MKS Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total net revenues reached a record $1,413 million for the quarter, up 43% year-over-year from $988 million in Q3 2025 and 13% sequentially from $1,248 million in Q2 2026.
• GAAP net income was a record $236 million, compared to $74 million in Q3 2025 and $175 million in Q2 2026.
• GAAP net income per diluted share was $3.26, up from $1.10 in Q3 2025 and $2.41 in Q2 2026.
• Adjusted EBITDA was a record $434 million, compared to $240 million in Q3 2025 and $358 million in Q2 2026.
• Non-GAAP net earnings were $292 million, or $4.18 per diluted share, compared to $130 million ($1.93 per share) in Q3 2025 and $232 million ($3.30 per share) in Q2 2026.
• Gross margin was 47.7% for the quarter, up from 46.6% in Q3 2025 and 47.6% in Q2 2026.
• GAAP operating margin was 23.1%, compared to 14.0% in Q3 2025 and 20.1% in Q2 2026.
• Non-GAAP operating margin was 27.8%, compared to 20.8% in Q3 2025 and 25.6% in Q2 2026.
• Cash and cash equivalents were $676 million as of September 30, 2026.
• Free cash flow was $243 million for the quarter, compared to $147 million in Q3 2025 and $188 million in Q2 2026.
• Net cash provided by operating activities was $292 million for the quarter.

Guidance and Future Outlook:

• Q4 2026 revenue guidance is $1,490 million, plus or minus $40 million.
• Q4 2026 gross margin guidance is 47.5%, plus or minus 1.0%.
• Q4 2026 GAAP operating expenses are guided at $355 million, plus or minus $5 million; Non-GAAP operating expenses are guided at $288 million, plus or minus $5 million.
• Q4 2026 GAAP net income is guided at $294 million, plus or minus $28 million; Non-GAAP net earnings are guided at $352 million, plus or minus $27 million.
• Q4 2026 GAAP net income per diluted share is guided at $4.04, plus or minus $0.38; Non-GAAP net earnings per diluted share is guided at $5.00, plus or minus $0.38.
• Q4 2026 Adjusted EBITDA is guided at $461 million, plus or minus $29 million.
• Guidance excludes the impact of the pending sale of the Ophir® Optics business.
• Guidance is based on the current business environment, including the impact of U.S. import tariffs and retaliatory actions by other countries up to the date of the release.

Business Segments and Product Lines:

• Semiconductor segment revenue was $638 million, up 54% year-over-year from $415 million in Q3 2025.
• Electronics & Packaging segment revenue was $415 million, up 43% year-over-year from $289 million in Q3 2025.
• Specialty Industrial segment revenue was $360 million, up 27% year-over-year from $284 million in Q3 2025.
• All end markets performed at or above the high end of guidance.
• The company reported robust orders and new design wins driven by fundamental challenges in stacking, scaling, and new materials in the AI era.

Market and Competitive Landscape:

• MKS positions itself as having the broadest set of capabilities across semiconductor and advanced packaging markets.
• The company notes exposure to attractive growth markets and a mix of equipment solutions and consumables.
• Management highlighted that fundamental challenges of miniaturization and complexity in advanced device manufacturing are driving demand for their solutions.

Risks and Challenges:

• Risks include substantial indebtedness and the ability to service such debt.
• Risks related to the pending sale of the Ophir Optics business.
• Manufacturing and sourcing risks, including supply chain disruptions, component shortages, and reliance on limited or sole-source international suppliers.
• Geopolitical conflicts, trade compliance, and trade protection measures such as U.S. import tariffs and retaliatory actions.
• Risks associated with cybersecurity, data privacy, and intellectual property.
• Fluctuations in capital spending in the semiconductor, electronics manufacturing, and automotive industries.
• Volatility of stock price and potential fluctuations in quarterly results.

Management Commentary and Tone:

• CEO John T.C. Lee stated business momentum continued to build, with revenue in all end markets at or above the high end of guidance.
• CFO Ram Mayampurath noted the business model is delivering scale benefits, driving gross and operating margin expansion, strong earnings growth, and cash generation.
• Management expressed confidence in a strong finish to 2026 and being well-positioned to generate significant, durable shareholder returns.
• The tone was positive, emphasizing robust orders, new design wins, and the company's foundational role in the AI era.

Other Key Points:

• The convertible senior notes are convertible at the option of noteholders during the fourth quarter of 2026 and were classified as short-term debt at September 30, 2026.
• In November 2026, the Company made a voluntary principal prepayment of $100 million on its USD term loan B.
• The Company has $1.3 billion of secured term loan principal outstanding, $1.4 billion of convertible senior notes outstanding, and €1.0 billion of senior notes outstanding.
• The Company has up to $1.0 billion of additional borrowing capacity under a revolving credit facility.
• Cash dividends per common share were $0.25 for the quarter.
• The pending sale of the Ophir® Optics business is a notable strategic transaction mentioned in the risk factors and guidance exclusions.