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It has been about a month since the last earnings report for MKS Instruments (MKSI). Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MKS Instruments due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
MKS Instruments Q3 Earnings Top Estimates, Revenues Down
MKS Instruments reported adjusted earnings of $1.72 per share in third-quarter 2024, up from the year-ago quarter’s earnings of $1.46 per share. The figure beat the Zacks Consensus Estimate by 21.13%.
Revenues of $896 million beat the consensus mark by 2.62% but declined 3.9% year over year.
Products revenues (86% of total revenues) were $776 million, down 5.1% year over year. The figure beat the Zacks Consensus Estimate by 1.78%.
Services revenues (13.4% of total revenues) increased 5.3% year over year to $120 million. The figure beat the Zacks Consensus Estimate by 6.92%.
Quarterly Update
Revenues from the Semiconductor market (42.2% of total revenues) increased 3% year over year to $378 million. The figure beat the Zacks Consensus Estimate by 4.80%.
Electronics & Packaging revenues (25.8% of total revenues) were $231 million, lower than $243 million reported in the year-ago quarter. The figure beat the Zacks Consensus Estimate by 3.02%.
Specialty Industrial revenues (32% of total revenues) declined 10.9% year over year to $287 million. The figure missed the Zacks Consensus Estimate by 0.94%.
Operating Details
In the third quarter, the adjusted gross margin expanded 110 basis points (bps) on a year-over-year basis to 48.2%.
Research & development, as a percentage of revenues, expanded 20 bps year over year. Sales, general & administrative expenses, as a percentage of revenues, expanded 70 bps on a year-over-year basis.
MKS Instruments reported a non-GAAP operating income of $195 million, down 3.9% year over year. The adjusted operating margin was flat year over year to 21.8%.
Adjusted EBITDA was down 3.7% year over year to $232 million. Adjusted EBITDA margin expanded 10 bps year over year to 25.9%.
Balance Sheet
As of Sept. 30, 2024, MKS Instruments had cash and cash equivalents of $861 million compared with $850 million as of June 30, 2024.
Cash flow from operations was $163 million in third-quarter 2024 compared with $122 million reported in the second quarter.
Free cash flow was $141 million compared with $96 million reported in the previous quarter.
In the third quarter, the company paid cash dividends of $15 million or 22 cents per share.