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MKS posts 86% EPS growth, warns gross margin may stay pressured
Revenue rose 28% year over year to $1.25 billion, but management flagged temporary gross margin headwinds as it scales capacity and shifts equipment sales strategy.
MKS Inc. posted a strong second-quarter results after its Aug. 6 earnings call, with revenue up 28% year over year to $1.25 billion and non-GAAP earnings per share rising 86% to $3.30, helped by faster profit growth than sales, Yahoo Finance reports.
Management said demand is accelerating across its business, including semiconductor revenue climbing 28% year over year to $554 million, electronics and packaging revenue increasing 44% to $381 million, and specialty industrial revenue up 14% to $313 million.
The company also reported operating margin expanding 480 basis points to 25.6% and free cash flow of $188 million, including a $100 million voluntary debt prepayment in August 2026 that reduced leverage to 3 times EBITDA.
Still, CFO Ram Mayampurath acknowledged that growth is starting to come with margin tradeoffs, citing equipment sales strategy as a temporary headwind to gross margin and ramp costs as the company doubles capacity at its Guangzhou chemistry equipment factory, expected online in the third quarter of 2027. Gross margin was 47.6% for the quarter, but the figure included a full percentage point of one-time tariff and duty refund benefits, and guidance calls for gross margin near 47% in the third quarter.