MKS Accelerated Revenue Growth and Raised Its Outlook
Adjusted EBITDA margin widened to 28.6% as profitability and cash generation improved.
MKS Inc. (MKSI), the semiconductor and advanced-manufacturing equipment supplier, accelerated growth in the second quarter as all three of its segments increased revenue and operating margins widened.
Revenue rose 28.3% from a year earlier to $1.248 billion and increased 15.8% sequentially, following gains of 4.4% in the first quarter and 4.6% in the fourth quarter of 2024. The result topped the high end of management’s prior guidance by $8 million.
GAAP net income nearly tripled from a year earlier to $175 million, or $2.41 a share, from $62 million, or 92 cents a share. Adjusted earnings increased to $232 million, or $3.30 a share, from $119 million, or $1.77 a share.
Electronics & Packaging led the year-over-year expansion, with revenue climbing 43.2% to $381 million. Semiconductor revenue rose 28.2% to $554 million, while Specialty Industrial revenue increased 13.8% to $313 million after reversing its first-quarter sequential decline.
Gross margin expanded to 47.6% from 47.0% in the prior quarter, and non-GAAP operating margin widened 380 basis points to 25.6% after remaining in a narrow range during the preceding three quarters. Operating cash flow rebounded to $243 million from $53 million, while interest expense declined to $38 million following refinancing and debt reduction.
For the third quarter, MKS expects revenue of $1.350 billion at the midpoint, implying an 8.2% sequential increase, with even the low end of its range above the second-quarter result. The company projects adjusted EBITDA of $395 million and non-GAAP earnings of $3.58 a share at the midpoint.
MKS made a further $100 million voluntary term-loan payment in August after paying the same amount in May, extending a reduction in secured term-loan principal to $1.5 billion at June 30 from $2.9 billion at the end of 2024. Its third-quarter gross-margin forecast midpoint is 47.0%, 60 basis points below the second-quarter level despite the higher revenue and earnings outlook.