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MKS Instruments (MKSI) Q3 Earnings Beat, Revenues Up Y/Y
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MKS Instruments (MKSI - Free Report) reported third-quarter 2022 adjusted earnings of $2.74 per share, which beat the Zacks Consensus Estimate by 15.13% but declined 1.8% year over year.
Revenues of $954 million missed the consensus mark by 0.02% but increased 28.6% year over year. Strong performance in the advanced electronics and semiconductor business segment contributed to revenue growth.
Products revenues (88.2% of total revenues) were $841 million, up 29.6% year over year. Services revenues (11.8% of total revenues) increased 11.9% to $113 million.
Quarterly Update
Revenues from the semiconductor market (56.7% of total revenues) advanced 10.9% year over year to $541 million, driven by strong demand for its Vacuum solutions and Photonics Solutions divisions.
Revenues from the advanced electronics market (19.4% of total revenues) were $185 million, which surged 105.6% year over year.
Revenues from the specialty industrial market (23.9% of total revenues) increased 39% year over year to $228 million.
MKS Instruments, Inc. Price, Consensus and EPS Surprise
In the third quarter, adjusted EBITDA increased 20.7% year over year to $268 million. Adjusted EBITDA margin decreased 150 basis points (bps) to 28.1%.
Research & development, as a percentage of revenues, decreased 30 bps year over year while sales, general & administrative expenses, as a percentage of revenues, increased 50 bps.
MKS Instruments reported a non-GAAP operating income of $240 million, up 19.4% year over year. Adjusted operating margin decreased 160 bps on a year-over-year basis to 25.1%. Rising input cost is one of the primary factors responsible for a decrease in operating margin.
Balance Sheet& Cash Flow
As of Sep 30, 2022, MKS Instruments had cash and cash equivalents of $884 million compared with $1.1 billion as of Jun 30, 2022.
Short-term investments as of Sep 30, 2022, were $1 million compared with $2 million as of Jun 30, 2022.
As of Sep 30, 2022, the secured term loan principal outstanding was $5.2 billion. The company had $500 million of incremental borrowing capacity under an asset-based line of credit, subject to certain borrowing base requirements.
Cash flow from operations was $199 million in the third quarter compared with the second-quarter 2022 figure of $105 million.
Free cash flow was $173 million compared with $41 million reported in the previous quarter.
In the third quarter, the company paid a cash dividend of $12 million or 22 cents per share.
Q4 Guidance
For the fourth quarter of 2022, MKS Instruments anticipates revenues to be $1 billion (+/- $50 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 $1.34 per share (+/- 27 cents).
Zacks Rank & Stocks to Consider
Currently, MKS Instruments has a Zacks Rank #4 (Sell).
The company’s shares have underperformed the Zacks Computer & Technology sector in the year-to-date period. While the stock has plunged 54.1%, the Computer & Technology sector has declined 37.6%.
Here are some better-ranked stocks worth considering in the broader sector.
BLZE shares have lost 73.8% in the year-to-date period compared with the Zacks Internet - Software industry’s decline of 61.9%.
Tencent Music Entertainment Group (TME - Free Report) is also a Zacks Rank #2 stock. The company is set to report third-quarter 2022 earnings on Nov 15.
TME shares have lost 45.4% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 42.1%.
ACM Research (ACMR - Free Report) has a Zacks Rank #2. The company is set to report third-quarter 2022 earnings on Nov 4.
ACMR shares have lost 78.7% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 62.7%.
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MKS Instruments (MKSI) Q3 Earnings Beat, Revenues Up Y/Y
MKS Instruments (MKSI - Free Report) reported third-quarter 2022 adjusted earnings of $2.74 per share, which beat the Zacks Consensus Estimate by 15.13% but declined 1.8% year over year.
Revenues of $954 million missed the consensus mark by 0.02% but increased 28.6% year over year. Strong performance in the advanced electronics and semiconductor business segment contributed to revenue growth.
Products revenues (88.2% of total revenues) were $841 million, up 29.6% year over year. Services revenues (11.8% of total revenues) increased 11.9% to $113 million.
Quarterly Update
Revenues from the semiconductor market (56.7% of total revenues) advanced 10.9% year over year to $541 million, driven by strong demand for its Vacuum solutions and Photonics Solutions divisions.
Revenues from the advanced electronics market (19.4% of total revenues) were $185 million, which surged 105.6% year over year.
Revenues from the specialty industrial market (23.9% of total revenues) increased 39% year over year to $228 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 third quarter, adjusted EBITDA increased 20.7% year over year to $268 million. Adjusted EBITDA margin decreased 150 basis points (bps) to 28.1%.
Research & development, as a percentage of revenues, decreased 30 bps year over year while sales, general & administrative expenses, as a percentage of revenues, increased 50 bps.
MKS Instruments reported a non-GAAP operating income of $240 million, up 19.4% year over year. Adjusted operating margin decreased 160 bps on a year-over-year basis to 25.1%. Rising input cost is one of the primary factors responsible for a decrease in operating margin.
Balance Sheet& Cash Flow
As of Sep 30, 2022, MKS Instruments had cash and cash equivalents of $884 million compared with $1.1 billion as of Jun 30, 2022.
Short-term investments as of Sep 30, 2022, were $1 million compared with $2 million as of Jun 30, 2022.
As of Sep 30, 2022, the secured term loan principal outstanding was $5.2 billion. The company had $500 million of incremental borrowing capacity under an asset-based line of credit, subject to certain borrowing base requirements.
Cash flow from operations was $199 million in the third quarter compared with the second-quarter 2022 figure of $105 million.
Free cash flow was $173 million compared with $41 million reported in the previous quarter.
In the third quarter, the company paid a cash dividend of $12 million or 22 cents per share.
Q4 Guidance
For the fourth quarter of 2022, MKS Instruments anticipates revenues to be $1 billion (+/- $50 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 $1.34 per share (+/- 27 cents).
Zacks Rank & Stocks to Consider
Currently, MKS Instruments has a Zacks Rank #4 (Sell).
The company’s shares have underperformed the Zacks Computer & Technology sector in the year-to-date period. While the stock has plunged 54.1%, the Computer & Technology sector has declined 37.6%.
Here are some better-ranked stocks worth considering in the broader sector.
Backblaze (BLZE - Free Report) currently has an Earnings ESP of +7.41% and a Zacks Rank #2 (Buy). The company is set to report third-quarter 2022 earnings on Nov 9. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BLZE shares have lost 73.8% in the year-to-date period compared with the Zacks Internet - Software industry’s decline of 61.9%.
Tencent Music Entertainment Group (TME - Free Report) is also a Zacks Rank #2 stock. The company is set to report third-quarter 2022 earnings on Nov 15.
TME shares have lost 45.4% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 42.1%.
ACM Research (ACMR - Free Report) has a Zacks Rank #2. The company is set to report third-quarter 2022 earnings on Nov 4.
ACMR shares have lost 78.7% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 62.7%.