UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction |
(I.R.S. Employer |
of incorporation or organization) |
Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
Registrant's telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 21, 2022, the registrant had
MKS INSTRUMENTS, INC.
FORM 10-Q
INDEX
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ITEM 1. |
3 |
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Condensed Consolidated Balance Sheets – March 31, 2022 and December 31, 2021 |
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4 |
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5 |
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Condensed Consolidated Statements of Cash Flows – Three months ended March 31, 2022 and 2021 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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ITEM 2. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
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ITEM 3. |
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ITEM 4. |
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ITEM 1. |
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ITEM 1A. |
40 |
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ITEM 6. |
41 |
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42 |
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2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
MKS INSTRUMENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
(Unaudited)
ASSETS |
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March 31, 2022 |
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December 31, 2021 |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Trade accounts receivable, net of allowance for doubtful accounts of $ |
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Inventories |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Right-of-use assets |
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Goodwill |
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Intangible assets, net |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Short-term debt |
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$ |
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$ |
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Accounts payable |
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Accrued compensation |
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Income taxes payable |
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Lease liabilities |
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Deferred revenue and customer advances |
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Other current liabilities |
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Total current liabilities |
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Long-term debt, net |
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Non-current deferred taxes |
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Non-current accrued compensation |
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Non-current lease liabilities |
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Other non-current liabilities |
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Total liabilities |
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Stockholders' equity: |
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Preferred Stock, $ |
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Common Stock, par value, |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3
MKS INSTRUMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(in millions, except per share data)
(Unaudited)
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Three Months Ended |
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2022 |
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2021 |
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Net revenues: |
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Products |
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$ |
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$ |
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Services |
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Total net revenues |
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Cost of revenues: |
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Products |
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Services |
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Total cost of revenues (exclusive of amortization shown separately below) |
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Gross profit |
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Research and development |
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Selling, general and administrative |
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Acquisition and integration costs |
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Restructuring and other |
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Amortization of intangible assets |
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Gain on sale of long-lived assets |
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( |
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— |
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Income from operations |
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Interest expense |
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Other (income) expense, net |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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$ |
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$ |
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Other comprehensive income, net of tax: |
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Changes in value of financial instruments designated as |
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$ |
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$ |
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Foreign currency translation adjustments |
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( |
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Total comprehensive income |
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$ |
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$ |
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Net income per share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4
MKS INSTRUMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions, except per share data)
(Unaudited)
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Common Stock |
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Additional |
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Retained |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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Balance at December 31, 2021 |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
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Net issuance under stock-based plans |
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Stock-based compensation |
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Cash dividend ($ |
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( |
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Comprehensive income (net of tax): |
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Net income |
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Other comprehensive income |
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Balance at March 31, 2022 |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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Common Stock |
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Additional |
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Retained |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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Balance at December 31, 2020 |
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$ |
— |
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$ |
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$ |
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$ |
— |
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$ |
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Net issuance under stock-based plans |
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( |
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Stock-based compensation |
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Cash dividend ($ |
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( |
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Comprehensive income (net of tax): |
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Net income |
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Other comprehensive loss |
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Balance at March 31, 2021 |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5
MKS INSTRUMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Unrealized loss on derivatives not designated as hedging instruments |
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— |
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Gain on sale of long-lived assets |
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( |
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— |
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Stock-based compensation |
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Provision for excess and obsolete inventory |
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Deferred income taxes |
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( |
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Changes in operating assets and liabilities: |
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Trade accounts receivable |
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( |
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Inventories |
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( |
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( |
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Other current and non-current assets |
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( |
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Accounts payable |
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Current and non-current accrued compensation |
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( |
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( |
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Income taxes payable |
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— |
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Other current and non-current liabilities |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchases of investments |
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— |
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( |
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Maturities of investments |
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Sales of investments |
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— |
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Proceeds from sale of long-lived assets |
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— |
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Purchases of property, plant and equipment |
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( |
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Net cash provided by (used in) investing activities |
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Cash flows from financing activities: |
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Proceeds from borrowings |
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Payments of borrowings |
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( |
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Dividend payments |
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( |
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Net payments related to employee stock awards |
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( |
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( |
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Net cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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( |
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Increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
6
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data)
The terms "MKS" and the "Company" refer to MKS Instruments, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The interim financial data as of March 31, 2022, and for the three months ended March 31, 2022, are unaudited; however, in the opinion of MKS, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The condensed consolidated balance sheet presented as of December 31, 2021 has been derived from the consolidated audited financial statements as of that date. The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by United States generally accepted accounting principles ("U.S. GAAP"). The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the MKS Annual Report on Form 10-K for the year ended December 31, 2021 filed with the U.S. Securities and Exchange Commission on February 28, 2022.
The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, inventory valuation, warranty costs, stock-based compensation, intangible assets, goodwill, other long-lived assets and other acquisition expenses and income taxes. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
In the first quarter of 2022, MKS updated the names of its three divisions in order to simplify its naming convention. These three divisions, formerly known as the Vacuum & Analysis Division, the Light & Motion Division and the Equipment & Solutions Division, are now referred to as the Vacuum Solutions Division ("VSD"), the Photonics Solutions Division ("PSD") and the Equipment Solutions Division ("ESD"), respectively. MKS' reportable segments continue to be its three divisions.
2) Revenue from Contracts with Customers
Contract assets as of March 31, 2022 and December 31, 2021 were immaterial.
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Three Months Ended |
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March 31, 2022 |
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March 31, 2021 |
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Beginning balance, January 1(1) |
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$ |
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$ |
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Additions to deferred revenue and customer advances |
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Amount of deferred revenue and customer advances recognized in income |
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( |
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( |
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Ending balance, March 31(2) |
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$ |
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$ |
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7
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data)
Disaggregation of Revenue
The following table summarizes revenue from contracts with customers:
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Three Months Ended March 31, 2022 |
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VSD |
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PSD |
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ESD |
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Total |
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Net revenues: |
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Products |
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$ |
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$ |
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$ |
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$ |
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Services |
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Total net revenues |
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$ |
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$ |
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$ |
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$ |
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Three Months Ended March 31, 2021 |
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VSD |
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PSD |
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ESD |
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Total |
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Net revenues: |
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Products |
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$ |
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$ |
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$ |
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$ |
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