Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to today's Conference Call to discuss Cohu's First Quarter Financial Results and Second Quarter Outlook. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question-and-answer session [Operator Instructions]. Please be advised that today's conference is being recorded. hand CFO. over to today, your like Jones, Jeff now the to conference host I'd ahead. go Please

Jeff Jones

Good afternoon.and XXXX our Luis XXXX today welcome to our Muller. results first discuss by and quarter Cohu's second and quarter President outlook. joined conference I'm CEO, call to

from be contacting presentation If it concludes. may Cohu available call on There's a copy after slide Investor page conjunction site Investor may a at with in that the site need the via of Relations our earnings Relations. Web you you Cohu's Web section. cohu.com call in same today's be release, this accessed of access our or by the will call also Replays

harbor. the safe to Now

Cohu's you information During based subject statements we today's forward-looking nature, we by of that statements as call, make and the business. concerning filed on future changes. review forward-looking are will Form current expectations assessed, abrupt to rapid Form and is reflecting filings its XX-K with section Cohu's but release We have earnings to the the which, These SEC, and statements current most management's even including presentation recently encourage as slide XX-Q. the well

Cohu today, this for only assumes speak XXXX, these Our comments no update May developments X, to as call. of obligation after and statements occurring

and during presentation measures. for discuss we Please the certain release comparable will our this GAAP earnings slide call, refer reconciliations Finally, non-GAAP financial to measures. most to

the call turn to to Luis? President like I'd CEO. Muller, Now over Luis Cohu's and

Luis Muller

global will review results quarter up discuss Cohu's at we aligning thoughts guidance growing for financial thanks and business, Jeff and end. some I'll for then key of to before afternoon, joining our quarter the second open first Good us. questions first investments in trends.

last performance company and allowing quarter We invest upturns. the profitable profitability our products to to through operational million months. results on and provides stable industry with business new are first to cycles, Chou's the cash continuing through generate the revenue technologies growth revenue business recruiting that improvements over market $XXX XX flow recurring in that in delivered focus pleased reflects deliver in

First a on Chou's first quarter renewal landed and XXX level. contributed of through interface test of gross business our Service non-GAAP Also bringing Chou's first annual our it's at recurring XX% revenue contactors gross CAGR margin XX.X% revenue new series points revenue year target Cohu’s basis and automotive margin business X.X% quarter, key year-over-year recurring, in financial component and this XX% XXXX. of sticky customers. of by approximately grew a across industrial of has recurring, service penetration better business opportunities a rate increased expand recurring is quarter model demonstrated and at QX XX% a than as semiconductor contracts. three greater part than of our helping the

and Philippines in Asia. new business interface to manufacture approximately the the foot We we've the is year to XX% start broke Philippines site continue in and of plan for transfer in And the factory. a new establish early of supply on new The this, our of support at mid of growth by fully XXXX. to next in quarter approximately be in XX,XXX ground term those of target January we contactors factory plans, operational facility into we XX% forward, closed construction the production Asia produce current planning to and at this work contactors in as With square to the on our designs chain. we're our long going adjacent local first

And ramp customers' business increase automation. production across trend predictive implement of higher factory for is our part to productivity We of working key see additional is flexibility a in support base large software and capabilities handlers. We the of expand software Cohu’s maintenance. semiconductor analytic supply developing of installed local to also our continue many Also to DI-Core needs. quickly to chain recurring, enabling customers

revenue contributed over Cohu's basis XX% at improvement approximately a Switching of quarter work products and business, is and from continue offset year-over-year cost XXX focus chain gross to first selling to margin, which systems points it to as inflation XX% we differentiated pressures constraints. on supply

the a points market strongest test segments. was QX cell estimated down Mobility segments. but in utilization was on remained computing across consumer a Automotive up sequentially and utilization X down X points points QX, and flat. Now, remained at was this couple XX% of end Commenting quarter-over-quarter. industrial the increased point, of sequentially

that revenue from systems Cohu benefit automotive with and stronger automotive this market along through resilient in drivetrains quarter remain was industry First autonomous electric technology to continues shift direction vehicles. more to markets notably more And industrial to end a cycle.

received and are interface devices, device carbide offers automation, a and silicon traceability power for tape, our wafer device We power of known die multiunit future for order these participation to aligning million and product to high interface and we device customers’ later inspection quarter, $X tester, modules. markets. first test supporting these expenditures our investments automation vision greater gain in from In the test handler capital inspection. good Cohu ensuring integration in

and the and NYXXW, from as is support bandgap to points our and the the MEMS expect coming We grew as make a inroads wide sequentially to of acquired into well performance to computing, that high of continue two benefited applications at discussing inspection strategy customers development MCT dies. wafer die business. as we Core years are of accelerate increasing we our the applicability products revenue technology. revenue other recently power this months and level new AI and from that align cGator test with manufacturing the that sensor Mobility also expansion percentage to few product, interface in

maintain use we of and is our electricity progress X detail employee in Cohu emissions. Scope you sustainability in XX% to to and derived record, our and sources increased that safety site@www.cohu.com. ethics and We about on, read progress published from can gas The with business along diversity, committed and which continue greenhouse ethnic last and stellar renewable responsible Moving Web report, year. gender XXXX X increase practices recycling, recently made details in our and

Now the of discussing our this year. balance view for

We product focused a economic for half industrial secular allow we in increased headwinds, XXXX well major that processing growing to market second demand on by outlook continues profitability positioned We're these now are market investments growth to strong the challenged aligned new weak cash focus these is aligning technologies put to pressure and that our Despite macroeconomic power. expect remain autonomous our of business to for and semiconductor flows sensing recovery. a remain opportunities. products. in trends vehicles, automation, The the and resources on to in and roadmaps ensuring deliver

this to results on Jeff turn now and Let XXXX guidance. quarter over for details me first further second Jeff? presentation quarter

Jeff Jones

Thanks, Luis.

comments to page please included Before which QX that release on I'll I other about non-GAAP reconciliations disclosures walk the earnings my accompanying figures. results that through to our site. follow measures of refer guidance, note in the GAAP are located the and investor are and Information non-GAAP presentation, financial non-GAAP the Web and QX including the investor

revenue with results. Now turning of QX financial in range. our the Cohu of to line million, strong $XXX.X is on profitability delivered which guidance the midpoint

higher was differentiated used quarter, from market points. products. a by products the our XX increases two of business strong on margin gross recurring tester Cohu's resilient basis minor basis of Headwinds on our for approximately and had cost IC impact components QX accounted XX% XX XX.X%, guidance, points customers more about than first for gross automotive at each sales. than in driven the margin During QX

inventory expect million. purchased We margin higher to future similar we line minor than prior the in quarters at $XX.X were as in impacts Operating normal for quarters costs. through at gross guidance remaining expenses in with work QX

jurisdictions. Non-GAAP targets income the of operating in quarter due adjusted XX.X%. summary, EBITDA was this tax effective for higher and revenue XX.X% midterm was of than First was level at and of projected financial In was EBITDA tax was adjusted $X.XX. The to QX annual for exceeding pre-tax margin guidance first QX income quarter higher gross the strong, non-GAAP approximately XX% rate and revenue. EPS rate concentration non-GAAP

expected QX new Philippines Cash the of balance building $XX of flow Total XXXX. in totaled for will building the The $XXX Cohu’s $XXX our million ended $XX.X through shares $XX Debt business. position XXXX, new at from totaled cash our million. we strategy. on XXth. X.X the million in QX with the in strong program cash Philippines was by closed to CapEx remainder of to including The our investment repurchased ended QX share with January CapEx QX remain drive million. investments debt mentioned in to million of approximately $X.X Moving million $XX a $X approximately served construction to interface million. MCT CapEx approximately technology and position was and and is million Overall, million. to cash and in growth operations opportunities growth portfolio acquisition sheet in facility balance markets support reduction, with for prospects to Cohu's related sheet. line a term maintains Luis million at expand and the $X repurchase support repayment long QX net another

to QX moving our outlook. Now

is cash $X by million flows are industry We’re a and QX year at stable million. QX approximately gross resilience offset essentially annual X.X% this target the through quarter-over-quarter. adds rate QX than With profitability of and be between for approximately projecting to million. be $X high We're and of business $XXX expense consistent level cycles. flat revenue the approximately projected approximately forecasted three guiding financial and to provides better expenses be to $XX of be margin recurring million, XX% income compound revenue. to million interest $XXX growth Operating QX interest model Cohu's margin to

approximately of expected of remarks. count be approximately That now forecasted call shares. we'll the prepared We the for XX% QX The concludes QX open our the at to rate approximately at guidance. XX.X is adjusted XX%. And is expect EBITDA questions. to million guidance midpoint be midpoint The non-GAAP diluted to tax QX share

Operator

[Operator comes Riley Ellis question a Instructions] Our B. Craig of line from Securities. with first

Craig Ellis

specifically wondering any toward see provide going a quarter, do the year. on additional on base? you the color back September I we're if seasonality looking coming could was or the down sales you of half on And as lower

Luis Muller

It's our we about a described a what has in view anything good ago. changed quarter I since question, but think don't

talked about same year, we months So change for of three ago. still there's really the the second no the perspective half it's

Operator

line question comes of Duley Steelhead with David the next from Securities. Our

David Duley

wondering with more conference can opportunity the if silicon that think win new current you was about as more call well win on the elaborate about. on I And talked talked that previous it is or you a you you business bit this or a customer, this as carbide about customer? little I talked

Luis Muller

been also A we more initial the that described business. now volume about qualification, quarter Dave, a of it's talked an acceptance current the of ramp have of have the the the the we on with it win, more and is ago, ago. the tools of might design couple first quarter description

David Duley

And out to customer with solutions and I other opportunity be of opportunity you're think handling inspection the where sold would solution the equipment to are mentioned customers? your an which known Is trying to to expand and to this that you figure good basically could the take die. the here customer footprint you other or you this initial

Luis Muller

It's so automation good provides for that side. the known more die is the current test, for and does it it interface What contactor of the as it does high here the inspection it of Dave. and then well, latter, the test equipment test. -- we're voltage electrical electrical piece I output And the on a sorting mean, and and you the dies have the selling very does through, the

the modules. So customers providing other same provide all the we're applications. we do types improve And of taking silicon these in and much of opportunity can each the their before listen good is doing dies the to the that quality market to known forward for pretty carbide stacking

David Duley

markets think wins little then topics, in that capacity you've you're you I for had mentioned test more seen switching you expanding the just you initially business? how in elaborate Philippines. recent Could contactors a bit And a where other what's on automotive your of curious as picked to market, rate in and at far just you've success point? if continue lot is this goes initial up be it or rate in as that attach I'm wins. customers

Luis Muller

going things of couple a So on.

First continues the grow. market of to automotive all,

contactors automotive greatest year-over-year. Our But the more XX% it in for year-over-year is automotive where is our automotive more exposure. we we're like in large have revenue with that at obviously And up contactors. QX. don't specifically here up automotive handy manufacturing and business I get

-- automotive in are it's Additionally, communications actually one we in won -- the probe series of have and segment design head of those market. actually wins more quarter, of a heads. probe in Two the third opportunities in not, a is the for first the more it's

we're we we more space, need manufacturing now we more need more So we at a capacity, point suppliers. that tools, more need basically need

Philippines were increase now we of That's also pushing we what after increase out the our output so region. enable go wins to operation, output to And and and need suppliers further can in the of but pushing capability our ramps. we so business the to

David Duley

I 'XX? just you these don't business X% grows XXXX? slides? Do super that of How see think talked year. a number in had big it's how you the was calendar remind CAGR us, Could in you difficult in And it’s for about the you've about a even though contactor business

Jeff Jones

target to ultimately is revenue up yes, a be Dave, do was million. last and year, of that Cohu. billion, anticipate of And business XX% we growth $XXX $XXX year the this target million that so the to for about

that high single sort growth still And we anticipate so rate… of that grow business digit will

David Duley

a the annual building as in does it putting place rate? now, Just it run this the the Philippines cover, everything, to and capacity you're does follow-up, $XXX get million in you new

Luis Muller

in we're between supply trying yes, to develop capacity chain the Yes, it the and does. internal region, the that

Operator

of next Schwab from Craig-Hallum. with Christian a question Our line comes

Tyler Burmeister

is on of This Christian. behalf Tyler

margins, as I the at revenue, of the into should above and levels. guess, So half year, look strong And the by definition, was recurring should then view margins modest. back if first, the although, should bit back I wondering, in gross directional I got should of from down the guess, half maybe see same right gross improvement, second maybe these at model kind expect now we trend we remain them is QX we little the Should XX% we about a or as before, how some think half? in I

Jeff Jones

I it only good a in of think but the the revenue also not margin. spot piece the street for back half got pretty gross in us

range. XX I’d pretty comfortable we’re the low it in XX, in high to maybe an so that Somewhere XX, of call average

Tyler Burmeister

talked then, and down tests, while that your a little anything I right, continuing, And strength I the quarter-on-quarter up question, the are rest if quarter, to Any but industrial of guess, you out? color little automotive there you a was just and in the about second fluctuations or industry markets are bit. heard call bit, legalization auto comment

Luis Muller

QX an a half. an indicative in a those here, down of points. combined industrial said fluctuation second we -- XX%. the Tyler, a industrial. indicative a same, We test in to even moment. get liking market couple not segments, a it you of computing, I auto couple into our was mobility is hopefully specific it's But right, cell this about of or points, and can not more it's normal But stability, year. and utilization upturn was bit profile, an down more said improvement as up QX up right, know, Automotive see to automotive We X that revenue the of the think profile the it's is revenue point and to we're as What see, a industrial was computing down you points last it's point. being up relative is to of at

Operator

Our with next question from comes Cowen. Krish Sankar

Bob Mertens

Bob This for Krish. on is Mertens

how you are, some on within had that market Let or market? me and between just have, products, business? if who the maybe to And dynamics little exposure the back the test handler play also, of the out are automotive that come bit playing side share in main are just color of at competitors then more a those sort just that gauge you a any

Luis Muller

tell data I here, can set have, see for down presentation in you, I market by exposure, our the the it results have we as do exposure we automotive. the numbers you for exact don't from is have highest can QX you to product. break in

of into automotive. XX% market have exposure We

to If down just you go qualitatively. going by you products, I'm tell

mostly contactors. Our handlers handlers have contactors and significant automotive, handlers both we our and exposed to are, leadership in are actually position a our

and when now revenue tester on Teradyne to market. hovers side, automotive behind Obviously, desire our in automotive. XX%, our this add Advantest the lot working we're tester of to in ATE a we're and our the a have more automotive further moment, But at XX% On industrial it. it business we is to between in tester

Bob Mertens

real around brought then quarter? quarter in throughout the this quarter? progressed how were last sort I of And XX.X maybe maybe has XX How the that. the weeks, times, just quick. think that or been time you'd lead handlers at same the current mentioned testers this lead has Is

Luis Muller

handlers times same, couple were a a generally times are two lead quarter shorter are shorter lead of maybe we -- weeks ago. weeks than than No, the shorter,

But about -- the a So change about time. XX handlers. got time. lead on sort faster well, of no as for we closer a contactors weeks little we're to talking weeks order narrowed six in that the band the of the all contactors dramatic Well, down But testers, same. on improved quarter-on-quarter lead

Operator

from Needham. comes question Quinn Bolton next Our line the with of

Unidentified Analyst

This Trevor on Quinn. is for

So when half, of the second or visibility quarter can cancellations the your any has backlog there backlog about shifts and to within second the that half? speak looking been start, at for into the you

Jeff Jones

answer clear that. months shifts visibility same six further, the part it's No, situation now. Typically, of our the first the no out to Yes, cancellations backlog. not and it's and in

So it's that, QX still but and visibility, beyond obviously, to foggy. good into QX

Luis Muller

maybe current different than quarter it's through kind ago of through and it not Yes, one September was July now view. same

backlog now so much QX is fourth backlog Like have booking of said already shipments. into We a that a pretty beyond and obviously for into QX Jeff far decent orders anything less quarter.

reality of approach year. end we to So of next become the of a beginning quarter this going as that that's more

Unidentified Analyst

into you these Do inventory And be any expect that second you stated was would in trend I quarter. levels this up PC and on continue helpful? to half the believe the and insight mobility

Luis Muller

quarter. mobility traction, Yes. of more to expect be over would of going improvement trend, big think I year. on have necessarily think of next Computing? computing I a traction towards year. particularly to cloud the this mobility the half positive the end I more second market in on don't the more is do a

Unidentified Analyst

carbide with carbide if opportunity? quantify you in mentioned able you of may. more, 'XX? when more recently Silicon percentage revenue I to may expected silicon customers are Are a you And have first what one be conversations this ago And quarters could you as having two than

Luis Muller

we the about first the an of to as on well. to we basis. revenue certainly X% order X%, of be Yes, talk on going when our revenue, is total something question second this and the carbide is Silicon But annual think on

Operator

Brian [Operator from Instructions] question Stifel. Our comes next Chin with

Brian Chin

Maybe little Luis, might like sort a contouring, know steady revenues seasonally then the end in there's the of towards sustainability second bit typically the just more soft I year, and some to like part XQ, into and the of year, or questions XQ year are here visibility know of provide that. half. I be sort been a pattern higher the state something something beginning usually at mid and the about of

try other pickup it how sustainability been sort you markets, ingredient QX, -- maybe depressed else would characterize you're thinking In be see year, into last on it this or consumer? How about and pretty if order about read year here, indications have maybe terms sort sort looking what of auto of, the as end second main you industrial? parts some which talked half? of call to particularly of the the coming that is is right of and earlier mobility includes businesses book know to moderation Because I your and of you’d for and there'll

Luis Muller

industrial right, best quarters now computing as drops a on there. real about the Brian, can from running end talking say But guess from and you think good do it equipment right recovering. the potentially mobility moderated. sequentially year about out flat question my just quarter I -- is a why we out, the decent to of quarter that? off based more So already time, fourth a because point up QX. And that automotive the fairly And now have two at visibility starts then would would lead quarter be appreciate, and we what and from very is I now our I comfortable lot feel

second mentioned the the sort now, some a now I real cloud, As be comes it's first. of think picking a generally the ago, will at is two computing, bottom up in it extremely is depressed barrel. of particularly that becomes right an steam. from But Mobility Mobility big that quarter indicative I or question.

next more that QX, does that more mean does have I answer That's QX the quarter year? difficult to mean a to now, clarity that. on right answer one Now, to little appreciate would

as think, said, see those like where, see atypical seasonal I of seasonally one On it may Which said, of QX usually, pattern, a this this seasonally to typical don't years you moment. a them So there. going and see your at of I QX up year, not I from then we low. probably two one one as cycle, going exactly? we we we know and again, high usually maybe or see those in quarters the

Brian Chin

leading least. and thought year maybe be little third the But business ATE, you at or that's of say of handlers quarter of peers test have industrial correct auto can This more. your ATE obviously, past, bit And pretty sometimes into their a quarter wrong strong one seemed can a this me. in by sometimes

a in [Multiple part is playing And that this bit? little Speakers] relationship so

Luis Muller

products. that's to a being that that that's business The doing of going the we're it a of I some second half of when is the turning seeing to it. The And pretty depressed, becomes very question profitable And able start year. start need we're that question playing what's on to do movement these is. Yes, up. the invest markets is and are magnitude all they think absolutely, the right on part of flows healthily new cash into delivering we run now,

could revenue well year right? the mark, exit accelerating we very question orders, So or

Brian Chin

continue the maybe Philippines? both on Luis. of of guess, the going that statements last the should that's mid trend in point. -- upper you you, as capacity one at in towards to Jeff to back question sort How this one, probably gross next then I and But business, to for start capacity, think that start sort to to And expansion expanding I XXs it's trend? also that out in back you And the at going made that point, footprint build margins about once in produce indications able but of Is as of it. filling you'll of How should ready? that the early that type business? comments some then that to wins to of that and segment some it's of good eventually sort year you're gross margin strategic you seeing out that made be improvements facility you do

Jeff Jones

take I is mid-XXs, margin, guess, right gross So of them it in business I’ll and the the right first you're and on high-XXs. that to around modeled operating part we've be

we another cost productivity And currently from and adding where that expanding the through think and they efficiencies. we XXX today, increasing points XXX, obviously so are operation do can basis

Luis Muller

the moment, we're heads. so at all we were mentioned earlier And QX probe was actually the in heads I they design of business, what your is something part that And the second Dave's not doing this had right, probe question question, wins in that are in Philippines.

So our of the Philippines. we manufacturing transferring contactor our the to contactor or bulk were of all

we high or manufacturing a We're it's manufactured or power US probe of products that or XX% Europe, did. depending designed now. speed in over signal In are still heads fact, in application. a These the and essentially RF are already there more application if

are. to a those where to get We not will the need well, Philippines path but we to find as that's

at product winds based European moment manufacturing. the US, are design the So

Operator

for to remarks. call question-and-answer Jones That Jeff the concludes closing back session. to like today's turn I'd

Jeff Jones

York the mention Liz. investor It's May in New on B. Francisco May Conference Xth; Stifel here: Boston Thursday, Baird and of XXth; that June Wednesday, be Los on attending And we Conference before going in on July TD quarter. number to XXst; during Riley Conference in off, in you, CEO like Thank on sign I'd second person XXth. Xth; San to conferences in them City the Conference in Angeles June Tuesday, Thursday, list a Wednesday, York on we'll Summit Cowen City New I'm

these like you. or conferences, one we'd you attend of to So plan with to meet if more

soon. And respective thank [Technical your call so forward for the with today’s contact and or please reach to to you analyst conference Again, out speaking look meeting. schedule you to Difficulty]

Operator

This concludes today's conference call. for participating. Thank you

now may disconnect. You

Cohu (COHU) 4 May 232023 Q1 Earnings call transcript