MKSI Beats on Q3 Earnings, Rev - Analyst Blog
MKS Instruments, Inc. ( MKSI ) reported strong year-over-year results in the third-quarter of 2013. The company generated adjusted earnings per share of 25 cents, beating the Zacks Consensus Estimate of 20 cents by 25.0%. Adjusted earnings also surpassed the year-ago earnings of 16 cents by 56.3%.
On a GAAP basis, MKS Instruments recorded earnings per share of 5 cents, flat compared with the year-ago earnings.
Net sales increased 17.7% year over year to $166.5 million. Reported revenues also beat the Zacks Consensus Estimate of $164.0 million.
Revenues from the sale of Products came in at $139.8 million and accounted for 84.0% of total revenue, while sales from Services came in at $26.6 million, accounting for the remaining 16.0%.
MKS Instruments' adjusted gross profit increased 21.4% from the year-earlier quarter to $68.7 million in the third quarter. This resulted in an adjusted gross margin of 41.2%, registering an increase of 120 basis points (bps) year over year. SG&A (selling, general and administrative) expense was $33.2 million, up 11.8% year over year. The company reported adjusted operating margins of 12.2%, increasing 310 bps year over year.
Balance Sheet/Cash Flow
Cash and cash equivalents at the end of third-quarter 2013 were $254.8 million, compared with $235.7 million at the end of the preceding quarter.
During the quarter, MKS Instruments paid a quarterly cash dividend of 16 cents per share.
The Chief Executive Officer (CEO) and Director of MKS Instruments, Mr. Leo Berlinghieri, is going to retire by the end of 2013. The current President and Chief Operating Officer (COO), Mr. Gerald G. Colella will be taking up the responsibilities of the CEO thereafter. Upon his appointment, Mr. Colella will also become a member of the Board of Directors.
Mr. Colella has been associated with the company since 1983, and has served at various positions with his latest responsibilities of the COO since 2010. MKS Instruments is expected to grow further, given Mr. Colella's strong understanding of the company.
Management believes the semiconductor markets will stabilize over the next few quarters, based on increased demand for new technologies to be used in full featured mobile phones. Accordingly, revenues are expected in the range of $185.0 million to $200.0 million in fourth-quarter 2013 while adjusted earnings per share are anticipated to be within the 31 cents to 41 cents range.
The semiconductor industry is in the process of gaining traction in the coming quarters after facing a downturn over the past few quarters.
Other Stocks to Consider
MKS Instruments currently carries a Zacks Rank #3 (Hold). Other stocks worth a watch in the semiconductor industry include Ultra Clean Holdings Inc. ( UCTT ), Alliance Fiber Optic Products Inc. ( AFOP ) and Ciena Corporation ( CIEN ). All these stocks carry a Zacks Rank #1 (Strong Buy).
ALLIANCE FIBER (AFOP): Free Stock Analysis Report
CIENA CORP (CIEN): Free Stock Analysis Report
MKS INSTRUMENTS (MKSI): Free Stock Analysis Report
ULTRA CLEAN HLD (UCTT): Free Stock Analysis Report
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