EQS-Adhoc: ams-OSRAM AG: delivers solid Q1 revenues of EUR 847m, adj. EBIT margin of 5.2%, restructures microLED development, works on exiting 8-inch fab SLB, on track for positive FCF (after interest) in 2025

EQS-Ad-hoc: ams-OSRAM AG / Key word(s): Quarter Results
ams-OSRAM AG: delivers solid Q1 revenues of EUR 847m, adj. EBIT margin of
5.2%, restructures microLED development, works on exiting 8-inch fab SLB,
on track for positive FCF (after interest) in 2025

26-Apr-2024 / 07:20 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the
Regulation (EU) No 596/2014, transmitted by EQS News – a service of EQS
Group AG.
The issuer is solely responsible for the content of this announcement.

══════════════════════════════════════════════════════════════════════════

Ad hoc announcement pursuant to Art. 53 Listing Rules of SIX Swiss
Exchange

ams OSRAM delivers like-for-like structural growth with solid Q1,
restructures microLED development and works on exiting 8-inch-wafer
factory SLB, accelerating path to positive free cash flow

 

• Q1/24: revenues EUR 847 m, adj. EBIT EUR 44m (5.2%), adj. EBITDA EUR
124m (14.6%)
• Q1/24: available liquidity of EUR 2.1bn (therein EUR 1.1bn in cash,
EUR 800m RCF, EUR 206m bilateral facilities)
• Q2/24: expected second quarter revenues of EUR 770 to 870m and adj.
EBITDA margin of 14 to 17%
• Free cash flow (before net interest) 2024:  reconfirmed to be positive
• Revision of microLED strategy:

• Around EUR 700m one-off cost, of that EUR 513m impairment and EUR
119m transformation costs in Q1
• Substantial restructuring of microLED development initiated (more
than 500 employees affected), remaining activities focus on
microLED technology for own automotive applications
• Significant cash flow improvement of more than a EUR 100m and
adj. EBIT improvement of around EUR 100m in 2025 compared to
continuation of the cornerstone project
• Kulim 8-inch-wafer factory to be transferred to new lessee with
high priority
• Reduction of debt by around EUR 400m targeted (SLB value)

• ‘Re-establish the Base (R-t-B)’ program:

• Restructuring of CMOS Imaging Sensors business with significant
overhead reduction, turning business profitable

Premstaetten, Austria, and Munich, Germany (26 April 2024) — ams OSRAM
delivers solid Q1 revenues of EUR 847m, adj. EBIT margin of 5.2%,
restructures microLED development, works on exiting 8-inch factory SLB, on
track for positive FCF (after interest) in 2025.

“The industry dynamics in our LED markets have changed with cancellation
of the microLED cornerstone project. We adjust our strategy accordingly
and continue to strengthen investments in the soon biggest LED market
segment – automotive – which is to grow structurally for years to come. We
intend to step out of the 8-inch factory and focus our microLED
development on automotive needs for accelerating our path towards
delivering truly positive free cash flow in 2025. We showed year-on-year
growth in Q1 on a like-for-like basis in a difficult environment driven by
structural growth in automotive and some cyclical recovery. The promising
mid-term growth prospects of all our core businesses that we are focusing
on in automotive, industrial, medical, as well as selected consumer
applications, are intact.” said Aldo Kamper, CEO of ams OSRAM.

Q1/24 financial update

ams OSRAM announces revenues of EUR 847 million for the first quarter
2024, at the midpoint of the guided range of EUR 800 – 900 million, a EUR
61 million – seasonal – decrease compared to the previous quarter. On a
like for like basis (without portfolio or currency effects), revenues
improved by around 5% year-on-year compared to the clean base of EUR 817
million in Q1/23. The main drivers for this year-on-year increase are the
automotive and consumer semiconductor businesses, whilst industrial
business remains weaker than a year ago.

The adjusted EBIT (adjusted earnings before interest and taxes, i.e.
operating margin adjusted for special, non-operational effects) margin
came in slightly below the midpoint of the guided range of 4% – 7%, namely
at 5.2%. This is a consequence of the stop of the cornerstone microLED
project, as less related research & development expenditures could be
capitalized. The adjusted EBIT amounted to EUR 44 million. Without the
capitalization effect, adjusted EBIT would have come in EUR 11 million
higher – above the mid-point of the guided range.

The adjusted EBITDA came in at EUR 124 million, i.e. at a 14.6% adj.
EBITDA margin. Adjusted depreciation & amortization of EUR 77 million does
not include microLED related charges and amortization of intangible assets
arisen from purchase price allocations (PPA), but are related to previous,
ordinary investments into PPE and capitalized R&D. Adjusted EBITDA is
considered a key metric, representative of the cash flow performance of
the underlying businesses.

 

Restructuring of microLED development and exit of Kulim 8-inch-wafer
factory

On February 28^th, 2024, ams OSRAM announced that a lead-customer had
stopped the cornerstone microLED development project. The company
initiated restructuring its microLED related development activities in
both Malaysia and Germany to a remaining minimum core development for
mainly proprietary use in future automotive products, such as advanced,
high-pixelated forward lighting solutions. In total, more than 500
employees at the respective sites combined are affected. Some freed-up
resources are reallocated to further strengthen the company’s market
leadership position in the automotive LED market, which is poised to soon
become the single largest segment in the LED market according to latest
market research. This new view of the market also suggests that the
superior features of advanced, high-performance microLED based displays
will primarily play a role in several smaller applications that also will
scale slower and later than expected previously.

In case a new lead customer commits in a timely manner to fund dedicated
developments for specific applications, the company may continue a more
substantial microLED development in an essentially cash flow and EBIT
neutral manner.

The stop of the cornerstone project will incur one-time cost of around EUR
700 million, at the lower end of the previously indicated range of EUR 600
to 900 million. The company booked EUR 513 million of non-cash impairment
for equipment and capitalized project-specific research & development
expenses and EUR 119 million of transformation costs for adjusting its
microLED strategy, such as cancellation fees and deinstallation cost in
Q1/24. For the remainder of the year, potentially up to EUR 70 million of
further transformation costs may come due when adjusting the development
set-up for microLED, which includes restructuring measures.  

With the cancellation of a significant share of equipment orders and
related charges, outstanding CAPEX for the project will be reduced by
around EUR 120 million in 2024/25. This leads to reduction of CAPEX for
PPE (property, plant, and equipment) to around EUR 450 million (including
capitalized R&D and some carried over PPE accounts payable from 2023) and
underpins the target for 2025 to reach the target CAPEX to sales ratio of
around 10%. 

The company is also pursuing to exit the Sale-and-Lease-Back (SLB)
contract for its state-of-the-art Kulim-8-inch factory to a new lessee
with high priority. The intended exit is being pursued in close alignment
with the SLB investors. With this step the company intends to reduce its
long-term debt by around EUR 400 million (booked under ‘other
liabilities’), significantly reduce its net-debt position and eliminate
the lease payments.

For 2025, the company expects upon implementation of these decisions
significant improvements of cash flow of more than EUR 100 million and
adjusted EBIT of around EUR 100 million, respectively, which is to be seen
in comparison to a continuation of the cornerstone project according to
the previous plan.

Re-establish-the-Base – non-core semiconductor portfolio

The company announces the following steps when it comes to the exit of the
non-core semiconductor portfolio (with 2023 run-rate of around EUR 300 to
400 million) that was announced in Q2/23.

CMOS Imaging Sensors

ams OSRAM decided to optimize and focus its CMOS Imaging Sensor business
on medical and industrial applications for growth and profitability.
Development activities that had been targeting future consumer
applications will be restructured. One affected site will be restructured
and one development site closed. One-time transformation costs are
estimated around EUR 4 million. Therefore, revenues in the order of EUR 50
million to EUR 100 million per annum will remain part of the group and its
long-term planning.

The company is also making good progress in divesting the Passive Optical
Components assets.

Furthermore, the optimization of other structural costs is progressing as
planned according to the ‘Re-establish-the-Base’ program.

Semiconductor business update

With strengthening the end-to-end responsibility of ams OSRAM’s Business
Units beginning Q4/23, the business is being steered along relevant KPIs
for those Business Units. Consequently, and in line with our efforts to
increase transparency, the company will report revenues and adjusted
profitability KPI for EBITDA along these lines. With that, the
semiconductor business is now being reported in the segments OS (‘Optical
Semiconductors’) and CSA (‚CMOS Sensors and ASICs’).  

Optical Semiconductors segment (OS)

Revenues for optical semiconductors stood at EUR 345 million in Q1/24.
Adjusted EBITDA stood at EUR 67 million, representing an adjusted EBITDA
Margin of 19.3%.

The profitability is still impacted by underutilization charges, high
research & development expenses before adjusting the microLED development
structures, and significantly less capitalization of research and
development charges due to the cancellation of the cornerstone microLED
project.     

CMOS Sensors and ASICs segment (CSA)

Revenues for CMOS sensors and ASICs came in at EUR 233 million in Q1/24.
Adjusted EBITDA stood at EUR 5 million, representing an adjusted EBITDA
Margin of 2.2%.

The currently unsatisfactory profitability of CSA continues to be impacted
by loss-making non-core businesses. In the context of the
‘Re-establish-the-Base‘ program, the CMOS Imaging Sensor business will be
restructured and optimized for structural growth in medical and industrial
applications as described above. On top, the company is making good
progress in divesting the Passive Optical Components assets.

Furthermore, the industrial and medical business that we continue to focus
on is still experiencing an inventory correction in the supply chain and
because of this significantly below normal run-rates with associated
underutilization. 

Semiconductors industry dynamics

Revenues from the two semiconductor business units represent 68% of Q1/24
revenues, or correspondingly EUR 578 million. End-markets continued to
show a diverse pattern.

Automotive:

Automotive business performed well in spite of the anticipated
normalization of sales in China. A strong 13% year-on-year increase could
be recorded. Both Automotive sensor and emitter businesses performed well
along demand from new and existing platforms. The design-win momentum
continues as well, supporting our mid-term growth ambitions.

Industrial & Medical (I&M):

Business showed a mostly prolonged weakness in industrial and medical
end-markets with some exceptions. Whilst inventory correction in
industrial capital goods and medical markets is in full swing, some early
stabilization in certain regional mass markets could be noted.
Infrastructure-related industrial markets showed relatively stable
development.

Consumer:

Revenues from shipments to personal Consumer device applications have
shown for the first time since many quarters a year-on-year increase of
15% on the back of strong business with Android based smart-phones. Other
parts of the Consumer business stabilized as well.

Lamps & Systems segment (L&S)

The Lamps & Systems segment represented 32% of Q1/24 revenues, or
correspondingly EUR 268 million.

Adjusted EBITDA in Q1 came in at EUR 60 million or 22.5% adjusted EBITDA
margin on the back of a favorable product mix and a positive EUR 13
million one-off effect (inventory revaluation) that together drove the
strong underlying profitability in Q1. In terms of industry dynamics, both
automotive and industrial & entertainment markets, business performed as
expected.

Automotive:

Aftermarket sales came in again as strong as seasonally expected. The
company typically sees its strongest demand in Q4 and Q1 when high halogen
bulb replacement rates can be expected in Europe and North America. Q4 to
Q1 dynamics was in line with normal seasonal patterns.

Specialty Lamps:

Industrial and professional entertainment markets continued to show weak
demand. 

Comments on additional key financial figures

The adjusted net result came in at EUR -35 million in Q1/24 after EUR -16
million in Q4/23, primarily driven by lower gross profit in line with
revenue decline and higher operating expenses.

Consequently, first quarter adjusted diluted earnings per share came in at
EUR -0.04, lower than the EUR -0.03 in the previous quarter, as in Q4/23
the average share count stood at 456,490,225 after completion of the
rights issue on December 7^th, 2023. However, in Q1/24, the net number of
shares (excluding company held treasury shares), i.e. 987,522,245, were
considered.

The IFRS net result stood at EUR -710 million in Q1, dominated by the
impairment taken on microLED related equipment and capitalized R&D in view
of the revised microLED strategy.

For this, the diluted IFRS earnings per share came in at EUR -0.72, after
EUR -0.18 in the fourth quarter. 

With this quarter, the operating cash flow includes net interest paid.
Operating cash flow stood at EUR 55 million in the first quarter, which
was impacted by raw materials inventory build-up for ramping new products
in H2 and a higher level of trade receivables in the lamps business.

Cash flow from investments into PPE, or CAPEX, improved significantly to
EUR -120 million from EUR
-222 million in the previous quarter and was substantially lower than a
year ago. 

Free cash flow – defined as operating cash flow including net interest
paid minus cash flow from CAPEX plus proceeds from divestments – came in
at EUR -60 million in Q1. Both year-on-year and quarter-on-quarter a
significant improvement can be noted driven by much less investments in
PPE.

 

Key financial figures

 

EUR millions  Q1 2024 Q4 2023 QoQ Q1 2023 YoY 
(except per share data) 
Revenues  847 908 -7% 927 -9%
Operating income (EBIT) adj.^1)  44 62 -30% 50 -13%
Operating margin (EBIT) adj.^1)  5.2% 6.9% -170 bps 5.4% -20 bps
EBITDA adj. 124 150 -17% 151 -18%
EBITDA margin adj. 14.6% 16.5% -190 bps 16.3% -170 bps
Net result adj. -35 -16 +119% 6 -683%
Diluted EPS adj. (in EUR)^1)2)  -0.03 -0.03 0% 0.02 -250%
Net result (IFRS) -710 -82 +886% -134 +430%
Diluted EPS (IFRS, in EUR) -0.72 -0.18 +294% -0.51 +39%
Operating cash flow ^3) 55 34 +62% 141 -61%
Cash flow from CAPEX ^4)  -120 -222 +46% -302 -60%
FCF (incl. net interest paid) -60 -125 -56% -159 -65%
Net debt  1,399 1,312 +7% 1,940 -28%
Net debt (incl. SLB) ^5)  1,793 1,696 +5% 1,940 -8%

^1)^ ^ Excluding M&A-related, transformation and share-based compensation
costs, results from investments in associates and sale of businesses    

^2)  Earnings per share in CHF were converted using the average currency
exchange rate for the respective periods

^3)  From Q1 2024, operating CF includes net interest paid, Q4/23 and
Q1/23

^4)  Cash flow from investments in property, plant, and equipment and
intangibles (such as capitalized R&D)

^5)  Incl. EUR 394m equivalent from SLB Malaysia transaction closed in
December 2023

 

Quarter-on-quarter, the net debt position slightly increased to EUR 1,399
million in Q1 after EUR 1,312 million in Q4/23 as a consequence of EUR 70
million less cash. When including EUR 394 million equivalent from the
Sale-and-Lease Back Malaysia transaction (booked under other liabilities),
the net debt position increased slightly to EUR 1,793 million in the first
quarter from EUR 1,696 in Q4/23.  

Status of outstanding OSRAM minority shares

On March 31st, 2024, the Group held around 86% of OSRAM Licht AG shares
unchanged to December 31st, 2023. The total liability for minority
shareholders’ put options stood at EUR 610 million at the end of Q1/2024
compared to EUR 611 million at the end of Q4/2023. The reduction was
around EUR 0.5 million.

The company has an undrawn Revolving Credit Facility (RCF) of EUR 800
million in place, which was prolonged to September 2026 with the
successful execution of the rights issue in December 2023. The RCF is
primarily in place to cover any further significant exercises under the
‚domination and profit and loss transfer agreement (DPLTA)’ put option but
can also be drawn for general corporate and working capital purposes.

Second Quarter 2024 Outlook

Looking at the semiconductor segments, the company continues to see robust
demand from Automotive applications for its semiconductor products. The
demand from industrial and medical markets remains muted with some early
signs of stabilization in certain mass markets. The outlook for shipments
into consumer device applications is cautiously optimistic.

Looking at the L&S segment, automotive aftermarket for halogen lamps will
enter its usually slower season during the summer and sales will show a
typical quarterly decline.

As a result, the Group expects second quarter revenues to decline in line
with typical seasonality, pronounced by weakness in industrial & medical
markets and land in a range of EUR 770 – 870 million. The adj. EBITDA is
expected to come in accordingly, in line with fall-through, at 14% to 17%.
The EUR/USD exchange rate is assumed at 1.10.

Comments on Fiscal Year 2024

The company continues to expect improvement in the second half of the
year, driven by new business wins and a potential normalization in some
industrial and medical business segments.

Within the context of its ‘Re-establish-the-Base’ program, the company
expects to exit certain non-core semiconductor businesses with EUR 300 to
400 million of 2023 revenues. In 2024, the run-rate of these non-core
businesses will be lower as some of these businesses are phasing out
gradually. With restructuring the CMOS imaging sensor business, revenues
in medical and industrial applications of EUR 50 to 100 million will
remain part of the group and its long-term planning.

The ‘Re-establish-the-Base’ program is expected to deliver approximately
EUR 75 million run-rate improvements to adjusted EBIT at the end of FY24
and associated measures are being implemented on an ongoing basis. In
contrast to these improvements, the company expects back to normal annual
price declines and less capitalized R&D expenses as outlined in its ad-hoc
from February 28^th, 2024, after the stop of the microLED cornerstone
project.

CAPEX is now expected to come in below EUR 450 million (including
capitalized R&D and rolled-over accounts payable related to PPE from 2023)
compared to an aggregated figure of EUR 700 million before.

The company continues to expect free cash flow excluding net interest paid
to be positive in 2024.

 

Additional Information

Additional financial information for the first quarter 2024 is available
on the company [1]website. The first quarter 2024 investor presentation
incl. detailed information is also available on the company [2]website.
ams OSRAM will host a press call as well as a conference call for analysts
and investors on the first quarter results on Friday, 26 April 2024. The
conference call for analysts and investors will start at 10.00am CEST and
can be joined via [3]webcast. The conference call for journalists will
take place at

11.15am CEST.

 

 

 

About ams OSRAM:

The ams OSRAM Group (SIX: AMS) is a global leader in intelligent sensors
and emitters. By adding intelligence to light and passion to innovation,
we enrich people’s lives.  

 
With over 110 years of combined history, our core is defined by
imagination, deep engineering expertise and the ability to provide global
industrial capacity in sensor and light technologies. We create exciting
innovations that enable our customers in the automotive, industrial,
medical and consumer markets to maintain their competitive edge and drive
innovation that meaningfully improves the quality of life in terms of
health, safety and convenience, while reducing impact on the environment. 
 
Our around 20,000 employees worldwide focus on innovation across sensing,
illumination and visualization to make journeys safer, medical diagnosis
more accurate and daily moments in communication a richer experience. Our
work creates technology for breakthrough applications, which is reflected
in over 15,000 patents granted and applied. Headquartered in
Premstaetten/Graz (Austria) with a co-headquarters in Munich (Germany),
the group achieved EUR 3.6 billion revenues in 2023 and is listed as
ams-OSRAM AG on the SIX Swiss Exchange (ISIN: AT0000A18XM4). 

 

Find out more about us on [4] https://ams-osram.com  

 

Ams is a registered trademark of ams-OSRAM AG. In addition, many of our
products and services are registered or filed trademarks of ams OSRAM
Group. All other company or product names mentioned herein may be
trademarks or registered trademarks of their respective owners.  

Join ams OSRAM social media channels: [5]>Twitter  [6]>LinkedIn 
[7]>Facebook  [8]>YouTube 

 

For further information

 

Investor Relations   Media Relations      

ams-OSRAM AG     ams-OSRAM AG   

Dr Juergen Rebel    Bernd Hops   

Senior Vice President    Senior Vice President   

Investor Relation    Corporate Communications 

T: +43 3136 500-0                    T  +43 3136 500-0  

[9]investor@ams-osram.com   [10]press@ams-osram.com     

 

   

 

End of Inside Information

══════════════════════════════════════════════════════════════════════════

26-Apr-2024 CET/CEST News transmitted by EQS Group AG. www.eqs.com

══════════════════════════════════════════════════════════════════════════

Language: English
Company: ams-OSRAM AG
Tobelbader Straße 30
8141 Premstaetten
Austria
Phone: +43 3136 500-0
E-mail: investor@ams-osram.com
Internet: https://ams-osram.com/
ISIN: AT0000A18XM4
WKN: A118Z8
Listed: Regulated Unofficial Market in Berlin, Dusseldorf, Frankfurt,
Munich, Stuttgart, Tradegate Exchange; BX, SIX, Vienna Stock
Exchange (Vienna MTF)
EQS News ID: 1890059

 
End of Announcement EQS News Service

1890059  26-Apr-2024 CET/CEST

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