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MKS Instruments (MKSI) Q2 Earnings Beat, Revenues Up Y/Y
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MKS Instruments (MKSI - Free Report) reported second-quarter 2022 adjusted earnings of $2.59 per share, which beat the Zacks Consensus Estimate by 0.28% but declined 14.2% year over year.
Revenues of $765 million surpassed the consensus mark by 4.09% and improved 2% year over year. Strong performance in the semiconductor business segment contributed to revenue growth. However, global supply chain challenges and inflationary challenges resulted in lowered industry demand for certain products, which led to a decline in revenues in other segments and slowed down growth to single digit.
Products revenues (86.8% of total revenues) were $664 million, up 1.1% year over year. Services revenues (13.2% of total revenues) increased 8.6% year over year to $101 million.
Quarterly Update
Revenues from the semiconductor market (67.3% of total revenues) advanced 19.5% year over year to $515 million, driven by strong demand for its Vacuum solutions and Photonics Solutions divisions.
Revenues from the advanced electronics market (10.1% of total revenues) were $77 million, down 43.8% year over year. The downside was due to low spending in the flexible PCB industry by customers, which lowered demand for products like drilling equipment.
Revenues from the specialty industrial market (22.6% of total revenues) decreased 4.9% year over year to $173 million.
MKS Instruments, Inc. Price, Consensus and EPS Surprise
In the second quarter, adjusted EBITDA decreased 9.2% year over year to $208 million. Adjusted EBITDA margin decreased by 330 bps on a year-over-year basis to 28.4%.
Both research & development, and sales, general & administrative expenses, as a percentage of revenues, increased by 30 bps year over year.
MKS Instruments reported non-GAAP operating income of $184 million, down 11.5% year over year. Adjusted operating margin decreased by 370 bps on a year-over-year basis to 24.1%. Rising input cost is one of the primary factors responsible for a decrease in operating margin.
Balance Sheet& Cash Flow
As of Jun 30, 2022, MKS Instruments had cash and short-term investments of $1.1 billion, flat since Mar 31, 2022.
As of Jun 30, 2022, the secured term loan principal outstanding was $820 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 $105 million in the second quarter compared with the first quarter 2022’s figure of $41 million.
Free cash flow was $41 million compared with $22 million reported in the previous quarter.
In the second quarter of 2022, the company paid a cash dividend of $12 million or $0.22 per diluted share.
Q3 Guidance
For the third quarter of 2022, MKS Instruments anticipates revenues to be $770 million (+/- $30 million). The Zacks Consensus Estimate for revenues is currently pegged at $757.42 million, indicating growth of 2.09% from the year-ago quarter.
Non-GAAP earnings are expected to be $2.26 per share (+/- 25 cents).
The consensus mark for earnings is currently pegged at $2.51 per share, suggesting a downgrade of 10.04% from the prior-year quarter.
Zacks Rank & Stocks to Consider
Currently, MKS Instruments has a Zacks Rank #4 (Sell).
MKS Instruments shares have underperformed the Zacks Computer & Technology sector in the year-to-date period. While MKSI shares have fallen 35.7%, the Computer & Technology sector has declined 29.3%.
Here are some better-ranked stocks worth considering in the broader sector.
ACLS’ shares have fallen 10.1% in the year-to-date period compared with the Zacks Electronics - Manufacturing Machinery industry’s decline of 29.8%. ACLS is scheduled to report second-quarter 2022 results on Aug 3.
Aspen’s shares have returned 22.3% in the year-to-date period against the Zacks Internet - Software industry’s decline of 52.6%. AZPN is scheduled to report second-quarter 2022 results on Aug 8.
ARW’s shares have fallen 8.3% in the year-to-date period compared with the Zacks Electronics - Parts Distribution industry’s decline of 7.5%. Arrow is scheduled to report second-quarter 2022 results on Aug 4.
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MKS Instruments (MKSI) Q2 Earnings Beat, Revenues Up Y/Y
MKS Instruments (MKSI - Free Report) reported second-quarter 2022 adjusted earnings of $2.59 per share, which beat the Zacks Consensus Estimate by 0.28% but declined 14.2% year over year.
Revenues of $765 million surpassed the consensus mark by 4.09% and improved 2% year over year. Strong performance in the semiconductor business segment contributed to revenue growth. However, global supply chain challenges and inflationary challenges resulted in lowered industry demand for certain products, which led to a decline in revenues in other segments and slowed down growth to single digit.
Products revenues (86.8% of total revenues) were $664 million, up 1.1% year over year. Services revenues (13.2% of total revenues) increased 8.6% year over year to $101 million.
Quarterly Update
Revenues from the semiconductor market (67.3% of total revenues) advanced 19.5% year over year to $515 million, driven by strong demand for its Vacuum solutions and Photonics Solutions divisions.
Revenues from the advanced electronics market (10.1% of total revenues) were $77 million, down 43.8% year over year. The downside was due to low spending in the flexible PCB industry by customers, which lowered demand for products like drilling equipment.
Revenues from the specialty industrial market (22.6% of total revenues) decreased 4.9% year over year to $173 million.
MKS Instruments, Inc. Price, Consensus and EPS Surprise
MKS Instruments, Inc. price-consensus-eps-surprise-chart | MKS Instruments, Inc. Quote
Operating Details
In the second quarter, adjusted EBITDA decreased 9.2% year over year to $208 million. Adjusted EBITDA margin decreased by 330 bps on a year-over-year basis to 28.4%.
Both research & development, and sales, general & administrative expenses, as a percentage of revenues, increased by 30 bps year over year.
MKS Instruments reported non-GAAP operating income of $184 million, down 11.5% year over year. Adjusted operating margin decreased by 370 bps on a year-over-year basis to 24.1%. Rising input cost is one of the primary factors responsible for a decrease in operating margin.
Balance Sheet& Cash Flow
As of Jun 30, 2022, MKS Instruments had cash and short-term investments of $1.1 billion, flat since Mar 31, 2022.
As of Jun 30, 2022, the secured term loan principal outstanding was $820 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 $105 million in the second quarter compared with the first quarter 2022’s figure of $41 million.
Free cash flow was $41 million compared with $22 million reported in the previous quarter.
In the second quarter of 2022, the company paid a cash dividend of $12 million or $0.22 per diluted share.
Q3 Guidance
For the third quarter of 2022, MKS Instruments anticipates revenues to be $770 million (+/- $30 million). The Zacks Consensus Estimate for revenues is currently pegged at $757.42 million, indicating growth of 2.09% from the year-ago quarter.
Non-GAAP earnings are expected to be $2.26 per share (+/- 25 cents).
The consensus mark for earnings is currently pegged at $2.51 per share, suggesting a downgrade of 10.04% from the prior-year quarter.
Zacks Rank & Stocks to Consider
Currently, MKS Instruments has a Zacks Rank #4 (Sell).
MKS Instruments shares have underperformed the Zacks Computer & Technology sector in the year-to-date period. While MKSI shares have fallen 35.7%, the Computer & Technology sector has declined 29.3%.
Here are some better-ranked stocks worth considering in the broader sector.
Axcelis Technologies (ACLS - Free Report) sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ACLS’ shares have fallen 10.1% in the year-to-date period compared with the Zacks Electronics - Manufacturing Machinery industry’s decline of 29.8%. ACLS is scheduled to report second-quarter 2022 results on Aug 3.
Aspen Technology (AZPN - Free Report) carries a Zacks Rank #2 (Buy).
Aspen’s shares have returned 22.3% in the year-to-date period against the Zacks Internet - Software industry’s decline of 52.6%. AZPN is scheduled to report second-quarter 2022 results on Aug 8.
Arrow Electronics (ARW - Free Report) carries a Zacks Rank #2.
ARW’s shares have fallen 8.3% in the year-to-date period compared with the Zacks Electronics - Parts Distribution industry’s decline of 7.5%. Arrow is scheduled to report second-quarter 2022 results on Aug 4.