entg-20240928false2024Q3ENTEGRIS INC0001101302--12-31xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:pure00011013022024-01-012024-09-2800011013022024-10-3100011013022024-09-2800011013022023-12-3100011013022024-06-302024-09-2800011013022023-07-022023-09-3000011013022023-01-012023-09-300001101302us-gaap:CommonStockMember2022-12-310001101302us-gaap:TreasuryStockCommonMember2022-12-310001101302us-gaap:AdditionalPaidInCapitalMember2022-12-310001101302us-gaap:RetainedEarningsMember2022-12-310001101302us-gaap:AccumulatedTranslationAdjustmentMember2022-12-310001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-12-310001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-12-3100011013022022-12-310001101302us-gaap:CommonStockMember2023-01-012023-04-010001101302us-gaap:AdditionalPaidInCapitalMember2023-01-012023-04-0100011013022023-01-012023-04-010001101302us-gaap:RetainedEarningsMember2023-01-012023-04-010001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-04-010001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-01-012023-04-010001101302us-gaap:AccumulatedTranslationAdjustmentMember2023-01-012023-04-010001101302us-gaap:CommonStockMember2023-04-010001101302us-gaap:TreasuryStockCommonMember2023-04-010001101302us-gaap:AdditionalPaidInCapitalMember2023-04-010001101302us-gaap:RetainedEarningsMember2023-04-010001101302us-gaap:AccumulatedTranslationAdjustmentMember2023-04-010001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-04-010001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-04-0100011013022023-04-010001101302us-gaap:CommonStockMember2023-04-022023-07-010001101302us-gaap:AdditionalPaidInCapitalMember2023-04-022023-07-0100011013022023-04-022023-07-010001101302us-gaap:RetainedEarningsMember2023-04-022023-07-010001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-04-022023-07-010001101302us-gaap:TreasuryStockCommonMember2023-04-022023-07-010001101302us-gaap:AccumulatedTranslationAdjustmentMember2023-04-022023-07-010001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-04-022023-07-010001101302us-gaap:CommonStockMember2023-07-010001101302us-gaap:TreasuryStockCommonMember2023-07-010001101302us-gaap:AdditionalPaidInCapitalMember2023-07-010001101302us-gaap:RetainedEarningsMember2023-07-010001101302us-gaap:AccumulatedTranslationAdjustmentMember2023-07-010001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-07-010001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-07-0100011013022023-07-010001101302us-gaap:CommonStockMember2023-07-022023-09-300001101302us-gaap:AdditionalPaidInCapitalMember2023-07-022023-09-300001101302us-gaap:RetainedEarningsMember2023-07-022023-09-300001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-07-022023-09-300001101302us-gaap:TreasuryStockCommonMember2023-07-022023-09-300001101302us-gaap:AccumulatedTranslationAdjustmentMember2023-07-022023-09-300001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-07-022023-09-300001101302us-gaap:CommonStockMember2023-09-300001101302us-gaap:TreasuryStockCommonMember2023-09-300001101302us-gaap:AdditionalPaidInCapitalMember2023-09-300001101302us-gaap:RetainedEarningsMember2023-09-300001101302us-gaap:AccumulatedTranslationAdjustmentMember2023-09-300001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-09-300001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-09-3000011013022023-09-300001101302us-gaap:CommonStockMember2023-12-310001101302us-gaap:TreasuryStockCommonMember2023-12-310001101302us-gaap:AdditionalPaidInCapitalMember2023-12-310001101302us-gaap:RetainedEarningsMember2023-12-310001101302us-gaap:AccumulatedTranslationAdjustmentMember2023-12-310001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-12-310001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-310001101302us-gaap:CommonStockMember2024-01-012024-03-300001101302us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-3000011013022024-01-012024-03-300001101302us-gaap:RetainedEarningsMember2024-01-012024-03-300001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-03-300001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-01-012024-03-300001101302us-gaap:AccumulatedTranslationAdjustmentMember2024-01-012024-03-300001101302us-gaap:CommonStockMember2024-03-300001101302us-gaap:TreasuryStockCommonMember2024-03-300001101302us-gaap:AdditionalPaidInCapitalMember2024-03-300001101302us-gaap:RetainedEarningsMember2024-03-300001101302us-gaap:AccumulatedTranslationAdjustmentMember2024-03-300001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-03-300001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-03-3000011013022024-03-300001101302us-gaap:CommonStockMember2024-03-312024-06-290001101302us-gaap:AdditionalPaidInCapitalMember2024-03-312024-06-2900011013022024-03-312024-06-290001101302us-gaap:RetainedEarningsMember2024-03-312024-06-290001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-03-312024-06-290001101302us-gaap:AccumulatedTranslationAdjustmentMember2024-03-312024-06-290001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-03-312024-06-290001101302us-gaap:CommonStockMember2024-06-290001101302us-gaap:TreasuryStockCommonMember2024-06-290001101302us-gaap:AdditionalPaidInCapitalMember2024-06-290001101302us-gaap:RetainedEarningsMember2024-06-290001101302us-gaap:AccumulatedTranslationAdjustmentMember2024-06-290001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-06-290001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-06-2900011013022024-06-290001101302us-gaap:CommonStockMember2024-06-302024-09-280001101302us-gaap:AdditionalPaidInCapitalMember2024-06-302024-09-280001101302us-gaap:RetainedEarningsMember2024-06-302024-09-280001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-06-302024-09-280001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-06-302024-09-280001101302us-gaap:AccumulatedTranslationAdjustmentMember2024-06-302024-09-280001101302us-gaap:CommonStockMember2024-09-280001101302us-gaap:TreasuryStockCommonMember2024-09-280001101302us-gaap:AdditionalPaidInCapitalMember2024-09-280001101302us-gaap:RetainedEarningsMember2024-09-280001101302us-gaap:AccumulatedTranslationAdjustmentMember2024-09-280001101302us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-09-280001101302us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-09-280001101302entg:PIMMember2024-03-012024-03-010001101302entg:PIMMember2024-03-010001101302entg:PIMMember2024-06-302024-09-280001101302entg:PIMMember2024-01-012024-09-280001101302entg:MaterialsSolutionsMSMember2023-12-310001101302entg:MicrocontaminationControlMCMember2023-12-310001101302entg:AdvancedMaterialsHandlingAMHMember2023-12-310001101302entg:MaterialsSolutionsMSMember2024-01-012024-09-280001101302entg:MicrocontaminationControlMCMember2024-01-012024-09-280001101302entg:AdvancedMaterialsHandlingAMHMember2024-01-012024-09-280001101302entg:MaterialsSolutionsMSMember2024-09-280001101302entg:MicrocontaminationControlMCMember2024-09-280001101302entg:AdvancedMaterialsHandlingAMHMember2024-09-280001101302us-gaap:DevelopedTechnologyRightsMember2024-09-280001101302us-gaap:TrademarksAndTradeNamesMember2024-09-280001101302us-gaap:CustomerRelationshipsMember2024-09-280001101302us-gaap:InProcessResearchAndDevelopmentMember2024-09-280001101302us-gaap:OtherIntangibleAssetsMember2024-09-280001101302us-gaap:DevelopedTechnologyRightsMember2023-12-310001101302us-gaap:TrademarksAndTradeNamesMember2023-12-310001101302us-gaap:CustomerRelationshipsMember2023-12-310001101302us-gaap:InProcessResearchAndDevelopmentMember2023-12-310001101302us-gaap:OtherIntangibleAssetsMember2023-12-310001101302entg:SecuredDebtDue2029Member2024-09-280001101302entg:SecuredDebtDue2029Member2023-12-310001101302entg:SeniorSecuredNotesDue2029Member2024-09-280001101302entg:SeniorSecuredNotesDue2029Member2023-12-310001101302entg:SeniorUnsecuredNotesDue2030Member2024-09-280001101302entg:SeniorUnsecuredNotesDue2030Member2023-12-310001101302entg:SeniorUnsecuredNotesDue2029Member2024-09-280001101302entg:SeniorUnsecuredNotesDue2029Member2023-12-310001101302entg:SeniorUnsecuredNotesDue2028Member2024-09-280001101302entg:SeniorUnsecuredNotesDue2028Member2023-12-310001101302us-gaap:RevolvingCreditFacilityMember2024-09-280001101302us-gaap:RevolvingCreditFacilityMember2023-12-310001101302us-gaap:DebtMember2024-01-012024-09-280001101302us-gaap:SubsequentEventMember2024-09-302024-09-300001101302us-gaap:DebtMember2024-06-302024-09-280001101302us-gaap:DebtMember2024-03-282024-03-280001101302us-gaap:FairValueInputsLevel1Member2024-09-280001101302us-gaap:FairValueInputsLevel1Member2023-12-310001101302us-gaap:FairValueInputsLevel2Member2024-09-280001101302us-gaap:FairValueInputsLevel2Member2023-12-310001101302us-gaap:FairValueInputsLevel3Member2024-09-280001101302us-gaap:FairValueInputsLevel3Member2023-12-310001101302us-gaap:FairValueInputsLevel12And3Member2024-09-280001101302us-gaap:FairValueInputsLevel12And3Member2023-12-310001101302us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateSwapMember2024-09-280001101302us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateSwapMember2023-12-310001101302us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2024-09-280001101302us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2023-12-310001101302us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2024-09-280001101302us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2023-12-310001101302us-gaap:FairValueInputsLevel12And3Memberus-gaap:InterestRateSwapMember2024-09-280001101302us-gaap:FairValueInputsLevel12And3Memberus-gaap:InterestRateSwapMember2023-12-310001101302us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherCurrentAssetsMember2024-09-280001101302us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherCurrentAssetsMember2023-12-310001101302us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentAssetsMember2024-09-280001101302us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentAssetsMember2023-12-310001101302us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-06-302024-09-280001101302us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-07-022023-09-300001101302us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-01-012024-09-280001101302us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-01-012023-09-300001101302us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2024-06-302024-09-280001101302us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2023-07-022023-09-300001101302us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2024-01-012024-09-280001101302us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2023-01-012023-09-3000011013022023-02-102023-02-100001101302entg:MaterialsSolutionsMSMember2024-06-302024-09-280001101302entg:MaterialsSolutionsMSMember2023-07-022023-09-300001101302entg:MaterialsSolutionsMSMember2023-01-012023-09-300001101302entg:MicrocontaminationControlMCMember2024-06-302024-09-280001101302entg:MicrocontaminationControlMCMember2023-07-022023-09-300001101302entg:MicrocontaminationControlMCMember2023-01-012023-09-300001101302entg:AdvancedMaterialsHandlingAMHMember2024-06-302024-09-280001101302entg:AdvancedMaterialsHandlingAMHMember2023-07-022023-09-300001101302entg:AdvancedMaterialsHandlingAMHMember2023-01-012023-09-300001101302entg:IntersegmentSalesEliminationMember2024-06-302024-09-280001101302entg:IntersegmentSalesEliminationMember2023-07-022023-09-300001101302entg:IntersegmentSalesEliminationMember2024-01-012024-09-280001101302entg:IntersegmentSalesEliminationMember2023-01-012023-09-300001101302country:USentg:MaterialsSolutionsMSMember2024-06-302024-09-280001101302country:USentg:MicrocontaminationControlMCMember2024-06-302024-09-280001101302country:USentg:AdvancedMaterialsHandlingAMHMember2024-06-302024-09-280001101302country:USentg:IntersegmentSalesEliminationMember2024-06-302024-09-280001101302country:US2024-06-302024-09-280001101302country:TWentg:MaterialsSolutionsMSMember2024-06-302024-09-280001101302country:TWentg:MicrocontaminationControlMCMember2024-06-302024-09-280001101302country:TWentg:AdvancedMaterialsHandlingAMHMember2024-06-302024-09-280001101302country:TWentg:IntersegmentSalesEliminationMember2024-06-302024-09-280001101302country:TW2024-06-302024-09-280001101302country:CNentg:MaterialsSolutionsMSMember2024-06-302024-09-280001101302country:CNentg:MicrocontaminationControlMCMember2024-06-302024-09-280001101302country:CNentg:AdvancedMaterialsHandlingAMHMember2024-06-302024-09-280001101302country:CNentg:IntersegmentSalesEliminationMember2024-06-302024-09-280001101302country:CN2024-06-302024-09-280001101302country:KRentg:MaterialsSolutionsMSMember2024-06-302024-09-280001101302country:KRentg:MicrocontaminationControlMCMember2024-06-302024-09-280001101302country:KRentg:AdvancedMaterialsHandlingAMHMember2024-06-302024-09-280001101302country:KRentg:IntersegmentSalesEliminationMember2024-06-302024-09-280001101302country:KR2024-06-302024-09-280001101302country:JPentg:MaterialsSolutionsMSMember2024-06-302024-09-280001101302country:JPentg:MicrocontaminationControlMCMember2024-06-302024-09-280001101302country:JPentg:AdvancedMaterialsHandlingAMHMember2024-06-302024-09-280001101302country:JPentg:IntersegmentSalesEliminationMember2024-06-302024-09-280001101302country:JP2024-06-302024-09-280001101302srt:EuropeMemberentg:MaterialsSolutionsMSMember2024-06-302024-09-280001101302srt:EuropeMemberentg:MicrocontaminationControlMCMember2024-06-302024-09-280001101302srt:EuropeMemberentg:AdvancedMaterialsHandlingAMHMember2024-06-302024-09-280001101302srt:EuropeMemberentg:IntersegmentSalesEliminationMember2024-06-302024-09-280001101302srt:EuropeMember2024-06-302024-09-280001101302entg:SoutheastAsiaMemberentg:MaterialsSolutionsMSMember2024-06-302024-09-280001101302entg:SoutheastAsiaMemberentg:MicrocontaminationControlMCMember2024-06-302024-09-280001101302entg:SoutheastAsiaMemberentg:AdvancedMaterialsHandlingAMHMember2024-06-302024-09-280001101302entg:SoutheastAsiaMemberentg:IntersegmentSalesEliminationMember2024-06-302024-09-280001101302entg:SoutheastAsiaMember2024-06-302024-09-280001101302country:USentg:MaterialsSolutionsMSMember2023-07-022023-09-300001101302country:USentg:MicrocontaminationControlMCMember2023-07-022023-09-300001101302country:USentg:AdvancedMaterialsHandlingAMHMember2023-07-022023-09-300001101302country:USentg:IntersegmentSalesEliminationMember2023-07-022023-09-300001101302country:US2023-07-022023-09-300001101302country:TWentg:MaterialsSolutionsMSMember2023-07-022023-09-300001101302country:TWentg:MicrocontaminationControlMCMember2023-07-022023-09-300001101302country:TWentg:AdvancedMaterialsHandlingAMHMember2023-07-022023-09-300001101302country:TWentg:IntersegmentSalesEliminationMember2023-07-022023-09-300001101302country:TW2023-07-022023-09-300001101302country:CNentg:MaterialsSolutionsMSMember2023-07-022023-09-300001101302country:CNentg:MicrocontaminationControlMCMember2023-07-022023-09-300001101302country:CNentg:AdvancedMaterialsHandlingAMHMember2023-07-022023-09-300001101302country:CNentg:IntersegmentSalesEliminationMember2023-07-022023-09-300001101302country:CN2023-07-022023-09-300001101302country:KRentg:MaterialsSolutionsMSMember2023-07-022023-09-300001101302country:KRentg:MicrocontaminationControlMCMember2023-07-022023-09-300001101302country:KRentg:AdvancedMaterialsHandlingAMHMember2023-07-022023-09-300001101302country:KRentg:IntersegmentSalesEliminationMember2023-07-022023-09-300001101302country:KR2023-07-022023-09-300001101302country:JPentg:MaterialsSolutionsMSMember2023-07-022023-09-300001101302country:JPentg:MicrocontaminationControlMCMember2023-07-022023-09-300001101302country:JPentg:AdvancedMaterialsHandlingAMHMember2023-07-022023-09-300001101302country:JPentg:IntersegmentSalesEliminationMember2023-07-022023-09-300001101302country:JP2023-07-022023-09-300001101302srt:EuropeMemberentg:MaterialsSolutionsMSMember2023-07-022023-09-300001101302srt:EuropeMemberentg:MicrocontaminationControlMCMember2023-07-022023-09-300001101302srt:EuropeMemberentg:AdvancedMaterialsHandlingAMHMember2023-07-022023-09-300001101302srt:EuropeMemberentg:IntersegmentSalesEliminationMember2023-07-022023-09-300001101302srt:EuropeMember2023-07-022023-09-300001101302entg:SoutheastAsiaMemberentg:MaterialsSolutionsMSMember2023-07-022023-09-300001101302entg:SoutheastAsiaMemberentg:MicrocontaminationControlMCMember2023-07-022023-09-300001101302entg:SoutheastAsiaMemberentg:AdvancedMaterialsHandlingAMHMember2023-07-022023-09-300001101302entg:SoutheastAsiaMemberentg:IntersegmentSalesEliminationMember2023-07-022023-09-300001101302entg:SoutheastAsiaMember2023-07-022023-09-300001101302country:USentg:MaterialsSolutionsMSMember2024-01-012024-09-280001101302country:USentg:MicrocontaminationControlMCMember2024-01-012024-09-280001101302country:USentg:AdvancedMaterialsHandlingAMHMember2024-01-012024-09-280001101302country:USentg:IntersegmentSalesEliminationMember2024-01-012024-09-280001101302country:US2024-01-012024-09-280001101302country:TWentg:MaterialsSolutionsMSMember2024-01-012024-09-280001101302country:TWentg:MicrocontaminationControlMCMember2024-01-012024-09-280001101302country:TWentg:AdvancedMaterialsHandlingAMHMember2024-01-012024-09-280001101302country:TWentg:IntersegmentSalesEliminationMember2024-01-012024-09-280001101302country:TW2024-01-012024-09-280001101302country:CNentg:MaterialsSolutionsMSMember2024-01-012024-09-280001101302country:CNentg:MicrocontaminationControlMCMember2024-01-012024-09-280001101302country:CNentg:AdvancedMaterialsHandlingAMHMember2024-01-012024-09-280001101302country:CNentg:IntersegmentSalesEliminationMember2024-01-012024-09-280001101302country:CN2024-01-012024-09-280001101302country:KRentg:MaterialsSolutionsMSMember2024-01-012024-09-280001101302country:KRentg:MicrocontaminationControlMCMember2024-01-012024-09-280001101302country:KRentg:AdvancedMaterialsHandlingAMHMember2024-01-012024-09-280001101302country:KRentg:IntersegmentSalesEliminationMember2024-01-012024-09-280001101302country:KR2024-01-012024-09-280001101302country:JPentg:MaterialsSolutionsMSMember2024-01-012024-09-280001101302country:JPentg:MicrocontaminationControlMCMember2024-01-012024-09-280001101302country:JPentg:AdvancedMaterialsHandlingAMHMember2024-01-012024-09-280001101302country:JPentg:IntersegmentSalesEliminationMember2024-01-012024-09-280001101302country:JP2024-01-012024-09-280001101302srt:EuropeMemberentg:MaterialsSolutionsMSMember2024-01-012024-09-280001101302srt:EuropeMemberentg:MicrocontaminationControlMCMember2024-01-012024-09-280001101302srt:EuropeMemberentg:AdvancedMaterialsHandlingAMHMember2024-01-012024-09-280001101302srt:EuropeMemberentg:IntersegmentSalesEliminationMember2024-01-012024-09-280001101302srt:EuropeMember2024-01-012024-09-280001101302entg:SoutheastAsiaMemberentg:MaterialsSolutionsMSMember2024-01-012024-09-280001101302entg:SoutheastAsiaMemberentg:MicrocontaminationControlMCMember2024-01-012024-09-280001101302entg:SoutheastAsiaMemberentg:AdvancedMaterialsHandlingAMHMember2024-01-012024-09-280001101302entg:SoutheastAsiaMemberentg:IntersegmentSalesEliminationMember2024-01-012024-09-280001101302entg:SoutheastAsiaMember2024-01-012024-09-280001101302country:USentg:MaterialsSolutionsMSMember2023-01-012023-09-300001101302country:USentg:MicrocontaminationControlMCMember2023-01-012023-09-300001101302country:USentg:AdvancedMaterialsHandlingAMHMember2023-01-012023-09-300001101302country:USentg:IntersegmentSalesEliminationMember2023-01-012023-09-300001101302country:US2023-01-012023-09-300001101302country:TWentg:MaterialsSolutionsMSMember2023-01-012023-09-300001101302country:TWentg:MicrocontaminationControlMCMember2023-01-012023-09-300001101302country:TWentg:AdvancedMaterialsHandlingAMHMember2023-01-012023-09-300001101302country:TWentg:IntersegmentSalesEliminationMember2023-01-012023-09-300001101302country:TW2023-01-012023-09-300001101302country:CNentg:MaterialsSolutionsMSMember2023-01-012023-09-300001101302country:CNentg:MicrocontaminationControlMCMember2023-01-012023-09-300001101302country:CNentg:AdvancedMaterialsHandlingAMHMember2023-01-012023-09-300001101302country:CNentg:IntersegmentSalesEliminationMember2023-01-012023-09-300001101302country:CN2023-01-012023-09-300001101302country:KRentg:MaterialsSolutionsMSMember2023-01-012023-09-300001101302country:KRentg:MicrocontaminationControlMCMember2023-01-012023-09-300001101302country:KRentg:AdvancedMaterialsHandlingAMHMember2023-01-012023-09-300001101302country:KRentg:IntersegmentSalesEliminationMember2023-01-012023-09-300001101302country:KR2023-01-012023-09-300001101302country:JPentg:MaterialsSolutionsMSMember2023-01-012023-09-300001101302country:JPentg:MicrocontaminationControlMCMember2023-01-012023-09-300001101302country:JPentg:AdvancedMaterialsHandlingAMHMember2023-01-012023-09-300001101302country:JPentg:IntersegmentSalesEliminationMember2023-01-012023-09-300001101302country:JP2023-01-012023-09-300001101302srt:EuropeMemberentg:MaterialsSolutionsMSMember2023-01-012023-09-300001101302srt:EuropeMemberentg:MicrocontaminationControlMCMember2023-01-012023-09-300001101302srt:EuropeMemberentg:AdvancedMaterialsHandlingAMHMember2023-01-012023-09-300001101302srt:EuropeMemberentg:IntersegmentSalesEliminationMember2023-01-012023-09-300001101302srt:EuropeMember2023-01-012023-09-300001101302entg:SoutheastAsiaMemberentg:MaterialsSolutionsMSMember2023-01-012023-09-300001101302entg:SoutheastAsiaMemberentg:MicrocontaminationControlMCMember2023-01-012023-09-300001101302entg:SoutheastAsiaMemberentg:AdvancedMaterialsHandlingAMHMember2023-01-012023-09-300001101302entg:SoutheastAsiaMemberentg:IntersegmentSalesEliminationMember2023-01-012023-09-300001101302entg:SoutheastAsiaMember2023-01-012023-09-300001101302us-gaap:SubsequentEventMember2024-10-162024-10-160001101302entg:BertrandLoyMember2024-06-302024-09-28
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________
FORM 10-Q
______________________________________________
(Mark One) | | | | | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 28, 2024
OR | | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 001-32598
_______________________________________
Entegris, Inc.
(Exact name of registrant as specified in its charter)
_________________________________________ | | | | | | | | | | | | | | |
Delaware | | 41-1941551 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | | |
129 Concord Road, | Billerica, | Massachusetts | | 01821 |
(Address of principal executive offices) | | (Zip Code) |
(978) 436-6500
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
_______________________________________
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common stock, $0.01 par value per share | | ENTG | | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | | | | | | | | | | | | | | | | | |
Large accelerated filer | | ý | Accelerated filer | | ☐ |
| | | |
Non-accelerated filer | | ¨ | Smaller reporting company | | ☐ |
| | | | | |
| | | Emerging growth company | | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
As of October 31, 2024, there were 150,997,961 shares of the registrant’s common stock outstanding.
ENTEGRIS, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
FOR THE QUARTER ENDED September 28, 2024
| | | | | |
Description | Page |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities | |
| |
| |
| |
Cautionary Statements
This Quarterly Report on Form 10-Q (this “Quarterly Report”) 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 fluctuations in demand for semiconductors; global economic uncertainty and the risks inherent in operating a global business; supply chain matters; 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 obtain, protect and enforce intellectual property rights; information technology risks; the Company’s ability to execute on our business strategies, including the 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 with respect to share repurchases, dividends, debt repayments and potential acquisitions; the impact of the acquisitions and divestitures 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 amount of goodwill we carry on our balance sheets; key employee retention; future capital and other expenditures, including estimates thereof; the Company’s expected tax rate; the impact, financial or otherwise, of any organizational changes or changes in the legal and regulatory environment in which we operate; the impact of accounting pronouncements; quantitative and qualitative disclosures about market risk; climate change and our environmental, social and governance commitments; 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 the ability to achieve the anticipated value-creation contemplated by the acquisition of CMC Materials; raw material shortages, supply and labor constraints, 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 effectively implement any organizational changes; the Company’s ability to protect and enforce intellectual property rights; the impact of regional and global instabilities, hostilities and geopolitical uncertainty, including, but not limited to, the ongoing conflicts between Ukraine and Russia and between Israel and Hamas and other tensions in the Middle East, as well as the global responses thereto; 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, 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, 2023, filed on February 15, 2024 (the “Annual Report”), 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.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | | | | |
(In thousands, except per share data) | September 28, 2024 | | December 31, 2023 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 432,072 | | | $ | 456,929 | |
Trade accounts receivable, net of allowance for credit losses of $4,901 and $6,412 | 503,165 | | | 457,052 | |
Inventories, net | 643,034 | | | 607,051 | |
Deferred tax charges and refundable income taxes | 26,941 | | | 63,879 | |
Assets held-for-sale | 7,004 | | | 278,753 | |
Other current assets | 102,873 | | | 113,663 | |
Total current assets | 1,715,089 | | | 1,977,327 | |
Property, plant and equipment, net of accumulated depreciation of $1,026,206 and $908,089 | 1,542,356 | | | 1,468,043 | |
Right-of-use assets - Operating lease | 63,634 | | | 57,990 | |
Right-of-use assets - Finance lease | 21,154 | | | 22,409 | |
Goodwill | 3,946,575 | | | 3,945,860 | |
Intangible assets, net of accumulated amortization of $953,421 and $808,298 | 1,138,630 | | | 1,281,969 | |
Deferred tax assets and other noncurrent tax assets | 20,340 | | | 31,432 | |
Other assets | 24,979 | | | 27,561 | |
Total assets | $ | 8,472,757 | | | $ | 8,812,591 | |
LIABILITIES AND EQUITY | | | |
Current liabilities: | | | |
Current portion of long-term debt | $ | 65,000 | | | $ | — | |
Accounts payable | 174,189 | | | 134,211 | |
Accrued payroll and related benefits | 108,279 | | | 109,559 | |
Accrued interest payable | 75,818 | | | 24,759 | |
Liabilities held-for-sale | 925 | | | 19,223 | |
Other accrued liabilities | 118,239 | | | 148,840 | |
Income taxes payable | 44,241 | | | 77,403 | |
Total current liabilities | 586,691 | | | 513,995 | |
Long-term debt, net of unamortized discount and debt issuance costs of $69,310 and $91,633 | 4,060,690 | | | 4,577,141 | |
Pension benefit obligations and other liabilities | 58,069 | | | 53,733 | |
Deferred tax liabilities and other noncurrent tax liabilities | 101,780 | | | 190,142 | |
Long term lease liability - Operating lease | 54,540 | | | 49,719 | |
Long term lease liability - Finance lease | 18,477 | | | 19,267 | |
Equity: | | | |
Preferred stock, par value $0.01; 5,000 shares authorized; none issued and outstanding as of September 28, 2024 and December 31, 2023 | — | | | — | |
Common stock, par value $0.01; 400,000 shares authorized; issued and outstanding shares as of September 28, 2024: 151,193 and 150,991, respectively; issued and outstanding shares as of December 31, 2023: 150,566 and 150,364, respectively | 1,512 | | | 1,506 | |
Treasury stock, at cost: 202 shares held as of September 28, 2024 and December 31, 2023 | (7,112) | | | (7,112) | |
Additional paid-in capital | 2,360,923 | | | 2,305,367 | |
Retained earnings | 1,296,839 | | | 1,151,765 | |
Accumulated other comprehensive loss | (59,652) | | | (42,932) | |
Total equity | 3,592,510 | | | 3,408,594 | |
Total liabilities and equity | $ | 8,472,757 | | | $ | 8,812,591 | |
See the accompanying notes to condensed consolidated financial statements.
ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Nine months ended |
(In thousands, except per share data) | September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
Net sales | $ | 807,694 | | | $ | 888,239 | | | $ | 2,391,371 | | | $ | 2,711,635 | |
Cost of sales | 435,869 | | | 521,165 | | | 1,291,907 | | | 1,558,710 | |
Gross profit | 371,825 | | | 367,074 | | | 1,099,464 | | | 1,152,925 | |
Selling, general and administrative expenses | 108,455 | | | 116,051 | | | 336,963 | | | 431,514 | |
Engineering, research and development expenses | 80,903 | | | 66,810 | | | 234,664 | | | 209,746 | |
Amortization of intangible assets | 46,226 | | | 51,239 | | | 143,898 | | | 163,493 | |
Goodwill impairment | — | | | 15,913 | | | — | | | 104,785 | |
Gain on termination of alliance agreement | — | | | — | | | — | | | (154,754) | |
Operating income | 136,241 | | | 117,061 | | | 383,939 | | | 398,141 | |
Interest expense | 51,666 | | | 77,820 | | | 162,726 | | | 244,874 | |
Interest income | (1,247) | | | (2,226) | | | (5,401) | | | (5,854) | |
Other (income) expense, net | (212) | | | 10,243 | | | 17,050 | | | 13,309 | |
Income before income tax expense (benefit) | 86,034 | | | 31,224 | | | 209,564 | | | 145,812 | |
Income tax expense (benefit) | 8,190 | | | (2,127) | | | 18,335 | | | 2,851 | |
Equity in net loss of affiliates | 262 | | | 139 | | | 685 | | | 269 | |
Net income | $ | 77,582 | | | $ | 33,212 | | | $ | 190,544 | | | $ | 142,692 | |
| | | | | | | |
Basic earnings per common share | $ | 0.51 | | | $ | 0.22 | | | $ | 1.26 | | | $ | 0.95 | |
Diluted earnings per common share | $ | 0.51 | | | $ | 0.22 | | | $ | 1.26 | | | $ | 0.95 | |
| | | | | | | |
Weighted average shares outstanding: | | | | | | | |
Basic | 151,196 | | 150,127 | | 150,849 | | 149,793 |
Diluted | 151,924 | | 151,229 | | 151,820 | | 150,816 |
See the accompanying notes to condensed consolidated financial statements.
ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Nine months ended |
(In thousands) | September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
Net income | $ | 77,582 | | | $ | 33,212 | | | $ | 190,544 | | | $ | 142,692 | |
Other comprehensive income (loss), net of tax | | | | | | | |
Foreign currency translation adjustments | 12,108 | | | (9,174) | | | (2,683) | | | (23,451) | |
Pension liability adjustments | (71) | | | (33) | | | (450) | | | 4 | |
Interest rate swap - cash flow hedge, change in fair value - loss, net of tax benefit of $(2,880) and $(3,963) for the three and nine months ended September 28, 2024, respectively, and $(598) and $(667) for the three and nine months ended September 30, 2023 respectively | (9,873) | | | (2,050) | | | (13,587) | | | (2,289) | |
Other comprehensive income (loss), net of tax | 2,164 | | | (11,257) | | | (16,720) | | | (25,736) | |
Comprehensive income | $ | 79,746 | | | $ | 21,955 | | | $ | 173,824 | | | $ | 116,956 | |
See the accompanying notes to condensed consolidated financial statements.
ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | Common shares issued | | Treasury shares | | Common shares outstanding | | Common stock | | Treasury stock | | Additional paid-in capital | | Retained earnings | | Foreign currency translation adjustments | | Defined benefit pension adjustments | | Interest rate swap - cash flow hedge | | Total |
Balance at December 31, 2022 | 149,339 | | | (202) | | | 149,137 | | | $ | 1,493 | | | $ | (7,112) | | | $ | 2,205,325 | | | $ | 1,031,391 | | | $ | (49,083) | | | $ | (83) | | | $ | 36,069 | | | $ | 3,218,000 | |
Shares issued under stock plans | 530 | | | — | | | 530 | | | 6 | | | — | | | 8,981 | | | — | | | — | | | — | | | — | | | 8,987 | |
Share-based compensation expense | — | | | — | | | — | | | — | | | — | | | 30,678 | | | — | | | — | | | — | | | — | | | 30,678 | |
Dividends declared ($0.10 per share) | — | | | — | | | — | | | — | | | — | | | — | | | (15,092) | | | — | | | — | | | — | | | (15,092) | |
Interest rate swap - cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (9,955) | | | (9,955) | |
Pension liability adjustment | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 37 | | | — | | | 37 | |
Foreign currency translation | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 23,734 | | | — | | | — | | | 23,734 | |
Net loss | — | | | — | | | — | | | — | | | — | | | — | | | (88,166) | | | — | | | — | | | — | | | (88,166) | |
Balance at April 1, 2023 | 149,869 | | | (202) | | | 149,667 | | | $ | 1,499 | | | $ | (7,112) | | | $ | 2,244,984 | | | $ | 928,133 | | | $ | (25,349) | | | $ | (46) | | | $ | 26,114 | | | $ | 3,168,223 | |
Shares issued under stock plans | 439 | | | — | | | 439 | | | 4 | | | — | | | 18,130 | | | — | | | — | | | — | | | — | | | 18,134 | |
Share-based compensation expense | — | | | — | | | — | | | — | | | — | | | 11,458 | | | — | | | — | | | — | | | — | | | 11,458 | |
Dividends declared ($0.10 per share) | — | | | — | | | — | | | — | | | — | | | — | | | (14,961) | | | — | | | — | | | — | | | (14,961) | |
Interest rate swap - cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,716 | | | 9,716 | |
Pension liability adjustment | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Foreign currency translation | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (38,011) | | | — | | | — | | | (38,011) | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | 197,646 | | | — | | | — | | | — | | | 197,646 | |
Balance at July 1, 2023 | 150,308 | | | (202) | | | 150,106 | | | $ | 1,503 | | | $ | (7,112) | | | $ | 2,274,572 | | | $ | 1,110,818 | | | $ | (63,360) | | | $ | (46) | | | $ | 35,830 | | | $ | 3,352,205 | |
Shares issued under stock plans | 49 | | | — | | | 49 | | | 1 | | | — | | | (1,029) | | | — | | | — | | | — | | | — | | | (1,028) | |
Share-based compensation expense | — | | | — | | | — | | | — | | | — | | | 10,280 | | | — | | | — | | | — | | | — | | | 10,280 | |
Dividends declared ($0.10 per share) | — | | | — | | | — | | | — | | | — | | | — | | | (15,123) | | | — | | | — | | | — | | | (15,123) | |
Interest rate swap - cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,050) | | | (2,050) | |
Pension liability adjustment | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (33) | | | — | | | (33) | |
Foreign currency translation | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (9,174) | | | — | | | — | | | (9,174) | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | 33,212 | | | — | | | — | | | — | | | 33,212 | |
Balance at September 30, 2023 | 150,357 | | | (202) | | | 150,155 | | | $ | 1,504 | | | $ | (7,112) | | | $ | 2,283,823 | | | $ | 1,128,907 | | | $ | (72,534) | | | $ | (79) | | | $ | 33,780 | | | $ | 3,368,289 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | Common shares issued | | Treasury shares | | Common shares outstanding | | Common stock | | Treasury stock | | Additional paid-in capital | | Retained earnings | | Foreign currency translation adjustments | | Defined benefit pension adjustments | | Interest rate swap - cash flow hedge | | Total |
Balance at December 31, 2023 | 150,566 | | | (202) | | | 150,364 | | | $ | 1,506 | | | $ | (7,112) | | | $ | 2,305,367 | | | $ | 1,151,765 | | | $ | (61,880) | | | $ | 314 | | | $ | 18,634 | | | $ | 3,408,594 | |
Shares issued under stock plans | 405 | | | — | | | 405 | | | 4 | | | — | | | (5,459) | | | — | | | — | | | — | | | — | | | (5,455) | |
Share-based compensation expense | — | | | — | | | — | | | — | | | — | | | 7,908 | | | — | | | — | | | — | | | — | | | 7,908 | |
Dividends declared ($0.10 per share) | — | | | — | | | — | | | — | | | — | | | — | | | (15,040) | | | — | | | — | | | — | | | (15,040) | |
Interest rate swap - cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (1,073) | | | (1,073) | |
Pension liability adjustment | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (379) | | | — | | | (379) | |
Foreign currency translation | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (9,651) | | | — | | | — | | | (9,651) | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | 45,266 | | | — | | | — | | | — | | | 45,266 | |
Balance at March 30, 2024 | 150,971 | | | (202) | | | 150,769 | | | $ | 1,510 | | | $ | (7,112) | | | $ | 2,307,816 | | | $ | 1,181,991 | | | $ | (71,531) | | | $ | (65) | | | $ | 17,561 | | | $ | 3,430,170 | |
Shares issued under stock plans | 58 | | | — | | | 58 | | | — | | | — | | | 616 | | | — | | | — | | | — | | | — | | | 616 | |
Share-based compensation expense | — | | | — | | | — | | | — | | | — | | | 26,889 | | | — | | | — | | | — | | | — | | | 26,889 | |
Dividends declared ($0.10 per share) | — | | | — | | | — | | | — | | | — | | | — | | | (15,200) | | | — | | | — | | | — | | | (15,200) | |
Interest rate swap - cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,641) | | | (2,641) | |
| | | | | | | | | | | | | | | | | | | | | |
Foreign currency translation | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (5,140) | | | — | | | — | | | (5,140) | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | 67,696 | | | — | | | — | | | — | | | 67,696 | |
Balance at June 29, 2024 | 151,029 | | | (202) | | | 150,827 | | | $ | 1,510 | | | $ | (7,112) | | | $ | 2,335,321 | | | $ | 1,234,487 | | | $ | (76,671) | | | $ | (65) | | | $ | 14,920 | | | $ | 3,502,390 | |
Shares issued under stock plans | 164 | | | — | | | 164 | | | 2 | | | — | | | 10,050 | | | — | | | — | | | — | | | — | | | 10,052 | |
Share-based compensation expense | — | | | — | | | — | | | — | | | — | | | 15,552 | | | — | | | — | | | — | | | — | | | 15,552 | |
Dividends declared ($0.10 per share) | — | | | — | | | — | | | — | | | — | | | — | | | (15,230) | | | — | | | — | | | — | | | (15,230) | |
Interest rate swap - cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (9,873) | | | (9,873) | |
Pension liability adjustment | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (71) | | | — | | | (71) | |
Foreign currency translation | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 12,108 | | | — | | | — | | | 12,108 | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | 77,582 | | | — | | | — | | | — | | | $ | 77,582 | |
Balance at September 28, 2024 | 151,193 | | | (202) | | | 150,991 | | | $ | 1,512 | | | $ | (7,112) | | | $ | 2,360,923 | | | $ | 1,296,839 | | | $ | (64,563) | | | $ | (136) | | | $ | 5,047 | | | $ | 3,592,510 | |
See the accompanying notes to condensed consolidated financial statements.
ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) | | | | | | | | | | | |
| Nine months ended |
(In thousands) | September 28, 2024 | | September 30, 2023 |
Operating activities: | | | |
Net income | $ | 190,544 | | | $ | 142,692 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation | 139,848 | | | 130,125 | |
Amortization | 143,898 | | | 163,493 | |
Share-based compensation expense | 50,349 | | | 52,416 | |
| | | |
Provision for deferred income taxes | (47,067) | | | (95,366) | |
Impairment of goodwill | — | | | 104,785 | |
Loss on extinguishment of debt | 11,385 | | | 10,862 | |
(Gain) loss from sale of businesses and held-for-sale assets, net | (4,311) | | | 28,579 | |
Gain on termination of alliance agreement | — | | | (154,754) | |
Charge for excess and obsolete inventory | 29,882 | | | 29,314 | |
Impairment of long-lived assets | 12,967 | | | — | |
Amortization of debt issuance costs and original issuance discounts | 11,413 | | | 16,718 | |
Other | 4,533 | | | 21,801 | |
Changes in operating assets and liabilities: | | | |
Trade accounts receivable | (52,075) | | | (295) | |
Inventories | (68,872) | | | 63,340 | |
Accounts payable and accrued liabilities | 52,563 | | | 11,804 | |
Other current assets | 450 | | | 1,644 | |
Income taxes payable and refundable income taxes | (23,708) | | | (36,774) | |
Other | 3,826 | | | (4,013) | |
Net cash provided by operating activities | 455,625 | | | 486,371 | |
Investing activities: | | | |
Acquisition of property, plant and equipment | (208,082) | | | (328,182) | |
| | | |
Proceeds from sale of businesses, net | 250,789 | | | 134,286 | |
Proceeds from termination of alliance agreement | — | | | 169,251 | |
Other | (1,875) | | | 1,919 | |
Net cash provided by (used in) investing activities | 40,832 | | | (22,726) | |
Financing activities: | | | |
Proceeds from revolving credit facility and short-term debt | 30,000 | | | — | |
Payments of revolving credit facility and short-term debt | (30,000) | | | (135,000) | |
Proceeds from long-term debt | 224,537 | | | 217,449 | |
Payments of long-term debt | (698,311) | | | (468,950) | |
| | | |
Payments for debt issuance costs | — | | | (3,475) | |
Payments for dividends | (45,478) | | | (45,202) | |
Issuance of common stock | 13,617 | | | 30,174 | |
| | | |
Taxes paid related to net share settlement of equity awards | (16,146) | | | (11,540) | |
| | | |
Other | (1,815) | | | (923) | |
Net cash used in financing activities | (523,596) | | | (417,467) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2,282 | | | (15,597) | |
(Decrease) increase in cash, cash equivalents and restricted cash | (24,857) | | | 30,581 | |
Cash, cash equivalents and restricted cash at beginning of period | 456,929 | | | 563,439 | |
Cash, cash equivalents and restricted cash at end of period | $ | 432,072 | | | $ | 594,020 | |
See the accompanying notes to condensed consolidated financial statements.
ENTEGRIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
| | | | | | | | | | | |
Supplemental Cash Flow Information | Nine months ended |
(In thousands) | September 28, 2024 | | September 30, 2023 |
Non-cash transactions: | | | |
Equipment purchases in accounts payable | $ | 35,062 | | | $ | 35,684 | |
Share issuance in exchange for extinguishment of Employee Stock Purchase Plan liability | 7,741 | | | 7,459 | |
Dividend payable | 720 | | | 628 | |
Schedule of interest and income taxes paid: | | | |
Interest paid, net of capitalized interest | 99,700 | | | 292,416 | |
Income taxes paid, net of refunds received | 92,333 | | | 129,474 | |
See the accompanying notes to condensed consolidated financial statements.
ENTEGRIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations Entegris, Inc. (“Entegris”, the “Company”, “us”, “we”, or “our”) is a leading supplier of advanced materials and process solutions for the semiconductor and other high-technology industries.
Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Intercompany profits, transactions and balances have been eliminated in consolidation. Reclassifications of certain prior year amounts have been made to conform to the current year presentation.
Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, particularly receivables, inventories, property, plant and equipment, right-of-use assets, goodwill, intangibles, accrued expenses, short-term and long-term lease liabilities, income taxes and related accounts, and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and contain all adjustments considered necessary, and are of a normal recurring nature, to present fairly the Company’s financial position as of September 28, 2024 and December 31, 2023, the results of operations and comprehensive income for the three and nine months ended September 28, 2024 and September 30, 2023, the equity statements as of and for the three and nine months ended September 28, 2024 and September 30, 2023, and cash flows for the nine months ended September 28, 2024 and September 30, 2023.
The condensed consolidated financial statements and accompanying notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company’s annual consolidated financial statements and notes. The information included in this Quarterly Report should be read in conjunction with Management’s Discussion and Analysis and consolidated financial statements and notes thereto included in the Company’s Annual Report. The results of operations for the three and nine months ended September 28, 2024 are not necessarily indicative of the results to be expected for the full year.
Recently Adopted Accounting Pronouncements The Company currently has no material recently adopted accounting pronouncements.
Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The updated standard is effective for our annual periods beginning in fiscal year 2024 and interim periods beginning in the first quarter of fiscal year 2025. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective for our annual periods beginning in fiscal year 2025. The guidance does not affect recognition or measurement in our condensed consolidated financial statements. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.
2. REVENUES
The following table provides information about current contract liabilities from contracts with customers. The contract liabilities are included in Other accrued liabilities in the condensed consolidated balance sheets.
| | | | | | | | | | | |
| |
(In thousands) | September 28, 2024 | | September 30, 2023 |
Balance at beginning of period | $ | 69,051 | | | $ | 60,476 | |
Revenue recognized that was included in the contract liability balance at the beginning of the period | (51,582) | | | (32,736) | |
Increases due to cash received, excluding amounts recognized as revenue during the period | 28,726 | | | 56,145 | |
Contract liabilities included as part of dispositions and held-for-sale | — | | | (6,226) | |
Balance at end of period | $ | 46,195 | | | $ | 77,659 | |
3. GOODWILL AND LONG-LIVED ASSET IMPAIRMENT
Electronic Chemicals
During the first quarter of 2023, while the criteria to classify the reporting unit as held-for-sale had not been met, the Company was exploring market interest in a potential sale of the Electronic Chemicals (“EC”) reporting unit within the Materials Solutions (“MS”) segment. In connection with the sale process, management determined that certain impairment indicators were present and evaluated goodwill, intangible assets, and long-lived assets for impairment in connection with the quarter ended April 1, 2023. The Company completed the divestiture of the EC business on October 2, 2023.
Long-lived assets, including finite-lived intangible assets
During the first quarter of 2023, the Company compared the estimated undiscounted future cash flows generated by the asset group to the carrying amount of the asset group for the reporting unit and determined that the undiscounted cash flows were expected to exceed the carrying value on a held and used basis. Therefore, no impairment was recorded on the long-lived assets or finite-lived intangible assets. The Company considered if the triggering event would cause a potential change to the useful life of the assets and determined no modification to the useful life of the assets was necessary.
Goodwill
The Company compared the reporting unit’s fair value to its carrying amount, including goodwill as of April 1, 2023. As the reporting unit’s carrying amount, including goodwill, exceeded its fair value, the Company determined the goodwill was impaired and recorded an impairment of $88.9 million during the quarter ended April 1, 2023 and an incremental impairment loss was recorded with the finalization of certain purchase price adjustments of $15.9 million during the three months ended September 30, 2023. The impairment was classified as Goodwill impairment in the Company’s condensed consolidated statements of operations. The goodwill impairment was non-taxable. The fair value of the reporting unit was determined using a market-based approach, which was aligned to the expected selling price of approximately $700.0 million. We consider this a Level 3 measurement in the fair value hierarchy. There was no goodwill impairment charge recorded during the three and nine months ended September 28, 2024.
Other business
The Company recorded an impairment charge of $13.0 million related to the long-lived assets of a small, industrial specialty chemicals business that reports within the MS segment due to a change in the fair value of the reporting unit for the three months ended March 30, 2024. The impairment is classified as selling, general and administrative expenses in the Company’s condensed consolidated statements of operations. No further impairment charge was recorded in the three months ended September 28, 2024. The fair value of the reporting unit was determined using a market-based approach. We consider this a Level 3 measurement in the fair value hierarchy. This business remains classified as an asset held-for-sale as of September 28, 2024; see Note 4 for further discussion.
4. ASSET HELD-FOR-SALE AND DIVESTITURE
Asset Held-For-Sale - Other
During the fourth quarter of 2023, the Company began the process to sell a small, industrial specialty chemicals business that reports within the MS segment. The related assets and liabilities of the business were classified as held-for-sale in the Company’s condensed consolidated balance sheets and measured at the lower of their carrying amount or fair value less cost to sell. The assets and liabilities continue to be marketed for sale and are classified as held-for-sale at September 28, 2024.
The proposed disposition of the business did not meet the criteria to be classified as a discontinued operation in the Company’s financial statements since the disposition did not represent a strategic shift that had, or will have, a major effect on the Company’s operations and financial results.
Assets held-for-sale and liabilities held-for-sale recorded on the balance sheet were $7.0 million and $0.9 million, respectively, as of September 28, 2024. The loss before income taxes attributable to the business was not significant for the three and nine months ended September 28, 2024, respectively, except for the impairment charge of $13.0 million as noted in Note 3 for the nine months ended September 28, 2024.
Divestiture - Pipeline and Industrial Materials
During the first quarter of 2024, the Company completed the sale of its Pipeline and Industrial Materials (“PIM”) business, which became part of the Company with the acquisition of CMC Materials, to SCF Partners, Inc. The PIM business specializes in the manufacture and sale of drag reducing agents and a range of valve maintenance products and services for the oil and gas industry, and reported into the MS segment of the Company.
The Company received gross cash proceeds of $263.2 million, or net proceeds of $256.2 million, and up to $25.0 million in cash earn-out payments contingent upon the performance of the PIM business in 2025 and 2026.
The Company’s policy is to account for the contingent consideration arrangement in accordance with ASC 450, Contingencies (Subtopic 450-30). Under this approach, the Company recognizes the contingent consideration receivable in earnings after the contingency is resolved. Accordingly, to determine the initial gain on the sale of the PIM business, the Company did not include an amount related to the contingent consideration arrangement as part of the consideration received.
The following table summarizes the fair value of the sale proceeds received in connection with the divestiture, which are subject to final post-closing adjustment:
| | | | | | | | |
(In thousands) | | March 1, 2024 |
Cash proceeds received, gross | | $ | 263,208 | |
Final working capital adjustment | | 1,189 | |
Cash transferred to the buyer on the closing balance sheet | | (230) | |
Direct costs to sell | | (8,005) | |
Fair value of sale consideration | | $ | 256,162 | |
The disposition of the PIM business did not meet the criteria to be classified as a discontinued operation in the Company’s financial statements since the disposition did not represent a strategic shift that had, or will have, a major effect on the Company’s operations and financial results.
The carrying amount of net assets associated with the PIM business was approximately $252.8 million. The major classes of assets and liabilities sold consisted of the following:
| | | | | | | | |
(In thousands) | | |
Assets: | | March 1, 2024 |
Current assets | | $ | 58,684 | |
Property, plant and equipment, net | | 118,146 | |
Intangible assets, net | | 76,692 | |
Goodwill | | 12,707 | |
Other assets | | 2,500 | |
Total assets held-for-sale | | $ | 268,729 | |
| | |
Liabilities: | | |
Accounts payable | | $ | 9,485 | |
Accrued expenses | | 4,672 | |
Long-term liabilities | | 1,737 | |
Total liabilities held-for-sale | | $ | 15,894 | |
As a result of the sale of the PIM business, the Company recognized a pre-tax loss (gain) of $0.0 million and $(4.3) million, inclusive of a $1.0 million gain reclassified from Accumulated other comprehensive loss for foreign currency translation, presented in Selling, general and administrative expenses in the condensed consolidated statements of operations for the three and nine months ended September 28, 2024, respectively. The Company recorded an income tax (benefit) expense associated with the PIM divestiture of approximately $0.0 million and $1.0 million for the three and nine months ended September 28, 2024, respectively.
5. INVENTORIES
Inventories consisted of the following:
| | | | | | | | | | | |
(In thousands) | September 28, 2024 | | December 31, 2023 |
Raw materials | $ | 250,025 | | | $ | 248,656 | |
Work-in-process | 56,857 | | | 49,704 | |
Finished goods (1) | 336,152 | | | 308,691 | |
Total inventories, net | $ | 643,034 | | | $ | 607,051 | |
(1) Includes consignment inventories held by customers of $22.3 million and $20.8 million at September 28, 2024 and December 31, 2023, respectively.
6. GOODWILL AND INTANGIBLE ASSETS
Goodwill activity for each of the Company’s reportable segments that carry goodwill, Material Solutions (“MS”), Microcontamination Control (“MC”), and Advanced Materials Handling (“AMH”), was as follows at September 28, 2024 and December 31, 2023: | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | MS | | MC | | AMH | | Total | | |
December 31, 2023 | $ | 3,631,350 | | | $ | 240,408 | | | $ | 74,102 | | | $ | 3,945,860 | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Foreign currency translation | (6) | | | 721 | | | — | | | 715 | | | |
September 28, 2024 | $ | 3,631,344 | | | $ | 241,129 | | | $ | 74,102 | | | $ | 3,946,575 | | | |
Identifiable intangible assets at September 28, 2024 and December 31, 2023 consisted of the following: | | | | | | | | | | | | | | | | | |
September 28, 2024 |
(In thousands) | Gross carrying amount | | Accumulated amortization | | Net carrying value |
Developed technology | $ | 1,257,034 | | | $ | 565,448 | | | $ | 691,586 | |
Trademarks and trade names | 172,050 | | | 46,092 | | | 125,958 | |
Customer relationships | 630,822 | | | 319,652 | | | 311,170 | |
In-process research and development (1) | 6,600 | | | — | | | 6,600 | |
Other | 25,545 | | | 22,229 | | | 3,316 | |
| $ | 2,092,051 | | | $ | 953,421 | | | $ | 1,138,630 | |
| | | | | | | | | | | | | | | | | |
December 31, 2023 |
(In thousands) | Gross carrying amount | | Accumulated amortization | | Net carrying value |
Developed technology | $ | 1,256,469 | | | $ | 455,720 | | | $ | 800,749 | |
Trademarks and trade names | 172,031 | | | 37,877 | | | 134,154 | |
Customer relationships | 630,743 | | | 293,782 | | | 336,961 | |
In-process research and development (1) | 7,100 | | | — | | | 7,100 | |
Other | 23,924 | | | 20,919 | | | 3,005 | |
| $ | 2,090,267 | | | $ | 808,298 | | | $ | 1,281,969 | |
(1) Intangible assets acquired in a business combination that are in-process and used in research and development activities are considered indefinite-lived until the completion or abandonment of the research and development efforts. Once the research and development efforts are completed, we move the asset to developed technology, determine the useful life and begin amortizing the assets.
Future amortization expense relating to intangible assets currently recorded in the Company’s condensed consolidated balance sheets is estimated to be the following at September 28, 2024: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | Remaining 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Total |
Future amortization expense | $ | 139,613 | | | 185,370 | | | 180,380 | | | 177,822 | | | 174,709 | | | 280,736 | | | $ | 1,138,630 | |
7. DEBT
The Company’s debt as of September 28, 2024 and December 31, 2023 consisted of the following: | | | | | | | | | | | |
(In thousands) | September 28, 2024 | | December 31, 2023 |
Senior secured term loans B due 2029 at 4.71% (1) | 900,000 | | | 1,373,774 | |
Senior secured notes due 2029 at 4.75% | 1,600,000 | | | 1,600,000 | |
Senior unsecured notes due 2030 at 5.95% | 895,000 | | | 895,000 | |
Senior unsecured notes due 2029 at 3.625% | 400,000 | | | 400,000 | |
Senior unsecured notes due 2028 at 4.375% | 400,000 | | | 400,000 | |
| | | |
| | | |
Revolving facility due 2027 at 7.08% (2) | — | | | — | |
Total debt (par value) | 4,195,000 | | | 4,668,774 | |
Unamortized discount and debt issuance costs | 69,310 | | | 91,633 | |
Total debt, net | 4,125,690 | | | 4,577,141 | |
Less current portion of long-term debt | 65,000 | | | — | |
Total long-term debt, net | $ | 4,060,690 | | | $ | 4,577,141 | |
Annual maturities of long-term debt, excluding unamortized discount and debt issuance costs, due as of September 28, 2024 were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | Remaining 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Total |
Long-term debt obligation maturities* | $65,000 (3) | | — | | | — | | | — | | | 400,000 | | | 3,730,000 | | | $ | 4,195,000 | |
* Senior secured term loans B subject to Excess Cash Flow payments to the lenders.
(1) The Company entered into a floating-to-fixed swap contract on its variable rate debt under our senior secured term loan facility due 2029. The effective interest rate after consideration of this floating-to-fixed swap contract was 4.71%. Refer to Note 9 for a description of our interest rate swap contract.
(2) Our senior secured revolving credit facility due 2027 (the “Revolving Facility”) bears interest at a rate per annum equal to SOFR, plus an applicable margin of 1.75%. The Revolving Facility has commitments of $575.0 million.
(3) On September 30, 2024, the Company repaid a total of $65.0 million of the outstanding borrowings under the senior secured term loans B due 2029. The Company has classified the debt associated with the repayment as a current liability in the condensed consolidated balance sheets as of September 28, 2024, based on both its intent and ability to repay the debt within the next 12 months.
Senior secured term loans B due 2029
On March 28, 2024, the Company and certain of its subsidiaries entered into Amendment No. 3 (the “Third Amendment”), with the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent, which amended the Credit and Guaranty Agreement, dated as of November 6, 2018 (as amended and restated as of July 6, 2022 and as subsequently amended on each of March 10, 2023 and September 11, 2023, the “Existing Credit Agreement” and, the Existing Credit Agreement as amended by the Third Amendment, the “Amended Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company party thereto, as guarantors, the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent.
The Third Amendment provides for, among other things, the reduction of the applicable rate of the Company’s outstanding senior secured term loans B under the Existing Credit Agreement. After giving effect to the Third Amendment, such outstanding term loans B bear interest, at a rate per annum equal to, at the Company’s option, either (i) Term SOFR plus an applicable margin of 1.75% or (ii) a base rate plus an applicable margin of 0.75%. Other than as described herein (and more fully described in the Third Amendment), the terms of the Amended Credit Agreement are substantially similar to the terms of the Existing Credit Agreement. In connection with the Third Amendment, the Company made a prepayment of $354.5 million on the term loans B.
During the three and nine months ended September 28, 2024, the Company repaid a total of $0.0 million and $473.8 million of the outstanding borrowings under the term loans B. For more information concerning repayments of outstanding borrowings under our term loans B, please see Note 14. Subsequent Events. In connection with these repayments and entry into the Third Amendment, the Company incurred a pre-tax loss on extinguishment and modification of debt of $0.0 million and $12.3 million for the three and nine months ended September 28, 2024, respectively, which is included in Other (income) expense, net in the condensed consolidated statements of operations.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company is required to record certain assets and liabilities at fair value. The valuation methods used for determining the fair value of these financial instruments by hierarchy are as follows:
Level 1 Cash and cash equivalents consist of various bank accounts used to support our operations and investments in institutional money-market funds that are traded in active markets.
Level 2 Derivative financial instruments include an interest rate swap contract. The fair value of our derivative instruments is estimated using standard valuation models and market-based observable inputs over the contractual term, including the prevailing SOFR-based yield curves for the interest rate swap, and forward rates. The fair value of our debt is estimated
based on independent broker/dealer bids or by comparison to other debt securities having similar durations, yields and credit
ratings.
Level 3 No Level 3 financial instruments.
The following table presents financial instruments, other than debt, that we measure at fair value on a recurring basis. See Note 7 to our condensed consolidated financial statements for a discussion of our debt. In instances where the inputs used to measure the fair value of an asset fall into more than one level of the hierarchy, we have classified it based on the lowest level input that is significant to the determination of the fair value.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value Measurements at Reporting Date Using |
(In thousands): | Level 1 | | Level 2 | | Level 3 | | Total |
Assets: | September 28, 2024 | December 31, 2023 | | September 28, 2024 | December 31, 2023 | | September 28, 2024 | December 31, 2023 | | September 28, 2024 | December 31, 2023 |
Cash and cash equivalents | $ | 432,072 | | $ | 456,929 | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 432,072 | | $ | 456,929 | |
| | | | | | | | | | | |
Derivative financial instruments - Interest rate swap - cash flow hedge | — | | — | | | 6,519 | | 24,069 | | | — | | — | | | 6,519 | | 24,069 | |
| | | | | | | | | | | |
Total | $ | 432,072 | | $ | 456,929 | | | $ | 6,519 | | $ | 24,069 | | | $ | — | | $ | — | | | $ | 438,591 | | $ | 480,998 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Other Fair Value Disclosures
The estimated fair value and carrying value of our debt as of September 28, 2024 and December 31, 2023 were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | September 28, 2024 | | December 31, 2023 |
(In thousands) | | Carrying Value | Fair Value | | Carrying Value | Fair Value |
Total debt, net | | $ | 4,125,690 | | $ | 4,140,175 | | | $ | 4,577,141 | | $ | 4,536,238 | |
9. DERIVATIVE INSTRUMENTS
The Company is exposed to various market risks, including risks associated with interest rates and foreign currency exchange rates. One objective of the Company’s risk management program is to mitigate these risks using derivative instruments.
Cash Flow Hedges - Interest Rate Swap Contract
In July 2022, the Company entered into a floating-to-fixed swap agreement on its variable rate debt under our senior secured term loan facility due 2029 (the “Term Loan Facility”). The interest rate swap was designated specifically to the Term Loan Facility and qualifies as a cash flow hedge. The notional amount is scheduled to decrease quarterly and will expire on December 30, 2025. As with cash flow hedges, unrealized gains are recognized as assets and unrealized losses are recognized as liabilities. Unrealized gains and losses are designated as effective or ineffective based on a comparison of the changes in fair value of the interest rate swaps and changes in fair value of the underlying exposures being hedged. The effective portion is recorded as a component of Accumulated other comprehensive loss in the condensed consolidated balance sheets and will be reflected in earnings during the period the hedged transaction effects earnings, while the ineffective portion is recorded as a component of Interest expense in the condensed consolidated statements of operations.
Foreign Currency Contracts Not Designated as Hedges
The Company enters into foreign exchange contracts in an effort to mitigate the risks associated with currency fluctuations on certain foreign currency balance sheet exposures. These foreign exchange contracts do not qualify for hedge accounting. The Company recognizes the change in fair value of its foreign currency forward contracts in the condensed consolidated statements of operations.
The notional amounts of our derivative instruments were as follows:
| | | | | | | | | | | |
(In thousands) | | | |
Derivatives designated as hedging instruments: | September 28, 2024 | | December 31, 2023 |
Interest rate swap contract - cash flow hedge | $ | 900,000 | | | $ | 1,350,000 | |
| | | |
| | | |
| | | |
| | | |
The fair values of our derivative instruments included in the condensed consolidated balance sheets were as follows:
| | | | | | | | | | | | | | | |
(In thousands) | | | | | |
Condensed Consolidated Balance Sheets Location | Derivative Assets | | | | |
Derivatives designated as hedging instruments - Interest rate swap contract - cash flow hedge | September 28, 2024 | | December 31, 2023 | | | | |
Other current assets | $ | 6,297 | | | $ | 21,451 | | | | | |
Other assets | 222 | | | 2,618 | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
The following table summarizes the effects of our derivative instruments on our condensed consolidated statements of operations:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Gain recognized in Condensed Consolidated Statements of Operations |
(In thousands) | | Three months ended | Nine months ended |
Derivatives designated as hedging instruments: | Condensed Consolidated Statements of Operations Location | September 28, 2024 | | September 30, 2023 | September 28, 2024 | | September 30, 2023 |
Interest rate swap contract - cash flow hedge | Interest expense | $ | (5,587) | | | $ | (9,530) | | $ | (23,241) | | | $ | (27,081) | |
| | | | | | | |
Derivatives not designated as hedging instruments: | | | | | | | |
Foreign exchange contracts | Other (income) expense, net | $ | — | | | $ | — | | $ | — | | | $ | (374) | |
The following table summarizes the effects of our derivative instruments on Accumulated other comprehensive loss:
| | | | | | | | | | | | | | | | | | | | | | | |
| Loss recognized in Other comprehensive loss |
(In thousands) | Three months ended | | Nine months ended |
Derivatives designated as hedging instruments: | September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
Interest rate swap contract - cash flow hedge | $ | (9,873) | | | $ | (2,050) | | | $ | (13,587) | | | $ | (2,289) | |
We expect approximately $6.3 million to be reclassified from Accumulated other comprehensive loss into Interest expense, net during the next twelve months related to our interest rate swap based on projected rates of the SOFR forward curve as of September 28, 2024.
10. INCOME TAXES
The Company’s tax provision or benefit from income taxes for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates an estimate of the annual effective tax rate, and if the estimated tax rate changes, we make a cumulative adjustment.
Income tax expense was $8.2 million and $18.3 million in the three and nine months ended September 28, 2024, respectively, compared to income tax (benefit) expense of $(2.1) million and $2.9 million in the three and nine months ended September 30, 2023, respectively. The Company’s year-to-date effective income tax rate was 9.5% and 8.7% for the three and nine months ended September 28, 2024, respectively, compared to (6.8)% and 2.0% for the three and nine months ended September 30, 2023, respectively.
The changes in the effective tax rate for the three and nine months ended September 28, 2024 compared to the prior year primarily relate to discrete divestiture activity recorded during the three and nine months ended September 30, 2023 and the integration of the CMC Materials acquisition.
The Organization for Economic Co-operation and Development introduced Base Erosion and Profit Shifting Pillar 2 rules that seek to impose a global minimum income tax rate of 15%. Numerous countries have enacted legislation in connection therewith that became effective on January 1, 2024. We have evaluated the impact of this legislation based on Entegris’ current global operations and it is not expected to have a material impact on the annual effective tax rate and there was not a material impact to the three and nine months ended September 28, 2024. The Company will continue to update our analysis and monitor the ongoing legislation throughout the year.
11. EARNINGS PER COMMON SHARE
Basic earnings per common share (“EPS”) is calculated based on the weighted average number of shares of common stock outstanding during the applicable period. Diluted EPS is calculated based on the weighted average number of shares of common stock outstanding plus potentially dilutive shares of common stock outstanding during the applicable period. The following table presents a reconciliation of the share amounts used in the computation of basic and diluted EPS:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Nine months ended |
(In thousands) | September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
Basic—weighted average common shares outstanding | 151,196 | | 150,127 | | 150,849 | | 149,793 |
Weighted average common shares assumed upon exercise of stock options and vesting of restricted common stock | 728 | | 1,102 | | 971 | | 1,023 |
Diluted—weighted average common shares and common shares equivalent outstanding | 151,924 | | 151,229 | | 151,820 | | 150,816 |
The