MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of
technologies that enable advanced processes and improve
productivity, today reported first quarter 2020 financial results.
“I could not be more proud of the dedication, resilience and
hard work of the MKS team during such a challenging time,” said
John TC Lee, President and Chief Executive Officer. “From the onset
of the global COVID-19 crisis, our team took swift action to ensure
the safety and well-being of our global workforce – which remains
our top priority. We also remained steadfast in delivering on our
customer commitments and overcoming the disruptions across our
factories and global supply chain.”
Mr. Lee added, “Our first quarter outlook did not factor in any
disruptions from the COVID-19 pandemic, and yet we were still able
to deliver quarterly revenue at the high-end of our guidance range.
This is a testament to our broad and differentiated portfolio, the
diverse and essential markets we serve, and our world-class
operational execution. Order rates remain strong in the second
quarter; however, the impact of shelter-in-place directives at our
facilities and those of our suppliers around the world are expected
to impact our second quarter revenue. We remain excited about the
long-term opportunity in the markets we serve, and our role as a
critical technology enabler.”
“Our top-line growth exceeded our expectations, driven by strong
sequential revenue growth of 15% in our Semiconductor Market, while
revenue in our Advanced Markets declined a modest 2%. Excluding our
Research market, which was negatively impacted by university and
research lab closures caused by COVID-19, our Advanced Markets
revenue would have grown sequentially,” said Seth H. Bagshaw,
Senior Vice President and Chief Financial Officer.
Mr. Bagshaw added, “Our balance sheet and liquidity position
remain strong. We ended the quarter with cash and short-term
investments of $503 million, which reflects the previously
announced $50 million voluntary debt prepayment on January 24th,
and our net leverage ratio exiting the quarter reduced further to
0.8 times. Moreover, we have an additional $100 million available
to us under an asset backed line of credit, subject to certain
borrowing base requirements.”
Second Quarter 2020 Outlook
Based on current business levels, the Company expects that
revenue in the second quarter of 2020 could range from $450 million
to $520 million. At these volumes, GAAP net income could range from
$0.62 to $1.10 per diluted share and non-GAAP net earnings could
range from $0.90 to $1.38 per diluted share.
Conference Call Details
A conference call with management will be held on Wednesday,
April 29, 2020 at 8:30 a.m. (Eastern Time). To access a live
webcast of the conference call and related presentation materials
management will refer to during the call, visit MKS’ website at
www.mksinst.com and click on the Company – Investor Relations –
Investor Overview. The webcast and related presentation materials
will be listed in the calendar of events. To participate by
telephone, please dial (877) 212-6076 for domestic callers and
(707) 287-9331 for international callers, and provide the operator
with Conference ID (6892300), and access the presentation materials
on MKS’ website. Participants are asked to access the live webcast
or dial in at least 15 minutes in advance to ensure a timely
connection. An archive of the webcast and related presentation
materials will be available on MKS’ website.
About MKS Instruments
MKS Instruments, Inc. is a global provider of instruments,
systems, subsystems and process control solutions that measure,
monitor, deliver, analyze, power and control critical parameters of
advanced manufacturing processes to improve process performance and
productivity for our customers. Our products are derived from our
core competencies in pressure measurement and control, flow
measurement and control, gas and vapor delivery, gas composition
analysis, electronic control technology, reactive gas generation
and delivery, power generation and delivery, vacuum technology,
lasers, photonics, optics, precision motion control, vibration
control and laser-based manufacturing systems solutions. We also
provide services relating to the maintenance and repair of our
products, installation services and training. Our primary served
markets include semiconductor, industrial technologies, life and
health sciences, research and defense. Additional information can
be found at www.mksinst.com.
Use of Non-GAAP Financial Results
This release includes measures that are not in accordance with
U.S. generally accepted accounting principles (“Non-GAAP
measures”). These Non-GAAP measures should be viewed in addition
to, and not as a substitute for, MKS’ reported GAAP results, and
may be different from Non-GAAP measures used by other companies. In
addition, these Non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. MKS management
believes the presentation of these Non-GAAP measures is useful to
investors for comparing prior periods and analyzing ongoing
business trends and operating results. For further information
regarding these Non-GAAP measures, please refer to the tables
presenting reconciliations of our Non-GAAP results to our U.S. 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 2020 |
Q4 2019 |
Net revenues |
$ |
536 |
|
$ |
500 |
|
|
|
|
GAAP
Financial Measures |
|
|
Operating margin |
|
16.8 |
% |
|
13.2 |
% |
Net income |
$ |
69 |
|
$ |
43 |
|
Diluted EPS |
$ |
1.25 |
|
$ |
0.77 |
|
|
|
|
Non-GAAP
Financial Measures |
|
|
Operating margin |
|
20.5 |
% |
|
18.4 |
% |
Net earnings |
$ |
85 |
|
$ |
66 |
|
Diluted EPS |
$ |
1.54 |
|
$ |
1.20 |
|
First Quarter 2020 Financial Results
Net revenues in the first quarter of 2020 were $536 million, an
increase of 7% from $500 million in the fourth quarter of 2019, and
an increase of 16% from $464 million in the first quarter of 2019.
The increase in net revenues was driven largely by increased demand
from customers in the Semiconductor Market. Net revenues in the
Semiconductor Market were $313 million in the first quarter of
2020, a sequential increase of 15%. Net revenues in Advanced
Markets were $223 million in the first quarter of 2020, a
sequential decrease of 2%, and were adversely affected by
university and research lab closures caused by COVID-19.
Net income in the first quarter of 2020 was $69 million, or
$1.25 per diluted share, compared to net income of $43 million, or
$0.77 per diluted share, in the fourth quarter of 2019, and $13
million, or $0.23 per diluted share, in the first quarter of
2019.
Net income in the first quarter of 2020 included acquisition and
integration costs of $2 million associated with the acquisition of
Electro Scientific Industries, Inc., (“ESI”), $0.4 million of
restructuring and other costs and $1.2 million of an asset
impairment charge.
Non-GAAP net earnings, which exclude special charges and
credits, were $85 million, or $1.54 per diluted share, in the first
quarter of 2020, compared to $66 million, or $1.20 per diluted
share, in the fourth quarter of 2019, and $61 million or $1.12 per
diluted share, in the first quarter of 2019.
Additional Financial Information
At March 31, 2020, the Company had $503 million in cash and
short-term investments, $840 million of secured term loan principal
outstanding and $100 million of incremental borrowing capacity
under an asset-based line of credit, subject to certain borrowing
base requirements. During the first quarter of 2020, the Company
paid a cash dividend of $11 million or $0.20 per diluted share.
SAFE HARBOR FOR FORWARD-LOOKING
STATEMENTS
This release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act and 21E of the
Securities Exchange Act of 1934 regarding the future financial
performance, business prospects and growth of MKS. 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 are the conditions
affecting the markets in which MKS operates, including the
fluctuations in capital spending in the semiconductor industry and
other advanced manufacturing markets, fluctuations in sales to our
major customers, the impact of the COVID-19 pandemic on the global
economy and financial markets, including any restrictions on MKS’
operations and the operations of MKS’ customers and suppliers
resulting from public health requirements and government mandates,
the terms of our term loan, competition from larger or more
established companies in MKS’ markets; MKS’ ability to successfully
grow ESI’s business; the challenges, risks and costs involved with
integrating the operations of the companies we have acquired, the
Company’s ability to successfully grow our business, potential
fluctuations in quarterly results, dependence on new product
development, rapid technological and market change, acquisition
strategy, manufacturing and sourcing risks, volatility of stock
price, international operations, financial risk management, and the
other factors described in MKS’ most recent Annual Report on Form
10-K for the year ended December 31, 2019 and any subsequent
Quarterly Reports on Form 10-Q, as filed with the SEC. 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 after the date of this
press release.
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) |
|
|
|
Quarter Ended |
|
March 31, |
March 31, |
December 31, |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
Net
revenues: |
|
|
|
Products |
$ |
461.2 |
|
$ |
397.4 |
|
$ |
426.5 |
|
Services |
|
74.5 |
|
|
66.2 |
|
|
73.2 |
|
Total net revenues |
|
535.7 |
|
|
463.6 |
|
|
499.7 |
|
Cost of
revenues: |
|
|
|
Products |
|
256.1 |
|
|
229.7 |
|
|
241.3 |
|
Services |
|
40.0 |
|
|
35.8 |
|
|
42.1 |
|
Total cost of revenues |
|
296.1 |
|
|
265.5 |
|
|
283.4 |
|
Gross
profit |
|
239.6 |
|
|
198.1 |
|
|
216.3 |
|
Research and
development |
|
42.4 |
|
|
38.9 |
|
|
41.7 |
|
Selling,
general and administrative |
|
87.2 |
|
|
82.5 |
|
|
82.5 |
|
Acquisition
and integration costs |
|
2.2 |
|
|
30.2 |
|
|
1.8 |
|
Restructuring and other |
|
0.4 |
|
|
1.9 |
|
|
2.3 |
|
Fees and
expenses related to Term Loan |
|
— |
|
|
5.8 |
|
|
0.1 |
|
Amortization
of intangible assets |
|
16.3 |
|
|
15.7 |
|
|
17.1 |
|
Asset
impairments |
|
1.2 |
|
|
— |
|
|
4.7 |
|
Income from
operations |
|
89.9 |
|
|
23.1 |
|
|
66.1 |
|
Interest
income |
|
0.7 |
|
|
1.7 |
|
|
1.0 |
|
Interest
expense |
|
8.9 |
|
|
9.1 |
|
|
8.8 |
|
Other
expense (income), net |
|
0.4 |
|
|
0.3 |
|
|
3.1 |
|
Income
before income taxes |
|
81.3 |
|
|
15.4 |
|
|
55.2 |
|
Provision
for income taxes |
|
12.2 |
|
|
2.9 |
|
|
12.5 |
|
Net
income |
$ |
69.1 |
|
$ |
12.5 |
|
$ |
42.7 |
|
Net income
per share: |
|
|
|
Basic |
$ |
1.26 |
|
$ |
0.23 |
|
$ |
0.78 |
|
Diluted |
$ |
1.25 |
|
$ |
0.23 |
|
$ |
0.77 |
|
Cash
dividends per common share |
$ |
0.20 |
|
$ |
0.20 |
|
$ |
0.20 |
|
Weighted
average shares outstanding: |
|
|
|
Basic |
|
54.9 |
|
|
54.1 |
|
|
55.0 |
|
Diluted |
|
55.2 |
|
|
54.8 |
|
|
55.4 |
|
|
|
|
|
MKS
Instruments, Inc. |
Unaudited
Consolidated Balance Sheet |
(In
millions) |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
ASSETS |
|
|
|
|
Cash and
cash equivalents |
|
$ |
442.0 |
|
|
$ |
414.6 |
|
Short-term
investments |
|
|
61.4 |
|
|
|
109.4 |
|
Trade
accounts receivable, net |
|
|
381.0 |
|
|
|
341.1 |
|
Inventories |
|
|
474.2 |
|
|
|
462.1 |
|
Other
current assets |
|
|
98.0 |
|
|
|
106.3 |
|
Total current assets |
|
|
1,456.6 |
|
|
|
1,433.5 |
|
Property,
plant and equipment, net |
|
|
238.2 |
|
|
|
241.9 |
|
Right-of-use
asset |
|
|
127.1 |
|
|
|
64.5 |
|
Goodwill |
|
|
1,056.4 |
|
|
|
1,058.5 |
|
Intangible
assets, net |
|
|
547.7 |
|
|
|
564.6 |
|
Long-term
investments |
|
|
6.0 |
|
|
|
5.8 |
|
Other
assets |
|
|
42.9 |
|
|
|
47.5 |
|
Total assets |
|
$ |
3,474.9 |
|
|
$ |
3,416.3 |
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
|
Short-term
debt |
|
$ |
14.3 |
|
|
$ |
12.1 |
|
Accounts
payable |
|
|
110.7 |
|
|
|
88.4 |
|
Accrued
compensation |
|
|
82.8 |
|
|
|
100.9 |
|
Income taxes
payable |
|
|
14.7 |
|
|
|
15.4 |
|
Lease
liability |
|
|
18.2 |
|
|
|
20.6 |
|
Deferred
revenue and customer advances |
|
|
21.9 |
|
|
|
21.5 |
|
Other
current liabilities |
|
|
59.0 |
|
|
|
58.8 |
|
Total current liabilities |
|
|
321.6 |
|
|
|
317.7 |
|
Long-term
debt, net |
|
|
820.4 |
|
|
|
871.7 |
|
Non-current
deferred taxes |
|
|
71.6 |
|
|
|
72.4 |
|
Non-current
accrued compensation |
|
|
42.3 |
|
|
|
43.9 |
|
Non-current
lease liability |
|
|
111.6 |
|
|
|
44.8 |
|
Other
liabilities |
|
|
54.9 |
|
|
|
42.5 |
|
Total liabilities |
|
|
1,422.4 |
|
|
|
1,393.0 |
|
Stockholders' equity: |
|
|
|
|
Common
stock |
|
|
0.1 |
|
|
|
0.1 |
|
Additional
paid-in capital |
|
|
852.4 |
|
|
|
864.3 |
|
Retained
earnings |
|
|
1,239.3 |
|
|
|
1,181.2 |
|
Accumulated
other comprehensive loss |
|
|
(39.3 |
) |
|
|
(22.3 |
) |
Total stockholders' equity |
|
|
2,052.5 |
|
|
|
2,023.3 |
|
Total
liabilities and stockholders' equity |
|
$ |
3,474.9 |
|
|
$ |
3,416.3 |
|
|
|
|
|
|
MKS
Instruments, Inc. |
Unaudited
Consolidated Statements of Cash Flows |
(In
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
March 31, |
|
December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2019 |
|
Cash flows
from operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
69.1 |
|
|
$ |
12.5 |
|
|
$ |
42.7 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
Depreciation and amortization |
|
|
28.4 |
|
|
|
25.2 |
|
|
|
30.2 |
|
Amortization of inventory step-up adjustment to fair value |
|
|
— |
|
|
|
5.1 |
|
|
|
— |
|
Amortization of debt issuance costs and original issue
discount |
|
|
1.1 |
|
|
|
1.2 |
|
|
|
0.5 |
|
Stock-based compensation |
|
|
8.5 |
|
|
|
27.8 |
|
|
|
7.1 |
|
Provision for excess and obsolete inventory |
|
|
6.2 |
|
|
|
5.1 |
|
|
|
6.1 |
|
Provision for doubtful accounts |
|
|
0.2 |
|
|
|
(0.4 |
) |
|
|
(0.9 |
) |
Deferred income taxes |
|
|
0.6 |
|
|
|
(2.4 |
) |
|
|
4.9 |
|
Asset impairments |
|
|
1.2 |
|
|
|
— |
|
|
|
4.7 |
|
Other |
|
|
(0.1 |
) |
|
|
— |
|
|
|
0.5 |
|
Changes in operating assets and liabilities |
|
|
(40.3 |
) |
|
|
(45.0 |
) |
|
|
(18.5 |
) |
Net cash
provided by operating activities |
|
|
74.9 |
|
|
|
29.1 |
|
|
|
77.3 |
|
Cash flows
provided by (used in) investing activities: |
|
|
|
|
|
|
Acquisition of business, net of cash acquired |
|
|
— |
|
|
|
(988.6 |
) |
|
|
— |
|
Purchases of investments |
|
|
(30.2 |
) |
|
|
(44.2 |
) |
|
|
(75.0 |
) |
Maturities of investments |
|
|
49.5 |
|
|
|
18.6 |
|
|
|
49.2 |
|
Sales of investments |
|
|
28.7 |
|
|
|
154.5 |
|
|
|
4.5 |
|
Proceeds from sale of assets |
|
|
— |
|
|
|
0.1 |
|
|
|
0.9 |
|
Purchases of property, plant and equipment |
|
|
(10.0 |
) |
|
|
(14.5 |
) |
|
|
(19.1 |
) |
Net cash
provided by (used in) investing activities |
|
|
38.0 |
|
|
|
(874.1 |
) |
|
|
(39.5 |
) |
Cash flows
used in (provided by) financing activities: |
|
|
|
|
|
|
Net proceeds from short and long-term borrowings |
|
|
12.1 |
|
|
|
638.6 |
|
|
|
— |
|
Payments on short-term borrowings |
|
|
(9.9 |
) |
|
|
(0.2 |
) |
|
|
(1.5 |
) |
Payments of long-term borrowings |
|
|
(52.3 |
) |
|
|
— |
|
|
|
(2.2 |
) |
Dividend payments |
|
|
(11.0 |
) |
|
|
(10.8 |
) |
|
|
(10.9 |
) |
Net (payments) proceeds related to employee stock awards |
|
|
(20.4 |
) |
|
|
(9.0 |
) |
|
|
0.7 |
|
Net cash
(used in) provided by financing activities |
|
|
(81.5 |
) |
|
|
618.6 |
|
|
|
(13.9 |
) |
Effect of
exchange rate changes on cash and cash equivalents |
|
|
(4.0 |
) |
|
|
0.1 |
|
|
|
4.4 |
|
Increase
(decrease) in cash and cash equivalents |
|
|
27.4 |
|
|
|
(226.3 |
) |
|
|
28.3 |
|
Cash and
cash equivalents at beginning of period |
|
|
414.6 |
|
|
|
644.3 |
|
|
|
386.3 |
|
Cash and
cash equivalents at end of period |
|
$ |
442.0 |
|
|
$ |
418.0 |
|
|
$ |
414.6 |
|
|
|
|
|
|
|
|
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) |
|
|
|
Quarter Ended |
|
March 31, |
March 31, |
December 31, |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
Net
income |
$ |
69.1 |
|
$ |
12.5 |
|
$ |
42.7 |
|
Acquisition and integration costs (Note 1) |
|
2.2 |
|
|
30.2 |
|
|
1.8 |
|
Acquisition inventory step-up (Note 2) |
|
— |
|
|
5.1 |
|
|
— |
|
Fees and expenses related to Term Loan (Note 3) |
|
— |
|
|
5.8 |
|
|
0.1 |
|
Amortization of debt issuance costs (Note 4) |
|
0.9 |
|
|
0.6 |
|
|
0.2 |
|
Restructuring and other (Note 5) |
|
0.4 |
|
|
1.9 |
|
|
2.3 |
|
Amortization of intangible assets |
|
16.3 |
|
|
15.7 |
|
|
17.1 |
|
Asset impairments (Note 6) |
|
1.2 |
|
|
— |
|
|
4.7 |
|
Windfall tax (benefit) expense on stock-based compensation (Note
7) |
|
(0.9 |
) |
|
(1.3 |
) |
|
(0.3 |
) |
Tax reform adjustments (Note 8) |
|
— |
|
|
— |
|
|
(2.9 |
) |
Tax cost on the inter-company sale of an asset (Note 9) |
|
— |
|
|
— |
|
|
5.4 |
|
Tax effect of pro-forma adjustments |
|
(4.3 |
) |
|
(9.2 |
) |
|
(4.8 |
) |
Non-GAAP net
earnings (Note 10) |
$ |
84.9 |
|
$ |
61.3 |
|
$ |
66.3 |
|
Non-GAAP net
earnings per diluted share (Note 10) |
$ |
1.54 |
|
$ |
1.12 |
|
$ |
1.20 |
|
Weighted
average diluted shares outstanding |
|
55.2 |
|
|
54.8 |
|
|
55.4 |
|
|
|
|
|
MKS
Instruments, Inc.Schedule Reconciling Selected Non-GAAP Financial
Measures(In Millions) |
|
|
|
Quarter Ended |
|
March 31, |
March 31, |
December 31, |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
Gross
profit |
$ |
239.6 |
|
$ |
198.1 |
|
$ |
216.3 |
|
Acquisition inventory step-up (Note 2) |
|
— |
|
|
5.1 |
|
|
— |
|
Non-GAAP
gross profit (Note 11) |
$ |
239.6 |
|
$ |
203.2 |
|
$ |
216.3 |
|
Non-GAAP
gross margin (Note 11) |
|
44.7 |
% |
|
43.8 |
% |
|
43.3 |
% |
|
|
|
|
Operating
expenses |
$ |
149.7 |
|
$ |
175.0 |
|
$ |
150.2 |
|
Acquisition and integration costs (Note 1) |
|
2.2 |
|
|
30.2 |
|
|
1.8 |
|
Fees and expenses related to Term Loan (Note 3) |
|
— |
|
|
5.8 |
|
|
0.1 |
|
Amortization of intangible assets |
|
16.3 |
|
|
15.7 |
|
|
17.1 |
|
Restructuring and other (Note 5) |
|
0.4 |
|
|
1.9 |
|
|
2.3 |
|
Asset impairments (Note 6) |
|
1.2 |
|
|
— |
|
|
4.7 |
|
Non-GAAP
operating expenses (Note 12) |
$ |
129.6 |
|
$ |
121.4 |
|
$ |
124.2 |
|
|
|
|
|
Income from
operations |
$ |
89.9 |
|
$ |
23.1 |
|
$ |
66.1 |
|
Acquisition inventory step-up (Note 2) |
|
— |
|
|
5.1 |
|
|
— |
|
Acquisition and integration costs (Note 1) |
|
2.2 |
|
|
30.2 |
|
|
1.8 |
|
Fees and expenses related to Term Loan (Note 3) |
|
— |
|
|
5.8 |
|
|
0.1 |
|
Restructuring and other (Note 5) |
|
0.4 |
|
|
1.9 |
|
|
2.3 |
|
Amortization of intangible assets |
|
16.3 |
|
|
15.7 |
|
|
17.1 |
|
Asset impairments (Note 6) |
|
1.2 |
|
|
— |
|
|
4.7 |
|
Non-GAAP
income from operations (Note 13) |
$ |
110.0 |
|
$ |
81.8 |
|
$ |
92.1 |
|
Non-GAAP
operating margin percentage (Note 13) |
|
20.5 |
% |
|
17.6 |
% |
|
18.4 |
% |
|
|
|
|
Interest
expense |
$ |
8.9 |
|
$ |
9.1 |
|
$ |
8.8 |
|
Amortization of debt issuance costs (Note 4) |
|
0.9 |
|
|
0.6 |
|
|
0.2 |
|
Non-GAAP
interest expense |
$ |
8.0 |
|
$ |
8.5 |
|
$ |
8.6 |
|
|
|
|
|
Net
income |
$ |
69.1 |
|
$ |
12.5 |
|
$ |
42.7 |
|
Interest expense, net |
|
8.2 |
|
|
7.4 |
|
|
7.8 |
|
Provision for income taxes |
|
12.2 |
|
|
2.9 |
|
|
12.5 |
|
Depreciation |
|
12.1 |
|
|
9.5 |
|
|
11.7 |
|
Amortization |
|
16.3 |
|
|
15.7 |
|
|
17.1 |
|
EBITDA (Note
14) |
$ |
117.9 |
|
$ |
48.0 |
|
$ |
91.8 |
|
Stock-based compensation |
|
8.0 |
|
|
9.3 |
|
|
7.2 |
|
Acquisition and integration costs (Note 1) |
|
2.2 |
|
|
30.2 |
|
|
1.8 |
|
Acquisition inventory step-up (Note 2) |
|
— |
|
|
5.1 |
|
|
— |
|
Fees and expenses related to Term Loan (Note 3) |
|
— |
|
|
5.8 |
|
|
0.1 |
|
Restructuring and other (Note 5) |
|
0.4 |
|
|
1.9 |
|
|
2.3 |
|
Asset impairments (Note 6) |
|
1.2 |
|
|
— |
|
|
4.7 |
|
Other adjustments |
|
— |
|
|
3.3 |
|
|
— |
|
Adjusted
EBITDA (Note 15) |
$ |
129.7 |
|
$ |
103.6 |
|
$ |
107.9 |
|
|
MKS
Instruments, Inc. |
|
Reconciliation of GAAP Income Tax Rate to Non-GAAP Income
Tax Rate |
|
(In
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2020 |
|
Three Months Ended December 31, 2019 |
|
|
Income Before |
|
Provision (benefit) |
|
Effective |
|
Income Before |
|
Provision (benefit) |
|
Effective |
|
|
Income Taxes |
|
for Income Taxes |
|
Tax Rate |
|
Income Taxes |
|
for Income Taxes |
|
Tax Rate |
GAAP |
|
$ |
81.3 |
|
|
$ |
12.2 |
|
|
|
15.0 |
% |
|
$ |
55.2 |
|
|
$ |
12.5 |
|
|
22.6 |
% |
Acquisition and integration costs (Note 1) |
|
|
2.2 |
|
|
|
— |
|
|
|
|
|
1.8 |
|
|
|
— |
|
|
|
Fees and expenses related to Term Loan (Note 3) |
|
|
— |
|
|
|
— |
|
|
|
|
|
0.1 |
|
|
|
— |
|
|
|
Amortization of debt issuance costs (Note 4) |
|
|
0.9 |
|
|
|
— |
|
|
|
|
|
0.2 |
|
|
|
— |
|
|
|
Restructuring and other (Note 5) |
|
|
0.4 |
|
|
|
— |
|
|
|
|
|
2.3 |
|
|
|
— |
|
|
|
Amortization of intangible assets |
|
|
16.3 |
|
|
|
— |
|
|
|
|
|
17.1 |
|
|
|
— |
|
|
|
Asset impairments (Note 6) |
|
|
1.2 |
|
|
|
— |
|
|
|
|
|
4.7 |
|
|
|
— |
|
|
|
Windfall tax (benefit) expense on stock-based compensation (Note
7) |
|
|
— |
|
|
|
0.9 |
|
|
|
|
|
— |
|
|
|
0.3 |
|
|
|
Tax reform adjustments (Note 8) |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
2.9 |
|
|
|
Tax cost on the inter-company sale of an asset (Note 9) |
|
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
(5.4 |
) |
|
|
Tax effect of pro-forma adjustments |
|
|
— |
|
|
|
4.3 |
|
|
|
|
|
— |
|
|
|
4.8 |
|
|
|
Non-GAAP |
|
$ |
102.3 |
|
|
$ |
17.4 |
|
|
|
17.0 |
% |
|
$ |
81.4 |
|
|
$ |
15.1 |
|
|
18.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019 |
|
|
Income Before |
|
Provision (benefit) |
|
Effective |
|
|
Income Taxes |
|
for Income Taxes |
|
Tax Rate |
GAAP |
|
$ |
15.4 |
|
|
$ |
2.9 |
|
|
|
18.8 |
% |
Acquisition and integration costs (Note 1) |
|
|
30.2 |
|
|
|
— |
|
|
|
Acquisition inventory step-up (Note 2) |
|
|
5.1 |
|
|
|
— |
|
|
|
Fees and expenses related to Term Loan (Note 3) |
|
|
5.8 |
|
|
|
— |
|
|
|
Amortization of debt issuance costs (Note 4) |
|
|
0.6 |
|
|
|
— |
|
|
|
Restructuring and other (Note 5) |
|
|
1.9 |
|
|
|
— |
|
|
|
Amortization of intangible assets |
|
|
15.7 |
|
|
|
— |
|
|
|
Windfall tax (benefit) expense on stock-based compensation (Note
7) |
|
|
— |
|
|
|
1.3 |
|
|
|
Tax effect of pro-forma adjustments |
|
|
— |
|
|
|
9.2 |
|
|
|
Non-GAAP |
|
$ |
74.7 |
|
|
$ |
13.4 |
|
|
|
18.0 |
% |
|
|
|
|
|
|
|
MKS
Instruments, Inc. |
Reconciliation of Q2-19 Guidance - GAAP Net Income to
Non-GAAP Net Earnings |
(In
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020 |
|
|
Low Guidance |
|
High Guidance |
|
|
$ Amount |
|
$ Per Share |
|
$ Amount |
|
$ Per Share |
GAAP net income |
|
$ |
34.5 |
|
|
$ |
0.62 |
|
|
$ |
61.0 |
|
|
$ |
1.10 |
|
Amortization |
|
|
13.9 |
|
|
|
0.25 |
|
|
|
13.9 |
|
|
|
0.25 |
|
Deferred
financing costs |
|
|
0.2 |
|
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
Integration
costs |
|
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
Restructuring and other costs |
|
|
5.3 |
|
|
|
0.10 |
|
|
|
5.3 |
|
|
|
0.10 |
|
Tax effect
of adjustments (Note 16) |
|
|
(4.0 |
) |
|
|
(0.07 |
) |
|
|
(4.0 |
) |
|
|
(0.07 |
) |
Non-GAAP net
earnings |
|
$ |
50.0 |
|
|
$ |
0.90 |
|
|
$ |
76.5 |
|
|
$ |
1.38 |
|
Estimated
weighted average diluted shares outstanding |
|
|
|
|
55.4 |
|
|
|
|
|
55.4 |
|
|
|
|
|
|
|
|
|
|
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 measures should be viewed in
addition to, and not as a substitute for, MKS' reported GAAP
results, and may be different from Non-GAAP measures used by other
companies. In addition, these Non-GAAP measures are not based on
any comprehensive set of accounting rules or principles. MKS
management believes the presentation of these Non-GAAP measures is
useful to investors for comparing prior periods and analyzing
ongoing business trends and operating results.
Note 1: Acquisition and integration costs during the three
months ended March 31, 2020, December 31, 2019 and March 31, 2019
related to our acquisition of Electro Scientific Industries, Inc.
(“ESI”) which closed on February 1, 2019.
Note 2: Cost of revenues during the three months ended March 31,
2019 includes the amortization of the step-up of inventory to fair
value as a result of the ESI acquisition.
Note 3: We recorded fees and expenses during the three months
ended December 31, 2019 related to Amendment No. 6 to our Term Loan
Credit Agreement. We also recorded fees and expenses during the
three months ended March 31, 2019 related to Amendment No. 5 to our
Term Loan Credit Agreement.
Note 4: We recorded additional interest expense during the three
months ended March 31, 2020, December 31, 2019 and March 31, 2019
as a result of amortization of debt issuance costs related to our
Term Loan Credit Agreement and our ABL Credit Agreement.
Note 5: Restructuring and other costs during the three months
ended March 31, 2020 resulted primarily from duplicate facility
costs attributed to entering into new facility leases offset by an
insurance reimbursement for costs recorded on a legal settlement.
Restructuring costs recorded during the three months ended December
31, 2019 resulted primarily from the pending closure of a facility
in Europe. Restructuring costs recorded during the three months
ended March 31, 2019 consisted primarily of severance costs related
to an organization-wide reduction in workforce. In the three
months ended March 31, 2019, we also recorded a legal settlement.
Note 6: During the three months ended March 31, 2020, we
recorded an asset impairment charge as a result of the write-down
of long-lived assets related to the pending closure of a
facility. During the three months ended December 31, 2019, we
recorded an impairment charge related to a minority interest
investment in a private company.
Note 7: We recorded windfall tax expenses (benefits) during the
three months ended March 31, 2020, December 31, 2019, and March 31,
2019, on the vesting of stock-based compensation.
Note 8: We recorded tax adjustments resulting from additional
guidance provided by tax authorities with respect to the 2017 U.S.
tax reforms.
Note 9: We recorded taxes on the inter-company sales of assets
during the three months ended December 31,
2019.
Note 10: Non-GAAP net earnings and Non-GAAP net earnings per
diluted share amounts exclude acquisition and integration costs,
amortization of the step-up of inventory to fair value, fees and
expenses related to repricings and amendments of our secured term
loan, amortization of debt issuance costs, restructuring and other
costs, amortization of intangible assets, asset impairments,
windfall tax adjustments related to stock compensation expense, tax
reform adjustments, tax costs on the inter-company sale of an asset
and the related tax effect of these adjustments to reflect the
expected full year effective tax rate in the related period.
Note 11: The Non-GAAP gross profit amount and Non-GAAP gross
margin exclude amortization of the step-up of inventory to fair
value.
Note 12: Non-GAAP operating expenses exclude acquisition and
integration costs, fees and expenses related to repricings of our
secured term loan, restructuring and other costs, amortization of
intangible assets and asset impairments.
Note 13: Non-GAAP income from operations and Non-GAAP operating
margin percentages exclude acquisition and integration costs,
amortization of the step-up of inventory to fair value, fees and
expenses related to repricings and amendments of our secured term
loan, restructuring and other costs, amortization of intangible
assets and asset
impairments.
Note 14: EBITDA excludes net interest, income taxes,
depreciation and amortization of intangible assets.
Note 15: Adjusted EBITDA excludes from EBITDA, stock-based
compensation, acquisition and integration costs, amortization of
the step-up of inventory to fair value, fees and expenses related
to repricings and amendments of our secured term loan,
restructuring and other costs, asset impairment and other
adjustments as defined in our Term Loan Credit Agreement.
Note 16: Non-GAAP adjustments are tax effected at applicable
statutory rates resulting in a difference between the GAAP and
Non-GAAP tax rates.
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