Entegris, Inc. · NASDAQ:ENTG
Entegris — Investor Day (December 2021)
33 slides from Entegris's investor day presentation, Dec 1, 2021
Slide 1: 2021 Investor and Analyst Update
2021 Investor and Analyst Update December 1, 2021
Slide 2: Agenda
Agenda Topic Speaker 1 Capturing Growth Bertrand Loy President and CEO 2 Financial Strength and Flexibility Greg Graves EVP and CFO 3 Q&A 2
Slide 3: 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 4: Capturing Growth
Capturing Growth Bertrand Loy President and CEO 4
Slide 5: Entegris at a Glance
Entegris at a Glance Our Mission To help our customers improve their productivity, performance and technology by providing Founded 2021E Revenue Headquarters Team Members enhanced materials and process 1966 $2.25B1 Billerica, MA 6,600+ solutions for the most advanced manufacturing environments Sales
Slide 6: Our Platform is Differentiated and Resilient
Our Platform is • Products spec’d into nodes “Sticky” Solutions Differentiated • High switching cost • Long product tails and Resilient… Broad Product • 20,000+ products Offering • No single product platform >4% of sales Recurring Revenue ~70% UNIT DRIVEN • One customer over 10% of sales Sales Growt
Slide 7: Sales Growth Formula
Sales Growth Formula Multiple growth drivers for served market expansion Core Semi Opportunities ~15% Emerging Growth Vectors (1 to 2 pts) CAGR ~2x GDP + (3 to 5 pts) 2021E1-2024 Life Sciences • Accelerating chip demand • Aramus as industry standard • Exposure to technology inflection points • Expan
Slide 8: Our Rapidly Expanding Served Markets
5G Our Rapidly Expanding Served Markets Strong semiconductor demand to continue 30% IC content increase 5G vs. 4G smartphone Semiconductor MSI Growth1 vs. GDP Growth2 Internet of Things 3x IoT devices in 2025 vs. 2020 PC Internet Mobile 4th Industrial Revolution Data Explosion 3.5x 2.5x 1.1x 3x annu
Slide 9: The Roadmaps Play to Entegris' Unique Capabilities
The Roadmaps Play to Entegris’ Unique Capabilities Performance materials and rigorous defect control The challenges our customers are facing 3D NAND GAA Transistors FinFET Elements Used in Today’s Advanced Devices ~4.5 times those used in the 1990s ~3 nm 60 Hydrogen atoms ~3 nm More materials More c
Slide 10: Our Rapidly Expanding Served Markets: Materials
Leading Edge Logic and Memory Materials Served Addressable Market Increase Logic 3D NAND Memory Our Rapidly Materials spend per wafer Materials spend per wafer 3.2 Expanding 1.0 1.9 1.0 1.5 2.4 Served Markets 14 nm 5 nm 2 nm 32 L 176 L 384 L What customer problems Growing materials content are we tr
Slide 11: Our Rapidly Expanding Served Markets: Filtration
Leading Edge Logic and Memory Filtration Served Addressable Market Increase Logic 3D NAND Memory Our Rapidly Liquid filtration revenue per wafer Liquid filtration revenue per wafer 6.5 Expanding 3.0 5.0 4.5 Served Markets 1.0 1.0 14 nm 5 nm 2 nm 32 L 176 L 384 L What customer problems Growing filtra
Slide 12: Additional Favorable Market Drivers
Leading-Edge Logic and Memory as Percentage of Total Fab Capacity1 5G/AI will drive faster and larger computing chips and more memory usage 64% 59% 55% Additional Favorable 51% 42% 45% 39% 38% 34% 32% Market Drivers 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 1 Source: Gartner, SEMI, company r
Slide 13: Customer Centricity and Shared Organizational Purpose Drive Competitiveness
Our Strong Customer Centricity and Shared Organizational Purpose Drive Enhanced Competitiveness Customer-driven Innovation Capability-based Strategy Our Entegris Flywheel + A new hard-to-solve process problem is We strengthen identified Our customer shares our relationship information to help throug
Slide 14: Emerging Growth Vectors – Life Sciences
Emerging Growth Vectors – Life Sciences Aramus™ as Industry Standard Ancillary Life Sciences Offerings Entegris’ semiconductor capabilities are transferable Highly controlled processes and solutions to enable purity and yield High performance, high- purity materials Key attributes applicable for COV
Slide 15: Emerging Growth Vectors – New Markets
Emerging Growth Vectors – New Markets …in emerging, high growth, high value …where Entegris Make informed bets… has a right to win markets with unmet needs… Unique technical capabilities Horizon 3 • Advanced materials • Contamination control Potential Impact Horizon 2 Manufacturing excellence CAGR •
Slide 16: Targeted Acquisitions Compound Value for Customers and Shareholders
Targeted Acquisitions Compound Value for Our Customers and Shareholders HOW? HOW? Building and • New materials Enabling Increasing • Accretion year two Leveraging Unique • New separation Customers’ Shareholder • High-single digit ROIC technologies Roadmaps Scale and Returns year three • Sensing and
Slide 17: Entegris Corporate Social Responsibility
Progress To Date – 2021 Entegris Corporate Social Responsibility TRIR1 DOWN ~40% $5M CONTRIBUTED TO STEM What we do as a business must be inextricably linked to our value 39% SCHOLARSHIP DIVERSE NEW proposition, what we stand for as an ENGINEER organization, and have a lasting, HIRES 33% positive im
Slide 18: Financial Strength and Flexibility
Financial Strength and Flexibility Greg Graves Executive Vice President and CFO 18
Slide 19: Compounding Value
Compounding Value Strong growth and significant operating leverage 2016-2021E Revenue1 14% 2016-2021E Adj. EBITDA1,2 21% 29% $ in millions 1.7x CAGR $ in millions 1.5x CAGR 2016-2021E non-GAAP EPS1,2 1.4x CAGR MARKET REVENUE EBITDA GROWTH RATE GROWTH RATE GROWTH RATE $2,254 $679 >$3.30 $1,859 $2.54
Slide 20: Thoughtful and Balanced Capital Allocation 2017 – 2021E
Thoughtful and Balanced Capital Allocation 2017 – 2021E PSS, SAES Pure Gas, DSC, MPD, Anow, Sinmat, GMTI, Precision Acquisitions Microchemicals, continued “bolt-on” acquisitions, broadened $882M capabilities, and leveraged global platform Continued investments and deployment of new products, ER&D in
Slide 21: Investments to Capture Growth and Enhance Differentiation
Investments to Capture Growth and Enhance Differentiation Drivers of Increased Growth and Investments Investment • Accelerated revenue growth 2016-2020 2021E1 Next 3 Years • Greater capability to support Sales growth (CAGR) 12% 21-22% ~15% advance nodes ER&D (% of sales) 8% 7% ~8-10% • Opportunity t
Slide 22: Capital Structure
Capital Structure Conservative and flexible – with optionality Capital Structure Targets Total Debt: ~$945M1 Leverage Ratios1 $ in millions • Minimum cash balance of approximately $200 million Senior Notes 2029 (globally) (3.625%) Term Loan 2025 3 • Maintaining debt rating of Gross Leverage $145 Ba1
Slide 23: Entegris Divisional Drivers and Outlook
Entegris Divisional Drivers and Outlook KEY GROWTH OPPORTUNITIES UPDATED THREE-YEAR OUTLOOK • Point-of-use liquid filtration/purification MC • Bulk filtration/purification Adjusted operating margin: 34-36% • New markets • Advanced deposition materials SCEM • Advanced coatings Adjusted operating marg
Slide 24: Annual Target Model
Annual Target Model Additional organic revenue assumes 40% incremental flow-through at EBITDA level External Target Model¹ Revenue ($ in millions) $2,200 $2,500 $2,800 $3,100 $3,400 Adjusted operating margin² ~25% ~26% ~27% ~27% ~28% Adjusted EBITDA margin2 ~30% ~31% ~32% ~33% ~34% Non-GAAP EPS3 >$3
Slide 25: Illustrative Growth Model
Illustrative Growth Model Growth and operating leverage lead to EPS of >$5.30 by 2024 Year Three 2021 Estimate1 Illustrative Model2 Revenue $2.25B 15% top-line growth $3.4B Adj. operating margin3 ~26% ~28%4 Adj. EBITDA margin3 ~30% 400 bps improvement ~34%4 Non-GAAP EPS >$3.306 >$5.305 ROIC7 ~20% ~2
Slide 26: 2022 Preliminary Expectations
2022 Preliminary Expectations • Backdrop: Optimistic about the market and Entegris' opportunities to outperform • Currently expect sales growth >15% for 2022 • We continue to monitor closely and manage proactively lingering supply chain issues • Expect to provide more detailed 2022 guidance during o
Slide 27: Seven Reasons to Own Entegris
Seven Reasons to Own Entegris Entegris is a value compounder 1. Exciting industry with secular growth 2. Accelerating exposure to key technology inflections 3. Strong competitive moats 4. Resilient business model 5. Strong operating cash flow 6. Optionality: emerging growth vectors 7. Disciplined ca
Slide 28: Thank you! Q&A
Thank you! Q&A Entegris®, the Entegris Rings Design®, and other product names are trademarks of Entegris, Inc. as listed on entegris.com/trademarks. 28 All product names, logos, and company names are trademarks or registered trademarks of their respective owners. Use of them does not imply any affil
Slide 29: Appendix
Appendix Entegris
Slide 30: Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA
Reconciliation of GAAP Net Income to Adjusted Operating Income and Adjusted EBITDA $ in thousands December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 Net sales $1,175,270 $1,342,532 $1,550,497 $1,591,066 $1,859,313 Net income $97,147 $85,066 $240,755 $254,860 $2
Slide 31: Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP
Reconciliation of GAAP Net Income and Diluted Earnings per Common Share to Non-GAAP Net Income and Diluted Non-GAAP Earnings per Common Share $ in thousands, except per share data December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 GAAP net income $97,147 $85,06
Slide 32: Reconciliation of GAAP Net Income to Adjusted Operating Margin, Adjusted EBITDA
Reconciliation of GAAP Net Income to Adjusted Operating Margin, Adjusted EBITDA and Adjusted EBITDA Margin $ in millions December 31, 2021E1 Net sales $2,254 Net income $403 Net income – as a % of net sales 18% Adjustments to net income: Income tax expense 60 Interest expense, net 40 Other (income)
Slide 33: Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS
Reconciliation of GAAP Diluted Earnings per Share to Non-GAAP Diluted Earnings per Share December 31, 2021E1 Diluted earnings per common share $2.95 Adjustments to net income: Integration costs 0.03 Severance and restructuring costs 0.01 Loss on debt extinguishment 0.17 Amortization of intangible as