MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of enabling
technologies that transform our world, today reported first quarter
2024 financial results.
“MKS delivered strong results in the first quarter despite a
soft end-market demand environment,” said John T.C. Lee, President
and Chief Executive Officer. “With markets expected to improve
later this year, we are in an outstanding position with critical
technologies and deep customer relationships to address the
intensifying challenges in the design and manufacturing of advanced
electronic devices. From the semiconductor, to the package
substrate, and printed circuit board – we are foundational.”
Mr. Lee added, “The value of our product portfolio is evident in
the strong gross margins we again reported in the first quarter. We
are delivering profitability through the value of our
differentiated products and technologies, prudent management of our
expenses and targeted investments for the long-term. In addition,
we remain committed to reducing our debt levels, and I’m pleased
that we made another $50 million voluntary debt prepayment in
April.”
Second Quarter 2024 Outlook
For the second quarter of 2024, the Company expects revenue of
$860 million, plus or minus $40 million, Adjusted EBITDA of $197
million, plus or minus $23 million, and Non-GAAP net earnings per
diluted share of $0.93, plus or minus $0.26.
Conference Call Details
A conference call with management will be held on Thursday, May
9, 2024 at 8:30 a.m. (Eastern Time). To participate in the call by
phone, participants should visit the Investor Relations section of
MKS’ website at investor.mks.com and click on Events &
Presentations, where you will be able to register online and
receive dial-in details. We encourage participants to register and
dial in to the conference call at least 15 minutes before the start
of the call to ensure a timely connection. A live and archived
webcast and related presentation materials will be available on the
Investor Relations section of the MKS website.
About MKS Instruments
MKS Instruments enables technologies that transform our world.
We deliver foundational technology solutions to leading edge
semiconductor manufacturing, electronics and packaging, and
specialty industrial applications. We apply our broad science and
engineering capabilities to create instruments, subsystems,
systems, process control solutions and specialty chemicals
technology that improve process performance, optimize productivity
and enable unique innovations for many of the world's leading
technology and industrial companies. Our solutions are critical to
addressing the challenges of miniaturization and complexity in
advanced device manufacturing by enabling increased power, speed,
feature enhancement, and optimized connectivity. Our solutions are
also critical to addressing ever-increasing performance
requirements across a wide array of specialty industrial
applications. Additional information can be found at
www.mks.com.
Use of Non-GAAP Financial Results
This press release includes financial measures that are not in
accordance with U.S. generally accepted accounting principles
(“Non-GAAP financial measures”). These Non-GAAP financial measures
should be viewed in addition to, and not as a substitute for, MKS’
reported results under U.S. generally accepted accounting
principles (“GAAP”), and may be different from Non-GAAP financial
measures used by other companies. In addition, these Non-GAAP
financial measures are not based on any comprehensive set of
accounting rules or principles. MKS management believes the
presentation of these Non-GAAP financial measures is useful to
investors for comparing prior periods and analyzing ongoing
business trends and operating results.
MKS is not providing a quantitative reconciliation of
forward-looking Non-GAAP net earnings per diluted share and
Adjusted EBITDA to their most directly comparable GAAP financial
measures because it is unable to estimate with reasonable certainty
the ultimate timing or amount of certain significant items without
unreasonable efforts. These items include, but are not limited to,
acquisition and integration costs, amortization of intangible
assets, ransomware remediation costs, restructuring expense,
goodwill and intangible asset impairments, excess and obsolescence
inventory charges, amortization of debt issuance costs, debt
refinancing fee, loss on extinguishment of debt, and the income tax
effect of these items. These items are uncertain, depend on various
factors, including, but not limited to, the integration of our
acquisition of Atotech Limited (“Atotech”), which we acquired in
August 2022 (the “Atotech Acquisition”), and the interest rate and
refinancing environment, and could have a material impact on GAAP
reported results for the relevant period.
For further information regarding these Non-GAAP financial
measures, including a change to how MKS defines Adjusted EBITDA,
please refer to the tables presenting reconciliations of our
Non-GAAP results to our GAAP results and the “Notes on Our Non-GAAP
Financial Information” at the end of this press release.
Selected GAAP and Non-GAAP Financial
Measures(In millions, except per share
data)
|
Q1 2024 |
|
Q4 2023 |
|
Q1 2023 |
Net
Revenues |
|
|
|
|
|
Semiconductor |
$ |
351 |
|
|
$ |
362 |
|
|
$ |
309 |
|
Electronics and Packaging |
|
208 |
|
|
|
226 |
|
|
|
222 |
|
Specialty Industrial |
|
309 |
|
|
|
305 |
|
|
|
263 |
|
Total net revenues |
$ |
868 |
|
|
$ |
893 |
|
|
$ |
794 |
|
GAAP
Financial Measures |
|
|
|
|
|
Gross margin |
|
47.8 |
% |
|
|
46.0 |
% |
|
|
42.2 |
% |
Operating margin |
|
12.2 |
% |
|
|
2.7 |
% |
|
|
0.1 |
% |
Net income (loss) |
$ |
15 |
|
|
$ |
(68 |
) |
|
$ |
(42 |
) |
Diluted income (loss) per
share |
$ |
0.22 |
|
|
$ |
(1.02 |
) |
|
$ |
(0.64 |
) |
Non-GAAP
Financial Measures |
|
|
|
|
|
Gross margin |
|
47.8 |
% |
|
|
46.0 |
% |
|
|
42.2 |
% |
Operating margin |
|
20.2 |
% |
|
|
20.3 |
% |
|
|
12.1 |
% |
Net earnings |
$ |
79 |
|
|
$ |
78 |
|
|
$ |
32 |
|
Diluted earnings per
share |
$ |
1.18 |
|
|
$ |
1.17 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Financial Information
At March 31, 2024, the Company had $846 million in cash and
short-term investments, $4.9 billion of secured term loan principal
outstanding, and up to $675 million of additional borrowing
capacity under a revolving credit facility, subject to certain
leverage ratio requirements. During the first quarter of 2024, the
Company paid a cash dividend of $15 million or $0.22 per diluted
share and made a voluntary prepayment of $50 million on its USD
term loan B. In April 2024, the Company made an additional
voluntary prepayment of $50 million on its USD term loan B.
As previously reported, in January 2024, the Company
successfully completed the refinancing of its term loan A using a
portion of the proceeds of its $490 million incremental USD term
loan B and €250 million incremental EUR term loan B. In February
2024, the Company successfully increased the available borrowing
capacity under its revolving credit facility by $175 million, from
$500 million to $675 million.
SAFE HARBOR FOR FORWARD-LOOKING
STATEMENTS
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934 regarding the future financial
performance, business prospects and growth of MKS Instruments, Inc.
(“MKS,” the “Company,” “our,” or “we”). These statements are only
predictions based on current assumptions and expectations. Any
statements that are not statements of historical fact (including
statements containing the words “will,” “projects,” “intends,”
“believes,” “plans,” “anticipates,” “expects,” “estimates,”
“forecasts,” “continues” and similar expressions) should be
considered to be forward-looking statements. Actual events or
results may differ materially from those in the forward-looking
statements set forth herein. Among the important factors that could
cause actual events to differ materially from those in the
forward-looking statements that we make are the need to generate
sufficient cash flows to service and repay the substantial
indebtedness we incurred in connection with the Atotech
Acquisition, which we completed in August 2022; the terms of our
existing credit facilities under which we incurred such debt; our
entry into the chemicals technology business through the Atotech
Acquisition, in which we did not have previous experience and which
may expose us to significant additional liabilities; the risk that
we are unable to integrate the Atotech Acquisition successfully or
realize the anticipated synergies, cost savings and other benefits
of the Atotech Acquisition; legal, reputational, financial and
contractual risks resulting from the ransomware incident we
identified in February 2023, and other risks related to
cybersecurity, data privacy and intellectual property; competition
from larger, more advanced or more established companies in our
markets; the ability to successfully grow our business, including
through growth of the Atotech business and growth of the Electro
Scientific Industries, Inc. business, which we acquired in February
2019, and financial risks associated with those and potential
future acquisitions, including goodwill and intangible asset
impairments; manufacturing and sourcing risks, including those
associated with limited and sole source suppliers and the impact
and duration of supply chain disruptions, component shortages, and
price increases; changes in global demand; the impact of a pandemic
or other widespread health crisis; risks associated with doing
business internationally, including geopolitical conflicts, such as
the conflict in the Middle East, trade compliance, regulatory
restrictions on our products, components or markets, particularly
the semiconductor market, and unfavorable currency exchange and tax
rate fluctuations, which risks become more significant as we grow
our business internationally and in China specifically; conditions
affecting the markets in which we operate, including fluctuations
in capital spending in the semiconductor, electronics manufacturing
and automotive industries, and fluctuations in sales to our major
customers; disruptions or delays from third-party service providers
upon which our operations may rely; the ability to anticipate and
meet customer demand; the challenges, risks and costs involved with
integrating or transitioning global operations of the companies we
have acquired; risks associated with the attraction and retention
of key personnel; potential fluctuations in quarterly results;
dependence on new product development; rapid technological and
market change; acquisition strategy; volatility of stock price;
risks associated with chemical manufacturing and environmental
regulation compliance; risks related to defective products;
financial and legal risk management; and the other important
factors described under the heading “Risk Factors” in Part I, Item
1A of our Annual Report on Form 10-K for the year ended December
31, 2023 and any subsequent Quarterly Reports on Form 10-Q, each as
filed with the U.S. Securities and Exchange Commission. MKS is
under no obligation to, and expressly disclaims any obligation to,
update or alter these forward-looking statements, whether as a
result of new information, future events or otherwise, even if
subsequent events cause our views to change, after the date of this
press release. Amounts reported in this press release are
preliminary and subject to finalization prior to the filing of our
Quarterly Report on Form 10-Q for the quarter ended March 31,
2024.
Company Contact: David RyzhikVice President,
Investor RelationsTelephone: (978) 557-5180Email:
david.ryzhik@mksinst.com
|
MKS Instruments, Inc. |
Unaudited Consolidated Statements of
Operations |
(In millions, except per share data) |
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2023 |
|
Net revenues: |
|
|
|
|
|
Products |
$ |
754 |
|
|
$ |
785 |
|
|
$ |
712 |
|
Services |
|
114 |
|
|
|
108 |
|
|
|
82 |
|
Total net revenues |
|
868 |
|
|
|
893 |
|
|
|
794 |
|
Cost of revenues: |
|
|
|
|
|
Products |
|
398 |
|
|
|
423 |
|
|
|
409 |
|
Services |
|
55 |
|
|
|
59 |
|
|
|
50 |
|
Total cost of revenues (exclusive of amortization shown separately
below) |
|
453 |
|
|
|
482 |
|
|
|
459 |
|
Gross profit |
|
415 |
|
|
|
411 |
|
|
|
335 |
|
Research and development |
|
70 |
|
|
|
70 |
|
|
|
72 |
|
Selling, general and administrative |
|
170 |
|
|
|
160 |
|
|
|
174 |
|
Acquisition and integration costs |
|
1 |
|
|
|
3 |
|
|
|
6 |
|
Restructuring |
|
3 |
|
|
|
7 |
|
|
|
1 |
|
Fees and expenses related to amendments to the Term Loan
Facility |
|
3 |
|
|
|
2 |
|
|
|
— |
|
Amortization of intangible assets |
|
62 |
|
|
|
70 |
|
|
|
81 |
|
Goodwill and intangible asset impairments |
|
— |
|
|
|
75 |
|
|
|
— |
|
Income from operations |
|
106 |
|
|
|
24 |
|
|
|
1 |
|
Interest income |
|
(6 |
) |
|
|
(7 |
) |
|
|
(3 |
) |
Interest expense |
|
87 |
|
|
|
90 |
|
|
|
85 |
|
Loss on extinguishment of debt |
|
9 |
|
|
|
8 |
|
|
|
— |
|
Other (income) expense, net |
|
(3 |
) |
|
|
12 |
|
|
|
(2 |
) |
Income (loss) before income taxes |
|
19 |
|
|
|
(79 |
) |
|
|
(79 |
) |
Provision (benefit) for income taxes |
|
4 |
|
|
|
(11 |
) |
|
|
(37 |
) |
Net income (loss) |
$ |
15 |
|
|
$ |
(68 |
) |
|
$ |
(42 |
) |
Net income (loss) per share: |
|
|
|
|
|
Basic |
$ |
0.22 |
|
|
$ |
(1.02 |
) |
|
$ |
(0.64 |
) |
Diluted |
$ |
0.22 |
|
|
$ |
(1.02 |
) |
|
$ |
(0.64 |
) |
Cash dividend per common share |
$ |
0.22 |
|
|
$ |
0.22 |
|
|
$ |
0.22 |
|
Weighted average shares outstanding: |
|
|
|
|
|
Basic |
|
67.0 |
|
|
|
66.9 |
|
|
|
66.7 |
|
Diluted |
|
67.4 |
|
|
|
66.9 |
|
|
|
66.7 |
|
|
|
|
|
|
|
MKS Instruments, Inc. |
Unaudited Consolidated Balance Sheet |
(In millions) |
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2024 |
|
|
|
2023 |
|
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
845 |
|
|
$ |
875 |
|
Short-term investments |
|
1 |
|
|
|
— |
|
Accounts receivable, net |
|
576 |
|
|
|
603 |
|
Inventories |
|
971 |
|
|
|
991 |
|
Other current assets |
|
268 |
|
|
|
227 |
|
Total current assets |
|
2,661 |
|
|
|
2,696 |
|
Property, plant and equipment, net |
|
766 |
|
|
|
784 |
|
Right-of-use assets, net |
|
227 |
|
|
|
225 |
|
Goodwill |
|
2,511 |
|
|
|
2,554 |
|
Intangible assets, net |
|
2,501 |
|
|
|
2,619 |
|
Other assets |
|
265 |
|
|
|
240 |
|
Total assets |
$ |
8,931 |
|
|
$ |
9,118 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Short-term debt |
$ |
50 |
|
|
$ |
93 |
|
Accounts payable |
|
290 |
|
|
|
327 |
|
Other current liabilities |
|
381 |
|
|
|
428 |
|
Total current liabilities |
|
721 |
|
|
|
848 |
|
Long-term debt, net |
|
4,692 |
|
|
|
4,696 |
|
Non-current deferred taxes |
|
622 |
|
|
|
640 |
|
Non-current accrued compensation |
|
148 |
|
|
|
151 |
|
Non-current lease liabilities |
|
210 |
|
|
|
205 |
|
Other liabilities |
|
114 |
|
|
|
106 |
|
Total liabilities |
|
6,507 |
|
|
|
6,646 |
|
Stockholders' equity |
|
|
|
Common stock |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
2,201 |
|
|
|
2,195 |
|
Retained earnings |
|
373 |
|
|
|
373 |
|
Accumulated other comprehensive loss |
|
(150 |
) |
|
|
(96 |
) |
Total stockholders' equity |
|
2,424 |
|
|
|
2,472 |
|
Total liabilities and stockholders' equity |
$ |
8,931 |
|
|
$ |
9,118 |
|
|
|
|
|
MKS Instruments, Inc. |
Unaudited Consolidated Statements of Cash
Flows |
(In millions) |
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
|
|
Net income (loss) |
$ |
15 |
|
|
$ |
(68 |
) |
|
$ |
(42 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
88 |
|
|
|
95 |
|
|
|
107 |
|
Goodwill and intangible asset impairments |
|
— |
|
|
|
75 |
|
|
|
— |
|
Unrealized loss on derivatives not designated as hedging
instruments |
|
3 |
|
|
|
10 |
|
|
|
13 |
|
Amortization of debt issuance costs and original issue
discounts |
|
8 |
|
|
|
10 |
|
|
|
8 |
|
Loss on extinguishment of debt |
|
9 |
|
|
|
8 |
|
|
|
— |
|
Stock-based compensation |
|
15 |
|
|
|
11 |
|
|
|
18 |
|
Provision for excess and obsolete inventory |
|
11 |
|
|
|
10 |
|
|
|
18 |
|
Deferred income taxes |
|
(36 |
) |
|
|
(61 |
) |
|
|
(10 |
) |
Other |
|
2 |
|
|
|
— |
|
|
|
— |
|
Changes in operating assets and liabilities, net of acquired assets
and liabilities |
|
(48 |
) |
|
|
90 |
|
|
|
(75 |
) |
Net cash provided by operating activities |
|
67 |
|
|
|
180 |
|
|
|
37 |
|
Cash flows from investing activities: |
|
|
|
|
|
Purchases of property, plant and equipment |
|
(18 |
) |
|
|
(34 |
) |
|
|
(17 |
) |
Net cash used in investing activities |
|
(18 |
) |
|
|
(34 |
) |
|
|
(17 |
) |
Cash flows from financing activities: |
|
|
|
|
|
Proceeds from borrowings |
|
761 |
|
|
|
214 |
|
|
|
2 |
|
Payments of borrowings |
|
(806 |
) |
|
|
(336 |
) |
|
|
(23 |
) |
Payments of deferred financing fees |
|
(2 |
) |
|
|
(9 |
) |
|
|
— |
|
Dividend payments |
|
(15 |
) |
|
|
(15 |
) |
|
|
(15 |
) |
Net (payments) proceeds related to employee stock awards |
|
(9 |
) |
|
|
4 |
|
|
|
(6 |
) |
Other financing activities |
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Net cash used in financing activities |
|
(72 |
) |
|
|
(143 |
) |
|
|
(43 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(7 |
) |
|
|
13 |
|
|
|
(6 |
) |
(Decrease) increase in cash and cash equivalents |
|
(30 |
) |
|
|
16 |
|
|
|
(29 |
) |
Cash and cash equivalents at beginning of period |
|
875 |
|
|
|
859 |
|
|
|
909 |
|
Cash and cash equivalents at end of period |
$ |
845 |
|
|
$ |
875 |
|
|
$ |
880 |
|
|
|
|
|
|
|
The following supplemental Non-GAAP earnings information
is presented to aid in understanding MKS’ operating
results:
MKS Instruments, Inc. |
Schedule Reconciling Selected Non-GAAP Financial
Measures |
(In millions, except per share data) |
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2023 |
|
Net income (loss) |
$ |
15 |
|
|
$ |
(68 |
) |
|
$ |
(42 |
) |
Acquisition and integration costs (Note 1) |
|
1 |
|
|
|
3 |
|
|
|
6 |
|
Restructuring (Note 2) |
|
3 |
|
|
|
7 |
|
|
|
1 |
|
Amortization of intangible assets |
|
62 |
|
|
|
70 |
|
|
|
81 |
|
Goodwill and intangible asset impairments (Note 3) |
|
— |
|
|
|
75 |
|
|
|
— |
|
Amortization of debt issuance costs (Note 4) |
|
6 |
|
|
|
7 |
|
|
|
6 |
|
Fees and expenses related to amendments to the Term Loan Facility
(Note 5) |
|
3 |
|
|
|
2 |
|
|
|
— |
|
Ransomware incident (Note 6) |
|
— |
|
|
|
1 |
|
|
|
7 |
|
Loss on extinguishment of debt (Note 7) |
|
9 |
|
|
|
8 |
|
|
|
— |
|
Tax effect of Non-GAAP adjustments (Note 8) |
|
(20 |
) |
|
|
(26 |
) |
|
|
(27 |
) |
Non-GAAP net earnings |
$ |
79 |
|
|
$ |
78 |
|
|
$ |
32 |
|
Non-GAAP net earnings per diluted share |
$ |
1.18 |
|
|
$ |
1.17 |
|
|
$ |
0.48 |
|
Weighted average diluted shares outstanding |
|
67.4 |
|
|
|
67.1 |
|
|
|
66.8 |
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
67 |
|
|
$ |
180 |
|
|
$ |
37 |
|
Purchases of property, plant and equipment |
|
(18 |
) |
|
|
(34 |
) |
|
|
(17 |
) |
Free cash flow |
$ |
49 |
|
|
$ |
146 |
|
|
$ |
20 |
|
|
|
|
|
|
|
MKS Instruments, Inc. |
Schedule Reconciling Selected Non-GAAP Financial
Measures |
(In millions) |
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2023 |
|
GAAP and Non-GAAP gross profit |
$ |
415 |
|
|
$ |
411 |
|
|
$ |
335 |
|
GAAP and Non-GAAP gross margin |
|
47.8 |
% |
|
|
46.0 |
% |
|
|
42.2 |
% |
Operating expenses |
$ |
309 |
|
|
$ |
387 |
|
|
$ |
334 |
|
Acquisition and integration costs (Note 1) |
|
1 |
|
|
|
3 |
|
|
|
6 |
|
Restructuring (Note 2) |
|
3 |
|
|
|
7 |
|
|
|
1 |
|
Amortization of intangible assets |
|
62 |
|
|
|
70 |
|
|
|
81 |
|
Goodwill and intangible asset impairments (Note 3) |
|
— |
|
|
|
75 |
|
|
|
— |
|
Fees and expenses related to amendments to the Term Loan Facility
(Note 5) |
|
3 |
|
|
|
2 |
|
|
|
— |
|
Ransomware incident (Note 6) |
|
— |
|
|
|
1 |
|
|
|
7 |
|
Non-GAAP operating expenses |
$ |
240 |
|
|
$ |
229 |
|
|
$ |
240 |
|
Income from operations |
$ |
106 |
|
|
$ |
24 |
|
|
$ |
1 |
|
Operating margin |
|
12.2 |
% |
|
|
2.7 |
% |
|
|
0.1 |
% |
Acquisition and integration costs (Note 1) |
|
1 |
|
|
|
3 |
|
|
|
6 |
|
Restructuring (Note 2) |
|
3 |
|
|
|
7 |
|
|
|
1 |
|
Amortization of intangible assets |
|
62 |
|
|
|
70 |
|
|
|
81 |
|
Goodwill and intangible asset impairments (Note 3) |
|
— |
|
|
|
75 |
|
|
|
— |
|
Fees and expenses related to amendments to the Term Loan Facility
(Note 5) |
|
3 |
|
|
|
2 |
|
|
|
— |
|
Ransomware incident (Note 6) |
|
— |
|
|
|
1 |
|
|
|
7 |
|
Non-GAAP income from operations |
$ |
175 |
|
|
$ |
182 |
|
|
$ |
96 |
|
Non-GAAP operating margin |
|
20.2 |
% |
|
|
20.3 |
% |
|
|
12.1 |
% |
Interest expense, net |
|
81 |
|
|
|
83 |
|
|
|
82 |
|
Amortization of debt issuance costs (Note 4) |
|
6 |
|
|
|
7 |
|
|
|
6 |
|
Non-GAAP interest expense, net |
|
75 |
|
|
|
76 |
|
|
|
76 |
|
Net income (loss) |
$ |
15 |
|
|
$ |
(68 |
) |
|
$ |
(42 |
) |
Interest expense, net |
|
81 |
|
|
|
83 |
|
|
|
82 |
|
Other (income) expense, net (Note 9) |
|
(3 |
) |
|
|
12 |
|
|
|
(2 |
) |
Provision (benefit) for income taxes |
|
4 |
|
|
|
(11 |
) |
|
|
(37 |
) |
Depreciation |
|
26 |
|
|
|
25 |
|
|
|
26 |
|
Amortization |
|
62 |
|
|
|
70 |
|
|
|
81 |
|
Stock-based compensation |
|
15 |
|
|
|
11 |
|
|
|
18 |
|
Acquisition and integration costs (Note 1) |
|
1 |
|
|
|
3 |
|
|
|
6 |
|
Restructuring (Note 2) |
|
3 |
|
|
|
7 |
|
|
|
1 |
|
Goodwill and intangible asset impairments (Note 3) |
|
— |
|
|
|
75 |
|
|
|
— |
|
Fees and expenses related to amendments to the Term Loan Facility
(Note 5) |
|
3 |
|
|
|
2 |
|
|
|
— |
|
Ransomware incident (Note 6) |
|
— |
|
|
|
1 |
|
|
|
7 |
|
Loss on extinguishment of debt (Note 7) |
|
9 |
|
|
|
8 |
|
|
|
— |
|
Adjusted EBITDA (Note 9) |
$ |
217 |
|
|
$ |
218 |
|
|
$ |
140 |
|
Adjusted EBITDA margin |
|
25.0 |
% |
|
|
24.4 |
% |
|
|
17.6 |
% |
|
|
|
|
|
|
MKS Instruments, Inc. |
Reconciliation of GAAP Income Tax Rate to Non-GAAP Income
Tax Rate |
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2024 |
|
Three Months Ended December 31, 2023 |
|
Income Before Income Taxes |
|
Provision for Income Taxes |
|
Effective Tax Rate |
|
(Loss) Income Before Income Taxes |
|
(Benefit) Provision for Income Taxes |
|
Effective Tax Rate |
GAAP |
$ |
19 |
|
$ |
4 |
|
23.1 |
% |
|
$ |
(79 |
) |
|
$ |
(11 |
) |
|
14.2 |
% |
Acquisition and integration costs (Note 1) |
|
1 |
|
|
— |
|
|
|
|
3 |
|
|
|
— |
|
|
|
Restructuring (Note 2) |
|
3 |
|
|
— |
|
|
|
|
7 |
|
|
|
— |
|
|
|
Amortization of intangible assets |
|
62 |
|
|
— |
|
|
|
|
70 |
|
|
|
— |
|
|
|
Goodwill and intangible asset impairments (Note 3) |
|
— |
|
|
— |
|
|
|
|
75 |
|
|
|
— |
|
|
|
Amortization of debt issuance costs (Note 4) |
|
6 |
|
|
— |
|
|
|
|
7 |
|
|
|
— |
|
|
|
Fees and expenses related to amendments to the Term Loan Facility
(Note 5) |
|
3 |
|
|
— |
|
|
|
|
2 |
|
|
|
— |
|
|
|
Ransomware incident (Note 6) |
|
— |
|
|
— |
|
|
|
|
1 |
|
|
|
— |
|
|
|
Loss on extinguishment of debt (Note 7) |
|
9 |
|
|
— |
|
|
|
|
8 |
|
|
|
— |
|
|
|
Tax effect of Non-GAAP adjustments (Note 8) |
|
— |
|
|
20 |
|
|
|
|
— |
|
|
|
26 |
|
|
|
Non-GAAP |
$ |
103 |
|
$ |
24 |
|
23.3 |
% |
|
$ |
94 |
|
|
$ |
15 |
|
|
15.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
(Loss) Income Before Income Taxes |
|
Benefit for Income Taxes |
|
Effective Tax Rate |
GAAP |
|
|
|
|
|
|
$ |
(79 |
) |
|
$ |
(37 |
) |
|
46.6 |
% |
Acquisition and integration costs (Note 1) |
|
|
|
|
|
|
|
6 |
|
|
|
— |
|
|
|
Restructuring (Note 2) |
|
|
|
|
|
|
|
1 |
|
|
|
— |
|
|
|
Amortization of intangible assets |
|
|
|
|
|
|
|
81 |
|
|
|
— |
|
|
|
Amortization of debt issuance costs (Note 4) |
|
|
|
|
|
|
|
6 |
|
|
|
— |
|
|
|
Ransomware incident (Note 6) |
|
|
|
|
|
|
|
7 |
|
|
|
— |
|
|
|
Tax effect of Non-GAAP adjustments (Note 8) |
|
|
|
|
|
|
|
— |
|
|
|
27 |
|
|
|
Non-GAAP |
|
|
|
|
|
|
$ |
23 |
|
|
$ |
(10 |
) |
|
(46.8 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
MKS Instruments,
Inc.Notes on Our Non-GAAP Financial
Information
Non-GAAP financial measures adjust GAAP financial measures for
the items listed below. These Non-GAAP financial measures should be
viewed in addition to, and not as a substitute for, MKS’ reported
GAAP results, and may be different from Non-GAAP financial measures
used by other companies. In addition, these Non-GAAP financial
measures are not based on any comprehensive set of accounting rules
or principles. MKS management believes the presentation of these
Non-GAAP financial measures is useful to investors for comparing
prior periods and analyzing ongoing business trends and operating
results. Totals presented may not sum and percentages may not
recalculate using figures presented due to rounding.
Note 1: Acquisition and integration costs related to the Atotech
Acquisition.
Note 2: Restructuring costs primarily related to severance costs
due to global cost-saving initiatives.
Note 3: As part of our annual goodwill and intangible asset
impairment analysis, we recorded impairment charges of $62 million
for our Materials Solutions Division and $13 million for our
Equipment Solutions Business.
Note 4: We recorded additional interest expense related to the
amortization of debt issuance costs associated with our term loan
facility.
Note 5: During the three months ended March 31, 2024, we
recorded fees and expenses related to an amendment to our term loan
facility where we borrowed additional amounts under our USD term
loan B and EUR term loan B and fully paid our term loan A. During
the three months ended December 31, 2023, we recorded fees and
expenses related to an amendment to the USD term loan B under our
term loan facility.
Note 6: We recorded costs, net of recoveries, associated with
the ransomware incident we identified on February 3, 2023. These
costs were primarily comprised of various third-party consulting
services, including forensic experts, restoration experts, legal
counsel, and other information technology and accounting
professional expenses, enhancements to our cybersecurity measures,
and costs to restore our systems and access our data.
Note 7: During the three months ended March 31, 2024, we
recorded a charge to write-off deferred financing fees and original
issue discount costs related to the extinguishment of the term loan
A under our term loan facility. During the three months ended
December 31, 2023, we recorded a charge to write-off deferred
financing fees and original issue discount costs related to the
repricing of the USD term loan B under our term loan facility.
Note 8: Non-GAAP adjustments are tax effected at applicable
statutory rates resulting in a difference between the GAAP and
Non-GAAP tax rates.
Note 9: In the fourth quarter of 2023, we modified our
definition of Adjusted EBITDA to exclude other (income) expense,
net from this Non-GAAP measure. Other (income) expense, net
primarily relates to changes in foreign exchange rates. We believe
this change enhances investor insight into our operational
performance. We have applied this modified definition of Adjusted
EBITDA to all periods presented.
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