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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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.
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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
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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
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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
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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%
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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
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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
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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?
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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
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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
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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”
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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
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Financials
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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+
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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
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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
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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:
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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)
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20
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)
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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
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