COHU INC Q1 FY2025 earnings call

• Implemented a restructuring program in late February to reduce manufacturing and operating expenses, with benefits starting in the second quarter.
• First quarter revenue split 63% recurring in balance systems. Systems revenue had ups and downs in different segments.
• Recurring orders increased 28% QoQ. Cohu factories in Malaysia and Philippines running below nominal capacity but adding resources for customer requests.
• Landed three new handler opportunities, won a selection with Diamondx tester, qualified power probe cards with a European semiconductor company.
• Received repeat multi-unit order for HBM inspection systems, expanded Diamondx application, and customers expanded use of contactors.
• Combined Tignis and Cohu’s DI-Core predictive maintenance solutions, signed three new demonstration opportunities for AI process monitoring.

First quarter 2025 revenue was approximately $97 million. Recurring revenue accounted for 63% of total revenue. Systems revenue saw sequential increases in automotive and consumer segments but declines in computing, industrial, and mobile. Estimated test cell utilization at the end of March was 72%, down 1 point quarter-over-quarter. Recurring orders increased 28% quarter-over-quarter.

• Q2 revenue guided to be approximately $106 million plus or minus $7 million, a 10% increase QoQ.
• Q2 gross margin forecasted at approximately 45%.
• Q2 operating expenses forecasted at approximately $48 million, about $500,000 lower than Q1.
• Not expecting recently announced tariffs to measurably increase cost of goods sold as customer is importer of record under standard shipping terms.
• Projecting Q2 interest income, net of interest expense and foreign currency impacts, to be approximately $900,000, and non-GAAP tax provision to be approximately $1.6 million.

• Tariffs: Cohu’s supply chain is primarily Asia-based, and under standard shipping terms, the customer is responsible for tariff costs, so minimal direct impact on cost of goods sold is expected.

Q: When looking at the roughly $9 million revenue increase at the midpoint of the 2Q guidance, how much is improvement in recurring revenue versus shipments for the HBM inspection?

A: It’s about half and half, half of the quarter over quarter increase is systems and half is recurring.

Q: In what segments are you seeing the pickup in the reoccurring orders mentioned?

A: The recurring order pickup is predominantly in the mobile segment, and it’s fairly concentrated.

Q: Could you elaborate on the Power Probe Card design win for SIC and the revenue stream?

A: Introduced in the second half of '24, aimed at high voltage testing. Had a qualification win, second customer win, with a third in progress, and the opportunity is about a $2 million a year per customer.

Q: How are we to think about the turnaround in the automotive market?

A: Automotive semiconductor manufacturers have called the trough around Q3 of '24 or Q1 of '25, expect utilization and recurring orders to creep up but at a slow pace for now.

Q: On the restructuring, after restructuring, what revenue levels can the expense levels support in a recovery situation?

A: With full benefit of restructuring, at $100 million revenue, OpEx would be around $47 million; at $130 million revenue, OpEx would be about $49 million.