BILLERICA, Mass.--(BUSINESS WIRE)--Entegris, Inc. (NASDAQ: ENTG), today reported its financial results for the Company’s fourth quarter ended December 31, 2023. Fourth-quarter sales were $812.3 million, a decrease of 14% from the same quarter last year. Fourth-quarter GAAP net income was $38.0 million, or $0.25 income per diluted share, which included $30.0 million of gain on termination of the Alliance Agreement with MacDermid Enthone, $10.4 million of goodwill impairment, $30.5 million of impairment of lo ...

Analysts on Wall Street project that Entegris (ENTG) will announce quarterly earnings of $0.59 per share in its forthcoming report, representing a decline of 28.9% year over year. Revenues are projected to reach $775.3 million, declining 18.1% from the same quarter last year.Over the last 30 days, there has been an upward revision of 3.1% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of their initial forecasts ov ...

BILLERICA, Mass.--(BUSINESS WIRE)--Entegris, Inc. (NASDAQ: ENTG), will host a webcast on its fourth quarter 2023 results and provide a brief analyst update on Wednesday, February 14, 2024 at 9:00 a.m. Eastern Time. *Please note, Entegris expects to release its financial results for the fourth quarter 2023 after market close on February 13. Participants can use the link below to register and join the live webcast. https://app.webinar.net/OEr1gk1anQW Note: There are no dial-in numbers for this live webcas ...

Earnings Summary Third Quarter 2023 November 2, 2023 2 Safe Harbor This presentation 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 supply chain matters; inflationary pressures; future period guidance or projections; the Company's ...

Financial Data and Key Metrics Changes - Sales for Q3 2023 were $888 million, down 11% year-over-year and down 1% sequentially [22][27] - Non-GAAP EPS was $0.68, exceeding guidance due to lower operating expenses and modestly lower interest expense [20][22] - Gross margin on a GAAP basis was 41.3% and 41.4% on a non-GAAP basis, within guidance range [9][20] - Adjusted EBITDA in Q3 was $235 million, representing 26.5% of revenue [20][22] Business Line Data and Key Metrics Changes - Advanced Materials Handling (AMH) sales were $180 million, down 14% year-over-year and down 5% sequentially [21] - Material Solutions sales in Q3 were $436 million, down 16% year-over-year and down 1% sequentially, driven by lower volumes across certain product lines [33][117] - Microcontamination Control (MC) sales were $286 million, up 2% year-over-year and up 1% sequentially, primarily driven by wet edge and clean liquid filters [28] Market Data and Key Metrics Changes - The industry is experiencing a mixed environment, with DRAM improving but 3D NAND remaining depressed [73][84] - The company expects wafer starts to improve in 2024, but visibility remains limited [73][84] - The company anticipates a continued contraction in mainstream fabs in Q4 [56] Company Strategy and Development Direction - The company is focused on integrating the SCM and EPS divisions into a new division called Material Solutions, which aims to leverage end-to-end capabilities [6][25] - The company is committed to improving free cash flow and inventory turns, with a significant reduction in inventory of almost $80 million in Q3 [50][60] - The company is actively engaging with customers on technology roadmaps, emphasizing the importance of material science and end-to-end solutions [8][34] Management's Comments on Operating Environment and Future Outlook - Management believes the industry has likely reached the bottom in terms of utilization rates but does not expect meaningful improvement in the short term [18][56] - The company remains optimistic about long-term growth prospects for the semiconductor industry, expecting the market to double in size to $1 trillion [18] - Management highlighted the importance of maintaining a focus on working capital and inventory reduction as part of their strategy [60][67] Other Important Information - The company closed the sale of its Electronic Chemicals business to Fujifilm and is using proceeds to pay down debt [5][16] - The company has begun initial shipments from its new facility in Taiwan, with expectations to ramp up production in the second half of 2024 [6][17] - The company was awarded a Gold sustainability rating from EcoVadis, reflecting its commitment to corporate social responsibility [18] Q&A Session All Questions and Answers Question: What is the outlook for wafer starts in 2024? - Management expects wafer starts to improve in 2024 but emphasizes that it is too early to provide specific forecasts [73][106] Question: Can you break down the drivers of gross margin guidance for Q4? - Management indicated that the guidance reflects a combination of divestitures, cost controls, and inventory reduction impacts [74][125] Question: How is the company addressing competition in China? - Management noted that while there are Chinese competitors, they have not matched the performance of the company's solutions, and customers continue to see value in their offerings [90][115]

Table of Contents Commission file number: 001-32598 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 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to _______ ...

Timothy Arcuri I guess, Bertrand, I asked because it does appear likely that there's going to be some push to restrict even lagging edge nodes. I don't know what they're going to do. But certainly, there's -- where there's smoke, there's typically fire. So I'm just wondering how you could get kicked in that. So I'm just kind of trying to ring-fence what's going to the domestic China companies, which -- most of which would be lagging edge because of the current restrictions. Bertrand Loy Yes. I mean, I can o ...

| --- | --- | --- | --- | --- | --- | |-------------------------------------------------|--------|--------|--------|----------------|----------------| | $ in millions, except per share data | 1Q23 | 1Q22 | 4Q22 | 1Q23 over 1Q22 | 1Q23 over 4Q22 | | Net Revenue | $922.4 | $649.6 | $946.1 | 42.0% | (2.5)% | | Adjusted Gross Margin – as a % of Net Sales | 44.3% | 47.7% | 42.8% | | | | Non-GAAP Operating Expenses 2 | $204.3 | $127.6 | $185.2 | 60.1% | 10.3% | | Adjusted Operating Income | $204.8 | $182.3 | $219 ...

Entegris, Inc. (NASDAQ:ENTG) Q1 2023 Results Earnings Conference Call May 11, 2023 8:00 AM ET Toshiya Hari - Goldman Sachs Kieran de Brun - Mizuho Securities Sidney Ho - Deutsche Bank Charles Shi - Needham & Company John Roberts - Credit Suisse Aleksey Yefremov - KeyBanc Capital Markets Chris Kapsch - Loop Capital Markets Mike Harrison - Seaport Global Bill Seymour With that, I'll hand the call over to Bertrand. During the quarter, we delivered strong results above our guidance on all fronts. Sales were $92 ...

[PART I](index=5&type=section&id=PART%20I) Entegris's business overview, including market position, strategic initiatives, operational segments, competitive landscape, and a detailed analysis of associated risk factors [Item 1. Business](index=5&type=section&id=Item%201.%20Business.) Entegris is a leading global supplier of advanced materials and process solutions for the semiconductor and high-technology industries, driving manufacturing yields and device performance [Our Company](index=5&type=section&id=OUR%20COMPANY) Entegris is a leading supplier of advanced materials and process solutions for the semiconductor and other high-technology industries, aiming to maximize manufacturing yields and enable higher device performance - Entegris is a leading supplier of advanced materials and process solutions for the semiconductor and other high-technology industries, aiming to maximize manufacturing yields and enable higher device performance[12](index=12&type=chunk) - The company anticipates long-term secular growth for semiconductors, expecting demand to reach **$1 trillion by 2030**[13](index=13&type=chunk) - Business is organized into four operating segments aligned with the advanced semiconductor manufacturing ecosystem[15](index=15&type=chunk) [Recent Events](index=5&type=section&id=RECENT%20EVENTS) The company recently completed the acquisition of CMC Materials, Inc. and announced divestitures of non-core assets, with one agreement terminated due to regulatory clearance issues - Completed the acquisition of CMC Materials, Inc. on July 6, 2022, for a total purchase price of **$6.0 billion** (inclusive of debt retired and cash assumed)[17](index=17&type=chunk) - Announced a definitive agreement to sell the Pipeline and Industrial Materials (PIM) business for **$240.0 million**, but the agreement was terminated on February 10, 2023, due to lack of HSR Act clearance[18](index=18&type=chunk)[19](index=19&type=chunk) - Announced a definitive agreement to sell QED Technologies International, Inc. for approximately **$135.0 million**, subject to customary purchase price adjustments[20](index=20&type=chunk) [The Semiconductor Ecosystem](index=6&type=section&id=THE%20SEMICONDUCTOR%20ECOSYSTEM) Entegris's products and solutions are utilized in complex semiconductor manufacturing steps, including Etch, Deposition, Photolithography, CMP, and chemical handling, with expanded offerings from the CMC Materials acquisition - Entegris's products and solutions are utilized in complex semiconductor manufacturing steps, including Etch and Resist Strip, Deposition, Photolithography, Ion Implant, Chemical Mechanical Planarization (CMP), Wafer and Reticle Transport, and Chemical Handling[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The acquisition of CMC Materials expanded offerings in CMP, including slurries, pads, formulated cleans, and filtration solutions[23](index=23&type=chunk)[27](index=27&type=chunk) - Provides ultra-high purity chemical container products and fluid handling systems for safe and clean chemical distribution[28](index=28&type=chunk) [Other Markets](index=7&type=section&id=Other%20Markets) Entegris leverages its semiconductor expertise to develop products for other high-technology markets, including flat panel displays, solar cells, and life sciences applications - Leverages expertise from the semiconductor industry to develop products for other high-technology markets such as flat panel displays, high-purity chemicals, solar cells, optical magnetic storage devices, and LEDs[25](index=25&type=chunk) - Pursues opportunities in certain life sciences applications, including Aramus high-purity bag assemblies for biologics production[25](index=25&type=chunk)[46](index=46&type=chunk) [Industry Trends](index=7&type=section&id=INDUSTRY%20TRENDS) Long-term semiconductor demand growth is driven by emerging applications and increasing manufacturing complexity, while geopolitical trends foster domestic ecosystems and customer consolidation demands greater capabilities - Emerging applications (e.g., smartphones, 5G, cloud computing, AI) and existing applications are expected to drive long-term growth in semiconductor demand[26](index=26&type=chunk) - Increasing manufacturing complexity, shrinking dimensions, and new device architectures require more process steps, innovative materials, and sophisticated contamination control[27](index=27&type=chunk)[29](index=29&type=chunk) - Geopolitical trends, such as the CHIPS Act, are fostering domestic semiconductor ecosystems, leading Entegris to expand manufacturing in Taiwan (KSP) and Colorado Springs, CO[32](index=32&type=chunk) - Customer consolidation and increased reliance on trusted suppliers drive demand for greater capabilities, efficiencies, and collaborative solutions[33](index=33&type=chunk)[34](index=34&type=chunk) [Our Competitive Strengths and Business Strategy](index=8&type=section&id=OUR%20COMPETITIVE%20STRENGTHS%20AND%20BUSINESS%20STRATEGY) Entegris maintains competitive strengths through recurring revenue, a broad product portfolio, significant R&D investment, expanding global infrastructure, and strategic acquisitions, all while committing to corporate social responsibility - Approximately **80% of 2022 revenue was unit-driven or recurring**, stemming from products consumed in the semiconductor manufacturing process, making revenue less cyclical than capital equipment sales[36](index=36&type=chunk) - Offers a broad product portfolio of over **30,000 standard and customized products**; no single product platform represented more than **4% of net sales in 2022**[36](index=36&type=chunk) Engineering, Research and Development Expenses | Year | ER&D Expenses (Millions) | % of Net Sales | | :--- | :----------------------- | :------------- | | 2022 | $229.0 | 7.0% | | 2021 | $167.6 | 7.3% | | 2020 | $136.1 | 7.3% | - Expanding global infrastructure with new manufacturing facilities in Taiwan (KSP) and Colorado Springs, CO, to support regional customers and enhance manufacturing resiliency[41](index=41&type=chunk) - Leverages collective expertise across its four segments to create innovative, co-optimized, and integrated solutions for customers[45](index=45&type=chunk) - Committed to Corporate Social Responsibility, with a program built around Innovation, Safety, Personal Development and Inclusion, and Sustainability, aiming for **2030 goals**[46](index=46&type=chunk) - Pursues strategic acquisitions and business partnerships to address product gaps, secure new customers, diversify markets, and broaden technological capabilities[47](index=47&type=chunk) [Our Segments](index=10&type=section&id=OUR%20SEGMENTS) The company's business is organized into four operating segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), Advanced Materials Handling (AMH), and Advanced Planarization Solutions (APS) - Business is organized into four segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), Advanced Materials Handling (AMH), and Advanced Planarization Solutions (APS)[48](index=48&type=chunk) [Specialty Chemicals and Engineered Materials (SCEM)](index=10&type=section&id=SPECIALTY%20CHEMICALS%20AND%20ENGINEERED%20MATERIALS%20SEGMENT) SCEM provides high-performance and high-purity process chemistries, gases, and materials, along with safe and efficient materials delivery systems, including products from the CMC Materials acquisition - Provides high-performance and high-purity process chemistries, gases, and materials, along with safe and efficient materials delivery systems[49](index=49&type=chunk) - Offers Specialty Gas Products (SDS, VAC cylinders), Advanced Deposition Materials (liquid, gaseous, solid precursors), and Surface Preparation and Integration Products (cleaning solutions, selective etch, plating solutions)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) - Includes Specialty Materials (graphite, silicon carbide, high-purity coatings) and Specialty Chemicals for various high-performance applications[54](index=54&type=chunk)[55](index=55&type=chunk) - The ITS business develops consumable products for cleaning advanced probe cards and test sockets[56](index=56&type=chunk) - The PIM and QED businesses, acquired with CMC Materials, report into SCEM; the sale of QED is pending[57](index=57&type=chunk) [Microcontamination Control (MC)](index=11&type=section&id=MICROCONTAMINATION%20CONTROL%20SEGMENT) MC offers solutions to filter and purify critical liquid chemistries and process gases, essential for reducing defects and improving manufacturing yield in semiconductor and other high-technology industries - Offers solutions to filter and purify critical liquid chemistries and process gases, essential for reducing defects and improving manufacturing yield in semiconductor and other high-technology industries[58](index=58&type=chunk)[59](index=59&type=chunk) - Liquid Microcontamination Control products include Torrento®, Trinzik®, Microgard™, Impact®, and Protego® series filters and purifiers[60](index=60&type=chunk) - Gas Microcontamination Control products include Wafergard® gas filters, GateKeeper® gas purifiers, Chambergard™ gas diffusers, and Vaporsorb products[61](index=61&type=chunk) [Advanced Materials Handling (AMH)](index=12&type=section&id=ADVANCED%20MATERIALS%20HANDLING%20SEGMENT) AMH develops solutions to monitor, protect, transport, and deliver critical liquid chemistries, wafers, and substrates for semiconductor and other high-technology industries - Develops solutions to monitor, protect, transport, and deliver critical liquid chemistries, wafers, and substrates for semiconductor and other high-technology industries[62](index=62&type=chunk) - Microenvironment Solutions include Ultrapak® products, FOSB, FOUPs, SMIF pods, and EUV reticle pods for wafer and reticle transport and protection[63](index=63&type=chunk) - Fluid Management Products include NOWPak® and FluoroPure® containers, PrimeLock® connections, IntelliGen® dispense systems, and Accusizer®, SemiChem®, and Invue® instrumentation for chemical handling and monitoring[64](index=64&type=chunk) [Advanced Planarization Solutions (APS)](index=13&type=section&id=ADVANCED%20PLANARIZATION%20SOLUTIONS%20SEGMENT) APS provides complementary Chemical Mechanical Planarization (CMP) solutions, including slurries, pads, pad conditioners, post-CMP brushes, and formulated cleaning chemistries, with purities extending to parts-per-trillion levels - Provides complementary Chemical Mechanical Planarization (CMP) solutions, including slurries, pads, pad conditioners, post-CMP brushes, and formulated cleaning chemistries[65](index=65&type=chunk) - Offers CMP slurries for polishing a wide range of materials (e.g., tungsten, copper, SiC, GaN) and emerging materials like molybdenum and ruthenium[66](index=66&type=chunk) - Provides CMP pads (NexPlanar™, Medea™, Ultra, Epic Power™) and Planargem® pad conditioners[67](index=67&type=chunk) - Offers Post-CMP Cleans (PlanarClean®, ESC 784) and consumable polyvinyl alcohol roller brush products[68](index=68&type=chunk) - Produces semiconductor-grade wet electronic chemicals (acids, solvents, blends) with purities extending to parts-per-trillion levels[69](index=69&type=chunk) [Our Customers and Markets](index=13&type=section&id=OUR%20CUSTOMERS%20AND%20MARKETS) Entegris serves logic and memory semiconductor device manufacturers, equipment makers, and gas/chemical companies, along with other high-technology markets, with a significant portion of sales to top customers and international markets - Serves logic and memory semiconductor device manufacturers, equipment makers, gas and chemical manufacturing companies, and wafer growers[70](index=70&type=chunk) - Also sells products to other high-technology markets including flat panel displays, solar, life sciences, electrical discharge machining, glass, and aerospace[71](index=71&type=chunk) Net Sales by Customer and Geography | Category | 2022 | 2021 | 2020 | | :-------------------------- | :--- | :--- | :--- | | Percentage of net sales to top customers: |||| | TSMC | 12 % | 12 % | 11 % | | Remaining top ten customers | 31 % | 31 % | 35 % | | Total top ten customers | 43 % | 43 % | 46 % | | Percentage of net sales by market: |||| | Domestic/US | 24 % | 23 % | 25 % | | Foreign/International | 76 % | 77 % | 75 % | [Sales, Marketing and Support](index=14&type=section&id=SALES,%20MARKETING%20AND%20SUPPORT) The company sells products worldwide primarily through a direct sales force and strategic independent distributors, emphasizing customer collaboration and extensive technical support - Sells products worldwide primarily through a direct sales force and strategic independent distributors, with approximately **788 sales and marketing employees** as of December 31, 2022[73](index=73&type=chunk) - Emphasizes customer collaboration at the early product design stage and provides extensive worldwide technical and application support services[74](index=74&type=chunk) [Competition](index=14&type=section&id=COMPETITION) Entegris operates in a highly competitive market, competing on technical expertise, product quality, advanced manufacturing, supply chain resiliency, and customer collaboration, believing it competes favorably due to its broad product line and R&D infrastructure - Operates in a highly competitive market, competing primarily on technical expertise, product quality and performance, advanced manufacturing capabilities, supply chain resiliency, and customer collaboration[75](index=75&type=chunk) - Believes it competes favorably due to its broad product line, strong R&D infrastructure, manufacturing excellence, and applications expertise[75](index=75&type=chunk) - While no global competitor competes across the full range of its product offerings, notable competitors in specific areas include Pall Corporation, Shin-Etsu Polymer, DuPont, Air Liquide, Linde plc, Anji Microelectronics, and Mersen[77](index=77&type=chunk) [Engineering, Research and Development](index=15&type=section&id=ENGINEERING,%20RESEARCH%20AND%20DEVELOPMENT) Technology is crucial for success, with significant resources devoted to ER&D globally, balancing short-term market needs and longer-term investments, and collaborating with leading universities and industry consortia - Technology is crucial for success, with significant resources devoted to engineering, research, and development (ER&D), balancing short-term market needs and longer-term investments[78](index=78&type=chunk) - As of December 31, 2022, had approximately **1,392 employees in ER&D**[78](index=78&type=chunk) - Maintains global ER&D capabilities in the United States, Canada, China, Japan, South Korea, Taiwan, Singapore, and Malaysia[80](index=80&type=chunk) - Collaborates with leading universities and industry consortia (e.g., University of California, Yale University, imec®) to extend R&D reach[81](index=81&type=chunk) [Patents and Other Intellectual Property Rights](index=15&type=section&id=PATENTS%20AND%20OTHER%20INTELLECTUAL%20PROPERTY%20RIGHTS) Entegris protects its proprietary rights through approximately 4,400 active patents, 2,000 pending applications, and a combination of patent, copyright, trademark, trade secret laws, and license agreements - As of December 31, 2022, owned approximately **4,400 active patents worldwide** and about **2,000 pending patent applications globally**[82](index=82&type=chunk) - Relies on a combination of patent, copyright, trademark, and trade secret laws, as well as license agreements, to protect proprietary rights[82](index=82&type=chunk) - Vigorously protects and defends its intellectual property, requiring confidentiality agreements from employees and collaborators[83](index=83&type=chunk) [Manufacturing](index=15&type=section&id=MANUFACTURING) The company maintains an extensive global manufacturing network with facilities across multiple countries, operating Class 100 to Class 10,000 cleanrooms and possessing advanced manufacturing capabilities for contamination control - Maintains an extensive global manufacturing network with facilities in the United States, Canada, China, France, Italy, Japan, Malaysia, Singapore, South Korea, Taiwan, and the United Kingdom[85](index=85&type=chunk) - Operates **Class 100 to Class 10,000 cleanrooms** for manufacturing and assembly, crucial for contamination control[85](index=85&type=chunk) - Advanced manufacturing capabilities include engineered polymer conversion, chemical formulation, high-purity gas handling, specialty coating, and various molding and machining processes[86](index=86&type=chunk) [Raw Materials](index=16&type=section&id=RAW%20MATERIALS) Products are made from a wide variety of raw materials, generally available from multiple sources, though certain critical materials are obtained from single or limited sources, necessitating multi-year supply agreements - Products are made from a wide variety of raw materials, generally available from multiple sources[87](index=87&type=chunk) - Certain critical materials (e.g., filtration membranes, petroleum coke, polymer resins, engineered abrasive particles) are obtained from single or limited sources or from suppliers in a single country[87](index=87&type=chunk) - Uses multi-year supply agreements with certain suppliers for supply assurance and cost control[87](index=87&type=chunk) [Governmental Regulation](index=16&type=section&id=GOVERNMENTAL%20REGULATION) Operations are subject to federal, state, local, and non-U.S. regulatory requirements related to export controls, environmental, waste management, and health and safety matters, with the company believing it operates in substantial compliance - Operations are subject to federal, state, local, and non-U.S. regulatory requirements related to export controls, environmental, waste management, and health and safety matters[88](index=88&type=chunk) - Believes its business is operated in substantial compliance with applicable regulations, but acknowledges that new or stricter requirements could adversely affect the company[88](index=88&type=chunk) [Human Capital Resources](index=16&type=section&id=HUMAN%20CAPITAL%20RESOURCES) Entegris had approximately 10,000 employees globally as of December 31, 2022, focusing on attracting and retaining talent through a diverse, inclusive, and safe workplace, competitive rewards, and development opportunities - As of December 31, 2022, had approximately **10,000 employees globally**, with **52% in North America** and significant presence in Southeast Asia, Japan, Taiwan, South Korea, and China[90](index=90&type=chunk) - Focuses on attracting and retaining top talent by creating a diverse, inclusive, and safe workplace, offering competitive total rewards, and providing development and training opportunities[89](index=89&type=chunk) - Guided by PACE values (respect, honesty, creativity/innovation, excellence) and conducts employee surveys to inform decision-making[91](index=91&type=chunk)[92](index=92&type=chunk) - The Board of Directors, through the Management Development and Compensation Committee, provides oversight on human capital matters[101](index=101&type=chunk) [Our History](index=18&type=section&id=OUR%20HISTORY) Entegris was incorporated in Delaware in 2005 through a merger, with corporate origins tracing back to 1966, and key acquisitions including ATMI in 2014 and CMC Materials in 2022 - Incorporated in Delaware on March 17, 2005, through a merger between Entegris, Inc. (Minnesota) and Mykrolis Corporation[103](index=103&type=chunk) - Corporate origins trace back to Fluoroware, Inc., which began operating in **1966**[103](index=103&type=chunk) - Key acquisitions include ATMI in **2014** and CMC Materials in **2022**[103](index=103&type=chunk) [Available Information](index=18&type=section&id=AVAILABLE%20INFORMATION) SEC filings, including Forms 10-K, 10-Q, 8-K, and proxy statements, are available free of charge on the company's investor relations website - SEC filings (Forms 10-K, 10-Q, 8-K, proxy statements) are available free of charge on the company's investor relations website (www.entegris.com)[104](index=104&type=chunk) [Item 1A. Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors.) This section outlines significant risks facing Entegris, including those related to its business, industry, government regulation, the CMC Materials acquisition, and indebtedness [Risk Factor Summary](index=19&type=section&id=Risk%20Factor%20Summary) Key risk categories include business and industry, government regulation, the merger with CMC Materials, and common stock ownership, which could materially and adversely affect the company's financial condition - Key risk categories include business and industry (e.g., economic conditions, geopolitical uncertainty, supply chain), government regulation, the merger with CMC Materials, and common stock ownership[107](index=107&type=chunk) [Risks Related to Our Business and Industry](index=19&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) Entegris faces risks from semiconductor industry cyclicality, economic conditions, supply chain disruptions, geopolitical tensions, intense competition, and the need for continuous innovation, which could harm its business - Declines in the cyclical semiconductor industry or worldwide economic conditions (recession, inflation, interest rates) can decrease demand for products and adversely affect business[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - Revenues and operating results are variable due to factors like customer order timing, supply chain issues, manufacturing difficulties, and changes in product/customer mix[110](index=110&type=chunk)[112](index=112&type=chunk) - Interruptions in the supply chain, including reliance on single and limited source suppliers, could affect manufacturing, increase costs, and harm revenue[117](index=117&type=chunk) - Operating a global business (**76% international sales in 2022**) exposes the company to geopolitical tensions, trade disputes (especially with China), and foreign currency exchange rate fluctuations[121](index=121&type=chunk)[122](index=122&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[127](index=127&type=chunk) - A significant portion of sales is concentrated on a limited number of key customers (top ten accounted for **43% in 2022**), and the customer base is geographically concentrated[129](index=129&type=chunk)[130](index=130&type=chunk) - Failure to anticipate and respond to rapid technological change and customer requirements by introducing new products could seriously harm the business, despite significant R&D investments (**$229.0 million in 2022**)[131](index=131&type=chunk) - Acquisitions, joint ventures, or divestitures involve numerous risks, including integration difficulties, failure to realize anticipated benefits, and diversion of management's attention[134](index=134&type=chunk)[135](index=135&type=chunk) - Manufacturing interruptions, use of hazardous materials, loss of key personnel, and inability to protect intellectual property rights are significant operational risks[136](index=136&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk) - Information technology system failures, network disruptions, data security breaches, and new data privacy laws could damage reputation and adversely affect financial results[143](index=143&type=chunk)[144](index=144&type=chunk) - Climate change and environmental, social, and governance (ESG) commitments could result in additional costs and reputational risks[146](index=146&type=chunk)[147](index=147&type=chunk) [Risks Related to Our Acquisition of CMC Materials](index=28&type=section&id=Risks%20Related%20to%20Our%20Acquisition%20of%20CMC%20Materials) Combining businesses with CMC Materials may be more difficult, costly, or time-consuming than expected, potentially failing to realize anticipated benefits and diverting management's attention - Combining businesses with CMC Materials may be more difficult, costly, or time-consuming than expected, potentially failing to realize anticipated benefits[148](index=148&type=chunk) - Integration process risks include loss of customers, disruption of ongoing businesses, inconsistencies in standards, unexpected integration issues, and higher-than-expected costs[149](index=149&type=chunk) - Diversion of management's attention from day-to-day business operations or other opportunities during integration[152](index=152&type=chunk) [Risks Related to Government Regulation](index=29&type=section&id=Risks%20Related%20to%20Government%20Regulation) Entegris is subject to various environmental laws, export controls, and other regulations across multiple jurisdictions, with non-compliance or changes in taxation potentially leading to significant liabilities, expenses, or reputational damage - Subject to a variety of environmental laws and regulations, which could lead to significant liabilities, expenses, or suspension of production/shipment if not complied with[153](index=153&type=chunk) - Exposed to risks from new, different, inconsistent, or conflicting laws and regulations across multiple jurisdictions (e.g., health and safety, export controls, anti-corruption, privacy, antitrust)[154](index=154&type=chunk) - Non-compliance could result in fines, restrictions on actions, reputational damage, and increased administrative expenses[154](index=154&type=chunk)[156](index=156&type=chunk) - Changes in taxation or adverse tax rulings could adversely affect results of operations, particularly due to complex international operations and reorganizations[157](index=157&type=chunk)[158](index=158&type=chunk) [Risks Related to Our Indebtedness](index=30&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) The company's substantial indebtedness, primarily from the CMC Materials acquisition, could limit financing ability, require significant cash flow for debt service, increase vulnerability to economic changes, and expose it to increased interest expense - Has a substantial amount of indebtedness, totaling **$5.9 billion as of December 31, 2022**, primarily from the CMC Materials acquisition[160](index=160&type=chunk) - Debt could limit ability to obtain additional financing, require a substantial portion of cash flow for debt service, increase vulnerability to adverse economic changes, and expose to increased interest expense for variable rates[162](index=162&type=chunk) - Terms of Credit Agreements and Indentures contain restrictive covenants that may limit operations, including incurring additional indebtedness, paying dividends, making acquisitions, and creating liens[166](index=166&type=chunk)[167](index=167&type=chunk) - Failure to comply with covenants could result in acceleration of indebtedness, potentially leading to bankruptcy or liquidation[168](index=168&type=chunk) [Risks Related to Owning our Common Stock](index=31&type=section&id=Risks%20Related%20to%20Owning%20our%20Common%20Stock) The price of common stock may remain volatile, future dividend payments and share repurchases are not assured, and charter provisions could delay or prevent an acquisition, potentially decreasing share value - The price of common stock has been and may remain volatile, influenced by global economic conditions, financial guidance, analyst expectations, and market trends[170](index=170&type=chunk) - Future payments of quarterly dividends and any future share repurchases are not assured and are subject to capital availability, board determinations, and contractual restrictions[172](index=172&type=chunk) - Provisions in charter documents and Delaware law (e.g., Section 203, authorization of preferred stock) could delay or prevent an acquisition, potentially decreasing the value of shares[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) [Item 1B. Unresolved Staff Comments](index=33&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) This item indicates that there are no unresolved staff comments from the SEC [Item 2. Properties](index=34&type=section&id=Item%202.%20Properties.) Entegris maintains a global network of owned and leased facilities for executive offices, research, manufacturing, distribution, and support, regularly adjusted to meet operational needs - Maintains an extensive global manufacturing network with facilities in the United States, Canada, China, France, Italy, Japan, Malaysia, Singapore, South Korea, Taiwan, and the United Kingdom[177](index=177&type=chunk) - Facilities serve principal functions including executive offices, research, manufacturing, distribution, technical support, sales, service, repair, and general administration[177](index=177&type=chunk) - Regularly assesses the size, capability, and location of its global infrastructure and periodically makes adjustments[177](index=177&type=chunk) [Item 3. Legal Proceedings](index=34&type=section&id=Item%203.%20Legal%20Proceedings.) Entegris is involved in various legal actions, but management does not anticipate any known matters will result in a material amount for litigation or other contingencies - Involved in certain legal actions, the outcomes of which are not entirely within its control and may take prolonged periods[178](index=178&type=chunk) - Records a liability for legal actions when a loss is known or probable and can be reasonably estimated[178](index=178&type=chunk) - Based on current information, the Company does not believe any known matters have a reasonable possibility of a material amount for litigation or other contingencies related to legal proceedings[178](index=178&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Entegris, Inc [PART II](index=37&type=section&id=PART%20II) This section covers Entegris's common stock market, dividend policy, comparative stock performance, and management's discussion and analysis of financial condition and results of operations [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Entegris's common stock trades on the Nasdaq Global Select Market under the symbol 'ENTG', with quarterly cash dividends declared in 2022, and no common stock repurchases made under its authorized plan in 2022 [Market Information and Holders](index=37&type=section&id=Market%20Information%20and%20Holders) Entegris's common stock trades on The Nasdaq Global Select Market under the symbol 'ENTG', with 1,080 shareholders of record as of February 13, 2023 - Entegris's common stock trades on The Nasdaq Global Select Market under the symbol '**ENTG**'[182](index=182&type=chunk) - As of February 13, 2023, there were **1,080 shareholders of record**[182](index=182&type=chunk) [Dividend Policy](index=37&type=section&id=Dividend%20Policy) The company declared quarterly cash dividends of $0.10 per share throughout 2022, totaling $57.3 million, with future declarations subject to board determination and credit agreement restrictions - Declared cash dividends of **$0.10 per share** during each of the first, second, third, and fourth quarters of 2022, totaling **$57.3 million**[183](index=183&type=chunk) - On January 18, 2023, a quarterly cash dividend of **$0.10 per share** was declared, payable on February 22, 2023[184](index=184&type=chunk) - Future dividend declarations are subject to the final determination of the board of directors and restrictions in credit agreements[184](index=184&type=chunk) [Issuer Sales of Unregistered Securities During the Past Three Years](index=37&type=section&id=Issuer%20Sales%20of%20Unregistered%20Securities%20During%20the%20Past%20Three%20Years) There were no issuer sales of unregistered securities during the past three years - No issuer sales of unregistered securities during the past three years[185](index=185&type=chunk) [Comparative Stock Performance](index=37&type=section&id=Comparative%20Stock%20Performance) Entegris's stock performance significantly declined in 2022 but still outperformed the Nasdaq Composite over the five-year period, based on a $100 investment in 2017 Cumulative Total Shareholder Return (Indexed to $100 at Dec 31, 2017) | Index | Dec 31, 2017 | Dec 31, 2018 | Dec 31, 2019 | Dec 31, 2020 | Dec 31, 2021 | Dec 31, 2022 | | :-------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Entegris, Inc. | $100.00 | $92.41 | $167.12 | $322.26 | $465.93 | $221.34 | | Nasdaq Composite | $100.00 | $97.16 | $132.81 | $192.47 | $235.15 | $158.64 | | Philadelphia Semiconductor Index | $100.00 | $93.95 | $153.38 | $235.69 | $336.68 | $219.25 | - Entegris's stock performance significantly declined in **2022**, from **$465.93 to $221.34** (based on $100 invested in 2017), while still outperforming the Nasdaq Composite over the five-year period[188](index=188&type=chunk) [Issuer Purchases of Equity Securities](index=38&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) The company repurchased none of its common stock in 2022 under its authorized plan, having suspended the program in late 2021 due to the CMC Materials acquisition, and does not anticipate resuming it in 2023 - The Company repurchased **none of its common stock in 2022** under an authorized common stock repurchase plan[189](index=189&type=chunk) - The share repurchase program was suspended in the fourth quarter of **2021** in anticipation of the CMC Materials acquisition, and the company does not anticipate resuming it in **2023**[261](index=261&type=chunk)[518](index=518&type=chunk) - Shares withheld for tax purposes on behalf of employees in connection with equity awards are treated as common stock repurchases but are not part of the authorized repurchase plan[190](index=190&type=chunk) [Item 6. Reserved](index=38&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Entegris's 2022 financial performance was significantly impacted by the $6.0 billion CMC Materials acquisition, driving sales growth but also declining gross margin and surging interest expense [Cautionary Statements](index=39&type=section&id=Cautionary%20Statements) This report contains forward-looking statements subject to substantial risks and uncertainties, including global economic conditions, semiconductor industry demand, indebtedness, and integration risks, with actual results potentially differing materially - This report contains forward-looking statements subject to substantial risks and uncertainties, including global economic conditions, semiconductor industry demand, indebtedness, CMC Materials integration risks, supply chain issues, geopolitical tensions, competition, and regulatory changes[194](index=194&type=chunk) - Actual results could differ materially from the results expressed or implied by these forward-looking statements[194](index=194&type=chunk) - The Company undertakes no obligation to update publicly any forward-looking statements or information[195](index=195&type=chunk) [Overview](index=40&type=section&id=Overview) Entegris is a leading supplier of advanced materials and process solutions, navigating new U.S. export control regulations, the ongoing COVID-19 pandemic, and the Russia-Ukraine conflict, which have impacted sales and material costs - Entegris is a leading supplier of advanced materials and process solutions for the semiconductor and other high-technology industries, organized into four operating segments: SCEM, APS, MC, and AMH[197](index=197&type=chunk)[198](index=198&type=chunk)[202](index=202&type=chunk) - New U.S. export control regulations, effective October 7, 2022, are estimated to reduce net sales by approximately **$20 million per quarter in 2023**[200](index=200&type=chunk) - The COVID-19 pandemic continues to impact the global economy and supply chain, but has not caused material adverse impacts to global operations[201](index=201&type=chunk) - The military conflict between Russia and Ukraine has caused volatility and disruptions, leading to increased material costs, though revenue from this region is not material[203](index=203&type=chunk) [Recent Events](index=41&type=section&id=Recent%20Events) The company completed the $6.0 billion acquisition of CMC Materials in July 2022, realigning financial reporting into four segments, and subsequently entered an interest rate swap agreement while terminating one divestiture and announcing another - Completed the acquisition of CMC Materials on July 6, 2022, for **$6.0 billion**, leading to a realignment of financial reporting into four segments[204](index=204&type=chunk)[205](index=205&type=chunk) - Entered into an interest rate swap agreement on July 28, 2022, to hedge **$1.95 billion** of its **$2.495 billion** Initial Term Loan Facility[206](index=206&type=chunk) - Terminated the definitive agreement to sell the PIM business on February 10, 2023, due to lack of HSR Act clearance[208](index=208&type=chunk) - Announced a definitive agreement to sell the QED business for approximately **$135.0 million**, with the sale expected to close in Q1 2023[209](index=209&type=chunk) [Critical Accounting Policies and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Preparation of consolidated financial statements requires management to make estimates, assumptions, and judgments, particularly for business acquisitions, fair value of intangible assets, and their useful lives, impacting amortization and net income - Preparation of consolidated financial statements requires management to make estimates, assumptions, and judgments, particularly for business acquisitions[210](index=210&type=chunk) - Accounts for acquired businesses using the acquisition method, recording assets acquired and liabilities assumed at their respective fair values[212](index=212&type=chunk) - Fair value of intangible assets is estimated using the income method, relying on key assumptions such as future revenue growth rates, gross margin, and discount rates[213](index=213&type=chunk) - Estimating the useful life of an intangible asset also requires judgment, impacting the amortization period and net income[214](index=214&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) Net sales increased by 43% to $3,282.0 million in 2022, primarily due to the CMC Materials acquisition and volume growth, but gross margin decreased by 3.6 percentage points due to acquired inventory write-ups and lower margins from acquired products Consolidated Results of Operations (2022 vs. 2021) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :----------------------------------- | :------------------ | :------------------ | :----------- | | Net sales | $3,282,033 | $2,298,893 | +43% | | Cost of sales | $1,885,620 | $1,239,229 | +52.2% | | Gross profit | $1,396,413 | $1,059,664 | +31.8% | | Gross margin (% of net sales) | 42.5% | 46.1% | -3.6 pp | | Selling, general and administrative expenses | $543,485 | $292,408 | +86% | | Engineering, research and development expenses | $228,994 | $167,632 | +36.6% | | Amortization of intangible assets | $143,953 | $47,856 | +200.8% | | Operating income | $479,981 | $551,768 | -13% | | Interest expense | $212,669 | $41,240 | +415.7% | | Income before income taxes | $247,080 | $479,076 | -48.4% | | Income tax expense | $38,160 | $69,950 | -45.5% | | Net income | $208,920 | $409,126 | -48.9% | | Diluted net income per common share | $1.46 | $3.00 | -51.3% | - Net sales increased primarily due to the inclusion of sales from the CMC Materials acquisition (**$495.6 million**) and volume growth (**$594.4 million**), partially offset by unfavorable foreign currency translation effects (**$106.9 million**)[216](index=216&type=chunk)[217](index=217&type=chunk) - Gross margin decreased by **3.6 percentage points**, mainly due to a **$61.9 million** charge for fair value write-up of acquired CMC Materials inventory sold and the inclusion of CMC Materials' products, which have lower aggregate gross margins[219](index=219&type=chunk) - Selling, general and administrative expenses increased by **$251.1 million (86%)** due to CMC Materials inclusion, deal and transaction costs, integration costs, and higher employee and professional costs[220](index=220&type=chunk) - Interest expense significantly increased to **$212.7 million in 2022** from **$41.2 million in 2021**, primarily reflecting higher interest related to the debt financing of the CMC Materials acquisition[224](index=224&type=chunk) - The effective tax rate increased to **15.4% in 2022** from **14.6% in 2021**, mainly due to a reduction in creditable foreign withholding taxes, partially offset by acquisition-related expenses and a change in income geographic mix[226](index=226&type=chunk)[227](index=227&type=chunk) [Non-GAAP Financial Measures Information](index=44&type=section&id=Non-GAAP%20Financial%20Measures%20Information) Entegris utilizes non-GAAP financial measures like adjusted EBITDA, adjusted operating income, and non-GAAP EPS to complement GAAP measures, providing a clearer assessment of ongoing business trends by excluding specific items - Utilizes non-GAAP financial measures (adjusted EBITDA, adjusted operating income, non-GAAP EPS) to complement GAAP measures and provide a clearer assessment of ongoing business trends[229](index=229&type=chunk)[278](index=278&type=chunk) Non-GAAP Financial Performance (2022 vs. 2021) | Metric | 2022 | 2021 | Change (YoY) | | :-------------------------- | :--- | :--- | :----------- | | Adjusted EBITDA (millions) | $973.2 | $699.4 | +39.1% | | Adjusted EBITDA (% of net sales) | 29.7% | 30.4% | -0.7 pp | | Adjusted operating income (millions) | $837.9 | $609.1 | +37.6% | | Adjusted operating income (% of net sales) | 25.5% | 26.5% | -1.0 pp | | Non-GAAP EPS | $3.73 | $3.44 | +8.4% | - Non-GAAP measures exclude items such as fair value write-up of acquired inventory, deal and transaction costs, integration costs, and amortization of intangible assets[279](index=279&type=chunk)[280](index=280&type=chunk) - Management uses these measures for planning, resource allocation, evaluating operational strategies, and assessing capacity to fund capital expenditures and expand business[283](index=283&type=chunk) [Segment Analysis](index=45&type=section&id=Segment%20Analysis) Effective July 6, 2022, the company realigned its financial reporting into four segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), Advanced Materials Handling (AMH), and Advanced Planarization Solutions (APS) - Effective July 6, 2022, the Company realigned its financial reporting structure into four reportable segments: Specialty Chemicals and Engineered Materials (SCEM), Microcontamination Control (MC), Advanced Materials Handling (AMH), and Advanced Planarization Solutions (APS)[232](index=232&type=chunk)[205](index=205&type=chunk) Segment Net Sales and Profit (2022 vs. 2021 vs. 2020) | Segment | Net Sales 2022 (in thousands) | Net Sales 2021 (in thousands) | Net Sales 2020 (in thousands) | Segment Profit 2022 (in thousands) | Segment Profit 2021 (in thousands) | Segment Profit 2020 (in thousands) | | :----------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Specialty Chemicals and Engineered Materials (SCEM) | $773,594 | $625,670 | $530,040 | $122,287 | $137,392 | $99,474 | | Microcontamination Control (MC) | $1,105,996 | $919,363 | $742,186 | $411,475 | $321,300 | $248,910 | | Advanced Materials Handling (AMH) | $846,492 | $704,946 | $538,682 | $183,738 | $159,995 | $111,028 | | Advanced Planarization Solutions (APS) | $606,614 | $85,621 | $79,492 | $96,902 | $30,415 | $28,495 | [Specialty Chemicals and Engineered Materials (SCEM)](index=45&type=section&id=Specialty%20Chemicals%20and%20Engineered%20Materials%20(SCEM)) SCEM net sales increased 24% to $773.6 million in 2022, driven by CMC Materials product lines and improved sales of advanced deposition materials, though segment profit decreased 11% due to unfavorable product mix and higher operating expenses - SCEM net sales increased **24% to $773.6 million in 2022**, primarily reflecting **$90.1 million** from CMC Materials product lines and improved sales of advanced deposition materials, formulated cleans, selective etch, and specialty coatings[235](index=235&type=chunk) - Segment profit decreased **11% to $122.3 million in 2022**, mainly due to unfavorable product mix, the absence of a gain on sale of non-core intangibles, higher operating expenses, and a **$5.1 million** charge for fair value write-up of acquired CMC Materials inventory[236](index=236&type=chunk) [Microcontamination Control (MC)](index=45&type=section&id=Microcontamination%20Control%20(MC)) MC net sales increased 20% to $1,106.0 million in 2022, driven by improved performance across substantially all platforms, with segment profit increasing 28% due to higher gross profit from increased sales volume - MC net sales increased **20% to $1,106.0 million in 2022**, driven by improved performance across substantially all platforms, with strong growth in liquid filtration and gas filtration products[238](index=238&type=chunk) - Segment profit increased **28% to $411.5 million in 2022**, primarily due to higher gross profit from increased sales volume, partially offset by a **17% increase** in operating expenses[239](index=239&type=chunk) [Advanced Materials Handling (AMH)](index=46&type=section&id=Advanced%20Materials%20Handling%20(AMH)) AMH net sales increased 20% to $846.5 million in 2022, mainly due to improved sales from wafer handling and fluid handling products, with segment profit increasing 15% driven by higher sales volume - AMH net sales increased **20% to $846.5 million in 2022**, mainly due to improved sales from wafer handling and fluid handling products[242](index=242&type=chunk) - Segment profit increased **15% to $183.7 million in 2022**, driven by higher sales volume, partially offset by a **16% increase** in operating expenses[242](index=242&type=chunk) [Advanced Planarization Solutions (APS)](index=46&type=section&id=Advanced%20Planarization%20Solutions%20(APS)) APS net sales dramatically increased 608% to $606.6 million in 2022, primarily due to sales attributed to the CMC Materials acquisition, which also drove a 219% increase in segment profit, partially offset by inventory write-up charges - APS net sales dramatically increased **608% to $606.6 million in 2022**, primarily due to sales attributed to the CMC Materials acquisition[245](index=245&type=chunk) - Segment profit increased **219% to $96.9 million in 2022**, also primarily due to the CMC Materials acquisition, partially offset by a **$56.8 million** charge for a fair value write-up of acquired CMC Materials inventory sold[246](index=246&type=chunk) [Unallocated general and administrative expenses](index=46&type=section&id=Unallocated%20general%20and%20administrative%20expenses) Unallocated general and administrative expenses increased by $141.0 million to $190.5 million in 2022, mainly reflecting integration-related costs and deal and transaction costs related to the CMC Materials acquisition - Unallocated general and administrative expenses increased by **$141.0 million to $190.5 million in 2022**, mainly reflecting **$106.2 million** in integration-related costs and **$34.8 million** in deal and transaction costs related to the CMC Materials acquisition[248](index=248&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) Total debt significantly increased to $5.9 billion in 2022 due to new debt financing for the CMC Materials acquisition, while net cash from operating activities decreased, and substantial capital expenditures are planned for growth capacity Liquidity and Capital Resources (in thousands) | Metric | December 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------------ | :------------------ | | Cash, cash equivalents and restricted cash | $563,439 | $402,565 | | Working capital | $1,573,254 | $934,369 | | Total debt (par value) | $5,925,000 | $945,000 | - Total debt significantly increased in **2022** due to new debt financing for the CMC Materials acquisition, including a **$2.495 billion** term loan, **$1.6 billion** secured notes, **$895 million** unsecured notes, and a **$275 million** bridge credit facility[249](index=249&type=chunk)[263](index=263&type=chunk) - Net cash provided by operating activities decreased by **$48.2 million to $352.3 million in 2022**, primarily due to changes in operating assets and liabilities (higher inventory, lower accounts payable)[254](index=254&type=chunk)[255](index=255&type=chunk) - Net cash used in investing activities increased to **$4.9 billion in 2022**, mainly due to **$4.5 billion** cash paid for the CMC Materials acquisition and **$466.2 million** in capital expenditures[256](index=256&type=chunk)[258](index=258&type=chunk) - Net cash provided by financing activities was **$4.8 billion in 2022**, primarily from net debt activity related to the acquisition[261](index=261&type=chunk) - Expected capital expenditure spending for **2023** is approximately **$500.0 million** for growth capacity investments and new manufacturing facilities in Taiwan and Colorado[272](index=272&type=chunk) Cash Requirements as of December 31, 2022 (in thousands) | Category | Total | Due within one year | Due later than one year | | :-------------------------- | :------ | :------------------ | :---------------------- | | Long-term debt | $5,925,000 | $153,713 | $5,771,287 | | Interest payments on long-term debt | $2,080,742 | $323,177 | $1,757,565 | | Capital purchase obligations | $252,333 | $191,571 | $60,762 | | Supply purchase obligations | $12,775 | $8,765 | $4,010 | | Operating leases | $117,296 | $22,817 | $94,479 | | Income tax liabilities | $489,249 | $98,057 | $391,192 | | **Total** | **$8,877,395** | **$798,100** | **$8,079,295** | [New Accounting Pronouncements](index=50&type=section&id=New%20Accounting%20Pronouncements) Entegris adopted ASU 2021-08 and ASU 2021-10 in 2022, neither of which had a material effect on its consolidated financial statements, and currently has no other material recent accounting pronouncements yet to be adopted - Adopted ASU 2021-08 (Business Combinations) and ASU 2021-10 (Government Assistance) in **2022**, neither of which had a material effect on its consolidated financial statements[276](index=276&type=chunk)[426](index=426&type=chunk)[427](index=427&type=chunk) - Currently has no material recent accounting pronouncements yet to be adopted[277](index=277&type=chunk)[428](index=428&type=chunk) [Item 7A. Quantitative and Qualitative Disclosure About Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk.) Entegris is exposed to market risks from interest rate fluctuations on its variable rate debt and cash, and foreign currency exchange rate changes on its international sales and operations, using derivative instruments to manage these exposures - Principal financial market risks are sensitivities to interest rates and foreign currency exchange rates[293](index=293&type=chunk) - A **100-basis point change** in interest rates would potentially increase or decrease annual net income by approximately **$15.5 million in 2022**[293](index=293&type=chunk) - Approximately **22.7% of sales in 2022** were denominated in various foreign currencies; a **10% reduction** in all foreign currencies versus the U.S. dollar would negatively impact **2022 revenue by approximately $62.6 million**[294](index=294&type=chunk) - Uses derivative financial instruments (e.g., interest rate swap, foreign exchange contracts) to manage foreign currency exchange rate risks, but not for speculative or trading purposes[293](index=293&type=chunk)[295](index=295&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=52&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This item refers to the Consolidated Financial Statements and accompanying notes, which provide detailed financial information at the end of this report - The information called for by this item is set forth in the Consolidated Financial Statements covered by the Report of Independent Registered Public Accounting Firm at the end of this report[296](index=296&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=52&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) This item indicates that there are no changes in or disagreements with accountants on accounting and financial disclosure [Item 9A. Controls and Procedures](index=52&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded Entegris's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, excluding newly acquired CMC Materials' internal controls, a conclusion supported by KPMG LLP's unqualified opinion [Evaluation of Disclosure Controls and Procedures](index=53&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2022, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely - Management, including the principal executive officer and principal financial officer, concluded that disclosure controls and procedures were effective as of December 31, 2022[299](index=299&type=chunk) - These controls provide reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported timely[299](index=299&type=chunk) [Changes in Internal Control Over Financial Reporting](index=53&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes to internal control over financial reporting during the quarter ended December 31, 2022, that materially affected or are reasonably likely to materially affect it - There were no changes to internal control over financial reporting during the quarter ended December 31, 2022, that materially affected or are reasonably likely to materially affect it[300](index=300&type=chunk) [Management Report on Internal Control Over Financial Reporting](index=53&type=section&id=Management%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) Management is responsible for establishing and maintaining adequate internal control over financial reporting and assessed its effectiveness as of December 31, 2022, concluding it was effective, excluding the newly acquired CMC Materials - Management is responsible for establishing and maintaining adequate internal control over financial reporting and assessed its effectiveness as of December 31, 2022, based on the COSO (2013 framework)[301](index=301&type=chunk)[302](index=302&type=chunk) - Management concluded that internal control over financial reporting was effective, excluding total assets of approximately **$6,540.2 million** and net sales of **$581.0 million** related to CMC Materials due to the recent acquisition[303](index=303&type=chunk)[304](index=304&type=chunk) [Report of Independent Registered Public Accounting Firm](index=54&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on the effectiveness of Entegris's internal control over financial reporting as of December 31, 2022, consistent with management's exclusion of CMC Materials' internal controls - KPMG LLP issued an unqualified opinion on the effectiveness of Entegris's internal control over financial reporting as of December 31, 2022[308](index=308&type=chunk) - The audit of internal control over financial reporting also excluded an evaluation of CMC Materials' internal control over financial reporting, consistent with management's exclusion[310](index=310&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=53&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Management acknowledges that control systems provide only reasonable, not absolute, assurance and may not prevent or detect all errors and fraud due to inherent limitations and resource constraints - Management acknowledges that control systems provide only reasonable, not absolute, assurance and may not prevent or detect all errors and fraud due to inherent limitations and resource constraints[306](index=306&type=chunk) [Item 9B. Other Information](index=55&type=section&id=Item%209B.%20Other%20Information.) This item indicates that there is no other information to report [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=55&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This item is not applicable to Entegris, Inc [PART III](index=55&type=section&id=PART%20III) This section provides information on Entegris's directors, executive officers, corporate governance, executive compensation, security ownership, and related transactions [Item 10. Directors, Executive Officers and Corporate Governance](index=55&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance.) Information regarding Entegris's directors, executive officers, and corporate governance practices is incorporated by reference from the 2023 Proxy Statement, with a list of executive officers provided [Directors, Executive Officers and Corporate Governance](index=55&type=section&id=Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information required by this item is incorporated by reference from the registrant's Definitive Proxy Statement for its 2023 Annual Meeting of Stockholders, with the company adopting a Code of Business Ethics and Corporate Governance Guidelines - Information required by this item is incorporated by reference from the registrant's Definitive Proxy Statement for its 2023 Annual Meeting of Stockholders[318](index=318&type=chunk) - The company has adopted a Code of Business Ethics and Corporate Governance Guidelines, available on its website[319](index=319&type=chunk) [Information About Our Executive Officers](index=55&type=section&id=INFORMATION%20ABOUT%20OUR%20EXECUTIVE%20OFFICERS) This section lists the executive officers as of the 10-K filing date, including their ages and offices, highlighting Daniel Woodland who joined as part of the CMC Materials acquisition Executive Officers as of 10-K Filing Date | Name | Age | Office | | :------------ | :-- | :--------------------------------------------------- | | Bertrand Loy | 57 | President & Chief Executive Officer | | Gregory B. Graves | 62 | Executive Vice President, Chief Financial Officer and Treasurer | | Sue Rice | 64 | Senior Vice President, Global Human Resources | | Joe Colella | 41 | Senior Vice President, General Counsel and Secretary | | Jim O'Neill | 58 | Senior Vice President and Chief Technology Officer | | Olivier Blachier | 49 | Senior Vice President, Business and New Markets Development | | Stuart Tison | 59 | Senior Vice President and President, Specialty Chemicals and Engineered Materials | | Clint Haris | 50 | Senior Vice President and President, Microcontamination Control | | William Shaner | 55 | Senior Vice President and President, Advanced Materials Handling | | Daniel Woodland | 52 | Senior Vice President and President, Advanced Planarization Solutions | | Michael Besnard | 52 | Senior Vice President and Chief Commercial Officer | | Neil Richards | 50 | Senior Vice President, Global Operations, Supply Chain, and Quality | | Bruce W. Beckman | 55 | Senior Vice President, Finance | | Michael D. Sauer | 57 | Vice President, Controller & Chief Accounting Officer | - Daniel Woodland joined Entegris in **2022** as part of the CMC Materials acquisition and serves as Senior Vice President and President, Advanced Planarization Solutions[331](index=331&type=chunk) [Item 11. Executive Compensation](index=58&type=section&id=Item%2011.%20Executive%20Compensation.) Information regarding executive compensation is incorporated by reference from the company's Definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - The information required by this item is incorporated by reference to the company's Definitive Proxy Statement for its 2023 Annual Meeting of Stockholders[336](index=336&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=58&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) This section details securities authorized for issuance under Entegris's equity compensation plans, with 3,075,996 securities to be issued upon exercise of outstanding options and 12,141,458 shares remaining available for future issuance as of December 31, 2022 [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=58&type=section&id=Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details securities authorized for issuance under equity compensation plans, with 3,075,996 securities to be issued upon exercise of outstanding options and 12,141,458 shares remaining available for future issuance as of December 31, 2022 Equity Compensation Plan Information as of December 31, 2022 | Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------------ | :-------------------------------------------------------------------- | :-------------------------------------------------------------------- | :------------------------------------------------------------- | | Equity compensation plans approved by security holders | 3,075,996 | $54.53 | 12,141,458 | | Equity compensation plans not approved by security holders | — | — | — | | Total | 3,075,996 | $54.53 | 12,141,458 | - The weighted average exercise price does not include shares issuable upon vesting of outstanding restricted stock units, which have no exercise price[340](index=340&type=chunk) - The remaining available shares for future issuance include **1,284,523 shares** under the Company's Employee Stock Purchase Plan[340](index=340&type=chunk) - Other information required by this item is incorporated by reference from the 2023 Proxy Statement[339](index=339&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=58&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence.) Information regarding certain relationships and related transactions, as well as director independence, is incorporated by reference from the company's 2023 Proxy Statement - The information required by this item is incorporated by reference to the company's Definitive Proxy Statement for its 2023 Annual Meeting of Stockholders[340](index=340&type=chunk) [Item 14. Principal Accountant Fees and Services](index=59&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services.) Information regarding principal account