EPS of $0.81 increased by 272.7% from previous year
Gross margin of 50.9%
Net income of 23.86M
""We believe that between wafer level and package part, the reliability test and burn-in market for AI processors exceeds $100 million annually." - Gayn Erickson, CEO" - Gayn Erickson
Aehr Test Systems (AEHR) Q4 2024 Financial Results Overview: Strong Growth Amidst Strategic Acquisitions
Executive Summary
Aehr Test Systems (NASDAQ: AEHR) reported a solid performance in Q4 2024, with revenues reaching $16.6 million, a decline from the $22.3 million achieved in Q4 the previous year, largely due to customer delays in orders for silicon carbide devices, which are influenced by slowing demand in the electric vehicle market. Despite this decrease in quarterly revenue, the overall full-year results were encouraging with total revenue of $66.2 million, surpassing management's expectations and indicating resilience in the silicon carbide segment and emerging opportunities in both the AI semiconductor and NAND flash markets. Management articulated optimism with the recently announced acquisition of Incal Technology, enhancing AEHR's capacity to serve the high-powered AI semiconductor market, an area anticipated to see significant growth moving forward.
Key Performance Indicators
Revenue
16.60M
QoQ: 119.49% | YoY:-25.46%
Gross Profit
8.45M
50.89% margin
QoQ: 167.68% | YoY:-26.40%
Operating Income
2.54M
QoQ: 224.19% | YoY:-54.94%
Net Income
23.86M
QoQ: 1 722.30% | YoY:290.51%
EPS
0.82
QoQ: 1 707.84% | YoY:272.73%
Revenue Trend
Margin Analysis
Key Insights
**Revenue (Q4 2024):** $16.6 million, down 25% YoY but up 119.49% QoQ.
**Full Year Revenue:** $66.2 million, up 2% YoY.
**Net Income (Q4 2024):** $23.9 million, reflecting a 290.51% increase YoY due to a deferred tax benefit of $20.8 million.
**Gross Profit Margin (Q4 2024):** 50.9%, slightly down from 51.5% YoY.
**Operating Income:** $2.54 million with an operating margin of 15.3%.
Financial Highlights
Financial Metrics Overview:
- Revenue (Q4 2024): $16.6 million, down 25% YoY but up 119.49% QoQ.
- Full Year Revenue: $66.2 million, up 2% YoY.
- Net Income (Q4 2024): $23.9 million, reflecting a 290.51% increase YoY due to a deferred tax benefit of $20.8 million.
- Gross Profit Margin (Q4 2024): 50.9%, slightly down from 51.5% YoY.
- Operating Income: $2.54 million with an operating margin of 15.3%.
- Cash Position: $49.2 million at year-end, showing a healthy liquidity ratio.
- Debt: Zero debt on the balance sheet, reflecting solid financial health.
Management Commentary:
"Our full year revenue and net income results exceeded our previously provided guidance and surpassed analyst consensus... we achieved another record for annual revenue for Aehr of $66.2 million," stated Gayn Erickson, CEO, showcasing confidence in continued growth despite current market fluctuations.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
16.60M
-25.46%
119.49%
Gross Profit
8.45M
-26.40%
167.68%
Operating Income
2.54M
-54.94%
224.19%
Net Income
23.86M
290.51%
1 722.30%
EPS
0.82
272.73%
1 707.84%
Key Financial Ratios
currentRatio
9.31
grossProfitMargin
50.9%
operatingProfitMargin
15.3%
netProfitMargin
143.8%
returnOnAssets
18.7%
returnOnEquity
21.4%
debtEquityRatio
0.06
operatingCashFlowPerShare
$0.04
freeCashFlowPerShare
$0.04
priceToBookRatio
2.99
priceEarningsRatio
3.49
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key Themes from the Earnings Call:
1. Silicon Carbide Market Growth: Management noted that despite temporary softening due to EV market dynamics, silicon carbide remains a pivotal growth driver. "We expect to add a significant number of silicon carbide customers this fiscal year as demand increases."
2. AI Market Opportunities: The acquisition of Incal Technology was emphasized as a strategic move to capture significant growth in the AI semiconductor sector, which is estimated to exceed $100 million annually. Erickson stated, "This unique combination strongly positions us to capitalize on the significant opportunity within the AI market."
3. Operational Investments: Continued investment in R&D, especially in automating manufacturing processes and enhancing test capabilities to meet evolving customer demands across various sectors, was highlighted: "We are committed to maintaining our competitive advantages through innovation."
"We believe that between wafer level and package part, the reliability test and burn-in market for AI processors exceeds $100 million annually." - Gayn Erickson, CEO
â Gayn Erickson
"The silicon carbide market continues to be an enormous opportunity for us and we're seeing more and more auto suppliers that are committed to silicon carbide in their EVs." - Gayn Erickson, CEO},
â Gayn Erickson
Forward Guidance
Aehr anticipates revenue for fiscal year ending May 30, 2025, to be at least $70 million, bolstered by the Incal acquisition. Management foresees significant contributions from emerging markets and AI-related initiatives. The company is also preparing for potential tax expenses following the release of deferred tax assets.
**Key factors to monitor:** 1. Progress in silicon carbide customer engagements and orders,
2. Revenue contributions from Incal Technology post-acquisition,
3. Stability of operational efficiencies in the face of rising expenses related to expansion initiatives.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AEHR Focus
50.89%
15.30%
21.40%
3.49%
PLAB
37.00%
25.10%
3.02%
10.39%
LRCX
47.80%
29.40%
11.90%
33.95%
KLAC
62.00%
41.00%
24.80%
33.27%
KLIC
48.30%
1.48%
1.28%
50.22%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Aehr Test Systems presents a compelling investment opportunity based on its innovative product offerings, strong financial health, and strategic growth initiatives in high-demand sectors. The anticipated revenue increase in fiscal 2025, backed by the integration of Incal Technology and the expansion into emerging semiconductor markets, positions Aehr favorably for long-term capital appreciation. Investors should closely monitor the execution of these strategies and the performance in silicon carbide and AI segments to validate the growth narrative.
Key Investment Factors
Growth Potential
Aehr's strategic acquisition of Incal Technology presents a considerable growth opportunity within high power testing solutions, particularly in AI applications. Management's focus on silicon carbide and emerging semiconductor technologies aligns with industry trends towards electrification and AI, suggesting robust demand.
Profitability Risk
Key risks include market volatility, particularly in the semiconductor space, and potential delays in customer orders, as evidenced by recent pushouts in silicon carbide device demand. The competitive landscape is also intensifying, particularly from companies capable of pushing prices lower in emerging markets.
Financial Position
Aehr's strong cash position of $49.2 million and zero debt provide strategic flexibility for investments. The balance sheet remains robust, allowing AEHR to effectively manage operational expenses while pursuing aggressive growth strategies.
SWOT Analysis
Strengths
Strong market presence in silicon carbide semiconductor testing.
Innovative technology leadership in AI testing capabilities with the acquisition of Incal Technology.
Solid financial position with zero debt and a significant cash reserve.
Weaknesses
Dependence on the semiconductor sector, which is currently experiencing volatility.
Recent decline in quarterly revenue, indicating potential challenges in customer retention.
Opportunities
Expansion into the growing AI semiconductor market through strategic acquisitions and partnerships.
Increased demand for silicon carbide in electric vehicles and other industrial applications.
Threats
Intensifying competition in the semiconductor testing industry.
Potential economic downturns affecting customer demand, particularly in the EV sector.