- Revenue of
$742 million , up 7% year-over-year - GAAP net income of
$143 million , up 17% year-over-year - Non-GAAP net earnings of
$151 million , up 6% year-over-year - Has become the market share leader in
RF Power Supplies - Successful re-syndication of Atotech Limited acquisition financing
“I am pleased with how we executed in the first quarter, delivering profitability above our expectations, despite industry supply chain challenges and rising input costs,” said
“We remain very excited about the long-term opportunities across our portfolio, and look forward to closing our acquisition of Atotech Limited, and welcoming their world class team to MKS,” said
“We delivered better than expected Non-GAAP operating margin, which is a clear reflection of our ability to control costs despite rising inflationary pressures, while remaining focused on targeted investments to drive long-term organic growth,” said
New End Market Categories
Beginning with the first quarter of 2022, MKS changed how it presents revenue to better represent the end markets it serves and to enable investors to better understand the key drivers of its business. MKS has divided what it previously categorized as Advanced Markets into two separate end markets,
Successful Re-syndication of Atotech Limited Acquisition Financing
On
Second Quarter 2022 Outlook
Based on current business levels and certain supply chain constraints and excluding any contribution from Atotech, the Company expects revenue in the second quarter of 2022 of
Conference Call Details
A conference call with management will be held on
About MKS Instruments
Use of Non-GAAP Financial Results
This press release includes financial measures that are not in accordance with
MKS is not providing a quantitative reconciliation of forward-looking Non-GAAP gross margin, operating expenses, interest expense, net, tax rate, net earnings and net earnings per diluted share to the most directly comparable GAAP financial measures because it is unable to estimate with reasonable certainty the ultimate timing or amount of certain significant items without unreasonable efforts. These items include, but are not limited to, acquisition and integration costs, acquisition inventory step-up, amortization of intangible assets, restructuring and other expense, asset impairment, debt issuance costs and the income tax effect of these items. These items are uncertain, depend on various factors, including, but not limited to, our pending acquisition of Atotech and could have a material impact on GAAP reported results for the relevant period.
For further information regarding these Non-GAAP financial measures, please refer to the tables presenting reconciliations of our Non-GAAP results to our GAAP results and the “Notes on Our Non-GAAP Financial Information” at the end of this press release.
Selected GAAP and Non-GAAP Financial Measures
(In millions, except per share data)
Q1 2022 | Q4 2021 | Q1 2021 | |||
Net Revenues | |||||
Semiconductor | |||||
82 | 96 | 115 | |||
172 | 173 | 167 | |||
Total net revenues | $742 | $764 | $694 | ||
GAAP Financial Measures | |||||
Operating margin | 23.1% | 23.8% | 22.4% | ||
Net income | |||||
Diluted EPS | |||||
Non-GAAP Financial Measures | |||||
Operating margin | 25.6% | 27.1% | 25.8% | ||
Net earnings | |||||
Diluted EPS | |||||
First Quarter 2022 Financial Results
Net revenues in the first quarter of 2022 were
Net income in the first quarter of 2022 was
Non-GAAP net earnings were
Additional Financial Information
At
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding the future financial performance, business prospects and growth of
Company Contact:
Vice President, Investor Relations
Telephone: (978) 557-5180
Email: david.ryzhik@mksinst.com
Unaudited Consolidated Statements of Operations | |||||||||
(In millions, except per share data) | |||||||||
Three Months Ended | |||||||||
2022 | 2021 | 2021 | |||||||
Net revenues: | |||||||||
Products | $ | 648 | $ | 668 | $ | 605 | |||
Services | 94 | 96 | 89 | ||||||
Total net revenues | 742 | 764 | 694 | ||||||
Cost of revenues: | |||||||||
Products | 360 | 359 | 323 | ||||||
Services | 48 | 50 | 49 | ||||||
Total cost of revenues | 408 | 409 | 372 | ||||||
Gross profit | 334 | 355 | 322 | ||||||
Research and development | 52 | 51 | 47 | ||||||
Selling, general and administrative | 92 | 97 | 96 | ||||||
Acquisition and integration costs | 8 | 9 | 6 | ||||||
Restructuring and other | 2 | 1 | 5 | ||||||
Amortization of intangible assets | 15 | 15 | 12 | ||||||
Gain on sale of long-lived assets | (7) | — | — | ||||||
Income from operations | 172 | 182 | 156 | ||||||
Interest expense | 6 | 6 | 6 | ||||||
Other (income) expense, net | (5) | (3) | 2 | ||||||
Income before income taxes | 171 | 179 | 148 | ||||||
Provision for income taxes | 28 | 29 | 26 | ||||||
Net income | $ | 143 | $ | 150 | $ | 122 | |||
Net income per share: | |||||||||
Basic | $ | 2.58 | $ | 2.71 | $ | 2.21 | |||
Diluted | $ | 2.57 | $ | 2.69 | $ | 2.20 | |||
Cash dividend per common share | $ | 0.22 | $ | 0.22 | $ | 0.20 | |||
Weighted average shares outstanding: | |||||||||
Basic | 55.6 | 55.5 | 55.3 | ||||||
Diluted | 55.8 | 55.7 | 55.6 |
Unaudited Consolidated Balance Sheet | |||||||
(In millions) | |||||||
2022 | 2021 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 1,011 | $ | 966 | |||
Short-term investments | 42 | 76 | |||||
Trade accounts receivable, net | 480 | 443 | |||||
Inventories | 636 | 577 | |||||
Other current assets | 89 | 85 | |||||
Total current assets | 2,258 | 2,147 | |||||
Property, plant and equipment, net | 331 | 326 | |||||
Right-of-use assets | 180 | 184 | |||||
1,227 | 1,228 | ||||||
Intangible assets, net | 561 | 576 | |||||
Other assets | 92 | 79 | |||||
Total assets | $ | 4,649 | $ | 4,540 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Short-term debt | $ | 12 | $ | 9 | |||
Accounts payable | 173 | 168 | |||||
Accrued compensation | 72 | 132 | |||||
Income taxes payable | 32 | 25 | |||||
Lease liabilities | 19 | 18 | |||||
Deferred revenue and customer advances | 46 | 37 | |||||
Other current liabilities | 82 | 71 | |||||
Total current liabilities | 436 | 460 | |||||
Long-term debt, net | 806 | 808 | |||||
Non-current deferred taxes | 103 | 99 | |||||
Non-current accrued compensation | 48 | 49 | |||||
Non-current lease liabilities | 189 | 193 | |||||
Other liabilities | 40 | 44 | |||||
Total liabilities | 1,622 | 1,653 | |||||
Stockholders' equity: | |||||||
Common stock | — | — | |||||
Additional paid-in capital | 909 | 907 | |||||
Retained earnings | 2,122 | 1,991 | |||||
Accumulated other comprehensive loss | (4 | ) | (11 | ) | |||
Total stockholders' equity | 3,027 | 2,887 | |||||
Total liabilities and stockholders' equity | $ | 4,649 | $ | 4,540 | |||
Unaudited Consolidated Statements of Cash Flows | |||||||||||
(In millions) | |||||||||||
Three Months Ended | |||||||||||
2022 | 2021 | 2021 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 143 | $ | 150 | $ | 122 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 28 | 28 | 24 | ||||||||
Unrealized loss (gain) on derivatives not designated as hedging instruments | 3 | (3 | ) | — | |||||||
Gain on sale of long-lived assets | (7 | ) | — | — | |||||||
Stock-based compensation | 8 | 9 | 10 | ||||||||
Provision for excess and obsolete inventory | 4 | 3 | 5 | ||||||||
Deferred income taxes | (2 | ) | (6 | ) | 10 | ||||||
Other | — | 2 | — | ||||||||
Changes in operating assets and liabilities | (136 | ) | 11 | (44 | ) | ||||||
Net cash provided by operating activities | 41 | 194 | 127 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of investments | — | — | (185 | ) | |||||||
Maturities of investments | 35 | 135 | 95 | ||||||||
Sales of investments | — | 35 | 108 | ||||||||
Proceeds from sale of long-lived assets | 7 | — | — | ||||||||
Purchases of property, plant and equipment | (19 | ) | (23 | ) | (27 | ) | |||||
Net cash provided by (used in) investing activities | 23 | 147 | (9 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Net proceeds from short and long-term borrowings | 3 | — | 1 | ||||||||
Payments of short and long-term borrowings | (2 | ) | (2 | ) | (8 | ) | |||||
Dividend payments | (12 | ) | (12 | ) | (11 | ) | |||||
Net (payments) proceeds related to employee stock awards | (6 | ) | 11 | (5 | ) | ||||||
Net cash used in financing activities | (17 | ) | (3 | ) | (23 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (2 | ) | (5 | ) | (3 | ) | |||||
Increase in cash and cash equivalents | 45 | 333 | 92 | ||||||||
Cash and cash equivalents at beginning of period | 966 | 633 | 608 | ||||||||
Cash and cash equivalents at end of period | $ | 1,011 | $ | 966 | $ | 700 | |||||
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results: | |||||||||||
Schedule Reconciling Selected Non-GAAP Financial Measures | |||||||||||
(In millions, except per share data) | |||||||||||
Three Months Ended | |||||||||||
2022 | 2021 | 2021 | |||||||||
Net income | $ | 143 | $ | 150 | $ | 122 | |||||
Acquisition and integration costs (Note 1) | 8 | 9 | 6 | ||||||||
Restructuring and other (Note 2) | 2 | 1 | 5 | ||||||||
Amortization of intangible assets | 15 | 15 | 12 | ||||||||
Gain on sale of long-lived assets (Note 3) | (7 | ) | — | — | |||||||
Currency hedge gain (Note 4) | (5 | ) | (3 | ) | — | ||||||
Windfall tax benefit on stock-based compensation (Note 5) | (1 | ) | — | (1 | ) | ||||||
Withholding tax related to Brexit (Note 6) | — | — | 3 | ||||||||
Tax effect of Non-GAAP adjustments (Note 7) | (4 | ) | (4 | ) | (4 | ) | |||||
Non-GAAP net earnings | $ | 151 | $ | 168 | $ | 143 | |||||
Non-GAAP net earnings per diluted share | $ | 2.71 | $ | 3.02 | $ | 2.56 | |||||
Weighted average diluted shares outstanding | 55.8 | 55.7 | 55.6 | ||||||||
Net cash provided by operating activities | $ | 41 | $ | 194 | $ | 127 | |||||
Purchases of property, plant and equipment | (19 | ) | (23 | ) | (27 | ) | |||||
Free cash flow | $ | 22 | $ | 171 | $ | 100 | |||||
Schedule Reconciling Selected Non-GAAP Financial Measures | |||||||||||
(In millions) | |||||||||||
Three Months Ended | |||||||||||
2022 | 2021 | 2021 | |||||||||
GAAP and Non-GAAP gross margin | 45.0 | % | 46.4 | % | 46.4 | % | |||||
Operating expenses | 162 | $ | 173 | $ | 166 | ||||||
Acquisition and integration costs (Note 1) | 8 | 9 | 6 | ||||||||
Restructuring and other (Note 2) | 2 | 1 | 5 | ||||||||
Gain on sale of long-lived assets (Note 3) | (7 | ) | — | — | |||||||
Amortization of intangible assets | 15 | 15 | 12 | ||||||||
Non-GAAP operating expenses | $ | 144 | $ | 148 | $ | 143 | |||||
Income from operations | $ | 172 | $ | 182 | $ | 156 | |||||
Acquisition and integration costs (Note 1) | 8 | 9 | 6 | ||||||||
Restructuring and other (Note 2) | 2 | 1 | 5 | ||||||||
Gain on sale of long-lived assets (Note 3) | (7 | ) | — | — | |||||||
Amortization of intangible assets | 15 | 15 | 12 | ||||||||
Non-GAAP income from operations | $ | 190 | $ | 207 | $ | 179 | |||||
Non-GAAP operating margin | 25.6 | % | 27.1 | % | 25.8 | % | |||||
GAAP and Non-GAAP interest expense, net | $ | 6 | $ | 6 | $ | 6 | |||||
Net income | $ | 143 | $ | 150 | $ | 122 | |||||
Interest expense, net | 6 | 6 | 6 | ||||||||
Provision for income taxes | 28 | 29 | 26 | ||||||||
Depreciation | 13 | 13 | 12 | ||||||||
Amortization of intangible assets | 15 | 15 | 12 | ||||||||
EBITDA | $ | 205 | $ | 213 | $ | 178 | |||||
Stock-based compensation | 8 | 9 | 10 | ||||||||
Acquisition and integration costs (Note 1) | 8 | 9 | 6 | ||||||||
Restructuring and other (Note 2) | 2 | 1 | 5 | ||||||||
Gain on sale of long-lived assets (Note 3) | (7 | ) | — | — | |||||||
Currency hedge gain (Note 4) | (5 | ) | (3 | ) | — | ||||||
Adjusted EBITDA | $ | 211 | $ | 229 | $ | 199 | |||||
Adjusted EBITDA margin | 28.4 | % | 29.9 | % | 28.7 | % | |||||
Reconciliation of GAAP Income Tax Rate to Non-GAAP Income Tax Rate | ||||||||||||||||||
(In millions) | ||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||
Income Before | Provision | Effective | Income Before | Provision | Effective | |||||||||||||
Income Taxes | for Income Taxes | Tax Rate | Income Taxes | for Income Taxes | Tax Rate | |||||||||||||
GAAP | $ | 171 | $ | 28 | 16.3% | $ | 179 | $ | 29 | 15.9% | ||||||||
Acquisition and integration costs (Note 1) | 8 | — | 9 | — | ||||||||||||||
Restructuring and other (Note 2) | 2 | — | 1 | — | ||||||||||||||
Amortization of intangible assets | 15 | — | 15 | — | ||||||||||||||
Gain on sale of long-lived assets (Note 3) | (7 | ) | — | — | — | |||||||||||||
Currency hedge gain (Note 4) | (5 | ) | — | (3 | ) | — | ||||||||||||
Windfall tax benefit on stock-based compensation (Note 5) | — | 1 | — | — | ||||||||||||||
Tax effect of Non-GAAP adjustments (Note 7) | — | 4 | — | 4 | ||||||||||||||
Non-GAAP | $ | 184 | $ | 33 | 17.8% | $ | 201 | $ | 33 | 16.3% | ||||||||
Three Months Ended | ||||||||||||||||||
Income Before | Provision | Effective | ||||||||||||||||
Income Taxes | for Income Taxes | Tax Rate | ||||||||||||||||
GAAP | $ | 148 | $ | 26 | 17.5% | |||||||||||||
Acquisition and integration costs (Note 1) | 6 | — | ||||||||||||||||
Restructuring and other (Note 2) | 5 | — | ||||||||||||||||
Amortization of intangible assets | 12 | — | ||||||||||||||||
Windfall tax benefit on stock-based compensation (Note 5) | — | 1 | ||||||||||||||||
Withholding tax related to Brexit (Note 6) | — | (3 | ) | |||||||||||||||
Tax effect of Non-GAAP adjustments (Note 7) | — | 4 | ||||||||||||||||
Non-GAAP | $ | 171 | $ | 28 | 17.0% |
Notes on Our Non-GAAP Financial Information
Non-GAAP financial measures adjust GAAP financial measures for the items listed below. These Non-GAAP financial measures should be viewed in addition to, and not as a substitute for, MKS' reported GAAP results, and may be different from Non-GAAP financial measures used by other companies. In addition, these Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. 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.
Note 1: Acquisition and integration costs during the three months ended
Note 2: Restructuring and other costs during the three months ended
Note 3: We recorded a gain on the sale of a minority interest investment in a private company.
Note 4: We realized a gain of
Note 5: We recorded windfall tax benefits on the vesting of stock-based compensation.
Note 6: We recorded additional withholding taxes on inter-company undistributed earnings following the United Kingdom’s withdrawal from the
Note 7: Non-GAAP adjustments are tax effected at applicable statutory rates resulting in a difference between the GAAP and Non-GAAP tax rates.
Source:
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