MKS Instruments (MKSI) First Quarter Earnings Beat, Revenue Up Year-over-Year – April 27, 2022

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MKS Instruments (MKSI Free Report) reported first-quarter 2022 adjusted earnings of $2.71 per share, which beat Zacks’ consensus estimate of 4.63% and improved 6% year-over-year. other.

Revenue of $742 million missed the consensus mark by 1.06% and was up 7% year-over-year. Global supply chain challenges and lower industry demand for certain products led to lower revenues.

Product revenue (87.3% of total revenue) was $648 million, up 7.1% year-over-year. Services revenue (12.7% of total revenue) increased 5.6% year-over-year to $94 million.

Quarterly update

Semiconductor market revenue (65.8% of total revenue) grew 19% year-over-year to $488 million.

Revenue from the advanced electronics market (11.1% of total revenue) was $82 million, down 29% year-over-year. The downside was due to low demand for flexible PCBs via drilling equipment in the industry.

Specialized industrial market revenues (23.2% of total revenues) increased 2% year over year to $172 million.

Operation details

In the first quarter, adjusted EBITDA increased 6% year over year to $211 million. Adjusted EBITDA margin decreased 20 basis points year over year to 28.4%.

Research and development, as a percentage of revenue, increased 20 basis points year over year. Meanwhile, selling, general and administrative expenses, as a percentage of revenue, fell 140 basis points on an annual basis.

MKS Instruments reported non-GAAP operating profit of $190 million, up 6.1% year-on-year. Adjusted operating margin decreased by 20 basis points year-on-year to 25.6%. The rising cost of inputs is one of the main factors responsible for the decline in operating margin.

Balance sheet

As of March 31, 2022, MKS Instruments had cash and short-term investments of $1.1 billion, compared to $910 million as of March 31, 2021.

As of March 31, 2021, the principal outstanding of the secured term loan was $822 million. The company had an additional borrowing capacity of $100 million under an asset-based line of credit, subject to certain borrowing base requirements.

Cash flow from operations was $41 million in the first quarter, compared to $194 million in the fourth quarter of 2021. Free cash flow was $22 million, compared to $171 million in the previous quarter.

MKS Instruments paid dividends worth $12 million in the quarter under review.

Orientation Q2

For the second quarter of 2022, MKS Instruments forecasts revenues of $730 million (+/- $30 million). Zacks’ consensus estimate for revenue is currently pegged at $749.95 million, indicating growth of 8.08% over the prior year quarter.

Non-GAAP earnings are expected to be $2.28 per share (+/- 24 cents).

The earnings consensus mark is currently set at $2.59 per share, suggesting a 1.17% improvement over the prior year quarter.

Zacks Ranking and Stocks to Consider

Currently, MKS Instruments carries a Zacks Rank #3 (Hold).

Shares of MKS Instruments have underperformed the Zacks Computer & Technology sector year-to-date. While shares of MKSI fell 33.2%, the sector fell 23.1%. Here are some top stocks to consider in the broader sector.

Analog devices (ADI Free report) wears a Zacks rank #2. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of ADI have fallen 13.1% since the start of the year. ADI is expected to release its second quarter 2022 results on May 18.

Cisco Systems (CSCO Free Report) carries a Zacks rank of 2.

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BWX Technologies (BWXT Free Report) carries a Zacks rank of 2.

BWX shares have returned 9.2% year-to-date. BWX is expected to report its first quarter 2022 results on May 9.

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