MKS Instruments (MKSI - Free Report) reported second-quarter 2020 adjusted earnings of $1.62 per share, which beat the Zacks Consensus Estimate by 39.7% and also jumped 48.6% year over year.
Revenues of $544.3 million surpassed the consensus mark by 11.4% and also improved 14.8% year over year, driven by buoyant demand for the company’s solutions in the semiconductor market.
Products revenues (86.9% of total revenues) were $473 million, up 17.9% from the year-ago quarter. Services revenues (13.1%) declined 2.1% year over year to $71.3 million.
Revenues from the semiconductor market (59.1% of total revenues) jumped 50.2% year over year to $321.5 million owing to increased demand, particularly for Power Solutions business.
Revenues from advanced markets (40.9% of total revenues) were $222.8 million, down 14.3% from the year-ago quarter. The top line was negatively impacted by lower revenues from certain industrial applications, partially offset by strong growth in PCB drilling applications.
Segment-wise, Vacuum and Analysis (57.8% of total revenues) revenues surged 33.5% year over year to $314.5 million.
Equipment & Solutions segment revenues (11.7% of total revenues) were $63.8 million, up 14.2% year over year.
However, Light and Motion division revenues (30.5% of total revenues) decreased 9.1% year over year to $166 million.
In the second quarter, MKS Instruments’ adjusted gross margin expanded 30 basis points (bps) on a year-over-year basis to 45.3%.
Adjusted EBITDA increased 28.8% year over year to $133.2 million. Adjusted EBITDA margin expanded 270 bps on a year-over-year basis to 24.5%.
Research & development and sales, general & administrative expenses, as a percentage of revenues, declined 100 bps and 170 bps on a year-to-date basis, respectively.
MKS Instruments reported non-GAAP operating income of $117.7 million, up 33.1% year over year. Adjusted operating margin expanded 300 bps on a year-over-year basis to 21.6%.
As of Jun 30, 2020, MKS Instruments had cash and short-term investments of $607 million compared with $503 million as of Mar 31, 2020.
Secured term-loan principal outstanding as of Jun 30, 2020 was $838 million. The company also had $100 million of incremental borrowing capacity under an asset-based line of credit, subject to certain borrowing base requirements.
Cash flow from operations surged 79.4% year over year to $139 million. Free cash flow jumped 85.1% year over year to $118.1 million.
MKS Instruments paid out dividends worth $11 million during the reported quarter.
For the third quarter of 2020, MKS Instruments anticipates revenues between $535 million and $585 million. The Zacks Consensus Estimate for revenues is currently pegged at $485.1 million, indicating growth of 5% from the figure reported in the year-ago quarter.
Non-GAAP earnings are expected between $1.55 per share and $1.95 per share.
The consensus mark for earnings is currently pegged at $1.20 per share, suggesting an increase of 7.1% from the figure reported in the year-ago quarter.
Zacks Rank & Other Stocks to Consider
Currently, MKS Instruments has a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader technology sector are Dropbox (DBX - Free Report) , Everbridge (EVBG - Free Report) and Asure Software (ASUR - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Both Dropbox and Everbridge are scheduled to report earnings on Aug 6. Asure Software is set to release quarterly results on Aug 10.
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