Yahoo Finance Cohu Inc (COHU) Q1 2024 Earnings Call Transcript Highlights: Navigating Market Challenges with ...
Revenue: $107.6 million in Q1; recurring revenue represented 66% of total.
Gross Margin: 46% in Q1, 100 basis points above guidance.
Net Income: Non-GAAP operating income approximately breakeven.
Earnings Per Share (EPS): Non-GAAP EPS was $0.01 in Q1.
Free Cash Flow: Cash and investments decreased by $64 million in Q1.
Adjusted EBITDA: 2.6% in Q1.
Capital Expenditures (CapEx): $3.3 million in Q1, with $2 million related to operations in the Philippines and Malaysia.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Cohu Inc (NASDAQ:COHU) reported first quarter results that were in line or better than guidance, with non-GAAP gross margin at 46% and EPS at $0.01.
Test cell utilization increased slightly, indicating a potential stabilization in the market.
A leading U.S. fabless semiconductor manufacturer selected Cohu Inc (NASDAQ:COHU)'s SaaS plus system with micro sense for testing their next-generation high-fidelity microphones, highlighting new product adoption and market opportunities.
Cohu Inc (NASDAQ:COHU) completed the qualification of Bionix for final test of display driver ICs at a large customer in Korea, potentially opening doors for further revenue growth in this segment.
The company maintains a strong balance sheet, with cash and investments totaling $271 million, supporting future investments and shareholder returns through share repurchase programs.
Negative Points
Cohu Inc (NASDAQ:COHU) expects business conditions to remain challenging for another quarter or two, with low test cell utilization continuing to impact the semiconductor industry.
Sequential declines in computing, industrial, and automotive demand indicate ongoing market weakness.
The overall revenue of $107.6 million reflects continued market challenges and a reliance on a stable, yet limited, recurring revenue stream.
Projected Q2 revenue reflects continued weakness across end markets, with expected revenue in the range of $105 million, plus or minus $6 million.
Operating expenses, although lower than guidance at $50.2 million, remain a concern as the company navigates through market downturns.
Q & A Highlights
Q: Can you provide some color on what you see on the mobile side of the end market, which drives your tester business? Are you more incrementally positive or cautious here? A: (Luis Muller, President & CEO) We are incrementally more positive on mobile. Particularly in IoT devices, we've seen a little bit of an improvement in orders in the fourth quarter and revenue in the first quarter. The mobile segment is the only segment where we saw an increase in revenue quarter over quarter, focused particularly on the Android segment and some customers in China and Korea.
Q: What are the ordering or quoting activities like right now, especially relative to three months ago? Are you starting to see some green shoots? A: (Luis Muller, President & CEO) The activity is still very much focused on new technologies, new applications, or our customers winning a particular socket that drives some demand. We have qualifications, design wins, and new product selections, but not much of a broad-based capacity addition at this point.
Q: When business does recover, which segments of your equipment do you think the handlers or testers will recover first? A: (Luis Muller, President & CEO) We've been thinking that the mobile segment and computing will start coming in first. However, automotive and industrial utilization rates are currently higher, which might lead them to recover sooner if they reach the capacity addition threshold.
Q: How should we think about the seasonal dynamics given the unusual year thus far? A: (Luis Muller, President & CEO) This year, you're not going to see as much seasonality because we're coming off of a trough. All indications are that the market starts to improve in the second half of the year and going into a 2025 recovery. Cyclicality is dominating what's happening in the market, likely overshadowing typical seasonality.
Q: Can you share what you're seeing by device type in terms of relative strength or weakness? A: (Luis Muller, President & CEO) The general analog semiconductor space is the weakest at the moment. We've seen some interesting dynamics in the processor space, particularly with high ASP, low quantities moving more to servers. There's also some improvement in demand for test handling equipment for battery management systems.
Q: How big is the TAM for your win in display drivers, and how should we think about your ability to grow share over time? A: (Luis Muller, President & CEO) The TAM is about $200 million, but currently, it's depressed. We are now supplying to two customers that make up about 50% of that TAM, viewing it as a $100 million opportunity. We expect to share this with our competitor, having captured significant portions of this market with recent qualifications.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
