Melexis Q3 2024 Earnings Call Highlights

In the latest earnings call, Melexis (ticker: MELE), a key player in the semiconductor industry, reported Q3 2024 sales of €247.9 million, which remained consistent with the same quarter the previous year and showed a slight 1% increase from Q2 2024.

However, the company has adjusted its Q4 sales forecast to between €200 million and €210 million, citing inventory corrections at European and U.S. automotive customers and a projected global car production decline.

Consequently, full-year sales estimates have been revised downward from around €1 billion to approximately €935 million to €945 million, with gross profit margins expected to be above 43%.

Key Takeaways

• Q3 2024 sales steady at €247.9 million, a 1% increase from Q2 2024.
• Q4 sales forecast adjusted to €200-€210 million due to inventory corrections.
• Full-year sales estimates revised to €935-€945 million, with gross profit margins above 43%.
• Growth in sensor products and design wins in Asia and Europe.
• Plans to launch five new Beyond Automotive products in 2024.
• Revenue from China up 9% in the first nine months of 2024.

Company Outlook

• Melexis anticipates continued growth in global automotive sales and production in 2025.
• The company is adjusting inventory levels to facilitate a quicker return to growth.
• Five new products targeting robotics, alternative mobility, and digital health are set to launch in 2024.
• Capital expenditures for 2024 are projected to be around €60 million.

Bearish Highlights

• Inventory corrections at European and U.S. customers impact sales forecasts.
• Gross profit margins have slightly decreased due to low yield and small cost factors.
• Pricing negotiations are challenging amid customer pressures for discounts.
• Concerns over potential pricing pressures in China due to auction dynamics.

Bullish Highlights

• Sensor product segment, particularly magnetic position and pressure sensors, is experiencing growth.
• Revenue from China significantly outpaces overall company performance with a strong pipeline of design wins.
• The IHF forecasts a 2% increase in global car production in 2025, with a shift towards hybrid and electric vehicles.

Misses

• Full-year sales estimates revised downward due to lower projected Q4 sales.
• Gross profit margins expected to be above 43%, a decrease from previous estimates of above 44%.

Q&A Highlights

• China's sales performance remains strong, accounting for over 27% of revenue year-to-date in 2024.
• Future price reductions expected to be in the low single-digit range, mirroring pre-COVID reductions.
• Next financial results announcement scheduled for February 5, 2025.

Melexis CEO Marc Biron and CFO Karen van Griensven discussed various factors influencing the company's performance and outlook during the earnings call. While facing challenges such as inventory corrections, pricing pressures, and slight gross margin decreases, the company remains focused on innovation and market growth opportunities. With an emphasis on new product launches and strategic pricing discussions, Melexis aims to maintain profitability despite the uncertainties in the global automotive market.