Aixtron SE (AIXXF) Q2 2024 Earnings Call Highlights: Navigating Market Challenges with ...
Revenue: EUR172 million for Q2 2024, EUR250 million for H1 2024.
Gross Margin: 37% for Q2 2024, down from 42% in the previous year.
EBIT: EUR30 million for Q2 2024.
OpEx: EUR36 million for Q2 2024, driven by higher R&D spending.
Order Backlog: EUR401 million at the end of Q2 2024.
Operating Cash Flow: EUR20 million for Q2 2024, EUR13 million for H1 2024.
Free Cash Flow: Minus EUR56 million for H1 2024.
Cash Balance: EUR79 million as of June 30, 2024.
Guidance for FY 2024: Revenue expected between EUR620 million and EUR660 million; Gross Margin 43% to 45%; EBIT Margin 22% to 25%.
Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Aixtron SE (AIXXF) maintained a strong competitive position despite a softer market environment, with significant orders in Q2 2024 totaling EUR176 million, primarily driven by power electronics.
The company expanded its market position in silicon carbide, with SiC-based systems accounting for 57% of incoming equipment orders.
Aixtron SE (AIXXF) secured substantial volume orders from China and new customers for its G10-SiC tool, including several from Japan.
The company's equipment order backlog increased to EUR401 million, up almost EUR50 million from the end of fiscal 2023.
Aixtron SE (AIXXF) announced the acquisition of a production site in Turin, Italy, to address expected demand increases and enhance manufacturing capabilities.
Negative Points
The gross margin decreased to 37% from 42% the previous year, primarily due to a product mix with a larger share of lower-margin LED tools.
Revenues in Q2 2024 were EUR132 million, down from EUR174 million the previous year, due to shipment and revenue timing differences.
The softer end market for power devices impacted delivery schedules, leading to an adjusted fiscal year 2024 revenue guidance of EUR620 million to EUR660 million.
High inventory levels persisted, with inventories slightly increasing to EUR448 million, reflecting a strategy to secure on-time delivery despite supply chain challenges.
The cash balance decreased to EUR79 million from EUR182 million at the end of 2023, primarily due to CapEx projects and a EUR45 million dividend payment.
Q & A Highlights
Q: Can you comment on the order momentum and whether you expect similar orders in the coming quarters? A: Yes, we expect the momentum in Q3 and Q4 2024 to be similar to Q2. Our pipeline is strong, and we have a clear understanding of customer needs and lead times, indicating that the order levels will remain consistent.
Q: What is your visibility on GaN adoption for AI power delivery, and when do you expect it to be widely adopted? A: We estimate that GaN adoption for AI power delivery will start ramping up in 2026. The energy consumption challenge in AI is pressing, and the industry is moving quickly to address it, with GaN playing a significant role.
Q: How does the innovation in photonics and 3D integration impact demand for AIXTRON's laser business? A: The exponential growth in data volume and the need for optical data communication are driving demand. However, the exact impact of various architectures on laser demand is still unclear, and we will provide updates as we gain more transparency.
Q: Given the strong order intake, what is your outlook for 2025 growth? A: It's too early to provide a reliable outlook for 2025 due to market dynamics. However, we see some large customers in silicon carbide continuing to invest through the cycle, aiming for operational efficiency and market share gains.
Q: Can you explain the factors behind the unchanged full-year margin guidance despite revenue downgrades? A: The product mix for the full year hasn't changed significantly, allowing us to maintain our gross margin guidance. The proportional cut in revenue did not affect the overall product mix, supporting our margin expectations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.