MKS Instruments' (MKSI) Q3 Earnings Beat, Revenues Up Y/Y
MKS Instruments MKSI reported third-quarter 2020 adjusted earnings of $1.93 per share, which beat the Zacks Consensus Estimate by 9.7% and jumped 72.3% year over year.
Revenues of $589.8 million surpassed the consensus mark by 5.4% and improved 27.5% year over year, driven by buoyant demand for the company’s solutions in the semiconductor market.
Products revenues (85.9% of total revenues) were $506.8 million, up 31.2% from the year-ago quarter. Services revenues (14.1%) increased 8.8% year over year to $83 million.
Revenues from the semiconductor market (60.9% of total revenues) jumped 61% year over year to $359 million owing to increased demand, particularly for the Power Solutions business.
MKS Instruments, Inc. Price, Consensus and EPS Surprise
Revenues from advanced markets (39.1% of total revenues) were $230.8 million, down 3.7% from the year-ago quarter.
Segment-wise, Vacuum and Analysis (61.3% of total revenues) revenues surged 50.1% year over year to $361.3 million.
Equipment & Solutions segment revenues (8.9% of total revenues) were $52.6 million, up 6.7% year over year.
Light and Motion division revenues (29.8% of total revenues) increased 2% year over year to $175.9 million.
In the third quarter, MKS Instruments’ adjusted gross margin expanded 10 basis points (bps) on a year-over-year basis to 44.4%.
Adjusted EBITDA increased 56.5% year over year to $153.5 million. Adjusted EBITDA margin expanded 480 bps on a year-over-year basis to 26%.
Research & development and sales, general & administrative expenses, as a percentage of revenues, declined 180 bps and 300 bps on a year-to-date basis, respectively.
MKS Instruments reported non-GAAP operating income of $136.4 million, up 68% year over year. Adjusted operating margin expanded 560 bps on a year-over-year basis to 23.1%.
As of Sep 30, 2020, MKS Instruments had cash and short-term investments of $715.7 million compared with $607 million as of Jun 30, 2020.
Secured term-loan principal outstanding as of Sep 30 was $836 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 150.6% year over year to $152.1 million. Free cash flow jumped 178.5% year over year to $123.1 million.
MKS Instruments paid out dividends worth $11 million during the reported quarter.
For the fourth quarter of 2020, MKS Instruments anticipates revenues to be $600 million (+/- $25 million). The Zacks Consensus Estimate for revenues is currently pegged at $542.8 million, indicating growth of 8.6% from the figure reported in the year-ago quarter.
Non-GAAP earnings are expected to be $2 per share (+/- 20 cents).
The consensus mark for earnings is currently pegged at $1.65 per share, suggesting an increase of 37.5% 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 AMETEK AME, Arrow Electronics ARW and Digital Turbine APPS. 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.
All three companies are set to release quarterly results on Oct 29.
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