Cohu(US:COHU)2023-05-05 00:24Financial Data and Key Metrics Changes - Cohu reported Q1 2023 revenue of $179.4 million, aligning with the midpoint of guidance, with a non-GAAP gross margin of 48.2%, an increase of 210 basis points year-over-year [3][7][10] - Non-GAAP operating income was 19.1% of revenue, and adjusted EBITDA was 21.1% [10] - Cash and investments at the end of Q1 totaled $324 million, with a net cash position of approximately $280 million after debt repayment of $35.3 million [8][10] Business Line Data and Key Metrics Changes - The recurring business contributed 43% of Q1 revenue with a gross margin of approximately 53%, growing at a three-year CAGR of 6.4% [3][4] - The systems business accounted for 57% of Q1 revenue with a gross margin of about 45%, improving by 250 basis points year-over-year [5] - Test cell utilization was estimated at 77% at the end of Q1, down 2 points quarter-over-quarter, with automotive and industrial remaining the strongest segments [5][10] Market Data and Key Metrics Changes - Automotive revenue was up 43% year-over-year in Q1, with significant design wins in the automotive sector [22] - Mobility revenue increased a few percentage points sequentially, benefiting from the recently acquired MCT business [5] - The company anticipates challenges in demand for the second half of 2023 due to a weak economic outlook affecting the semiconductor market recovery [13] Company Strategy and Development Direction - Cohu is focusing on aligning investments with key global trends, particularly in industrial automation and autonomous vehicles [3][13] - The company is expanding its manufacturing capacity in the Philippines, with plans to start production at a new facility in early 2024 [4][8] - Cohu aims to increase its participation in automotive and industrial markets, particularly in electric drivetrains and autonomous vehicle technologies [5][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong profitability and cash flows despite macroeconomic headwinds [13] - The company expects to see stability in computing and potential recovery in mobility towards the end of the year [61] - There is a cautious outlook for the second half of 2023, with visibility into Q3 but uncertainty beyond that [35][49] Other Important Information - Cohu's sustainability efforts include increasing the use of renewable energy to 26% and maintaining a strong safety and ethics record [13] - The company repurchased 3.5 million shares in Q1 and expects total CapEx for 2023 to be around $20 million [8][10] Q&A Session Summary Question: What is the outlook for the second half of the year? - Management indicated that there is decent visibility into Q3, but beyond that, it remains uncertain [35][49] Question: How is the automotive market performing? - Automotive revenue is up 43% year-over-year, with significant design wins in the sector [22] Question: What are the lead times for products? - Lead times for handlers are about 22 weeks, with no dramatic changes quarter-over-quarter [18][59] Question: How is the silicon carbide opportunity developing? - Silicon carbide revenue is expected to be around 2-3% of total revenue annually, with ongoing discussions with customers [62] Question: What is the expected growth for the contactor business? - The contactor business is anticipated to grow to $200 million, representing 20% of the revenue target of $1 billion [32][42]