ASM International Q3 2024 $ASM (+2.05%)
Financial performance:
ASM International reported a strong financial performance in the third quarter of 2024 with revenue of 779 million €which represents an increase of 26 % year-on-year (at constant currencies) and at the upper end of the guidance range of 740-780 million is at the upper end of the forecast range. New orders also recorded a significant increase to 815 millionwhich represents an increase of 30 % year-on-year (at constant currencies). Adjusted operating profit rose to 220 millioncompared to 157 million in the third quarter of 2023, which corresponds to an adjusted operating margin of 28,2 % corresponds to.
Balance sheet analysis:
ASM's balance sheet remains robust, with an increase in total assets to € 4,699 million as of September 30, 2024, compared to € 4,227 million at the end of December 2023. The cash position improved significantly to 747 million €compared to 637 million at the end of June 2024. Equity also increased to 3,430 million and shows a strong ratio of equity to assets.
Income overview:
The gross margin for the third quarter of 2024 was 49,4 %slightly decreased from 49,8 % in the second quarter of 2024, but increased compared to 48,9 % in the third quarter of 2023. The operating result margin improved to 27,6 %driven by higher revenue and a one-off gain from the sale of a building. The net profit amounted to 127.9 millionwhereby the adjusted net profit amounted to 133.6 million which represents a decrease compared to the previous quarter due to currency losses.
Cash flow analysis:
In the third quarter of 2024, ASM generated free cash flow of 242 millioncompared to 103 million in the second quarter of 2024, which is attributable to higher profitability, lower working capital requirements and reduced capital expenditure. Net cash flow from operating activities amounted to 295.2 millionan increase from € 195 million in the second quarter of 2024.
Key figures and profitability:
The adjusted gross margin amounted to 49,4 %and the adjusted operating margin amounted to 28,2 %. The ratio of orders to sales remained at 1,0which indicates a balance between incoming orders and sales.
Segment analysis:
Sales growth was driven by strong demand in the Gate-All-Around (GAA) and High-Bandwidth Memory (HBM) segments. Sales from devices increased by 22 % year-on-year, while revenue from spare parts and services increased by 45 % increase.
Competitive analysis:
ASM holds a leading position in the atomic layer deposition (ALD) market, which is expected to grow at a compound annual growth rate (CAGR) of 10% to 14 from 2022 to 2027. The company is also expanding its position in the silicon epitaxy (Si Epi) market and growing selectively in PECVD and vertical furnaces.
Forecasts and management commentary:
For the fourth quarter of 2024, ASM forecasts sales of between 770-810 million €. The company expects sales related to ATM to continue to grow in 2025, despite mixed conditions in the end markets.
Risks and opportunities:
Risks include potential impact from investment cuts in advanced logic/foundry spending and lower sales in China in the second half of 2024. Opportunities lie in the growing demand for advanced semiconductor devices and the SiC Epi market.
Summary and strategic implications:
ASM's strong financial performance in Q3 2024, supported by robust demand in key technology segments, positions the company well for future growth. The strategic focus on innovation and expanding market share in high-growth areas such as ATM and SiC Epi is in line with long-term industry trends. The company's solid cash position and strong balance sheet provide a basis for continued investment in growth opportunities and returns to shareholders.
Positive statements:
- Significant increase in salesASM International reported an increase in sales of 26 % year-on-year (at constant currencies) and reached € 779 million in the third quarter of 2024 779 million €which represents a new quarterly record and is at the upper end of its guidance.
- Robust free cash flow: The company generated free cash flow of € 242 million in the third quarter of 2024 242 millionan increase of 103 million in the second quarter of 2024, which is attributable to higher profitability and efficient working capital management.
- Increase in new ordersNew orders increased by 30 % year-on-year (at constant currencies) and reached 815 millionmainly driven by strong demand for Gate-All-Around (GAA) technology and High Bandwidth Memory (HBM) DRAM applications.
- Improved adjusted operating marginThe company's adjusted operating margin improved to 28,2 %which represents an increase of 2.9 percentage points compared to the same period last year, supported by higher gross profits and a one-off gain from the sale of a building.
- Strong liquidityThe company's cash position improved significantly to 747 million € at the end of September 2024, compared to € 637 million at the end of June 2024, indicating strong liquidity.
Negative statements:
- Decline in net profits: Net profits fell in the third quarter of 2024 to 127.9 million €whereby the adjusted net profits amounted to 133.6 million reflecting a decrease compared to the previous quarter due to currency translation losses.
- Currency translation lossThe company suffered a currency translation loss of € 48 million in the third quarter of 2024. 48 millioncompared to gains in the previous periods, mainly due to changes in the US dollar.
- Decline in sales figures in ChinaSales figures in China are expected to be lower in the second half of 2024 compared to the first half, with the sales forecast for the fourth quarter expected to be lower than for the third quarter.
- Decrease in net working capitalThe company's net working capital decreased to 412 millioncompared to 502 million on June 30, 2024, which is mainly due to higher contractual liabilities and accrued expenses.
- Risks due to investment cutbacksDespite the overall positive outlook, the company faces risks due to the potential impact of investment cuts in the area of advanced logic/foundry, which could affect future growth.
