Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you elaborate on the signs of recovery in the industrial and medical markets, and what is your expectation for the automotive supply chain? A: In the industrial market, we are seeing increased orders as inventories deplete, particularly in the CMOS segment. Silicon carbide orders are also improving with a book-to-bill ratio above one. In the medical market, investments in larger equipment like X-ray machines are recovering after a pause due to COVID and high interest rates. For the automotive supply chain, while we have a strong pipeline with Chinese EV brands, the 350-nanometer segment is underutilized, and recovery might take 2-3 quarters. However, the 180-nanometer segment is performing well, supporting gradual growth in 2025. - Rudy de Winter, CEO
Q: Could you elaborate on your statement about achieving a sustainable balance between debt reduction, capital return, and further growth once positive free cash flow is generated? A: We plan to first use the increased EBITDA to pay back loans and LTAs starting at the end of this year. In 2026, there might be room for returns to investors, but decisions on this will be made later. Our focus is on debt reduction first, followed by capital return and further growth. - Rudy de Winter, CEO
Q: What leverage level would you be comfortable with before considering capital returns, and how does this relate to your 2026 guidance? A: We aim to return to a more balanced leverage level between debt and cash. As CapEx normalizes with higher capacity, operational cash flow will help reduce debt. Our EBITDA margin should increase, and we plan not to exceed EBITDA levels in terms of CapEx. The 2026 guidance reflects expected growth from new products and depleted inventories. - Alba Morganti, CFO
Q: Have you observed any signs of auto chip shortages similar to 2021, and how are inventory levels being managed? A: We haven't seen signs of shortages yet, but we advise customers to be cautious with inventory reductions. Current bookings are below capacity, but a sudden demand increase could lead to high utilization rates. Inventory levels vary, with some customers reducing to one month, but it's uncertain if they will maintain higher levels post-2021 experiences. - Rudy de Winter, CEO
Q: What is the outlook for your China business, particularly in the automotive sector, for 2025? A: Our total China business was around $100 million, with automotive growing from low 30s to low 40s million in 2024. We expect significant growth in 2025, driven by the automotive sector, despite a drop in silicon carbide. - Rudy de Winter, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.