- Revenue of
$932 million , in-line with the midpoint of guidance - GAAP gross margin of 45.7% and Non-GAAP gross margin of 47.1%, above the high-end of guidance
- GAAP operating margin of 12.6% and Non-GAAP operating margin of 21.8%, above the high-end of guidance
- GAAP net income per diluted share of
$0.58 and Non-GAAP net earnings per diluted share of$1.46 , above the high-end of guidance - Operating cash flow of
$160 million and free cash flow of$142 million
“We executed well in delivering strong profitability in the third quarter, despite a muted demand environment across our end markets,” said
“We have a long history of managing our business through cycles, and the third quarter was no exception, as disciplined cost management along with favorable product mix enabled us to exceed the high-end of our guidance for Non-GAAP gross and operating margins in the third quarter,” said
Fourth Quarter 2023 Outlook
For the fourth quarter of 2023, the Company expects revenue of
Conference Call Details
A conference call with management will be held on
About MKS Instruments
MKS Instruments enables technologies that transform our world. We deliver foundational technology solutions to leading edge semiconductor manufacturing, electronics and packaging, and specialty industrial applications. We apply our broad science and engineering capabilities to create instruments, subsystems, systems, process control solutions and specialty chemicals technology that improve process performance, optimize productivity and enable unique innovations for many of the world's leading technology and industrial companies. Our solutions are critical to addressing the challenges of miniaturization and complexity in advanced device manufacturing by enabling increased power, speed, feature enhancement, and optimized connectivity. Our solutions are also critical to addressing ever-increasing performance requirements across a wide array of specialty industrial applications. Additional information can be found at www.mks.com.
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 net earnings per diluted share and Adjusted EBITDA to their 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, amortization of intangible assets, ransomware remediation costs, restructuring and other expense, goodwill and intangible asset impairments or other asset impairments, debt refinancing, prepayments of term loan principal, and the income tax effect of these items. These items are uncertain, depend on various factors, including, but not limited to, our acquisition of
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)
Year to Date | |||||||||||||||||||
Q3 2023 | Q2 2023 | Q3 2022 | Q3 2023 | Q3 2022 | |||||||||||||||
Net Revenues | |||||||||||||||||||
Semiconductor | $ | 367 | $ | 440 | $ | 535 | $ | 1,117 | $ | 1,538 | |||||||||
243 | 225 | 166 | 691 | 275 | |||||||||||||||
322 | 338 | 253 | 922 | 648 | |||||||||||||||
Total net revenues | $ | 932 | $ | 1,003 | $ | 954 | $ | 2,730 | $ | 2,461 | |||||||||
GAAP Financial Measures | |||||||||||||||||||
Gross margin | 45.7 | % | 46.9 | % | 40.8 | % | 45.1 | % | 43.1 | % | |||||||||
Operating margin | 12.6 | % | (169.1 | %) | 12.4 | % | (57.8 | %) | 18.4 | % | |||||||||
Net income (loss) | $ | 39 | $ | (1,769 | ) | $ | 6 | $ | (1,772 | ) | $ | 279 | |||||||
Diluted income (loss) per share | $ | 0.58 | $ | (26.47 | ) | $ | 0.09 | $ | (26.53 | ) | $ | 4.84 | |||||||
Non-GAAP Financial Measures | |||||||||||||||||||
Gross margin | 47.1 | % | 46.9 | % | 44.9 | % | 45.6 | % | 44.7 | % | |||||||||
Operating margin | 21.8 | % | 22.6 | % | 25.1 | % | 19.3 | % | 24.9 | % | |||||||||
Net earnings | $ | 98 | $ | 88 | $ | 167 | $ | 218 | $ | 464 | |||||||||
Diluted earnings per share | $ | 1.46 | $ | 1.32 | $ | 2.74 | $ | 3.25 | $ | 8.05 | |||||||||
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 | Nine Months Ended | |||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
Net revenues: | ||||||||||||||||||||
Products | $ | 818 | $ | 885 | $ | 841 | $ | 2,416 | $ | 2,153 | ||||||||||
Services | 114 | 118 | 113 | 314 | 308 | |||||||||||||||
Total net revenues | 932 | 1,003 | 954 | 2,730 | 2,461 | |||||||||||||||
Cost of revenues: | ||||||||||||||||||||
Products | 446 | 470 | 506 | 1,326 | 1,243 | |||||||||||||||
Services | 60 | 63 | 58 | 173 | 156 | |||||||||||||||
Total cost of revenues (exclusive of amortization shown separately below) | 506 | 533 | 564 | 1,499 | 1,399 | |||||||||||||||
Gross profit | 426 | 470 | 390 | 1,231 | 1,062 | |||||||||||||||
Research and development | 71 | 75 | 63 | 218 | 168 | |||||||||||||||
Selling, general and administrative | 167 | 172 | 126 | 514 | 319 | |||||||||||||||
Acquisition and integration costs | 3 | 5 | 31 | 14 | 41 | |||||||||||||||
Restructuring | 1 | 11 | 5 | 13 | 10 | |||||||||||||||
Amortization of intangible assets | 68 | 76 | 47 | 225 | 77 | |||||||||||||||
— | 1,827 | — | 1,827 | — | ||||||||||||||||
Gain on sale of long-lived assets | (2 | ) | — | — | (2 | ) | (7 | ) | ||||||||||||
Income (loss) from operations | 118 | (1,696 | ) | 118 | (1,578 | ) | 454 | |||||||||||||
Interest income | (4 | ) | (4 | ) | (1 | ) | (10 | ) | (2 | ) | ||||||||||
Interest expense | 93 | 88 | 80 | 266 | 93 | |||||||||||||||
Other expense (income), net | 7 | 11 | (1 | ) | 14 | (4 | ) | |||||||||||||
Income (loss) before income taxes | 22 | (1,791 | ) | 40 | (1,848 | ) | 367 | |||||||||||||
(Benefit) provision for income taxes | (17 | ) | (22 | ) | 34 | (76 | ) | 88 | ||||||||||||
Net income (loss) | $ | 39 | $ | (1,769 | ) | $ | 6 | $ | (1,772 | ) | $ | 279 | ||||||||
Net income (loss) per share: | ||||||||||||||||||||
Basic | $ | 0.59 | $ | (26.47 | ) | $ | 0.09 | $ | (26.53 | ) | $ | 4.85 | ||||||||
Diluted | $ | 0.58 | $ | (26.47 | ) | $ | 0.09 | $ | (26.53 | ) | $ | 4.84 | ||||||||
Cash dividend per common share | $ | 0.22 | $ | 0.22 | $ | 0.22 | $ | 0.66 | $ | 0.66 | ||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 66.9 | 66.8 | 61.0 | 66.8 | 57.4 | |||||||||||||||
Diluted | 67.1 | 66.8 | 61.1 | 66.8 | 57.6 | |||||||||||||||
Unaudited Consolidated Balance Sheet | |||||||
(In millions) | |||||||
2023 | 2022 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 859 | $ | 909 | |||
Short-term investments | 1 | 1 | |||||
Accounts receivable, net | 618 | 720 | |||||
Inventories | 1,009 | 977 | |||||
Other current assets | 288 | 187 | |||||
Total current assets | 2,775 | 2,794 | |||||
Property, plant and equipment, net | 761 | 800 | |||||
Right-of-use assets, net | 227 | 234 | |||||
2,540 | 4,308 | ||||||
Intangible assets, net | 2,614 | 3,173 | |||||
Other assets | 223 | 186 | |||||
Total assets | $ | 9,140 | $ | 11,495 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Short-term debt | $ | 87 | $ | 93 | |||
Accounts payable | 309 | 426 | |||||
Other current liabilities | 442 | 433 | |||||
Total current liabilities | 838 | 952 | |||||
Long-term debt, net | 4,787 | 4,834 | |||||
Non-current deferred taxes | 595 | 783 | |||||
Non-current accrued compensation | 139 | 138 | |||||
Non-current lease liabilities | 208 | 215 | |||||
Other liabilities | 97 | 90 | |||||
Total liabilities | 6,664 | 7,012 | |||||
Stockholders' equity | |||||||
Common stock | — | — | |||||
Additional paid-in capital | 2,180 | 2,142 | |||||
Retained earnings | 455 | 2,272 | |||||
Accumulated other comprehensive (loss) income | (159 | ) | 69 | ||||
Total stockholders' equity | 2,476 | 4,483 | |||||
Total liabilities and stockholders' equity | $ | 9,140 | $ | 11,495 | |||
Unaudited Consolidated Statements of Cash Flows | |||||||||||||||||||
(In millions) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income (loss) | $ | 39 | $ | (1,769 | ) | $ | 6 | $ | (1,772 | ) | $ | 279 | |||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||||
Depreciation and amortization | 93 | 101 | 64 | 301 | 120 | ||||||||||||||
Amortization of inventory step-up adjustment to fair value | — | — | 39 | — | 39 | ||||||||||||||
— | 1,827 | — | 1,827 | — | |||||||||||||||
Unrealized loss (gain) on derivatives not designated as hedging instruments | 3 | 6 | (1 | ) | 23 | 6 | |||||||||||||
Amortization of debt issuance costs and original issue discounts | 8 | 7 | 46 | 23 | 46 | ||||||||||||||
Gain on sale of long-lived assets | (2 | ) | — | — | (2 | ) | (7 | ) | |||||||||||
Stock-based compensation | 13 | 13 | 10 | 43 | 31 | ||||||||||||||
Provision for excess and obsolete inventory | 24 | 12 | 3 | 54 | 10 | ||||||||||||||
Deferred income taxes | (53 | ) | (109 | ) | 6 | (173 | ) | 4 | |||||||||||
Other | 3 | 1 | 1 | 4 | 3 | ||||||||||||||
Changes in operating assets and liabilities, net of acquired assets and liabilities | 32 | (148 | ) | 25 | (190 | ) | (186 | ) | |||||||||||
Net cash provided by (used in) operating activities | 160 | (59 | ) | 199 | 138 | 345 | |||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Acquisition of business, net of cash acquired | — | — | (4,473 | ) | — | (4,473 | ) | ||||||||||||
Purchases of investments | — | — | — | — | (1 | ) | |||||||||||||
Maturities of investments | — | — | — | — | 76 | ||||||||||||||
Proceeds from sale of long-lived assets | 2 | — | — | 3 | 7 | ||||||||||||||
Purchases of property, plant and equipment | (18 | ) | (18 | ) | (26 | ) | (53 | ) | (109 | ) | |||||||||
Net cash used in investing activities | (16 | ) | (18 | ) | (4,499 | ) | (50 | ) | (4,500 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||||||
Proceeds from borrowings | — | — | 4,979 | 1 | 4,985 | ||||||||||||||
Payments of borrowings | (22 | ) | (22 | ) | (826 | ) | (67 | ) | (835 | ) | |||||||||
Dividend payments | (15 | ) | (15 | ) | (13 | ) | (44 | ) | (37 | ) | |||||||||
Net (payments) proceeds related to employee stock awards | (1 | ) | 1 | — | (5 | ) | (5 | ) | |||||||||||
Other financing activities | (1 | ) | 1 | — | (1 | ) | — | ||||||||||||
Net cash (used in) provided by financing activities | (39 | ) | (35 | ) | 4,140 | (116 | ) | 4,108 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (3 | ) | (11 | ) | (21 | ) | (22 | ) | (35 | ) | |||||||||
Increase (decrease) in cash and cash equivalents | 102 | (123 | ) | (181 | ) | (50 | ) | (82 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 757 | 880 | 1,065 | 909 | 966 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 859 | $ | 757 | $ | 884 | $ | 859 | $ | 884 | |||||||||
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 | Nine Months Ended | |||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
Net income (loss) | $ | 39 | $ | (1,769 | ) | $ | 6 | $ | (1,772 | ) | $ | 279 | ||||||||
Excess and obsolete charge from discontinued product line (Note 1) | 13 | — | — | 13 | — | |||||||||||||||
Acquisition inventory step-up (Note 2) | — | — | 39 | — | 39 | |||||||||||||||
Acquisition and integration costs (Note 3) | 3 | 5 | 31 | 14 | 41 | |||||||||||||||
Restructuring (Note 4) | 1 | 11 | 5 | 13 | 10 | |||||||||||||||
Amortization of intangible assets | 68 | 76 | 47 | 225 | 77 | |||||||||||||||
— | 1,827 | — | 1,827 | — | ||||||||||||||||
Gain on sale of long-lived assets (Note 6) | (2 | ) | — | — | (2 | ) | (7 | ) | ||||||||||||
Amortization of debt issuance costs (Note 7) | 6 | 5 | 43 | 17 | 43 | |||||||||||||||
Ransomware incident (Note 8) | 2 | 4 | — | 14 | — | |||||||||||||||
Currency hedge gain (Note 9) | — | — | — | — | (5 | ) | ||||||||||||||
Reversal of indefinite reinvestment assertion (Note 10) | — | — | 30 | — | 30 | |||||||||||||||
Tax effect of Non-GAAP adjustments (Note 11) | (32 | ) | (72 | ) | (34 | ) | (131 | ) | (43 | ) | ||||||||||
Non-GAAP net earnings | $ | 98 | $ | 88 | $ | 167 | $ | 218 | $ | 464 | ||||||||||
Non-GAAP net earnings per diluted share | $ | 1.46 | $ | 1.32 | $ | 2.74 | $ | 3.25 | $ | 8.05 | ||||||||||
Weighted average diluted shares outstanding | 67.1 | 67.0 | 61.1 | 66.8 | 57.6 | |||||||||||||||
Net cash provided by (used in) operating activities | $ | 160 | $ | (59 | ) | $ | 199 | $ | 138 | $ | 345 | |||||||||
Purchases of property, plant and equipment | (18 | ) | (18 | ) | (26 | ) | (53 | ) | (109 | ) | ||||||||||
Free cash flow | $ | 142 | $ | (77 | ) | $ | 173 | $ | 85 | $ | 236 |
Schedule Reconciling Selected Non-GAAP Financial Measures | ||||||||||||||||||||
(In millions) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
Gross profit | $ | 426 | $ | 470 | $ | 390 | $ | 1,231 | $ | 1,062 | ||||||||||
GAAP gross margin | 45.7 | % | 46.9 | % | 40.8 | % | 45.1 | % | 43.1 | % | ||||||||||
Excess and obsolete charge from discontinued product line (Note 1) | 13 | — | — | 13 | — | |||||||||||||||
Acquisition inventory step-up (Note 2) | — | — | 39 | — | 39 | |||||||||||||||
Non-GAAP gross profit | $ | 439 | $ | 470 | $ | 429 | $ | 1,244 | $ | 1,101 | ||||||||||
Non-GAAP gross margin | 47.1 | % | 46.9 | % | 44.9 | % | 45.6 | % | 44.7 | % | ||||||||||
Operating expenses | $ | 308 | $ | 2,166 | $ | 272 | $ | 2,809 | $ | 608 | ||||||||||
Acquisition and integration costs (Note 3) | 3 | 5 | 31 | 14 | 41 | |||||||||||||||
Restructuring (Note 4) | 1 | 11 | 5 | 13 | 10 | |||||||||||||||
— | 1,827 | — | 1,827 | — | ||||||||||||||||
Ransomware incident (Note 8) | 2 | 4 | — | 14 | — | |||||||||||||||
Gain on sale of long-lived assets (Note 6) | (2 | ) | — | — | (2 | ) | (7 | ) | ||||||||||||
Amortization of intangible assets | 68 | 76 | 47 | 225 | 77 | |||||||||||||||
Non-GAAP operating expenses | $ | 236 | $ | 243 | $ | 189 | $ | 718 | $ | 487 | ||||||||||
Income (loss) from operations | $ | 118 | $ | (1,696 | ) | $ | 118 | $ | (1,578 | ) | $ | 454 | ||||||||
Operating margin | 12.6 | % | (169.1 | %) | 12.4 | % | (57.8 | %) | 18.4 | % | ||||||||||
Excess and obsolete charge from discontinued product line (Note 1) | 13 | — | — | 13 | — | |||||||||||||||
Acquisition inventory step-up (Note 2) | — | — | 39 | — | 39 | |||||||||||||||
Acquisition and integration costs (Note 3) | 3 | 5 | 31 | 14 | 41 | |||||||||||||||
Restructuring (Note 4) | 1 | 11 | 5 | 13 | 10 | |||||||||||||||
— | 1,827 | — | 1,827 | — | ||||||||||||||||
Ransomware incident (Note 8) | 2 | 4 | — | 14 | — | |||||||||||||||
Gain on sale of long-lived assets (Note 6) | (2 | ) | — | — | (2 | ) | (7 | ) | ||||||||||||
Amortization of intangible assets | 68 | 76 | 47 | 225 | 77 | |||||||||||||||
Non-GAAP income from operations | $ | 203 | $ | 227 | $ | 240 | $ | 526 | $ | 614 | ||||||||||
Non-GAAP operating margin | 21.8 | % | 22.6 | % | 25.1 | % | 19.3 | % | 24.9 | % | ||||||||||
Interest expense, net | 89 | 84 | 79 | 256 | 91 | |||||||||||||||
Amortization of debt issuance costs (Note 7) | 6 | 5 | 43 | 17 | 43 | |||||||||||||||
Non-GAAP interest expense, net | 83 | 79 | 36 | 239 | 48 | |||||||||||||||
Net income (loss) | $ | 39 | $ | (1,769 | ) | $ | 6 | $ | (1,772 | ) | $ | 279 | ||||||||
Interest expense, net | 89 | 84 | 79 | 256 | 91 | |||||||||||||||
(Benefit) provision for income taxes | (17 | ) | (22 | ) | 34 | (76 | ) | 88 | ||||||||||||
Depreciation | 25 | 25 | 17 | 76 | 43 | |||||||||||||||
Amortization of intangible assets | 68 | 76 | 47 | 225 | 77 | |||||||||||||||
EBITDA | $ | 205 | $ | (1,606 | ) | $ | 183 | $ | (1,291 | ) | $ | 578 | ||||||||
Excess and obsolete charge from discontinued product line (Note 1) | 13 | — | — | 13 | — | |||||||||||||||
Stock-based compensation | 13 | 13 | 10 | 43 | 31 | |||||||||||||||
Acquisition inventory step-up (Note 2) | — | — | 39 | — | 39 | |||||||||||||||
Acquisition and integration costs (Note 3) | 3 | 5 | 31 | 14 | 41 | |||||||||||||||
Restructuring (Note 4) | 1 | 11 | 5 | 13 | 10 | |||||||||||||||
— | 1,827 | — | 1,827 | — | ||||||||||||||||
Ransomware incident (Note 8) | 2 | 4 | — | 14 | — | |||||||||||||||
Gain on sale of long-lived assets (Note 6) | (2 | ) | — | — | (2 | ) | (7 | ) | ||||||||||||
Currency hedge gain (Note 9) | — | — | — | — | (5 | ) | ||||||||||||||
Adjusted EBITDA | $ | 235 | $ | 254 | $ | 268 | $ | 631 | $ | 687 | ||||||||||
Adjusted EBITDA margin | 25.2 | % | 25.3 | % | 28.0 | % | 23.1 | % | 27.9 | % | ||||||||||
Reconciliation of GAAP Income Tax Rate to Non-GAAP Income Tax Rate | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||
Income Before Income Taxes | (Benefit) Provision for Income Taxes | Effective Tax Rate | (Loss) Income Before Income Taxes | (Benefit) Provision for Income Taxes | Effective Tax Rate | |||||||||||||||||
GAAP | $ | 22 | $ | (17 | ) | (75.3 | %) | $ | (1,791 | ) | $ | (22 | ) | 1.2 | % | |||||||
Excess and obsolete charge from discontinued product line (Note 1) | 13 | — | — | — | ||||||||||||||||||
Acquisition and integration costs (Note 3) | 3 | 5 | — | |||||||||||||||||||
Restructuring (Note 4) | 1 | — | 11 | — | ||||||||||||||||||
Amortization of intangible assets | 68 | — | 76 | — | ||||||||||||||||||
— | — | 1,827 | — | |||||||||||||||||||
Gain on sale of long-lived assets (Note 6) | (2 | ) | — | — | ||||||||||||||||||
Amortization of debt issuance costs (Note 7) | 6 | — | 5 | — | ||||||||||||||||||
Ransomware incident (Note 8) | 2 | — | 4 | — | ||||||||||||||||||
Tax effect of Non-GAAP adjustments (Note 11) | — | 32 | — | 72 | ||||||||||||||||||
Non-GAAP | $ | 114 | $ | 16 | 14.2 | % | $ | 137 | $ | 49 | 35.5 | % | ||||||||||
Three Months Ended | ||||||||||||||||||||||
Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | ||||||||||||||||||||
GAAP | $ | 40 | $ | 34 | 85.5 | % | ||||||||||||||||
Acquisition and integration costs (Note 3) | 31 | — | ||||||||||||||||||||
Acquisition inventory step-up | 39 | — | ||||||||||||||||||||
Restructuring (Note 4) | 5 | — | ||||||||||||||||||||
Amortization of intangible assets | 47 | — | ||||||||||||||||||||
Amortization of debt issuance costs (Note 7) | 43 | — | ||||||||||||||||||||
Reversal of indefinite reinvestment assertion (Note 10) | — | (30 | ) | |||||||||||||||||||
Tax effect of Non-GAAP adjustments (Note 11) | — | 34 | ||||||||||||||||||||
Non-GAAP | $ | 204 | $ | 37 | 18.0 | % | ||||||||||||||||
Nine Months Ended | Nine Months Ended | |||||||||||||||||||||
(Loss) Income Before Income Taxes | (Benefit) Provision for Income Taxes | Effective Tax Rate | Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | |||||||||||||||||
GAAP | $ | (1,848 | ) | $ | (76 | ) | 4.1 | % | $ | 367 | $ | 88 | 24.1 | % | ||||||||
Excess and obsolete charge from discontinued product line (Note 1) | 13 | — | — | — | ||||||||||||||||||
Acquisition inventory step-up (Note 2) | — | — | 39 | — | ||||||||||||||||||
Acquisition and integration costs (Note 3) | 14 | 41 | ||||||||||||||||||||
Restructuring (Note 4) | 13 | — | 10 | — | ||||||||||||||||||
Amortization of intangible assets | 225 | — | 77 | — | ||||||||||||||||||
1,827 | — | — | — | |||||||||||||||||||
Gain on sale of long-lived assets (Note 6) | (2 | ) | (7 | ) | ||||||||||||||||||
Amortization of debt issuance costs (Note 7) | 17 | — | 43 | — | ||||||||||||||||||
Ransomware incident (Note 8) | 14 | — | — | — | ||||||||||||||||||
Currency hedge gain (Note 9) | — | — | (5 | ) | ||||||||||||||||||
Reversal of indefinite reinvestment assertion (Note 10) | — | — | — | (30 | ) | |||||||||||||||||
Tax effect of Non-GAAP adjustments (Note 11) | — | 131 | — | 43 | ||||||||||||||||||
Non-GAAP | $ | 273 | $ | 55 | 20.1 | % | $ | 565 | $ | 101 | 17.9 | % | ||||||||||
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. Totals presented may not sum and percentages may not recalculate using figures presented due to rounding.
Note 1: We recorded an excess and obsolescence inventory charge related to a product line that is being discontinued.
Note 2: Costs of revenues during the three and nine months ended
Note 3: Acquisition and integration costs primarily related to the Atotech Acquisition.
Note 4: Restructuring costs during the three months ended
Note 5: During the three months ended
Note 6: We recorded a gain on the sale of a minority interest investment in a private company.
Note 7: We recorded additional interest expense related to the amortization of debt issuance costs associated with our term loan facility.
Note 8: We recorded costs, net of recoveries, associated with the ransomware incident we identified on
Note 9: We realized a gain from a euro currency contract used to hedge our financing in connection with the Atotech Acquisition. The contract expired on
Note 10: We no longer intend to indefinitely reinvest earnings of our foreign subsidiaries after the Atotech Acquisition. Additional income tax expense was recorded to reflect an estimate of withholding taxes that would be due on repatriation of prior period earnings.
Note 11: 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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