MKSI Q2 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Rise

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]