MKS Instruments Reports Third Quarter 2022 Financial

• Record quarterly income of $954 million
• Non-GAAP web earnings per diluted share of $2.74 and GAAP web revenue per diluted share of $0.09
• Successfully accomplished acquisition of Atotech Limited, including essential chemistry options for superior electronics and specialty industrial markets to MKS’ portfolio

ANDOVER, Mass., Nov. 02, 2022 (GLOBE NEWSWIRE) — MKS Instruments, Inc. (NASDAQ: MKSI), a worldwide supplier of applied sciences that allow superior processes and enhance productiveness, at the moment reported third quarter 2022 monetary outcomes.

“We delivered a strong third quarter driven by robust demand for our vacuum and photonics solutions,” stated John T.C. Lee, President and Chief Executive Officer. “While end market demand in our Semiconductor and Advanced Electronics markets is expected to soften in the fourth quarter and into 2023, we believe our market leadership in critical technologies for advanced device manufacturing, our operational track record, and our significant base of consumables and services revenue position MKS to emerge from this changing market landscape even stronger than when we entered into it.”

Mr. Lee added, “The third quarter also marked a major advancement in MKS’ long-term strategy, as we completed the acquisition of Atotech Limited. Atotech broadens MKS’ capabilities by adding leadership in critical chemistry solutions for advanced electronics and specialty industrial applications. We are thrilled to welcome the talented global team of over 4,000 new employees to the MKS family.”

“We delivered revenues above the midpoint of our guidance range, and are especially pleased with the 100 basis point sequential improvement in Non-GAAP operating margin,” stated Seth H. Bagshaw, Senior Vice President and Chief Financial Officer. “This performance is a testament to our track record of prudent cost management.”

Mr. Bagshaw added, “We exited the third quarter with a net leverage ratio of 3.3. We have a well-established history of rapidly paying down debt following each major acquisition, and will be focused on doing so again in the coming quarters.”

Fourth Quarter 2022 Outlook

Based on present business ranges, regulatory surroundings, and sure provide chain constraints, the Company expects income within the fourth quarter of 2022 of $1.00 billion, plus or minus $50 million. At these volumes, the Company expects Non-GAAP web earnings per diluted share of $1.34, plus or minus $0.27.

Conference Call Details

A convention name with administration shall be held on Thursday, November 3, 2022 at 8:30 a.m. (Eastern Time). To take part within the name by cellphone, members ought to go to the Investor Relations part of MKS’ web site at www.mks.com and click on on Calendar of Events, the place it is possible for you to to register on-line and obtain dial-in particulars. We encourage members to register and dial in to the convention name at the least quarter-hour earlier than the beginning of the decision to make sure a well timed connection. A dwell and archived webcast and associated presentation supplies shall be obtainable on MKS’ web site.

About MKS Instruments

MKS Instruments, Inc. permits applied sciences that rework our world. We ship foundational know-how options to forefront semiconductor manufacturing, superior electronics and specialty industrial functions. We apply our broad science and engineering capabilities to create devices, subsystems, programs, course of management options and specialty chemical substances know-how that enhance course of efficiency, optimize productiveness and allow distinctive improvements for lots of the world’s main know-how and industrial firms. Our options are essential to addressing the challenges of miniaturization and complexity in superior machine manufacturing by enabling elevated energy, velocity and have enhancement for optimized connectivity. Our options are additionally essential to addressing ever-increasing efficiency necessities throughout a big selection of specialty industrial functions. Additional info will be discovered at www.mks.com.

Use of Non-GAAP Financial Results

This press launch contains monetary measures that aren’t in accordance with U.S. usually accepted accounting ideas (“Non-GAAP financial measures”). These Non-GAAP monetary measures must be seen along with, and never as an alternative choice to, MKS’ reported outcomes underneath U.S. usually accepted accounting ideas (“GAAP”), and could also be completely different from Non-GAAP monetary measures utilized by different firms. In addition, these Non-GAAP monetary measures are usually not primarily based on any complete set of accounting guidelines or ideas. MKS administration believes the presentation of those Non-GAAP monetary measures is helpful to traders for evaluating prior intervals and analyzing ongoing business tendencies and working outcomes.

MKS isn’t offering a quantitative reconciliation of forward-looking Non-GAAP gross margin, working bills, curiosity expense, web, revenue tax fee, web earnings, web earnings per diluted share and adjusted EBITDA to essentially the most straight comparable GAAP monetary measures as a result of it’s unable to estimate with affordable certainty the final word timing or quantity of sure important objects with out unreasonable efforts. These objects embody, however are usually not restricted to, acquisition and integration prices, acquisition stock step-up, amortization of intangible property, restructuring and different expense, asset impairment, and the revenue tax impact of these things. These objects are unsure, rely upon numerous elements, together with, however not restricted to, our latest acquisition of Atotech and will have a fabric impression on GAAP reported outcomes for the related interval.

For additional info relating to these Non-GAAP monetary measures, please consult with the tables presenting reconciliations of our Non-GAAP outcomes to our GAAP outcomes and the “Notes on Our Non-GAAP Financial Information” on the finish of this press launch.

Selected GAAP and Non-GAAP Financial Measures
(In tens of millions, besides per share knowledge)

Additional Financial Information

At September 30, 2022, the Company had $885 million in money and short-term investments, $5.2 billion of secured time period mortgage principal excellent, and as much as $500 million of further borrowing capability underneath a revolving credit score facility, topic to sure leverage ratio necessities. During the third quarter of 2022, the Company paid a money dividend of $12 million or $0.22 per diluted share.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This press launch incorporates forward-looking statements inside the that means 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 relating to the long run monetary efficiency, business prospects and progress of MKS Instruments, Inc. (“MKS” or the “Company”). These statements are solely predictions primarily based on present assumptions and expectations. Any statements that aren’t statements of historic reality (together with statements containing the phrases “will,” “projects,” “intends,” “believes,” “plans,” “anticipates,” “expects,” “estimates,” “forecasts,” “continues” and comparable expressions) must be thought-about to be forward-looking statements. Actual occasions or outcomes could differ materially from these within the forward-looking statements set forth herein. Among the vital elements that might trigger precise occasions to vary materially from these within the forward-looking statements are the necessity to generate ample money flows to service and repay the substantial indebtedness MKS has incurred in reference to the acquisition of Atotech, the phrases of the prevailing time period loans underneath which MKS incurred such debt, MKS’ entry into the chemical substances know-how business by means of its acquisition of Atotech, during which MKS doesn’t have expertise and which can expose MKS to important further liabilities, the danger of litigation regarding the Atotech acquisition, the danger that disruption from the Atotech acquisition materially and adversely impacts MKS’ companies and operations, MKS’ capability to understand the anticipated synergies, value financial savings and different advantages of the Atotech acquisition, competitors from bigger, extra superior or extra established firms in MKS’ markets, MKS’ capability to efficiently develop its business and the companies of Atotech, which MKS acquired in August 2022, and Electro Scientific Industries, Inc., which MKS acquired in February 2019, and monetary dangers related to these and potential future acquisitions, together with goodwill and intangible asset impairments, potential antagonistic reactions or modifications to business relationships ensuing from the completion of the Atotech acquisition, manufacturing and sourcing dangers, together with these related to restricted and sole supply suppliers and the impression and length of provide chain disruptions and part shortages, and modifications in international demand and the impression of COVID-19 or some other pandemic with respect to such disruptions, shortages and will increase, dangers related to doing business internationally, together with commerce compliance, regulatory restrictions on MKS’ merchandise or parts and unfavorable foreign money alternate and tax fee fluctuations, which dangers turn into extra important as MKS grows its business internationally and in China particularly, circumstances affecting the markets during which MKS operates, together with fluctuations in capital spending within the semiconductor trade and different superior manufacturing markets, and fluctuations in gross sales to MKS’ main prospects or disruptions or delays from third-party service suppliers upon which our operations could rely, the flexibility to anticipate and meet buyer demand, the challenges, dangers and prices concerned with integrating or transitioning native and worldwide operations of the businesses MKS has acquired, dangers related to the attraction and retention of key personnel, potential fluctuations in quarterly outcomes, dependence on new product improvement, fast technological and market change, acquisition technique, volatility of inventory worth, dangers related to chemical manufacturing and environmental regulation compliance, dangers associated to MKS’ merchandise ensuing from defects, which might enhance MKS’ prices and critically hurt the business, monetary situation, working outcomes and buyer relationships, monetary and authorized danger administration, dangers associated to cybersecurity and knowledge privateness threats and the challenges related to mental property safety, and the opposite elements described in Exhibit 99.1 to MKS’ Current Report on Form 8-Okay filed with the U.S. Securities and Exchange Commission on August 17, 2022, and any subsequent Quarterly Reports on Form 10-Q. MKS is underneath no obligation to, and expressly disclaim any obligation to, replace or alter these forward-looking statements, whether or not because of new info, future occasions or in any other case after the date of this press launch.

Company Contact:
David Ryzhik
Vice President, Investor Relations
Telephone: (978) 557-5180
Email: [email protected] 

MKS Instruments, Inc.
Notes on Our Non-GAAP Financial Information

Non-GAAP monetary measures modify GAAP monetary measures for the objects listed under. These Non-GAAP monetary measures must be seen along with, and never as an alternative choice to, MKS’ reported GAAP outcomes, and could also be completely different from Non-GAAP monetary measures utilized by different firms. In addition, these Non-GAAP monetary measures are usually not primarily based on any complete set of accounting guidelines or ideas. MKS administration believes the presentation of those Non-GAAP monetary measures is helpful to traders for evaluating prior intervals and analyzing ongoing business tendencies and working outcomes. Totals offered could not sum resulting from rounding.

Note 1: Acquisition and integration prices through the three and 9 months ended September 30, 2022 and the three months ended June 30, 2022 primarily associated to the Atotech Acquisition. Acquisition and integration prices through the three and 9 months ended September 30, 2021 primarily associated to our acquisition of Photon Control and the Atotech Acquisition. Acquisition and integration prices through the 9 months ended September 30, 2021 additionally included prices associated to a proposed acquisition that was not consummated.

Note 2: Costs of revenues through the three and 9 months ended September 30, 2022 embody the amortization from the step-up of stock to honest worth because of the Atotech Acquisition.

Note 3: Restructuring and different prices through the three months ended September 30, 2022 primarily associated to government funds made associated to the Atotech Acquisition. Restructuring and different prices through the three months ended June 30, 2022 primarily associated to severance prices resulting from a worldwide cost-saving initiative and the closure of two services in Europe. Restructuring and different prices through the 9 months ended September 30, 2022 primarily associated to government funds made associated to the Atotech Acquisition and severance prices resulting from a worldwide cost-saving initiative and the closure of two services in Europe. Restructuring and different prices through the three and 9 months ended September 30, 2021 primarily associated to duplicate facility prices attributed to coming into into new facility leases, severance prices resulting from a worldwide value saving initiative, prices associated to the closure of two services in Europe and motion of sure merchandise to low-cost areas.

Note 4: We recorded further curiosity expense associated to the amortization of debt issuance prices related to our new and prior time period mortgage services.

Note 5: We recorded a achieve on the sale of a minority curiosity funding in a personal firm.

Note 6: We realized a achieve within the 9 months ended September 30, 2022 from a euro foreign money contract used to hedge our financing in reference to the acquisition of Atotech. The contract expired on January 31, 2022. We recorded a fair-value loss within the three and 9 months ended September 30, 2021 from Canadian greenback contracts used to hedge the funding of our acquisition of Photon Control.

Note 7: We not intend to indefinitely reinvest earnings of our international subsidiaries after the Atotech Acquisition. Additional revenue tax expense was recorded to replicate an estimate of withholding taxes that will be due on repatriation of prior interval earnings.

Note 8: We recorded windfall tax advantages on the vesting of stock-based compensation.

Note 9: We recorded further withholding taxes on intercompany undistributed earnings following the United Kingdom’s withdrawal from the European Union.

Note 10: Non-GAAP changes are tax effected at relevant statutory charges leading to a distinction between the GAAP and Non-GAAP tax charges.