MKS Instruments(MKSI) - 2024 Q4 - Annual Results

Financial Performance - Q4 2024 revenue reached $935 million, exceeding the midpoint of guidance, with a full-year revenue of $3.586 billion[5]. - Q4 2024 GAAP net income was $90 million, translating to a diluted earnings per share of $1.33, compared to a net loss of $68 million in Q4 2023[9]. - Adjusted EBITDA for Q4 2024 was $237 million, also above the midpoint of guidance, with full-year adjusted EBITDA totaling $1.014 billion[5]. - Gross margin for Q4 2024 was 47.2%, slightly down from 48.2% in Q3 2024, while operating margin improved to 14.5%[9]. - Non-GAAP net earnings for 2024 reached $444 million, up from $297 million in 2023, representing a 49.5% increase[24]. - Free cash flow for 2024 was $410 million, compared to $232 million in 2023, indicating a 76.7% increase[24]. - Non-GAAP income from operations for Q4 2024 was $199 million, resulting in a non-GAAP operating margin of 21.3%[26]. - Adjusted EBITDA for Q4 2024 was $237 million, with an adjusted EBITDA margin of 25.3%[26]. - The company expects GAAP net income of $43 million for Q1 2025, with non-GAAP net earnings projected at $95 million[29]. Cash and Debt Management - Cash and cash equivalents stood at $714 million as of December 31, 2024, with $3.2 billion in secured term loan principal outstanding[11]. - MKS Instruments made a voluntary principal prepayment of $100 million on its USD term loan B in January 2025, continuing to manage leverage proactively[3][12]. - Long-term debt decreased from $4,696 million in 2023 to $4,488 million in 2024, a reduction of 4.4%[20]. - Interest expense for Q4 2024 was $49 million, down from $83 million in Q4 2023[26]. Asset and Liability Management - Total assets decreased from $9,118 million in 2023 to $8,590 million in 2024, a decline of 5.8%[20]. - Total liabilities reduced from $6,646 million in 2023 to $6,268 million in 2024, a decrease of 5.7%[20]. - Cash and cash equivalents decreased to $714 million at the end of 2024 from $875 million at the end of 2023, a decline of 18.4%[22]. - Retained earnings increased from $373 million in 2023 to $503 million in 2024, reflecting a growth of 34.8%[20]. Segment Performance - The semiconductor segment generated $400 million in revenue for Q4 2024, while the electronics and packaging segment contributed $254 million[9]. - Gross profit for Q4 2024 was $441 million, with a gross margin of 47.2%, compared to $432 million and 48.2% in Q3 2024[26]. Operational Costs and Expenses - Operating expenses for Q4 2024 were $306 million, down from $387 million in Q4 2023[26]. - The company reported depreciation and amortization expenses of $348 million for 2024, down from $397 million in 2023[24]. - The company incurred $9 million in acquisition and integration costs for 2024, down from $16 million in 2023[24]. - The company recorded a non-GAAP operating expense of $242 million for Q4 2024, compared to $229 million in Q4 2023[26]. Impairments and Charges - The company recorded an impairment of $1.3 billion for its Materials Solutions Division and $0.5 billion for its Equipment Solutions Business due to softer industry demand, particularly in the personal computer and smartphone markets[36]. - Additional impairment charges of $62 million for the Materials Solutions Division and $13 million for the Equipment Solutions Business were recorded during the three months ended December 31, 2023[36]. - An excess and obsolescence inventory charge was recorded related to a discontinued product line[39]. Other Financial Considerations - The effective tax rate for non-GAAP income in Q4 2024 was 4.0%, compared to 15.6% in Q4 2023[28]. - Non-GAAP financial measures are presented to provide investors with a useful comparison of ongoing business trends and operating results[31]. - Non-GAAP adjustments are tax affected at applicable statutory rates, resulting in a difference between GAAP and Non-GAAP tax rates[39]. - The company incurred costs related to a ransomware incident identified on February 3, 2023, primarily for third-party consulting services and enhancements to cybersecurity measures[38]. - Fees and expenses related to the repricing of USD term loan B and EUR term loan B were recorded during the twelve months ended December 31, 2024[35].