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MKS Instruments (MKSI - Free Report) reported first-quarter 2020 adjusted earnings of $1.54 per share, which beat the Zacks Consensus Estimate by 24.2% and also increased 28.3% year over year.
Revenues of $535.7 million surpassed the consensus mark by 4.8% and also improved 15.6% year over year, driven by buoyant demand for the semiconductor market.
Products revenues (86.1% of total revenues) were $461.2 million, up 8.1% from the year-ago quarter. Services revenues (13.9%) inched up 1.8% year over year to $74.5 million.
Quarterly Update
Revenues from the semiconductor market (58.4% of total revenues) jumped 41.9% year over year to $312.6 million owing to increased demand.
Revenues from advanced markets (41.6% of total revenues) were $223.1 million, down 8.3% from the year-ago quarter. The top line was negatively impacted by university and research lab closures due to the coronavirus (COVID-19).
MKS Instruments, Inc. Price, Consensus and EPS Surprise
Segmentwise, Vacuum and Analysis (59.6% of total revenues) revenues surged 36.2% year over year to $319.3 million.
Equipment & Solutions segment revenues (9.5% of total revenues) were $51 million, up 44.9% year over year.
Light and Motion division revenues (30.9% of total revenues), however, decreased 14.7% year over year to $165.4 million.
Operating Details
In the first quarter, MKS Instruments’ adjusted gross margin contracted 190 basis points (bps) on a year-over-year basis to 44.7%.
Adjusted EBITDA increased 20.2% year over year to $129.7 million. Adjusted EBITDA margin expanded 90 bps on a year-over-year basis to 24.2%.
Research & development and sales, general & administrative expenses, as a percentage of revenues, declined 110 bps and 150 bps on a year-to-date basis, respectively.
MKS Instruments reported non-GAAP operating income of $110 million, up 19.4% year over year. Adjusted operating margin expanded 70 bps on a year-over-year basis to 20.5%.
Balance Sheet & Cash Flow
As of Mar 31, 2020, MKS Instruments had cash and short-term investments of $503 million compared with $524 million as of Dec 31, 2019.
Secured term-loan principal outstanding as of Mar 31, 2020 was $840 million. The company also had $100 million of incremental borrowing capacity under an asset-based line of credit, subject to certain borrowing base requirements.
MKS Instruments paid out dividends worth $11 million during the reported quarter.
Q2 Guidance
For the second quarter of 2020, MKS Instruments anticipates revenues between $450 million and $520 million. Management stated that order rates will remain strong in the second quarter. However, lockdowns around the world due to the coronavirus are expected to impact second-quarter revenues.
The Zacks Consensus Estimate for revenues is currently pegged at $507 million, indicating growth of 7% from the figure reported in the year-ago quarter.
Non-GAAP earnings are expected between 90 cents and $1.38 per share.
The consensus mark for earnings is currently pegged at $1.28 per share, suggesting an increase of 17.4% from the figure reported in the year-ago quarter.
Both Pixelworks and Fortive are scheduled to report earnings on Apr 30. Shopify is set to release quarterly results on May 6.
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MKS Instruments' (MKSI) Q1 Earnings Top, Revenues Rise Y/Y
MKS Instruments (MKSI - Free Report) reported first-quarter 2020 adjusted earnings of $1.54 per share, which beat the Zacks Consensus Estimate by 24.2% and also increased 28.3% year over year.
Revenues of $535.7 million surpassed the consensus mark by 4.8% and also improved 15.6% year over year, driven by buoyant demand for the semiconductor market.
Products revenues (86.1% of total revenues) were $461.2 million, up 8.1% from the year-ago quarter. Services revenues (13.9%) inched up 1.8% year over year to $74.5 million.
Quarterly Update
Revenues from the semiconductor market (58.4% of total revenues) jumped 41.9% year over year to $312.6 million owing to increased demand.
Revenues from advanced markets (41.6% of total revenues) were $223.1 million, down 8.3% from the year-ago quarter. The top line was negatively impacted by university and research lab closures due to the coronavirus (COVID-19).
MKS Instruments, Inc. Price, Consensus and EPS Surprise
MKS Instruments, Inc. price-consensus-eps-surprise-chart | MKS Instruments, Inc. Quote
Segmentwise, Vacuum and Analysis (59.6% of total revenues) revenues surged 36.2% year over year to $319.3 million.
Equipment & Solutions segment revenues (9.5% of total revenues) were $51 million, up 44.9% year over year.
Light and Motion division revenues (30.9% of total revenues), however, decreased 14.7% year over year to $165.4 million.
Operating Details
In the first quarter, MKS Instruments’ adjusted gross margin contracted 190 basis points (bps) on a year-over-year basis to 44.7%.
Adjusted EBITDA increased 20.2% year over year to $129.7 million. Adjusted EBITDA margin expanded 90 bps on a year-over-year basis to 24.2%.
Research & development and sales, general & administrative expenses, as a percentage of revenues, declined 110 bps and 150 bps on a year-to-date basis, respectively.
MKS Instruments reported non-GAAP operating income of $110 million, up 19.4% year over year. Adjusted operating margin expanded 70 bps on a year-over-year basis to 20.5%.
Balance Sheet & Cash Flow
As of Mar 31, 2020, MKS Instruments had cash and short-term investments of $503 million compared with $524 million as of Dec 31, 2019.
Secured term-loan principal outstanding as of Mar 31, 2020 was $840 million. The company also had $100 million of incremental borrowing capacity under an asset-based line of credit, subject to certain borrowing base requirements.
MKS Instruments paid out dividends worth $11 million during the reported quarter.
Q2 Guidance
For the second quarter of 2020, MKS Instruments anticipates revenues between $450 million and $520 million. Management stated that order rates will remain strong in the second quarter. However, lockdowns around the world due to the coronavirus are expected to impact second-quarter revenues.
The Zacks Consensus Estimate for revenues is currently pegged at $507 million, indicating growth of 7% from the figure reported in the year-ago quarter.
Non-GAAP earnings are expected between 90 cents and $1.38 per share.
The consensus mark for earnings is currently pegged at $1.28 per share, suggesting an increase of 17.4% 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 Pixelworks (PXLW - Free Report) , Fortive (FTV - Free Report) and Shopify (SHOP - Free Report) . While Pixelworks sports a Zacks Rank #1 (Strong Buy), both Fortive and Shopify carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Both Pixelworks and Fortive are scheduled to report earnings on Apr 30. Shopify is set to release quarterly results on May 6.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>