MKS Instruments MKSI 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%.

MKSI’s shares have inched up 0.4% year to date compared with the Zacks Computer & Technology sector’s growth of 11.5%. We believe the raised guidance will help MKSI stock to recover.

MKSI's 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%.

MKSI's 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%.

MKSI's 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.

MKSI Initiates Q4 Guidance

MKSI expects fourth-quarter 2024 revenues of $910 million (+/- $40 million).

The company expects an adjusted EBITDA of $226 million (+/- 23 million).

On a non-GAAP basis, MKSI expects earnings of $1.95 (+/- 32 cents) per share.

MKSI’s Zacks Rank & Stocks to Consider

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

Shopify SHOP, BiliBili BILI and NVIDIA NVDA are some better-ranked stocks that investors can consider in the broader sector. While SHOP sports Zacks Rank #1 (Strong Buy), BILI and NVIDIA carry Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shopify shares have risen 4.9% year to date. SHOP is set to report its third-quarter 2024 results on Nov. 12.

Bilibili shares have gained 82% year to date. BILI is set to report its third-quarter 2024 results on Nov. 14.

NVIDIA shares have gained 194% year to date. NVDA is set to report its third-quarter fiscal 2025 results on Nov. 20.

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