7-24-13 4:30 PM EDT | Email Article

ANDOVER, Mass., July 24, 2013 (GLOBE NEWSWIRE) -- 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.

       
MKS Instruments, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
       
  Three Months Ended (Note 5)
  June 30, June 30, March 31,
  2013 2012 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.
       
             
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.
     
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.
     
MKS Instruments, Inc.
Unaudited Consolidated Balance Sheet
(In thousands)
 
  June 30, December 31,
  2013 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
     
CONTACT: Seth H. Bagshaw
         Vice President, Chief Financial Officer & Treasurer
         Telephone:  978.645.5578

MKS Instruments logo

GlobeNewswire, Inc. 2013
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Morningstar - 2013/7/24 - MKS Instruments Reports Q2 2013 Financial Results
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