Contact: Ronald C. Weigner Vice President of Finance & Treasurer Telephone: 978.645.5576
MKS Instruments Reports Q1 2010 Financial Results 87% Increase in Sequential Non-GAAP Net Earnings per Share
Andover, Mass., April 21, 2010 — MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reports first quarter 2010 financial results.
Sales were $198.1 million, an increase of 33 percent from $149.3 million in the fourth quarter of 2009, and an increase of 158 percent from $76.7 million in the first quarter of 2009.
First quarter net income was $29.2 million, or $0.58 per diluted share, compared to net income of $14.9 million, or $0.30 per diluted share in the fourth quarter of 2009, and a net loss of $16.5 million, or ($0.34) per basic share in the first quarter of 2009.
Non-GAAP net earnings, which exclude special items, were $29.2 million, or $0.58 per diluted share, compared to $15.5 million, or $0.31 per diluted share in the fourth quarter of 2009, and a net loss of $11.0 million, or ($0.23) per basic share in the first quarter of 2009.
Leo Berlinghieri, Chief Executive Officer and President, said, “As we exited 2009, we reported seeing signs of rapid recovery in our business and these conditions continued to accelerate in the first quarter. Our broad technology portfolio opens opportunities to us in many advanced and growing markets including LEDs, medical, biopharm, environmental, thin films, semiconductor, solar and more, and we saw substantial growth in many of these markets we serve.
“While it is always difficult to project future business with our short lead times, many analysts are projecting improved business conditions in 2010 for the advanced technology markets we serve. We are focused on participating in the growth of these markets, as well as penetrating and increasing share in new and expanding markets, and expect these will fuel additional growth for MKS in 2010. Based on these factors and current business levels, we estimate that our second quarter sales may range from $205 to $220 million and, at these volumes, our non-GAAP net earnings could range from $0.56 to $0.66 per diluted share on 51 million shares outstanding. Our GAAP net income could range from $0.55 to $0.65 per diluted share.”
Management will discuss first quarter financial results on a conference call tomorrow at 8:30 a.m. (Eastern Time). Dial-in numbers are 1-800-762-8779 for domestic callers and 480-629-9771 for international callers. The call will be broadcast live and available for replay atwww.mksinst.com. To hear a telephone replay through April 29, 2010, dial 303-590-3030, pass code 4265616#.
The financial results that exclude certain charges and special items are not in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP). MKS’ management believes the presentation of non-GAAP financial measures, which exclude costs associated with acquisitions and special items, is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results.
MKS Instruments, Inc. is a global provider of instruments, subsystems and process control solutions that measure, control, power, monitor and analyze critical parameters of advanced manufacturing processes to improve process performance and productivity. Our products are derived from our core competencies in pressure measurement and control, materials delivery, gas composition analysis, electrostatic charge management, control and information technology, power and reactive gas generation, and vacuum technology. Our primary served markets are manufacturers of capital equipment for semiconductor devices, and for other thin film applications including flat panel displays, solar cells, light emitting diodes, data storage media, and other advanced coatings. We also leverage our technology in other markets with advanced manufacturing applications including medical equipment, pharmaceutical manufacturing, energy generation, and environmental monitoring.
This release contains projections or other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27 of the Securities Act, and Section 21E of the Securities Exchange Act regarding MKS’ future growth and the future financial performance of MKS. These projections or statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements set forth herein. Among the important factors that could cause actual events to differ materially from those in the projections or other forward-looking statements are the fluctuations in capital spending in the semiconductor industry, fluctuations in net sales to MKS’ major customers, potential fluctuations in quarterly results, the challenges, risks and costs involved with integrating the operations of MKS and any acquired companies, 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 future growth subject to risks. Readers are referred to MKS’ filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, for a discussion of these and other important risk factors concerning MKS and its operations. MKS is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
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1
MKS Instruments, Inc. Unaudited Consolidated Statements of Operations (In thousands, except per share data)
Three Months Ended
March 31, 2010
March 31, 2009
December 31, 2009
Net sales
$
198,069
$
76,719
$
149,270
Cost of sales
109,605
66,370
86,536
Gross profit
88,464
10,349
62,734
Research and development
16,468
15,463
13,681
Selling, general and administrative
29,374
28,222
27,814
Amortization of acquired intangible assets
651
1,653
872
Gain on sale of asset
(682
)
—
—
Restructuring
—
5,620
(44
)
Income (loss) from operations
42,653
(40,609
)
20,411
Interest income, net
325
1,009
156
Income (loss) before income taxes
42,978
(39,600
)
20,567
Provision (benefit) for income taxes
13,753
(23,101
)
5,620
Net income (loss)
$
29,225
$
(16,499
)
$
14,947
Net income (loss) per share:
Basic
$
0.59
$
(0.34
)
$
0.30
Diluted
$
0.58
$
(0.34
)
$
0.30
Weighted average shares outstanding:
Basic
49,601
48,994
49,509
Diluted
50,600
48,994
50,459
The following supplemental Non-GAAP earnings (loss) information is presented to aid in understanding MKS’ operating results:
GAAP net income (loss)
$
29,225
$
(16,499
)
$
14,947
Adjustments:
Amortization of acquired intangible assets
651
1,653
872
Excess & obsolete inventory adjustment (Note 1)
—
12,900
—
Restructuring and related items (Note 2)
—
4,322
(44
)
Gain on sale of asset (Note 3)
(682
)
—
—
Benefit for income taxes (Note 4)
—
(6,370
)
—
Proforma tax adjustments
39
(7,047
)
(279
)
Non-GAAP net earnings (loss) (Note 5)
$
29,233
$
(11,041
)
$
15,496
Non-GAAP net earnings (loss) per share (Note 5)
$
0.58
$
(0.23
)
$
0.31
Weighted average shares outstanding — diluted
50,600
48,994
50,459
Note 1: Cost of sales for the three month period ended March 31, 2009 includes $12,900 of excessive E&O inventory charges.
Note 2: The three month period ended March 31, 2009 includes a $5,620 restructuring charge primarily for severance related costs offset by a credit of $1,298 for the reversal of previously expensed equity compensation charges of terminated employees. The three month period ended December 31, 2009 includes a $(44) adjustment primarily for severance related costs.
Note 3: The three month period ended March 31, 2010 includes a $682 gain on the sale of a vacated facility.
Note 4: The three month period ended March 31, 2009 includes a benefit of $6,370 attributable to the reversal of FIN 48 reserve items as a result of a Federal audit close.
Note 5: The Non-GAAP net earnings (loss) and Non-GAAP net earnings (loss) per share amounts exclude amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of applicable income taxes.
2
MKS Instruments, Inc. Unaudited Consolidated Balance Sheet (In thousands)
March 31, 2010
December 31, 2009
ASSETS
Cash and short-term investments
$
285,199
$
271,795
Trade accounts receivable
134,614
94,215
Inventories
126,770
118,004
Other current assets
40,780
48,867
Total current assets
587,363
532,881
Property, plant and equipment, net
65,681
67,196
Goodwill
144,511
144,511
Acquired intangible assets, net
4,312
4,963
Other assets
16,535
24,518
Total assets
$
818,402
$
774,069
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt
$
9,701
$
12,885
Accounts payable
36,829
26,292
Accrued expenses and other liabilities
41,230
32,123
Total current liabilities
87,760
71,300
Other long-term liabilities
19,118
17,836
Stockholders’ equity:
Common stock
113
113
Additional paid-in capital
644,564
645,411
Retained earnings
57,994
28,769
Other stockholders’ equity
8,853
10,640
Total stockholders’ equity
711,524
684,933
Total liabilities and stockholders’ equity
$
818,402
$
774,069
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