PORTLAND, Ore., Oct. 30, 2018 (GLOBE NEWSWIRE) -- Electro Scientific Industries, Inc. (NASDAQ:ESIO), an innovator of laser-based manufacturing solutions for the microtechnology industry, today announced the signing of a definitive agreement to be acquired by MKS Instruments, Inc. and financial results for its fiscal 2019 second quarter ended September 29, 2018. Financial measures are provided on both a GAAP and non-GAAP basis. Non-GAAP results exclude the impact of purchase accounting, equity compensation, restructuring, and other items shown in the non-GAAP reconciliation table below.
ESI Signs Definitive Agreement
ESI announces the signing of a definitive agreement for MKS Instruments, Inc. (NASDAQ:MKSI) to acquire ESI for $30.00 per share. The all-cash transaction is valued at approximately $1 billion. The transaction is subject to customary closing conditions, including the approval of ESI’s shareholders and antitrust approvals in the U.S. and certain other foreign jurisdictions, and is expected to close in the first quarter of calendar 2019. MKS intends to fund the transaction with cash on hand and a new, fully-committed debt financing. See the separate announcement from MKS Instruments for additional transaction details.
As a result, ESI is canceling today’s previously announced investor call.
In connection with this transaction, Stifel is acting as financial advisor and Wilson Sonsini Goodrich & Rosati P.C. is acting as legal advisor to ESI.
FY19 Q2 Financial Performance
Second quarter revenue was $85.9 million, compared to $71.0 million in the second quarter of last fiscal year. GAAP net income was $16.8 million or $0.47 per diluted share, compared to net income of $4.3 million or $0.12 per diluted share one year ago. On a non-GAAP basis net income was $21.1 million or $0.59 per diluted share, compared to net income of $13.7 million or $0.39 per share in the prior fiscal year's second quarter. Total orders for the quarter were $66.9 million, compared to $128.9 million one year ago and $82.3 million in the prior quarter.
Michael Burger, ESI’s president and CEO stated, "With Component Test and Service bookings remaining well above historical levels in the quarter, we continue to demonstrate the increased diversity of our product portfolio. We also officially launched our new Capstone TM flex drilling system and Allegro LC MLCC test tool, both of which have been extremely well received, and are expected to contribute new product revenue in the second half of the fiscal year."
GAAP gross margin was 45.5%, compared to 37.4% in the second quarter of last fiscal year and operating expense was $20.0 million, down from $22.1 million last year, both improvements resulting from last year's restructuring costs. Operating income was $19.1 million, or 22% of revenue, compared to income of $4.4 million in last fiscal year's second quarter.
Non-GAAP gross margin was 45.9%, compared to 46.4% one year ago. Non-GAAP operating expense decreased year over year from $18.6 million to $18.3 million resulting in non-GAAP operating income of $21.1 million or 25% of sales.
At quarter end, total cash, cash equivalents, restricted cash and current investments increased to $179.3 million. The company generated $51.1 million of cash from operations during the quarter, driven primarily by strong customer collections and reduced inventory levels.
Discussion of Non-GAAP Financial Measures
In this press release, we have presented financial measures which have not been determined in accordance with generally accepted accounting principles (GAAP) and are therefore non-GAAP financial measures. Non-GAAP, or adjusted, financial measures exclude the impact of purchase accounting, equity compensation, restructuring, and other items. We believe that this presentation of non-GAAP financial measures allows investors to assess the Company's operating performance by comparing it to prior periods on a more consistent basis. We have included a reconciliation of various non-GAAP financial measures to those measures reported in accordance with GAAP. Because our calculation of non-GAAP financial measures may differ from similar measures used by other companies, investors should be careful when comparing our non-GAAP financial measures to those of other companies.
About ESI
ESI enables our customers to commercialize technology using precision laser processes. ESI's solutions produce the industry's highest quality and throughput, and target the lowest total cost of ownership. ESI is headquartered in Portland, Oregon, with global operations and subsidiaries in Asia, Europe and North America. More information is available at www.esi.com.
Additional Information and Where to Find It
This communication is being made in respect of the proposed transaction involving Electro Scientific Industries, Inc. (“ESI”) and MKS Instruments, Inc. (“MKS”). In connection with the proposed transaction, ESI intends to file relevant materials with the Securities and Exchange Commission (the “SEC”), including a proxy statement. Promptly after filing its definitive proxy statement with the SEC, ESI will mail the definitive proxy statement and a proxy card to each stockholder of ESI entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the proxy statement or any other document that ESI may file with the SEC or send to its stockholders in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION, ESI SHAREHOLDERS ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT ESI WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ESI AND THE PROPOSED TRANSACTION. ESI stockholders may obtain free copies of the proxy statement (when it becomes available) and other relevant documents filed with the SEC by ESI at the SEC’s web site (http://www.sec.gov). Free copies of the proxy statement, when available, and other filings made by ESI with the SEC also may be obtained from the Investor Relations section of ESI web site (www.esi.com) or by directing a request to ESI, Attn: Investor Relations, at 13900 N.W. Science Park Drive, Portland, Oregon 97229.
Participants in the Solicitation
ESI and its directors and executive officers may be deemed to be participants in the solicitation of proxies from ESI’s stockholders with respect to the proposed transaction. Information about ESI’s directors and executive officers and their ownership of ESI’s common stock is set forth in ESI’s proxy statement on Schedule 14A filed with the SEC on July 10, 2018, and ESI’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018, which was filed with the SEC on June 8, 2018. Additional information regarding the potential participants, and their direct or indirect interests in the proposed transaction, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with SEC in connection with the proposed transaction.
