Company Overview - MKS is a leading technology solutions and subsystems provider focused on advanced semiconductor manufacturing, electronics, and packaging [1] Leadership and Presentation - The session features Ram Mayampurath, Executive Vice President and CFO, and Keith Loop, Vice President of Vacuum Systems and Services [2] - A presentation will be followed by a Q&A session, allowing for audience engagement [2]

MKS Instruments FY Conference Summary Company Overview - **Company**: MKS Instruments (NasdaqGS: MKSI) - **Industry**: Advanced Industrial Technology, focusing on semiconductor manufacturing, electronics, and packaging [1][2] Core Business Segments - **Semiconductor**: Long history of steady growth, driven by AI, big data, and high-performance computing. Expected to reach approximately $1 trillion in revenue by 2030 [5][6] - **Electronics and Packaging**: Growth driven by AI demand, with a focus on improving performance and efficiency in printed circuit boards and package substrates [11][12] - **Specialty Industrial**: Includes automotive, general industrial, aerospace, defense, and life sciences. This segment is currently stabilizing but remains below previous levels [4][18] Financial Performance - **2025 Financials**: Projected revenue of approximately $3.9 billion, representing a 9% year-over-year growth. EPS expected to grow by 22% [15][16] - **Free Cash Flow**: Strong generation with a projection of 15% of revenue in Q4 2025, compared to 11% in 2024 [15][16] - **Segment Performance**: - **Semiconductor**: Q3 revenue of $415 million, year-over-year growth of over 10% [16] - **Electronics and Packaging**: Q3 revenue growth of 25% year-over-year, driven by AI demand [17] - **Specialty Industrial**: Q3 revenue of approximately $284 million, showing slight improvement [18] Market Dynamics - **Wafer Fab Equipment (WFE)**: Significant increase in spending from $30 billion to over $100 billion in recent years, with expectations to exceed $150 billion by 2030 [6][7] - **Equipment Complexity**: Semiconductor manufacturing involves complex processes requiring advanced equipment, with MKS involved in 85% of the necessary equipment [9][10] Capital Allocation Strategy - **CapEx**: Expected to be 4%-5% of revenue, focusing on modernizing manufacturing facilities and expanding capacity [19] - **Debt Management**: Aiming to reduce net leverage to 2-2.5 times, with a disciplined approach to debt repayment [20][38] R&D and Innovation - **R&D Investment**: Approximately 8% of revenue spent on R&D, contributing to technology differentiation and competitive advantage [3][24] - **AI Integration**: Early stages of AI adoption within the company, focusing on enhancing operational efficiency [36][37] Service Revenue - **Service Component**: Accounts for about 40% of total revenue, with high margins and growth potential as the install base increases [25][26][27] Conclusion - **Growth Outlook**: Positive outlook for 2026, driven by strong market demand, effective cost management, and a focus on cash generation and deleveraging [21][29]

Key Takeaways MKS Instruments' Q3 earnings rose 12.2% year over year, beating estimates by 7.22%.Revenues grew 10.3% to $988 million, driven by strong product and Electronics & Packaging sales. MKSI projects Q4 revenues of about $990 million and non-GAAP EPS near $2.27 per share. MKS Inc. (MKSI) reported third-quarter 2025 adjusted earnings of $1.93 per share, which beat the Zacks Consensus Estimate by 7.22%. The figure increased 12.2% year over year.Revenues of $988 million beat the consensus mark by 2.7% ...

A strong stock as of late has been MKS (MKSI) . Shares have been marching higher, with the stock up 15.6% over the past month. The stock hit a new 52-week high of $157.23 in the previous session. MKS has gained 48.7% since the start of the year compared to the 25.1% move for the Zacks Computer and Technology sector and the 35.8% return for the Zacks Electronics - Miscellaneous Products industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surprises, as it hasn't ...

Revenue Performance - For the three months ended September 30, 2025, total net revenues were $988 million, a 1.5% increase from $973 million in the prior quarter[130]. - For the nine months ended September 30, 2025, total net revenues increased to $2,898 million, up $246 million (9.3%) from $2,652 million in the same period last year[148]. - Net product revenues for the nine months ended September 30, 2025, increased by $227 million (10.1%) compared to the prior year, driven by higher sales in the semiconductor and electronics markets[149]. - For the three months ended September 30, 2025, total net revenues were $988 million, with product revenues at $860 million (87.0%) and service revenues at $128 million (13.0%)[148]. Market Segment Performance - Semiconductor market revenues decreased by $17 million, or 4%, to $415 million compared to the prior quarter, primarily due to reduced demand from NAND upgrades[133]. - For the nine months ended September 30, 2025, semiconductor market revenues increased by $163 million, or 15%, to $1,261 million compared to $1,098 million in the same period last year[134]. - Electronics and packaging market revenues increased by $23 million, or 9%, to $289 million for the three months ended September 30, 2025, driven by higher chemistry and equipment sales[136]. - For the nine months ended September 30, 2025, electronics and packaging market revenues rose by $140 million, or 21%, to $809 million compared to $669 million in the same period last year[137]. - Specialty industrial market revenues increased by $9 million, or 3%, to $284 million for the three months ended September 30, 2025, mainly due to higher chemistry sales[142]. - For the nine months ended September 30, 2025, specialty industrial market revenues decreased by $57 million, or 6%, to $828 million compared to $885 million in the same period last year[143]. International Operations - International net revenues accounted for approximately 81% of total net revenues for the nine months ended September 30, 2025, up from 77% in the same period last year[144]. - Long-lived assets located outside the United States accounted for approximately 68% of total long-lived assets as of September 30, 2025, compared to 59% as of December 31, 2024[145]. Expenses and Profitability - Gross profit as a percentage of total net revenues for the three months ended September 30, 2025, was 46.6%, unchanged from the prior quarter, but down from 47.8% in the same period last year[155]. - Research and development expenses for the nine months ended September 30, 2025, increased by $16 million (7.8%) to $222 million compared to $206 million in the same period last year[163]. - Selling, general and administrative expenses increased by $5 million for the three months ended September 30, 2025, primarily due to a $3 million increase in compensation-related costs[167]. - For the nine months ended September 30, 2025, selling, general and administrative expenses rose by $41 million compared to the same period in the prior year, mainly driven by a $46 million increase in compensation-related costs[168]. Cash Flow and Investments - Net cash provided by operating activities was $503 million for the nine months ended September 30, 2025, resulting from net income of $188 million and non-cash charges of $240 million[188]. - Net cash used in investing activities was $96 million for the nine months ended September 30, 2025, primarily related to capital expenditures of $98 million[189]. - Cash and cash equivalents totaled $697 million at September 30, 2025, with $166 million held in the United States and $531 million held by foreign subsidiaries[186]. Debt and Financing - As of September 30, 2025, the company had a principal outstanding of $3.0 billion on its Term Loan Facility, with a weighted average interest rate of 5.8%[196]. - The company made additional voluntary prepayments of $100 million on the USD Tranche B loan in January, June, August, and October 2025[193]. - The company completed a private offering of $1.4 billion in convertible senior notes due 2030 on May 16, 2024[203]. - The effective interest rate of the convertible notes was 1.56% as of September 30, 2025[211]. - The company is required to prepay outstanding term loans with portions of its annual excess cash flow and net cash proceeds from certain asset sales[198]. Shareholder Returns - The company approved a share repurchase program for up to $200 million of its common stock, with repurchases depending on various factors including market conditions[190]. - Approximately 546,000 shares were repurchased for a total of $45 million during the nine months ended September 30, 2025, with a total of 3.1 million shares repurchased for approximately $172 million since the program's adoption[191]. - The Board declared a cash dividend of $0.22 per share for each of the first three quarters of 2025 and 2024, totaling $44 million for the nine months ended September 30, 2025 and 2024[192]. Tax and Regulatory Matters - The effective tax rate for the nine months ended September 30, 2025 was 12.7%, significantly lower than the U.S. statutory tax rate, mainly due to deductions for foreign derived intangible income and research and development tax credits[180]. - The company plans to apply ASU 2023-09 prospectively starting with the period ending December 31, 2025, with no impact on consolidated balance sheets, cash flows, or income statements[219]. - ASU No. 2024-03 requires public companies to disclose additional disaggregated information about certain income statement expense line items, effective for annual reporting periods beginning after December 15, 2026[219]. - As of September 30, 2025, there were no material changes in the company's exposure to market risk from December 31, 2024[221]. Restructuring and Charges - Restructuring and other charges for the three months ended September 30, 2025 amounted to $4 million, primarily related to severance costs from a global cost-saving initiative[170]. - Amortization of intangible assets for the three months ended September 30, 2025 increased by $1 million compared to the prior quarter, totaling $63 million[172]. - Loss on extinguishment of debt for the nine months ended September 30, 2025 was $8 million, associated with voluntary prepayments and the Fifth Amendment[177]. Strategic Initiatives - The company continues to implement strategies to strengthen supplier diversification and optimize logistics routes in response to evolving global trade conditions[125]. - The company continues to invest significantly in research and development to address evolving customer needs and market trends, particularly in semiconductor and electronics sectors[166].

Financial Data and Key Metrics Changes - Third quarter revenue reached $988 million, representing a 10% year-over-year increase and a 2% sequential increase, exceeding guidance expectations [4][12] - Net earnings per diluted share were $1.93, above the midpoint of guidance, with strong free cash flow generation of $147 million, over 100% of net earnings [4][16] - Gross margin for Q3 was 46.6%, stable compared to the previous quarter, with tariff impacts of about 80 basis points [15][16] Business Line Data and Key Metrics Changes - Semiconductor revenue was $415 million, down 4% sequentially but up 10% year-over-year, driven by strong demand in vacuum products and plasma and reactive gas businesses [12][13] - Electronics and packaging revenue grew to $289 million, up 25% year-over-year, driven by robust demand for chemistry and equipment [6][13] - Specialty industrial market revenue was $284 million, a 3% sequential increase but down 1% year-over-year, indicating stable trends [9][14] Market Data and Key Metrics Changes - The semiconductor market showed solid year-over-year growth, with expectations for flat sequential revenue in Q4, translating to double-digit growth for the year [5][12] - Electronics and packaging market revenue is expected to increase sequentially in Q4, with a robust full-year growth forecast of approximately 20% [9][18] - Specialty industrial market revenue is anticipated to remain steady at around $280 million in Q4 [19] Company Strategy and Development Direction - The company is focused on leveraging its comprehensive portfolio to capture emerging AI-driven demand and is well-positioned to support advanced technology roadmaps [4][10] - Continued investments in organic growth opportunities while reducing leverage through principal prepayments are part of the long-term capital allocation strategy [17][21] - The company aims to achieve a net leverage target of 2.5 times by 2027, with ongoing efforts to reduce debt [97] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the semiconductor market's recovery, particularly in memory pricing and demand, with expectations for a more supply-constrained environment [26][60] - The company anticipates continued strength in its chemistry equipment business, supported by AI, despite potential seasonal declines in chemistry sales [9][19] - Management highlighted the importance of adapting to evolving industry trends, particularly in advanced packaging and the increasing complexity of semiconductor applications [68][70] Other Important Information - The company made a voluntary principal prepayment of $100 million in October, totaling $400 million in voluntary payments for 2025 [17] - A dividend of $0.22 per share was paid during the quarter, amounting to $15 million [18] Q&A Session Summary Question: Clarification on E&P business and chemistry flow-through into 2026 - Management indicated that while they are not guiding for 2026, strong equipment sales position them well for additional chemistry revenue starting in 2026 [24][25] Question: Semiconductor order patterns and pricing recovery - Management noted positive trends in memory pricing and a potential supply-constrained environment, but emphasized that customer order patterns remain to be seen [26][60] Question: Growth drivers in E&P business - Management stated that equipment sales contribute significantly to revenue growth, with a historic year for the equipment business expected [31] Question: Visibility on equipment sales and chemistry growth - Management confirmed strong bookings for chemistry equipment and expressed confidence in meeting demand with existing manufacturing capacity [37] Question: Trends in NAND upgrade cycles - Management acknowledged the lumpy nature of NAND upgrades but expressed readiness to meet any uptick in demand [60] Question: Revenue trends by geography - Management highlighted growth driven by Asia, with a shift towards Southeast Asia as customers onshore chip and packaging fabs [77] Question: Direct China business outlook - Management indicated that while direct semiconductor sales to China are limited, advanced electronics packaging remains a significant part of their business [95]

MKS Inc. November 6, 2025 Safe Harbor for Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding the future financial performance, business prospects and growth of MKS Inc. ("MKS," the "Company," "our," or "we"). These statements are only predictions based on current assumptions and expectations. Any ...

For the quarter ended September 2025, MKS (MKSI) reported revenue of $988 million, up 10.3% over the same period last year. EPS came in at $1.93, compared to $1.72 in the year-ago quarter.The reported revenue represents a surprise of +2.7% over the Zacks Consensus Estimate of $962.01 million. With the consensus EPS estimate being $1.80, the EPS surprise was +7.22%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next ...

Core Insights - MKS reported quarterly earnings of $1.93 per share, exceeding the Zacks Consensus Estimate of $1.80 per share, and up from $1.72 per share a year ago [1] - The company achieved revenues of $988 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.70% and increasing from $896 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was +7.22%, following a previous surprise of +9.94% when actual earnings were $1.77 per share against an expected $1.61 per share [2] - MKS has consistently surpassed consensus EPS estimates over the last four quarters [2] Stock Performance - MKS shares have increased approximately 31.4% since the beginning of the year, outperforming the S&P 500's gain of 15.1% [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for continued outperformance in the near future [7] Future Outlook - Current consensus EPS estimate for the upcoming quarter is $1.72 on revenues of $946.96 million, and for the current fiscal year, it is $7.02 on revenues of $3.82 billion [8] - The industry outlook is favorable, with the Electronics - Miscellaneous Products sector ranking in the top 23% of Zacks industries, suggesting potential for strong performance [9]

| | | | Three Months Ended | | | | | | Nine Months Ended | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Q3 2025 | | | Q2 2025 | | Q3 2024 | Q3 2025 | | | Q3 2024 | | Net Revenues | | | | | | | | | | | | Semiconductor | $ | 415 | $ | 432 | $ | 378 | $ | 1,261 | $ | 1,098 | | Electronics & Packaging | | 289 | | 266 | | 231 | | 809 | | 669 | | Specialty Industrial | | 284 | | 275 | | 287 | | 828 | | 885 | | Total net revenues | $ | 988 | $ | 973 | $ | 896 | $ | 2,898 | $ | 2,652 | ...