MKS Instruments Posts In-line Q2 Earnings; Beats on Revenues

Zacks Equity Research

MKS Instruments, Inc. (MKSI) reported strong year-over-year results in the second quarter of 2014. The company’s adjusted earnings per share of 42 cents were in line with the Zacks Consensus Estimate. However, adjusted earnings surpassed the year-ago figure of 14 cents by an astounding 200.0%. The high income was primarily attributable to better-than-expected demand in the semiconductor market and continued growth in other advanced markets.

On a GAAP basis, MKS Instruments recorded earnings per share of 40 cents, compared with the year-ago earnings of 14 cents.

Mks Instruments, Inc - Earnings Surprise | FindTheBest

Revenues

Net sales increased 17.7% year over year to $184.7 million. Reported revenues also beat the Zacks Consensus Estimate of $172.0 million.

Revenues from the sale of Products came in at $157.5 million and accounted for 85.3% of total revenues; while sales from Services came in at $27.2 million, representing the remaining 14.7%.

Margins/Costs

MKS Instruments’ adjusted gross profit margin increased 390 basis points to 43.4% from the year-ago quarter. Selling, general and administrative expenses stood at $32.2 million, down 7.5% year over year. Research and development expenditure declined 8.3% year over year to $15.4 million.

Adjusted operating margins were 17.6%, up from 6.6% in the year-ago comparable period.

Balance Sheet/Cash Flow

Cash and cash equivalents at the quarter-end were $262.8 million, compared with $287.1 million at the end of the preceding quarter.

MKS Instruments increased its quarterly cash dividend to 16.5 cents from 16 cents per share. The company also repurchased 0.7 million shares worth $20.0 million, using cash in hand.

Further, the company completed the $87 million-worth Granville-Phillips acquisition in the quarter.

Outlook

Third-quarter original equipment manufacturers’ shipments are expected to decline from the second-quarter level, although other market sales are expected to improve. For the third-quarter, revenues are predicted in the range of $170.0 to $190.0 million, while adjusted earnings per share are anticipated to come within 28 to 42 cents. Also, GAAP earnings per share are expected in the range of 23 to 37 cents.

Other Stocks to Consider

MKS Instruments currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the semiconductor industry include Brooks Automation, Inc. (BRKS), Entegris, Inc. (ENTG) and Nikon Corporation (NINOY), each holding a Zacks Rank #2 (Buy).

Read the Full Research Report on BRKS
Read the Full Research Report on MKSI
Read the Full Research Report on ENTG
Read the Full Research Report on NINOY


Zacks Investment Research