The beaten-down semiconductor company's earnings were better than the market feared.Shares of semiconductor foundry Globalfoundries (GFS 12.52%) rallied 12.1% on Wednesday, as of 1:32 p.m. ET.The company, a leading manufacturer of specialty semiconductors that are often made using less-advanced "trailing edge" nodes, reported its third-quarter results Tuesday evening. While Globalfoundries' overall revenue declined, it was ahead of expectations, and management's guidance was also better than expected, perha ...

Financial Data and Key Metrics - Revenue for Q3 2024 was $1.739 billion, representing a 7% sequential growth and a 6% year-over-year decline [10][35] - Non-IFRS gross margin was 24.7%, exceeding the mid-point of the guidance range [17] - Non-IFRS diluted earnings per share were $0.41, surpassing the high end of the guidance range [17] - Year-to-date non-IFRS adjusted free cash flow was $779 million, with expectations of approximately 3x growth compared to 2023 [19] - Q4 2024 revenue guidance is between $1.8 billion and $1.85 billion, with gross profit expected to be between $432 million and $481 million [50] Business Line Performance - Smart mobile devices accounted for 50% of Q3 revenue, with a 14% sequential increase and an 11% year-over-year increase [37] - Home and industrial IoT markets represented 18% of Q3 revenue, with a 4% sequential increase but a 25% year-over-year decline [39] - Automotive segment accounted for 15% of Q3 revenue, with a 5% sequential decline and a 16% year-over-year decline, but expected to grow high-single-digits for 2024 [41] - Communications infrastructure and data center segment represented 7% of Q3 revenue, with a 14% sequential decline and a 15% year-over-year decline [42] Market Performance - Automotive remains a key growth driver, with high-single-digit revenue growth expected for 2024 despite short-term demand dynamics [23][41] - Smart mobile devices returned to year-over-year revenue growth in Q3, with demand expected to normalize in 2024 [25][38] - IoT end market saw a 4% sequential revenue growth but is down on a full-year basis due to elevated inventory levels [28] - Communications infrastructure and data center segment is expected to see growth opportunities in power, connectivity, and optical networking [43] Strategic Direction and Industry Competition - The company is focused on diversifying its product portfolio and customer base, with 90% of year-to-date design wins being sole-source opportunities [12][13] - A key design win with NXP on the 22FDX platform highlights the company's focus on power and performance solutions [14] - The company is expanding its global manufacturing footprint, particularly in Malta, New York, to support customer demand across the U.S., Europe, and Asia [15][16] - Silicon photonics and power management are identified as key growth areas, with partnerships in optical networking and power solutions [31][32] Management Commentary on Operating Environment and Future Outlook - The company expects sequential growth throughout 2024, with Q1 being the low point for revenue [10] - Management is optimistic about long-term growth opportunities, particularly in automotive and smart mobile devices, despite near-term demand challenges [23][25] - The company is well-positioned to capitalize on industry recovery, with a focus on improving factory utilization and cost recovery initiatives [64][65] Other Important Information - The company shipped approximately 549,300 millimeter equivalent wafers in Q3, up 6% sequentially but down 5% year-over-year [36] - Non-wafer revenue, including reticles and non-recurring engineering, accounted for 10% of total revenue in Q3 [36] - The company has a $1 billion revolving credit facility, which remains undrawn [49] Q&A Session Summary Question: How does the company reconcile its strong performance with the weakness of its customers? [56] - The company attributes its performance to the breadth of its end markets, particularly smart mobile devices and automotive, which are growing despite industry challenges [57][58] - For 2025, the company expects growth, with Q1 2025 projected to show year-over-year growth, albeit with high seasonal cyclicality [60][61] Question: What are the gross margin trends and expectations for 2025? [62] - Gross margin benefits from underutilization charges are expected to decrease, but overall margins are expected to improve with industry recovery and higher utilization [64][65] Question: What are the pricing trends and expectations for 2025? [67] - The company expects pricing to remain stable, with opportunities for better pricing in 2025 due to inflation and the shift away from long-term agreements [69][70] Question: What are the demand trends in the smart mobile segment? [71] - The company is seeing growth in China, particularly in 5G low and mid-tier phones, with design wins on 8SW, 9SW SOI, and RF GaN platforms [73][74] Question: What is the impact of customer underutilization payments on gross margin? [75] - The impact of underutilization payments is expected to decrease, with minimal effect on gross margin in the first half of 2025 [76][77] Question: How does the company balance geographic diversification with local production trends in China? [78] - The company sees strong demand from Chinese fabless companies for global supply, with a strategy to support both local and global needs [80][81][82] Question: What are the key design wins and their expected contributions? [85] - The company is focused on converting design wins into revenue, with a strong pipeline in automotive, IoT, and smart mobile devices [85][86] Question: What are the capital allocation plans given the strong cash flow? [107] - The company is considering various capital allocation strategies, including share repurchases, dividends, and reducing leverage, while also exploring accretive M&A opportunities [109][110][112] Question: What is the outlook for silicon photonics and compound semiconductors? [115] - Silicon photonics and SiGe are expected to be significant revenue drivers, particularly in high-performance analog applications [116][117] Question: What is the nature of the partnership with NXP and the role of LTAs? [122] - The partnership with NXP is strategic, with LTAs providing certainty in volume, pricing, and duration, particularly in long-tail markets like automotive [122][123][125] Question: How does the company reconcile its Q4 guidance with weak smartphone trends? [128] - The company expects IoT and infrastructure declines to offset growth in other segments, with strong performance in RF and design wins supporting smart mobile devices [129][130] Question: What are the gross margin expectations excluding prepayment impacts? [131] - Gross margin is expected to improve with higher factory utilization and cost recovery initiatives, supported by a favorable business mix [131]

GlobalFoundries Inc. (GFS) reported $1.74 billion in revenue for the quarter ended September 2024, representing a year-over-year decline of 6.1%. EPS of $0.41 for the same period compares to $0.55 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $1.73 billion, representing a surprise of +0.78%. The company delivered an EPS surprise of +24.24%, with the consensus EPS estimate being $0.33.While investors closely watch year-over-year changes in headline numbers -- revenue and earning ...

GlobalFoundries Inc. (GFS) came out with quarterly earnings of $0.41 per share, beating the Zacks Consensus Estimate of $0.33 per share. This compares to earnings of $0.55 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 24.24%. A quarter ago, it was expected that this company would post earnings of $0.29 per share when it actually produced earnings of $0.38, delivering a surprise of 31.03%.Over the last four quarters, the comp ...

Financial Performance - Net revenue for Q3 2024 was $1,739 million, a decrease of 6.1% compared to $1,852 million in Q3 2023[8] - Gross profit for Q3 2024 was $414 million, down 21.7% from $529 million in Q3 2023[8] - Operating income for Q3 2024 was $185 million, a decline of 29.1% compared to $261 million in Q3 2023[8] - Net income for Q3 2024 was $178 million, down 28.6% from $249 million in Q3 2023[8] - Basic net earnings per share for Q3 2024 were $0.32, a decrease from $0.45 in Q3 2023[8] - Total comprehensive income for Q3 2024 was $226 million, slightly up from $225 million in Q3 2023[10] - For the nine months ended September 30, 2024, net income was $467 million, a decrease of 37% compared to $740 million for the same period in 2023[17] - The effective tax rate for the three months ended September 30, 2024, was 8.7%, compared to (2.5)% in 2023, primarily due to U.S. withholding tax reclassification[41] - Basic earnings per share (EPS) for the three months ended September 30, 2024, was $0.32, down from $0.45 in 2023, reflecting a decrease of 28.9%[46] Expenses and Investments - Research and development expenses increased to $130 million in Q3 2024, up 20.4% from $108 million in Q3 2023[8] - Depreciation increased to $1,094 million in 2024 from $952 million in 2023, reflecting a rise of approximately 15%[17] - The company incurred share-based compensation of $143 million in 2024, up from $120 million in 2023, representing an increase of about 19%[17] - The company incurred restructuring charges of $1 million for the three months ended September 30, 2024, significantly lower than $17 million in the same period of 2023[50] - The company plans to continue investing in new technologies and market expansion to enhance its competitive position in the semiconductor industry[21] Assets and Liabilities - Total current assets as of September 30, 2024, were $6,598 million, an increase of 4.3% from $6,327 million as of December 31, 2023[5] - Total liabilities decreased to $6,523 million as of September 30, 2024, down 5.4% from $6,893 million as of December 31, 2023[5] - Total equity increased to $11,582 million as of September 30, 2024, up from $11,151 million as of December 31, 2023[5] - Total inventories as of September 30, 2024, increased to $1,802 million from $1,487 million as of December 31, 2023, representing a rise of 21.1%[59] - The net book value of property, plant, and equipment as of September 30, 2024, was $8,950 million, slightly down from $9,000 million as of December 31, 2023[49] - The company reported a total of 1,323 million in trade receivables as of September 30, 2024, down from $1,420 million as of December 31, 2023[54] - Work in progress inventory as of September 30, 2024, was $1,199 million, an increase from $1,005 million as of December 31, 2023[59] Cash Flow and Investments - Net cash provided by operating activities was $1,265 million, down from $1,441 million in the previous year, indicating a decline of about 12%[17] - The company reported a net cash used in investing activities of $1,033 million, compared to $1,787 million in 2023, showing a reduction of approximately 42%[17] - Cash and cash equivalents at the end of the period were $2,286 million, an increase from $1,880 million in the prior year[17] - Investments in marketable securities increased to $2,047 million as of September 30, 2024, up from $1,501 million as of December 31, 2023, reflecting a growth of approximately 36.5%[82] - The company’s total cash equivalents and investments in marketable securities combined amounted to $3,944 million as of September 30, 2024, compared to $3,398 million as of December 31, 2023, an increase of approximately 16.1%[82] Debt and Credit Facilities - Total long-term debt decreased from $2.372 billion as of December 31, 2023, to $2.313 billion as of September 30, 2024[66] - The company has unutilized credit facilities totaling $1.118 billion as of September 30, 2024, compared to $1.058 billion as of December 31, 2023[66] - Future payments under purchase agreements amounted to $591 million as of September 30, 2024, down from $1.1 billion as of December 31, 2023[72] - The company reported cash outflow for leases of $42 million for the nine months ended September 30, 2024, compared to $57 million for the same period in 2023[63] - The company has commitments of $368 million due within the next 12 months as of September 30, 2024[72] Share Repurchase and Equity - On May 22, 2024, the company announced a share repurchase of 3.9 million ordinary shares at a price of $50.75 per share, totaling $200 million[93] - The company completed the share repurchase on May 28, 2024, and subsequently canceled the 3.9 million shares[93] - The company’s investments in equity instruments increased from $19 million as of December 31, 2023, to $25 million as of September 30, 2024, marking a growth of approximately 31.6%[82] Derivatives and Fair Value - The company reported total liabilities for derivatives at $56 million as of December 31, 2023, which decreased to $42 million by September 30, 2024, indicating a reduction of approximately 25%[82] - The fair value of other long-term debt was estimated at $2,256 million as of September 30, 2024, down from $2,319 million as of December 31, 2023, a decrease of about 2.7%[88] - Derivative assets increased from $132 million as of December 31, 2023, to $166 million as of September 30, 2024, representing a rise of approximately 25.8%[82] - The company utilizes the Black-Scholes and Monte Carlo models for estimating the fair value of share-based compensation, which involves subjective assumptions and management judgment[89] Legal Matters - The trial related to IBM's claims is scheduled to commence on February 3, 2025[74]

MALTA, N.Y., Nov. 05, 2024 (GLOBE NEWSWIRE) -- GlobalFoundries Inc. (GF) (Nasdaq: GFS) today announced preliminary financial results for the third quarter ended September 30, 2024. Key Third Quarter Financial Highlights Revenue of $1.739 billionGross margin of 23.8% and Non-IFRS gross margin(1) of 24.7%Operating margin of 10.6% and Non-IFRS operating margin(1) of 13.6%Net income of $178 million and Non-IFRS net income(1) of $229 millionNon-IFRS adjusted EBITDA(1) of $627 millionCash, cash equivalents and ma ...

MALTA, N.Y., Oct. 07, 2024 (GLOBE NEWSWIRE) -- GlobalFoundries (NASDAQ: GFS) today announced that it will host a conference call on Tuesday, November 5, 2024, at 8:30 a.m. ET following the release of the company's third quarter 2024 financial results. Conference Call and Webcast Information The company will host a conference call with the financial community on Tuesday, November 5, 2024, at 8:30 a.m. ET. Interested parties may join the scheduled conference call by registering here. The company's financial r ...

Shares of GlobalFoundries (GFS, Financial) saw a modest increase of 1.98% recently, yet concerns linger due to earlier declines attributed to sector-wide geopolitical and economic challenges. Despite this small uptick, GlobalFoundries has struggled to mirror the recovery observed in other semiconductor stocks. Throughout 2024, GlobalFoundries (GFS, Financial) has experienced significant volatility, with negative returns in six out of nine months leading to a cumulative 36% decrease in stock value. This perf ...

Is GlobalFoundries falling behind in the semiconductor race? Find out how broader market trends are affecting this company and its stock. Shares of GlobalFoundries (GFS 1.80%) fell 13.8% in September 2024, according to data from S&P Global Market Intelligence. The chip sector as a whole took a haircut in the first week of September due to geopolitical and economy concerns. Most of the price drops had reversed into modest gains by the end of the month, but this semiconductor manufacturing specialist stayed d ...

Core Viewpoint - GlobalFoundries is being reassessed in light of a weaker semiconductor industry, with current stock prices potentially offering long-term growth opportunities despite recent challenges [1]. Financial Performance - In 2023, GlobalFoundries reported net revenue of $7.4 billion, down from $8.1 billion in 2022, with a gross profit of $2.1 billion [4]. - The company is expected to see revenue growth from $6.7 billion in 2023 to $7.6 billion in 2024 and $8.6 billion by 2026, indicating a solid growth trajectory [4]. - Earnings per share are projected to increase from $1.39 in 2023 to $1.98 in 2024 and $2.93 in 2026, reflecting a positive outlook for profitability [4]. Balance Sheet Strength - GlobalFoundries has a solid balance sheet with cash and equivalents totaling $2.2 billion and total assets of $17.9 billion, providing financial flexibility [2]. - The current ratio stands at 2.25, indicating good short-term financial health [2]. - The price/book ratio is 1.97, which is lower than the sector median of 3.01, suggesting potential undervaluation for a growth company [2]. Cash Flow Analysis - The company has demonstrated strong operating cash flow, with operating free cash flow of $2.1 billion in 2024 (1H) [5]. - GlobalFoundries is investing heavily in growth, with investing free cash flow of ($1.9 billion) in 2024 (1H), indicating a commitment to expansion [5]. - The company does not currently pay dividends, focusing instead on reinvestment for growth [5]. Industry Context - The semiconductor industry is experiencing a correction, with overcapacity impacting performance, but GlobalFoundries is viewed as a long-term player in this market [6]. - The cyclical nature of the semiconductor industry means that economic conditions can significantly affect demand and investment [3]. - GlobalFoundries relies on a small number of major customers, which could pose risks if any of these customers face downturns [3].