8-K: Cohu Reports Third Quarter 2024 Results with Revenue of $95.3 Million

Cohu announced its third quarter 2024 results, reporting a revenue of $95.3 million and a GAAP loss of $18.1 million.

Summary

• Cohu reported third quarter 2024 net sales of $95.3 million, with approximately 67% of revenue being recurring.
• The company experienced a GAAP loss of $18.1 million, or $0.39 per share, for the quarter.
• Non-GAAP loss for the third quarter was $3.8 million, or $0.08 per share.
• For the first nine months of 2024, net sales totaled $307.7 million with a GAAP loss of $48.5 million, or $1.03 per share.
• The non-GAAP loss for the first nine months was also $3.8 million, or $0.08 per share.
• Cohu's gross margin was 46.8%, while non-GAAP gross margin was 47.1%.
• The company saw sequential order growth, with recurring revenue improving 8% quarter-over-quarter.
• Total cash and investments at the end of the third quarter were $269.2 million.
• Cohu repurchased 315,000 shares of its common stock for approximately $8.1 million during the third quarter.
• The company expects fourth quarter 2024 sales to be in the range of $95 million +/$7 million.

Sentiment

Score: 4

Explanation: The sentiment is negative due to the reported losses and decreased sales compared to the previous year, despite some positive aspects like recurring revenue and new product development. The forward guidance is also not particularly strong.

Positives

• Recurring revenue makes up a significant portion of total revenue at 67%.
• The company achieved sequential order growth, with recurring revenue improving 8% quarter-over-quarter.
• Cohu is focused on developing new products aligned with growth opportunities in data centers.
• The company is expanding its inspection metrology business with Neon and the new Krypton system.
• Cohu has a strong cash position with $269.2 million in total cash and investments.

Negatives

• Cohu reported a GAAP loss of $18.1 million for the third quarter and $48.5 million for the first nine months of 2024.
• The company also reported a non-GAAP loss of $3.8 million for both the third quarter and the first nine months of 2024.
• Net sales decreased from $150.8 million in Q3 2023 to $95.3 million in Q3 2024.
• The company's GAAP gross profit decreased from $70.9 million in Q3 2023 to $44.7 million in Q3 2024.

Risks

• The semiconductor industry is seasonal, cyclical, volatile, and unpredictable.
• There has been a recent erosion in mobile, automotive, and industrial market sales.
• The company faces ongoing inflationary pressures on material and operational costs, coupled with rising interest rates.
• Economic recession could impact the company's performance.
• The semiconductor industry is intensely competitive and subject to rapid technological changes.
• A limited number of customers account for a substantial percentage of net sales.
• The company has significant exports to foreign countries with economic and political instability.
• There are risks associated with using artificial intelligence within Cohu's product developments and business.
• The company relies on foreign locations and faces geopolitical instability in those locations.
• Natural disasters, war, and climate-related changes could impact the company.
• There are risks associated with acquisitions, investments, and divestitures.
• Increasingly restrictive trade and export regulations, particularly in China, could impact sales.
• The company faces the risk of cybersecurity breaches.
• There is a risk of instability of financial institutions where the company maintains cash deposits and potential loss of uninsured cash deposits.

Future Outlook

Cohu expects fourth quarter 2024 sales to be in the range of $95 million +/$7 million.

Management Comments

• Cohu President and CEO Luis Mller stated that they are focused on developing new products aligned to higher near-term growth opportunities in data centers and continuing to build their recurring software revenue.
• He also mentioned that they continued to execute on their strategy to win customers on Cohu's Diamondx tester and are expanding their inspection metrology business with Neon and the new Krypton system.

Industry Context

The semiconductor industry is currently experiencing a cyclical downturn, which is reflected in Cohu's reduced sales compared to the previous year. The company is focusing on recurring revenue and new product development to mitigate the impact of this downturn and capitalize on growth opportunities in data centers.

Comparison to Industry Standards

• Cohu's performance is being impacted by the broader semiconductor industry downturn, similar to companies like Teradyne and Advantest, which have also reported reduced sales in recent quarters.
• The focus on recurring revenue is a common strategy in the industry to stabilize revenue streams during cyclical downturns, with companies like National Instruments also emphasizing software and services.
• The expansion into inspection metrology with Neon and Krypton systems is a move to diversify product offerings, similar to how companies like KLA Corporation offer a range of inspection and metrology solutions.
• The share repurchase program is a common practice among public companies to return value to shareholders, similar to programs implemented by other companies in the tech sector.

Stakeholder Impact

• Shareholders are negatively impacted by the reported losses and decreased sales.
• Employees may be impacted by restructuring and cost-cutting measures.
• Customers may benefit from new product developments and improved services.
• Suppliers may be affected by changes in demand and production levels.
• Creditors may be concerned about the company's financial performance and debt levels.

Next Steps

• Cohu will host a conference call and webcast on October 31, 2024, to discuss the third quarter 2024 results.
• The company will continue to focus on developing new products aligned with growth opportunities in data centers.
• Cohu will continue to build its recurring software revenue.

Key Dates

Keywords

semiconductor, test equipment, automation, inspection, metrology, recurring revenue, gross margin, financial results, non-GAAP, share repurchase