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Cohu(COHU) - 2024 Q4 - Annual Report

Financial Performance - For the fiscal year ended December 28, 2024, Cohu's net sales decreased 36.9% year-over-year to 401.8millionduetolowerdemandinautomotive,industrial,andmobileapplications[198].Cohusconsolidatednetsalesdecreased36.9401.8 million due to lower demand in automotive, industrial, and mobile applications [198]. - Cohu's consolidated net sales decreased 36.9% from 636.3 million in fiscal 2023 to 401.8millioninfiscal2024,primarilyduetolowerdemandinvarioussectors[220].Grossmargindecreasedto44.9401.8 million in fiscal 2024, primarily due to lower demand in various sectors [220]. - Gross margin decreased to 44.9% in fiscal 2024 from 47.6% in fiscal 2023, attributed to lower business volume impacting fixed cost leverage [221]. - Net loss for fiscal 2024 was 69.8 million, compared to net income of 28.2millioninfiscal2023[239].Cashprovidedbyoperatingactivitiesinfiscal2024totaled28.2 million in fiscal 2023 [239]. - Cash provided by operating activities in fiscal 2024 totaled 2.8 million, a significant decrease from 101.5millioninfiscal2023[247].AcquisitionsCohucompletedtheacquisitionofMCTonJanuary30,2023,andEQTonOctober2,2023,bothofwhichareincludedintheconsolidatedresultsofoperations[197].CohuacquiredMCTonJanuary30,2023,andEQTonOctober2,2023,contributingtoconsolidatedresultsfromtheacquisitiondates[218].Amortizationofpurchasedintangibleassetsincreasedto101.5 million in fiscal 2023 [247]. Acquisitions - Cohu completed the acquisition of MCT on January 30, 2023, and EQT on October 2, 2023, both of which are included in the consolidated results of operations [197]. - Cohu acquired MCT on January 30, 2023, and EQT on October 2, 2023, contributing to consolidated results from the acquisition dates [218]. - Amortization of purchased intangible assets increased to 39.1 million in fiscal 2024 from 36.4millioninfiscal2023,drivenbyEQTsacquisition[226].DebtandFinancingCohurepaid36.4 million in fiscal 2023, driven by EQT's acquisition [226]. Debt and Financing - Cohu repaid 29.3 million of its Term Loan Credit Facility on February 9, 2024, and repurchased 915,504 shares of common stock for approximately 27.0millionduringfiscal2024[198].TotalindebtednessasofDecember28,2024,was27.0 million during fiscal 2024 [198]. - Total indebtedness as of December 28, 2024, was 8.8 million, including 1.7millionundertermloansand1.7 million under term loans and 6.5 million under construction loans [242]. - Cash used in financing activities in fiscal 2024 totaled 59.0million,adecreasefrom59.0 million, a decrease from 68.1 million in fiscal 2023 [249]. - Repayments of short-term borrowings and long-term debt in fiscal 2024 totaled 31.3million,including31.3 million, including 29.3 million in cash prepayments of the Term Loan Credit Facility [249]. - As of December 30, 2023, the company had approximately 29.3millionoflongtermdebtunderaTermLoanCreditFacility,withinterestpaymentsbasedonabaserateplusamarginofupto2.029.3 million of long-term debt under a Term Loan Credit Facility, with interest payments based on a base rate plus a margin of up to 2.0% per annum or SOFR plus a margin of up to 3.0% per annum [274]. - The company repaid the remaining outstanding principal of 29.3 million on February 9, 2024 [274]. Cash Flow and Investments - In fiscal 2024, net cash provided by investing activities totaled 21.9million,comparedtoanetcashusedof21.9 million, compared to a net cash used of 30.2 million in fiscal 2023 [248]. - Cash used for purchases of short-term investments in fiscal 2024 was 78.6million,whilecashgeneratedfromsalesandmaturitieswas78.6 million, while cash generated from sales and maturities was 114.2 million [248]. - Additions to property, plant, and equipment in fiscal 2024 amounted to 10.6million,downfrom10.6 million, down from 16.1 million in fiscal 2023 [248]. - The company expects to continue making capital expenditures to support its business and anticipates that current working capital will be sufficient for at least the next twelve months [263]. - At December 28, 2024, the investment portfolio included short-term, fixed-income investment securities with a fair value of approximately 55.7million[271].TaxandValuationThecompanymaintainsagrossdeferredtaxassetbalanceofapproximately55.7 million [271]. Tax and Valuation - The company maintains a gross deferred tax asset balance of approximately 138.2 million, with a valuation allowance of approximately 114.5millionasofDecember28,2024[206].ThecompanyhasdeterminedtherewasnoimpairmentofgoodwillasofOctober1,2024,astheestimatedfairvaluesofreportingunitsexceededtheircarryingvalues[210].ForeignCurrencyandRiskManagementFluctuationsinforeigncurrencyexchangeratesimpactedthecompanysstockholdersequity,whichdecreasedby114.5 million as of December 28, 2024 [206]. - The company has determined there was no impairment of goodwill as of October 1, 2024, as the estimated fair values of reporting units exceeded their carrying values [210]. Foreign Currency and Risk Management - Fluctuations in foreign currency exchange rates impacted the company's stockholders' equity, which decreased by 16.8 million due to foreign currency translation as of December 28, 2024, compared to December 30, 2023 [277]. - A hypothetical 10% devaluation of the U.S. dollar would result in an approximate 28.3millionpositivetranslationadjustmentrecordedinothercomprehensiveincomewithinstockholdersequity[278].Conversely,ahypothetical1028.3 million positive translation adjustment recorded in other comprehensive income within stockholders' equity [278]. - Conversely, a hypothetical 10% appreciation of the U.S. dollar would lead to an approximate 28.3 million negative translation adjustment recorded in other comprehensive income within stockholders' equity [278]. - The company has entered into foreign currency forward contracts to hedge against future movements in foreign exchange rates affecting U.S. Dollar denominated assets and liabilities [276]. - The company began hedging foreign currency risk associated with net investment positions in certain foreign subsidiaries in the third quarter of fiscal 2024 [277]. - The company’s strategy aims to mitigate risks and volatility associated with foreign currency transaction gains or losses through foreign currency forward contracts [276]. Operational Focus - Cohu's long-term market drivers remain intact, with optimism about the increasing use of semiconductors, particularly in artificial intelligence applications [199]. - The company continues to focus on developing innovative products and capturing new customers, driven by increasing semiconductor complexity and quality demands [199]. - Cohu's inventory valuation includes reserves for estimated excess and obsolete inventory, which may impact gross margin if future demand is lower than projected [204]. Expenses - Research and development (R&D) expenses in fiscal 2024 were 84.8million,or21.184.8 million, or 21.1% of net sales, compared to 88.6 million, or 13.9% of net sales in fiscal 2023 [223]. - Selling, general and administrative (SG&A) expenses as a percentage of net sales increased to 31.9% in fiscal 2024 from 20.8% in fiscal 2023, despite a decrease in total SG&A expenses from 132.2millionto132.2 million to 128.0 million [225]. - Cohu's share-based compensation expense is calculated based on the market price of common stock on the grant date, affecting financial results [216].