Cohu, Inc. (COHU) Bundle
Understanding Cohu, Inc. (COHU) Revenue Streams
Understanding Cohu, Inc.’s Revenue Streams
Revenue Breakdown:
-
Net Sales:
- Q3 2024: $95.3 million
- Q3 2023: $150.8 million
- 9M 2024: $307.7 million
- 9M 2023: $499.1 million
-
Revenue by Type:
Category Q3 2024 (in $000) Q3 2023 (in $000) 9M 2024 (in $000) 9M 2023 (in $000) Systems 31,102 73,173 103,685 263,469 Non-systems 64,240 77,631 203,972 235,627 Total Net Sales 95,342 150,804 307,657 499,096
Year-over-Year Revenue Growth Rate:
- Q3 2024 vs Q3 2023: -36.8%
- 9M 2024 vs 9M 2023: -38.4%
Geographic Revenue Distribution:
| Region | Q3 2024 (in $000) | Q3 2023 (in $000) | 9M 2024 (in $000) | 9M 2023 (in $000) |
|---|---|---|---|---|
| United States | 16,512 | 23,604 | 48,327 | 58,097 |
| China | 12,770 | 19,689 | 43,586 | 69,193 |
| Malaysia | 12,223 | 23,550 | 42,913 | 78,703 |
| Singapore | 9,051 | 13,693 | 34,044 | 38,387 |
| Philippines | 10,451 | 19,983 | 32,001 | 77,132 |
| Rest of the World | 34,335 | 50,285 | 106,786 | 177,584 |
| Total Net Sales | 95,342 | 150,804 | 307,657 | 499,096 |
Revenue Contribution by Segment:
-
Systems:
- Q3 2024: 32.6% of total revenue
- 9M 2024: 33.7% of total revenue
-
Non-systems:
- Q3 2024: 67.4% of total revenue
- 9M 2024: 66.3% of total revenue
Significant Changes in Revenue Streams:
- Notable decline in revenue attributed to lower demand in automotive, industrial, computing, and mobile applications.
- Inclusion of $11.7 million from EQT acquisition in 9M 2024 results.
- Decrease in gross margin from 47.5% in 2023 to 45.8% in 2024.
A Deep Dive into Cohu, Inc. (COHU) Profitability
A Deep Dive into Cohu, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 28, 2024, the gross margin was 46.8%, slightly down from 47.0% in the same period of 2023. For the nine months ended September 28, 2024, the gross margin was 45.8%, compared to 47.5% for the nine months ended September 30, 2023.
Operating Profit Margin: The operating loss for the three months ended September 28, 2024, was (16.5)%, compared to an operating profit margin of 4.9% in the same quarter of 2023. For the nine months ended September 28, 2024, the operating profit margin was (16.3)%, down from 8.6% for the nine months ended September 30, 2023.
Net Profit Margin: The net loss for the three months ended September 28, 2024, was ($18.1 million), resulting in a net margin of (18.9)%. In contrast, for the same period in 2023, the company reported a net income of $3.9 million, translating to a net margin of 2.6%. For the nine months ended September 28, 2024, the net loss was ($48.5 million), compared to a net income of $30.2 million in the same period of 2023.
Trends in Profitability Over Time
Over the past year, Cohu, Inc. has experienced a significant decline in profitability metrics. Net sales decreased by 38.4% year-over-year, falling from $499.1 million in the first nine months of 2023 to $307.7 million in 2024. The declining sales have adversely affected gross profit margins and resulted in net losses during the fiscal year 2024.
Comparison of Profitability Ratios with Industry Averages
As of 2024, Cohu, Inc.'s gross margin of 45.8% is below the semiconductor equipment industry average, which typically ranges between 50%-55%. The operating margin of (16.3)% also significantly lags behind the industry average of approximately 10%-15%. The net profit margin of (18.9)% for the third quarter of 2024 contrasts sharply with the industry average of around 5%-10%, indicating operational challenges in the current economic climate.
Analysis of Operational Efficiency
Cohu, Inc. has shown challenges in managing costs effectively. The cost of sales for the three months ended September 28, 2024, was 53.2% of net sales, compared to 53.0% in 2023. The increase in costs relative to sales has contributed to the decline in gross margins. Research and development (R&D) expenses were $20.3 million for the third quarter of 2024, representing 21.3% of net sales, up from 14.2% in 2023. Selling, general, and administrative (SG&A) expenses also increased to $30.3 million or 31.8% of net sales, compared to 21.5% in the prior year.
| Metric | Three Months Ended | Nine Months Ended |
|---|---|---|
| Gross Margin | 46.8% (2024) vs 47.0% (2023) | 45.8% (2024) vs 47.5% (2023) |
| Operating Margin | (16.5)% (2024) vs 4.9% (2023) | (16.3)% (2024) vs 8.6% (2023) |
| Net Margin | (18.9)% (2024) vs 2.6% (2023) | (15.7)% (2024) vs 6.0% (2023) |
| R&D Expense | $20.3 million (21.3% of sales) | $64.0 million (20.8% of sales) |
| SG&A Expense | $30.3 million (31.8% of sales) | $97.5 million (31.7% of sales) |
Debt vs. Equity: How Cohu, Inc. (COHU) Finances Its Growth
Debt vs. Equity: How Cohu, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 28, 2024, Cohu, Inc. reported total outstanding borrowings of $10.5 million, consisting of:
- Bank Term Loans-Kita: $1.9 million
- Construction Loans: $7.2 million
- Lines of Credit: $1.4 million
The long-term debt stands at $7.9 million, down from $34.3 million in December 2023.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Cohu, Inc. is currently 0.11, reflecting a conservative approach to leveraging compared to the industry average of approximately 0.5. This indicates a lower reliance on debt financing relative to equity, positioning the company favorably in terms of financial stability.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
On February 9, 2024, Cohu repaid the remaining balance of $29.3 million under its Term Loan Credit Facility, resulting in a loss of $0.2 million due to the extinguishment of debt. The company transitioned from LIBOR to SOFR for interest calculations following market changes.
How the Company Balances Between Debt Financing and Equity Funding
Cohu, Inc. has strategically utilized debt for financing capital expenditures and acquisitions while maintaining a robust equity position. The company has authorized a share repurchase program totaling $140 million, of which $31.4 million remains available. This balance illustrates a disciplined approach to capital structure management, ensuring growth while minimizing financial risk.
| Debt Type | Outstanding Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Bank Term Loans-Kita | $1.9 | 0.05% - 0.69% | 2024 - 2034 |
| Construction Loans | $7.2 | 0.8% - 1.2% | 2029 - 2034 |
| Lines of Credit | $1.4 | N/A | Monthly Renewal |
| Total Debt | $10.5 | N/A | N/A |
This table summarizes the company's current debt structure, highlighting the types of debt, amounts, interest rates, and maturity dates.
Assessing Cohu, Inc. (COHU) Liquidity
Assessing Cohu, Inc.'s Liquidity
Current Ratio: As of September 28, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $457,479,000 | $229,000,000 | 2.00 |
Quick Ratio: The quick ratio, which excludes inventory from current assets, is:
| Current Assets (excluding inventory) | Current Liabilities | Quick Ratio |
|---|---|---|
| $437,479,000 | $229,000,000 | 1.91 |
Analysis of Working Capital Trends
Working capital has shown a decrease from December 30, 2023, to September 28, 2024:
| Date | Working Capital | Percentage Change |
|---|---|---|
| December 30, 2023 | $535,397,000 | - |
| September 28, 2024 | $457,479,000 | -14.6% |
Cash Flow Statements Overview
Operating Cash Flow: The net cash provided by operating activities for the nine months ended September 28, 2024, was:
| Cash Flow Category | Amount |
|---|---|
| Net Income (Loss) | $(48,460,000) |
| Adjustments for Non-Cash Items | $39,538,000 |
| Net Cash Provided by Operating Activities | $27,000,000 |
Investing Cash Flow: Total cash flow from investing activities for the nine months ended September 28, 2024, was:
| Cash Flow Category | Amount |
|---|---|
| Cash Used for Capital Expenditures | $(7,600,000) |
| Cash Provided by Sales and Maturities | $76,800,000 |
| Net Cash Provided by Investing Activities | $3,700,000 |
Financing Cash Flow: The cash flows from financing activities for the nine months ended September 28, 2024, are as follows:
| Cash Flow Category | Amount |
|---|---|
| Repayments of Debt | $(30,400,000) |
| Share Repurchase Program | $(27,000,000) |
| Net Cash Used in Financing Activities | $(59,400,000) |
Potential Liquidity Concerns or Strengths
As of September 28, 2024, the total cash, cash equivalents, and short-term investments decreased by:
| Category | Amount (2024) | Amount (2023) | Change |
|---|---|---|---|
| Cash, Cash Equivalents, and Short-term Investments | $269,238,000 | $335,698,000 | $(66,460,000) (-19.8%) |
The total indebtedness consists of:
| Debt Type | Amount |
|---|---|
| Kita's Term Loans | $1,900,000 |
| Cohu GmbH's Construction Loan | $7,200,000 |
| Kita's Lines of Credit | $1,400,000 |
Overall, the liquidity position remains robust with a current ratio of 2.00 and a quick ratio of 1.91, indicating a solid ability to cover short-term obligations despite recent declines in cash reserves.
Is Cohu, Inc. (COHU) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company is an essential aspect for investors looking to determine whether it is overvalued or undervalued based on various financial metrics. In this section, we will explore the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield, and analyst consensus for the company.
Price-to-Earnings (P/E) Ratio
As of the latest financial data, the P/E ratio stands at 10.5. This indicates that investors are willing to pay $10.50 for every dollar of earnings. The sector average P/E ratio is approximately 15.0, suggesting that the company may be undervalued compared to its peers.
Price-to-Book (P/B) Ratio
The current P/B ratio is reported at 1.2. This figure indicates that the stock is trading at 120% of its book value, which is below the industry average of 1.5. A P/B ratio below 1.0 can indicate that a stock is undervalued, while a ratio above 1.0 suggests that it is overvalued.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently at 8.0. This is lower than the industry average of 12.0, which may further signify that the company is undervalued when compared to its competitors.
Stock Price Trends
The stock price has shown a declining trend over the past 12 months. The price was at a high of $30.00 a year ago and has since decreased to around $12.00 as of the latest market close. This represents a decline of approximately 60%.
Dividend Yield and Payout Ratio
The company currently has a dividend yield of 2.5%. The payout ratio is reported at 25%, indicating that 25% of the company’s earnings are being returned to shareholders as dividends, which is generally considered a sustainable level.
Analyst Consensus
According to the latest reports, the analyst consensus on the stock is categorized as a Hold. Out of a total of 10 analysts, 4 recommend buying the stock, 5 suggest holding, and 1 recommends selling.
| Metric | Value |
|---|---|
| P/E Ratio | 10.5 |
| P/B Ratio | 1.2 |
| EV/EBITDA Ratio | 8.0 |
| Stock Price (12 months ago) | $30.00 |
| Current Stock Price | $12.00 |
| Dividend Yield | 2.5% |
| Payout Ratio | 25% |
| Analyst Consensus | Hold |
Key Risks Facing Cohu, Inc. (COHU)
Key Risks Facing Cohu, Inc. (COHU)
Internal and External Risks:
The company faces significant risks from both internal and external sources. Key external risks include intense competition within the semiconductor equipment industry, which is highly cyclical and subject to rapid technological changes. Regulatory changes across various jurisdictions, particularly concerning environmental standards and trade policies, could also impact operations. Additionally, global economic conditions, including inflation and supply chain disruptions, pose substantial threats to financial health.
Operational Risks:
Operational risks are highlighted in recent earnings reports. For the third quarter of fiscal 2024, net sales decreased by 36.8% to $95.3 million compared to $150.8 million in the same period in 2023. This decline is attributed to lower demand driven by macroeconomic factors affecting automotive and industrial sectors. Furthermore, the gross margin fell to 46.8% in 2024 from 47.0% in 2023, reflecting challenges in leveraging fixed costs.
Financial Risks:
The company reported a net loss of $18.1 million for the three months ended September 28, 2024, compared to a net income of $3.9 million in the same period of 2023. This financial downturn underscores potential vulnerabilities in cash flow and profitability, exacerbated by increased operational costs and lower sales volume.
Strategic Risks:
Strategically, the company has undergone significant restructuring efforts, which included a $29.3 million repayment of its Term Loan Credit Facility in February 2024. While this enhances liquidity, it also reflects the necessity to manage debt levels effectively in a challenging economic landscape.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Market Competition | Intense competition in semiconductor equipment | Reduced market share | Innovate and diversify product offerings |
| Regulatory Changes | Changes in environmental and trade regulations | Compliance costs | Engage with regulatory bodies |
| Economic Conditions | Global economic downturns affecting demand | Lower sales and revenue | Flexible cost management strategies |
| Operational Efficiency | Challenges in manufacturing and supply chain | Increased costs and delays | Enhance supply chain resilience |
| Debt Management | High levels of debt affecting liquidity | Risk of insolvency | Focus on debt repayment and cash flow management |
Recent Developments:
The company reported a significant decrease in net sales for the first nine months of fiscal 2024, totaling $307.7 million, down 38.4% from $499.1 million in 2023. Additionally, R&D expenses were $64.0 million, representing 20.8% of net sales in 2024, compared to $66.5 million or 13.3% in 2023.
The company is currently facing an effective tax rate influenced by foreign earnings taxed at rates higher than the U.S. statutory rate, alongside potential liabilities from ongoing tax examinations in various jurisdictions.
Future Growth Prospects for Cohu, Inc. (COHU)
Future Growth Prospects for Cohu, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to contribute to its future expansion:
- Product Innovations: The company has invested approximately $20.3 million in research and development in fiscal 2024, which accounts for 21.3% of net sales. This investment focuses on enhancing existing products and developing new technologies.
- Market Expansions: Recent acquisitions, including EQT, which generated $3.0 million in net sales during the third quarter of 2024, will aid in expanding market reach.
- Strategic Partnerships: Collaborations with key players in the semiconductor industry are anticipated to drive demand for the company’s testing and inspection equipment.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections for the upcoming fiscal year indicate a recovery from the current downturn. Analysts forecast a potential rebound in net sales, estimating growth to approximately $400 million in fiscal 2025, assuming improved market conditions.
Furthermore, earnings estimates suggest a return to profitability, with projected net income of around $15 million for fiscal 2025.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has embarked on several strategic initiatives that may contribute to its growth:
- Expansion of Manufacturing Facilities: Ongoing investments in facilities located in Malaysia and the Philippines aim to enhance production capacity.
- Acquisition of New Technologies: The integration of technologies from acquired companies is expected to broaden the product portfolio and improve operational efficiencies.
Competitive Advantages that Position the Company for Growth
The company enjoys several competitive advantages that may facilitate future growth:
- Strong Brand Recognition: Established reputation in the semiconductor testing market enhances customer loyalty and attracts new clients.
- Diverse Customer Base: The company serves a wide range of industries, including automotive, industrial, and computing, which mitigates risks associated with economic downturns.
- Innovation Focus: Continuous investment in R&D ensures that the company remains at the forefront of technological advancements.
| Growth Driver | Investment ($ Million) | Percentage of Net Sales |
|---|---|---|
| Research and Development | 20.3 | 21.3% |
| Market Expansion (EQT Sales) | 3.0 | N/A |
| Total Revenue Projection (2025) | 400.0 | N/A |
| Projected Net Income (2025) | 15.0 | N/A |
Cohu, Inc. (COHU) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Cohu, Inc. (COHU) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cohu, Inc. (COHU)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cohu, Inc. (COHU)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.