverage: 40% incremental EBITDA flow-through External Target Model1 (For illustrative purposes only – does not reflect actual guidance) Key Assumptions Revenue ($ in millions) $4,500 $5,000 $5,500 $6,000 $6,500 • 40% flow-through to EBITDA • Tax rate:
Slide 31: Revenue Outlook Higher than Analyst Day 2021
Revenue Outlook Higher than Analyst Day 2021 Bridge: Analyst Day 2022 vs. 2021 22% Growth What’s different than 2021 Analyst Day? 15% Growth • Much higher M&A – reflecting CMC acquisition M&A • Higher Entegris organic outperformance Emerging growth vectors • Lower expected growth from emerging growt
Slide 32: We've Been Here Before…
We’ve Been Here Before… Experienced management team that has executed through cycles Model is more resilient We have built a variable cost model • 80% unit driven – exposed to secular growth • ~60% of COGS variable of semi chip demand • Significant variable costs in OpEx • ~10% exposed to WFE Experi
Slide 33: Our Corporate Social Responsibility Program
Our Corporate Social Responsibility Program What we do as a business must be inextricably linked to our value proposition, what we stand for as an organization and have a lasting, positive impact on our world Personal Innovation Safety Development Sustainability and Inclusion $8M 2030 Goals 2030 Goa
Slide 34: Takeaways
Takeaways 1. Resilient unit-driven model with significant growth drivers 2. Strong secular growth drivers for the semiconductor industry 3. Growing importance of new materials and contamination control 4. Entegris outperformance opportunities continue 5. Strong focus on unlocking full potential of c
Slide 35: Q&A
Q&A Entegris®, the Entegris Rings Design®, and other product names are trademarks of Entegris, Inc. as listed on entegris.com/trademarks. All product names, logos, and company names are trademarks 35 or registered trademarks of their respective owners. Use of them does not imply any affiliation, spo