Core Insights - The article emphasizes the importance of MKS's international operations in assessing its financial resilience and growth prospects, particularly in the semiconductor equipment sector [1][2][3] Revenue Performance - MKS reported total revenue of $973 million for the quarter, reflecting a year-over-year increase of 9.7% [4] - International revenue streams contributed significantly, with $248 million from Other International, accounting for 25.5% of total revenue, surpassing analyst expectations of $240.24 million [5] - Japan's revenue was $59 million, representing 6.1% of total revenue, which was below the expected $65.77 million, marking a decline of 10.29% [6] - China generated $219 million, making up 22.5% of total revenue, exceeding the consensus estimate of $207.83 million by 5.38% [7] Future Revenue Forecasts - Analysts project MKS will report revenues of $963.62 million for the current fiscal quarter, an increase of 7.6% year-over-year, with expected contributions of 24.9% from Other International, 7.1% from Japan, and 21.6% from China [8] - For the full year, total annual revenue is anticipated to reach $3.77 billion, a 5.2% increase from the previous year, with specific contributions from Other International (25.6%), Japan (7.2%), and China (22.4%) [9] Strategic Considerations - The reliance on international markets presents both opportunities and challenges for MKS, necessitating close monitoring of international revenue trends to project future performance [10] - Analysts are increasingly focused on international operations due to their impact on earnings estimates and stock price movements, highlighting the significance of geopolitical factors and local market conditions [11][12]

Core Insights - MKS Inc. (MKSI) reported second-quarter 2025 adjusted earnings of $1.77 per share, exceeding the Zacks Consensus Estimate by 9.94% and reflecting a year-over-year increase of 15.7% [1] - Revenues reached $973 million, surpassing the consensus mark by 4.61% and showing a year-over-year growth of 9.7% [1] - MKSI shares rose 6.6% in pre-market trading, although the company has experienced a 14.2% decline year to date, underperforming the Zacks Computer and Technology sector's 12.2% [1] Revenue Breakdown - Product revenues, accounting for 87.2% of total revenues, were $848 million, up 10.1% year over year [2] - Service revenues, making up 12.8% of total revenues, increased 6.8% year over year to $125 million [2] - Revenues from the Semiconductor market, which constituted 44.4% of total revenues, rose 17.1% year over year to $432 million [3] - Electronics & Packaging revenues, representing 27.3% of total revenues, were $266 million, up 16.2% year over year [3] - Specialty Industrial revenues, accounting for 28.3% of total revenues, declined 4.8% year over year to $275 million [3] Segment Performance - Revenues from Vacuum Solutions, which made up 41.8% of total revenues, increased 21.5% year over year to $407 million [4] - Photonics Solutions revenues, comprising 25% of total revenues, decreased 4.3% year over year to $243 million [4] - Materials Solutions revenues, accounting for 33.2% of total revenues, climbed 8.4% year over year to $323 million [4] Operating Metrics - The adjusted gross margin contracted by 70 basis points year over year to 46.6% [5] - Adjusted EBITDA rose 5.3% year over year to $240 million, with the adjusted EBITDA margin contracting 100 basis points year over year to 24.7% [5] - Total operating expenses increased 10.6% year over year to $251 million [5] - Non-GAAP operating income was reported at $202 million, up 5.2% year over year, with the adjusted operating margin contracting 90 basis points year over year to 20.8% [6] Balance Sheet Overview - As of June 30, 2025, cash and cash equivalents stood at $674 million, up from $655 million as of March 31 [7] - Long-term debt was reported at $4.36 billion [7] - Cash flow from operations was $165 million in Q2 2025, compared to $141 million in Q1 2025 [7] - Free cash flow increased to $136 million from $123 million in the previous quarter [7] Q3 Guidance - For Q3 2025, MKSI expects revenues of $960 million, with a variance of plus or minus $40 million [9] - The company anticipates a gross margin of 46.5% (plus or minus 1%) and an adjusted EBITDA of $232 million (plus or minus $24 million) [9] - Non-GAAP earnings are projected at $1.80 per share, with a variance of plus or minus $0.29 [9]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 [ITEM 1. FINANCIAL STATEMENTS (Unaudited)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements, highlighting key financial positions, operational results, equity changes, and cash flows for the period ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025 Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $674 | $714 | | Inventories | $918 | $893 | | Goodwill | $2,570 | $2,479 | | Total assets | $8,826 | $8,590 | | **Liabilities & Equity** | | | | Total current liabilities | $832 | $775 | | Long-term debt, net | $4,357 | $4,488 | | Total liabilities | $6,273 | $6,268 | | Total stockholders' equity | $2,553 | $2,322 | - Total assets increased to **$8.826 billion** as of June 30, 2025, from **$8.590 billion** at the end of 2024, driven by increases in goodwill and property, plant, and equipment[7](index=7&type=chunk) - Total liabilities remained relatively stable at approximately **$6.3 billion**, while stockholders' equity increased from **$2.322 billion** to **$2.553 billion**, primarily due to retained earnings and changes in accumulated other comprehensive loss[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) This section details the company's financial performance, including revenues, gross profit, and net income for the second quarter and year-to-date periods of 2025 Consolidated Statement of Operations Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net revenues | $973 | $887 | $1,910 | $1,755 | | Gross profit | $453 | $419 | $897 | $834 | | Income from operations | $135 | $127 | $246 | $233 | | Net income | $62 | $23 | $114 | $37 | | Diluted EPS | $0.92 | $0.33 | $1.69 | $0.55 | - Net revenues for Q2 2025 increased by **9.7% YoY** to **$973 million**, and for the six months ended June 30, 2025, revenues grew by **8.8% YoY** to **$1.91 billion**[9](index=9&type=chunk) - Net income for Q2 2025 more than doubled to **$62 million** compared to **$23 million** in Q2 2024, driven by higher revenues and lower interest and debt extinguishment expenses[9](index=9&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in the company's equity, including share repurchases and dividend payments, for the period ended June 30, 2025 - Total stockholders' equity increased from **$2.322 billion** at the end of 2024 to **$2.553 billion** at June 30, 2025[11](index=11&type=chunk) - During the first six months of 2025, the company repurchased **0.5 million shares** for **$45 million** and paid cash dividends of **$30 million** (**$0.44 per share**)[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities for the first half of 2025 Consolidated Statement of Cash Flows Highlights (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $306 | $189 | | Net cash used in investing activities | ($45) | ($44) | | Net cash used in financing activities | ($309) | ($159) | | **Decrease in cash and cash equivalents** | **($40)** | **($25)** | - Cash from operations significantly increased to **$306 million** for the first half of 2025, up from **$189 million** in the prior-year period, primarily due to higher net income[14](index=14&type=chunk) - Financing activities used **$309 million**, mainly for debt repayments of **$225 million**, common stock repurchases of **$45 million**, and dividend payments of **$30 million**[14](index=14&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on the company's segments, revenue by end market, and debt structure, supporting the financial statements - The company operates under three reportable segments: Vacuum Solutions Division (VSD), Photonics Solutions Division (PSD), and Materials Solutions Division (MSD)[17](index=17&type=chunk) Revenue by End Market (in millions) | End Market | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Semiconductor | $432 | $369 | $846 | $720 | | Electronics and Packaging | $266 | $229 | $519 | $437 | | Specialty Industrial | $275 | $289 | $545 | $598 | | **Total net revenues** | **$973** | **$887** | **$1,910** | **$1,755** | Debt Summary (in millions) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Term Loan Facility, net | $2,981 | $3,114 | | Convertible Notes, net | $1,376 | $1,374 | | **Total long-term debt, net** | **$4,357** | **$4,488** | Revenue by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | VSD | $407 | $335 | $793 | $668 | | PSD | $243 | $254 | $507 | $507 | | MSD | $323 | $298 | $610 | $580 | | **Total** | **$973** | **$887** | **$1,910** | **$1,755** | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=34&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial performance, condition, and operational results, highlighting revenue drivers, expense trends, and liquidity for the period ended June 30, 2025 [Overview and Markets](index=34&type=section&id=Overview%20and%20Markets) This section provides an overview of the company's market focus and details revenue performance across its key end markets - The company delivers foundational technology solutions to the semiconductor manufacturing, electronics and packaging, and specialty industrial applications markets[117](index=117&type=chunk) Net Revenues by End Market (in millions) | End Market | Q2 2025 | Q1 2025 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Semiconductor | $432 | $413 | $846 | $720 | | Electronics and Packaging | $266 | $253 | $519 | $437 | | Specialty Industrial | $275 | $270 | $545 | $598 | | **Total net revenues** | **$973** | **$936** | **$1,910** | **$1,755** | - Semiconductor market revenue increased **5% sequentially** in Q2 2025 due to strength in logic and foundry applications and upgrades for NAND memory production[127](index=127&type=chunk) - Electronics and Packaging market revenue grew **5% sequentially**, driven by a seasonal rebound in chemistry sales after the Lunar New Year[131](index=131&type=chunk) - Specialty Industrial market revenue decreased **9% year-over-year** for the six-month period, mainly due to lower chemistry sales in the automotive market and lower revenues in the general industrial market[138](index=138&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) This section analyzes key operational metrics including gross margin, research and development expenses, and interest expense for the reporting period - Total gross margin for Q2 2025 was **46.6%**, a decrease of **0.8 percentage points** from Q1 2025, primarily due to higher duty/tariff costs and unfavorable product mix[151](index=151&type=chunk)[154](index=154&type=chunk) - Research and development expenses increased to **$76 million** in Q2 2025 from **$70 million** in Q1 2025, mainly due to higher compensation-related costs[157](index=157&type=chunk)[158](index=158&type=chunk) - Selling, general and administrative expenses decreased by **$10 million** sequentially to **$175 million** in Q2 2025, primarily from lower stock compensation costs[162](index=162&type=chunk) - Interest expense, net, decreased by **$54 million** for the first six months of 2025 compared to the same period in 2024, due to debt refinancing at a lower interest rate and voluntary prepayments[169](index=169&type=chunk) - The effective tax rate for the six months ended June 30, 2025 was **13.0%**, lower than the U.S. statutory rate due to deductions for foreign derived intangible income (FDII) and R&D credits[174](index=174&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, operating cash flow, debt management, and capital allocation strategies - The company held **$674 million** in cash and cash equivalents as of June 30, 2025, with **$577 million** held by foreign subsidiaries[179](index=179&type=chunk)[180](index=180&type=chunk) - Net cash from operating activities was **$306 million** for the first six months of 2025, a significant increase from **$189 million** in the prior year period[182](index=182&type=chunk) - The company made voluntary debt prepayments of **$100 million** in January 2025 and **$100 million** in June 2025 on its USD Tranche B loan. An additional **$100 million** was prepaid on August 1, 2025[187](index=187&type=chunk)[193](index=193&type=chunk) - In the first half of 2025, the company repurchased **$45 million** of its common stock and paid **$30 million** in dividends[183](index=183&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - As of June 30, 2025, the principal outstanding on the Term Loan Facility was **$3.1 billion** with a weighted average interest rate of **5.9%**. There were no borrowings under the **$675 million** Revolving Facility[190](index=190&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=41&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section confirms no material changes in the company's market risk exposure since December 31, 2024, referencing prior disclosures - As of June 30, 2025, there were no material changes in the company's exposure to market risk from the levels reported at December 31, 2024[215](index=215&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management confirms the effectiveness of disclosure controls and procedures as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[216](index=216&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[217](index=217&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes disclosures on risk factors, other information, and a list of exhibits filed with the report [ITEM 1A. RISK FACTORS](index=42&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section incorporates by reference the company's risk factors from its Annual Report on Form 10-K and prior Quarterly Report on Form 10-Q - The company's risk factors are incorporated by reference from its Annual Report on Form 10-K for the year ended December 31, 2024, and its Quarterly Report on Form 10-Q for the period ended March 31, 2025[218](index=218&type=chunk) [ITEM 5. OTHER INFORMATION](index=42&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section confirms that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - During the second quarter of 2025, none of the company's directors or officers adopted or terminated a trading arrangement under Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement[219](index=219&type=chunk) [ITEM 6. EXHIBITS](index=43&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits accompanying the Form 10-Q, including required certifications and XBRL data files - The report includes standard exhibits such as CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL documents[221](index=221&type=chunk)

Financial Data and Key Metrics Changes - The company reported second quarter revenue of $973 million, which was above the high end of guidance, reflecting a 4% sequential increase and a 10% year-over-year increase [5][13] - Net earnings per diluted share were $1.77, at the high end of guidance, with a gross margin of 46.6% [6][18] - Free cash flow increased to $136 million, representing over 100% of net earnings and 14% of revenue [19] Business Line Data and Key Metrics Changes - Semiconductor revenue reached $432 million, up 5% sequentially and 17% year-over-year, driven by demand in vacuum solutions and normalization of customer inventories [14] - Electronics and packaging revenue was $266 million, also up 5% sequentially and 16% year-over-year, supported by growth in chemistry and chemistry equipment [15] - Specialty industrial revenue was $275 million, a 2% sequential increase but down 5% year-over-year, with modest improvements in life and health sciences [16][10] Market Data and Key Metrics Changes - The semiconductor market is expected to see mid to high single-digit year-over-year growth, while electronics and packaging is anticipated to grow double digits year-over-year in Q3 [9][10] - The specialty industrial market is expected to remain flat in Q3 [11] Company Strategy and Development Direction - The company is focused on expanding its value-added services and maintaining a disciplined cost structure while investing in organic growth opportunities [12][19] - The management emphasized the importance of technology integration in advanced applications, particularly in AI-related sectors [10][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in mitigating tariff impacts and expects a gross margin of 46.5% in Q3, with a reduced tariff impact compared to Q2 [22] - The company remains optimistic about its growth trajectory despite trade-related challenges, with significant increases in revenue, earnings per share, and free cash flow in the first half of the year [24] Other Important Information - The company made voluntary principal prepayments totaling $200 million on its term loan, demonstrating strong cash flow management [5][19] - The company has approximately $1.3 billion in liquidity, including cash and undrawn credit facilities [19] Q&A Session Summary Question: Future semiconductor revenue trends - Management indicated that the semiconductor portfolio is growing year-over-year and is expected to outperform the market, with NAND upgrades being a significant factor [26][28] Question: Strength in electronics and packaging - Management noted that the strength in the PCB business was primarily driven by AI demand, with expectations for continued growth in Q3 [29][30] Question: Chemistry equipment orders sustainability - Management confirmed that high utilization rates among substrate manufacturers are driving demand for chemistry equipment, indicating a potential sustainable trend [34] Question: Tariff impacts on guidance - Management stated that while tariffs had a significant impact in Q2, they expect less impact in Q3 due to mitigation strategies [76][77] Question: Specialty industrial business indicators - Management highlighted that while the industrial segment remains muted, the defense sector has shown growth, providing a positive outlook for that area [89]

Financial Data and Key Metrics Changes - Second quarter revenue was $973 million, up 4% sequentially and up 10% year over year, exceeding guidance [13][14] - Net earnings per diluted share were $1.77, at the high end of guidance [18] - Gross margin was 46.6%, impacted by tariffs, with an estimated negative impact of 115 basis points [17][21] - Free cash flow was $136 million, representing over 100% of net earnings and 14% of revenue [19] Business Line Data and Key Metrics Changes - Semiconductor revenue was $432 million, up 5% sequentially and 17% year over year, driven by demand in vacuum solutions and normalization of customer inventories [14] - Electronics and packaging revenue was $266 million, up 5% sequentially and 16% year over year, driven by growth in chemistry and chemistry equipment [15] - Specialty industrial revenue was $275 million, up 2% sequentially but down 5% year over year, with modest improvements in life sciences and research [16][12] Market Data and Key Metrics Changes - Semiconductor market outlook indicates mid to high single-digit year-over-year growth for the upcoming quarter [9] - Electronics and packaging market is expected to see double-digit year-over-year growth in Q3, driven by AI-related applications [10] - Specialty industrial market is expected to be flattish in Q3, with defense showing growth [12] Company Strategy and Development Direction - Company focuses on expanding value-added services and maintaining a disciplined cost structure while investing in growth [8][19] - Emphasis on technology integration in advanced applications, particularly in AI and complex electronics [10][48] - Continued efforts to reduce leverage through principal prepayments and optimizing capital allocation [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic trade environment and mitigating tariff impacts [21][23] - Anticipated revenue for Q3 is $960 million, with semiconductor revenue expected to be around $405 million [20] - Management remains optimistic about long-term growth despite short-term volatility in NAND upgrade cycles [26] Other Important Information - Company received recognition as the best company to work for by US News and among America's best mid-sized companies by Time [13] - The effective tax rate for Q2 was 18.2%, consistent with guidance [18] Q&A Session Summary Question: Future semiconductor revenue trends - Management indicated that the semiconductor portfolio is growing year over year, with NAND upgrades being lumpy but beneficial in the long term [26][27] Question: PCB business outlook - Management noted that Q2 strength was driven by AI, with expectations for continued growth in Q3 [29][30] Question: Chemistry equipment orders sustainability - Management confirmed high utilization rates among substrate manufacturers, indicating a positive trend for chemistry equipment orders driven by AI [34][35] Question: Tariff impacts on guidance - Management stated that while tariffs had a significant impact in Q2, they expect less impact in Q3 due to mitigation strategies [21][79] Question: Specialty industrial business indicators - Management highlighted growth in defense and stability in life sciences, despite muted industrial performance [93]

Q2 2025 Financial Performance - Revenue reached $973 million[10], exceeding guidance due to increased demand in Semiconductor and Electronic & Packaging markets[11] - Non-GAAP net earnings per diluted share were $1.77[10], at the high end of guidance[11] - Adjusted EBITDA was $240 million[10] - Non-GAAP gross margin was 46.6%[10] Segment Performance - Semiconductor revenue was $432 million[12], a 17% year-over-year increase or 16% excluding FX impacts[12] - Electronics & Packaging revenue was $266 million[19], a 16% year-over-year increase excluding FX and Palladium impacts, or 14% year-over-year increase[19] - Specialty Industrial revenue was $275 million[26], a 5% year-over-year decrease excluding FX and Palladium impacts, or 6% year-over-year decrease[26] Q3 2025 Outlook - Revenue is projected to be $960 million, with a variance of plus or minus $40 million[40] - Semiconductor revenue is expected to be $405 million, with a variance of plus or minus $15 million[16, 43] - Electronics & Packaging revenue is expected to be $285 million, with a variance of plus or minus $10 million[23, 43] - Specialty Industrial revenue is expected to be $270 million, with a variance of plus or minus $15 million[30, 43]

Core Insights - MKS reported quarterly earnings of $1.77 per share, exceeding the Zacks Consensus Estimate of $1.61 per share, and up from $1.53 per share a year ago [1][2] - The company achieved revenues of $973 million for the quarter, surpassing the Zacks Consensus Estimate by 4.61% and increasing from $887 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was +9.94%, following a previous surprise of +20.42% when earnings were $1.71 per share against an expectation of $1.42 [2] - MKS has consistently surpassed consensus EPS estimates over the last four quarters [2] Revenue Performance - MKS has also exceeded consensus revenue estimates in each of the last four quarters [3] - The current consensus EPS estimate for the upcoming quarter is $1.52, with expected revenues of $926.3 million, and for the current fiscal year, the estimate is $6.64 on $3.74 billion in revenues [8] Market Position and Outlook - MKS shares have underperformed the market, losing about 11.9% since the beginning of the year, while the S&P 500 has gained 7.1% [4] - The Zacks Rank for MKS is currently 1 (Strong Buy), indicating expectations for the stock to outperform the market in the near future [7] Industry Context - The Electronics - Miscellaneous Products industry, to which MKS belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Another company in the same industry, Universal Electronics, is expected to report earnings soon, with a projected EPS of $0.05, reflecting a year-over-year increase of +155.6% [10]

[Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) MKS Inc. reported strong second-quarter 2025 results, with revenue and adjusted EBITDA surpassing the high end of guidance, and GAAP net income and earnings per share above the midpoint, driven by significant year-over-year growth in Semiconductor and Electronics & Packaging markets Q2 2025 Key Financial Results (in millions, except per diluted share amounts) | Metric | Value | Guidance Comparison | | :--- | :--- | :--- | | Revenue | $973 | Above high end | | GAAP Net Income | $62 | Above midpoint | | GAAP Net Income per Diluted Share | $0.92 | Above midpoint | | Adjusted EBITDA | $240 | Above high end | | Non-GAAP Net Earnings per Diluted Share | $1.77 | At high end | - The strong performance was attributed to robust year-over-year growth in the Semiconductor and Electronics & Packaging end markets, fueled by demand for products related to advanced packaging and AI applications[3](index=3&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted exceptional execution, strong cash flow generation, and progress in deleveraging the balance sheet, successfully navigating trade policy instability while focusing on long-term value creation - CEO John T.C. Lee emphasized that results reflect growing demand for solutions in advanced packaging and AI-related applications[3](index=3&type=chunk) - CFO Ram Mayampurath noted the company's progress on deleveraging, with two separate voluntary principal prepayments of **$100 million** each on its term loan in June and August 2025[3](index=3&type=chunk)[7](index=7&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) The company's total net revenues for Q2 2025 reached **$973 million**, an increase from **$887 million** in Q2 2024, primarily driven by the Semiconductor and Electronics & Packaging segments, with GAAP net income substantially increasing to **$62 million** from **$23 million** [Revenue by End Market](index=2&type=section&id=Revenue%20by%20End%20Market) In Q2 2025, revenue from the Semiconductor market grew **17%** year-over-year to **$432 million**, and the Electronics & Packaging market grew **16%** to **$266 million**, while the Specialty Industrial market saw a slight decline of **5%** to **$275 million** Net Revenues by End Market (in millions) | End Market | Q2 2025 | Q1 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Semiconductor | $432 | $413 | $369 | +17.1% | | Electronics & Packaging | $266 | $253 | $229 | +16.2% | | Specialty Industrial | $275 | $270 | $289 | -4.8% | | **Total net revenues** | **$973** | **$936** | **$887** | **+9.7%** | [Key Financial Metrics (GAAP & Non-GAAP)](index=2&type=section&id=Key%20Financial%20Metrics%20%28GAAP%20%26%20Non-GAAP%29) GAAP net income for Q2 2025 was **$62 million**, or **$0.92** per diluted share, a significant improvement from **$23 million**, or **$0.33** per share, in Q2 2024, with Non-GAAP net earnings also increasing to **$119 million**, or **$1.77** per diluted share, compared to **$103 million**, or **$1.53** per share, in the prior-year period Q2 2025 vs. Q2 2024 Key Metrics (in millions, except percentages and per diluted share amounts) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **GAAP Measures** | | | | Gross Margin | 46.6% | 47.3% | | Operating Margin | 13.9% | 14.4% | | Net Income | $62 | $23 | | Net Income per Diluted Share | $0.92 | $0.33 | | **Non-GAAP Measures** | | | | Gross Margin | 46.6% | 47.3% | | Operating Margin | 20.8% | 21.7% | | Net Earnings | $119 | $103 | | Net Earnings per Diluted Share | $1.77 | $1.53 | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's operational results, financial position, and cash flows, showing net cash provided by operating activities of **$306 million** for the six months ended June 30, 2025, and total assets growing to **$8.83 billion** - The Statement of Operations shows a year-over-year increase in Q2 net revenues to **$973 million** and a significant rise in net income to **$62 million**[19](index=19&type=chunk) - The Balance Sheet as of June 30, 2025, indicates total assets of **$8.8 billion** and total liabilities of **$6.3 billion**[21](index=21&type=chunk) - The Statement of Cash Flows for the first six months of 2025 shows a strong net cash inflow from operating activities of **$306 million**, compared to **$189 million** in the prior year period[23](index=23&type=chunk) [Balance Sheet and Deleveraging](index=2&type=section&id=Balance%20Sheet%20and%20Deleveraging) As of June 30, 2025, MKS maintained a solid liquidity position with **$674 million** in cash and cash equivalents and **$675 million** of available borrowing capacity, actively deleveraging through two voluntary principal prepayments of **$100 million** each in June and August 2025 Key Balance Sheet Items (as of June 30, 2025, in millions) | Item | Amount | | :--- | :--- | | Cash and cash equivalents | $674 | | Secured term loan principal | $3,100 | | Convertible senior notes | $1,400 | | Additional borrowing capacity | up to $675 | - The company made a voluntary principal prepayment of **$100 million** in June 2025 and another **$100 million** in August 2025 on its USD term loan B, demonstrating a commitment to reducing its debt[7](index=7&type=chunk) [Third Quarter 2025 Outlook](index=2&type=section&id=Third%20Quarter%202025%20Outlook) MKS provided guidance for the third quarter of 2025, projecting revenues to be in the range of **$920 million** to **$1.0 billion**, with anticipated GAAP net income per diluted share of **$0.99** (±**$0.31**) and Non-GAAP net earnings per diluted share of **$1.80** (±**$0.29**) Q3 2025 Guidance (in millions, except per diluted share amounts and percentages) | Metric | Guidance Range | | :--- | :--- | | Revenue | $960 ± $40 | | Gross Margin | 46.5% ± 1.0% | | GAAP Net Income per Diluted Share | $0.99 ± $0.31 | | Non-GAAP Net Earnings per Diluted Share | $1.80 ± $0.29 | | Adjusted EBITDA | $232 ± $24 | - The guidance is based on the business environment as of the release date and includes impacts from U.S. import tariffs and retaliatory actions by other countries[9](index=9&type=chunk) [Supplemental Information](index=3&type=section&id=Supplemental%20Information) This section provides details for the upcoming investor conference call, explains the use of Non-GAAP financial measures, and includes the standard safe harbor statement for forward-looking information, along with detailed reconciliation tables between GAAP and Non-GAAP results - A conference call to discuss the results is scheduled for Thursday, August 7, 2025, at 8:30 a.m. (Eastern Time)[11](index=11&type=chunk) - The report includes Non-GAAP financial measures, which management believes are useful for investors in comparing periods and analyzing business trends, with detailed reconciliations to GAAP measures provided[13](index=13&type=chunk)[24](index=24&type=chunk) - The press release contains forward-looking statements regarding future performance and prospects, which are subject to various risks and uncertainties as detailed in the company's SEC filings[15](index=15&type=chunk)[16](index=16&type=chunk)

Core Insights - MKS Inc. reported strong financial results for Q2 2025, with revenues and adjusted EBITDA exceeding guidance, driven by growth in Semiconductor and Electronics & Packaging markets [2][6] - The company emphasized its focus on creating durable value for customers and shareholders while managing trade policy instability [2][4] - MKS made significant progress in deleveraging its balance sheet, with $200 million in voluntary principal prepayments on its term loan in June and August [4][6] Financial Performance - Total net revenues for Q2 2025 reached $973 million, a 9.7% increase from $887 million in Q2 2024 [2][16] - Semiconductor revenues were $432 million, up from $369 million year-over-year, while Electronics & Packaging revenues increased to $266 million from $229 million [2][16] - Gross margin for Q2 2025 was 46.6%, slightly down from 47.3% in Q2 2024, while operating margin improved to 13.9% from 14.4% [2][16] Earnings and Cash Flow - GAAP net income for Q2 2025 was $62 million, compared to $23 million in Q2 2024, resulting in net income per diluted share of $0.92 [2][16] - Non-GAAP net earnings were $119 million, with a diluted earnings per share of $1.77, reflecting strong operational performance [2][24] - Cash flows from operating activities for Q2 2025 were $165 million, up from $141 million in Q1 2025 [22][24] Balance Sheet and Debt Management - As of June 30, 2025, MKS had $674 million in cash and cash equivalents, with total liabilities of $6.273 billion [4][19] - The company has $3.1 billion in secured term loan principal outstanding and $1.4 billion in convertible senior notes [4][19] - MKS's proactive debt management included a $100 million prepayment in June and another $100 million in August 2025 [4][6] Future Guidance - For Q3 2025, MKS expects revenues of approximately $960 million, with a gross margin of around 46.5% [13][29] - The company anticipates GAAP net income of $67 million and non-GAAP net earnings of $121 million for the upcoming quarter [13][29] - MKS will continue to monitor the business environment, particularly the impact of U.S. import tariffs and international trade policies [7][29]

Group 1 - MKS Inc. has authorized a quarterly cash dividend of $0.22 per share, payable on September 5, 2025, to shareholders of record as of August 25, 2025 [1] - Future dividend declarations and payment dates are subject to the Board of Directors' final determination [1] Group 2 - MKS Inc. is a global provider of enabling technologies, delivering foundational technology solutions for semiconductor manufacturing, electronics, packaging, and specialty industrial applications [2] - The company focuses on addressing challenges in miniaturization and complexity in advanced device manufacturing, enhancing power, speed, feature enhancement, and optimized connectivity [2]