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Business Segment, Geographic Area, and Significant Customer Information
 6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Business Segment, Geographic Area, and Significant Customer Information
(15)
Business Segment, Geographic Area, and Significant Customer Information

The Company has three reportable segments: VSD, PSD and MSD. During the third quarter of 2022, MKS consolidated ESD into PSD and prior periods were recast to reflect this change. The Company’s Chief Operating Decision Maker (“CODM”), which is the Company’s Chief Executive Officer, utilizes financial information to make decisions about allocating resources and assessing performance for the entire Company, which is used in the decision-making process to assess performance and allocate resources to the three segments.

Reportable Segments

VSD delivers foundational technology solutions to leading edge semiconductor manufacturing, advanced electronics and specialty industrial applications. VSD products are derived from our core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, electronic control technology, reactive gas generation and delivery, power generation and delivery, and vacuum technology.

PSD provides a full range of solutions including lasers, beam measurement and profiling, precision motion control, vibration isolation systems, photonics instruments, temperature sensing, opto-mechanical components, optical elements, laser-based systems for flexible printed circuit board (“PCB”) processing, laser-based systems for high density interconnect PCB and package substrate manufacturing, and high-speed multilayer ceramic capacitor testing.

MSD develops leading process and manufacturing technologies for advanced surface modification, electroless and electrolytic plating, and surface finishing. Atotech is a brand within MSD. Applying a comprehensive systems-and-solutions approach, MSD’s portfolio includes chemistry, equipment, software, and services for innovative and high-technology applications in a wide variety of end markets.

The Company derives its segment results directly from the manner in which results are reported in its management reporting system. The accounting policies that the Company uses to derive reportable segment results are substantially the same as those used for external reporting purposes. The Company groups similar products within its three reportable segments.

The following table sets forth net revenues by reportable segment:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Vacuum Solutions Division

 

$

426

 

 

$

507

 

 

$

720

 

 

$

981

 

Photonics Solutions Division

 

 

279

 

 

 

258

 

 

 

475

 

 

 

526

 

Materials Solutions Division

 

 

298

 

 

 

—

 

 

 

602

 

 

 

—

 

 

$

1,003

 

 

$

765

 

 

$

1,797

 

 

$

1,507

 

 

The following table reconciles gross profit by reportable segment to net (loss) income:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Gross profit by reportable segment:

 

 

 

 

 

 

 

 

 

 

 

 

Vacuum Solutions Division

 

$

193

 

 

$

219

 

 

$

301

 

 

$

425

 

Photonics Solutions Division

 

 

128

 

 

 

119

 

 

 

209

 

 

 

247

 

Materials Solutions Division

 

 

149

 

 

 

—

 

 

 

296

 

 

 

—

 

Total gross profit by reportable segment

 

 

470

 

 

 

338

 

 

 

806

 

 

 

672

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

75

 

 

 

53

 

 

 

147

 

 

 

105

 

Selling, general and administrative

 

 

172

 

 

 

101

 

 

 

348

 

 

 

193

 

Acquisition and integration costs

 

 

5

 

 

 

2

 

 

 

11

 

 

 

10

 

Restructuring

 

 

11

 

 

 

3

 

 

 

12

 

 

 

5

 

Amortization of intangible assets

 

 

76

 

 

 

15

 

 

 

157

 

 

 

30

 

Goodwill and intangible asset impairments

 

 

1,827

 

 

 

—

 

 

 

1,827

 

 

 

—

 

Gain on sale of long-lived assets

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7

)

(Loss) income from operations

 

 

(1,696

)

 

 

164

 

 

 

(1,696

)

 

 

336

 

Interest income

 

 

(4

)

 

 

(1

)

 

 

(7

)

 

 

(1

)

Interest expense

 

 

88

 

 

 

7

 

 

 

173

 

 

 

13

 

Other expense (income), net

 

 

11

 

 

 

2

 

 

 

9

 

 

 

(3

)

(Loss) income before income taxes

 

 

(1,791

)

 

 

156

 

 

 

(1,871

)

 

 

327

 

(Benefit) provision for income taxes

 

 

(22

)

 

 

26

 

 

 

(59

)

 

 

54

 

Net (loss) income

 

$

(1,769

)

 

$

130

 

 

$

(1,812

)

 

$

273

 

Interest income, interest expense and income tax (benefit) expense are not presented by reportable segment because the necessary information is not classified within the segments nor used by the CODM.

The following table sets forth segment assets by reportable segment:

June 30, 2023

 

Accounts
 receivable, net

 

 

Inventories

 

 

Total

 

Vacuum Solutions Division

 

$

258

 

 

$

541

 

 

$

799

 

Photonics Solutions Division

 

 

266

 

 

 

317

 

 

 

583

 

Materials Solutions Division

 

 

286

 

 

 

178

 

 

 

464

 

Corporate, Eliminations & Other

 

 

(179

)

 

 

—

 

 

 

(179

)

Total segment assets

 

$

631

 

 

$

1,036

 

 

$

1,667

 

 

December 31, 2022

 

Accounts
 receivable, net

 

 

Inventories

 

 

Total

 

Vacuum Solutions Division

 

$

307

 

 

$

491

 

 

$

798

 

Photonics Solutions Division

 

 

210

 

 

 

296

 

 

 

506

 

Materials Solutions Division

 

 

298

 

 

 

190

 

 

 

488

 

Corporate, Eliminations & Other

 

 

(95

)

 

 

—

 

 

 

(95

)

Total segment assets

 

$

720

 

 

$

977

 

 

$

1,697

 

The following table reconciles segment assets to total assets:

 

 

June 30, 2023

 

 

December 31, 2022

 

Total segment assets

 

$

1,667

 

 

$

1,697

 

Cash and cash equivalents and short-term investments

 

 

758

 

 

 

910

 

Other current assets

 

 

303

 

 

 

187

 

Property, plant and equipment, net

 

 

777

 

 

 

800

 

Right-of-use assets, net

 

 

237

 

 

 

234

 

Goodwill and intangible assets, net

 

 

5,303

 

 

 

7,481

 

Other assets

 

 

185

 

 

 

186

 

Total assets

 

$

9,230

 

 

$

11,495

 

 

Geographic Area

Information about the Company’s operations by geographic area is presented in the tables below. Net revenues from unaffiliated customers are based on the location in which the sale originated. Intercompany sales between geographic areas are at tax transfer prices and have been eliminated from consolidated net revenues.

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Net revenues:

 

2023

 

 

2022

 

 

2023

 

 

2022

 

United States

 

$

366

 

 

$

347

 

 

$

620

 

 

$

690

 

China

 

 

175

 

 

 

82

 

 

 

322

 

 

 

149

 

South Korea

 

 

87

 

 

 

95

 

 

 

161

 

 

 

178

 

Germany

 

 

65

 

 

 

38

 

 

 

138

 

 

 

76

 

Other

 

 

310

 

 

 

203

 

 

 

556

 

 

 

414

 

 

$

1,003

 

 

$

765

 

 

$

1,797

 

 

$

1,507

 

Long-lived assets include property, plant and equipment, net, right-of-use assets, net and certain other assets, and exclude goodwill, intangible assets and long-term tax-related accounts.

Long-lived assets:

 

June 30, 2023

 

 

December 31, 2022

 

United States

 

$

515

 

 

$

508

 

Germany

 

 

155

 

 

 

160

 

China

 

 

159

 

 

 

175

 

Other

 

 

338

 

 

 

343

 

 

$

1,167

 

 

$

1,186

 

Goodwill associated with each of the Company’s reportable segments is as follows:

 

 

VSD

 

 

PSD

 

 

MSD

 

 

Total

 

Reportable segment:

 

 

 

 

 

 

 

 

 

 

 

 

Gross goodwill, at December 31, 2022

 

$

336

 

 

$

1,031

 

 

$

3,087

 

 

$

4,454

 

Foreign currency translation

 

 

(1

)

 

 

(1

)

 

 

(105

)

 

 

(107

)

Gross goodwill, at June 30, 2023

 

 

335

 

 

 

1,030

 

 

 

2,982

 

 

 

4,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated goodwill impairment, at December 31, 2022

 

 

(141

)

 

 

(5

)

 

 

—

 

 

 

(146

)

Impairment charge

 

 

—

 

 

 

(372

)

 

 

(1,254

)

 

 

(1,626

)

Accumulated goodwill impairment, at June 30, 2023

 

 

(141

)

 

 

(377

)

 

 

(1,254

)

 

 

(1,772

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill, net of accumulated impairment and foreign currency translation, at June 30, 2023

 

$

194

 

 

$

653

 

 

$

1,728

 

 

$

2,575