(MKS LOGO)
EXHIBIT 99.1
Contact: Seth H. Bagshaw
Vice President, Chief Financial Officer & Treasurer
Telephone: 978.645.5578
MKS Instruments Reports Q1 2013 Financial Results
Andover, Mass., April 24, 2013 — MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity; today reports first quarter 2013 financial results.
| GAAP Results | Non-GAAP Results | |||||||
| Net revenues ($ millions) | $ | 142 | $ | 142 | ||||
| Operating margin | 3.3 | % | 3.7 | % | ||||
| Net income ($ millions) | $ | 5.8 | $ | 3.8 | ||||
| Diluted EPS | $ | 0.11 | $ | 0.07 | ||||
First Quarter Financial Results
Sales were $142 million, an increase of 6% from $134 million in the fourth quarter of 2012, and a decrease of 26% from $191 million in the first quarter of 2012.
First quarter net income was $5.8 million, or $0.11 per diluted share, compared to net income of $4.1 million, or $0.08 per diluted share in the fourth quarter of 2012, and $22.8 million, or $0.43 per diluted share in the first quarter of 2012.
Non-GAAP net earnings, which exclude special charges, were $3.8 million, or $0.07 per diluted share, compared to $5.1 million, or $0.10 per diluted share in the fourth quarter of 2012, and $22.9 million, or $0.43 per diluted share in the first quarter of 2012. Non-GAAP net earnings in the first quarter excludes a benefit of $2.4 million related to the enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013. This Act reinstated certain tax incentives with retroactive application to January 1, 2012, the retroactive tax effects of which were recorded in the first quarter of 2013.
In the first quarter, the Company paid a quarterly cash dividend of $0.16 per share which was paid on March 15th and the Company also repurchased 61 thousand shares for $1.7 million at an average price of $27.35 pursuant to the share repurchase program announced in July of 2011.
Leo Berlinghieri, Chief Executive Officer, said, “We are encouraged by the improvement we are seeing in the semiconductor market, however, near term we anticipate that business conditions for our other markets will remain challenging. We are optimistic about the longer term recovery, and are continuing to work closely with customers on design wins and make investments to position ourselves for long-term growth.
“Given current business levels, we anticipate that sales in the second quarter may range from $145 million to $165 million. At these volumes, our GAAP net income could range from $0.03 to $0.17 per diluted share and our Non-GAAP net earnings could range from $0.04 to $0.18 per diluted share.”
Conference Call Details
A conference call with management will be held on Thursday, April 25, 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 24366289, 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, 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 intangible assets, costs associated with acquisitions, restructuring charges, the related tax effect of any adjustments and a benefit related to the enactment of the American Taxpayer Relief Act of 2012, 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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MKS Instruments, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended (Note 5) | ||||||||||||
| March 31, 2013 | March 31, 2012 | December 31, 2012 | ||||||||||
| Net revenues: | ||||||||||||
| Products | $ | 116,611 | $ | 164,488 | $ | 108,788 | ||||||
| Services | 25,034 | 26,380 | 25,008 | |||||||||
| Total net revenues | 141,645 | 190,868 | 133,796 | |||||||||
| Cost of revenues: | ||||||||||||
| Products | 70,575 | 91,024 | 66,535 | |||||||||
| Services | 16,368 | 16,053 | 14,660 | |||||||||
| Total cost of revenues | 86,943 | 107,077 | 81,195 | |||||||||
| Gross profit | 54,702 | 83,791 | 52,601 | |||||||||
| Research and development | 15,248 | 16,184 | 14,207 | |||||||||
| Selling, general and administrative | 34,173 | 34,119 | 30,853 | |||||||||
| Completed acquisition costs | 171 | — | — | |||||||||
| Restructuring | — | — | 343 | |||||||||
| Amortization of intangible assets | 434 | 119 | 583 | |||||||||
| Income from operations | 4,676 | 33,369 | 6,615 | |||||||||
| Interest income | 305 | 261 | 299 | |||||||||
| Interest expense | 14 | 9 | 54 | |||||||||
| Interest income, net | 291 | 252 | 245 | |||||||||
| Income before income taxes | 4,967 | 33,621 | 6,860 | |||||||||
| (Benefit) Provision for income taxes | (794 | ) | 10,853 | 2,751 | ||||||||
| Net income | $ | 5,761 | $ | 22,768 | $ | 4,109 | ||||||
| Net income per share: | ||||||||||||
| Basic | $ | 0.11 | $ | 0.43 | $ | 0.08 | ||||||
| Diluted | $ | 0.11 | $ | 0.43 | $ | 0.08 | ||||||
| Cash dividends per common share | $ | 0.16 | $ | 0.15 | $ | 0.16 | ||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 52,773 | 52,504 | 52,707 | |||||||||
| Diluted | 53,359 | 53,222 | 53,217 | |||||||||
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results: | ||||||||||||
| Net income | $ | 5,761 | $ | 22,768 | $ | 4,109 | ||||||
| Adjustments (net of tax, if applicable): | ||||||||||||
| Acquisition inventory step-up (Note 1) | — | — | 202 | |||||||||
| Tax benefit (Note 2) | (2,353 | ) | — | — | ||||||||
| Completed acquisition costs (Note 3) | 171 | — | — | |||||||||
| Restructuring (Note 4) | — | — | 343 | |||||||||
| Amortization of intangible assets | 434 | 119 | 583 | |||||||||
| Pro forma tax adjustments | (168 | ) | (34 | ) | (132 | ) | ||||||
| Non-GAAP net earnings (Note 5) | $ | 3,845 | $ | 22,853 | $ | 5,105 | ||||||
| Non-GAAP net earnings per share (Note 5) | $ | 0.07 | $ | 0.43 | $ | 0.10 | ||||||
| Weighted average shares outstanding | 53,359 | 53,222 | 53,217 | |||||||||
| Income from operations | $ | 4,676 | $ | 33,369 | $ | 6,615 | ||||||
| Adjustments: | ||||||||||||
| Acquisition inventory step-up (Note 1) | — | — | 202 | |||||||||
| Completed acquisition costs (Note 3) | 171 | — | — | |||||||||
| Restructuring (Note 4) | — | — | 343 | |||||||||
| Amortization of intangible assets | 434 | 119 | 583 | |||||||||
| Non-GAAP income from operations | $ | 5,281 | $ | 33,488 | $ | 7,743 | ||||||
| Non-GAAP operating margin percentage | 3.7 | % | 17.5 | % | 5.8 | % | ||||||
Note 1: Costs related to the Company’s acquisition of Plasmart, Inc. in August 2012.
Note 2: The benefit related to the enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013.
Note 3: Costs related to the Company’s acquisition of Alter Power Systems S.r.l., in March 2013, are comprised of legal fees.
Note 4: The three month period ended December 31, 2012, includes restructuring charges primarily for severance related costs.
Note 5: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude amortization of intangible assets, costs associated with acquisitions, restructuring charges, the related tax effect of these adjustments and a benefit related to the enactment of the American Taxpayer Relief Act of 2012.
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MKS Instruments, Inc.
Reconciliation of GAAP Income Tax Rate to Non-GAAP Income Tax Rate
(In thousands)
| Three Months Ended March 31, 2013 (Note 5) | Three Months Ended December 31, 2012 (Note 5) | |||||||||||||||||||||||
| Income Before | Provision for | Effective | Income Before | Provision for | Effective | |||||||||||||||||||
| Income Taxes | Income taxes | Tax Rate | Income Taxes | Income taxes | Tax Rate | |||||||||||||||||||
| GAAP | $ | 4,967 | $ | (794) | (16.0)% | $ | 6,860 | $ | 2,751 | 40.1% | ||||||||||||||
| Adjustments: | ||||||||||||||||||||||||
| Acquisition inventory step-up (Note | — | — | 202 | — | ||||||||||||||||||||
| 1) | ||||||||||||||||||||||||
| Tax benefit (Note 2) | — | 2,353 | — | — | ||||||||||||||||||||
| Completed acquisition costs (Note 3) | 171 | — | — | — | ||||||||||||||||||||
| Restructuring (Note 4) | — | — | 343 | — | ||||||||||||||||||||
| Amortization of intangible assets | 434 | — | 583 | — | ||||||||||||||||||||
| Tax effect of pro forma adjustments | — | 168 | — | 338 | ||||||||||||||||||||
| Adjustment to pro forma tax rate | — | — | — | (206 | ) | |||||||||||||||||||
| Non-GAAP | $ | 5,572 | $ | 1,727 | 31.0% | $ | 7,988 | $ | 2,883 | 36.1% | ||||||||||||||
| Three Months Ended March 31, 2012 (Note 5) | ||||||||||||
| Income Before | Provision for | Effective | ||||||||||
| Income Taxes | Income taxes | Tax Rate | ||||||||||
| GAAP | $ | 33,621 | $ | 10,853 | 32.3% | |||||||
| Adjustments: | ||||||||||||
| Amortization of intangible assets | 119 | — | ||||||||||
| Tax effect of pro forma adjustments | — | 34 | ||||||||||
| Adjustment to pro forma tax rate | — | — | ||||||||||
| Non-GAAP | $ | 30,740 | $ | 10,887 | 32.3% | |||||||
Note 1: Costs related to the Company’s acquisition of Plasmart, Inc. in August 2012.
Note 2: The benefit related to the enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013.
Note 3: Costs related to the Company’s acquisition of Alter Power Systems S.r.l., in March 2013, are comprised of legal fees.
Note 4: The three month period ended December 31, 2012, includes restructuring charges primarily for severance related costs.
Note 5: The Non-GAAP net earnings and Non-GAAP provision for income taxes amounts exclude amortization of intangible assets, costs associated with acquisitions, restructuring charges, the related tax effect of these adjustments, a benefit related to the enactment of the American Taxpayer Relief Act of 2012 and pro-forma income tax adjustments to reflect the expected full year effective tax rate in the quarter.
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MKS Instruments, Inc.
Unaudited Consolidated Balance Sheet
(In thousands)
| March 31, 2013 | December 31, 2012 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 266,708 | $ | 287,588 | ||||
| Short-term investments | 331,634 | 327,653 | ||||||
| Trade accounts receivable, net | 90,457 | 82,060 | ||||||
| Inventories | 131,253 | 134,639 | ||||||
| Deferred income taxes | 8,585 | 8,194 | ||||||
| Other current assets | 30,008 | 28,048 | ||||||
| Total current assets | 858,645 | 868,182 | ||||||
| Property, plant and equipment, net | 79,709 | 80,516 | ||||||
| Long-term investments | 10,157 | 12,158 | ||||||
| Goodwill | 150,340 | 150,733 | ||||||
| Intangible assets, net | 13,750 | 11,561 | ||||||
| Other assets | 12,807 | 11,692 | ||||||
| Total assets | $ | 1,125,408 | $ | 1,134,842 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Short-term borrowings | $ | 759 | $ | — | ||||
| Accounts payable | 21,159 | 16,803 | ||||||
| Accrued compensation | 17,621 | 20,955 | ||||||
| Income taxes payable | 3,151 | 4,148 | ||||||
| Other current liabilities | 34,042 | 37,405 | ||||||
| Total current liabilities | 76,732 | 79,311 | ||||||
| Other liabilities | 45,613 | 43,375 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 113 | 113 | ||||||
| Additional paid-in capital | 719,782 | 718,005 | ||||||
| Retained earnings | 275,058 | 278,583 | ||||||
| Other stockholders’ equity | 8,110 | 15,455 | ||||||
| Total stockholders’ equity | 1,003,063 | 1,012,156 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,125,408 | $ | 1,134,842 | ||||
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