entg 2010 rev c - mcilvaine company...sell across the supply chain growing opportunities in adjacent...

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April 29, 2013 Investor Overview

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Page 1: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

April 29, 2013

Investor Overview

Page 2: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Safe Harbor

Certain information contained in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Statements that include such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “will,” “should” or the negative thereof and similar expressions as they relate to Entegris or our management are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris’ stock, Entegris’ future operating results, other acquisition and investment opportunities available to Entegris, general business and market conditions and other factors. Additional information concerning these and other risk factors may be found in previous financial press releases issued by Entegris and Entegris’ periodic public filings with the Securities and Exchange Commission, including discussions appearing under the headings “Risks Relating to our Business and Industry,” “Manufacturing Risks,” “International Risks” and “Risks Related to Owning Our Securities” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as well as other matters and important factors disclosed previously and from time to time in the filings of Entegris with the U.S. Securities and Exchange Commission. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update publicly any forward-looking statements contained herein.

Page 3: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Our proven track record of performance

Our core technologies are more critical to the industry

Redesigned business model

Entegris Investment Thesis: Demonstrated Results and Clear Strategy

Grow 3% Faster Than Our Markets

Strategic Objectives

Deliver Superior Profitability – Operating Margin of 20%+

Generate $100 Million+ of Annual Cash Flow

Results

Page 4: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Market leader in specialized, very demanding manufacturing environments

Broad array of technology solutions

Differentiated products for filtering and controlling nano-level contamination

A Leader in Filtration and Contamination Control

Cleanroom photo courtesy of Applied Materials

Page 5: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Our largest market is semiconductor

Sell across the supply chain

Growing opportunities in adjacent microelectronics markets, industrial and life sciences

Total served available market = $2.2 billion

Attractive Microelectronics Markets

Semiconductor IC Manufacturers

40%

15%

20%

10%

15%

Semiconductor Equipment Makers

Semiconductor Materials Companies

Entegris Sales by Market FY2012

Industrial and Life Sciences

Other Microelectronics

Page 6: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Industry to outperform worldwide GDP driven by end market demand for electronics

MSI = millions of square inches of silicon Source: Gartner, December 2012

Entegris is Leveraged to Continued Growth in Semiconductor Units

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Worldwide Silicon Demand in MSI and Global GDP

MSI GDP

Estimated

3-yr. CAGR = 7.2%

3-yr. CAGR = 3.5%

Page 7: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Entegris Products are Critical to the Fab; The “Last Defense for the Wafer”

Broadest array of technologies to solve yield issues, recurring revenue model

44%

20%

26%

10%

2012 Sales

Filtration/Purification

Fluid Handing

Wafer and Critical Substrate Handling

Specialty Materials

Fluid Handling

Wafer and Critical Substrate Handling

Specialty Materials

Filtration and Purification

Page 8: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Entegris is #1 in key fab processes that are the greatest sources of defects

Entegris’ unique combination of technology and process applications knowledge provides barriers to new competition

The Leading Contamination Control Company in the Fab

Source: Entegris customer survey

Lithography

Wet Etch and Clean

CMP

Market Position

#1

#1

#2

#1 Wafer Handling

Page 9: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Scale – Entegris is the largest contamination control company serving the microelectronics market

Technology Investment – Entegris is investing more in new technologies than other filtration companies

Portfolio – Entegris has the most comprehensive portfolio of contamination control technologies in the industry

Focus – Entegris is focused on the most demanding yield challenges facing its customers

Manufacturing Excellence – Entegris is achieving customer recognition as a leading supplier

Why Do We Win?

Page 10: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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The Most Demanding Manufacturing Environments Are Getting More Demanding

Cost Performance

Power

The relentless drive for new, better, and more powerful devices

Page 11: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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0

1,000

2,000

3,000

4,000

0%

20%

40%

60%

80%

100%

90 65 45 32 28 20 14 10

Est Mature No. Steps

Semi Makers Face Intense Pressure to Maximize Yields Quickly

Capex projection based on projected 20 nm steps: 2,000, 14 nm steps: 2,700 Source: Entegris

Cost of semiconductor technology is rising at unprecedented rate

More complex processes with more steps

Declining target yields put pressure on returns on investment

$0.7

$1.1

$1.9

$2.4

$3.0

$3.9

65 4X 3X 2X 14 10

Capex for Logic/Foundry Production Line $ in billions/10K wspm

Technology Node in Nanometers

% Yield Process Steps

Semi Manufacturing Yields and Steps

Technology Node in Nanometers

Page 12: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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The Industry’s Challenges are Entegris’ Opportunities

Industry Challenges

1. More manufacturing process steps

2. More expensive fabs

3. Lower target yields

Entegris Opportunities

1. More filtration points

2. More value placed on strategic supplier relationships

3. More focus on yield optimization and “time to yield”

Page 13: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

15 nm and below

32 nm - 22 nm

65 nm - 45 nm

90 nm

130 nm and above

Source: Gartner, December 2012

Entegris is “Node” Driven

Year-End Capacity by Linewidth (MSI/Quarter)

Entegris addresses both the leading edge and legacy nodes

Need for contamination control increasing at advanced nodes

Long “tail” of recurring demand at legacy nodes provides stable base

Millions of square inches of silicon

Advanced nodes drive growth

Legacy nodes provide stable, recurring sales

Page 14: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Financials

Page 15: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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1 Represents range of adjusted operating margin based on respective quarterly revenue levels. 2 Adjusted for amortization of intangible assets and one-time charges and expenses. 3 Assumes shares outstanding equal 138 million.

Our Target Model Provides Flexibility and Drives Performance

Quarterly Revenue Level 1

Revenue ($M) $170 $190 $220

Adjusted Operating Margin2 13% - 15% 16% - 18% 20%+

Earnings Per Share3 $0.11 - $0.13 $0.15 - $0.17 $0.22+

Page 16: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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2012: Good Performance in a Difficult Environment

Despite big drop in industry spending in 2H-2012, sales decline by only 4%

Solar and LED markets remained weak

Operating margin reflects new model that supports sustained investments

$399

$688 $749

$716

$0

$100

$200

$300

$400

$500

$600

$700

$800

2009 2010 2011 2012

-5%

0%

5%

10%

15%

20%

25%

Mil

lio

ns

Sales Adj. Op. Margin

Page 17: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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$175

$188

$184

$168$165

$165 to

$173

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13E

Q1-2013: Industry Trends Remained Mixed

Revenue ($ millions)

Adjusted Operating Margin* (% of Sales)

16.7%18.1% 18.1%

9.7%

13.7% 13% to14%

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13E

Q1 sales of $165M declined 2% from Q4, in line with expectations

Adjusted operating margin improved to 13.7% due to improved gross margin and cost controls

Q1 appears to be the trough; cautious optimism for stronger second half of 2013

* Adjusted operating margin defined as GAAP operating income, plus amortization and costs related to CEO succession

Page 18: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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0

10

20

30

40

50

60

70

80

2008 2009 2010 2011 2012 2013P 2014P

Maintenance

Investment

Investing to Extend Technology Leadership

Entegris Capital Spending Plan

Some equipment investment may shift to 2014

$ in millions

i2M Center for Advanced Material Science

Location: Bedford, MA

Research, development and manufacturing of filtration media and specialty coatings

Initial Opening 2H of 2013

Advanced Technology Center

Location: Colorado Springs, CO

Dedicated to 450 mm and EUV pod manufacturing

Opened April 2012

Investments include:

Page 19: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Estimated

201

3

201

4

Strong Cash Flow With Strategic Cash Deployment

Generated more than $400 million in free cash flow since 2007

Strong cash flow capability even with major capital projects underway

More strategic capital allocation Reserve portion of cash for highly

focused, strategic M&A

Replenish M&A reservoir of cash as cash is deployed

Opportunistic buybacks to reduce share count

1 Free cash flow capability assumes no M&A activity or change in capital structure

Free Cash Flow Capability1

$0

$100

$200

$300

$400

$500

$600

$700

200

7

200

8

200

9

201

0

201

1

201

2

Actual Free Cash Flow

Cumulative Free Cash Flow ($ in M)

Page 20: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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0%

2%

4%

6%

8%

10%

12%

14%

16%

ROA (FY2012)

Entegris Returns Compare Favorably

* Adjusted for restructuring and one-time expenses

0%

5%

10%

15%

20%

25%

Adj. EBITA* Margin (FY2012)

Page 21: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market

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Growing faster than market with superior profitability

Entegris is “node driven” – technology addresses yield issues that are increasingly critical to leading semiconductor device makers

Market leader with technology gap widening; Entegris is emerging among the few companies that can solve next-generation yield issues

Capturing share at the leading-edge creates potential for long-term revenues and cash flow streams

Why Entegris Should be a Core Holding

Page 22: ENTG 2010 Rev C - McIlvaine Company...Sell across the supply chain Growing opportunities in adjacent microelectronics markets, industrial and life sciences Total served available market