Among the important factors that could cause actual events to differ materially from those in the forward-looking statements that we make are the need to generate sufficient cash flows to service and repay the substantial indebtedness we incurred in connection with the Atotech Acquisition, which we completed in August 2022; the terms of our existing credit facilities under which we incurred such debt; our entry into the chemicals technology business through the Atotech Acquisition, in which we did not have previous experience and which may expose us to significant additional liabilities; the risk that we are unable to integrate the Atotech Acquisition successfully or realize the anticipated synergies, cost savings and other benefits of the Atotech Acquisition; legal, reputational, financial and contractual risks resulting from the ransomware incident we identified in February 2023, and other risks related to cybersecurity, data privacy and intellectual property; competition from larger, more advanced or more established companies in our markets; the ability to successfully grow our business, including through growth of the Atotech business and growth of the Electro Scientific Industries, Inc.business, which we acquired in February 2019, and financial risks associated with those and potential future acquisitions, including goodwill and intangible asset impairments; manufacturing and sourcing risks, including those associated with limited and sole source suppliers and the impact and duration of supply chain disruptions, component shortages, and price increases; changes in global demand; the impact of a pandemic or other widespread health crisis; risks associated with doing business internationally, including geopolitical conflicts, such as the conflict in the Middle East, trade compliance, regulatory restrictions on our products, components or markets, particularly the semiconductor market, and unfavorable currency exchange and tax rate fluctuations, which risks become more significant as we grow our business internationally and in China specifically; conditions affecting the markets in which we operate, including fluctuations in capital spending in the semiconductor, electronics manufacturing and automotive industries, and fluctuations in sales to our major customers; disruptions or delays from third-party service providers upon which our operations may rely; the ability to anticipate and meet customer demand; the challenges, risks and costs involved with integrating or transitioning global operations of the companies we have acquired; risks associated with the attraction and retention of key personnel; potential fluctuations in quarterly results; dependence on new product development; rapid technological and market change; acquisition strategy; volatility of stock price; risks associated with chemical manufacturing and environmental regulation compliance; risks related to defective products; financial and legal risk management; and the other important factors described under the heading "Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and any subsequent Quarterly Reports on Form 10-Q, each as filed with the U.S.
Schedule Reconciling Selected Non-GAAP Financial Measures(In millions) Three Months Ended March 31, December 31, March 31, 2024 2023 2023 GAAP and Non-GAAP gross profit$415 $411 $335 GAAP and Non-GAAP gross margin 47.8% 46.0% 42.2%Operating expenses$309 $387 $334 Acquisition and integration costs (Note 1) 1 3 6 Restructuring (Note 2) 3 7 1 Amortization of intangible assets 62 70 81 Goodwill and intangible asset impairments (Note 3) — 75 — Fees and expenses related to amendments to the Term Loan Facility (Note 5) 3 2 — Ransomware incident (Note 6) — 1 7 Non-GAAP operating expenses$240 $229 $240 Income from operations$106 $24 $1 Operating margin 12.2% 2.7% 0.1%Acquisition and integration costs (Note 1) 1 3 6 Restructuring (Note 2) 3 7 1 Amortization of intangible assets 62 70 81 Goodwill and intangible asset impairments (Note 3) — 75 — Fees and expenses related to amendments to the Term Loan Facility (Note 5) 3 2 — Ransomware incident (Note 6) — 1 7 Non-GAAP income from operations$175 $182 $96 Non-GAAP operating margin 20.2% 20.3% 12.1%Interest expense, net 81 83 82 Amortization of debt issuance costs (Note 4) 6 7 6 Non-GAAP interest expense, net 75 76 76 Net income (loss)$15 $(68) $(42)Interest expense, net 81 83 82 Other (income) expense, net (Note 9) (3) 12 (2)Provision (benefit) for income taxes 4 (11) (37)Depreciation 26 25 26 Amortization 62 70 81 Stock-based compensation 15 11 18 Acquisition and integration costs (Note 1) 1 3 6 Restructuring (Note 2) 3 7 1 Goodwill and intangible asset impairments (Note 3) — 75 — Fees and expenses related to amendments to the Term Loan Facility (Note 5) 3 2 — Ransomware incident (Note 6) — 1 7 Loss on extinguishment of debt (Note 7) 9 8 — Adjusted EBITDA (Note 9)$217 $218 $140 Adjusted EBITDA margin 25.0% 24.4% 17.6% MKS Instruments, Inc.
Schedule Reconciling Selected Non-GAAP Financial Measures(In millions, except per share data) Three Months Ended March 31, December 31, March 31, 2024 2023 2023 Net income (loss)$15 $(68) $(42)Acquisition and integration costs (Note 1) 1 3 6 Restructuring (Note 2) 3 7 1 Amortization of intangible assets 62 70 81 Goodwill and intangible asset impairments (Note 3) — 75 — Amortization of debt issuance costs (Note 4) 6 7 6 Fees and expenses related to amendments to the Term Loan Facility (Note 5) 3 2 — Ransomware incident (Note 6) — 1 7 Loss on extinguishment of debt (Note 7) 9 8 — Tax effect of Non-GAAP adjustments (Note 8) (20) (26) (27)Non-GAAP net earnings$79 $78 $32 Non-GAAP net earnings per diluted share$1.18 $1.17 $0.48 Weighted average diluted shares outstanding 67.4 67.1 66.8 Net cash provided by operating activities$67 $180 $37 Purchases of property, plant and equipment (18) (34) (17)Free cash flow$49 $146 $20 MKS Instruments, Inc.
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