Andover, Mass., October 19, 2011 — MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity; today reports third quarter 2011 financial results.
Third Quarter Financial Results
Sales were $194.5 million, down 12.1% from $221.3 million in the third quarter of 2010 and down 13.4% from $224.5 million in the second quarter of 2011.
Third quarter net income was $30.4 million, or $0.57 per diluted share, compared to net income of $38.6 million in the third quarter of 2010, or $0.76 per diluted share, and $38.6 million in the second quarter of 2011, or $0.73 per diluted share.
Non-GAAP net earnings were $30.6 million, or $0.58 per diluted share, compared to $36.8 million, or $0.72 per diluted share, in the third quarter of 2010 and a record $38.8 million, or $0.73 per diluted share, in the second quarter of 2011.
Cash and investments, net of short-term borrowings, were $533.8 million at the end of the quarter, while stockholders’ equity, net of intangible assets and goodwill, was $831.2 million at quarter end.
Leo Berlinghieri, Chief Executive Officer and President, said, “Order levels began to decline in May and continued to decline until the middle of the third quarter. However, since then, orders have remained fairly stable. In conditions like these, our proven strategy is to remain nimble, aggressively identify and pursue new opportunities while simultaneously controlling costs.
“Based upon recent business levels and general business outlook, we estimate that our fourth quarter sales may range from $145 to $165 million and at this volume, our non-GAAP net earnings could range from $0.18 to $0.31 per diluted share.”
Conference Call Details
A conference call with management will be held on Thursday, October 20, 2011 at 8:30 a.m. (Eastern Time). To participate in the conference call, please dial (877) 212-6076 for domestic callers and (707) 287-9331 for international callers, and an operator will connect you. Participants will need to provide the operator with the Conference ID of 11366013, which has been reserved for this call. A live and archived webcast of the call will also be available on the company’s website at www.mksinst.com.
Use of Non-GAAP Financial Results
Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude discontinued operations, amortization of acquired intangible assets, costs associated with acquisitions and disposition related charges, and certain adjustments to income tax rates. These non-GAAP measures are not in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP). 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.
About MKS Instruments
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, 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.
Forward-Looking Statements
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, and other advanced manufacturing markets, 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 and Quarterly Reports on Form 10-Q, 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 (Note 1)
September 30, 2011
September 30, 2010
June 30, 2011
Net revenues
$
194,508
$
221,323
$
224,487
Cost of revenues
106,830
122,820
119,499
Gross profit
87,678
98,503
104,988
Research and development
14,331
15,070
15,582
Selling, general and administrative
31,984
28,247
31,851
Amortization of intangible assets
251
250
250
Income from operations
41,112
54,936
57,305
Interest income, net
272
35
309
Income from continuing operations before income taxes
41,384
54,971
57,614
Provision for income taxes
11,011
18,370
19,013
Income from continuing operations
30,373
36,601
38,601
Income from discontinued operations, net of taxes
—
2,035
—
Net income
$
30,373
$
38,636
$
38,601
Basic income per share:
Continuing operations
$
0.58
$
0.73
$
0.74
Discontinued operations
—
0.04
—
Net income
$
0.58
$
0.77
$
0.74
Diluted income per share:
Continuing operations
$
0.57
$
0.72
$
0.73
Discontinued operations
—
0.04
—
Net income
$
0.57
$
0.76
$
0.73
Cash dividends per common share
$
0.15
$
—
$
0.15
Weighted average shares outstanding:
Basic
52,456
50,226
52,346
Diluted
52,992
50,994
52,906
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
Income from continuing operations
$
30,373
$
36,601
$
38,601
Adjustments (net of tax, if applicable):
Amortization of acquired intangible assets
251
250
250
Proforma tax adjustments
(67
)
(66
)
(65
)
Non-GAAP net earnings (Note 2)
$
30,557
$
36,785
$
38,786
Non-GAAP net earnings per share (Note 2)
$
0.58
$
0.72
$
0.73
Weighted average shares outstanding
52,992
50,994
52,906
NOTE 1: During 2010, the Company sold two product lines that no longer met the Company’s long-term strategic objectives. The results of operations of the two product lines have been classified as discontinued operations in the consolidated statements of operations for the prior year period provided.
NOTE 2: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude results of discontinued operations, amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of applicable income taxes.
2
MKS Instruments, Inc. Unaudited Consolidated Statements of Operations (In thousands, except per share data)
Nine Months Ended
September 30, (Note 1)
2011
2010
Net revenues
$
650,846
$
634,136
Cost of revenues
351,819
352,819
Gross profit
299,027
281,317
Research and development
46,809
46,899
Selling, general and administrative
96,542
86,961
Amortization of intangible assets
751
1,033
Gain on sale of asset
—
(682
)
Income from operations
154,925
147,106
Interest income, net
852
614
Income from continuing operations before income taxes
155,777
147,720
Provision for income taxes
48,760
48,977
Income from continuing operations
107,017
98,743
Income from discontinued operations, net of taxes
—
7,895
Net income
$
107,017
$
106,638
Basic income per share:
Continuing operations
$
2.06
$
1.98
Discontinued operations
—
0.16
Net income
$
2.06
$
2.13
Diluted income per share:
Continuing operations
$
2.03
$
1.94
Discontinued operations
—
0.16
Net income
$
2.03
$
2.10
Cash dividends per common share
$
0.45
$
—
Weighted average shares outstanding:
Basic
52,070
49,965
Diluted
52,761
50,821
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
Income from continuing operations
$
107,017
$
98,743
Adjustments (net of tax, if applicable):
Amortization of acquired intangible assets
751
1,033
Gain on sale of asset (Note 2)
—
(682
)
Proforma tax adjustments
(197
)
(48
)
Non-GAAP net earnings (Note 3)
$
107,571
$
99,046
Non-GAAP net earnings per share (Note 3)
$
2.04
$
1.95
Weighted average shares outstanding
52,761
50,821
NOTE 1: During 2010, the Company sold two product lines that no longer met the Company’s long-term strategic objectives. The results of operations of the two product lines have been classified as discontinued operations in the consolidated statements of operations for the prior year period provided.
NOTE 2: The nine month period ended September 30, 2010 includes a $682 gain on the sale of a vacated facility.
NOTE 3: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude results of discontinued operations, amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of applicable income taxes.
3
MKS Instruments, Inc. Unaudited Consolidated Balance Sheet (In thousands)
September 30, 2011
December 31, 2010
ASSETS
Cash and short-term investments
$
525,839
$
431,933
Trade accounts receivable, net
125,517
138,181
Inventories
161,059
156,429
Other current assets
37,913
26,352
Total current assets
850,328
752,895
Property, plant and equipment, net
69,891
68,976
Goodwill
140,084
140,020
Intangible assets, net
1,307
1,743
Long-term marketable securities
9,260
—
Other assets
16,842
18,779
Total assets
$
1,087,712
$
982,413
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term borrowings
$
1,302
$
—
Accounts payable
22,572
36,427
Accrued expenses and other liabilities
59,057
73,259
Total current liabilities
82,931
109,686
Other liabilities
32,169
25,688
Stockholders’ equity:
Common stock
113
113
Additional paid-in capital
703,405
663,792
Retained earnings
254,701
171,356
Other stockholders’ equity
14,393
11,778
Total stockholders’ equity
972,612
847,039
Total liabilities and stockholders’ equity
$
1,087,712
$
982,413
4
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