MKS Instruments Reports Strong Q3 Earnings, Sets Optimistic Q4 Expectations
MKS Instruments (MKSI) announced adjusted earnings of $1.72 per share for the third quarter of 2024, a rise from $1.46 per share during the same period last year. This figure exceeded the Zacks Consensus Estimate by 21.13%.
Revenue reached $896 million, beating the consensus estimate by 2.62%, although it marked a decline of 3.9% from the previous year.
Product revenues, which account for 86% of total revenue, stood at $776 million, down 5.1% year over year. This amount surpassed the Zacks Consensus Estimate by 1.78%.
Conversely, service revenues, representing 13.4% of total revenues, experienced a 5.3% increase year over year, totaling $120 million, exceeding the Zacks Consensus Estimate by 6.92%.
MKS Instruments, Inc. Financial Summary
MKS Instruments, Inc. price-consensus-eps-surprise-chart | MKS Instruments, Inc. Quote
Year-to-date, MKSI shares have increased by 0.4%, while the Zacks Computer & Technology sector has risen by 11.5%. An optimistic outlook for the future may support MKSI’s stock recovery.
Quarterly Breakdown from MKSI
Revenue from the Semiconductor market, which comprises 42.2% of total revenue, rose by 3% year over year to $378 million, beating the Zacks Consensus Estimate by 4.80%.
Revenue from Electronics & Packaging, making up 25.8% of total revenue, fell to $231 million, down from $243 million last year. This figure, however, surpassed the Zacks Consensus by 3.02%.
Specialty Industrial revenue, which constitutes 32% of total revenue, saw a significant decline of 10.9% year over year, totaling $287 million. This result missed the Zacks Consensus Estimate by 0.94%.
Operating Metrics of MKSI
The adjusted gross margin for MKS Instruments widened by 110 basis points (bps) year over year, reaching 48.2% in the third quarter.
Research & Development expenses increased slightly as a percentage of revenue, expanding 20 bps year over year. Sales, General & Administrative expenses also increased, up 70 bps year over year.
Non-GAAP operating income fell to $195 million, down 3.9% from the prior year, while the adjusted operating margin remained stable at 21.8%.
Adjusted EBITDA decreased by 3.7% year over year to $232 million, although the adjusted EBITDA margin improved by 10 bps to 25.9%.
Financial Position of MKSI
As of September 30, 2024, MKS Instruments reported cash and cash equivalents of $861 million, up from $850 million on June 30, 2024.
Cash flow from operations for the third quarter totaled $163 million, compared to $122 million in the prior quarter.
Free cash flow surged to $141 million, growing from $96 million reported the previous quarter.
During this quarter, the company also paid out cash dividends of $15 million, equating to 22 cents per share.
MKS Instruments Offers Q4 Guidance
Looking ahead, MKSI anticipates third-quarter revenues of approximately $910 million, with a potential variance of +/- $40 million.
For adjusted EBITDA, the company foresees figures around $226 million, with a variance of +/- $23 million.
On a non-GAAP basis, MKSI expects to deliver earnings of $1.95 per share, with a variance of +/- 32 cents.
MKSI’s Market Outlook
At present, MKSI holds a Zacks Rank #3 (Hold).
Investors may also look at other promising stocks in the sector, including Shopify (SHOP), BiliBili (BILI), and NVIDIA (NVDA). Shopify, currently a Zacks Rank #1 (Strong Buy), has seen its shares rise by 4.9% year to date and is set to report third-quarter 2024 results on November 12. Meanwhile, Bilibili has gained 82% for the year and will report results on November 14, and NVIDIA has surged by 194% year to date, with its results expected on November 20.
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