Andover, Mass., July 24, 2013 — MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity; today reports second quarter 2013 financial results.
GAAP Results
Non-GAAP Results
Net revenues ($ millions)
$
157
$
157
Operating margin
6.6
%
6.6
%
Net income ($ millions)
$
7.3
$
7.3
Diluted EPS
$
0.14
$
0.14
Second Quarter Financial Results
Sales were $157 million, an increase of 11% from $142 million in the first quarter, and a decrease of 12% from $177 million in the second quarter of 2012.
Second quarter net income was $7.3 million, or $0.14 per diluted share, compared to net income of $5.8 million, or $0.11 per diluted share in the first quarter of 2013, and $18.6 million, or $0.35 per diluted share in the second quarter of 2012.
Non-GAAP net earnings, which exclude special items, were $7.3 million, or $0.14 per diluted share, compared to $3.9 million, or $0.07 per diluted share in the first quarter of 2013, and $18.9 million, or $0.36 per diluted share in the second quarter of 2012. Non-GAAP net earnings in the second quarter exclude amortization of acquired intangible assets as well as $0.2 million in restructuring charges and an insurance reimbursement of $1.1 million related to a litigation settlement in the third quarter of 2012, and the related tax impact of these adjustments.
In the second quarter, the Company paid a quarterly cash dividend of $0.16 per share which was paid on June 14th and the Company also repurchased 46 thousand shares for $1.2 million at an average price of $26.24 pursuant to the share repurchase program announced in July of 2011.
Leo Berlinghieri, Chief Executive Officer, said, “The tone at the recent Semicon West tradeshow was positive regarding long-term demand in the semiconductor market, and reports are projecting that we could continue to see modest growth as the year progresses. As the global economy continues to stabilize and grow, we are optimistic about the opportunities for MKS in both semiconductor and the other advanced markets we serve.
“Given current business levels, we anticipate that sales in the third quarter may range from $155 million to $170 million, and, at these volumes, our non-GAAP net earnings could range from $0.14 to $0.26 per share.”
Conference Call Details
A conference call with management will be held on Thursday, July 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 98319907, 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, an insurance reimbursement related to a prior year litigation settlement, a benefit related to the enactment of the American Taxpayer Relief Act of 2012 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 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 (Note 5)
June 30, 2013
June 30, 2012
March 31, 2013
Net revenues:
Products
$
132,541
$
148,851
$
116,611
Services
24,387
28,546
25,034
Total net revenues
156,928
177,397
141,645
Cost of revenues:
Products
79,206
84,622
70,575
Services
15,764
16,259
16,368
Total cost of revenues
94,970
100,881
86,943
Gross profit
61,958
76,516
54,702
Research and development
16,813
15,591
15,248
Selling, general and administrative
34,849
32,582
34,133
Insurance reimbursement
(1,071
)
—
—
Completed acquisition costs
—
377
171
Restructuring
198
—
40
Amortization of intangible assets
742
119
434
Income from operations
10,427
27,847
4,676
Interest income, net
211
149
291
Income before income taxes
10,638
27,996
4,967
Provision (benefit) for income taxes
3,318
9,424
(794
)
Net income
$
7,320
$
18,572
$
5,761
Net income per share:
Basic
$
0.14
$
0.35
$
0.11
Diluted
$
0.14
$
0.35
$
0.11
Cash dividends per common share
$
0.16
$
0.15
$
0.16
Weighted average shares outstanding:
Basic
53,054
52,679
52,773
Diluted
53,358
53,206
53,359
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
Net income
$
7,320
$
18,572
$
5,761
Adjustments (net of tax, if applicable):
Tax benefit (Note 1)
—
—
(2,353
)
Insurance reimbursement (Note 2)
(1,071
)
—
—
Completed acquisition costs (Note 3)
—
377
171
Restructuring (Note 4)
198
—
40
Amortization of intangible assets
742
119
434
Pro forma tax adjustments
61
(176
)
(181
)
Non-GAAP net earnings (Note 5)
$
7,250
$
18,892
$
3,872
Non-GAAP net earnings per share (Note 5)
$
0.14
$
0.36
$
0.07
Weighted average shares outstanding
53,358
53,206
53,359
Income from operations
$
10,427
$
27,847
$
4,676
Adjustments:
Insurance reimbursement (Note 2)
(1,071
)
—
—
Completed acquisition costs (Note 3)
—
377
171
Restructuring (Note 4)
198
—
40
Amortization of intangible assets
742
119
434
Non-GAAP income from operations
$
10,296
$
28,343
$
5,321
Non-GAAP operating margin percentage
6.6
%
16.0
%
3.8
%
Note 1: Tax benefit related to the enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013.
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. In the second quarter of 2013, we recovered $1.1 million from our insurance company relating to the prior year settlement.
Note 3: Costs related to the Company’s acquisition of Alter Power Systems S.r.l., in March 2013, are comprised of legal fees. Costs related to the Company’s acquisition of Plasmart, Inc. in 2012, are comprised of investment banking fees, legal fees and due diligence fees.
Note 4: The three month period ended June 30, 2013, includes restructuring charges primarily for severance related costs related to the consolidation of two sites.
Note 5: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude amortization of intangible assets, restructurings, costs associated with acquisitions, a benefit related to an insurance reimbursement, 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.
2
MKS Instruments, Inc. Reconciliation of GAAP Income Tax Rate to Non-GAAP Income Tax Rate (In thousands)
Three Months Ended June 30, 2013 (Note 5)
Three Months Ended March 31, 2013 (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
$
10,638
$
3,318
31.2%
$
4,967
$
(794)
-16.0%
Adjustments:
Tax benefit (Note 1)
—
—
—
2,353
Insurance reimbursement (Note 2)
(1,071
)
—
—
—
Completed acquisition costs (Note 3)
—
—
171
—
Restructuring (Note 4)
198
—
40
—
Amortization of intangible assets
742
—
434
—
Tax effect of pro forma adjustments
—
(147
)
—
182
Adjustment to pro forma tax rate
—
86
—
(1
)
Non-GAAP
$
10,507
$
3,257
31.0%
$
5,612
$
1,740
31.0%
Three Months Ended June 30, 2012 (Note 5)
Income Before
Provision for
Effective
Income Taxes
Income taxes
Tax Rate
GAAP
$
27,996
$
9,424
33.7%
Adjustments:
Completed acquisition costs (Note 3)
377
—
Amortization of intangible assets
119
—
Tax effect of pro forma adjustments
—
176
Non-GAAP
$
28,492
$
9,600
33.7%
Six Months Ended June 30, 2013 (Note 5)
Six Months Ended June 30, 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
$
15,605
$
2,524
16.2%
$
61,617
$
20,277
32.9%
Adjustments:
Tax benefit (Note 1)
—
2,353
—
—
Insurance reimbursement (Note 2)
(1,071
)
—
—
—
Completed acquisition costs (Note 3)
171
—
377
—
Restructuring (Note 4)
238
—
—
—
Amortization of intangible assets
1,176
—
238
—
Tax effect of pro forma adjustments
—
35
—
210
Adjustment to pro forma tax rate
—
85
—
—
Non-GAAP
$
16,119
$
4,997
31.0%
$
62,232
$
20,487
32.9%
Note 1: Tax benefit related to the enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013.
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. In the second quarter of 2013, we recovered $1.1 million from our insurance company relating to the prior year settlement.
Note 3: Costs related to the Company’s acquisition of Alter Power Systems S.r.l., in March 2013, are comprised of legal fees. Costs related to the Company’s acquisition of Plasmart, Inc. in 2012, are comprised of investment banking fees, legal fees and due diligence fees.
Note 4: The three month period ended June 30, 2013, includes restructuring charges primarily for severance related costs related to the consolidation of two sites.
Note 5: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude amortization of intangible assets, restructurings, costs associated with acquisitions, a benefit related to an insurance reimbursement, 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. Unaudited Consolidated Statements of Operations (In thousands, except per share data)
Six Months Ended
June 30, (Note 5)
2013
2012
Net revenues:
Products
$
249,152
$
313,339
Services
49,421
54,926
Total net revenues
298,573
368,265
Cost of revenues:
Products
149,781
175,646
Services
32,132
32,312
Total cost of revenues
181,913
207,958
Gross profit
116,660
160,307
Research and development
32,061
31,775
Selling, general and administrative
68,982
66,701
Insurance reimbursement
(1,071
)
—
Completed acquisition costs
171
377
Restructuring
238
—
Amortization of intangible assets
1,176
238
Income from operations
15,103
61,216
Interest income, net
502
401
Income from continuing operations before income taxes
15,605
61,617
Provision for income taxes
2,524
20,277
Net income
$
13,081
$
41,340
Net income per share:
Basic
$
0.25
$
0.79
Diluted
$
0.25
$
0.78
Cash dividends per common share
$
0.32
$
0.30
Weighted average shares outstanding:
Basic
52,914
52,591
Diluted
53,359
53,214
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
Net income
$
13,081
$
41,340
Adjustments (net of tax, if applicable):
Tax benefit (Note 1)
(2,353
)
—
Insurance reimbursement (Note 2)
(1,071
)
—
Completed acquisition costs (Note 3)
171
377
Restructuring (Note 4)
238
—
Amortization of intangible assets
1,176
238
Pro forma tax adjustments
(120
)
(210
)
Non-GAAP net earnings (Note 5)
$
11,122
$
41,745
Non-GAAP net earnings per share (Note 5)
$
0.21
$
0.78
Weighted average shares outstanding
53,359
53,214
Income from operations
$
15,103
$
61,216
Adjustments:
Insurance reimbursement (Note 2)
(1,071
)
—
Completed acquisition costs (Note 3)
171
377
Restructuring (Note 4)
238
—
Amortization of intangible assets
1,176
238
Non-GAAP income from operations
$
15,617
$
61,831
Non-GAAP operating margin percentage
5.2
%
16.8
%
Note 1: Tax benefit related to the enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013.
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. In the second quarter of 2013, we recovered $1.1 million from our insurance company relating to the prior year settlement.
Note 3: Costs related to the Company’s acquisition of Alter Power Systems S.r.l., in March 2013, are comprised of legal fees. Costs related to the Company’s acquisition of Plasmart, Inc. in 2012, are comprised of investment banking fees, legal fees and due diligence fees.
Note 4: The three month period ended June 30, 2013, includes restructuring charges primarily for severance related costs related to the consolidation of two sites.
Note 5: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude amortization of intangible assets, restructurings, costs associated with acquisitions, a benefit related to an insurance reimbursement, the related tax effect of these adjustments and pro-forma income tax adjustments to reflect the expected full year effective tax rate in the period.
4
MKS Instruments, Inc. Unaudited Consolidated Balance Sheet (In thousands)
June 30, 2013
December 31, 2012
ASSETS
Cash and cash equivalents
$
235,724
$
287,588
Short-term investments
346,715
327,653
Trade accounts receivable, net
95,771
82,060
Inventories
137,006
134,639
Deferred income taxes
9,297
8,194
Other current assets
38,426
28,048
Total current assets
862,939
868,182
Property, plant and equipment, net
78,875
80,516
Long-term investments
15,788
12,158
Goodwill
150,012
150,733
Intangible assets, net
12,523
11,561
Other assets
10,210
11,692
Total assets
$
1,130,347
$
1,134,842
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable
$
24,302
$
16,803
Accrued compensation
19,318
20,955
Income taxes payable
3,269
4,148
Other current liabilities
32,697
37,405
Total current liabilities
79,586
79,311
Other liabilities
46,693
43,375
Stockholders’ equity:
Common stock
113
113
Additional paid-in capital
723,360
718,005
Retained earnings
273,296
278,583
Other stockholders’ equity
7,299
15,455
Total stockholders’ equity
1,004,068
1,012,156
Total liabilities and stockholders’ equity
$
1,130,347
$
1,134,842
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.
