FORM 10-Q (MARK ONE) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 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 0-23621 MKS INSTRUMENTS, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2277512 (State or other jurisdictio ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2021 was $353 million, a 25% increase year-over-year, driven by 17% organic growth in chemistry and equipment, a 7% favorable FX impact, and a 1% benefit from palladium price pass-throughs [20][21] - Adjusted EBITDA increased by 32% year-over-year, with an adjusted EBITDA margin of 31.2%, up 150 basis points [11][23] - Diluted earnings per share was a negative $0.55, while adjusted earnings per share improved from $0.15 to $0.35 [24] Business Line Data and Key Metrics Changes - Electronics segment revenue was $226 million, a 31% increase year-over-year, with organic growth of 21% and a 77% increase in electronic equipment sales [25][26] - General Metal Finishing (GMF) segment revenue grew 15% to $128 million, with organic growth of 9% and chemistry revenues growing organically at 11% [29][30] - GMF adjusted EBITDA reached $35 million, with an adjusted margin of 27.2% [31] Market Data and Key Metrics Changes - Strong recovery noted in Greater China, with expectations for GMF business to perform slightly above unit growth in automotive electrification and advanced coatings [10] - The company is benefiting from robust recovery in Asian markets, particularly in electronics and automotive sectors [20] Company Strategy and Development Direction - The company is focusing on advanced packaging, semiconductors, and high-density interconnect circuit boards as key growth drivers [6][7] - Investments in digitalization and IIoT capabilities are aimed at enhancing customer service and operational efficiency [13][14] - The company is committed to sustainability-driven markets, with R&D efforts directed towards electric vehicles and renewable energy applications [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges supply chain disruptions, including semiconductor shortages and increased freight costs, but remains optimistic about recovery in the second half of the year [11][36] - The company raised its full-year revenue growth guidance from 10%-12% to 11%-13%, reflecting confidence in top-line growth potential [34][36] - Expectations for organic revenue growth in chemistry are set at approximately 9% for the year [36] Other Important Information - The company successfully refinanced its debt, reducing net leverage to 3.7x EBITDA and securing competitive interest rates for new term loans [33][34] - The company is expanding its production capacity with new facilities in Mexico and China to support anticipated growth [14][33] Q&A Session Summary Question: Impact of chip shortages on EL chemistry and equipment business - Management indicated that new foundries being added will drive demand for leading-edge technologies, positively impacting the business [42][43] Question: Details on the acquired software company - The software company will enhance equipment solutions and expand into IIoT and predictive maintenance services [45][46] Question: Sustainability of growth in Electronics - Growth is driven by strong demand in 5G and semiconductor markets, with expectations for continued growth in the coming years [48][49] Question: Raw material availability and pricing - The company has effective contractual pass-throughs for precious metals and is working to manage supply chain disruptions [51][52] Question: Revenue guidance and supply constraints - Management noted that supply constraints had a minor impact on Q1, but overall market growth remains strong [62][63] Question: Regionalization of semiconductor production - The company is well-positioned to adapt to changes in supply chains and has diversified its sourcing to mitigate risks [66][67] Question: New services and their potential impact - New services are expected to drive differentiation and improve business over the next five years, with potential sales in the range of $50 million [71][72] Question: Palladium pricing and purchasing strategy - The company does not speculate on palladium prices and passes costs directly to customers [79] Question: Capital allocation strategy post-IPO - The focus remains on supporting organic growth while aiming to deleverage to a range of 2-3x [90]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (MARK ONE) ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or 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 ...

Q1 2021 Financial Performance - Net Revenue increased by 25% to $353 million, with organic growth of 17%[10] - Adjusted EBITDA increased by 32% to $110 million, driven by strong organic volume[7, 10] - Adjusted EBITDA margin increased by 150 basis points to 312%[9, 13] Segment Performance - Electronics net revenue increased by 31% to $226 million, with organic growth of 21%[10, 16] - Electronics chemistry organic growth was 15%, driven by strong demand for IC substrates and semiconductor packaging[7, 19] - GMF (General Metal Finishing) net revenue increased by 15% to $128 million, with organic growth of 9%[10, 23] - GMF chemistry organic growth was 11%, led by recovery in global auto and broader industrial markets[7, 26] Liquidity and Capital Structure - Net leverage at 37x at quarter-end, supported by solid adjusted EBITDA[7, 27, 30] - Q1 adjusted free cash flow from operations was $32 million before debt service[7, 30] Full-Year 2021 Guidance - The company anticipates total revenue growth of 11-13% and adjusted EBITDA of $415 million - $435 million[35] - The company expects chemistry organic revenue growth of approximately 9%[35]

Part I [Business](index=6&type=section&id=Item%201.%20Business) MKS Instruments, Inc. provides instruments, systems, and process control solutions globally, serving semiconductor and advanced manufacturing markets through three reportable segments - MKS operates through two main product strategies: "Surround the Chamber®" for semiconductor customers and "Surround the Workpiece®" for laser-based manufacturing, expanded through the acquisitions of Newport and ESI[26](index=26&type=chunk)[27](index=27&type=chunk) Revenue by Market (2018-2020) | Market | 2020 Revenue % | 2019 Revenue % | 2018 Revenue % | | :--- | :--- | :--- | :--- | | Semiconductor | 59% | 49% | 55% | | Advanced Markets | 41% | 51% | 45% | Customer Concentration (2018-2020) | Customer Group | 2020 Revenue % | 2019 Revenue % | 2018 Revenue % | | :--- | :--- | :--- | :--- | | Top 10 Customers | 44% | 33% | 41% | | Lam Research & Applied Materials | 24% | 18% | 23% | Research & Development Expenses (2018-2020) | Year | R&D Expense (in millions) | | :--- | :--- | | 2020 | $173.1 | | 2019 | $164.1 | | 2018 | $135.7 | - As of December 31, 2020, the company had a global workforce of approximately **5,800 individuals**, with **49% in North America**, **26% in the Asia-Pacific region**, and **25% in Europe and the Middle East**[58](index=58&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, semiconductor industry cyclicality, international operations, debt obligations, and intellectual property protection - The COVID-19 pandemic poses risks through government mandates, potential economic downturns, operational challenges, and supply chain interruptions, particularly from key suppliers in Malaysia and Mexico[66](index=66&type=chunk)[68](index=68&type=chunk)[71](index=71&type=chunk) - The business is highly dependent on capital spending in the semiconductor industry, which accounted for **59% of net revenues in 2020**, an industry characterized by periodic and sometimes severe fluctuations[82](index=82&type=chunk) - International operations, which accounted for **55% of 2020 net revenues**, expose the company to risks including political instability, trade restrictions (tariffs), and unfavorable currency exchange rates[74](index=74&type=chunk)[80](index=80&type=chunk) - The terms of the company's Term Loan Facility and ABL Facility impose significant financial obligations and restrictive covenants that limit its ability to incur additional debt, pay dividends, and make certain acquisitions[115](index=115&type=chunk)[118](index=118&type=chunk) - Increased trade tensions between the U.S. and China have resulted in tariffs and sanctions against key customers like Huawei and SMIC, leading to loss of business and increased compliance burdens[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - As of December 31, 2020, goodwill and intangible assets represented approximately **$1,579 million**, or **40% of total assets**, which are subject to impairment risk if business performance deteriorates[124](index=124&type=chunk) [Unresolved Staff Comments](index=32&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None[161](index=161&type=chunk) [Properties](index=32&type=section&id=Item%202.%20Properties) MKS Instruments operates numerous principal and other facilities globally, both owned and leased, for manufacturing, research, and corporate functions, primarily in the US, China, France, Israel, Mexico, and Singapore Principal Facilities as of December 31, 2020 | Location | Activity | Segment(s) | Ownership | | :--- | :--- | :--- | :--- | | Shenzhen, China | Manufacturing and Service | Vacuum & Analysis, Light & Motion | Leased | | Beaune-la-Rolande/Brigueil, France | Manufacturing, R&D | Light & Motion | Owned | | Jerusalem, Israel | Manufacturing, Sales, R&D | Light & Motion | Owned & Leased | | Nogales, Mexico | Manufacturing and Service | Vacuum & Analysis, Light & Motion | Leased | | Andover, MA, USA | Corporate HQ, Manufacturing, R&D | Vacuum & Analysis | Owned & Leased | | Irvine, CA, USA | Manufacturing, R&D | Light & Motion | Leased | | Rochester, NY, USA | Manufacturing, Sales, Service, R&D | Vacuum & Analysis | Owned | [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in a putative class action lawsuit related to the 2016 acquisition of Newport Corporation, but management believes it will not materially affect financial condition or results - The company is subject to a class action lawsuit, In re Newport Corporation Shareholder Litigation, stemming from its 2016 acquisition of Newport, with the case currently on appeal in the Nevada Supreme Court after the District Court granted summary judgment in favor of the defendants[565](index=565&type=chunk)[566](index=566&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[168](index=168&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) MKS Instruments' common stock is traded on Nasdaq, with a consistent dividend policy and an ongoing share repurchase program, demonstrating outperformance against market indices - The Board of Directors declared a cash dividend of **$0.20 per share** in each quarter of 2020 and 2019, totaling **$0.80 per share annually**[173](index=173&type=chunk) - The company has a **$200 million** share repurchase program, of which approximately **$127.0 million** has been utilized since inception, with no shares repurchased during 2020 or 2019[176](index=176&type=chunk)[177](index=177&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, MKS Instruments achieved significant revenue growth to $2.33 billion, driven by the semiconductor market, leading to improved gross margin, substantial net income increase, and strong operating cash flow Financial Performance (2020 vs. 2019) | Metric (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Total Net Revenues | $2,330.0 | $1,899.8 | | Gross Profit | $1,049.5 | $830.4 | | Gross Margin | 45.0% | 43.7% | | Income from Operations | $453.8 | $219.8 | | Net Income | $350.1 | $140.4 | - Net revenues in the semiconductor market increased by **49% ($457.4 million)** in 2020 compared to 2019, driven by strong demand for capital equipment in memory, foundry, and logic manufacturing[192](index=192&type=chunk) - Net revenues from advanced markets decreased by **3% ($27.2 million)** in 2020, as growth in the Equipment & Solutions segment was offset by declines in the Light & Motion and Vacuum & Analysis segments, partly due to COVID-19 impacts on research and life sciences[198](index=198&type=chunk) Net Revenues by Segment (in millions) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | Vacuum & Analysis | $1,405.9 | $990.5 | | Light & Motion | $689.6 | $725.6 | | Equipment & Solutions | $234.5 | $183.7 | - Cash flow from operations was strong at **$513.2 million** in 2020, a significant increase from **$244.5 million** in 2019[269](index=269&type=chunk)[270](index=270&type=chunk) - As of December 31, 2020, the company had an outstanding principal balance of **$833.4 million** on its Term Loan Facility and has not borrowed against its **$100 million** ABL Facility[286](index=286&type=chunk)[297](index=297&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages primary market risks from interest rate fluctuations on variable-rate debt and foreign currency exchange rates through derivative instruments like interest rate swaps and forward exchange contracts - The company is exposed to interest rate risk on its Term Loan Facility, with **$533.4 million** of the **$833.4 million** total debt at a variable interest rate as of December 31, 2020, managed using interest rate swaps[323](index=323&type=chunk)[324](index=324&type=chunk) - To manage foreign currency risk, the company uses forward exchange contracts, with notional amounts totaling **$176.2 million** as of December 31, 2020, primarily to hedge exposures to the South Korean won and Japanese yen[320](index=320&type=chunk)[321](index=321&type=chunk)[311](index=311&type=chunk) [Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2020, including an unqualified auditor's opinion from PricewaterhouseCoopers LLP, highlighting goodwill impairment assessment as a critical audit matter - The independent auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2020[330](index=330&type=chunk) - The critical audit matter identified was the quantitative goodwill impairment assessment for the Equipment & Solutions reporting unit, due to the significant management judgment involved in determining its fair value[339](index=339&type=chunk)[340](index=340&type=chunk) Consolidated Balance Sheet Data (in millions) | Account | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Assets | $3,903.8 | $3,416.3 | | Total Liabilities | $1,542.9 | $1,393.0 | | Total Stockholders' Equity | $2,360.9 | $2,023.3 | Consolidated Statement of Operations Data (in millions) | Account | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Total Net Revenues | $2,330.0 | $1,899.8 | $2,075.1 | | Net Income | $350.1 | $140.4 | $392.9 | Consolidated Cash Flow Data (in millions) | Account | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $513.2 | $244.5 | $413.8 | | Net Cash from Investing Activities | $(202.4) | $(947.2) | $72.7 | | Net Cash from Financing Activities | $(121.5) | $476.2 | $(178.0) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=107&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports that there have been no changes in or disagreements with its accountants on accounting and financial disclosure - None[577](index=577&type=chunk) [Controls and Procedures](index=107&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2020, with no material changes during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[578](index=578&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020, based on the criteria set forth in the Internal Control-Integrated Framework (2013) by COSO[581](index=581&type=chunk) [Other Information](index=108&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[584](index=584&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, and Principal Accountant Fees](index=109&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) Information for directors, executive officers, corporate governance, compensation, and principal accountant fees is incorporated by reference from the company's forthcoming 2021 Proxy Statement - Information for Part III (Items 10-14) is incorporated by reference from the company's forthcoming 2021 Proxy Statement[587](index=587&type=chunk)[589](index=589&type=chunk)[590](index=590&type=chunk)[592](index=592&type=chunk)[593](index=593&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=110&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, including consolidated financial statements and various organizational documents - This section provides an index of all financial statements, schedules, and exhibits filed with the Form 10-K[596](index=596&type=chunk)[598](index=598&type=chunk) [Form 10-K Summary](index=113&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not applicable[604](index=604&type=chunk)

| --- | --- | --- | --- | --- | --- | |------------------------------------------------------|-------|-------|-------|-----------------------|------------------| | | | | | | | | | | | | | | | | | | | | | | Fourth Quarter and Full Year 2020 Financial Results | | | | MKS Instruments, Inc. | January 28, 2021 | | | | | | | | Safe Harbor for Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of t ...

Financial Data and Key Metrics Changes - The company reported record revenue of $660 million for Q4 2020, up 12% sequentially and 32% year-over-year, exceeding guidance [14] - Non-GAAP net earnings for Q4 were a record $130 million, translating to $2.34 per diluted share, also a record [17] - For the full year 2020, sales reached $2.3 billion, a 23% increase year-over-year, with non-GAAP net earnings of $411 million, or $7.43 per diluted share, up more than 60% from 2019 [19] Business Line Data and Key Metrics Changes - Semiconductor sales for Q4 were a record $393 million, up 9% sequentially and 45% year-over-year, driven by strong demand across memory, foundry, and logic applications [14] - Advanced markets revenue reached a record $267 million in Q4, up 16% sequentially and 17% year-over-year, marking a return to year-over-year organic growth for the first time since Q3 2018 [11][15] Market Data and Key Metrics Changes - The semiconductor market showed robust growth, with the company outperforming the wafer fabrication equipment (WFE) market by 200 basis points over the past decade [9] - Advanced electronics manufacturing is expected to be a key growth driver for advanced markets, supported by trends in miniaturization and complexity [11] Company Strategy and Development Direction - The company emphasized resilience, opportunity, and growth as key themes for 2020, highlighting a focus on innovation and employee development [6][8] - M&A is identified as a growth strategy, with targets in both advanced markets and semiconductors, indicating potential for further consolidation in the photonics industry [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong demand trends for the semiconductor market in Q1 2021, with expectations for revenue to be consistent to slightly down compared to Q4 levels [10][36] - The company anticipates continued recovery in advanced markets, expecting strong year-over-year growth in Q1 2021 [13] Other Important Information - The company maintained a strong balance sheet with cash and short-term investments of $836 million and a net cash position following the acquisition of ESI [19] - Non-GAAP gross margin for Q4 was 45.7%, up 240 basis points year-over-year, reflecting strong financial leverage [17] Q&A Session Summary Question: Strength in E&S business and its relation to smartphone cycle - Management attributed the strength in MLCC and flex demand primarily to a stronger smartphone cycle, with Geode being a minor contributor [24] Question: Impact of M&A developments in the laser photonics market - Management acknowledged the potential for further consolidation in the photonics industry and confirmed active participation in M&A [25] Question: Chip shortage and its impact on demand - Management noted that while they sell service and spare parts to older fabs, they could not directly link demand to the automotive chip shortage [27] Question: Semiconductor business outlook and share gains - Management expressed confidence in outperforming industry growth rates in the optics segment, particularly in lithography and process control [30] Question: Supply chain and working capital management - Management indicated a typical ramp environment for supply chain and highlighted strong cash conversion efforts contributing to working capital strength [31][32] Question: Advanced markets growth and HDI orders - Management confirmed that the growth in advanced markets is driven by broader order patterns, not just one-off events, and expressed optimism about HDI orders [56] Question: R&D spending focus for future growth - Management stated that R&D spending will be targeted towards areas with growth opportunities, including power, optics, lasers, and HDI [65][66]

| --- | --- | --- | --- | --- | --- | --- | --- | |------------------|-------|---------|-------|-------|-------|-------|------------------------------------------| | | | | | | | | | | Analyst Day 2020 | | | | | | | December 10, 2020 · · · · ·· ......... | | | | · · mks | | | | | | Introduction to Today's Speakers | --- | --- | --- | --- | --- | --- | |----------------------------------------------------|---------------------------------------------------------------------------|-------|--------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (MARK ONE) ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 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 0-23621 MKS INSTRUMENTS, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2277512 (State or other jurisd ...

MKS Instruments, Inc. Third Quarter 2020 Financial Results October 28, 2020 Safe Harbor for Forward-Looking Statements This presentation 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 21E of the Securities Exchange Act of 1934 regarding the future financial performance, business prospects and growth of MKS Instruments, Inc. ("MKS" or the "Company"). These statements are only predictions based on cu ...