MKS Instruments Beats on Q1 Earnings, Revs - Analyst Blog

MKS Instruments, Inc. MKSI reported strong year-over-year results in the first quarter of 2014. The company reported adjusted earnings per share of 51 cents, beating the Zacks Consensus Estimate of 42 cents by 21.4%. Adjusted earnings also surpassed the year-ago earnings of 7 cents by an astounding 628.6%. The high income was primarily due to improvement in the semiconductor and other advanced markets.

On a GAAP basis, MKS Instruments recorded earnings per share of 58 cents, compared with the year-ago earnings of 11 cents.

Revenues

Net sales increased 45.7% year over year to $206.4 million. Reported revenues also beat the Zacks Consensus Estimate of $200.0 million.

Revenues from the sale of Products came in at $181.2 million and accounted for 87.8% of total revenue, while sales from Services came in at $25.2 million, accounting for the remaining 12.2%.

Margins/Costs

MKS Instruments' gross profit increased 63.4% from the year-earlier quarter to $89.4 million in the first quarter. SG&A (selling, general and administrative) expenses were $34.6 million, roughly flat year over year. The company reported adjusted operating margins of 19.0%, up from 3.8% in the year-ago comparable period.

Balance Sheet/Cash Flow

Cash and cash equivalents at the end of the first quarter were $287.1 million, compared with $278.5 million at the end of the preceding quarter.

During the quarter, MKS Instruments paid a quarterly cash dividend of 16 cents per share.

Also, the company announced the acquisition of Granville-Phillips worth $87 million, which is expected to be completed in the second quarter.

Outlook

The semiconductor industry is experiencing a decline in original equipment manufacturer bookings, which is lowering order rates for MKS Instruments. Revenues are expected in the range of $160.0 to $180.0 million in second-quarter 2014, while adjusted earnings per share are anticipated within the 21 to 35 cents range. Also, GAAP earnings per share are expected in the range of 20 to 34 cents.

Other Stocks to Consider

MKS Instruments currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the semiconductor industry include Alliance Fiber Optic Products Inc. AFOP, Tessera Technologies Inc. TSRA and Bruker Corporation BRKR. While Alliance Fiber Optic sports a Zacks Rank #1 (Strong Buy), Tessera and Bruker have a Zacks Rank #2 (Buy).