EPS of $-1.39 decreased by 40.4% from previous year
Gross margin of 1.1%
Net income of -174.90M
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Wolfspeed Inc (0I4Q.L) QQ4 2024 Results Analysis — Modest Revenue Stability Amid Escalating Losses and Heavy Capacity Investment in SiC/GaN Power Devices
Executive Summary
Wolfspeed’s QQ4 2024 results depict a company in the early stages of scaling large-capacity SiC and GaN production with a still-challenging profitability profile. Revenue for the quarter came in at USD 200.7 million, up marginally YoY (1.7%) but flat QoQ, while gross profit was a hair above break-even at USD 2.2 million and gross margin persisted at roughly 1.1%. The quarter delivered a negative operating result of USD -119.4 million and a net loss of USD -174.9 million, with earnings per share of -1.39. A heavy fixed-cost structure, ongoing R&D and SG&A investments, and sizeable financing costs (interest expense USD 60.8 million) contributed to the weak bottom-line despite modest top-line growth. Free cash flow was deeply negative at USD -885.4 million, driven by operating cash burn (USD -239.5 million) and a steep capital expenditure program (USD -645.9 million). The company ended the period with USD 1.0459 billion in cash and equivalents and a sizable debt burden (total debt USD 6.2914 billion; net debt USD 5.2455 billion), implying substantial liquidity but a fragile near-term balance sheet health if operating performance does not improve. Management commentary is not available in the provided transcript, limiting direct quotes from the earnings call. Investors should view Wolfspeed as a secular-growth bets on SiC/GaN adoption with a high capital-expenditure cadence and meaningful near-term profitability risks. The roadmap hinges on accelerating shipment volumes, improving gross margins through capacity utilization, and reducing leverage over the planning horizon.
Key quarterly metrics (USD unless noted):
- Revenue: 200.7 million; YoY +1.7%; QoQ +0.0%
- Gross Profit: 2.20 million; Gross Margin: 1.10% (YoY -91.1%; QoQ -90.1%)
- Operating Income: -119.40 million; Operating Margin: -59.49%
- Net Income: -174.90 million; Net Margin: -87.14%
- EPS (Diluted): -1.39; YoY EPS: -40.40%; QoQ: -17.80%
- EBITDA: -68.30 million; EBITDARatio: -0.34
- Interest Expense: 60.80 million; Depreciation & Amortization: 45.30 million
- Total Other Income/Expenses: -28.50 million; Income Before Tax: -174.40 million; Tax Expense: 0.50 million
- Net Cash from Operating Activities: -239.50 million
- Capex: -645.90 million; Free Cash Flow: -885.40 million
- Cash and Equivalents: 1.0459 billion at period end
- Total Debt: 6.2914 billion; Net Debt: 5.2455 billion
- Current Ratio: 4.51; Quick Ratio: 3.82
- DSO / DIO / CCC: 129.96 days / 209.11 days / 315.03 days
- Leverage & Valuation: Debt/Capitalization ~87.7%; Debt/Equity ~7.13x; P/S ~14.18x; EV multiple ~-118.46x (reflecting negative EBITDA and high leverage)
Notes: The data reflects Q4 2024 results (calendar quarter ended 2024-06-30) and includes annualized metrics where provided. Revenue YoY/QoQ and margins are sourced from the earnings data and 4-quarter trailing figures.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
200.70M
1.67%
0.00%
Gross Profit
2.20M
-91.09%
-90.09%
Operating Income
-119.40M
-42.48%
-12.22%
Net Income
-174.90M
-41.50%
-17.46%
EPS
-1.39
-40.40%
-17.80%
Key Financial Ratios
currentRatio
4.51
grossProfitMargin
1.1%
operatingProfitMargin
-59.5%
netProfitMargin
-87.1%
returnOnAssets
-2.19%
returnOnEquity
-19.8%
debtEquityRatio
7.13
operatingCashFlowPerShare
$-1.9
freeCashFlowPerShare
$-7.01
priceToBookRatio
3.23
priceEarningsRatio
-4.07
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript highlights unavailable. The earnings transcript is provided as empty ([]). As a result, there are no management quotes to incorporate. If a transcript becomes available, quotes can be grouped by themes (strategy, operations, market conditions) with context and significance added.
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Forward Guidance
No explicit forward guidance was published in the QQ4 2024 data excerpt. Given Wolfspeed’s substantial capex trajectory in SiC Power Devices, GaN die, and related systems, the near-term outlook will depend on: 1) ramp in customer adoption and volume across automotive (EV charging, inverters), data centers, and industrial power applications; 2) progress toward manufacturing scale and yield improvements to lift gross margins; 3) management’s ability to reduce reliance on high-interest financing by generating operating cash flow or restructuring debt. Industry trends toward higher SiC/GaN penetration in power electronics remain favorable, but profitability hinges on utilization of installed capacity and cost discipline. Key factors to monitor: 1) quarterly shipments and order intake for SiC devices and GaN products; 2) gross margin trajectory as utilization improves; 3) the pace of debt reduction and balance sheet strength; 4) changes in interest expense and financing terms as the company navigates its leverage. A constructive stance would require signs of margin expansion, a path to free cash flow generation, and reduced leverage over the next 6–12 quarters.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0I4Q.L Focus
1.10%
-59.50%
-19.80%
-4.07%
0HWG.L
17.90%
-0.37%
-3.53%
-44.93%
0HYI.L
51.80%
14.10%
2.47%
27.73%
0HM0.L
90.30%
38.00%
2.38%
13.61%
0HRZ.L
34.10%
28.80%
3.19%
11.52%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The QQ4 2024 results position Wolfspeed as a high-growth, high-capital-expenditure story within the semiconductor space. The company demonstrates revenue stability at USD 200.7m for the quarter but remains burdened by large losses and outsized capex, leading to negative free cash flow and substantial net debt. The near-term investment thesis hinges on a successful ramp of SiC and GaN capacity, improved utilization, and a path to EBITDA/margin expansion as fixed costs dilute with higher volumes. Absent explicit forward guidance, the key watchpoints are: (1) quarterly volume momentum and customer wins in SiC/GaN product lines; (2) evidence of gross margin improvement through better mix and utilization; (3) ongoing debt management and potential refinancing to ease interest burden; and (4) achievement of cash flow break-even or positive free cash flow in a future period. Relative to peers, Wolfspeed trades at a high price-to-sales multiple (approximately 14.18x) but shows a negative enterprise value multiple driven by negative EBITDA and large leverage, underscoring the need for a clear margin improvement path to validate the elevated valuation. Investors should maintain a cautious stance until there are tangible signs of margin stabilization, a credible plan to reduce leverage, and a clearer roadmap to free cash flow generation over the next 12–24 months.
Key Investment Factors
Growth Potential
Strong long-term growth potential from SiC and GaN adoption across EVs, charging infrastructure, data centers, and industrial power systems; secular demand driver supports revenue upside as capacity scales and yields improve.
Profitability Risk
High leverage and ongoing cash burn; sensitivity to financing conditions; potential mix shift toward lower-margin components; execution risk in scaling high-capital expenditure programs; competitive intensity in SiC/GaN markets.
Financial Position
Significant debt load with negative free cash flow; solid liquidity buffer from cash and investments, but net debt remains substantial; current ratios indicate short-term liquidity cushion despite weak profitability.
SWOT Analysis
Strengths
Strong liquidity with cash and short-term investments totaling roughly USD 3.22 billion as of 2024-06-30 (USD 1.0459b cash + USD 2.1746b cash equivalents/short-term investments)
Market leadership in silicon carbide (SiC) and gallium nitride (GaN) power devices with diversified end-markets (EVs, RF, industrial power, data centers)
Two-segment portfolio (Wolfspeed SiC/GaN and LED Products) providing diversification across growth and cyclicality
Exposure to secular growth themes (electric vehicles, charging infrastructure, power electronics) potentially underpinning longer-term revenue growth
Weaknesses
Sustained net losses and negative free cash flow in QQ4 2024 (net income USD -174.9m; free cash flow USD -885.4m)
Heavy debt burden (total debt USD 6.2914b; net debt USD 5.2455b) with material interest expense (USD 60.8m)
Gross margin close to break-even (~1.1%) and high operating expense base (R&D and SG&A) pressuring profitability
Significant capex intensity (USD -645.9m in capex) implying continued cash burn absent rapid revenue upside
Opportunities
Mass adoption of SiC/GaN in EV power electronics and industrial power systems (inverters, charging, power modules)
Capacity expansion and yield improvements could unlock margin expansion as utilization increases
Potential partnerships, collaborations, or strategic investments to accelerate scale and reduce cost per watt
Threats
Intense competition in SiC/GaN ecosystems, including both established semiconductor players and niche suppliers
Macro cycles in the semiconductor industry impacting demand and capital expenditure cycles
High leverage makes Wolfspeed vulnerable to higher interest rates, refinancing risk, and tighter credit conditions
Execution risk in scaling the manufacturing footprint and achieving profitable mix with pricing pressure in a competitive market