MKS Instruments, Inc. (MKSI) reported decent results for the fourth quarter of 2014, backed by strategic business and corporate level growth initiatives.
Quarterly non-GAAP earnings came in at 54 cents per share, which comfortably surpassed the Zacks Consensus Estimate of 47 cents and improved from the year-ago quarter's tally of 42 cents. The company’s non-GAAP earnings for 2014 were $1.89 per share compared with 90 cents accrued a year ago.
On a GAAP basis, MKS Instruments recorded earnings per share of 64 cents, as against 38 cents earned in the year-ago quarter. For 2014, GAAP earnings were $2.16 per share, reflecting a remarkable improvement from 67 cents earned at 2013-end. The year-over-year improvement was primarily attributable to the company’s successful attainment of certain strategic goals.
Revenues
Net sales declined roughly 1.7% year over year to $203.0 million. However, the top line surpassed the Zacks Consensus Estimate of $193 million by 5.2%. Also, total net revenue for 2014 grew approximately 17.7% to $781.9 million.
In fourth-quarter 2014, revenues from the sale of Products came in at $176.6 million, representing 87% of total revenue; while sales from Services amounted to $26.4 million and accounted for the remainder.
Margins/Costs
MKS Instruments’ adjusted gross profit margin increased 120 basis points (bps) to 44.1% from the year-ago quarter. Selling, general and administrative expenses stood at $32.6 million, down 18.1% year over year. Research and development expenditure inched down 1.4% year over year to $16.0 million. Adjusted operating margin was 20.1%, up from 16.7% recorded in the year-ago comparable period.
For 2014, the adjusted operating margin and gross profit margin of MKS Instruments stood at 18.6% and 43.5%, respectively, climbing 810 and 270 bps from their corresponding year-ago tallies.
Balance Sheet/Cash Flow
Cash and cash equivalents at year-end 2014 were $305.4 million, compared with $288.9 million at year-end 2013. In the fourth quarter, the company recorded a restructuring charge of $0.5 million, resulting from reduced input and workforce costs in one of its important foreign subsidiary. On a year-to-date basis, the total value of share repurchase, Granville-Phillips acquisition and dividends for the company amounted to $143 million.
Outlook
On the back of its core business growth, MKS Instruments aims to earn higher revenues and margins in the upcoming quarters. The company also plans to augment its brand status and financial performance by providing higher value to its stakeholders. For first-quarter 2015, the company estimates sales to come in the range of $195 to $215 million, and non-GAAP earnings to fall in the band of 45 to 60 cents.
Zacks Rank
With a market capitalization of $1.84 billion, MKS Instruments currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Kulicke and Soffa Industries, Inc. (KLIC), Tessera Technologies Inc. (TSRA) and Veeco Instruments Inc. (VECO). All the three stocks sport a Zacks Rank #1 (Strong Buy).
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