MKS Instruments, Inc. reports 149% Net Income growth in 2020 and 4.9 pp EBITDA Margin growth from 18.8% to 23.7%
01/27/2021 • About MKS Instruments, Inc. (
$MKSI) • By InTwits
MKS Instruments, Inc. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- MKS Instruments, Inc. is a fast growth stock: FY2020 revenue growth was 22.6%, 5 year revenue CAGR was 23.4% at FY2020 ROIC 14.1%
- MKS Instruments, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $85m in FY2020, $64m in FY2019, $63m in FY2018, $31m in FY2017, $19m in FY2016
- The company has highly profitable business model: ROIC is 14.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.8x while industry average is -1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
MKS Instruments, Inc.'s Revenue jumped on 22.6%. Revenue growth showed acceleration in FY20Q4 - it increased 32.1% YoY. During FY2016-FY2020 Revenue growth bottomed in FY2019 at -8.4%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.1 pp from -1.0% to 1.0% in FY2020.
Gross Margin increased slightly on 1.3 pp from 43.7% to 45.0% in FY2020. SG&A as a % of Revenue decreased on 2.2 pp from 17.4% to 15.2% in FY2020.
Net Income margin increased on 7.6 pp from 7.4% to 15.0% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 3.6%. CAPEX/Revenue increased on 2.0 pp from 1.6% in FY2017 to 3.6% in FY2020. For the last three years the average CAPEX/Revenue was 3.3%. CAPEX as a % of Revenue followed a growing trend at 0.61 pp per annum in the last 5 years.
Return on investment
The company operates at good ROIC (14.1%) and ROE (16.0%). ROIC increased on 5.7 pp from 8.3% to 14.1% in FY2020. ROE increased on 8.8 pp from 7.2% to 16.0% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.8x and Debt / EBITDA is 1.9x. Net Debt / EBITDA dropped on 0.7x from 1.5x to 0.8x in FY2020. Debt increased on 8.2% while cash jumped on 46.7%.
MKS Instruments, Inc. has no short term refinancing risk: cash is higher than short term debt (2,007.6%).
Valuation and dividends
MKS Instruments, Inc.'s trades at EV/EBITDA 17.2x and P/E 26.0x.
Management team
John T C Lee is a MKS Instruments, Inc.'s CEO. John T C Lee has spent 1 year with the company. MKS Instruments, Inc.'s CFO is Seth H Bagshaw. Seth H Bagshaw has 11 years tenure at the company.
Financial and operational results
MKS Instruments, Inc. ($MKSI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,295 | 1,916 | 2,075 | 1,900 | 2,330 | 22.6% |
| Gross Profit | 566 | 891 | 979 | 830 | 1,049 | 26.4% |
| SG&A | 229 | 291 | 298 | 330 | 353 | 6.9% |
| EBITDA | 223 | 489 | 574 | 357 | 553 | 54.7% |
| EBIT | 157 | 407 | 494 | | | |
| Interest expence | 31 | 31 | 17 | | | |
| Tax | 23 | 108 | 88 | | | |
| Net Income | 105 | 339 | 393 | 140 | 350 | 149.4% |
| Stock Based Compensation | 24 | 24 | 27 | | | |
Balance Sheet
|
|---|
| Cash | 229 | 334 | 644 | 415 | 608 | 46.7% |
| Accounts Receivable | 249 | 300 | 295 | | | |
| Inventory | 276 | 339 | 385 | | | |
| Accounts Payable | 69 | 83 | 84 | | | |
| Short Term Debt | 11 | 3 | 4 | 33 | 30 | -7.4% |
| Long Term Debt | 601 | 390 | 344 | 916 | 997 | 8.8% |
Cash flow
|
|---|
| Capex | 19 | 31 | 63 | 64 | 85 | 32.9% |
| Dividends | 36 | 38 | 42 | | | |
| Acquisitions | 940 | | | | | |
Ratios
|
|---|
| Revenue growth | 59.2% | 47.9% | 8.3% | -8.4% | 22.6% | |
| EBITDA growth | 24.9% | 119.2% | 17.3% | -37.7% | 54.7% | |
|
|---|
| Gross Margin | 43.7% | 46.5% | 47.2% | 43.7% | 45.0% | 1.3% |
| EBITDA Margin | 17.2% | 25.5% | 27.7% | 18.8% | 23.7% | 4.9% |
| EBIT Margin | 12.1% | 21.2% | 23.8% | | |
| SG&A, % of revenue | 17.7% | 15.2% | 14.4% | 17.4% | 15.2% | -2.2% |
| SBC, % of revenue | 1.8% | 1.3% | 1.3% | | |
| Net Income Margin | 8.1% | 17.7% | 18.9% | 7.4% | 15.0% | 7.6% |
| CAPEX, % of revenue | 1.5% | 1.6% | 3.0% | 3.4% | 3.6% | 0.3% |
|
|---|
| ROIC | 10.1% | 20.3% | 22.7% | 8.3% | 14.1% | 5.7% |
| ROE | 8.7% | 24.0% | 22.7% | 7.2% | 16.0% | 8.8% |
| Net Debt/EBITDA | 1.7x | 0.1x | -0.5x | 1.5x | 0.8x | -0.7x |
| Interest expence / Average debt | 5.0% | 6.2% | 4.6% | | | |
People
|
|---|
| Insider ownership | 1.2% | 1.2% | 1.2% | | | |
| Employees | 4,667 | 4,923 | 4,851 | | | |
| Revenue/Employee, th. $ | 278 | 389 | 428 | | | |
MKS Instruments, Inc. ($MKSI) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 536 | 544 | 590 | 660 | | 15.6% | 14.8% | 27.5% | 32.1% |
| EBITDA | 126 | 133 | 147 | 170 | | 134.1% | 36.1% | 46.4% | 60.3% |
| Net Income | 69 | 74 | 92 | 116 | | 454.8% | 95.3% | 93.3% | 170.7% |
Balance Sheet
|
|---|
| Cash | 442 | 429 | 493 | 608 | | 5.7% | 16.9% | 27.7% | 46.7% |
| Short Term Debt | 33 | 28 | 29 | 30 | | 9.3% | -11.4% | -13.2% | -7.4% |
| Long Term Debt | 932 | 981 | 989 | 997 | | -9.2% | 0.3% | 7.4% | 8.8% |
Ratios
|
|---|
| Gross Margin | 44.7% | 45.3% | 44.4% | 45.7% | | 2.0% | 0.7% | 0.1% | 2.4% |
| EBITDA Margin | 23.4% | 24.3% | 24.9% | 25.8% | | 11.9% | 3.8% | 3.2% | 4.5% |
| Net Income Margin | 12.9% | 13.5% | 15.5% | 17.5% | | 10.2% | 5.6% | 5.3% | 9.0% |
Peers in Semiconductor Equipment
Below you can find MKS Instruments, Inc. benchmarking vs. other companies in Semiconductor Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Xperi Corporation ($XPER) | - | 44.0% | 8.7% | -31.0% | 218.5% |
| DAQO New Energy Corp. ($DQ) | - | 41.1% | -6.7% | 16.0% | 93.0% |
| Advanced Energy Industries, Inc. ($AEIS) | - | 38.7% | 7.1% | 9.7% | 79.5% |
| Ichor Holdings ($ICHR) | - | 61.7% | 25.6% | -24.6% | 47.3% |
| ACM Research, Inc. ($ACMR) | - | 33.4% | 104.5% | 44.1% | 45.7% |
| |
|---|
| Median (27 companies) | 5.0% | 24.2% | 15.5% | -0.2% | 16.3% |
|---|
| MKS Instruments, Inc. ($MKSI) | - | 47.9% | 8.3% | -8.4% | 22.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Xperi Corporation ($XPER) | 99.8% | 98.3% | 96.7% | 97.0% | 91.2% |
| PDF Solutions, Inc. ($PDFS) | 58.6% | 53.4% | 50.1% | 60.9% | 58.2% |
| Teradyne, Inc. ($TER) | 54.7% | 57.2% | 58.1% | 58.4% | 57.2% |
| Nova Measuring Instruments Ltd. ($NVMI) | 45.9% | 59.1% | 57.8% | 54.2% | 56.8% |
| Kulicke and Soffa Industries, Inc. ($KLIC) | 45.7% | 47.2% | 46.1% | 47.1% | 47.8% |
| |
|---|
| Median (27 companies) | 37.3% | 43.2% | 40.2% | 40.3% | 42.4% |
|---|
| MKS Instruments, Inc. ($MKSI) | 43.7% | 46.5% | 47.2% | 43.7% | 45.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Xperi Corporation ($XPER) | 47.6% | 23.4% | 34.3% | 16.4% | 40.8% |
| DAQO New Energy Corp. ($DQ) | 43.3% | 49.1% | 36.1% | 27.1% | 38.0% |
| Teradyne, Inc. ($TER) | 3.4% | 29.6% | 27.9% | 30.3% | 33.8% |
| Cabot Microelectronics Corporation ($CCMP) | 23.4% | 27.2% | 31.5% | 20.1% | 31.6% |
| Entegris, Inc. ($ENTG) | 21.7% | 25.6% | 27.1% | 24.7% | 29.3% |
| |
|---|
| Median (25 companies) | 11.4% | 16.0% | 16.2% | 11.9% | 15.4% |
|---|
| MKS Instruments, Inc. ($MKSI) | 17.2% | 25.5% | 27.7% | 18.8% | 23.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| DAQO New Energy Corp. ($DQ) | 29.5% | 19.8% | 47.4% | 79.7% | 17.5% |
| Photronics, Inc. ($PLAB) | 10.4% | 20.4% | 17.3% | 32.4% | 11.6% |
| Cabot Microelectronics Corporation ($CCMP) | 4.1% | 4.2% | 3.6% | 5.4% | 11.3% |
| Amkor Technology, Inc. ($AMKR) | 16.5% | 13.1% | 12.7% | 11.7% | 10.9% |
| ACM Research, Inc. ($ACMR) | 2.9% | 1.8% | 2.5% | 0.9% | 9.5% |
| |
|---|
| Median (24 companies) | 2.6% | 3.2% | 2.9% | 3.2% | 3.5% |
|---|
| MKS Instruments, Inc. ($MKSI) | 1.5% | 1.6% | 3.0% | 3.4% | 3.6% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Teradyne, Inc. ($TER) | -2.9% | 23.8% | 22.6% | 29.2% | 40.3% |
| DAQO New Energy Corp. ($DQ) | 12.7% | 23.2% | 12.2% | 5.6% | 18.5% |
| Entegris, Inc. ($ENTG) | 10.3% | 14.7% | 15.4% | 11.3% | 16.4% |
| Advanced Energy Industries, Inc. ($AEIS) | 41.2% | 45.7% | 31.3% | 6.9% | 15.5% |
| Ultra Clean Holdings, Inc. ($UCTT) | 7.8% | 27.5% | 10.5% | 4.1% | 14.8% |
| |
|---|
| Median (27 companies) | 6.9% | 12.2% | 11.2% | 5.5% | 10.2% |
|---|
| MKS Instruments, Inc. ($MKSI) | 10.1% | 20.3% | 22.7% | 8.3% | 14.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Veeco Instruments Inc. ($VECO) | - | - | - | 577.2x | 3.4x |
| Cohu, Inc. ($COHU) | -6.0x | -2.7x | - | 10.1x | 2.9x |
| Xperi Corporation ($XPER) | 4.2x | 5.0x | 2.6x | 6.1x | 2.1x |
| Cabot Microelectronics Corporation ($CCMP) | -1.3x | -1.8x | -1.9x | 3.6x | 2.0x |
| Entegris, Inc. ($ENTG) | 0.7x | 0.1x | 1.1x | 1.6x | 1.0x |
| |
|---|
| Median (23 companies) | -1.3x | -0.7x | -1.0x | -0.4x | -0.4x |
|---|
| MKS Instruments, Inc. ($MKSI) | 1.7x | 0.1x | -0.5x | 1.5x | 0.8x |
