ams Osram (AMS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues ranged from EUR 819 million to EUR 890 million, at the midpoint of guidance, with adjusted EBITDA at EUR 135 million (16.5% margin), up 9% quarter-over-quarter and near the top end of guidance.

• Profitability improved, supported by the 'Re-establish-the-Base' program, which delivered EUR 60 million in cost savings to date, targeting EUR 75 million by year-end.

• Strong design-win momentum with EUR 2.5 billion in new business (lifetime value) secured in H1 2024, especially in automotive, industrial, and consumer segments.

• Major restructuring of the microLED business followed the cancellation of a cornerstone project, with significant one-time costs and a strategic shift to automotive applications.

• Automotive semiconductors showed year-over-year structural growth, offsetting declines in legacy consumer business.

Financial highlights

• Adjusted EBIT margin improved to 6.8% (EUR 56 million), up from Q1; adjusted EBITDA margin at 16.5%.

• Adjusted gross margin improved to 29.7%, up 130 bps sequentially and 190 bps year-over-year.

• Operating cash flow was EUR 55 million; free cash flow was negative, ranging from minus EUR 119 million to minus EUR 190 million, impacted by high CapEx and interest/dividend payments.

• Net debt increased to EUR 1,576 million, or EUR 1,977 million including the Malaysia SLB transaction; available liquidity stood at EUR 1.8 billion.

• Adjusted net result was minus EUR 1 million; IFRS net result was minus EUR 41 million, reflecting microLED-related impairments.

Outlook and guidance

• Q3 2024 revenues expected between EUR 830 and EUR 930 million, with adjusted EBITDA margin guidance of 17–20%.

• Free cash flow expected to improve significantly in H2 2024 due to lower CapEx and higher profitability, targeting positive free cash flow (excluding interest payments) for the year.

• Full-year 2024 CapEx may reach EUR 500–550 million if certain capital grants are delayed.

• Structural cost savings target of EUR 75 million for 2024 and EUR 150 million by end of 2025 remains on track.

• Second half revenue growth to be driven by new product ramps and design wins, though industrial and medical rebound is not expected in 2024.