Business Segment, Geographic Area, Product Information and Significant Customer Information

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Business Segment, Geographic Area, Product Information and Significant Customer Information

20)Business Segment, Geographic Area, Product Information and Significant Customer Information

Reportable Segments and Products

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. The Company has a diverse base of customers across its primary served markets, which include semiconductor, electronics and packaging, and specialty industrial.

VSD delivers foundational technology solutions to leading edge semiconductor manufacturing, electronics and packaging and specialty industrial applications. VSD products are derived from the Company’s 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, systems for flexible PCB laser processing, high-speed multilayer ceramic capacitor testing, laser-based systems for high density interconnect PCB and package manufacturing.

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 its product offerings by its reportable segments, VSD, PSD, and MSD. The Company also provides services relating to the maintenance and repair of its products, installation services and training to all three of its reportable segments.

The following table sets forth net revenues by reportable segment:

	Years Ended December 31,
	2022		2021		2020
Vacuum Solutions Division	$	1,966	$	1,862	$	1,406
Photonics Solutions Division		1,064		1,088		924
Materials Solutions Division		517		—		—
	$	3,547	$	2,950	$	2,330

The following table sets forth a reconciliation of segment gross profit to consolidated net income:

	Years Ended December 31,
	2022			2021		2020
Gross profit by reportable segment:
Vacuum Solutions Division	$	856		$	868	$	633
Photonics Solutions Division		499			512		416
Materials Solutions Division		192			—		—
Total gross profit by reportable segment		1,547			1,380		1,049
Operating expenses:
Research and development		241			200		173
Selling, general and administrative		488			385		353
Acquisition and integration costs		52			30		4
Restructuring and other		10			11		10
Amortization of intangible assets		146			55		55
Gain on sale of long-lived assets		(7	)		—		—
Income from operations		617			699		454
Interest income		(4	)		—		(1	)
Interest expense		177			25		29
Other expense, net		11			9		3
Income before income taxes		433			665		423
Provision for income taxes		100			114		73
Net income	$	333		$	551	$	350

The following table set forth capital expenditures by reportable segment:

	Years Ended December 31,
	2022		2021		2020
Vacuum Solutions Division	$	96	$	37	$	36
Photonics Solutions Division		40		50		49
Materials Solutions Division		28		—		—
Total capital expenditures	$	164	$	87	$	85

The following table sets forth depreciation and amortization by reportable segment:

	Years Ended December 31,
	2022		2021		2020
Vacuum Solutions Division	$	24	$	23	$	20
Photonics Solutions Division		88		81		79
Materials Solutions Division		104		—		—
Total depreciation and amortization	$	216	$	104	$	99

Total income tax expense is not presented by reportable segment because the necessary information is not available or used by the CODM.

The following table sets forth segment assets by reportable segment:

	Accounts Receivable			Inventory		Total
December 31, 2022
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

	Accounts Receivable			Inventory			Total
December 31, 2021
Vacuum Solutions Division	$	285		$	339		$	624
Photonics Solutions Division		183			239			422
Materials Solutions Division		—			—			—
Corporate, Eliminations & Other		(25	)		(1	)		(26	)
Total segment assets	$	443		$	577		$	1,020

The following is a reconciliation of segment assets to consolidated total assets:

	December 31,
	2022		2021
Total segment assets	$	1,697	$	1,020
Cash and cash equivalents and short-term investments		910		1,042
Other current assets		187		85
Property, plant and equipment, net		800		326
Right-of-use assets		234		184
Goodwill and intangible assets, net		7,481		1,804
Other assets and long-term assets		186		79
Consolidated total assets	$	11,495	$	4,540

Geographic Area

Information about the Company’s operations by geographic region 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.

	Years Ended December 31,
	2022		2021		2020
Net revenues:
United States	$	1,479	$	1,259	$	1,059
China		497		355		274
South Korea		360		386		279
Germany		243		144		125
Other		968		806		593
	$	3,547	$	2,950	$	2,330

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

	December 31,
	2022		2021
Long-lived assets:
United States	$	508	$	412
Germany		160		18
China		175		16
Other		343		128
	$	1,186	$	574

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

	December 31,
	2022		2021
Vacuum Solutions Division	$	195	$	195
Photonics Solutions Division		1,026		1,033
Materials Solutions Division		3,087		—
Total goodwill	$	4,308	$	1,228

The Company sells products and services to thousands of customers worldwide, in a wide range of end markets. Revenues from its top ten customers accounted for 42%, 46% and 44% of net revenues for 2022, 2021, and 2020, respectively.

The Company had two customers with net revenues greater than or equal to 10% of total net revenues for the years ended December 31, 2022, 2021 and 2020, as shown below.

	Years Ended December 31,
	2022	2021	2020
Lam Research Corporation	14%	15%	14%
Applied Materials, Inc.	10%	11%	11%