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MKS Instruments' (MKSI) Q4 Earnings Beat, Revenues Rise Y/Y

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MKS Instruments (MKSI - Free Report) reported fourth-quarter 2020 adjusted earnings of $2.34 per share, which beat the Zacks Consensus Estimate by 15.3% and surged 95% year over year.

Revenues of $660.2 million surpassed the consensus mark by 9.1% and improved 32.1% year over year, driven by buoyant demand for the company’s solutions in the semiconductor market.

Products revenues (86.9% of total revenues) were $573.8 million, up 34.5% from the year-ago quarter. Services revenues (13.1%) increased 18% year over year to $86.4 million.

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

Quarter Details

Revenues from the semiconductor market (59.5% of total revenues) jumped 44.8% year over year to $392.9 million owing to increased demand, particularly for the Power Solutions business.
 
Revenues from advanced markets (40.5% of total revenues) were $267.3 million, up 17.1% from the year-ago quarter attributed to recovery in demand trends for Advanced Electronics applications.

Segment-wise, Vacuum and Analysis (62.2% of total revenues) revenues surged 46.8% year over year to $410.8 million.

Light and Motion division revenues (27.6% of total revenues) increased 3.3% year over year to $182.3 million.

Equipment & Solutions segment revenues (10.2% of total revenues) were $67.1 million, up 54.9% year over year.

Operating Details

In the fourth quarter, MKS Instruments’ adjusted gross margin expanded 240 basis points (bps) on a year-over-year basis to 45.7%.

Adjusted EBITDA increased 67.5% year over year to $180.7 million. Adjusted EBITDA margin expanded 580 bps on a year-over-year basis to 27.4%.

Research & development and sales, general & administrative expenses, as a percentage of revenues, declined 150 bps and 250 bps on a year-over-year basis, respectively.

MKS Instruments reported non-GAAP operating income of $163.4 million, up 77.4% year over year. Adjusted operating margin expanded 630 bps on a year-over-year basis to 24.8%.

Balance Sheet

As of Dec 31, 2020, MKS Instruments had cash and short-term investments of $836 million compared with $715.7 million as of Sep 30, 2020.

Secured term-loan principal outstanding as of Dec 31, 2021 was $833 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 90.4% year over year to $147.2 million. Free cash flow jumped 110% year over year to $122.2 million.

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

Q1 Guidance

For the first quarter of 2021, MKS Instruments anticipates revenues to be $650 million (+/- $25 million). The Zacks Consensus Estimate for revenues is currently pegged at $611.3 million, indicating growth of 14.1% from the figure reported in the year-ago quarter.

Non-GAAP earnings are expected to be $2.16 per share (+/- 20 cents).

The consensus mark for earnings is currently pegged at $2.04 per share, suggesting an increase of 32.4% 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 Entegris, Inc. (ENTG - Free Report) , EMCORE Corporation (EMKR - Free Report) and Brooks Automation, Inc. (BRKS - 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.

Entegris, EMCORE and Brooks Automation are set to report their quarterly results on Feb 2, 3 and 4 respectively.

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