MKSI

Investors might want to bet on MKS (MKSI), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook. The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this maker of analysis and processing equipment for semiconductor companies, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core. The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008. For MKS, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: For the current quarter, the company is expected to earn $3.53 per share, which is a change of +82.9% from the year-ago reported number. Over the last 30 days, three estimates have moved higher for MKS compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 9.49%. For the full year, the earnings estimate of $12.96 per share represents a change of +64.5% from the year-ago number. There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, seven estimates have moved up for MKS versus no negative revisions. This has pushed the consensus estimate 10.15% higher. The promising estimate revisions have helped MKS earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500. MKS shares have added 5.5% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MKS Inc. (MKSI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The gain was set before the results crossed, and its optical peers rose with it. Coherent (COHR) stock gained about 9% on Wednesday, which reads like a market applauding a good quarter. The timing says otherwise. The fourth-quarter results did not cross until after the closing bell, so the entire session's gain was locked in before anyone outside the company had seen a figure, and the coverage that followed the release reported the stock slipping despite the beat. Its Optical Peers Rose That Same Session The tape points away from anything Coherent-specific. LITE gained 13.6% over the same window, MKSI 4.2%, IPGP 1.8%, against 0.3% for the S&P 500. The day was framed in advance as a same-session read on the AI networking build-out, with Cisco Systems also reporting after that close, and buyers who could not yet have seen either set of numbers paid up across the group. That is exposure to a theme, not to a company, and a single session can reprice an entire group. The Trefis High Quality Portfolio does not depend on the handful of largest technology names to produce its returns. Indium Phosphide, Not Orders, Sets The Ceiling Coming into Wednesday, the stock was already up about 205% over the trailing year. On a run like that, a beat and an above-consensus outlook are the price of admission, not a surprise. The fiscal Q4 report (ended June) put record revenue of $2.05 billion on the board, up 34% year over year and 42% excluding two businesses sold during the year, with data center and communications at 79% of the total. What the report did not settle is how fast that demand converts into product. Management names Indium Phosphide capacity as the primary constraint, and Indium Phosphide lasers are what sit inside its 800G and 1.6T transceivers. The company produced about 80% more of those lasers in the June quarter than a year earlier, and yields on its 6-inch lines in Texas and Sweden are running above those on its 3-inch lines. Watch The Ramp, Not The Reaction Management expects internal Indium Phosphide output capacity to double year over year by the end of the September quarter, a quarter ahead of the original plan, with guidance for that period of $2.2 billion to $2.4 billion. Beyond transceivers, first revenue from co-packaged optics is expected in the December quarter, carried by ultra-high-power CW lasers that its Texas plant has begun to ramp. Those two ramps decide whether the order book turns into revenue. The stock itself is the noisier variable: in the six sessions before Wednesday it rose 13.4% on one day and fell 14.2% on another, which is a wide swing for a business whose order book management describes as booked out. If you are sizing a position around the next print, the useful record is how this stock has actually traded through its own earnings, rather than how it traded into this one. A Ramp Is A Schedule, And Schedules Slip Coherent's demand looks booked, but its delivery runs through one material and a small number of plants, and that is timing risk no single position can spread. The Trefis High Quality (HQ) Portfolio is built the other way, as a system rather than a bet on one company's schedule. That portfolio has a track record of outpacing the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000.

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 8:30 a.m. ET Vice President of Investor Relations - Paretosh Misra President and Chief Executive Officer - John Lee Executive Vice President and Chief Financial Officer - Ram Mayampurath Operator: Good day, and thank you for standing by. Welcome to the MKS Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Paretosh Misra. Paretosh Misra: Good morning, everyone. I'm Paretosh Misra, Vice President of Investor Relations, and I'm joined this morning by John Lee, President and Chief Executive Officer; and Ram Mayampurath, Executive Vice President and Chief Financial Officer. Yesterday, after market close, we released our financial results for the second quarter of 2026, which are posted to our investor website at investor.mks.com. As a reminder, various remarks about future expectations, plans and prospects for MKS comprise forward-looking statements. Actual results may differ materially as a result of various important factors, including those discussed in yesterday's press release and in our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q. These statements represent the company's expectations only as of today and should not be relied upon as representing the company's estimates or views as of any date subsequent to today, and the company disclaims any obligation to update these statements. During the call, we will be discussing various non-GAAP financial measures. Unless otherwise noted, all income statement-related financial measures will be non-GAAP other than revenue and gross margin. Please refer to our press release and the presentation materials posted to the Investor Relations section of our website for information regarding our non-GAAP financial results and the reconciliations to our GAAP measure. Our investor website also provides a detailed breakout of revenues by end market and division. Now I'll turn the call over to John. John Lee: Thanks, Paretosh, and good morning, everyone. Momentum is continuing to build at MKS with strong demand across all of our markets. Second quarter revenue and key profitability metrics came in at the high end or above our guidance ranges. Our Q3 guidance is supported by strong order activity that we expect will drive continued robust year-over-year growth. Against the backdrop of intensifying AI-driven investment across semiconductor and advanced packaging applications, we are demonstrating the strength of our foundational position, from vacuum, plasma and power products that enable leading-edge etch and deposition applications, to optical components and photonic subsystems for the lithography, metrology and inspection markets, to laser systems, proprietary chemistries and chemistry equipment for the advanced circuit boards on which leading-edge semi devices are integrated. We are a leading enabler of advanced electronics. This is MKS at its core. Our performance reflects the benefits of investments we've made and continue to make in broadening our capabilities and expertise, deepening our relationships with customers across the electronics ecosystem and building out the global capacity needed to meet the unprecedented demands of this investment cycle. We're not only excelling in the current environment, but also generating new design wins that position us to capitalize on long-term growth opportunities. Now I'll review our Q2 end market performance and Q3 outlook. Starting with our semiconductor market. Revenue was above the midpoint of expectations as we and our supply chain partners continue to ramp our operations. Revenue grew 19% sequentially and 28% year-over-year, which accelerated meaningfully from the 13% year-over-year result in Q1. Growth was broad-based across deposition and etch products, including RF power for NAND upgrades and vacuum subsystems, plasma generators, reactive gases for advanced logic and DRAM applications. Our Photonics and Optics solutions also continue to gain momentum in the lithography, metrology and inspection market. Overall, we continue to see strong order activity and very healthy order backlog that gives us good visibility through the second half of the year. We also continue to achieve design wins, including in advanced logic, where we are the process tool of record for dissolved gas applications and in RF power, where we have segment share leadership in high aspect ratio dielectric etch applications. Our semi outlook for Q3 implies year-over-year growth will accelerate to over 50% with strength across our entire portfolio of solutions. This anticipated growth is an indicator of MKS' long-standing track record of WFE outperformance during improving investment environments. Turning to Electronics and Packaging. AI-related applications are driving a meaningful increase in investment. Revenue was above the high end of our outlook, up 19% sequentially and 44% year-over-year. Laser drilling system sales into the flex PCB markets for advanced smartphones and peripherals were strong, and chemistry sales remained robust as well. In chemistry equipment, we said last year that order activity had been elevated for multiple quarters. It has moved another level above that. Our chemistry equipment demand is easily the strongest it has ever been, supported by AI server investments, including optical modules. Our visibility now extends through 2027, and to meet this growing demand, we recently announced we are doubling the capacity of our Guangzhou equipment factory. And notably, in rigid PCB drilling, we're pleased to see increased order activity as the market embraces our differentiated capabilities and a compelling cost of ownership proposition. As we have noted in the past, our proprietary chemistry carries higher gross margins than equipment, and we have high chemistry attach rates with our equipment customers, so we believe the stage is set for continued attractive high-margin chemistry growth through the cycle. We continue to be actively engaged with customers on their future plans, which serves as a good leading indicator for strong equipment orders. Overall, the growth we're seeing in E&P reflects our long-held view that the trends driving device scaling in semi would ultimately come to the advanced PCB market as device integration becomes a core requirement for advanced electronics. That day has arrived and advanced PCBs are rising in importance as increasing layer count requirements and integration challenges extend to higher-end smartphones, AI servers and other advanced electronics. In Q3, we expect Electronics and Packaging revenue to be up over 30% year-over-year with AI-related investment partially offset by flex equipment-related seasonality. Our flex market is typically down sequentially in Q3 ahead of the next design cycles, and we are coming off a very strong first half. I'd like to highlight how we are scaling in our Semiconductor and Electronics and Packaging business to meet anticipated demand growth today and over the next several years. Near term, we are increasing our working capital investments to address rapidly accelerating demand in the current cycle. Longer term, capacity planning is also key. Our new Malaysia supercenter, which opened in Q2, can be expanded at our option, and we are building out our chemistry equipment facility in Guangzhou, as I mentioned earlier. These facilities will play an important role in supporting our future capacity needs and their proximity to many of our customers will strengthen engagement as well as deliver performance benefits as the new facilities ramp. Switching to our Specialty Industrial market. We delivered a strong quarter, up 8% sequentially and 14% year-over-year. Revenue has not been this high since 2023, driven by our datacom and defense markets. Performance across our remaining Specialty Industrial markets was steady in Q2. We expect strong performance in our Specialty Industrial market in Q3, led by the markets I've called out. We're pleased to see how our foundational enabling technologies extend beyond Semi and Electronics and Packaging into adjacent opportunities that leverage our R&D spend and deliver strong incremental cash flows. Wrapping up, MKS is executing at a high level financially, operationally and technologically. We further broadened our capabilities and expertise to address key opportunities across the ecosystem, resulting in deepening penetration in areas like lithography, metrology and inspection and advanced PCB at a critical time for the industry. We're also making strategic investments to support our customers and drive profitable growth well into the future. Our customer engagement and design win activity underscores our role as a foundational enabler of advanced electronics who looks ahead and solves ahead. Thank you to our MKS team, our suppliers and customers for your hard work and partnership. We're incredibly excited about what lies ahead. Now here's Ram to run through the quarter and our financial outlook in more detail. Ramakumar Mayampurath: Thank you, John, and good morning, everyone. We delivered an excellent second quarter and are seeing increased demand across all end markets. We remain focused on driving profitable growth with disciplined execution and continue to make the investments needed to capitalize on the growth opportunities that we see ahead. Let me begin by reviewing our Q2 results in detail. MKS reported revenue of $1.25 billion, up 16% sequentially and 28% year-over-year. Year-over-year growth trends accelerated through the first half of the year, and we expect that to continue in Q3 as demand increases across our end markets. Second quarter semiconductor revenue was $554 million, up 19% sequentially and 28% year-over-year. In addition to continued strengthening of demand in DRAM and logic, we saw increased momentum in NAND upgrade activity. Collectively, this demand is driving strength across our key product categories led by plasma and reactive gases and vacuum products, while also supported by robust growth in our power solutions, optics and photonics offerings. Second quarter Electronics and Packaging revenue was $381 million, an increase of 19% quarter-over-quarter and 44% year-over-year. The very strong sequential improvement highlighted elevated demand across our portfolio, including chemistry solutions, chemistry equipment and flexible PCB drilling sales. The even stronger year-over-year comparison was driven by demand for chemistry equipment, which continues to inflect higher. We are also seeing very healthy demand for chemistry solutions and flexible PCB drilling equipment. As the chemistry business continues to benefit from accelerating demand for AI-related applications. Sales in the quarter were up 21% year-over-year, excluding the impact of FX and palladium pass-through. In our Specialty Industrial market, second quarter revenue was $313 million, an increase of 8% sequentially and 14% year-over-year. The year-over-year growth was driven by datacom and defense applications, while the sequential improvements reflected continued momentum in datacom as well as seasonal recovery following the Lunar New Year. Turning to gross margin. We reported second quarter gross margin of 47.6%. In addition to higher volume, we also saw a benefit from certain discrete items in the quarter. Excluding these discrete benefits, gross margin remained very healthy despite unfavorable product mix and accelerated investments necessary to address rising demand. Second quarter operating income was approximately $320 million, yielding an operating margin of 25.6%, which was up 480 basis points year-over-year and well above our guidance midpoint. Operating expenses of $275 million were in line with our guidance. We are driving very healthy operating leverage in the business as revenue scales. Second quarter adjusted EBITDA was $358 million, yielding a 28.6% margin and also above the high end of our guidance. Net interest expenses was $33 million compared with $46 million in the second quarter of 2025, reflecting the full quarter benefits of our first quarter financing actions as well as continued proactive principal prepayments. Our second quarter effective tax rate was 19.6% and in line with our guidance. Second quarter net earnings were $232 million or $3.30 per diluted share, up 86% year-over-year on a per share basis and above the high end of our guidance. Let me now turn to our cash flow and balance sheet. We closed the quarter with over $1.6 billion of liquidity comprised of cash and cash equivalents of $611 million and our undrawn revolving credit facility of $1 billion. We generated free cash flow of $188 million, about 15% of our revenue. We expect investments in CapEx and working capital to increase through the remainder of the year as we continue to prioritize our organic growth. Beyond that, we will maintain our focus on proactively deleveraging to strengthen the balance sheet. We made a $100 million prepayment on our term loan earlier this week. Our leverage at the end of Q2 was 3x based on a trailing 12-month adjusted EBITDA of $1.1 billion, which is down one full turn since Q2 of last year as we continue to make strong progress towards our target leverage ratio. Finally, we paid a dividend of $0.25 per share or $17 million following the 14% increase in our dividend in Q1. Let me now turn to our third quarter outlook. We expect revenue of $1.35 billion, plus or minus $40 million, which represents continued strong sequential improvement and further acceleration in year-over-year growth. Our third quarter outlook by end market is as follows: Revenue from our Semiconductor market is expected to be $630 million, plus or minus $15 million; revenue from our Electronics and Packaging market is expected to be $385 million, plus or minus $15 million; and revenue from our Specialty Industrial market is expected to be $335 million, plus or minus $10 million. Based on anticipated revenue levels and product mix, we estimate third quarter gross margin of 47%, plus or minus 100 basis points. We expect third quarter operating expenses of $280 million, plus or minus $5 million. We expect operating expenses will grow at a much lower rate than revenue. We expect third quarter operating income of $355 million with an operating margin of 26.3%. We estimate third quarter adjusted EBITDA of $395 million, plus or minus $28 million. We continue to expect CapEx for the year to be in the range of 4% to 5% of our revenue. We expect our third quarter tax rate to be approximately 20% and the full year tax rate to be at the lower end of the 18% to 20% range we provided previously. Based on these assumptions, we expect third quarter net earnings per diluted share of $3.58, plus or minus $0.31. As our Q2 results and Q3 guidance indicate, our business momentum continues to increase. Our focus is on meeting accelerating customer demand. We remain committed to making the investments necessary to support growth while continuing to prioritize our deleveraging efforts. We are in a great position entering the second half of the year. And with that, operator, please open the call for questions. Operator: [Operator Instructions] Our first question comes from Steve Barger at KeyBanc Capital Markets. Steve Barger: I'm going to start on some of the NAND tool upgrade. You talked about that activity will contribute in coming years. But greenfield NAND, I think, is even better business. Can you update us on what the upgrade cycle looks like and how that bridges to greenfield projects you may see entering equipment planning? John Lee: Yes, Steve. So we did mention that we are seeing upgrade activity in Q2. We certainly expect that to continue. It can be lumpy, but we know that the industry is certainly trying to increase capacity in NAND. And then, of course, there's been some announcements of greenfields and those factories, as you say, will be even better for our power as well as the rest of our portfolio. And those factories fabs will be coming in towards the end of '27, beginning of '28, so that's the plan right now. So between now and then, we would expect continued upgrade activity. Steve Barger: Got it. Can you compare the magnitude of dollar spend for a new leading-edge tool versus an upgrade? John Lee: Yes. We haven't really disclosed that, but I would just say that the RF power part of that upgrade is the largest part of the BOM in terms of cost and therefore, opportunity for MKS. That's why when there are upgrades, we benefit from that. Of course, if it's a brand-new tool, we would have the rest of the semiconductor portfolio around that tool. So that would be better, but the our power content is large. Steve Barger: Got it. And then one quick follow-up. Really appreciate the commentary on visibility into '27 in Electronics and Packaging. As we've gone through earnings, some of your biggest semiconductor customers said visibility is the best it's ever been for their business. Can you talk about lead times and visibility into 2027 on the semi side? John Lee: Yes, sure. We are in constant communication with our customers, as you know. They have given us their plans and expectations much further out than normal. And we are building capacity and inventory and scaling our factories and getting the labor in to meet those anticipated increases from our customers. So we are planning to make sure that we're not the constrained. Lead times right now for us are still kind of normal, so we're executing really well given we're already a couple of quarters into the ramp. So of course, we've got to manage many suppliers. But right now, our supply chain is stepping up. Operator: Our next question comes from Bhavesh Lodaya, BMO Capital Markets. Bhavesh Lodaya: Can you give us an update around the ramp-up of Malaysia capacities as you ramp up those things? And are you still comfortable with the $180 billion to $200 billion of WFE that you can support with those plans? John Lee: Bhavesh, yes, Malaysia has started ramping. In fact, we could say that the first revenue shipments have occurred there. It's still early days, of course. We've said in the past that we did not need Malaysia for 2026, to meet the 2026 demand. So Malaysia is ramping up to meet the 2027 demand and then beyond that. We had talked about capacity planning last quarter that we would need Penang as well as perhaps other sites. Right now, we have reconfigured things so that we believe that when we fill out Penang, we will be able to support a WFE in that $200 billion to $250 billion range, which is an incremental improvement from what we said last quarter. And of course, in addition to that, we announced the doubling of capacity in our MSP chemistry equipment factory in Guangzhou. Bhavesh Lodaya: Got it. And a question on your specialty industrials platform. It's a nice step change in the earnings growth profile. Your guidance seems to indicate it's going to grow in the high teens in 3Q. Could you touch on some of the end markets or sectors that are helping? I know you called out a couple of them, but it looks like pretty -- those have to be very strong for the overall platform to grow in the high teens. Maybe talk about the durability of those earnings. Are there any timing benefits? And how should we think about the baseline of this platform into the next year? John Lee: Yes. Thanks for that. I think we called out two of the submarkets, and that was datacom communications. Now again, that's driven by AI, so communications testing for AI data centers. That continues to be strong. We expect that to continue to be strong. It should follow, for instance, the AI investments for the industry. The other segment we called out was defense, and that has continued to be strong and grown over the last several quarters, and that's really a market where it probably depends on your view of defense. But those two markets continue to remain strong. That's why our guidance for specialty industrials in Q3 remains strong, so that's the color we can give you. The other submarkets, one is automotive, that's kind of bouncing along, no degradation, no material improvement either, so -- and then industrial, industrials, that is also -- we're seeing incremental improvement there, but not to that same order of magnitude as datacom and defense. Operator: Our next question comes from Matthew Prisco at Cantor. Matthew Prisco: I guess first on the E&P side, how should we be thinking about the chemistry growth potential moving forward given this continued equipment strength? Is this something kind of we look for meaningful growth inflection in '27 and '28 as those systems move to high-volume manufacturing? And any update you can provide on the AI contribution as a percentage of those revenues? John Lee: Yes, Matt, maybe I'll start with the AI contribution. We had said in '24, it's 5% AI chemistry as a percentage of our chemistry overall and 10% and this year, 15% last quarter. I would say it's incrementally better, so think about 15% to 20% as the right number now for chemistry as a percentage of our chemistry for AI, so that's one update. I would also say that the equipment business is -- the chemistry equipment business is growing very, very fast. We did talk about the fact that we have visibility through 2027, which gives us the confidence to build that Guangzhou factory, expand that capacity. I would say, too, that we have said the percentage of chemistry or the amount of chemistry that comes out for every dollar of equipment sales is in that 20% to 40% range. That's still true, but maybe the update here for your modeling is that we're selling a lot more of the higher-end pieces of equipment fundamentally because AI boards are more difficult and you need higher-end equipment. Those come with higher ASPs. And so mathematically, that 20% to 40% range, think of it at the lower end now, and that's just the math problem. The chemistry is still there, but the ASP of the equipment is higher now. Matthew Prisco: Perfect. That's helpful. And then on the debt side, we're seeing strong sequential growth in 2Q, guided strong sequential growth in 3Q. Voluntary prepayment kind of staying the same. And I understand you're investing in supply to meet demand. But can you maybe give us updated thoughts on strategy around deleveraging? And at what point do the voluntary payments begin to move more meaningfully higher? Ramakumar Mayampurath: Matt, this is Ram. I'll take that. It's a great question. As we have said before, investing in organic growth, supporting our organic growth is first priority and then strengthening balance sheet, the prepayment on our term loan is #2 -- a close #2, I would say. In the second half of the year, you will see our CapEx picking up and inventory growing as we prepare for the ramp. Having said that, we continue to make the prepayment of $100 million each quarter. And we are looking at making additional payments in Q3 and in Q4. So although it has not happened yet, it is high on our priority. Operator: Our next question comes from Michael Mani at Bank of America Securities. Michael Mani: To start on semi market, nice to see that on a quarterly run rate basis, you've crossed the last peak that the segment saw back in 2022. If you were to compare it then versus now, could you give us an update on how much of the mix is NAND versus DRAM versus logic, so especially NAND, so we get a rough sense of how far it is off from the bottom? And like looking ahead, how do you expect that mix to evolve, especially as you pick up more wins on the logic side? John Lee: Michael, I'll start with that. I think the way we're looking at it in terms of our end markets, it's still largely a logic DRAM-driven semi market. The NAND upgrade was nice to see. We kind of expect that to continue. It might be even better. But eventually, in '28 with NAND greenfields, that will become a bigger percentage of our semi revenue. I think also you pointed out that we are getting to that point of overperformance of WFE during the ramp as we've done historically. And our guidance in Q3 of our semi revenue implies that we will be over 50% year-over-year in Q3. And to just give the audience a little more color, remember, we are exposed to 85% of WFE, so every segment of WFE. And as we've said in the past, in litho metrology inspection, those amplitudes are smaller in terms of the ramp than depth etch, so our average is over 50%, but you can do the math as well as I can that the depth etch part is significantly higher than that average. Michael Mani: Great. Very helpful. And then on E&P, could you help decompose between this past quarter you reported and what you're seeing into Q3 and potentially into Q4? Like where is the strength coming from between chemistry versus electroplating versus flex drilling? And is it fair to say that maybe some of the demand destruction here related to mobile were more benign than feared? Or is it still kind of too early to make that judgment? John Lee: Yes. Regarding the demand destruction that the industry feared earlier in the year, I think it is more benign than feared. That's true. We can see it in our flex drilling because the flex drilling business has -- was very strong in the first half. There is seasonality to it, but new form factors and high-end smartphones have been fairly strong for us, and that's reflected in our flex drilling system revenue, so that's pretty good. Now the chemistry for the rest of the consumer products also goes through seasonality, but it's really AI that's driving the quarter-on-quarter growth is our expectation. And then the other part is chemistry equipment. We are shipping that chemistry equipment as fast as we can. And to add a little more color to the prepared remarks, we talked about the Guangzhou factory, doubling capacity there. We've talked in the past about what happens if the current Guangzhou factory is full, and that was to use our Germany factory, and we have turned on Germany as well to fill the gap between now and when the Guangzhou second factory comes online, so we are shipping equipment as fast as we can. To the earlier question, that is great for market share of chemistry in the future, and the equipment does have lower gross margin. So that mix does affect the overall company gross margin, but we're okay with that because it's a great market share and much higher chemistry gross margin later. Operator: Our next question comes from Shane Brett at Morgan Stanley. Shane Brett: I want you guys to help us unpack the gross margin portion a little bit. If my numbers are correct, your gross margin ex palladium for the June quarter would have been kind of in the mid-48% range. Just how much of your quarter-over-quarter decline into September is a result of some E&P chemistry weakness? And are you expecting palladium to be a tailwind or a headwind to gross margin in the September quarter? Ramakumar Mayampurath: Shane, let me -- the last part of your question, we expect palladium to kind of stay flat in the third quarter at about $1,300. It will probably stay at that. But to get back to your question on gross margin, let me touch on a few points here. So in Q2, 47.6% is what we had, what we reported. That includes about 100 basis points of discrete items. mostly coming from the refund of tariffs and duties. It's also important to point out that without these discrete benefits, GM would have been consistent with what we have in the past several quarters despite the impact from some investments we are making to support growth. John talked about getting Malaysia ready for 2027, and we continue to invest in the ramp. We are stepping up our investments to prepare for the demand, and these investments come with the P&L impact. So those are included in the numbers as well, and you'll see that for the remainder of the year. And then on the mix side, mix is unfavorable and will remain so as long as VSD and the chemistry equipment ramps. As we have said before, these are good problems to have because as higher VSD means higher operating income. and higher chemistry sales follows the equipment sales like we have explained before. So overall, our gross margin remains healthy with all these puts and takes. So the investments will continue, and we have made a strategic choice to push forward on our equipment sales. So those two will have -- will be a headwind temporarily to the gross margin. Shane Brett: Got it. And for my follow-up, I'm actually going to ask another gross margin question. This is going to be on VSD specifically, which I assume is a lot of semi. So VSD gross margins were north of 46% in 2021. But as of the March quarter, we were at 42.9%. Just where are we in the margin recovery path there? And what do we need to have happened for margins to get above that sort of 46% to 47% mark that we saw in the prior peak? Ramakumar Mayampurath: Yes. So VSD, like I said, VSD margins are slightly lower, but where we benefit from VSD ramp is in the operating income side. We have continuously worked on operational excellence programs that will help us, but it also depends on the mix within VSD as to what will drive the margins. And that's what you're seeing now. What products that make up a lot of the VSD sales are not our highest end VSD products. John Lee: Shane, maybe to add a little bit about that. In the prior cycle, when we hit that 45%, 46%, it was China direct sales for VSD, which is much, much lower now. That came with a gross margin tailwind. There was also a lot more RF power for NAND greenfields, and that's accretive to BSD gross margins. And then the third point is what Ram already pointed out, we are in that part of the cycle where we are investing in labor ahead as well as CapEx ahead. So those are the three things that are a bit of a difference between the quarter you quoted and where we are now. But we think that over time, the investments will catch up, and that will be no longer a headwind. China is China. That is what it is. And then I think volume will continue to help. Operator: Our next question comes from Melissa Weathers at DB. Melissa Weathers: I was hoping to talk a little bit about 2027. The second half seems like you guys are off to a really, really strong start in the second half. But I was hoping to get your thoughts on how you're thinking about 2027 growth rates. Like what do you think will grow faster between the semis and the E&P business? Clearly, both are doing awesome, but which one do you think grows faster next year? John Lee: Thanks for the question, Melissa. I don't think we know. I think though that they're both at historic growth rates, as you know. I think though that they are coupled, right? When you think about all the investments in WFE and many of the semi customers talk about that, many of our investors are aware of that. But when you pivot to our packaging, the equipment orders we're seeing are on the same order of increase that we're seeing in WFE and maybe even higher, so they're coupled. If you're going to make a lot of chips, you got to package them to get it. And so both industries are coupled to support advanced electronics. So it would be pretty hard to tell -- to determine now which ones are higher than the other. But there are a little dynamic differences between the two markets. We have short lead times in semi. And therefore, that's why we always guide just a quarter out. And then we look at the industry to see where we might be in '27. In chemistry equipment, our lead times are much longer. We talked about 6 to 9 months in the past. And because of that, we require down payments, those down payments are things that give us confidence. And that's why we said we have visibility through 2027 because of those long lead items, similar to maybe some of the semi guys that have long lead equipment lead times. So those are the dynamics, but I think they're coupled, Melissa. So if one grows, the other must. Melissa Weathers: I'll take that. And then maybe along those lines, from a pricing perspective, can you just talk about -- like clearly, you're expanding capacity to serve the strong demand. But is there any change to how you guys are thinking about pricing? Is there any like opportunistic or any leverage that you can get across either business on the pricing side? John Lee: Yes. I think our strategy for pricing has always been to get fairly paid and to do it continuously. So we're always looking at every product line and whether there's a pricing problem, and we're not getting fairly paid. And so we're certainly in a competitive environment. We also value the long-term relationships we have with our customers. So I think we're pretty happy with where we are -- what we are doing in pricing. But we're not going to take advantage of any opportunistic short-term dislocations in supply and demand. The long-term relationships are something that we're proud of, and we want to maintain. Operator: Our next question comes from Krish Sankar at TD Cowen. Sreekrishnan Sankarnarayanan: John, when I look at your semi revenues this quarter for the guided one and given that it has to grow in December given the strength, it seems like you're going to easily grow over 35% this year in semi revenues compared to some of your other peers talking about 30-plus. A, is that a fair characterization? So what does that imply to how inventory is managed by your semi cap customers? Then I had a follow-up. John Lee: Yes, Krish, I think that's the right math. I think maybe even a little north of the number you just said. And again, as I said earlier, the dep-etch part is higher than the litho metrology inspection part, but you're in the right ZIP code. Sreekrishnan Sankarnarayanan: Got you. Any comments on how inventory is managed by semi caps compared to prior cycles? John Lee: Yes. No, I think I don't expect any difference. I think right now, though, we are shipping to demand, even though inventory may be rising a little bit in some of our -- the large semi cap guys, I think it's because they have to be higher to ship the revenues they want to ship. And as you know, the turns are even better, right? So there's no stocking of extra inventory given what they're trying to ship. And so we, as an industry, are just ramping up the factories of our suppliers and ourselves to meet that. So at some point, I'm sure everybody would like to build a little extra inventory, but we are not in that stage right now in the ramp. Sreekrishnan Sankarnarayanan: Got you. And then a quick follow-up on the E&P side. It looks like when you look at the chemistry business, some of your chemistry customers, especially the substrate folks from Taiwan and Japan, they seem to be capacity constrained though they're raising CapEx in the short term. Is that happening? Or do you think chemistry is going to continue growing? Or is that going to have any impact on your chemistry growth? John Lee: Yes. No, I think just like in semi, people are finding ways to utilize tools better, faster. So I think the chemistry revenue will continue to grow. That's our expectation. And at the same time, the equipment we're putting in as well as other people's equipment going into these factories get turned on, and that will increase the chemistry as well. So I think we expect chemistry to continue to grow even though there is a constraint in capacity, and that's why the equipment orders are so high for us. So I think that portends well for the future of chemistry revenue. Operator: Our next question comes from Vijay Rakesh at Mizuho. Vijay Rakesh: Good quarter and guide here. Just looking at the June and September quarters here, obviously, very strong growth in semis. You mentioned up 50% year-on-year. What is driving the acceleration into September? If you can give us some color if it's like dep or etch or inspection or if you want to break it out differently like foundry or memory or something. And I have a follow-up. John Lee: Thanks, Vijay. Yes, I think both. We are seeing acceleration in dep-etch as well as litho metrology inspection. Both are growing, but they're growing at the normal expectations depending on the lead times of those subsegments of the market. So dep-etch, as I said earlier, is growing much faster year-over-year. The average is over 50% in Q3 year-over-year. And so those are the dynamics. Those haven't changed. So they're both growing, but they're growing at the expected ratio, if you will, of the two subsegments. Vijay Rakesh: Got it. And then as you look at 2027, obviously, your semis are growing way faster than WFE. I mean WFE is probably growing 25%, 30% year-on-year. You're growing 50%. Packaging is also doing some massive increase versus WFE. How should we look at the growth there as you look at 2027 versus WFE if you look at semis and the E&P segment because both -- all these trends seem to be in place, if not accelerating into next year. John Lee: Yes. I think right now, we do see this acceleration. We are planning on the acceleration. Our customer conversations all say we should expand capacity and be prepared for an accelerating environment into '27. And so it's hard to know what that will mean. But certainly, if that's true and our plans meet that, then certainly, we would expect continued outperformance of WFE. And as you know, that's always the case during the first half of the ramp. At some point, we will meet WFE just because the ramp will peak. And then, of course, on the downturn, it reverses. But right now, everything is pointing up, and we are preparing to meet that. Operator: Our next question comes from Jim Ricchiuti at Needham & Company. James Ricchiuti: You may have said this, did you provide the chemistry growth in the quarter? John Lee: Yes, Jim, I think the question was, can we provide the chemistry growth quarter-on-quarter. I think year-over-year, I guess, is one way to look at it. That was about 21%, and so we're pretty healthy. Quarter-on-quarter, I can give you that number, but it was also an increase and very healthy. So we're pretty happy with the chemistry growth. James Ricchiuti: Any way of knowing that 21% growth that you're seeing, how much of that is coming from new capacity versus just what we've all been hearing about the higher layer counts within the existing installed base? John Lee: Yes. I think hard to tell, Jim, but part of it is coming definitely from new capacity of equipment that we and our peers have shipped to those customers. But most of it today is still driven by capacity that was already there. And maybe some customers are taking tools that were mothballed even and turning them on. We know that's happened earlier in the cycle. So I would say the majority of the chemistry growth right now, Jim, is still with previously installed capacity. James Ricchiuti: And the timing on the new capacity in E&P, you may have given that, when do you expect to have that facility the second factory? John Lee: Yes. So the capacity that we're shipping now, I think if that's a question, those tools are going in now. It takes, I think, between 24 to 30 months for chemistry to go into that volume to go into a piece of equipment. And so some of that equipment is already going in. So I think it portends well for the several years because of the equipment that's going in now, next year and perhaps the year after. James Ricchiuti: I'm sorry, I apologize. I was just curious about the new capacity that you're adding in Guangzhou. What is the timing on that? John Lee: Yes. Q3 2027, Jim, the Guangzhou factory will be online. Operator: Our next question comes from Elizabeth Sun at Citi. Yiling Sun: I guess my question is on the E&P for the flex drilling equipment part. I'm just trying to understand which part of PCB or AI PCB or AI substrates those flex drilling equipment are more exposed to? John Lee: Yes. The flex drilling PCB revenue is really mostly targeted to the smartphone and peripherals markets, Elizabeth, so a lot of flex used in foldables and smartphones and AirPods, if you will. So most of it is there. Not much of it is being used in AI. But we did mention in our prepared remarks that we are starting to see more progress on our rigid PCB drilling, and that is driven by two markets, AI being one of them, but also the low earth orbit market that we've talked about in the past. So we're starting to see some momentum there as well. But the flex is really targeted towards more consumer product, smartphones. Yiling Sun: Got it. And then on the chemistry side, you just talked about there -- are you starting to see some of the revenue coming from the new capacities that got in on the chemistry equipment side? So I was wondering when do you expect to see most -- more of the chemistry revenue show up that is attached to the equipment you shipped for the past 2 years? John Lee: Yes. I think it's going to be continuous over the next couple of years. As I said earlier, the lead times can be anywhere from 24 to 30 months before you see volume chemistry and equipment we started building. So I think -- and we're shipping equipment every quarter, and they're installing -- being installed as fast as our customers can install them and they be turned on as fast as they can turn them on. So I think it's going to be this continuous ramp. We talked about equipment revenue in the past being at most $200 million a year. This year will be significantly higher than that, as you can imagine. And then we expect that to continue to grow, and that's why we've committed to building the new Guangzhou factory. So I think it will be more of a continuous ramp for the next couple of years. Operator: Our next question comes from Joe Quatrochi at Wells Fargo. Joseph Quatrochi: On the E&P equipment side, the capacity ramp, are you expecting to be somewhat constrained in your own capacity to fulfill demand until that facility opens in 3Q of next year? Or does it ramp kind of modularly? John Lee: Joe, no, we are not constrained because we always have that Germany factory in order to meet any shorter-term demand before the second factory comes online in Guangzhou in Q3 of '27. So as I said earlier, we have turned that Germany factory back on. It was running at a pretty low level. Now it's running -- it's much busier. At the same time, in Guangzhou, with the current factory, we continue to eke out new space here and there. So we continue to increase that capacity as well. So we are bursting at the seams, but we've been able to take every order that our customers needed. And so that's really an area where we're pretty happy with our capacity plans. Joseph Quatrochi: And then as a follow-up, maybe, I think your services revenue was actually really strong this quarter, kind of one of the highest levels we've really ever seen. Just curious what drove that. John Lee: Yes. I think utilization of our semi customers is what's driving that, Joe. You can imagine they're all running 100% utilization if they can. When you do that, of course, equipment needs more service. So we are seeing this kind of a step-up in new elevated service revenue. And we kind of expect that to continue. I don't know if it's going to step up again, but I think this is just a reflection of utilization in semi. The fabs have been running really hot for a couple of years, but the parts that need servicing, take a little time, right, after utilization goes to these high levels. So I think it's really a step-up that we kind of feel this is the new level for the foreseeable future. Operator: Our next question comes from Jim Schneider at Goldman Sachs. James Schneider: Given the factory ramps both in Malaysia and Guangzhou, can you maybe talk about some of the accounting in terms of how the expenses are loaded into cost of goods and if any, are in OpEx? And as those factories get qualified and production ready, should we expect those start-up cost headwinds to start to abate? And would that accrue mainly to the gross margin line? Sorry if I missed that before. Ramakumar Mayampurath: Jim, so you're right. The cost right now will get charged through COGS and will impact our OpEx -- I'm sorry, our gross margin. It's mostly about the gross margin. There's not much OpEx impact there. The magnitude of that now is in the 50 to 80 basis points a quarter each quarter. And that will continue for a few quarters now, next couple at least. And you're right, once that plant gets up and running and gets fully loaded, we will start seeing improvement flow through. So most of these investments will be self-liquidating and come back as margin improvements in the future. James Schneider: And then maybe just as a follow-up on the earlier pricing input cost question. I understand you don't want to be opportunistic in terms of taking price today. But do you expect that over the next, say, 12 to 18 months, your billable pricing increase can more than offset the level of input cost pressure you've been seeing? John Lee: Yes, Jim, we always strive to do that, and we've been pretty successful in the past in doing that. it's really two things. It's getting the best suppliers and the valuable -- the ones that can scale and lower cost because they have scale. That's one strategy on the input side. And then on the other side, as I talked about, it's really about delivering valuable products that customers are willing to pay for. So I think we've done pretty well, Jim, in the past, and we expect to continue that kind of performance. Operator: This concludes the question-and-answer session. I would now like to turn it back over to Paretosh for closing remarks. Paretosh Misra: Thank you all for joining us today and for your interest in MKS. Operator, you may close the call, please. Operator: This does conclude the program. You may now disconnect. Before you buy stock in Mks, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Mks wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. MKS (MKSI) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

MKS Inc. MKSI used its second-quarter 2026 call to frame AI-driven spending as the key force behind accelerating semiconductor and advanced-packaging demand. Management paired that view with plans to expand manufacturing capacity while preserving operating leverage. Revenues of $1.25 billion exceeded the Zacks Consensus Estimate of $1.21 billion, while adjusted earnings of $3.3 per share topped the $2.94 consensus estimate. The larger message was that demand visibility now extends well beyond the current quarter. MKS Inc. price-consensus-eps-surprise-chart | MKS Inc. Quote President and chief executive officer John Lee said the third-quarter semiconductor outlook implies year-over-year growth of more than 50%, with strength across MKS' portfolio. He also cited a healthy backlog supporting second-half visibility. Second-quarter semiconductor revenues reached $554 million, up 19% sequentially and 28% year over year. Growth spanned deposition and etch products, NAND-related RF power upgrades, vacuum, plasma, reactive gases, optics and photonics. A KeyBanc Capital Markets analyst pressed management on NAND. Lee said upgrades should continue before greenfield fabs arrive toward late 2027 and early 2028, with new tools offering broader content opportunities beyond RF power. Lee described chemistry equipment demand as the strongest MKS has seen, supported by AI server investment, including optical modules. Electronics and Packaging revenue rose 19% sequentially and 44% year over year to $381 million. MKS now has chemistry equipment visibility through 2027 and is doubling Guangzhou capacity. Lee said the company has also reactivated its Germany factory to bridge demand until new Guangzhou capacity comes online in the third quarter of 2027. A Cantor Fitzgerald analyst asked about chemistry. Lee said AI-related applications now account for roughly 15% to 20% of chemistry revenue, while volume chemistry can take 24 to 30 months to ramp after equipment installation. Lee said MKS' new Malaysia center has begun shipping revenue, though management did not need that capacity to satisfy 2026 demand. The facility is being ramped for 2027 and beyond. Responding to a BMO Capital Markets analyst, Lee said a fully built-out Penang site could support wafer fab equipment spending in the $200 billion to $250 billion range. That plan complements the Guangzhou expansion. Executive vice president and chief financial officer Ram Mayampurath said factory ramp expenses are costing about 50 to 80 basis points of gross margin per quarter and should persist for at least the next couple of quarters. Mayampurath guided third-quarter revenues to $1.35 billion, plus or minus $40 million. Semiconductor revenues are expected at $630 million, Electronics and Packaging at $385 million, and Specialty Industrial at $335 million. Third-quarter adjusted earnings are projected at $3.58 per share, plus or minus $0.31. Adjusted EBITDA is expected at $395 million, plus or minus $28 million. Management expects a 47% gross margin, plus or minus 100 basis points, with mix and capacity investments weighing on profitability. Mayampurath said operating expenses should grow much slower than revenues. Free cash flow was $188 million in the second quarter, or about 15% of revenues. MKS ended the period with more than $1.6 billion of liquidity and leverage of 3 times trailing adjusted EBITDA. Mayampurath said organic growth remains the first capital priority, with balance-sheet strengthening a close second. He expects capital expenditures and inventory to rise in the second half. A Cantor Fitzgerald analyst asked about voluntary debt payments. Mayampurath said MKS continues $100 million quarterly term-loan prepayments and is evaluating additional payments in the third and fourth quarters. Lee emphasized that customers are sharing plans further out than normal, while MKS is adding labor, inventory and capacity to avoid becoming a constraint. He said lead times remain normal and the supply chain is keeping pace. Management's posture centered on scaling for semiconductor and packaging growth without abandoning pricing discipline, customer relationships or deleveraging. MKS is accepting near-term margin pressure from capacity and equipment mix to support the ramp. MKSI carries a Zacks Rank #2 (Buy). Its Momentum Score of B is the strongest Style Score, while the Value Score is D, the Growth Score is C and the VGM Score is C. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Zacks Style Score methodology favors stronger A or B readings alongside top Zacks Ranks, making MKSI's profile favorable on momentum but mixed across the other styles. The Zacks Rank can change as analysts revise estimates following the just-reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MKS Inc. (MKSI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

MKS (MKSI) reported $1.25 billion in revenue for the quarter ended June 2026, representing a year-over-year increase of 28.3%. EPS of $3.30 for the same period compares to $1.77 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $1.21 billion, representing a surprise of +3.06%. The company delivered an EPS surprise of +12.25%, with the consensus EPS estimate being $2.94. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how MKS performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Revenues- Semiconductor: $554 million versus $554.22 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +28.2% change. Net Revenues- Specialty Industrial: $313 million compared to the $297.84 million average estimate based on three analysts. The reported number represents a change of +13.8% year over year. Net Revenues- Electronics and Packaging: $381 million versus $358.4 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +43.2% change. Net Revenues- Products: $1.1 billion compared to the $1.06 billion average estimate based on two analysts. The reported number represents a change of +30.2% year over year. Net Revenues- MSD (Materials Solutions Division): $400 million versus the two-analyst average estimate of $389.24 million. The reported number represents a year-over-year change of +23.8%. Net Revenues- PSD (Photonics Solutions Division): $341 million compared to the $323.44 million average estimate based on two analysts. The reported number represents a change of +40.3% year over year. Net Revenues- Services: $144 million versus the two-analyst average estimate of $154.29 million. The reported number represents a year-over-year change of +15.2%. Net Revenues- VSD (Vacuum Solutions Division): $507 million versus the two-analyst average estimate of $503.01 million. The reported number represents a year-over-year change of +24.6%. View all Key Company Metrics for MKS here>>> Shares of MKS have returned -21% over the past month versus the Zacks S&P 500 composite's +2.3% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MKS Inc. (MKSI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in MKS Inc.? Here are five stocks we like better. MKS reported strong second-quarter results, with revenue of $1.25 billion, up 16% sequentially and 28% year over year, while operating margin reached 25.6% and adjusted EBITDA totaled $358 million. Growth was broad-based across semiconductor, electronics and packaging, and specialty industrial markets. AI investment is accelerating demand for MKS’ semiconductor, advanced packaging, chemistry, optics and photonics products. Semiconductor revenue rose 28% year over year, electronics and packaging revenue climbed 44%, and management expects third-quarter revenue to increase to $1.35 billion, including semiconductor growth of more than 50% year over year. MKS is expanding capacity to meet sustained demand, including doubling its Guangzhou chemistry-equipment facility and ramping its Malaysia Super Center. The company generated $188 million in free cash flow, held more than $1.6 billion in liquidity, and continued reducing debt with a $100 million term-loan prepayment. 3 High-Growth Unknowns in Photonics That Are Vital for AI MKS (NASDAQ:MKSI) reported second-quarter 2026 revenue of $1.25 billion, up 16% sequentially and 28% from a year earlier, as demand increased across semiconductor, electronics and packaging, and specialty industrial markets. Management said revenue and key profitability measures reached the high end of, or exceeded, the company’s guidance ranges. President and Chief Executive Officer John Lee said investment tied to artificial intelligence is supporting demand across the company’s semiconductor and advanced packaging offerings. “Momentum is continuing to build at MKS,” Lee said, citing broad demand for vacuum, plasma, power, optics, photonics, laser systems, chemistry products and equipment. → 3 Drone Stocks That Should Soar After the Summer Slump The 3 Favored Machinery Stocks To Buy In August The company expects third-quarter revenue of $1.35 billion, plus or minus $40 million. Its outlook includes semiconductor revenue of $630 million, electronics and packaging revenue of $385 million, and specialty industrial revenue of $335 million. Second-quarter semiconductor revenue was $554 million, rising 19% sequentially and 28% year over year. The growth rate accelerated from 13% year-over-year growth in the first quarter, driven by demand in DRAM and logic as well as increased NAND upgrade activity. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Lee said demand was broad-based across deposition and etch applications, including RF power used in NAND upgrades, vacuum subsystems, plasma generators and reactive gases used in advanced logic and DRAM applications. The company also cited momentum in optics and photonics products for lithography, metrology and inspection markets. MKS expects semiconductor revenue to grow more than 50% year over year in the third quarter. Lee said the company has healthy backlog visibility through the second half of the year and continues to secure design wins, including in advanced logic dissolved-gas applications and high-aspect-ratio dielectric etch RF power applications. → Jersey Mike's Serves Fresh Gains After IPO Stumble Regarding NAND, Lee said upgrades are expected to continue before planned greenfield fabs begin coming online toward the end of 2027 and the beginning of 2028. He noted that new fabs would create broader opportunities for MKS’ semiconductor product portfolio than upgrades, although RF power represents a significant portion of the bill of materials in upgrade projects. The company’s Malaysia Super Center began ramping during the quarter and has made its first revenue shipments, according to Lee. MKS said it did not require the Malaysia site to meet 2026 demand but is scaling it to support expected demand in 2027 and beyond. When the Penang facility is fully built out, management believes it can support a wafer-fab-equipment market in the range of $200 billion to $250 billion. Electronics and packaging revenue reached $381 million in the second quarter, up 19% from the prior quarter and 44% from a year earlier. The company said chemistry solutions, chemistry equipment and flexible printed-circuit-board drilling equipment all contributed to the improvement. Chemistry sales rose 21% year over year excluding foreign-exchange effects and palladium pass-through, according to Chief Financial Officer Ram Mayampurath. Lee said AI-related applications now represent about 15% to 20% of MKS’ chemistry revenue, an increase from the company’s prior estimate of 15%. Management described chemistry equipment demand as the strongest it has experienced, supported by AI server investment and optical-module applications. MKS said its visibility for chemistry equipment extends through 2027, supported in part by longer lead times and customer down payments. To support that demand, the company is doubling the capacity of its Guangzhou chemistry-equipment factory. The expanded facility is expected to be online in the third quarter of 2027. MKS has also increased production at its Germany factory to bridge demand before the Guangzhou expansion opens, while continuing to find additional capacity at its existing Guangzhou operation. Lee said chemistry equipment sales are increasingly weighted toward higher-end systems required for AI boards, resulting in higher equipment selling prices. While MKS has previously said chemistry revenue can equal 20% to 40% of equipment sales over time, Lee said the ratio is now expected to be toward the lower end of that range because of the higher equipment prices. He added that equipment installations can take 24 to 30 months before reaching chemistry volume production. For the third quarter, MKS expects electronics and packaging revenue to increase more than 30% year over year. AI-related investment is expected to be partly offset by seasonal declines in flexible PCB equipment sales following a strong first half. Lee said flex drilling is primarily tied to smartphones, foldables and peripherals, while rigid PCB drilling is seeing increasing activity related to AI and low-Earth-orbit applications. Second-quarter gross margin was 47.6%. Mayampurath said the result included about 100 basis points of discrete benefits, primarily tariff and duty refunds. Excluding those items, he said gross margin remained healthy despite less favorable product mix and investments to prepare for higher demand. Operating income was approximately $320 million, representing a 25.6% operating margin and an improvement of 480 basis points from the prior year. Adjusted EBITDA was $358 million, or 28.6% of revenue. Net earnings were $232 million, or $3.30 per diluted share, up 86% year over year on a per-share basis. The company generated $188 million in free cash flow, equal to about 15% of revenue, and ended the quarter with more than $1.6 billion in liquidity, including $611 million in cash and cash equivalents and a $1 billion undrawn revolving credit facility. MKS made a $100 million voluntary prepayment on its term loan after quarter-end. Leverage stood at three times trailing-12-month adjusted EBITDA of $1.1 billion, down one full turn from the year-earlier period. Mayampurath said the company expects capital expenditures and working-capital investment to increase in the second half as it supports growth, while continuing to prioritize debt reduction. For the third quarter, MKS forecast gross margin of 47%, plus or minus 100 basis points; operating income of $355 million; adjusted EBITDA of $395 million, plus or minus $28 million; and diluted earnings per share of $3.58, plus or minus $0.31. MKS Instruments, Inc (NASDAQ: MKSI) designs, manufactures and markets technology solutions that enable advanced processes in a variety of high‐technology and industrial markets. The company's core offerings include vacuum and gas delivery systems, pressure and flow measurement instruments, optical metrology tools, photonics subsystems and critical components for manufacturing processes. These products support the precise control and monitoring needs of semiconductor, industrial manufacturing, life and health sciences, and research applications. The company's product portfolio features mass flow controllers, pressure transducers, vacuum gauges, gas purity monitors, laser-based metrology systems and photonic devices such as lasers and detectors. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "MKS Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by intensifying AI-driven investment across the electronics ecosystem, particularly in advanced packaging and semiconductor applications. Semiconductor growth of 28% year-over-year was fueled by broad-based demand in deposition and etch, alongside increased momentum in NAND upgrade activity. Electronics and Packaging (E&P) revenue surged 44% year-over-year, driven by record-high demand for chemistry equipment used in AI servers and optical modules. Management attributes outperformance to a foundational position across the value chain, from vacuum and plasma products to proprietary chemistries and laser systems. The company is aggressively scaling capacity, including doubling the Guangzhou equipment factory and ramping the new Malaysia supercenter to meet multi-year demand visibility. Specialty Industrial growth was supported by datacom and defense markets, leveraging core R&D to deliver strong incremental cash flows from adjacent opportunities. Q3 guidance anticipates semiconductor revenue growth accelerating to over 50% year-over-year, reflecting historical WFE outperformance during investment ramps. E&P visibility now extends through 2027, supported by long-lead equipment orders and down payments that provide high confidence in future chemistry attach rates. Management is increasing working capital and inventory investments in the second half of 2026 to ensure supply chain readiness for an anticipated 2027 demand surge. Long-term capacity planning for the Malaysia facility is now designed to support a WFE environment in the $200 billion to $250 billion range. The strategy prioritizes organic growth investment and proactive deleveraging, with a target to continue $100 million quarterly principal prepayments on term loans. Gross margins were impacted by approximately 100 basis points of discrete benefits from tariff and duty refunds in Q2, which will not recur in Q3. Accelerated investments in labor and capacity ahead of the 2027 ramp are creating a temporary 50 to 80 basis point headwind to gross margins. Unfavorable product mix is expected to persist as lower-margin equipment sales (VSD and chemistry equipment) outpace high-margin chemistry in the near term. The company has reactivated its Germany factory to bridge capacity needs until the second Guangzhou facility comes online in Q3 2027. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Current growth is supported by RF power upgrades for existing NAND tools, which represent the largest portion of the bill of materials for such upgrades. Management expects greenfield NAND fab projects to begin contributing more significantly toward the end of 2027 and into 2028. AI-related chemistry now accounts for 15% to 20% of total chemistry revenue, up from previous estimates of 15%. While equipment ASPs are rising due to the complexity of AI boards, the long-term chemistry attach rate remains a critical driver of high-margin recurring revenue. VSD margins are currently lower than the 2021 peak due to a shift away from high-margin China direct sales and the current phase of front-loaded labor investments. Management expects margins to improve as volume scales and the current investment cycle matures, though the mix of products remains a variable. Lead times remain normal despite the ramp, as MKS is shipping to immediate demand rather than seeing customers stock excess inventory. The company is intentionally building its own inventory levels to prevent becoming a bottleneck for customers during the expected 2027 acceleration.

This article first appeared on GuruFocus. Revenue: $1.25 billion, up 16% sequentially and 28% year-over-year. Semiconductor Revenue: $554 million, up 19% sequentially and 28% year-over-year. Electronics and Packaging Revenue: $381 million, up 19% sequentially and 44% year-over-year. Specialty Industrial Revenue: $313 million, up 8% sequentially and 14% year-over-year. Gross Margin: 47.6%. Operating Income: Approximately $320 million, with an operating margin of 25.6%. Adjusted EBITDA: $358 million, yielding a 28.6% margin. Net Earnings: $232 million, or $3.30 per diluted share, up 86% year-over-year on a per-share basis. Free Cash Flow: $188 million, about 15% of revenue. Leverage: 3 times based on trailing 12-month adjusted EBITDA of $1.1 billion. Dividend: Paid $0.25 per share, or $17 million. Warning! GuruFocus has detected 6 Warning Signs with MKSI. Is MKSI fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. MKS Inc (NASDAQ:MKSI) delivered strong Q2 2026 results with revenue of $1.25 billion, up 16% sequentially and 28% year-over-year, exceeding guidance. Semiconductor revenue grew 19% sequentially and 28% year-over-year, with Q3 guidance implying over 50% year-over-year growth, driven by broad-based demand across deposition, etch, and photonics. Electronics and Packaging revenue surged 44% year-over-year, with chemistry equipment demand at its strongest ever, providing visibility through 2027. Specialty Industrial revenue hit its highest level since 2023, up 14% year-over-year, led by strong datacom and defense markets. The company is expanding capacity, including a new Malaysia supercenter and doubling its Guangzhou factory, to support anticipated long-term growth and strengthen customer engagement. Operating margin improved to 25.6%, up 480 basis points year-over-year, and adjusted EBITDA margin reached 28.6%, both above guidance. MKS Inc (NASDAQ:MKSI) generated strong free cash flow of $188 million (15% of revenue) and reduced leverage to 3.0x, down one full turn year-over-year. The company continues to achieve design wins, including process tool of record for dissolved gas applications and segment share leadership in RF power for high aspect ratio dielectric etch. Chemistry revenue grew 21% year-over-year, with AI-related chemistry now contributing 15-20% of total chemistry sales, up from 15% last quarter. Q3 2026 guidance is strong, with revenue expected at $1.35 billion, up 8% sequentially, and EPS of $3.58, up 86% year-over-year. Gross margin in Q2 was 47.6%, but included about 100 basis points of discrete benefits (e.g., tariff refunds); excluding these, margins were flat, and Q3 guidance implies a decline to 47%. Gross margin is under pressure from unfavorable product mix, particularly from lower-margin chemistry equipment and vacuum subsystem (VSD) sales, which are ramping to meet demand. The company is incurring significant start-up costs for new facilities (Malaysia and Guangzhou), which are expected to impact gross margin by 50-80 basis points per quarter for the next few quarters. Electronics and Packaging revenue in Q3 is expected to be partially offset by seasonality in flex equipment, which could temper sequential growth. The company is increasing working capital investments and CapEx to support rapid demand growth, which may pressure near-term cash flow and limit deleveraging speed. NAND upgrade activity is lumpy, and while greenfield NAND fabs are expected in late 2027/2028, the interim period relies on less predictable upgrade cycles. Palladium prices are expected to remain flat, providing no tailwind to gross margin, and the company faces ongoing input cost pressures. The company's pricing strategy avoids opportunistic increases, which may limit near-term margin expansion despite strong demand. Specialty Industrial growth is concentrated in datacom and defense, while other submarkets like automotive and industrial are only showing incremental improvement, creating potential concentration risk. The company's visibility in semi is limited to one quarter out due to short lead times, making it harder to predict 2027 performance compared to the longer visibility in chemistry equipment. Q: Can you compare the magnitude of dollar spend for a new leading-edge tool versus an upgrade in the NAND market?A: John Lee (CEO): We haven't disclosed that, but the RF power part of the upgrade is the largest part of the BOM in terms of cost and opportunity for MKS. That's why we benefit from upgrades. Of course, if it's a brand-new tool, we would have the rest of the semiconductor portfolio around that tool, which would be better, but our power content is large. Q: Can you give us an update around the ramp-up of Malaysia capacities? And are you still comfortable with the $180 billion to $200 billion of WFE that you can support with those plans?A: John Lee (CEO): Malaysia has started ramping, and the first revenue shipments have occurred there. It's still early days. We did not need Malaysia for 2026 demand; it's ramping to meet 2027 demand and beyond. We have reconfigured things so that when we fill out Penang, we will be able to support a WFE in the $200 billion to $250 billion range, which is an incremental improvement from what we said last quarter. We also announced the doubling of capacity in our MSP chemistry equipment factory in Guangzhou. Q: How should we be thinking about the chemistry growth potential moving forward given this continued equipment strength? And any update you can provide on the AI contribution as a percentage of those revenues?A: John Lee (CEO): We had said in '24, AI is 5% of our chemistry overall, 10% last year, and 15% last quarter. I would say it's incrementally better, so think about 15% to 20% as the right number now for AI chemistry. The chemistry equipment business is growing very, very fast, and we have visibility through 2027. The percentage of chemistry that comes out for every dollar of equipment sales is in that 20% to 40% range, but we're selling a lot more of the higher-end pieces of equipment fundamentally because AI boards are more difficult. Those come with higher ASPs, so think of that 20% to 40% range at the lower end now. Q: On the debt side, can you give us updated thoughts on strategy around deleveraging? And at what point do the voluntary payments begin to move more meaningfully higher?A: Ramakumar Mayampurath (CFO): Investing in organic growth is first priority, and strengthening the balance sheet with prepayments on our term loan is a close second. In the second half of the year, you will see CapEx picking up and inventory growing as we prepare for the ramp. Having said that, we continue to make the prepayment of $100 million each quarter, and we are looking at making additional payments in Q3 and Q4. Q: On a quarterly run rate basis, you've crossed the last peak the semi segment saw back in 2022. How much of the mix is NAND versus DRAM versus logic? And how do you expect that mix to evolve?A: John Lee (CEO): It's still largely a logic DRAM-driven semi market. The NAND upgrade was nice to see, and we expect that to continue. Eventually, in '28 with NAND greenfields, that will become a bigger percentage of our semi revenue. Our Q3 guidance implies we will be over 50% year-over-year. We are exposed to 85% of WFE, so every segment. The dep-etch part is significantly higher than that average. Q: Can you help decompose the strength in E&P between chemistry versus electroplating versus flex drilling? And is it fair to say that some of the demand destruction related to mobile were more benign than feared?A: John Lee (CEO): Regarding demand destruction, it is more benign than feared. We can see it in our flex drilling business, which was very strong in the first half. New form factors and high-end smartphones have been fairly strong. The chemistry for consumer products goes through seasonality, but it's really AI that's driving the quarter-on-quarter growth. We are shipping chemistry equipment as fast as we can. We have turned on our Germany factory to fill the gap between now and when the Guangzhou second factory comes online. That equipment does have lower gross margin, which affects the overall company gross margin, but we're okay with that because it's a great market share play and leads to much higher chemistry gross margin later. Q: Can you help unpack the gross margin portion a little bit? How much of your quarter-over-quarter decline into September is a result of E&P chemistry weakness? And are you expecting palladium to be a tailwind or a headwind?A: Ramakumar Mayampurath (CFO): We expect palladium to stay flat in the third quarter at about $1,300. In Q2, 47.6% includes about 100 basis points of discrete items, mostly from the refund of tariffs and duties. Without these discrete benefits, GM would have been consistent with the past several quarters despite the impact from investments we are making to support growth. Mix is unfavorable and will remain so as long as VSD and the chemistry equipment ramps. These are good problems to have because higher VSD means higher operating income. Q: VSD gross margins were north of 46% in 2021, but as of the March quarter, we were at 42.9%. Where are we in the margin recovery path there?A: John Lee (CEO): In the prior cycle, when we hit that 45%, 46%, it was China direct sales for VSD, which is much, much lower now. There was also a lot more RF power for NAND greenfields, which is accretive to VSD gross margins. And we are in that part of the cycle where we are investing in labor ahead as well as CapEx ahead. Over time, the investments will catch up, and that will no longer be a headwind. Q: How are you thinking about 2027 growth rates? What do you think will grow faster between the semis and the E&P business?A: John Lee (CEO): I don't think we know, but they're both at historic growth rates. They are coupled. When you pivot to our packaging, the equipment orders we're seeing are on the same order of increase that we're seeing in WFE and maybe even higher. If you're going to make a lot of chips, you got to package them. There are For the complete transcript of the earnings call, please refer to the full earnings call transcript.

MKS (MKSI) came out with quarterly earnings of $3.3 per share, beating the Zacks Consensus Estimate of $2.94 per share. This compares to earnings of $1.77 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +12.25%. A quarter ago, it was expected that this maker of analysis and processing equipment for semiconductor companies would post earnings of $2 per share when it actually produced earnings of $2.3, delivering a surprise of +15%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. MKS, which belongs to the Zacks Electronics - Miscellaneous Products industry, posted revenues of $1.25 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.06%. This compares to year-ago revenues of $973 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. MKS shares have added about 100.7% since the beginning of the year versus the S&P 500's gain of 13%. While MKS has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for MKS was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $3.30 on $1.26 billion in revenues for the coming quarter and $11.81 on $4.87 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Miscellaneous Products is currently in the top 20% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Plug Power (PLUG), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This alternative energy company is expected to post quarterly loss of $0.08 per share in its upcoming report, which represents a year-over-year change of +50%. The consensus EPS estimate for the quarter has been revised 4.4% higher over the last 30 days to the current level. Plug Power's revenues are expected to be $167.74 million, down 3.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MKS Inc. (MKSI) : Free Stock Analysis Report Plug Power, Inc. (PLUG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

MKS Inc. MKSI reported second-quarter 2026 non-GAAP earnings of $3.30 per share, up 86.4% year over year. The figure beat the Zacks Consensus Estimate by 12.25%.Revenues rose 28.3% year over year to $1.25 billion and surpassed the consensus mark by 3.06%. Growth was broad-based across all three end markets, led by Electronics & Packaging, while adjusted EBITDA margin expanded to 28.6%. Product revenues, which accounted for 88.5% of total revenues, increased 30.2% year over year to $1.10 billion. The performance reflected stronger demand across the company’s semiconductor, electronics and packaging and specialty industrial businesses.Services revenues totaled $144 million, representing 11.5% of revenues. The figure increased 15.2% from the year-ago quarter, supporting the company’s overall double-digit top-line expansion. MKS Inc. price-consensus-eps-surprise-chart | MKS Inc. Quote Semiconductor revenues increased 28.2% year over year to $554 million and represented 44.4% of total revenues. Management highlighted accelerating AI-driven investment across semiconductor and advanced packaging applications, along with rapidly growing order volumes.Electronics & Packaging revenues increased 43.2% to $381 million, contributing 30.5% of revenues. Specialty Industrial revenues rose 13.8% to $313 million and accounted for 25.1% of the quarterly total. The gains across each end market underscored the breadth of demand in the quarter. Gross margin expanded 100 basis points year over year to 47.6%. Non-GAAP operating income totaled $320 million, while the non-GAAP operating margin improved 480 basis points to 25.6%.Non-GAAP operating expenses were $275 million compared with $251 million a year earlier.Adjusted EBITDA climbed 49.2% year over year to $358 million. Adjusted EBITDA margin rose 390 basis points to 28.6%, reflecting stronger revenue and improved profitability. GAAP income from operations increased to $251 million from $135 million in the prior-year quarter. The operating margin expanded 620 basis points to 20.1%, benefiting from the higher revenue base and improved gross margin. As of June 30, 2026, MKS had cash and cash equivalents of $611 million compared with $569 million as of March 31, 2026.As of June 30, 2026, long-term debt totaled $2.54 billion.Net cash provided by operating activities was $243 million in the second quarter, up 47.3% year over year. Capital expenditures totaled $55 million, resulting in free cash flow of $188 million compared with $136 million in the prior-year quarter. For the third quarter of 2026, MKS expects revenues of $1.35 billion, plus or minus $40 million. Gross margin is projected to be 47%, plus or minus 1 percentage point, while non-GAAP operating expenses are expected to be $280 million, plus or minus $5 million.The company forecasts non-GAAP earnings of $3.58 per share, plus or minus 31 cents. Adjusted EBITDA is expected to be $395 million, plus or minus $28 million. Management noted that the outlook reflects the current business environment, including U.S. import tariffs and retaliatory actions by other countries. MKSI currently carries a Zacks Rank #2 (Buy).Some other top-ranked stocks in the broader Zacks Computer and Technology sector include Applied Materials AMAT, Inuvo INUV and Analog Devices ADI. Each stock carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Applied Materials shares have gained 107.9% in the year-to-date period. Applied Materials is set to report second-quarter 2026 results on Aug. 13.Shares of Inuvo have plunged 56% in the year-to-date period. Inuvo is set to report the second-quarter 2026 results on Aug. 11.Shares of Analog Devices have rallied 39.3% year to date. Analog Devices is slated to report fiscal third-quarter 2026 results on Aug. 19. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MKS Inc. (MKSI) : Free Stock Analysis Report Analog Devices, Inc. (ADI) : Free Stock Analysis Report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report Inuvo, Inc (INUV) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Revenue of $1,248 million, above the high end of guidance GAAP net income of $175 million and net income per diluted share of $2.41, each above the high end of guidance Adjusted EBITDA of $358 million and Non-GAAP net earnings per diluted share of $3.30, each above the high end of guidance ANDOVER, Mass., Aug. 05, 2026 (GLOBE NEWSWIRE) -- MKS Inc. (NASDAQ: MKSI), a global provider of enabling technologies that transform our world, today reported its financial results for the second quarter of 2026. “MKS delivered accelerated double-digit year-over-year revenue growth across each of our end markets in the second quarter, demonstrating our foundational role as an enabler of advanced electronics,” said John T.C. Lee, President and Chief Executive Officer. “As AI-driven investment levels intensify across semiconductor and advanced packaging applications, our momentum is continuing to build, including rapidly growing order volumes. With the industry’s broadest technology capabilities, deep relationships in the electronics ecosystem, and enhanced capacity to deliver to customer demand, we are confident in MKS’ near- and long-term growth prospects.” “Our second quarter revenue and key profitability metrics once again came in at or above the high end of our guided ranges, underscoring our strong execution and favorable position in a robust demand environment,” said Ram Mayampurath, Executive Vice President and Chief Financial Officer. “We are demonstrating our ability to drive profitable growth and healthy free cash flow as we further strengthen our balance sheet and invest for the future.” Additional Financial Information At June 30, 2026, the Company had $611 million in cash and cash equivalents, $1.5 billion of secured term loan principal outstanding, $1.4 billion of convertible senior notes outstanding, €1.0 billion of senior notes outstanding and up to $1.0 billion of additional borrowing capacity under a revolving credit facility, subject to certain leverage ratio requirements. The trading price of our common stock during the second quarter of 2026 resulted in the satisfaction of the stock price conversion condition under the indenture governing our convertible senior notes. As a result, the convertible senior notes are convertible, in whole or in part, at the option of the noteholders at any time during the third quarter of 2026, and were classified as short-term debt, net of issuances costs, at June 30, 2026. In August 2026, the Company made a voluntary principal prepayment of $100 million on its USD term loan B. Third Quarter 2026 Guidance Revenue of $1,350 million, plus or minus $40 million Gross margin of 47.0%, plus or minus 1.0% GAAP operating expenses of $346 million, plus or minus $5 million and Non-GAAP operating expenses of $280 million, plus or minus $5 million GAAP net income of $201 million, plus or minus $23 million and Non-GAAP net earnings of $257 million, plus or minus $22 million GAAP net income per diluted share of $2.73, plus or minus $0.31 and Non-GAAP net earnings per diluted share of $3.58, plus or minus $0.31 Adjusted EBITDA of $395 million, plus or minus $28 million The guidance for the third quarter is based on the current business environment, including the impact of U.S. import tariffs and the imposition of retaliatory actions taken by other countries up through but not including the date of this release. The Company will continue to monitor and adapt to changes in the business environment as needed. Conference Call Details A conference call with management will be held on Thursday, August 6, 2026 at 8:30 a.m. (Eastern Time). To participate in the call by phone, participants should visit the Investor Relations section of MKS’ website at investor.mks.com and click on Events & Presentations, where you will be able to register online and receive dial-in details. We encourage participants to register and dial in to the conference call at least 15 minutes before the start of the call to ensure a timely connection. A live and archived webcast and related presentation materials will be available on the Investor Relations section of the MKS website. About MKS Inc. MKS Inc. (NASDAQ: MKSI) enables technologies that transform our world. We deliver foundational technology solutions to leading edge semiconductor manufacturing, electronics and packaging, and specialty industrial applications. We apply our broad science and engineering capabilities to create instruments, subsystems, systems, process control solutions and specialty chemicals technology that improve process performance, optimize productivity and enable unique innovations for many of the world's leading technology and industrial companies. Our solutions are critical to addressing the challenges of miniaturization and complexity in advanced device manufacturing by enabling increased power, speed, feature enhancement, and optimized connectivity. Our solutions are also critical to addressing ever-increasing performance requirements across a wide array of specialty industrial applications. Additional information can be found at www.mks.com. Use of Non-GAAP Financial Results This press release includes financial measures that are not in accordance with U.S. generally accepted accounting principles (“Non-GAAP financial measures”). These Non-GAAP financial measures should be viewed in addition to, and not as a substitute for, MKS’ reported results under U.S. generally accepted accounting principles (“GAAP”), and may be different from Non-GAAP financial measures used by other companies. In addition, these Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. MKS management believes the presentation of these Non-GAAP financial measures is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results. For further information regarding these Non-GAAP financial measures, please refer to the tables presenting reconciliations of our Non-GAAP results to our GAAP results and the “Notes on Our Non-GAAP Financial Information” at the end of this press release. SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS This press release 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 statements that are not statements of historical fact (including statements containing the words “will,” “projects,” “intends,” “believes,” “plans,” “anticipates,” “expects,” “estimates,” “forecasts,” “continues” and similar expressions) should be considered forward-looking statements. Actual events or results may differ materially from those in the forward-looking statements set forth herein. Among the important factors that could cause actual events to differ materially from those in the forward-looking statements that we make are the level and terms of our substantial indebtedness and our ability to service such debt; risks related to pursuing, completing, and/or failing to realize the benefits of acquisitions and other strategic transactions critical to our growth strategy; risks related to cybersecurity, data privacy and intellectual property; manufacturing and sourcing risks, including supply chain disruptions, component shortages and price increases, the use of limited, sole source and international suppliers, the relocation of manufacturing operations, and product defects; risks associated with doing business internationally, including geopolitical conflicts, trade compliance, trade protection measures, such as import tariffs by the United States and/or retaliatory actions taken by other countries, regulatory restrictions on our products, components or markets, particularly the semiconductor market, and unfavorable currency exchange and tax rate fluctuations; conditions affecting the markets in which we operate, including intense competition, rapid technological and market changes, dependence on new product development, the ability to anticipate and meet customer demand, fluctuations in capital spending in the semiconductor, electronics manufacturing and automotive industries, and fluctuations in sales to our major customers; disruptions or delays from third-party service providers upon which our operations may rely; risks associated with the attraction and retention of key personnel; potential fluctuations in quarterly results; volatility of stock price; risks associated with chemical manufacturing and environmental regulation compliance; risks associated with artificial intelligence (“AI”); financial and legal risk management; and the other important factors described under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission and any subsequent Quarterly Reports on Form 10-Q. MKS is under no obligation to, and expressly disclaims any obligation to, update or alter these forward-looking statements, whether as a result of new information, future events or otherwise, even if subsequent events cause our views to change, after the date of this press release. Amounts reported in this press release are preliminary and subject to finalization prior to the filing of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. Company Contact: Paretosh MisraVice President, Investor RelationsTelephone: (978) 284-4705Email: [email protected] MKS Inc.Notes on Our Non-GAAP Financial Information Non-GAAP financial measures adjust GAAP financial measures for the items listed below. These Non-GAAP financial measures should be viewed in addition to, and not as a substitute for, MKS’ reported GAAP results, and may be different from Non-GAAP financial measures used by other companies. In addition, these Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. MKS management believes the presentation of these Non-GAAP financial measures is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results. Totals presented may not sum and percentages may not recalculate using figures presented due to rounding. Restructuring and other includes incremental expenses incurred in connection with restructuring programs and other strategic initiatives, primarily related to changes in business and/or cost structure. Such costs may include third-party services, one-time termination benefits, facility-related costs, contract termination fees and other items that have no direct correlation to our future business operations. Legal settlement includes charges related to the resolution of legal matters. Amortization of intangible assets includes non-cash amortization expense associated with intangible assets acquired in acquisitions. Loss on extinguishment of debt includes the non-cash write-off of unamortized debt issuance costs and original issue discount costs incurred from voluntary prepayments, refinancings and/or repricings of our term loan facility. Amortization of debt issuance costs includes non-cash additional interest expense related to the amortization of debt issuance costs associated with our debt. Loss from de-designation of interest rate hedges includes a cash loss from the de-designation of certain interest rate hedges in connection with the voluntary prepayment of the USD term loan B. Fees and expenses related to debt activities includes direct third-party costs related to repricings or refinancings of our term loan facility and the issuance of our €1.0 billion of senior notes due 2034 in February 2026. Convertible debt capped calls includes the antidilutive impact of the capped call transactions entered into in connection with the issuance of $1.4 billion of convertible senior notes in May 2024. The capped calls are designed to reduce potential dilution to the Company’s common stock and/or offset cash payments in excess of the principal upon conversion of the notes, subject to a cap. Because the capped calls are excluded from GAAP diluted share calculations, GAAP and Non-GAAP diluted share counts will differ. Tax effect of Non-GAAP adjustments includes the impact of Non-GAAP adjustments that are tax effected at applicable statutory rates resulting in a difference between the GAAP and Non-GAAP tax rates.