EQS-Adhoc: ams-OSRAM AG: ams OSRAM delivers solid EUR 881m Q3 revenues, 19% adj. EBITDA and upsizes strategic savings program by another EUR 75m run-rate savings

EQS-Ad-hoc: ams-OSRAM AG / Key word(s): Quarter Results
ams-OSRAM AG: ams OSRAM delivers solid EUR 881m Q3 revenues, 19% adj.
EBITDA and upsizes strategic savings program by another EUR 75m run-rate
savings

07-Nov-2024 / 07:15 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.

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

ams OSRAM delivers solid EUR 881m Q3 revenues, 19% adj. EBITDA and upsizes
strategic savings program by another EUR 75m run-rate savings

 

• Q3/24: revenues EUR 881m (at the midpoint of the guided range), adj.
EBITDA EUR 166m (18.8%, above the midpoint of the guided range), adj.
EBIT EUR 82m (9.3%), supported by NREs
• Q3/24: free cash flow (incl. net interest) EUR 188m, significantly
improved by good operational performance, lower CAPEX and supported by
customer prepayment & NREs (together approx. EUR 250m)  
• Q3/24: strong cash position of EUR 1.1bn
• Design-win momentum continues with deepening customer relationships,
standing at EUR 3.5bn (life-time-value) year-to-date
• Execution of “Re-establish the Base” program progressing well,
approx. EUR 85m run-rate savings realized to date, ahead of schedule
• Upsizing “Re-establish the Base” program by another EUR 75m run-rate
savings to reach in total approx. EUR 225m by end of 2026 to safeguard
profitability improvements in an uncertain environment; more than 500
non-production employees will be affected, additionally
• Mid-term Target Operating Model updated for 2024-2027:
core-semiconductor business to grow 6% to 10% and adj. EBITDA margin
for the group to reach 20% to 24% by 2027 at 8% CAPEX to Sales
• Q4/24: expected fourth quarter revenues of EUR 810m to 910m and adj.
EBITDA margin of 15% to 18% in line with seasonality of business mix
• Comment on Q1/25: company expects a weak Q1, but sees growth in its
semiconductor core-portfolio for the full year 

 

Premstaetten, Austria, and Munich, Germany (07 November 2024) — ams OSRAM
delivers solid EUR 881m Q3 revenues, 19% adj. EBITDA margin supported by
NRE, pos. FCF of EUR 188m and upsizes strategic efficiency program
“Re-establish the Base” by EUR 75m run-rate savings

“We are progressing faster with implementing our strategic efficiency
program ‘Re-establish the Base’ as planned. Given that cyclical weakness
in key markets persists, further cost savings are required to sustain our
trajectory towards industry benchmarks while continuing our investment to
exploit structural growth paths in our semiconductor target markets.
Therefore, we are stepping up our ‘Re-establish the Base’ program by
another 75 million Euro run-rate savings – to be realized by the end of
2026,” said Aldo Kamper, CEO of ams OSRAM.

Q3/24 financial update

ams OSRAM announces revenues of EUR 881 million for the third quarter
2024, at the midpoint of the guided range of EUR 830 – 930 million.
Revenues increased 8% quarter-over-quarter, primarily driven by the ramp
of new semiconductor products for consumer handheld applications, the
seasonal high of LED products for horticulture and NREs (including
catch-up) for development of novel LED technologies, whilst the product
mix showed seasonal and cyclical shifts overall.  

Year-over-year, the group records a slight revenue decline of 3% which is
entirely attributable to the segment Lamps & Systems. The semiconductor
business came in flat year-over-year with EUR 647 million revenues in Q3,
compared to EUR 648 million a year ago. Excluding the non-core portfolio,
a mid-single-digit growth in the relevant core portfolio is visible
year-over-year.

The adjusted EBITDA (adjusted earnings before interest, taxes,
depreciation, and amortization, i.e. operating margin adjusted for
special, non-operational effects) came in at EUR 166 million, i.e. at
18.8% adj. EBITDA margin, above the midpoint of the guided range of 17% –
20%, supported by one-offs such as NREs. Further details are described
further down in the commentary on the segments.

The adjusted EBIT (adjusted earnings before interest and taxes, i.e.
operating margin adjusted for special, non-operational effects) margin for
the group came in at 9.3%. In absolute terms, the adjusted EBIT amounted
to EUR 82 million.

“Re-establish the Base” program implementation status & upsizing

Implementation of current program

On 27 July 2023, the company announced its strategic efficiency program
“Re-establish the Base”, which was aimed at focusing the company on its
profitable, structurally growing core. It targets EUR 75 million run-rate
savings by end of FY2024 and EUR 150 million run-rate savings by end of
FY2025 compared to 2023 actuals. 

To date, the company has realized already EUR 85 million savings, reaching
the EUR 75 million run-rate savings mark earlier than anticipated. Recent
implementation successes are especially evident when looking at the
profitability improvement of the CSA segment.

At the start of the program in 2023, the company’s non-core semiconductor
portfolio represented approx. EUR 300 – 400 million. In FY2024, close to
EUR 200 million of those are still part of the group revenues. The company
is exiting this remaining, loss-making, non-core business through product
end-of-life, which will be largely completed by the end of 2024, after it
had sold the passive optical components assets and restructured its CMOS
image sensors business earlier this year. Several sizeable new design-wins
in consumer device applications are expected to compensate for the revenue
loss from those product discontinuations. 

Upsizing “Re-establish the Base”

In view of the persisting market uncertainties in 2025, especially when it
comes to the automotive sector, the company has decided to up-size and
extend its strategic efficiency program by around EUR 75 million run-rate
savings to be effective by the end of 2026. The extended program addresses
especially company footprint considerations to get step-by-step even
closer to industry benchmarks with regard to overhead, corporate and
manufacturing footprint. The program extension will affect additionally
more than 500 non-production employees. Out of this number, approx. one
third of functions are planned to be relocated to best-cost countries. In
total, the program is expected to deliver EUR 225 million run-rate savings
by the end of 2026. The company expects approx. EUR 40 million of
additional transformation cost due mostly in 2025.

 

Advancing the mid-term Target Operating Model to 2024-2027

With largely completing the exit of the non-core semiconductor portfolio
by end of 2024, the company sharpens its focus on structural growth in its
semiconductor core markets. Based on this year’s semiconductor core
revenues (which are defined excluding approx. EUR 200 million of non-core
business which is being exited as described above), the company intends to
grow its semiconductor business with a CAGR between 6% and 10% until end
of 2027. The traditional lamps business is expected to develop in a
corridor of flat or slightly down.

Previously, the company was assuming for the core-semiconductor portfolio
together with the L&S a CAGR of 6% to 8% for the period 2023-2026.

With its focus on improving cash generation, the company also switches its
profitability benchmark to EBITDA. The levers of its profitability
improvement remain unchanged. Firstly, structural cost-savings and
efficiency improvements from its “Re-establish the Base” program.
Secondly, ramp of new products and design-wins. Thirdly, market recovery
in target markets. As the market recovery in important markets (such as
industrial) is delayed and additional and temporary weakness in some core
markets like automotive is seen, the company now expects to reach an
adjusted EBITDA of 20% to 24% by 2027.

The revised CAPEX to Sales target ratio is 8%.

Previously, the company assumed reaching an adjusted EBIT of approx. 15%
by 2026 at a CAPEX to Sales target ratio of 10%.

Semiconductor business update

Opto Semiconductors segment (OS)

Revenues for opto-electronic semiconductors increased by EUR 9 million to
EUR 381 million in Q3/24 compared to EUR 372 million in Q2/24. Adjusted
EBITDA stood at EUR 88 million, representing an adjusted EBITDA margin of
23%.

NRE payments for the development of LED technologies were essential for
the quarter-over-quarter revenue and adj. EBITDA improvement and exemplify
the company’s leading technology position. As expected, Automotive revenue
contribution was down quarter-over-quarter. A catch-up of government
subsidies also contributed to the strong adj. EBITDA of the OS segment.

CMOS sensors and ASICs segment (CSA)

Revenues for CMOS sensors and ASICs increased to EUR 266 million in Q3/24,
up from EUR 224 million in Q2/24. The 19% quarter-over-quarter increase
was mainly driven by the ramp of a new sensor product for consumer device
applications.

Adjusted EBITDA more than doubled to EUR 48 million in Q3/24, up from EUR
21 million in Q2/24, representing an adjusted EBITDA Margin of 17.9%. In
Q2/24, the adj. EBITDA margin stood at 9.4%. The two-fold increase is
driven by significantly higher sales, therefore much lower
underutilization cost, additional gross profit and savings from
implementing the Re-establish-the-Base program.

The industrial and medical businesses are still suffering from persistent
inventory corrections in the supply chain. 

 

Semiconductors industry dynamics

Revenues from the two semiconductor business units represented 73% of
Q3/24 revenues, or correspondingly EUR 647 million. This compares to EUR
648 million a year ago, essentially flat. End-markets continued to show
different cyclicality. Revenues from consumer applications compensated for
cyclically weaker revenues in automotive, industrial, and medical
applications. Excluding the non-core portfolio (in FY23 around EUR 350
million, for FY24 around EUR 200 million estimated), the company sees a
mid-single-digit percentage growth in the core portfolio year-over-year.

Automotive:

The automotive business performed reasonably well in a weakening market
environment, which was illustrated by a string of profit warnings from car
OEMs. The year-over-year decline of 9% and quarter-over-quarter decline of
7% is in line with the overall situation in the automotive market.

Industrial & Medical (I&M):

The business showed a mixed performance and landed essentially flat
quarter-over-quarter, exhibiting an 8% decline compared to a year ago. The
persisting inventory corrections for medical technology and industrial
capital goods businesses are still weighing heavily on the groups I&M
semiconductor business. The sale of LED emitters into professional
lighting applications was relatively healthy, whilst product sales into
horticulture applications showed its seasonal peak.

Consumer:

With the ramp of new products and healthy overall sales of consumer
hand-held devices and wearables, the business showed a significant
increase of 24% year-over-year. Quarter-over-quarter, the increase was
even higher, standing at 45%.

New business wins – Design-wins:

The company managed to intensify and deepen its relationship with various
key customers during the quarter, which resulted not only in the
previously mentioned NRE funded technology development projects and a
prepayment for the development & production of new products, but also in
unabated design-win momentum, across all product categories of the core
semiconductor portfolio. Several meaningful consumer design-wins are
standing out. The company added EUR 1 billion of new future business
during the third quarter, totaling EUR 3.5 billion year-to-date, measured
in estimated life-time-value of each individual design won.

Lamps & Systems segment (L&S)

The Lamps & Systems segment represented 27% of Q3/24 revenues, equaling
EUR 233 million. A 5% quarter-over-quarter increase. The year-over-year
reduction comes mainly from discontinued OEM products and a slight decline
in the traditional business.

Adjusted EBITDA in Q3 came in at EUR 37 million or 16% adjusted EBITDA
margin.

Automotive:

The automotive aftermarket business was still off-season during the summer
months. The OEM business was as expected, including planned end-of-life of
legacy module businesses amongst other dynamics. The company typically
sees its strongest demand in Q4 and Q1 of a year when high halogen bulb
replacement rates can be seen in the European and North American
aftermarket.

 

 

Specialty Lamps:

Industrial and professional entertainment markets are still impacted by
persistent inventory correction and weakness whilst revenues remained on a
comparable level as in previous quarters.

Additional key financial figures

Gross margin

The adjusted gross margin remained flat quarter-over-quarter and increased
70 basis points year-over-year due to improved factory loading and
contributions from the “Re-establish the Base” program.

Net result & earnings per share

The adjusted net result came in at 37 EUR million in Q3/24 from EUR 29
million a year ago and up from EUR -1 million in the second quarter.
Various one-off effects, such as NRE, funding catch-up and reduced
re-structuring cost were key to this development.

On 30 Sep 2024, a reverse split in a ratio of 10:1 was executed. The
figures for earnings per share of previous quarters have been backward
adjusted for comparison purposes.

Consequently, third quarter adjusted basic earnings per share came in at
0.37 EUR, significantly up compared to the EUR -0.01 EUR in the second
quarter.

Third quarter adjusted diluted earnings per share came in at 0.37 EUR,
also significantly higher than the EUR -0.01 in the second quarter.

The IFRS net result stood at EUR 24 million in Q3/24 after EUR -41 million
in the second quarter. As mentioned above, one-off effects supported that
significant improvement. Consequently, the basic IFRS earnings per share
came in at EUR 0.24 in Q3/24, after EUR -0.41 in Q2/24. The diluted IFRS
earnings per share amounted to EUR 0.24 in Q3/24 after EUR -0.42 in Q2/24.

Cash flow

Customer pre-payments & NREs

In Q3/24, ams OSRAM received both a prepayment for the development &
production (i.e. securing supply-chain availability) of new products and
NREs for the development of LED technologies from various customers. The
received amounts total approx. EUR 250 million, exemplifying the leading
technology position of the company in its target markets.

The prepayment is a non-financial liability that will be repaid through
the delivery of products starting in 2026.

The NREs are payments for the development of certain novel LED
technologies that may or may not lead to future products and are not
refundable or re-payable.  

Operating cash flow (including net interest paid) came in at EUR 246
million in Q3/24, significantly improved by the aforementioned customer
prepayment (approx. EUR 225 million).

Cash flow from investments into PPE and intangibles, or CAPEX, came down
significantly to EUR -102 million compared to EUR -176 million in the
previous quarter. Cash flow from CAPEX was substantially lower than a year
ago (EUR -262 million), as CAPEX spendings are approaching the target
CAPEX to Sales ratio. Some CAPEX overhang persists from the cancelled
microLED cornerstone project in conjunction with equipment that could not
be cancelled anymore. 

Free cash flow – defined as operating cash flow including net interest
paid minus cash flow from CAPEX plus proceeds from divestments – came in
strong at a positive EUR 188 million in Q3/24 after EUR -119 million in
Q2/24.

 

Key financial figures

 

EUR millions  Q3 2024 Q2 2024 QoQ Q3 2023 YoY 
(except per share data) 
Revenues  881 819 8% 904 -3%
Gross Margin adj. 29.7% 29.7% 4 bps 29.0%  67 bps
Operating income (EBIT) adj.^1)  82 56 47% 71 15%
Operating margin (EBIT) adj.^1)  9.3% 6.8% 250 bps 7.9% 138 bps
EBITDA adj. 166 135 23% 160 3%
EBITDA margin adj. 18.8% 16.5% 235 bps 17.7% 108 bps
Net result adj. 37 -1 n/a 29 27%
Diluted EPS adj. (in EUR)^1)2)  0.37 -0.01 n/a 1.10 -66%
Net result (IFRS) 24 -41 n/a -55 n/a
Diluted EPS (IFRS, in EUR) ^ 2) 0.24 -0.42 n/a -2.10 n/a
Operating cash flow ^3) 246 55 +348% 141 +75%
Cash flow from CAPEX ^4)  -102 -176 -42% -262 -61%
FCF (incl. net interest paid) 188 -119 n/a -70 n/a
Net debt  1,399 1,576 -11% 2,269 -38%
Net debt (incl. SLB) 5^)  1,840 1,977 -7% 2,269 -19%

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

^2)  Earnings per share are not comparable between the years due to the
capital increase on 7 December 2023 whereby additional 724,154,662 shares
were issued. Comparative figures were adjusted following the 10:1 reverse
share split on 30 September 2024.   

^3)  From Q1 2024, operating CF includes net interest paid; 2023 figures
reclassified for comparison.

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

^5)  Incl. EUR 441m equivalent as of end of September 2024 from SLB
Malaysia transaction closed in December 2023.

 

Net-debt related financial figures 

The gross cash position increased to EUR 1,097 million in Q3/24 after EUR
900 million in Q2/24. Main elements contributing to the increased cash
balance were the operational performance with improved EBITDA, the
customer prepayment, the extension of the EUR denominated senior notes by
EUR 200 million (nominal), offset by the re-payment of a short-term
bi-lateral facility and a promissory note (together

Consequently, the net debt position decreased to EUR 1.399 million quarter-over-quarter after EUR 1,576 million in Q2/24. 

When including EUR 441 million equivalent from the Sale-and-Lease Back Malaysia transaction (booked under other financial liabilities), the net debt position decreased accordingly to EUR 1,840 million in Q3/24 compared to EUR 1,977 in Q2/24.  

 

 

 

Update of transformation costs

The company excludes transformation costs from its operational performance measures, i.e. adj. EBITDA and adj. EBIT. Transformation costs in 2024 are mainly driven by the adjustment of its microLED strategy and its “Re-establish the Base” program.

Adjusting the microLED strategy led to impairment charges of EUR 513 million and transformation costs of EUR 108 million in H1/24, including non-cash accruals. In Q3/24, the company recorded a net gain of  approx. EUR 20 million as a consequence of the reversal of some provisions. In summary, the company now expects in total up to EUR 660 million of transformation cost related to adjusting the microLED strategy including impairments (from previously EUR 680 million).

Transformation costs related to “Re-establish the Base” were approx. EUR 8 million in Q3/24. For FY 2024, the company now expects up to EUR 40 million which could include an additional approx. EUR 15 million from upsizing the program compared to the expectation end of Q2.               

Moreover, additional details on the bridge from EBITDA according to IFRS to adj. EBITDA can be found in the investor presentation on the company’s website.

Status of outstanding OSRAM minority shares

On 30 September 2024, the Group held around 86% of OSRAM Licht AG shares. The total liability for minority shareholders’ put options stood almost unchanged at EUR 604 million at the end of Q3/24 compared to EUR 605 million at the end of Q2/24.

The company has a Revolving Credit Facility (RCF) in place. The RCF is primarily in place to cover any further significant exercises under the ‚domination and profit and loss transfer agreement (DPLTA)’ put option and would be sufficient to fully cover all outstanding minority shareholders’ put options. It could also be drawn for general corporate and working capital purposes.

Fourth quarter 2024 Outlook

The company sees flattish demand for its automotive semiconductor products in Q4/24 reflecting the uncertainties in the global automotive supply chain. The demand from industrial and medical markets remains very muted in some segments. The business with its semiconductor products for consumer handheld devices and horticulture will see a seasonal slowdown in the fourth quarter.

Looking at the L&S segment, the automotive aftermarket halogen lamps business will see a seasonal demand upswing when entering the short daylight season in the Northern hemisphere.

As a result, the group expects fourth quarter revenues to go down a bit due to seasonal mix effects and land in a range of EUR 810 – 910 million. Consequently, the adj. EBITDA is expected to come in between 15% – 18% driven by revenue fall-through and some cost headwinds. The EUR/USD exchange rate is assumed to be 1.10.

Comments on FY 2024

The company continues to expect CAPEX for FY2024 to come in between EUR 500 – 550 million (including capitalized R&D and rolled-over accounts payable related to PPE from 2023).

The company continues to target a positive free cash flow before net interest paid for the full year 2024.

Comments on FY 2025

The company expects a weak start into 2025 with weaker revenues in the first Quarter of 2025 than one would expect from seasonal mix effects. In particular, the company expects the cyclical weakness in its automotive business to become fully visible in the first quarter, with gradual, steady improvement during the FY. Consequently, the company still expects growth in its semiconductor core-portfolio in 2025.

 

The company will also target a positive free cash flow including net interest paid for the full year 2025.

 

Additional Information

Additional financial information for the third quarter 2024 is available on the company [1]website. The third 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 third quarter results on Thursday, 07 November 2024. The conference call for analysts and investors will start at 10.00 am CET and can be joined via webcast. The conference call for journalists will take place at 11.00 am CET.

 

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: AT0000A3EPA4). 

 

Find out more about us on [3] 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: [4]>Twitter  [5]>LinkedIn  [6]>Facebook  [7]>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  

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

 

 

End of Inside Information

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07-Nov-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: AT0000A3EPA4
WKN: A118Z8
Listed: Regulated Unofficial Market in Berlin, Dusseldorf, Frankfurt, Munich, Stuttgart, Tradegate Exchange; BX, SIX, Vienna Stock Exchange (Vienna MTF)
EQS News ID: 2024299

 
End of Announcement EQS News Service

2024299  07-Nov-2024 CET/CEST

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8. investor@ams-osram.com
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