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Exhibit 99.1

 

LOGO

For Immediate Release

Contact: Seth H. Bagshaw

Vice President, Chief Financial Officer & Treasurer

Telephone: 978.645.5578

MKS Instruments Reports Q3 2012 Financial Results

Andover, Mass., October 24, 2012 — MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity; today reports third quarter 2012 financial results.

 

     GAAP Results   Non-GAAP Results

Net revenues ($ millions)

   $141.4   $141.4

Operating margin

   4.5%   9.1%

Net income ($ millions)

   $2.6   $8.4

Diluted EPS

   $0.05   $0.16

Third Quarter Financial Results

Sales were $141.4 million, a decrease of 20% from $177.4 million in the second quarter of 2012, and a decrease of 27% from $194.5 million in the third quarter of 2011.

Third quarter net income was $2.6 million, or $0.05 per diluted share, compared to net income of $18.6 million, or $0.35 per diluted share in the second quarter of 2012, and $30.4 million, or $0.57 per diluted share in the third quarter of 2011.

Non-GAAP net earnings, which exclude special charges, were $8.4 million, or $0.16 per diluted share, compared to $18.9 million, or $0.36 per diluted share in the second quarter of 2012, and $30.6 million, or $0.58 per diluted share in the third quarter of 2011.

In the third quarter, the board of directors authorized an increase in the Company’s quarterly cash dividend from $0.15 per share to $0.16 per share which was paid on September 14th and the Company also repurchased 76,600 shares for $2.1 million at an average price of $26.97 pursuant to the share repurchase program announced in July of 2011.

Leo Berlinghieri, Chief Executive Officer and President, said, “Forecasts by industry analysts and recent earnings reports by our customers indicate that the semiconductor


industry will decrease further in the fourth quarter, and the solar and LED equipment markets are also expected to remain depressed until excess capacity is absorbed. In this environment we are cautious and have implemented additional measures to curtail non-critical spending.

“Given current business levels, we anticipate that sales in the fourth quarter may range from $115 million to $135 million. At these volumes, our GAAP net income could range from a net loss of $(0.08) per basic share to net income of $0.05 per diluted share. Non-GAAP net earnings could range from a net loss of $(0.07) per basic share to net earnings of $0.06 per diluted share. While near term business conditions are challenging, we are continuing to work closely with customers on design wins and are continuing to make investments to position ourselves for long term growth.”

Conference Call Details

A conference call with management will be held on Thursday, October 25, 2012 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 38424683, 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 legal settlement charges, amortization of intangible assets, costs associated with acquisitions and disposition related charges, and certain adjustments to income taxes. 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 legal settlement charges, amortization of intangible assets, costs associated with acquisitions, the related tax effect of any adjustments and pro-forma tax adjustments to reflect the expected full year effective tax rate in the quarter, is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results. Non-GAAP net earnings (loss) per share guidance, excludes amortization of intangible assets and special charges net of tax.


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, including a pending investigation on export compliance in China, 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, as well as recent press releases, 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.

###


MKS Instruments, Inc.

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

 

     Three Months Ended (Notes 3 and 4)  
     September 30,
2012
    September 30,
2011
    June 30,
2012
 

Net revenues

   $ 141,447      $ 194,508      $ 177,397   

Cost of revenues

     84,876        106,830        100,881   
  

 

 

   

 

 

   

 

 

 

Gross profit

     56,571        87,678        76,516   

Research and development

     14,136        14,331        15,591   

Selling, general and administrative

     29,661        31,984        32,582   

Litigation settlements

     5,316        —          —     

Completed acquisition costs

     851        —          377   

Amortization of intangible assets

     215        251        119   
  

 

 

   

 

 

   

 

 

 

Income from operations

     6,392        41,112        27,847   

Interest income, net

     267        272        149   
  

 

 

   

 

 

   

 

 

 

Income before income taxes

     6,659        41,384        27,996   

Provision for income taxes

     4,079        11,011        9,424   
  

 

 

   

 

 

   

 

 

 

Net income

   $ 2,580      $ 30,373      $ 18,572   
  

 

 

   

 

 

   

 

 

 

Basic income per share:

      

Net income

   $ 0.05      $ 0.58      $ 0.35   

Diluted income per share:

      

Net income

   $ 0.05      $ 0.57      $ 0.35   

Cash dividends per common share

   $ 0.16      $ 0.15      $ 0.15   

Weighted average shares outstanding:

      

Basic

     52,854        52,456        52,679   

Diluted

     53,290        52,992        53,206   

The following supplemental Non-GAAP earnings information is presented

to aid in understanding MKS' operating results:

      

Net income

   $ 2,580      $ 30,373      $ 18,572   

Adjustments (net of tax, if applicable):

      

Completed acquisition costs (Note 1)

     851        —          377   

Acquisition inventory step-up

     101        —          —     

Litigation settlements (Note 2)

     5,316        —          —     

Amortization of intangible assets

     215        251        119   

Pro forma tax adjustments

     (626     (67     (176
  

 

 

   

 

 

   

 

 

 

Non-GAAP net earnings (Note 3)

   $ 8,437      $ 30,557      $ 18,892   
  

 

 

   

 

 

   

 

 

 

Non-GAAP net earnings per share (Note 3)

   $ 0.16      $ 0.58      $ 0.36   
  

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding

     53,290        52,992        53,206   

Income from operations

   $ 6,392      $ 41,112      $ 27,847   

Adjustments:

      

Completed acquisition costs (Note 1)

     851        —          377   

Acquisition inventory step-up

     101        —          —     

Litigation settlements (Note 2)

     5,316        —          —     

Amortization of intangible assets

     215        251        119   
  

 

 

   

 

 

   

 

 

 

Non-GAAP income from operations

   $ 12,875      $ 41,363      $ 28,343   
  

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     9.1     21.3     16.0
  

 

 

   

 

 

   

 

 

 

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 and Non-GAAP net earnings per share amounts 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.

Note 4: In the third quarter of 2012, the Company has 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.


MKS Instruments, Inc.

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

 

     Nine Months Ended
September 30, (Notes 3 and 4)
 
     2012     2011  

Net revenues

   $ 509,712      $ 650,846   

Cost of revenues

     292,834        351,819   
  

 

 

   

 

 

 

Gross profit

     216,878        299,027   

Research and development

     45,911        46,809   

Selling, general and administrative

     96,332        96,542   

Litigation settlements

     5,316        —     

Completed acquisition costs

     1,258        —     

Amortization of intangible assets

     453        751   
  

 

 

   

 

 

 

Income from operations

     67,608        154,925   

Interest income, net

     668        852   
  

 

 

   

 

 

 

Income from continuing operations before income taxes

     68,276        155,777   

Provision for income taxes

     24,356        48,760   
  

 

 

   

 

 

 

Net income

   $ 43,920      $ 107,017   
  

 

 

   

 

 

 

Basic income per share:

    

Net income

   $ 0.83      $ 2.06   

Diluted income per share:

    

Net income

   $ 0.82      $ 2.03   

Cash dividends per common share

   $ 0.46      $ 0.45   

Weighted average shares outstanding:

    

Basic

     52,679        52,070   

Diluted

     53,240        52,761   

The following supplemental Non-GAAP earnings information is presented

to aid in understanding MKS' operating results:

    

Net income

   $ 43,920      $ 107,017   

Adjustments (net of tax, if applicable):

    

Completed acquisition costs (Note 1)

     1,258        —     

Acquisition inventory step-up

     101        —     

Litigation settlements (Note 2)

     5,316        —     

Amortization of intangible assets

     453        751   

Pro forma tax adjustments

     (2,639     (197
  

 

 

   

 

 

 

Non-GAAP net earnings (Note 3)

   $ 48,409      $ 107,571   
  

 

 

   

 

 

 

Non-GAAP net earnings per share (Note 3)

   $ 0.91      $ 2.04   
  

 

 

   

 

 

 

Weighted average shares outstanding

     53,240        52,761   

Income from operations

   $ 67,608      $ 154,925   

Adjustments:

    

Completed acquisition costs (Note 1)

     1,258        —     

Acquisition inventory step-up

     101        —     

Litigation settlements (Note 2)

     5,316        —     

Amortization of intangible assets

     453        751   
  

 

 

   

 

 

 

Non-GAAP income from operations

   $ 74,736      $ 155,676   
  

 

 

   

 

 

 

Non-GAAP operating margin

     14.7     23.9
  

 

 

   

 

 

 

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 and Non-GAAP net earnings per share amounts 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.

Note 4: In the third quarter of 2012, the Company has 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 year to date 2012 Non-GAAP net earnings and Non-GAAP net earnings per share have been adjusted to reflect this change.


MKS Instruments, Inc.

Reconciliation of GAAP Income Tax Rate to Non-GAAP Income Tax Rate

(In thousands)

 

     Three Months Ended September 30, 2012
(Note 3)
    Three Months Ended June 30, 2012
(Note 3)
 
     Income Before
Income Taxes
     Provision for
Income Taxes
    Effective
Tax Rate
    Income Before
Income Taxes
     Provision for
Income Taxes
     Effective
Tax Rate
 

GAAP

   $ 6,659       $ 4,079        61.3   $ 27,996       $ 9,424         33.7

Adjustments:

               

Completed acquisition costs (Note 1)

     851         —            377         —        

Acquisition inventory step-up

     101         —            —           —        

Litigation settlements (Note 2)

     5,316         —            —           —        

Amortization of intangible assets

     215         —            119         —        

Tax effect of pro forma adjustments

     —           2,390          —           176      

Adjustment to pro forma tax rate

     —           (1,764       —           —        
  

 

 

    

 

 

     

 

 

    

 

 

    

Non-GAAP

   $ 13,142       $ 4,705        35.8   $ 28,492       $ 9,600         33.7
  

 

 

    

 

 

     

 

 

    

 

 

    
     Three Months Ended September 30, 2011
(Note 3)
                     
     Income Before
Income Taxes
     Provision for
Income Taxes
    Effective
Tax Rate
                     

GAAP

   $ 41,384       $ 11,011        26.6        

Adjustments:

               

Amortization of intangible assets

     251         —               

Tax effect of pro forma adjustments

     —           67             

Adjustment to pro forma tax rate

     —           —               
  

 

 

    

 

 

           

Non-GAAP

   $ 41,635       $ 11,078        26.6        
  

 

 

    

 

 

           
     Nine Months Ended September 30, 2012
(Note 3)
    Nine Months Ended September 30, 2011
(Note 3)
 
     Income Before
Income Taxes
     Provision for
Income Taxes
    Effective
Tax Rate
    Income Before
Income Taxes
     Provision for
Income Taxes
     Effective
Tax Rate
 

GAAP

   $ 68,276       $ 24,356        35.7   $ 155,777       $ 48,760         31.3

Adjustments:

               

Completed acquisition costs (Note 1)

     1,258         —            —           —        

Acquisition inventory step-up

     101         —            —           —        

Litigation settlements (Note 2)

     5,316         —            —           —        

Amortization of intangible assets

     453         —            751         —        

Tax effect of pro forma adjustments

     —           2,611          —           197      

Adjustment to pro forma tax rate

     —           28          —           —        
  

 

 

    

 

 

     

 

 

    

 

 

    

Non-GAAP

   $ 75,404       $ 26,995        35.8   $ 156,528       $ 48,957         31.3
  

 

 

    

 

 

     

 

 

    

 

 

    

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.


MKS Instruments, Inc.

Unaudited Consolidated Balance Sheet

(In thousands)

 

     September 30,
2012
     December 31,
2011
 

ASSETS

     

Cash and short-term investments

   $ 583,634       $ 565,519   

Trade accounts receivable, net

     87,536         120,894   

Inventories

     145,518         153,632   

Other current assets

     36,249         44,856   
  

 

 

    

 

 

 

Total current assets

     852,937         884,901   

Property, plant and equipment, net

     77,493         72,487   

Long-term investments

     40,062         7,873   

Goodwill

     149,887         140,084   

Intangible assets, net

     11,843         1,043   

Other assets

     10,080         12,266   
  

 

 

    

 

 

 

Total assets

   $ 1,142,302       $ 1,118,654   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Short-term borrowings

   $ 4,164       $ 1,932   

Accounts payable

     16,395         24,853   

Accrued expenses and other liabilities

     68,631         69,646   
  

 

 

    

 

 

 

Total current liabilities

     89,190         96,431   

Other liabilities

     37,925         32,211   

Stockholders' equity:

     

Common stock

     113         113   

Additional paid-in capital

     715,001         707,419   

Retained earnings

     284,802         268,870   

Other stockholders' equity

     15,271         13,610   
  

 

 

    

 

 

 

Total stockholders' equity

     1,015,187         990,012   
  

 

 

    

 

 

 

Total liabilities and stockholders' equity

   $ 1,142,302       $ 1,118,654