- Global operations restored following ransomware incident
- Revenue of
$794 million - GAAP net loss per diluted share of
$0.64 - Non-GAAP net earnings per diluted share of
$0.48 - Operating cash flow of
$37 million and free cash flow of$20 million
“We have restored our global operations following the ransomware incident we identified in February and are on track to meet our commitment to substantially recover revenue by the end of the second quarter,” said
“We executed well in ramping factory utilization as we emerged from the ransomware incident, which, combined with prudent cost control, allowed us to deliver positive free cash flow in the first quarter, despite the unusual challenges we faced,” said
Second Quarter 2023 Outlook
The Company expects for the second quarter of 2023, revenue of
Conference Call Details
A conference call with management will be held on
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
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 and other expense, asset impairment, debt refinancing, prepayments of term loan principal, and the income tax effect of these items. These items are uncertain, depend on various factors, including, but not limited to, our acquisition of
For further information regarding these Non-GAAP financial measures, 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 2023 | Q4 2022 | Q1 2022 | |||||||||
Net Revenues | |||||||||||
Semiconductor | $ | 309 | $ | 503 | $ | 488 | |||||
222 | 266 | 60 | |||||||||
263 | 316 | 194 | |||||||||
Total net revenues | $ | 794 | $ | 1,085 | $ | 742 | |||||
GAAP Financial Measures | |||||||||||
Gross margin | 42.2 | % | 44.7 | % | 45.0 | % | |||||
Operating margin | 0.1 | % | 15.0 | % | 23.1 | % | |||||
Net (loss) income | $ | (42 | ) | $ | 54 | $ | 143 | ||||
Diluted (loss) earnings per share | $ | (0.64 | ) | $ | 0.81 | $ | 2.57 | ||||
Non-GAAP Financial Measures | |||||||||||
Gross margin | 42.2 | % | 45.9 | % | 45.0 | % | |||||
Operating margin | 12.1 | % | 23.6 | % | 25.6 | % | |||||
Net earnings | $ | 32 | $ | 133 | $ | 151 | |||||
Diluted earnings per share | $ | 0.48 | $ | 2.00 | $ | 2.71 |
Additional Financial Information
At
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
Company Contact:
Vice President, Investor Relations
Telephone: (978) 557-5180
Email: david.ryzhik@mksinst.com
Unaudited Consolidated Statements of Operations | |||||||||||
(In millions, except per share data) | |||||||||||
Three Months Ended | |||||||||||
2023 | 2022 | 2022 | |||||||||
Net revenues: | |||||||||||
Products | $ | 712 | $ | 965 | $ | 648 | |||||
Services | 82 | 120 | 94 | ||||||||
Total net revenues | 794 | 1,085 | 742 | ||||||||
Cost of revenues: | |||||||||||
Products | 409 | 531 | 360 | ||||||||
Services | 50 | 69 | 48 | ||||||||
Total cost of revenues (exclusive of amortization shown separately below) | 459 | 600 | 408 | ||||||||
Gross profit | 335 | 485 | 334 | ||||||||
Research and development | 72 | 73 | 52 | ||||||||
Selling, general and administrative | 174 | 168 | 92 | ||||||||
Acquisition and integration costs | 6 | 11 | 8 | ||||||||
Restructuring and other | 1 | 1 | 2 | ||||||||
Amortization of intangible assets | 81 | 69 | 15 | ||||||||
Gain on sale of long-lived assets | — | — | (7 | ) | |||||||
Income from operations | 1 | 163 | 172 | ||||||||
Interest income | (3 | ) | (2 | ) | — | ||||||
Interest expense | 85 | 85 | 6 | ||||||||
Other (income) expense, net | (2 | ) | 15 | (5 | ) | ||||||
(Loss) income before income taxes | (79 | ) | 65 | 171 | |||||||
(Benefit) provision for income taxes | (37 | ) | 11 | 28 | |||||||
Net (loss) income | $ | (42 | ) | $ | 54 | $ | 143 | ||||
Net (loss) income per share: | |||||||||||
Basic | $ | (0.64 | ) | $ | 0.81 | $ | 2.58 | ||||
Diluted | $ | (0.64 | ) | $ | 0.81 | $ | 2.57 | ||||
Cash dividend per common share | $ | 0.22 | $ | 0.22 | $ | 0.22 | |||||
Weighted average shares outstanding: | |||||||||||
Basic | 66.7 | 66.6 | 55.6 | ||||||||
Diluted | 66.7 | 66.7 | 55.8 | ||||||||
Unaudited Consolidated Balance Sheet | |||||||
(In millions) | |||||||
2023 | 2022 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 880 | $ | 909 | |||
Short-term investments | 1 | 1 | |||||
Accounts receivable, net | 572 | 720 | |||||
Inventories | 1,058 | 977 | |||||
Other current assets | 237 | 187 | |||||
Total current assets | 2,748 | 2,794 | |||||
Property, plant and equipment, net | 794 | 800 | |||||
Right-of-use assets, net | 240 | 234 | |||||
4,327 | 4,308 | ||||||
Intangible assets, net | 3,108 | 3,173 | |||||
Other assets | 149 | 186 | |||||
Total assets | $ | 11,366 | $ | 11,495 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Short-term debt | $ | 88 | $ | 93 | |||
Accounts payable | 372 | 426 | |||||
Other current liabilities | 416 | 433 | |||||
Total current liabilities | 876 | 952 | |||||
Long-term debt, net | 4,837 | 4,834 | |||||
Non-current deferred taxes | 751 | 783 | |||||
Non-current accrued compensation | 138 | 138 | |||||
Non-current lease liabilities | 219 | 215 | |||||
Other liabilities | 94 | 90 | |||||
Total liabilities | 6,915 | 7,012 | |||||
Stockholders' equity | |||||||
Common stock | — | — | |||||
Additional paid-in capital | 2,154 | 2,142 | |||||
Retained earnings | 2,215 | 2,272 | |||||
Accumulated other comprehensive income | 82 | 69 | |||||
Total stockholders' equity | 4,451 | 4,483 | |||||
Total liabilities and stockholders' equity | $ | 11,366 | $ | 11,495 | |||
Unaudited Consolidated Statements of Cash Flows | |||||||||||
(In millions) | |||||||||||
Three Months Ended | |||||||||||
2023 | 2022 | 2022 | |||||||||
Cash flows from operating activities: | |||||||||||
Net (loss) income | $ | (42 | ) | $ | 54 | $ | 143 | ||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 107 | 96 | 28 | ||||||||
Amortization of inventory step-up adjustment to fair value | — | 13 | — | ||||||||
Unrealized loss on derivatives not designated as hedging instruments | 13 | 7 | 3 | ||||||||
Amortization of debt issuance costs and original issue discounts | 8 | 10 | — | ||||||||
Gain on sale of long-lived assets | — | — | (7 | ) | |||||||
Stock-based compensation | 18 | 13 | 8 | ||||||||
Provision for excess and obsolete inventory | 18 | 11 | 4 | ||||||||
Deferred income taxes | (10 | ) | (50 | ) | (2 | ) | |||||
Changes in operating assets and liabilities, net of acquired assets and liabilities | (75 | ) | 30 | (136 | ) | ||||||
Net cash provided by operating activities | 37 | 184 | 41 | ||||||||
Cash flows from investing activities: | |||||||||||
Maturities of investments | — | — | 35 | ||||||||
Proceeds from sale of long-lived assets | — | 1 | 7 | ||||||||
Purchases of property, plant and equipment | (17 | ) | (54 | ) | (19 | ) | |||||
Net cash (used in) provided by investing activities | (17 | ) | (53 | ) | 23 | ||||||
Cash flows from financing activities: | |||||||||||
Proceeds from borrowings | 2 | 3 | 3 | ||||||||
Payments of borrowings | (23 | ) | (127 | ) | (2 | ) | |||||
Dividend payments | (15 | ) | (15 | ) | (12 | ) | |||||
Net (payments) proceeds related to employee stock awards | (6 | ) | 4 | (6 | ) | ||||||
Other financing activities | (1 | ) | (2 | ) | — | ||||||
Net cash used in financing activities | (43 | ) | (137 | ) | (17 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (6 | ) | 31 | (2 | ) | ||||||
(Decrease) increase in cash and cash equivalents | (29 | ) | 25 | 45 | |||||||
Cash and cash equivalents at beginning of period | 909 | 884 | 966 | ||||||||
Cash and cash equivalents at end of period | $ | 880 | $ | 909 | $ | 1,011 | |||||
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results: | |||||||||||
Schedule Reconciling Selected Non-GAAP Financial Measures | |||||||||||
(In millions, except per share data) | |||||||||||
Three Months Ended | |||||||||||
2023 | 2022 | 2022 | |||||||||
Net (loss) income | $ | (42 | ) | $ | 54 | $ | 143 | ||||
Acquisition and integration costs (Note 1) | 6 | 11 | 8 | ||||||||
Acquisition inventory step-up (Note 2) | — | 13 | — | ||||||||
Restructuring and other (Note 3) | 1 | 1 | 2 | ||||||||
Amortization of intangible assets | 81 | 69 | 15 | ||||||||
Amortization of debt issuance costs (Note 4) | 6 | 7 | — | ||||||||
Ransomware incident (Note 5) | 7 | — | — | ||||||||
Gain on sale of long-lived assets (Note 6) | — | — | (7 | ) | |||||||
Currency hedge gain (Note 7) | — | — | (5 | ) | |||||||
Windfall tax benefit on stock-based compensation (Note 8) | — | — | (1 | ) | |||||||
Foreign tax rate adjustment (Note 9) | (3 | ) | — | — | |||||||
Tax effect of Non-GAAP adjustments (Note 10) | (24 | ) | (22 | ) | (4 | ) | |||||
Non-GAAP net earnings | $ | 32 | $ | 133 | $ | 151 | |||||
Non-GAAP net earnings per diluted share | $ | 0.48 | $ | 2.00 | $ | 2.71 | |||||
Weighted average diluted shares outstanding | 66.8 | 66.7 | 55.8 | ||||||||
Net cash provided by operating activities | $ | 37 | $ | 184 | $ | 41 | |||||
Purchases of property, plant and equipment | (17 | ) | (54 | ) | (19 | ) | |||||
Free cash flow | $ | 20 | $ | 130 | $ | 22 | |||||
Schedule Reconciling Selected Non-GAAP Financial Measures | |||||||||||
(In millions) | |||||||||||
Three Months Ended | |||||||||||
2023 | 2022 | 2022 | |||||||||
Gross profit | $ | 335 | $ | 485 | $ | 334 | |||||
Gross margin | 42.2 | % | 44.7 | % | 45.0 | % | |||||
Acquisition inventory step-up (Note 2) | — | 13 | — | ||||||||
Non-GAAP gross profit | 335 | 498 | 334 | ||||||||
Non-GAAP gross margin | 42.2 | % | 45.9 | % | 45.0 | % | |||||
Operating expenses | $ | 334 | $ | 322 | $ | 162 | |||||
Acquisition and integration costs (Note 1) | 6 | 11 | 8 | ||||||||
Restructuring and other (Note 3) | 1 | 1 | 2 | ||||||||
Ransomware incident (Note 5) | 7 | — | — | ||||||||
Gain on sale of long-lived assets (Note 6) | — | — | (7 | ) | |||||||
Amortization of intangible assets | 81 | 69 | 15 | ||||||||
Non-GAAP operating expenses | $ | 240 | $ | 242 | $ | 144 | |||||
Income from operations | $ | 1 | $ | 163 | $ | 172 | |||||
Operating margin | 0.1 | % | 15.0 | % | 23.1 | % | |||||
Acquisition and integration costs (Note 1) | 6 | 11 | 8 | ||||||||
Acquisition inventory step-up (Note 2) | — | 13 | — | ||||||||
Restructuring and other (Note 3) | 1 | 1 | 2 | ||||||||
Ransomware incident (Note 5) | 7 | — | — | ||||||||
Gain on sale of long-lived assets (Note 6) | — | — | (7 | ) | |||||||
Amortization of intangible assets | 81 | 69 | 15 | ||||||||
Non-GAAP income from operations | $ | 96 | $ | 257 | $ | 190 | |||||
Non-GAAP operating margin | 12.1 | % | 23.6 | % | 25.6 | % | |||||
Interest expense, net | 82 | 83 | 6 | ||||||||
Amortization of debt issuance costs (Note 4) | 6 | 7 | — | ||||||||
Non-GAAP interest expense, net | 76 | 75 | 6 | ||||||||
Net (loss) income | $ | (42 | ) | $ | 54 | $ | 143 | ||||
Interest expense, net | 82 | 83 | 6 | ||||||||
(Benefit) provision for income taxes | (37 | ) | 11 | 28 | |||||||
Depreciation | 26 | 27 | 13 | ||||||||
Amortization of intangible assets | 81 | 69 | 15 | ||||||||
EBITDA | $ | 110 | $ | 244 | $ | 205 | |||||
Stock-based compensation | 18 | 13 | 8 | ||||||||
Acquisition and integration costs (Note 1) | 6 | 11 | 8 | ||||||||
Acquisition inventory step-up (Note 2) | — | 13 | — | ||||||||
Restructuring and other (Note 3) | 1 | 1 | 2 | ||||||||
Ransomware incident (Note 5) | 7 | — | — | ||||||||
Gain on sale of long-lived assets (Note 6) | — | — | (7 | ) | |||||||
Currency hedge gain (Note 7) | — | — | (5 | ) | |||||||
Adjusted EBITDA | $ | 142 | $ | 282 | $ | 211 | |||||
Adjusted EBITDA margin | 17.8 | % | 26.0 | % | 28.4 | % | |||||
Reconciliation of GAAP Income Tax Rate to Non-GAAP Income Tax Rate | |||||||||||||||||||||
(In millions) | |||||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||||
(Loss) Income Before Income Taxes | Benefit for Income Taxes | Effective Tax Rate | Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | ||||||||||||||||
GAAP | $ | (79 | ) | $ | (37 | ) | 46.6 | % | $ | 65 | $ | 11 | 17.1 | % | |||||||
Acquisition and integration costs (Note 1) | 6 | — | 11 | — | |||||||||||||||||
Acquisition inventory step-up (Note 2) | — | — | 13 | — | |||||||||||||||||
Restructuring and other (Note 3) | 1 | — | 1 | — | |||||||||||||||||
Amortization of intangible assets | 81 | — | 69 | — | |||||||||||||||||
Amortization of debt issuance costs (Note 4) | 6 | — | 7 | — | |||||||||||||||||
Ransomware incident (Note 5) | 7 | — | — | — | |||||||||||||||||
Foreign tax rate adjustment (Note 9) | — | 3 | — | — | |||||||||||||||||
Tax effect of Non-GAAP adjustments (Note 10) | — | 24 | — | 22 | |||||||||||||||||
Non-GAAP | $ | 23 | $ | (10 | ) | (46.8 | %) | $ | 166 | $ | 33 | 19.9 | % | ||||||||
Three Months Ended | |||||||||||||||||||||
Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | |||||||||||||||||||
GAAP | $ | 171 | $ | 28 | 16.3 | % | |||||||||||||||
Acquisition and integration costs (Note 1) | 8 | — | |||||||||||||||||||
Restructuring and other (Note 3) | 2 | — | |||||||||||||||||||
Amortization of intangible assets | 15 | — | |||||||||||||||||||
Gain on sale of long-lived assets (Note 6) | (7 | ) | — | ||||||||||||||||||
Currency hedge gain (Note 7) | (5 | ) | — | ||||||||||||||||||
Windfall tax benefit on stock-based compensation (Note 8) | — | 1 | |||||||||||||||||||
Tax effect of Non-GAAP adjustments (Note 10) | — | 4 | |||||||||||||||||||
Non-GAAP | $ | 184 | $ | 33 | 17.8 | % | |||||||||||||||
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 primarily related to the Atotech Acquisition.
Note 2: Costs of revenues during the three months ended
Note 3: Restructuring and other costs during the three months ended
Note 4: We recorded additional interest expense related to the amortization of debt issuance costs associated with our term loan facility.
Note 5: We recorded costs, net of recoveries, associated with the ransomware incident we identified on
Note 6: We recorded a gain on the sale of a minority interest investment in a private company.
Note 7: We realized a gain in the three months ended
Note 8: We recorded windfall tax benefits on the vesting of stock-based compensation.
Note 9: We recorded a reduction in benefit for income taxes for a retrospective approval of an income tax rate reduction from a foreign jurisdiction we received in the first quarter of 2023.
Note 10: Non-GAAP adjustments are tax effected at applicable statutory rates resulting in a difference between the GAAP and Non-GAAP tax rates.
Source:
2023 GlobeNewswire, Inc., source