mksi-8k_20190129.htm

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 29, 2019

 

MKS Instruments, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Massachusetts

000-23621

04-2277512

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

2 Tech Drive, Suite 201,

Andover, MA

 

01810

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (978) 645-5500

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 


 

Item 2.02 Results of Operations and Financial Condition.

 

On January 29, 2019, MKS Instruments, Inc. announced its financial results for the quarter ended December 31, 2018. The full text of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1 Press Release dated January 29, 2019

 

 


 

Exhibit Index

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated January 29, 2019

 

 

 

 

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

MKS Instruments, Inc.

 

 

 

 

Date: January 29, 2019

 

By:

/s/Seth H. Bagshaw

 

 

 

Name: Seth H. Bagshaw

 

 

 

Title: Sr. Vice President, Chief Financial Officer and Treasurer

 

 

mksi-ex991_6.htm

EXHIBIT 99.1

 

MKS Instruments Reports Fourth Quarter and

Full Year 2018 Financial Results

 

 

2018 was another record year in revenue and GAAP and Non-GAAP EPS

 

 

Total revenue increased 8% in 2018, compared to 2017, to a record $2.1 billion

 

 

Revenue from advanced markets increased 14% to $931 million in 2018, compared to 2017

 

 

Semiconductor revenue increased 4% to $1.14 billion in 2018, compared to 2017

 

Andover, MA, January 29, 2019 -- MKS Instruments, Inc. (Nasdaq: MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reported fourth quarter and full year 2018 financial results.

GAAP Financial Results

 

 

 

Q4

 

 

Full Year

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net revenues ($ millions)

 

$

461

 

 

$

512

 

 

$

2,075

 

 

$

1,916

 

Operating margin

 

 

20.4

%

 

 

23.4

%

 

 

23.8

%

 

 

21.2

%

Net income ($ millions)

 

$

72

 

 

$

78

 

 

$

393

 

 

$

339

 

Diluted EPS

 

$

1.32

 

 

$

1.41

 

 

$

7.14

 

 

$

6.16

 

 

Non-GAAP Financial Results

 

 

 

Q4

 

 

Full Year

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net revenues ($ millions)

 

$

461

 

 

$

512

 

 

$

2,075

 

 

$

1,916

 

Operating margin

 

 

23.7

%

 

 

25.9

%

 

 

26.3

%

 

 

24.6

%

Net earnings ($ millions)

 

$

84

 

 

$

95

 

 

$

430

 

 

$

328

 

Diluted EPS

 

$

1.54

 

 

$

1.71

 

 

$

7.83

 

 

$

5.96

 

 

“We are pleased to report another year of record results despite semiconductor market headwinds in the second half of the year,” said Gerald Colella, Chief Executive Officer.  Mr. Colella added, “Our ability to consistently deliver sustainable and profitable growth through market cycles reflects the benefits of our diversification strategy as well as our cost discipline, flexible manufacturing capabilities, and continued market share gains.”

“During 2018, we recorded 8% revenue growth, a 170 basis point improvement in non-GAAP operating margins and a 31% increase in non-GAAP earnings per share,” said Seth Bagshaw, Senior Vice President and Chief Financial Officer.  Mr. Bagshaw added “This performance reflects the strong operating leverage inherent


in our model as well as balanced exposure to a variety of end markets, and continued cost structure improvements.

Fourth Quarter 2018 Financial Results

Revenue was $461 million, a decrease of 5% from $487 million in the third quarter of 2018 and a decrease of 10% from $512 million in the fourth quarter of 2017.

Fourth quarter net income was $72 million, or $1.32 per diluted share, compared to net income of $93 million, or $1.70 per diluted share in the third quarter of 2018, and $78 million, or $1.41 per diluted share in the fourth quarter of 2017.

Non-GAAP net earnings, which exclude special charges and credits, were $84 million, or $1.54 per diluted share, compared to $103 million, or $1.88 per diluted share, in the third quarter of 2018, and $95 million, or $1.71 per diluted share, in the fourth quarter of 2017.

Sales to semiconductor customers were $235 million, a decrease of 10% compared to the third quarter of 2018, and sales to Advanced Markets were $226 million, consistent with the third quarter of 2018.

Sales in the Vacuum and Analysis Division were $258 million, a decrease of 10% compared to the third quarter of 2018, and Sales in the Light and Motion Division were $203 million, an increase of 1% from the third quarter of 2018.

Additional Financial Information

The Company had $718 million in cash and short-term investments and $348 million of Term Loan Debt as of December 31, 2018. During the fourth quarter, the Company also paid a dividend of $10.8 million or $0.20 per diluted share.

Full Year and 2018 Financial Results

Sales were a record $2.1 billion, an increase of 8% from $1.9 billion in 2017, driven by strong sales to both semiconductor customers, specifically during the first half of the year, as well as customers in our Advanced Markets, which include industrial manufacturing, life and health sciences and research and defense markets. Sales to semiconductor customers were $1.1 billion, an increase of 4% compared to 2017, while sales to Advanced Markets were $931 million, an increase of 14% compared to 2017.

Sales in the Vacuum and Analysis Division were $1.3 billion, an increase of 4% compared to 2017, driven by very strong sales to semiconductor customers during the first half of 2018 and sales to our Advanced Markets.

Sales in the Light and Motion Division were $814 million, an increase of 15% from $709 million in 2017, driven by both sales to semiconductor customers as well as industrial manufacturing customers.

First Quarter 2019 Outlook

Based on current business levels, the Company expects that revenue in the first quarter of 2019 could range from $400 million to $440 million.  At these volumes, GAAP net income could range from $0.78 to $1.02 per diluted share and Non-GAAP net earnings could range from $0.95 to $1.18 per diluted share. The financial


guidance excludes the effects of our announced acquisition of Electro Scientific Industries, Inc. (Nasdaq: ESIO) which is expected to close on February 1, 2019.

Conference Call Details

A conference call with management will be held on Wednesday, January 30, 2019 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 6575625, 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, along with the Company's earnings press release and supplemental financial information.

About MKS Instruments

MKS Instruments, Inc. is a global provider of instruments, subsystems and process control solutions that measure, monitor, deliver, analyze, power and control critical parameters of advanced manufacturing processes to improve process performance and productivity for our customers. Our products are derived from our core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, residual gas analysis, leak detection, control technology, ozone generation and delivery, power, reactive gas generation, vacuum technology, lasers, photonics, sub-micron positioning, vibration control and optics. We also provide services relating to the maintenance and repair of our products, installation services and training. Our primary served markets include semiconductor, industrial technologies, life and health sciences, research and defense. Additional information can be found at www.mksinst.com.

Use of Non-GAAP Financial Results

This release includes measures that are not in accordance with U.S. generally accepted accounting principles (“Non-GAAP measures”). Non-GAAP measures exclude amortization of acquired intangible assets, asset impairments, costs associated with completed and announced acquisitions, acquisition integration costs, restructuring charges, certain excess and obsolete inventory charges, fees and expenses related to the re-pricings of our term loan, amortization of debt issuance costs, environmental costs related to an acquisition, costs associated with the sale of a business, the one-time tax effects of the 2017 Tax Cut and Jobs Act, windfall tax benefits from stock-based compensation, accrued taxes on subsidiary distributions, a tax adjustment related to the sale of a business, tax cost of the inter-company sale of an asset and the related tax effects of adjustments impacting pre-tax income. These Non-GAAP measures should be viewed in addition to, and not as a substitute for, MKS’ reported results, and may be different from Non-GAAP measures used by other companies. In addition, these Non-GAAP measures are not based on any comprehensive set of accounting rules or principles. MKS management believes the presentation of these Non-GAAP measures is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results.


SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the future financial performance, business prospects and growth of MKS. These statements are only predictions based on current assumptions and expectations. Actual events or results may differ materially from those in the forward-looking statements set forth herein. Among the important factors that could cause actual events to differ materially from those in the forward-looking statements are the conditions affecting the markets in which MKS operates, including the fluctuations in capital spending in the semiconductor industry and other advanced manufacturing markets, fluctuations in net sales to our major customers, the ability of MKS to complete the ESI acquisition, litigation relating to the ESI acquisition, the risk that disruption from the proposed ESI acquisition materially and adversely affects the respective business and operations of MKS and ESI, the risk that the anticipated benefits from the proposed ESI acquisition may not be realized within the expected time period or at all, competition from larger or more established companies in MKS’ and ESI’s respective markets; MKS’ ability to successfully grow ESI’s business; potential adverse reactions or changes to business relationships resulting from the announcement, pendency or completion of the ESI acquisition, the challenges, risks and costs involved with integrating the operations of the companies we have acquired, including our most recently completed acquisition of Newport Corporation, the Company’s ability to successfully grow our business, potential fluctuations in quarterly results, the terms of our term loan, 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 the other factors described in MKS’ most recent Annual Report on Form 10-K for the year ended December 31, 2017 filed with SEC, and its subsequent Quarterly Reports on Form 10-Q. MKS is under no obligation to, and expressly disclaims any obligation to, update or alter these forward-looking statements, whether as a result of new information, future events or otherwise after the date of this press release.  

###

 

Company Contact:  Seth H. Bagshaw

Senior Vice President, Chief Financial Officer and Treasurer

Telephone:  978.645.5578

 

Investor Relations Contacts:  

Monica Gould

The Blueshirt Group

Telephone:  212.871.3927

Email:  monica@blueshirtgroup.com

 

Lindsay Grant Savarese

The Blueshirt Group

Telephone:  212.331.8417

Email:  lindsay@blueshirtgroup.com


MKS Instruments, Inc.

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

 

 

 

 

 

(Note 14)

 

 

 

 

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

402,271

 

 

$

458,155

 

 

$

426,255

 

Services

 

 

58,270

 

 

 

53,645

 

 

 

60,897

 

Total net revenues

 

 

460,541

 

 

 

511,800

 

 

 

487,152

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

221,766

 

 

 

243,384

 

 

 

219,311

 

Services

 

 

28,891

 

 

 

30,090

 

 

 

35,981

 

Total cost of revenues

 

 

250,657

 

 

 

273,474

 

 

 

255,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

209,884

 

 

 

238,326

 

 

 

231,860

 

Research and development

 

 

32,461

 

 

 

33,045

 

 

 

31,898

 

Selling, general and administrative

 

 

68,166

 

 

 

72,510

 

 

 

70,822

 

Acquisition and integration costs

 

 

4,245

 

 

 

634

 

 

 

36

 

Restructuring

 

 

193

 

 

 

1,324

 

 

 

1,364

 

Amortization of intangible assets

 

 

10,735

 

 

 

10,797

 

 

 

10,695

 

Income from operations

 

 

94,084

 

 

 

120,016

 

 

 

117,045

 

Interest income

 

 

1,698

 

 

 

1,125

 

 

 

1,516

 

Interest expense

 

 

3,871

 

 

 

7,989

 

 

 

3,719

 

Other expense, net

 

 

763

 

 

 

2,155

 

 

 

326

 

Income from operations before income taxes

 

 

91,148

 

 

 

110,997

 

 

 

114,516

 

Provision for income taxes

 

 

19,512

 

 

 

33,359

 

 

 

21,239

 

Net income

 

$

71,636

 

 

$

77,638

 

 

$

93,277

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.33

 

 

$

1.43

 

 

$

1.71

 

Diluted

 

$

1.32

 

 

$

1.41

 

 

$

1.70

 

Cash dividends per common share

 

$

0.20

 

 

$

0.18

 

 

$

0.20

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

54,005

 

 

 

54,318

 

 

 

54,476

 

Diluted

 

 

54,454

 

 

 

55,236

 

 

 

54,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS' operating results:

 

Net income

 

$

71,636

 

 

$

77,638

 

 

$

93,277

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration costs (Note 1)

 

 

4,245

 

 

 

634

 

 

 

36

 

Amortization of debt issuance costs (Note 2)

 

 

711

 

 

 

3,983

 

 

 

682

 

Restructuring (Note 3)

 

 

193

 

 

 

1,324

 

 

 

1,364

 

Amortization of intangible assets

 

 

10,735

 

 

 

10,797

 

 

 

10,695

 

Windfall tax benefit on stock-based compensation (Note 4)

 

 

(202

)

 

 

(658

)

 

 

(287

)

Deferred tax adjustment (Note 5)

 

 

 

 

 

(24,546

)

 

 

 

Transition tax on accumulated foreign earnings (Note 6)

 

 

 

 

 

28,658

 

 

 

863

 

Tax adjustment related to the sale of a business (Note 7)

 

 

 

 

 

(12,131

)

 

 

 

Accrued tax on MKS subsidiary distributions (Note 8)

 

 

(2,277

)

 

 

14,000

 

 

 

(2,756

)

Tax cost on the inter-company sale of an asset (Note 9)

 

 

541

 

 

 

 

 

 

 

Pro-forma tax adjustments

 

 

(1,549

)

 

 

(5,083

)

 

 

(659

)

Non-GAAP net earnings (Note 10)

 

$

84,033

 

 

$

94,616

 

 

$

103,215

 

Non-GAAP net earnings per share (Note 10)

 

$

1.54

 

 

$

1.71

 

 

$

1.88

 

Weighted average shares outstanding

 

 

54,454

 

 

 

55,236

 

 

 

54,954

 

Income from operations

 

$

94,084

 

 

$

120,016

 

 

$

117,045

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration costs (Note 1)

 

 

4,245

 

 

 

634

 

 

 

36

 

Restructuring (Note 3)

 

 

193

 

 

 

1,324

 

 

 

1,364

 

Amortization of intangible assets

 

 

10,735

 

 

 

10,797

 

 

 

10,695

 

Non-GAAP income from operations (Note 11)

 

$

109,257

 

 

$

132,771

 

 

$

129,140

 

Non-GAAP operating margin percentage (Note 11)

 

 

23.7

%

 

 

25.9

%

 

 

26.5

%

Interest expense

 

$

3,871

 

 

$

7,989

 

 

$

3,719

 


Amortization of debt issuance costs (Note 2)

 

 

711

 

 

 

3,983

 

 

 

682

 

Non-GAAP interest expense

 

$

3,160

 

 

$

4,006

 

 

$

3,037

 

Net income

 

$

71,636

 

 

$

77,638

 

 

$

93,277

 

Interest expense, net

 

 

2,173

 

 

 

6,864

 

 

 

2,203

 

Provision for income taxes

 

 

19,512

 

 

 

33,359

 

 

 

21,239

 

Depreciation

 

 

9,212

 

 

 

9,208

 

 

 

8,834

 

Amortization

 

 

10,735

 

 

 

10,797

 

 

 

10,695

 

EBITDA (Note 12)

 

$

113,268

 

 

$

137,866

 

 

$

136,248

 

Stock-based compensation

 

 

5,257

 

 

 

4,544

 

 

 

5,213

 

Acquisition and integration costs (Note 1)

 

 

4,245

 

 

 

634

 

 

 

36

 

Restructuring (Note 3)

 

 

193

 

 

 

1,324

 

 

 

1,364

 

Other adjustments

 

 

 

 

 

839

 

 

 

 

Adjusted EBITDA (Note 13)

 

$

122,963

 

 

$

145,207

 

 

$

142,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 1: During the fourth quarter of 2018 we incurred acquisition costs related to the announced acquisition of Electro Scientific Industries, Inc. which is expected to close on February 1, 2019. We recorded acquisition and integration costs related to the Newport Corporation acquisition, which closed during the second quarter of 2016, during the three months ended September 30, 2018 and December 31, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 2: We recorded additional interest expense related to the amortization of debt issuance costs affiliated with our Term Loan Credit Agreement and ABL Facility.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 3: We recorded restructuring charges during the three months ended December 31, 2018 and September 30, 2018, which consisted primarily of severance costs related to an organization-wide reduction in workforce. We recorded restructuring costs during the three months ended December 31, 2017, primarily related to the consolidation of two manufacturing plants.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 4: We recorded windfall tax benefits on the vesting of stock-based compensation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 5: We recorded a deferred tax adjustment, which also includes the reversal of a tax accrual on a French dividend, related to U.S. tax reform legislation during the three months ended December 31, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 6: We recorded and adjusted the transition tax on accumulated foreign earnings related to the 2017 Tax Cut and Jobs Act.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 7: We recorded a tax adjustment resulting from the 2017 Tax Cut and Jobs Act, related to the sale of our Data Analytics Solutions business during the three months ended December 31, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 8: We recorded and adjusted tax accruals related to distributions of MKS subsidiaries.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 9: We recorded taxes on the inter-company sale of an asset during the three months ended December 31, 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 10: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude acquisition and integration costs, amortization of debt issuance costs, restructuring costs, amortization of intangible assets, a windfall tax benefit related to stock compensation expense, accrued taxes on subsidiary distributions, a deferred tax adjustment, transition tax on accumulated foreign earnings, a tax adjustment related to the sale of a business, tax cost on the inter-company sale of an asset and the related tax effect of these adjustments to reflect the expected full year effective tax rate in the related period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 11: The Non-GAAP income from operations and Non-GAAP operating margin percentages exclude acquisition and integration costs, restructuring costs and amortization of intangible assets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 12: EBITDA excludes net interest, income taxes, depreciation and amortization of intangible assets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 13: Adjusted EBITDA excludes stock-based compensation, acquisition and integration costs, restructuring costs and other adjustments as defined in our Term Loan Credit Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 14: We historically recorded the revenue and related cost of revenue for our spare parts within Products in our Statement of Operations for the Vacuum and Analysis Division. We have now determined that these items are better reflected within Services in our Statement of Operations and have revised the presentation of our previously issued financial statements as shown below:

 


 

 

 

Three Months Ended December 31, 2017

 

 

 

As previously

reported

 

 

Adjustment

 

 

As revised

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

463,851

 

 

$

(5,696

)

 

$

458,155

 

Services

 

 

47,949

 

 

 

5,696

 

 

 

53,645

 

Total net revenues

 

 

511,800

 

 

 

 

 

 

511,800

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products

 

 

242,008

 

 

 

1,376

 

 

 

243,384

 

Cost of services

 

 

31,466

 

 

 

(1,376

)

 

 

30,090

 

Total cost of revenues

 

$

273,474

 

 

$

 

 

$

273,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


MKS Instruments, Inc.

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

 

 

 

 

 

Twelve Months Ended

 

 

 

 

 

December 31,

 

 

 

 

 

2018

 

 

2017 (Note 21)

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

Products

 

 

 

$

1,835,202

 

 

$

1,701,301

 

Services

 

 

 

 

239,906

 

 

 

214,676

 

Total net revenues

 

 

 

 

2,075,108

 

 

 

1,915,977

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

Products

 

 

 

 

969,288

 

 

 

906,369

 

Services

 

 

 

 

126,344

 

 

 

118,157

 

Total cost of revenues

 

 

 

 

1,095,632

 

 

 

1,024,526

 

Gross profit

 

 

 

 

979,476

 

 

 

891,451

 

Research and development

 

 

 

 

135,720

 

 

 

132,555

 

Selling, general and administrative

 

 

 

 

298,118

 

 

 

290,056

 

Acquisition and integration costs

 

 

 

 

3,113

 

 

 

5,332

 

Restructuring

 

 

 

 

3,567

 

 

 

3,920

 

Environmental costs

 

 

 

 

1,000

 

 

 

 

Asset impairment

 

 

 

 

 

 

 

6,719

 

Fees and expenses related to repricing of term loan

 

 

 

 

378

 

 

 

492

 

Amortization of intangible assets

 

 

 

 

43,521

 

 

 

45,743

 

Income from operations

 

 

 

 

494,059

 

 

 

406,634

 

Interest income

 

 

 

 

5,775

 

 

 

3,021

 

Interest expense

 

 

 

 

16,942

 

 

 

30,990

 

Gain on sale of business

 

 

 

 

 

 

 

74,856

 

Other expense, net

 

 

 

 

1,942

 

 

 

5,896

 

Income from operations before income taxes

 

 

 

 

480,950

 

 

 

447,625

 

Provision for income taxes

 

 

 

 

88,054

 

 

 

108,493

 

Net income

 

 

 

$

392,896

 

 

$

339,132

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

$

7.22

 

 

$

6.26

 

Diluted

 

 

 

$

7.14

 

 

$

6.16

 

Cash dividends per common share

 

 

 

$

0.78

 

 

$

0.71

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

54,406

 

 

 

54,137

 

Diluted

 

 

 

 

54,992

 

 

 

55,074

 

 

 

 

 

 

 

 

 

 

 

 

The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS' operating results:

 

Net income

 

 

 

$

392,896

 

 

$

339,132

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Acquisition and integration costs (Note 1)

 

 

 

 

3,113

 

 

 

5,332

 

Expenses related to sale of a business (Note 2)

 

 

 

 

 

 

 

859

 

Excess and obsolete inventory charge (Note 3)

 

 

 

 

 

 

 

1,160

 

Fees and expenses related to repricing of term loan (Note 4)

 

 

 

 

378

 

 

 

492

 

Amortization of debt issuance costs (Note 5)

 

 

 

 

3,884

 

 

 

9,405

 

Restructuring (Note 6)

 

 

 

 

3,567

 

 

 

3,920

 

Environmental costs (Note 7)

 

 

 

 

1,000

 

 

 

 

Asset impairment (Note 8)

 

 

 

 

 

 

 

6,719

 

Gain on sale of business (Note 9)

 

 

 

 

 

 

 

(74,856

)

Amortization of intangible assets

 

 

 

 

43,521

 

 

 

45,743

 

Windfall tax benefit on stock-based compensation (Note 10)

 

 

 

 

(8,277

)

 

 

(11,071

)

Accrued tax on MKS subsidiary distributions (Note 11)

 

 

 

 

(5,033

)

 

 

14,000

 

Tax adjustment related to the sale of a business (Note 12)

 

 

 

 

 

 

 

2,876

 

Deferred tax adjustment (Note 13)

 

 

 

 

878

 

 

 

(24,546

)

Transition tax on accumulated foreign earnings (Note 14)

 

 

 

 

(1,464

)

 

 

28,658

 


Tax cost on the inter-company sale of an asset (Note 15)

 

 

 

 

541

 

 

 

 

Pro-forma tax adjustments

 

 

 

 

(4,655

)

 

 

(19,639

)

Non-GAAP net earnings (Note 16)

 

 

 

$

430,349

 

 

$

328,184

 

Non-GAAP net earnings per share (Note 16)

 

 

 

$

7.83

 

 

$

5.96

 

Weighted average shares outstanding

 

 

 

 

54,992

 

 

 

55,074

 

Income from operations

 

 

 

$

494,059

 

 

$

406,634

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Acquisition and integration costs (Note 1)

 

 

 

 

3,113

 

 

 

5,332

 

Expenses related to sale of a business (Note 2)

 

 

 

 

 

 

 

859

 

Excess and obsolete inventory charge (Note 3)

 

 

 

 

 

 

 

1,160

 

Fees and expenses related to repricing of term loan (Note 4)

 

 

 

 

378

 

 

 

492

 

Restructuring (Note 6)

 

 

 

 

3,567

 

 

 

3,920

 

Environmental costs (Note 7)

 

 

 

 

1,000

 

 

 

 

Asset impairment (Note 8)

 

 

 

 

 

 

 

6,719

 

Amortization of intangible assets

 

 

 

 

43,521

 

 

 

45,743

 

Non-GAAP income from operations (Note 17)

 

 

 

$

545,638

 

 

$

470,859

 

Non-GAAP operating margin percentage (Note 17)

 

 

 

 

26.3

%

 

 

24.6

%

Gross profit

 

 

 

$

979,476

 

 

$

891,451

 

Excess and obsolete inventory charge (Note 3)

 

 

 

 

 

 

 

1,160

 

Non-GAAP gross profit (Note 18)

 

 

 

$

979,476

 

 

$

892,611

 

Non-GAAP gross profit percentage (Note 18)

 

 

 

 

47.2

%

 

 

46.6

%

Interest expense

 

 

 

$

16,942

 

 

$

30,990

 

Amortization of debt issuance costs (Note 5)

 

 

 

 

3,884

 

 

 

9,405

 

Non-GAAP interest expense

 

 

 

$

13,058

 

 

$

21,585

 

Net Income

 

 

 

$

392,896

 

 

$

339,132

 

Interest expense, net

 

 

 

 

11,167

 

 

 

27,969

 

Provision for income taxes

 

 

 

 

88,054

 

 

 

108,493

 

Depreciation

 

 

 

 

36,332

 

 

 

36,813

 

Amortization

 

 

 

 

43,521

 

 

 

45,743

 

EBITDA (Note 19)

 

 

 

$

571,970

 

 

$

558,150

 

Stock-based compensation

 

 

 

 

27,262

 

 

 

24,378

 

Acquisition and integration costs (Note 1)

 

 

 

 

3,113

 

 

 

5,332

 

Expenses related to sale of a business (Note 2)

 

 

 

 

 

 

 

859

 

Excess and obsolete inventory charge (Note 3)

 

 

 

 

 

 

 

1,160

 

Fees and expenses related to repricing of term loan (Note 4)

 

 

 

 

378

 

 

 

492

 

Restructuring (Note 6)

 

 

 

 

3,567

 

 

 

3,920

 

Environmental costs (Note 7)

 

 

 

 

1,000

 

 

 

 

Asset impairment (Note 8)

 

 

 

 

 

 

 

6,719

 

Gain on sale of business (Note 9)

 

 

 

 

 

 

 

(74,856

)

Other adjustments

 

 

 

 

772