Amkor Technology Inc (AMKR) Q4 2024 Earnings Call Highlights: Navigating Market Challenges with ...

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Tue, Feb 11, 2025, 12:08 AM 4 min read

Fourth Quarter Revenue: $1.63 billion
Fourth Quarter EPS: $0.43
Full Year 2024 Revenue: $6.3 billion, a 3% decline from the previous year
Advanced Packaging Revenue: Increased 3% year over year, reaching $3.1 billion
Computing Revenue: Reached a record $1.2 billion, driven by growth in AI GPUs and arm-based PCs
Fourth Quarter Gross Profit: $247 million
Fourth Quarter Gross Margin: 15.1%
Fourth Quarter Operating Income: $134 million
Fourth Quarter Operating Income Margin: 8.3%
Fourth Quarter Net Income: $106 million
Fourth Quarter EBITDA: $302 million
Full Year 2024 Gross Profit: $933 million
Full Year 2024 Gross Margin: 14.8%
Full Year 2024 Operating Income: $438 million
Full Year 2024 Operating Margin: 6.9%
Full Year 2024 Net Income: $354 million
Full Year 2024 EPS: $1.43
Full Year 2024 EBITDA: $1.1 billion
CapEx for 2024: $744 million
Free Cash Flow for 2024: $359 million
Cash and Short-term Investments: $1.6 billion
Total Debt: $1.2 billion
Debt to EBITDA Ratio: 1.1 times
First Quarter 2025 Revenue Outlook: $1.275 billion
First Quarter 2025 Gross Margin Outlook: 10% to 13%
First Quarter 2025 Net Income Outlook: $23 million
First Quarter 2025 EPS Outlook: $0.09
CapEx Forecast for 2025: $850 million

Warning! GuruFocus has detected 4 Warning Signs with NGL.

Release Date: February 10, 2025

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

Positive Points

Amkor Technology Inc (NASDAQ:AMKR) delivered fourth quarter results in line with guidance, achieving revenue of $1.63 billion and EPS of $0.43.
Advanced packaging revenue increased by 3% year over year, reaching a record of $3.1 billion.
The company qualified its new Vietnam facility for production, enhancing its global manufacturing capabilities.
Amkor Technology Inc (NASDAQ:AMKR) secured $407 million in CHIPS funding to support its planned Arizona facility, strengthening its US manufacturing strategy.
The company expanded partnerships with TSMC and Infineon to support advanced packaging and power modules, respectively, in the US and Europe.

Negative Points

Full year 2024 revenue declined by 3% compared to the previous year, primarily due to weakness in the automotive and industrial markets.
Revenue in the communications market declined 25% sequentially in Q4 due to changes in bill patterns and lower content in new iOS phones.
The automotive and industrial market experienced a 16% decline for the full year, marking seven consecutive quarters of year-on-year declines.
Gross margin for Q4 was impacted by the ramp of the new Vietnam facility, resulting in an 80 basis point burden.
The company anticipates a year-on-year revenue decline of 7% in Q1 2025, primarily due to the temporary socket gap in current iOS phones.

Q & A Highlights

Q: Can you clarify the impact of the lower content in the iPhone on your communications business and your confidence in regaining that content in 2025? A: The impact was significant, with the Q4 impact being more about the build pattern than the socket gap. We are confident in regaining the SIP socket in the next generation iOS phones due to our longstanding relationship with the customer and clear milestones for mass production in Q3 2025.

Q: How should we think about the gross margin trajectory throughout 2025, considering the Q1 guidance of 10% to 13%? A: For Q1, we expect a traditional incremental flow-through. For the rest of 2025, our financial model supports a 30% to 40% incremental flow-through due to increased material content. By the end of 2025, we expect the Vietnam facility to reach break-even operating income.

Q: What gives you confidence in the automotive market's growth in 2025 despite recent declines? A: We have a strong project pipeline in advanced packaging for automotive, particularly in ADS devices, in-car networking, and infotainment. Although mainstream product visibility is unclear, we believe we've reached a trough and expect gradual improvement.

Q: How are you planning to backfill the potential decline in business from your marquee customer in the compute market? A: We are confident in our project pipeline and customer base. We are ramping with a second customer in 2.5D and expanding our technology portfolio to RDL-based technologies. We are also working on next-generation GPU devices with several customers for production in 2026.

Q: Can you provide more details on your CapEx allocation for 2025, given the conservative outlook? A: Our target is $850 million, with 70% for capacity and capability in high-performance computing, advanced SIP, and test. About 25% is for facilities and construction, including 5% to 10% for our Arizona facility, and 5% for quality and R&D.

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

This article first appeared on GuruFocus.

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