Cohu(COHU)2025-02-20 22:23Financial Performance - For the fiscal year ended December 28, 2024, Cohu's net sales decreased 36.9% year-over-year to $401.8 million due to lower demand in automotive, industrial, and mobile applications [198]. - Cohu's consolidated net sales decreased 36.9% from $636.3 million in fiscal 2023 to $401.8 million in fiscal 2024, primarily due to lower demand in various sectors [220]. - Gross margin decreased to 44.9% in fiscal 2024 from 47.6% in fiscal 2023, attributed to lower business volume impacting fixed cost leverage [221]. - Net loss for fiscal 2024 was $69.8 million, compared to net income of $28.2 million in fiscal 2023 [239]. - Cash provided by operating activities in fiscal 2024 totaled $2.8 million, a significant decrease from $101.5 million in fiscal 2023 [247]. Acquisitions - Cohu completed the acquisition of MCT on January 30, 2023, and EQT on October 2, 2023, both of which are included in the consolidated results of operations [197]. - Cohu acquired MCT on January 30, 2023, and EQT on October 2, 2023, contributing to consolidated results from the acquisition dates [218]. - Amortization of purchased intangible assets increased to $39.1 million in fiscal 2024 from $36.4 million in fiscal 2023, driven by EQT's acquisition [226]. Debt and Financing - Cohu repaid $29.3 million of its Term Loan Credit Facility on February 9, 2024, and repurchased 915,504 shares of common stock for approximately $27.0 million during fiscal 2024 [198]. - Total indebtedness as of December 28, 2024, was $8.8 million, including $1.7 million under term loans and $6.5 million under construction loans [242]. - Cash used in financing activities in fiscal 2024 totaled $59.0 million, a decrease from $68.1 million in fiscal 2023 [249]. - Repayments of short-term borrowings and long-term debt in fiscal 2024 totaled $31.3 million, including $29.3 million in cash prepayments of the Term Loan Credit Facility [249]. - As of December 30, 2023, the company had approximately $29.3 million of long-term debt under a Term Loan Credit Facility, with interest payments based on a base rate plus a margin of up to 2.0% per annum or SOFR plus a margin of up to 3.0% per annum [274]. - The company repaid the remaining outstanding principal of $29.3 million on February 9, 2024 [274]. Cash Flow and Investments - In fiscal 2024, net cash provided by investing activities totaled $21.9 million, compared to a net cash used of $30.2 million in fiscal 2023 [248]. - Cash used for purchases of short-term investments in fiscal 2024 was $78.6 million, while cash generated from sales and maturities was $114.2 million [248]. - Additions to property, plant, and equipment in fiscal 2024 amounted to $10.6 million, down from $16.1 million in fiscal 2023 [248]. - The company expects to continue making capital expenditures to support its business and anticipates that current working capital will be sufficient for at least the next twelve months [263]. - At December 28, 2024, the investment portfolio included short-term, fixed-income investment securities with a fair value of approximately $55.7 million [271]. Tax and Valuation - The company maintains a gross deferred tax asset balance of approximately $138.2 million, with a valuation allowance of approximately $114.5 million as of December 28, 2024 [206]. - The company has determined there was no impairment of goodwill as of October 1, 2024, as the estimated fair values of reporting units exceeded their carrying values [210]. Foreign Currency and Risk Management - Fluctuations in foreign currency exchange rates impacted the company's stockholders' equity, which decreased by $16.8 million due to foreign currency translation as of December 28, 2024, compared to December 30, 2023 [277]. - A hypothetical 10% devaluation of the U.S. dollar would result in an approximate $28.3 million positive translation adjustment recorded in other comprehensive income within stockholders' equity [278]. - Conversely, a hypothetical 10% appreciation of the U.S. dollar would lead to an approximate $28.3 million negative translation adjustment recorded in other comprehensive income within stockholders' equity [278]. - The company has entered into foreign currency forward contracts to hedge against future movements in foreign exchange rates affecting U.S. Dollar denominated assets and liabilities [276]. - The company began hedging foreign currency risk associated with net investment positions in certain foreign subsidiaries in the third quarter of fiscal 2024 [277]. - The company’s strategy aims to mitigate risks and volatility associated with foreign currency transaction gains or losses through foreign currency forward contracts [276]. Operational Focus - Cohu's long-term market drivers remain intact, with optimism about the increasing use of semiconductors, particularly in artificial intelligence applications [199]. - The company continues to focus on developing innovative products and capturing new customers, driven by increasing semiconductor complexity and quality demands [199]. - Cohu's inventory valuation includes reserves for estimated excess and obsolete inventory, which may impact gross margin if future demand is lower than projected [204]. Expenses - Research and development (R&D) expenses in fiscal 2024 were $84.8 million, or 21.1% of net sales, compared to $88.6 million, or 13.9% of net sales in fiscal 2023 [223]. - Selling, general and administrative (SG&A) expenses as a percentage of net sales increased to 31.9% in fiscal 2024 from 20.8% in fiscal 2023, despite a decrease in total SG&A expenses from $132.2 million to $128.0 million [225]. - Cohu's share-based compensation expense is calculated based on the market price of common stock on the grant date, affecting financial results [216].