Back to top

Image: Bigstock

MKS Instruments' (MKSI) Q3 Earnings Beat, Revenues Up Y/Y

Read MoreHide Full Article

MKS Instruments (MKSI - Free Report) reported third-quarter 2020 adjusted earnings of $1.93 per share, which beat the Zacks Consensus Estimate by 9.7% and jumped 72.3% year over year.

Revenues of $589.8 million surpassed the consensus mark by 5.4% and improved 27.5% year over year, driven by buoyant demand for the company’s solutions in the semiconductor market.

Products revenues (85.9% of total revenues) were $506.8 million, up 31.2% from the year-ago quarter. Services revenues (14.1%) increased 8.8% year over year to $83 million.

Quarterly Update

Revenues from the semiconductor market (60.9% of total revenues) jumped 61% year over year to $359 million owing to increased demand, particularly for the Power Solutions business.
 

MKS Instruments, Inc. Price, Consensus and EPS Surprise

MKS Instruments, Inc. Price, Consensus and EPS Surprise

MKS Instruments, Inc. price-consensus-eps-surprise-chart | MKS Instruments, Inc. Quote

 

Revenues from advanced markets (39.1% of total revenues) were $230.8 million, down 3.7% from the year-ago quarter.

Segment-wise, Vacuum and Analysis (61.3% of total revenues) revenues surged 50.1% year over year to $361.3 million.

Equipment & Solutions segment revenues (8.9% of total revenues) were $52.6 million, up 6.7% year over year.

Light and Motion division revenues (29.8% of total revenues) increased 2% year over year to $175.9 million.

Operating Details

In the third quarter, MKS Instruments’ adjusted gross margin expanded 10 basis points (bps) on a year-over-year basis to 44.4%.

Adjusted EBITDA increased 56.5% year over year to $153.5 million. Adjusted EBITDA margin expanded 480 bps on a year-over-year basis to 26%.

Research & development and sales, general & administrative expenses, as a percentage of revenues, declined 180 bps and 300 bps on a year-to-date basis, respectively.

MKS Instruments reported non-GAAP operating income of $136.4 million, up 68% year over year. Adjusted operating margin expanded 560 bps on a year-over-year basis to 23.1%.

Balance Sheet

As of Sep 30, 2020, MKS Instruments had cash and short-term investments of $715.7 million compared with $607 million as of Jun 30, 2020.

Secured term-loan principal outstanding as of Sep 30  was $836 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 150.6% year over year to $152.1 million. Free cash flow jumped 178.5% year over year to $123.1 million.

MKS Instruments paid out dividends worth $11 million during the reported quarter.

Q4 Guidance

For the fourth quarter of 2020, MKS Instruments anticipates revenues to be $600 million (+/- $25 million). The Zacks Consensus Estimate for revenues is currently pegged at $542.8 million, indicating growth of 8.6% from the figure reported in the year-ago quarter.

Non-GAAP earnings are expected to be $2 per share (+/- 20 cents).

The consensus mark for earnings is currently pegged at $1.65 per share, suggesting an increase of 37.5% from the figure reported in the year-ago quarter.

Zacks Rank & Stocks to Consider

Currently, MKS Instruments has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are AMETEK (AME - Free Report) , Arrow Electronics (ARW - Free Report) and Digital Turbine (APPS - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

All three companies are set to release quarterly results on Oct 29.

Zacks’ 2020 Election Stock Report:

In addition to the companies you learned about above, we invite you to learn more about profiting from the upcoming presidential election. Trillions of dollars will shift into new market sectors after the votes are tallied, and investors could see significant gains. This report reveals specific stocks that could soar: 6 if Trump wins, 6 if Biden wins.

Check out the 2020 Election Stock Report >>