MKS Instruments Reports Fourth Quarter And Full-Year 2022 Financial Results
4:30 PM ET 2/27/23 | GlobeNewswire
MKS Instruments Reports Fourth Quarter And Full-Year 2022 Financial Results
-- Record quarterly revenue of $1.09 billion, up 42% year-over-year, exceeding the high-end of guidance -- Quarterly GAAP net income per diluted share of $0.81 and quarterly Non-GAAP net earnings per diluted share of $2.00, exceeding the high-end of guidance -- Quarterly GAAP net income of $54 million and quarterly Adjusted EBITDA of $282 million, exceeding the high-end of guidance -- Quarterly operating cash flow of $184 million and free cash flow of $130 million -- Record annual revenue of $3.55 billion, up 20% year-over-year
ANDOVER, Mass., Feb. 27, 2023 (GLOBE NEWSWIRE) -- MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that transform our world, today reported fourth quarter and full year 2022 financial results. The Company also announced that it will be filing a Form 12b-25 with the SEC today, as it requires additional time to file its Form 10-K for the year ended December 31, 2022 due to the ransomware event it identified on February 3, 2023.
"Fourth quarter revenue and Non-GAAP EPS exceeded the high-end of our guidance range, capping an important year for MKS in which we firmly established the company as a foundational technology solutions provider focused on the core building blocks of advanced electronic devices," said John T.C. Lee, President and Chief Executive Officer.
Mr. Lee added, "We are well into the recovery phase of our manufacturing and service operations following the ransomware incident identified on February 3rd, and we expect these operations will be restored over the coming weeks. I am very thankful for our dedicated employees who have worked tirelessly to help bring interrupted systems back online. Our team is focused on making up for lost time, delivering on our commitments and meeting the needs of our customers, whose support during the past weeks we've greatly appreciated."
"We delivered strong revenue and profitability in the fourth quarter as a result of solid operational execution," said Seth H. Bagshaw, Executive Vice President and Chief Financial Officer. "We also generated strong free cash flow in the quarter, as evidenced by a $100 million voluntary term loan prepayment made in December."
Mr. Bagshaw added, "We are looking forward to returning to solid growth and profitability as our business normalizes, with a focus on driving attractive gross margins associated with our proprietary and high-value solutions, disciplined investment in the growth of our business, and extending our long-standing track record of accelerated de-levering following an acquisition."
First Quarter 2023 Outlook
The Company anticipates the previously announced ransomware incident identified on February 3, 2023 to have a material impact on the Company's first quarter results. The full scope of the costs and related impacts of the incident has not yet been determined. As a result, the Company will not provide its usual first quarter guidance at this time.
Prior to the ransomware event, the Company expected revenue in the first quarter of approximately $1 billion. The Company currently estimates the impact from the incident on first quarter revenue to be at least $200 million.
The Company expects to resume its normal guidance practice for the second quarter.
Conference Call Details
A conference call with management will be held on Tuesday, February 28, 2023 at 8:30 a.m. (Eastern Time). To participate in the call by phone, participants should visit the Investor Relations section of MKS' website at investor.mks.com and click on Events & Presentations, where you will be able to register online and receive dial-in details. We encourage participants to register and dial in to the conference call at least 15 minutes before the start of the call to ensure a timely connection. A live and archived webcast and related presentation materials will be available on the MKS Investor Relations webpage at investor.mks.com.
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 U.S. generally accepted accounting principles ("Non-GAAP financial measures"). These Non-GAAP financial measures should be viewed in addition to, and not as a substitute for, MKS' reported results under U.S. generally accepted accounting principles ("GAAP"), 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.
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)
Quarter Full Year -------------------------------- ---------------------- Q4 2022 Q3 2022 Q4 2021 2022 2021 ---------- --------- --------- ---------- ---------- Net Revenues Semiconductor $ 503 $ 536 $ 495 $2,041 $1,825 Electronics & Packaging 266 166 73 541 344 Specialty Industrial 316 253 196 964 780 ----- ---- ---- ----- ----- Total net revenues $1,085 $ 954 $ 764 $3,547 $2,950 GAAP Financial Measures Gross margin 44.7% 40.8% 46.4% 43.6% 46.8% Operating margin 15.0% 12.4% 23.8% 17.4% 23.7% Net income $ 54 $ 6 $ 150 $ 333 $ 551 Diluted EPS $ 0.81 $0.09 $2.69 $ 5.56 $ 9.90 Non-GAAP Financial Measures Gross margin 45.9% 44.9% 46.4% 45.1% 46.8% Operating margin 23.6% 25.1% 27.1% 24.5% 27.0% Net earnings $ 133 $ 167 $ 168 $ 597 $ 634 Diluted EPS $ 2.00 $2.74 $3.02 $ 9.97 $11.38
Additional Financial Information
At December 31, 2022, the Company had $910 million in cash and short-term investments, $5.1 billion of secured term loan principal outstanding, and up to $500 million of additional borrowing capacity under a revolving credit facility, subject to certain leverage ratio requirements. During the fourth quarter of 2022, the Company paid a cash dividend of $15 million or $0.22 per diluted share.
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 MKS Instruments, Inc. ("MKS", the "Company", "our", or "we") and the impact of the ransomware event we identified on February 3, 2023. These statements are only predictions based on current assumptions and expectations. Any statements that are not statements of historical fact (including statements containing the words "will," "projects," "intends," "believes," "plans," "anticipates," "expects," "estimates," "forecasts," "continues" and similar expressions) should be considered to be forward-looking statements. 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 that we make are the need to generate sufficient cash flows to service and repay the substantial indebtedness we have incurred in connection with our acquisition of Atotech Limited ("Atotech" and such transaction, the "Atotech Acquisition"), which we completed in August 2022; the terms of our existing term loans under which we incurred such debt; our entry into the chemicals technology business through the Atotech Acquisition, in which we do not have experience and which may expose us to significant additional liabilities; the risk that we are unable to integrate the Atotech Acquisition successfully or realize the anticipated synergies, cost savings and other benefits of the Atotech Acquisition; the ongoing assessment and impact of the ransomware event we identified on February 3, 2023, including legal, reputational, financial and contractual risks resulting from the incident, and other risks related to cybersecurity, data privacy and intellectual property; competition from larger, more advanced or more established companies in our markets; the ability to successfully grow our business and the businesses of Atotech and Electro
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