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MKS Instruments (MKSI) Beats on Q4 Earnings and Revenues
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Premium scientific & technical instruments company, MKS Instruments, Inc. (MKSI - Free Report) reported better-than-expected results for fourth-quarter 2016. The company’s adjusted earnings of $1.05 per share surpassed the Zacks Consensus Estimate of $1.00 by 5%. Also, the bottom line surged 208.8% from the year-ago tally of 34 cents.
For 2016, the company’s adjusted earnings were $3.03 per share, above the Zacks Consensus Estimate of $2.92 and up 36.5% from $2.22 recorded in 2015.
In the quarter, MKS Instruments generated net revenue of $405 million, above the Zacks Consensus Estimate of $395.9 million. Also, the top line grew 135.5% year over year on the back of 151.1% increase in Products revenues and 55.9% growth in Services revenues.
For 2016, the company’s net revenue totaled $1,295 million, in line with the Zacks Consensus Estimate. However, revenues increased 59.1% year over year.
Margins
In the quarter, MKS Instruments’ cost of sales increased 122.6% year over year, representing 54.7% of net revenue, up from 57.8% in the year-ago quarter. Gross margin increased 310 basis points (bps) year over year to 45.3%.
Selling, general and administrative expenses, as a percentage of revenues, decreased 160 bps year over year to 16.7%, while research and development was at 8.1% versus 9.8% in the year-ago quarter. Adjusted operating margin in the quarter was 20.6%, up from 14.4% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the fourth quarter, MKS Instruments had cash and cash equivalents of $228.6 million, down from $366.9 million recorded in the preceding quarter. Long-term debt was at $601.2 million, down 5.9% sequentially.
During the quarter, the company paid quarterly dividends of $9.1 million.
Outlook
MKS Instruments anticipates benefiting from integration of its acquired assets of Newport Corporation (completed in Apr 2016). From this buyout, the company realized annualized synergistic benefit of approximately $20 million exiting 2016. It anticipates total synergies to be roughly $40 million, revised up from the earlier prediction of $35 million by 2018 end. In addition, the company aims at reducing its debt levels and lowering its interest costs.
For first-quarter 2017, MKS Instruments anticipates sales to range within $385−$425 million and adjusted earnings within 93 cents to $1.17 per share.
With a market capitalization of approximately $3.6 billion, MKS Instruments presently sports a Zacks Rank #1 (Strong Buy). Some other stocks worth considering in the industry include EMCORE Corporation (EMKR - Free Report) , Ultra Clean Holdings, Inc. (UCTT - Free Report) and Axcelis Technologies, Inc. (ACLS - Free Report) . While both EMCORE Corporation and Ultra Clean Holdings sport the same Zacks Rank as MKS Instruments, Axcelis Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EMCORE Corporation’s earnings estimates for fiscal 2017 have been revised upward over the last 60 days. Earnings surprise in the last quarter was a positive 100%.
Ultra Clean Holdings, Inc. reported better-than-expected results in the last quarter, with a positive earnings surprise of 41.67%. Also, bottom-line expectations for 2017 improved over the past 60 days.
Axcelis Technologies, Inc.’s earnings estimates for 2017 and 2018 improved over the last 60 days. Its financial performance has been impressive, with an average positive earnings surprise of 151.25% for the last four quarters.
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MKS Instruments (MKSI) Beats on Q4 Earnings and Revenues
Premium scientific & technical instruments company, MKS Instruments, Inc. (MKSI - Free Report) reported better-than-expected results for fourth-quarter 2016. The company’s adjusted earnings of $1.05 per share surpassed the Zacks Consensus Estimate of $1.00 by 5%. Also, the bottom line surged 208.8% from the year-ago tally of 34 cents.
For 2016, the company’s adjusted earnings were $3.03 per share, above the Zacks Consensus Estimate of $2.92 and up 36.5% from $2.22 recorded in 2015.
Revenues
In the quarter, MKS Instruments generated net revenue of $405 million, above the Zacks Consensus Estimate of $395.9 million. Also, the top line grew 135.5% year over year on the back of 151.1% increase in Products revenues and 55.9% growth in Services revenues.
For 2016, the company’s net revenue totaled $1,295 million, in line with the Zacks Consensus Estimate. However, revenues increased 59.1% year over year.
Margins
In the quarter, MKS Instruments’ cost of sales increased 122.6% year over year, representing 54.7% of net revenue, up from 57.8% in the year-ago quarter. Gross margin increased 310 basis points (bps) year over year to 45.3%.
Selling, general and administrative expenses, as a percentage of revenues, decreased 160 bps year over year to 16.7%, while research and development was at 8.1% versus 9.8% in the year-ago quarter. Adjusted operating margin in the quarter was 20.6%, up from 14.4% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the fourth quarter, MKS Instruments had cash and cash equivalents of $228.6 million, down from $366.9 million recorded in the preceding quarter. Long-term debt was at $601.2 million, down 5.9% sequentially.
During the quarter, the company paid quarterly dividends of $9.1 million.
Outlook
MKS Instruments anticipates benefiting from integration of its acquired assets of Newport Corporation (completed in Apr 2016). From this buyout, the company realized annualized synergistic benefit of approximately $20 million exiting 2016. It anticipates total synergies to be roughly $40 million, revised up from the earlier prediction of $35 million by 2018 end. In addition, the company aims at reducing its debt levels and lowering its interest costs.
For first-quarter 2017, MKS Instruments anticipates sales to range within $385−$425 million and adjusted earnings within 93 cents to $1.17 per share.
MKS Instruments, Inc. Price and Consensus
MKS Instruments, Inc. Price and Consensus | MKS Instruments, Inc. Quote
Zacks Rank & Other Stocks to Consider
With a market capitalization of approximately $3.6 billion, MKS Instruments presently sports a Zacks Rank #1 (Strong Buy). Some other stocks worth considering in the industry include EMCORE Corporation (EMKR - Free Report) , Ultra Clean Holdings, Inc. (UCTT - Free Report) and Axcelis Technologies, Inc. (ACLS - Free Report) . While both EMCORE Corporation and Ultra Clean Holdings sport the same Zacks Rank as MKS Instruments, Axcelis Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EMCORE Corporation’s earnings estimates for fiscal 2017 have been revised upward over the last 60 days. Earnings surprise in the last quarter was a positive 100%.
Ultra Clean Holdings, Inc. reported better-than-expected results in the last quarter, with a positive earnings surprise of 41.67%. Also, bottom-line expectations for 2017 improved over the past 60 days.
Axcelis Technologies, Inc.’s earnings estimates for 2017 and 2018 improved over the last 60 days. Its financial performance has been impressive, with an average positive earnings surprise of 151.25% for the last four quarters.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>