• Revenue: EUR 581.1 million, marking a 1% growth and a new sales record for the fourth consecutive year.
• Gross Margin: 44%, consistent with expectations.
• Operating EBIT Margin: 25.1%, aligning with guidance.
• Reported EBIT: EUR 172.6 million, or 29.7% of sales, including special items.
• CapEx: Reduced to 7.6% from 20% the previous year.
• R&D Expenses: EUR 59.1 million, with an R&D ratio of 10.2%.
• Adjusted Free Cash Flow: Positive at EUR 5.1 million for fiscal year 2024.
• Car Production Volumes: Dropped by 1% to 89.4 million newly produced vehicles.
• 2025 Revenue Outlook: Expected to be EUR 580 million, with a range of plus or minus EUR 30 million.
• 2025 EBIT Margin Guidance: 23% plus or minus 3 percentage points.
• 2025 CapEx Expectation: Around 7% plus or minus 2 percentage points.
• 2025 Adjusted Free Cash Flow Forecast: Positive at 7% plus or minus 2 percentage points of sales.

• Warning! GuruFocus has detected 2 Warning Sign with XTER:ELG.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Elmos Semiconductor SE (XTER:ELG) achieved a new sales record for the fourth consecutive year, with a small growth of 1% to EUR 581.1 million in 2024.
• The company maintained a high operating EBIT margin of 25.1% in 2024, demonstrating resilience in a challenging market environment.
• Elmos Semiconductor SE successfully completed its transformation into a fabless company, allowing it to focus on growth potential without the burden of an owned front-end fab.
• The company has a strong position in China and is increasing its local presence, which is crucial for maintaining competitiveness in the world's largest automotive market.
• Elmos Semiconductor SE's innovative IC solutions and strong product pipeline position it well to benefit from long-term growth trends in the automotive semiconductor market.

Negative Points

• The global automotive market faced challenges in 2024, with production of new cars dropping by 1%, impacting Elmos Semiconductor SE's short-term visibility.
• Ongoing destocking effects and limited visibility in the short term have influenced the automotive semiconductor market, with a reported decline of around 7% in 2024.
• Elmos Semiconductor SE's gross margin in Q4 was lower due to year-end cut-off accounting and valuation effects, reflecting a conservative approach.
• The company faces challenges in maintaining high profitability and achieving its 25% EBIT margin target amidst pricing headwinds and a low growth scenario.
• Elmos Semiconductor SE's cash flow performance is conservative, with uncertainties in working capital development and potential cash outflows impacting projections.

Q & A Highlights

Q: What are the reasons for Elmos Semiconductor's strong performance compared to peers in 2024? Is it due to design wins or contract structures? Also, do you see Q1 as the potential trough of the cycle, with sequential growth in Q2 and a recovery in Q3? A: Our growth in 2024 was driven by business wins and an excellent product portfolio, allowing us to take some market share. Regarding the cycle trough, while we can't predict perfectly, we see some positive signs, like increased demand for certain products. We expect sequential growth in Q2 compared to Q1. Arne Schneider, CEO

Q: Can you clarify the cash flow development, considering the extraordinary impacts like tax payments and the PEP payment? How should we calculate the clean cash flow for last year compared to this year? A: Historically, we've generated about 1% cash flow without transactions. We guide for a substantial improvement this year, but remain conservative. Our transition to a fabless model and cautious market outlook influence our cash flow projections. Arne Schneider, CEO

Q: Why isn't working capital coming down more significantly this year, and can we expect a jump in 2026? A: Our cash flow performance may accelerate by 2026. We're cautious due to the current environment, but our guidance reflects this. We might see higher working capital reduction and less CapEx than guided, but we're taking a conservative approach. Arne Schneider, CEO

Q: Can you explain the gross margin development in Q4 and what we should expect for this year? A: Q4 gross margin was influenced by year-end accounting. For 2025, we expect gross margins in the mid-40s, despite low single-digit price declines. We focus on cost measures to support profitability. Arne Schneider, CEO

Q: How did the design wins in 2024 compare to previous years, and what is the outlook for ramps in the coming years? A: 2024 was our second-best year for design wins, with significant growth. We expect project ramps to start in Q2, becoming more pronounced in Q3 and Q4. The pipeline for new designs remains strong, driven by industry trends towards software-defined and electric vehicles. Arne Schneider, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.