Suss Microtec Se ((DE:SMHN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call of SUSS MicroTec SE revealed a mixed sentiment, showcasing both positive strides and notable challenges. While the company reported commendable progress in sales performance and cost management, issues such as order intake, margin pressure, and cash flow remain areas of concern. Despite these challenges, the company remains optimistic about future orders and new product launches.
Sales and Revenue On Track
The company has achieved EUR 384 million in sales after three quarters, which is 78% of the midpoint of their sales forecast. This suggests that SUSS MicroTec SE is on track to meet its annual expectations, providing a solid foundation for the year’s financial performance.
Strong Performance in Imaging and Coating Systems
Imaging and Coating Systems have shown significant year-on-year sales growth of over 50% each. This robust demand highlights the strength of these segments and their contribution to the company’s overall performance.
New Facility in Taiwan
The opening of a new site in Zhubei, Taiwan, equipped with large clean rooms, marks a strategic move for future growth. This development has received strong support from key industry figures, indicating confidence in the company’s expansion plans.
Cost Management Success
The company has successfully implemented short-term cost-cutting measures, resulting in savings of over EUR 5 million compared to Q2. This demonstrates effective financial management and a proactive approach to maintaining profitability.
Decreased Order Intake
Order intake in Q3 was EUR 70 million, with the order book down 35.9% compared to the previous year. This significant drop in demand poses a challenge for the company moving forward.
Pressure on Margins
The gross profit margin faced significant pressure, decreasing to 31.7% in Q3. This was attributed to an unfavorable product mix and postponed high-margin projects, impacting overall profitability.
Challenges in Photomask Solutions
The Photomask Solutions segment experienced a very low order intake, with orders from China down EUR 32 million compared to the previous year. This highlights a critical area of concern for the company.
Negative Free Cash Flow
Free cash flow from continuing operations was minus EUR 0.7 million in the third quarter, with a total of minus EUR 28.2 million after three quarters. This negative cash flow underscores the financial challenges the company is facing.
Forward-Looking Guidance
SUSS MicroTec SE provided guidance for its financial performance, anticipating orders exceeding EUR 100 million in Q4. The company expects Q4 sales to range between EUR 85 million and EUR 125 million to meet their annual forecast. Despite a current gross profit margin of 31.7%, impacted by an unfavorable product mix, the company remains optimistic about future growth and improving its cost structure. Details on these plans will be discussed at their Capital Markets Day on November 17.
In summary, SUSS MicroTec SE’s earnings call presented a mixed outlook, with both positive developments and significant challenges. While the company is on track with its sales targets and has shown strong performance in certain segments, issues such as decreased order intake and margin pressure remain. The forward-looking guidance suggests optimism for future growth, with strategic plans to address current challenges.