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Why Is MKS Instruments (MKSI) Up 2.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for MKS Instruments (MKSI - Free Report) . Shares have added about 2.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MKS Instruments due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
MKS Instruments Q4 Earnings Beat, Revenues up Y/Y
MKS Instruments reported fourth-quarter 2021 adjusted earnings of $3.02 per share, which beat the Zacks Consensus Estimate by 5.59% and surged 29.1% year over year.
Revenues of $763.9 million surpassed the consensus mark by 0.47% and improved 15.7% year over year, driven by rising demand for the company’s solutions in the semiconductor and advanced market despite the negative impact of pandemic and supply chain constraints.
Product revenues (87.4% of total revenues) were $667.8 million, up 16.4% year over year. Services revenues (12.6%) increased 3.6% year over year to $96.1 million.
Quarterly Update
Revenues from the semiconductor market (64.8% of total revenues) increased 25.9% year over year to $494.8 million, owing to robust performance by the Vacuum & Analysis division.
Revenues from advanced markets (35.2% of total revenues) were $269.1 million, up 0.7% year over year. The upside can be attributed to recovery in demand trends for advanced electronics applications.
Segment-wise, Vacuum and Analysis (63.5% of total revenues) revenues surged 18% year over year to $484.4 million.
Light and Motion division revenues (30.1% of total revenues) climbed 26.1% year over year to $229.8.
Equipment & Solutions segment revenues (6.4% of total revenues) were $49.2 million, down 26.6% year over year.
Operating Details
In the fourth quarter, adjusted gross margin expanded 70 basis points (bps) on a year-over-year basis to 46.4%.
Adjusted EBITDA increased 26.4% year over year to $228.4 million. Adjusted EBITDA margin expanded 250 bps on a year-over-year basis to 29.9%.
Research & development, and sales, general & administrative expenses, as a percentage of revenues, declined 20 bps and 150 bps on a year-over-year basis, respectively.
MKS Instruments reported non-GAAP operating income of $207.2 million, up 26.8% year over year. Adjusted operating margin expanded 240 bps on a year-over-year basis to 27.1%.
Balance Sheet
As of Dec 30, 2021, MKS Instruments had cash and short-term investments of $1.04 billion compared with $879.6 million as of Sep 30, 2021.
Total debt as of Dec 31 2021, was $818.7 million. Secured term loan principal outstanding as of Dec 31, 2021, was $827 million. The company had $100 million of incremental borrowing capacity under an asset-based line of credit, subject to certain borrowing base requirements.
Cash flow from operations was $194.3 million in the fourth quarter compared with the previous quarter’s figure of $153.1 million. Free cash flow was $170.9 million compared with $132.6 million reported in the previous quarter.
MKS Instruments paid out dividends worth $12 million during the reported quarter.
Q1 Guidance
For the first quarter of 2022, MKS Instruments anticipates revenues to be $750 million (+/- $30 million).
Non-GAAP earnings are expected to be $2.57 per share (+/- 25 cents).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -10.17% due to these changes.
VGM Scores
Currently, MKS Instruments has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise MKS Instruments has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is MKS Instruments (MKSI) Up 2.3% Since Last Earnings Report?
A month has gone by since the last earnings report for MKS Instruments (MKSI - Free Report) . Shares have added about 2.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MKS Instruments due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
MKS Instruments Q4 Earnings Beat, Revenues up Y/Y
MKS Instruments reported fourth-quarter 2021 adjusted earnings of $3.02 per share, which beat the Zacks Consensus Estimate by 5.59% and surged 29.1% year over year.
Revenues of $763.9 million surpassed the consensus mark by 0.47% and improved 15.7% year over year, driven by rising demand for the company’s solutions in the semiconductor and advanced market despite the negative impact of pandemic and supply chain constraints.
Product revenues (87.4% of total revenues) were $667.8 million, up 16.4% year over year. Services revenues (12.6%) increased 3.6% year over year to $96.1 million.
Quarterly Update
Revenues from the semiconductor market (64.8% of total revenues) increased 25.9% year over year to $494.8 million, owing to robust performance by the Vacuum & Analysis division.
Revenues from advanced markets (35.2% of total revenues) were $269.1 million, up 0.7% year over year. The upside can be attributed to recovery in demand trends for advanced electronics applications.
Segment-wise, Vacuum and Analysis (63.5% of total revenues) revenues surged 18% year over year to $484.4 million.
Light and Motion division revenues (30.1% of total revenues) climbed 26.1% year over year to $229.8.
Equipment & Solutions segment revenues (6.4% of total revenues) were $49.2 million, down 26.6% year over year.
Operating Details
In the fourth quarter, adjusted gross margin expanded 70 basis points (bps) on a year-over-year basis to 46.4%.
Adjusted EBITDA increased 26.4% year over year to $228.4 million. Adjusted EBITDA margin expanded 250 bps on a year-over-year basis to 29.9%.
Research & development, and sales, general & administrative expenses, as a percentage of revenues, declined 20 bps and 150 bps on a year-over-year basis, respectively.
MKS Instruments reported non-GAAP operating income of $207.2 million, up 26.8% year over year. Adjusted operating margin expanded 240 bps on a year-over-year basis to 27.1%.
Balance Sheet
As of Dec 30, 2021, MKS Instruments had cash and short-term investments of $1.04 billion compared with $879.6 million as of Sep 30, 2021.
Total debt as of Dec 31 2021, was $818.7 million. Secured term loan principal outstanding as of Dec 31, 2021, was $827 million. The company had $100 million of incremental borrowing capacity under an asset-based line of credit, subject to certain borrowing base requirements.
Cash flow from operations was $194.3 million in the fourth quarter compared with the previous quarter’s figure of $153.1 million. Free cash flow was $170.9 million compared with $132.6 million reported in the previous quarter.
MKS Instruments paid out dividends worth $12 million during the reported quarter.
Q1 Guidance
For the first quarter of 2022, MKS Instruments anticipates revenues to be $750 million (+/- $30 million).
Non-GAAP earnings are expected to be $2.57 per share (+/- 25 cents).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -10.17% due to these changes.
VGM Scores
Currently, MKS Instruments has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise MKS Instruments has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.