MKS 'Q1 net revenue fell to $794 million, and the company expects a full recovery in the next quarter

On May 4, U.S. semiconductor equipment maker MKS Instruments announced its financial results for the first quarter of 2023. In its most recent earnings report, Q1 2023 totaled $794 million. Net income declined further, to a loss of $42 million ($0.64) from $143 million ($2.57) a year earlier; Gross profit margin was 42.2%.

The latest disappointing revenue and profit margins also show the pressure MKS is facing following a ransomware attack in February. In March 2023, the company announced that February's ransomware attack had "reduced its sales by approximately $200 million" in the first quarter of 2023.

In fact, newly released figures from MKS Instruments this week show that the company's net income fell by nearly $300 million between the fourth quarter of 2022 and the first quarter of 2023, with total net income slipping from $1.085 billion to $794 million in the latest quarter.

(photo credit: MKS Instruments)

Revenue of each business segment

For the first quarter of 2023, MKS Instruments revenue by business segment was as follows:

- Semiconductor market net revenue of $309 million;

- Advanced Electronics market net revenue of $222 million;

- Specialty Industries market net revenue was $263 million.

Among the business segments mentioned above, the advanced electronics end market represents revenues from PCBS, solar, displays and electronic component applications. The specialty industrial end market represents revenue from industrial, life and health sciences, research and defense applications. In addition, MKS 'semiconductor terminal market remains unchanged.

For the quarter, MKS Instruments also increased total revenue by $52 million from the same period last year due to higher revenue in its electronics and packaging and specialty industries segments, which more than offset a decline in semiconductor revenue.

Top comment: Recovery expected in Q2

MKS Instruments currently owns major optoelectronics brands including Spectra-Physics lasers, Newport and ESI.

President and Chief Executive Officer John T.C. Lee commented: "Following the discovery of the ransomware incident in February, we have resumed global operations and are on track to deliver on our previous commitment to substantially restore revenue by the end of the second quarter. Thanks to the dedication, hard work and ingenuity of our more than 10,000 employees, we are stronger and more resilient today than ever before."

Mr Lee added that the merger between MKS and Atotech, a process chemicals and advanced electroplating solutions company, was as expected a major push. MKS previously entered into a definitive transaction agreement with Atotech on July 1, 2021, and received unconditional Chinese market approval in August 2022. John T.C. Mr Lee said: "We have made excellent progress with the acquisition of Atotech in the face of weak macro and end markets, which enables MKS to take advantage of a number of attractive long-term opportunities with our portfolio of fundamental solutions in the semiconductor, electronics and packaging and specialty industrial markets."

Seth H., Executive Vice President and Chief Financial Officer Bagshaw commented, "Despite the unusual challenges we faced, we executed well in improving plant utilization following the ransomware incident and, coupled with prudent cost control, we managed to achieve positive free cash flow in the first quarter. Going forward, we are focused on restoring strong free cash flow generation, realizing acquisition synergies and executing on our disciplined balance sheet deleveraging strategy."

Second quarter outlook

MKS Instruments expects revenue of $980 million (± $50 million) and non-GAAP net income per diluted share of $1.13 (± 0.29) for the second quarter of 2022.

Source: OFweek