MKS Instruments Reports Full Year and Fourth Quarter 2012 Financial Results
Andover, Mass., January 30, 2013 — MKS Instruments, Inc. (NASDAQ:MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reports full year and fourth quarter 2012 financial results.
Full Year 2012
GAAP Results
Non-GAAP Results
Net revenues ($ millions)
$
644
$
644
Operating margin
11.5
%
12.8
%
Net income ($ millions)
$
48.0
$
53.3
Diluted EPS
$
0.90
$
1.00
Full Year Financial Results
Sales were $644 million, a decrease of 22% from $823 million in 2011. Net income was $48.0 million, or $0.90 per diluted share, compared to $129.7 million, or $2.45 per diluted share in 2011. Non-GAAP net earnings were $53.3 million, or $1.00 per diluted share, compared to $127.9 million, or $2.42 per diluted share in 2011.
Fourth Quarter Financial Results
Sales were $133.8 million, a decrease of 5% from $141.4 million in the third quarter of 2012, and a decrease of 22% from $171.7 million in the fourth quarter of 2011.
Fourth quarter net income was $4.1 million, or $0.08 per diluted share, compared to net income of $2.6 million, or $0.05 per diluted share in the third quarter of 2012, and $22.7 million, or $0.43 per diluted share in the fourth quarter of 2011.
Non-GAAP net earnings, which exclude special charges, were $5.1 million, or $0.10 per diluted share, compared to $8.4 million, or $0.16 per diluted share in the third quarter of 2012, and $20.4 million, or $0.38 per diluted share in the fourth quarter of 2011.
Leo Berlinghieri, Chief Executive Officer and President, said, “Global economic conditions remain unsettled, however, we are encouraged by the recent announcements and forecasts that the semiconductor market may be at trough levels and that business could begin to grow within a quarter or so and be even stronger in the second half of the year. We have seen stabilization of our overall order rates for several months which is also encouraging.
“Based on these current conditions, we expect that sales in the first quarter of 2013 may range from $125 to $145 million, and at these volumes, our non-GAAP net earnings could range from a net loss per share of $(0.06) to net earnings of $0.08 per share, and on a GAAP basis, from a net loss per share of $(0.08) to net income of $0.08 per share.”
Conference Call Details
A conference call with management will be held on Thursday, January 31, 2013 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 86739239, which has been reserved for this call. A live and archived webcast of the call will 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 amortization of acquired intangible assets, costs associated with acquisitions, litigation settlements, restructuring charges, income tax adjustments related to the settlement of tax audits and the related tax effect of any adjustments. 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, which exclude amortization of acquired intangible assets, costs associated with acquisitions, litigation settlements, restructuring charges, income tax adjustments related to the settlement of tax audits and the related tax effect of any adjustments, 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.
###
1
MKS Instruments, Inc. Unaudited Consolidated Statements of Operations (In thousands, except per share data)
Three Months Ended (Notes 4 and 5)
December 31, 2012
December 31, 2011
September 30, 2012
Net revenues
$
133,796
$
171,671
$
141,447
Cost of revenues
81,195
95,710
84,876
Gross profit
52,601
75,961
56,571
Research and development
14,207
14,224
14,136
Selling, general and administrative
30,853
31,473
29,661
Litigation
—
—
5,316
Completed acquisition costs
—
—
851
Restructuring
343
—
—
Amortization of intangible assets
583
264
215
Income from operations
6,615
30,000
6,392
Interest income, net
245
275
267
Income before income taxes
6,860
30,275
6,659
Provision for income taxes
2,751
7,561
4,079
Net income
$
4,109
$
22,714
$
2,580
Net income per share:
Basic
$
0.08
$
0.43
$
0.05
Diluted
$
0.08
$
0.43
$
0.05
Cash dividends per common share
$
0.16
$
0.15
$
0.16
Weighted average shares outstanding:
Basic
52,707
52,465
52,854
Diluted
53,217
53,105
53,290
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
Net income
$
4,109
$
22,714
$
2,580
Adjustments (net of tax, if applicable):
Settlement of foreign tax audit
—
(2,548
)
—
Completed acquisition costs (Note 1)
—
—
851
Acquisition inventory step-up
202
—
101
Litigation (Note 2)
—
—
5,316
Restructuring (Note 3)
343
—
—
Amortization of intangible assets
583
264
215
Pro forma tax adjustments
(132
)
(71
)
(626
)
Non-GAAP net earnings (Note 4)
$
5,105
$
20,359
$
8,437
Non-GAAP net earnings per share (Note 4)
$
0.10
$
0.38
$
0.16
Weighted average shares outstanding
53,217
53,105
53,290
Income from operations
$
6,615
$
30,000
$
6,392
Adjustments:
Completed acquisition costs (Note 1)
—
—
851
Acquisition inventory step-up
202
—
101
Litigation (Note 2)
—
—
5,316
Restructuring (Note 3)
343
—
—
Amortization of intangible assets
583
264
215
Non-GAAP income from operations
$
7,743
$
30,264
$
12,875
Non-GAAP operating margin percentage
5.8
%
17.6
%
9.1
%
Note 1: Costs related to the Company’s acquisition of Plasmart, Inc. in August 2012, are comprised of investment banking fees, legal fees and due diligence fees.
Note 2: In the third quarter of 2012, the Company incurred $5.3 million in charges to settle litigation with former shareholders of one of its former subsidiaries. This litigation was long standing and the decision to reach a settlement was made to eliminate future legal expenses related to the suit.
Note 3: The three month period ended December 31, 2012 includes restructuring charges primarily for severance related costs.
Note 4: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude amortization of intangible assets, restructurings, costs associated with acquisitions, litigation settlements, the related tax effect of these adjustments and pro-forma income tax adjustments to reflect the expected full year effective tax rate in the quarter.
Note 5: In the third quarter of 2012, the Company reported completed acquisition costs as a line item separate from selling, general and administrative expenses. The Company has reclassified these costs from selling, general and administrative expenses to this separate line beginning with the first quarter of 2012. These costs have been excluded from Non-GAAP earnings and the second quarter and year to date 2012 Non-GAAP net earnings and Non-GAAP net earnings per share have been adjusted to reflect this change.
2
MKS Instruments, Inc. Unaudited Consolidated Statements of Operations (In thousands, except per share data)
Twelve Months Ended
December 31, (Note 4)
2012
2011
Net revenues
$
643,508
$
822,517
Cost of revenues
374,029
447,529
Gross profit
269,479
374,988
Research and development
60,118
61,033
Selling, general and administrative
127,185
128,015
Litigation
5,316
—
Completed acquisition costs
1,258
—
Restructuring
343
—
Amortization of intangible assets
1,036
1,015
Income from operations
74,223
184,925
Interest income, net
913
1,127
Income before income taxes
75,136
186,052
Provision for income taxes
27,107
56,321
Net income
$
48,029
$
129,731
Net income per share:
Basic
$
0.91
$
2.49
Diluted
$
0.90
$
2.45
Cash dividends per common share
$
0.62
$
0.60
Weighted average shares outstanding:
Basic
52,686
52,169
Diluted
53,234
52,847
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
Net income
$
48,029
$
129,731
Adjustments (net of tax, if applicable):
Settlement of foreign tax audit
—
(2,548
)
Completed acquisition costs (Note 1)
1,258
—
Acquisition inventory step-up
303
—
Litigation (Note 2)
5,316
—
Restructuring (Note 3)
343
—
Amortization of intangible assets
1,036
1,015
Pro forma tax adjustments
(2,948
)
(268
)
Non-GAAP net earnings (Note 4)
$
53,337
$
127,930
Non-GAAP net earnings per share (Note 4)
$
1.00
$
2.42
Weighted average shares outstanding
53,234
52,847
Income from operations
$
74,223
$
184,925
Adjustments:
Completed acquisition costs (Note 1)
1,258
—
Acquisition inventory step-up
303
—
Litigation (Note 2)
5,316
—
Restructuring (Note 3)
343
—
Amortization of intangible assets
1,036
1,015
Non-GAAP income from operations
$
82,479
$
185,940
Non-GAAP operating margin percentage
12.8
%
22.6
%
Note 1: Costs related to the Company’s acquisition of Plasmart, Inc. in August 2012, are comprised of investment banking fees, legal fees and due diligence fees.
Note 2: In the third quarter of 2012, the Company incurred $5.3 million in charges to settle litigation with former shareholders of one of its former subsidiaries. This litigation was long standing and the decision to reach a settlement was made to eliminate future legal expenses related to the suit.
Note 3: The twelve months ended December 31, 2012 includes restructuring charges primarily for severance related costs.
Note 4: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude amortization of intangible assets, restructurings, costs associated with acquisitions, litigation settlements, the related tax effect of these adjustments and pro-forma income tax adjustments to reflect the expected full year effective tax rate in the quarter.
3
MKS Instruments, Inc. Reconciliation of GAAP Income Tax Rate to Non-GAAP Income Tax Rate (In thousands)
Three Months Ended December 31, 2012 (Note 3)
Three Months Ended September 30, 2012 (Note 3)
Income Before
Provision for
Effective
Income Before
Provision for
Effective
Income Taxes
Income taxes
Tax Rate
Income Taxes
Income taxes
Tax Rate
GAAP
$
6,860
$
2,751
40.1%
$
6,659
$
4,079
61.3%
Adjustments:
Completed acquisition costs (Note 1)
—
—
851
—
Acquisition inventory step-up
202
—
101
—
Litigation (Note 2)
—
—
5,316
—
Restructuring
343
—
—
—
Amortization of intangible assets
583
—
215
—
Tax effect of pro forma adjustments
—
338
—
626
Adjustment to pro forma tax rate
—
(206
)
—
—
Non-GAAP
$
7,988
$
2,883
36.1%
$
13,142
$
4,705
35.8%
Three Months Ended December 31, 2011 (Note 3)
Income Before
Provision for
Effective
Income Taxes
Income taxes
Tax Rate
GAAP
$
30,275
$
7,561
25.0%
Adjustments:
Amortization of intangible assets
264
—
Tax effect of pro forma adjustments
—
71
Adjustment to pro forma tax rate
—
—
Non-GAAP
$
30,539
$
7,632
25.0%
Twelve Months Ended December 31, 2012
(Note 3)
Twelve Months Ended December 31, 2011 (Note 3)
Income Before
Provision for
Effective
Income Before
Provision for
Effective
Income Taxes
Income taxes
Tax Rate
Income Taxes
Income taxes
Tax Rate
GAAP
$
75,136
$
27,107
36.1%
$
186,052
$
56,321
30.3%
Adjustments:
Settlement of foreign tax audit
—
—
(2,548
)
—
Completed acquisition costs (Note 1)
1,258
—
—
—
Acquisition inventory step-up
303
—
—
—
Litigation (Note 2)
5,316
—
—
—
Restructuring
343
—
—
—
Amortization of intangible assets
1,036
—
1,015
—
Tax effect of pro forma adjustments
—
2,948
—
268
Adjustment to pro forma tax rate
—
—
—
—
Non-GAAP
$
83,392
$
30,055
36.0%
$
184,519
$
56,589
30.7%
Note 1: Costs related to the Company’s acquisition of Plasmart, Inc. in August 2012, are comprised of investment banking fees, legal fees and due diligence fees.
Note 2: In the third quarter of 2012, we incurred $5.3 million in charges to settle litigation with former shareholders of one of our former subsidiaries. This litigation was long standing and the decision to reach a settlement was made to eliminate future legal expenses related to the suit.
Note 3: The Non-GAAP net earnings before taxes exclude amortization of intangible assets, costs associated with acquisitions, litigation settlements, the related tax effect of these adjustments and pro-forma income tax adjustments to reflect the expected full year effective tax rate in the quarter.
4
MKS Instruments, Inc. Unaudited Consolidated Balance Sheet (In thousands)
December 31, 2012
December 31, 2011
ASSETS
Cash and short-term investments
$
615,241
$
565,519
Trade accounts receivable, net
82,060
120,894
Inventories
134,639
153,632
Other current assets
36,242
44,856
Total current assets
868,182
884,901
Property, plant and equipment, net
80,516
72,487
Long-term investments
12,158
7,873
Goodwill
150,733
140,084
Intangible assets, net
11,561
1,043
Other assets
11,692
12,266
Total assets
$
1,134,842
$
1,118,654
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term borrowings
$
—
$
1,932
Accounts payable
16,803
24,853
Accrued expenses and other liabilities
62,508
69,646
Total current liabilities
79,311
96,431
Other liabilities
43,375
32,211
Stockholders’ equity:
Common stock
113
113
Additional paid-in capital
718,005
707,419
Retained earnings
278,583
268,870
Other stockholders’ equity
15,455
13,610
Total stockholders’ equity
1,012,156
990,012
Total liabilities and stockholders’ equity
$
1,134,842
$
1,118,654
5
We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.
