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01/10 16:59
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows strong financial results with revenue and EPS at the high end of guidance, positive free cash flow, and significant shareholder returns through dividends and share repurchases. The Q&A section highlights optimism in sectors like AI and A&D, despite some uncertainties in semi-cap. The company's positive outlook for 2026, coupled with strategic investments, suggests a positive market reaction. Given the small-cap nature, the stock is likely to see a positive movement of 2% to 8% over the next two weeks.
Revenue $681 million, up 6% sequentially and returned to year-over-year growth. Growth was supported by broadening sector contributions and solid momentum in new bookings.
Non-GAAP EPS $0.62, at the high end of prior guidance ($0.56 to $0.62).
Non-GAAP Gross Margin 10.1%, down 10 basis points sequentially and year-over-year due to mix.
Non-GAAP Operating Margin 4.8%, up 10 basis points sequentially, driven by leveraging cost basis on higher revenue.
Medical Sector Revenue Up 15% sequentially and 18% year-over-year. Growth attributed to normalized channel inventory, improved end demand, and ramping new products.
A&D Sector Revenue Up 2% sequentially and 26% year-over-year. Growth driven by stability in commercial air, strong defense demand, and ramping satellite and space business.
Industrial Sector Revenue Up 8% sequentially and 1% year-over-year. Growth consistent with expectations of strengthening throughout the year.
Semi-cap Sector Revenue Decreased 3% sequentially and 1% year-over-year. Decline due to softening demand from OEMs, increased China restrictions, and evolving tariff environment.
Free Cash Flow $25 million in Q3, totaling over $74 million generated in the last 12 months. Growth supported by multiyear record cash cycle quarter and net income performance.
Cash Balance $286 million as of September 30, an increase of $21 million from Q2.
Inventory Turns 4.8 in the quarter, with inventory days down 8 sequentially due to active inventory management.
AI wins and HPC builds: Starting to ramp in Q4 and into 2026, indicating a return to growth in advanced computing and communications.
Medtech engineering wins: Large engineering wins in the medtech subsector, which has been growing for several quarters.
Geographic expansion: Investments in a new 4th PT building in Penang, Malaysia, and maintaining 50% of manufacturing capacity in the Americas.
Sector diversification: Revenue growth across medical, A&D, and industrial sectors, with a focus on expanding base business and adding new market-leading customers.
Cash cycle improvement: Achieved a multiyear record cash cycle quarter with inventory turns of 4.8.
Free cash flow generation: Generated $25 million in free cash flow in Q3 and $74 million over the last 12 months.
Succession planning: David Moezidis promoted to President and will become CEO effective March 31, 2026.
Customer-centric approach: Focus on strategic partnerships and competitive takeaways, supported by a diversified portfolio in 5 high-value sectors.
Semi-cap sector demand: Softening in demand from OEMs due to increased China restrictions and evolving tariff environment. Near-term industry challenges and cyclical recovery delays are impacting revenue.
Inventory management: While inventory days have improved, active management is required to maintain efficiency as the company grows its top line.
Geopolitical and regulatory risks: Increased China restrictions and evolving tariff environment are creating uncertainties, particularly in the semi-cap sector.
Sector-specific growth variability: While some sectors like medical and A&D are showing strong growth, others like semi-cap are facing challenges, leading to uneven performance across sectors.
Economic and market uncertainties: Mixed demand signals in sectors like semi-cap and industrial, with potential strengthening only expected in the second half of 2026.
Strategic execution risks: Ongoing investments in facilities and capacity expansion, such as in Malaysia and the Americas, require careful execution to ensure ROI and operational efficiency.
Revenue Expectations: For Q4 2025, revenue is expected to be in the range of $670 million to $720 million, representing mid-single-digit year-over-year growth at the midpoint.
Gross Margin Projections: Non-GAAP gross margin for Q4 2025 is expected to be between 10.1% and 10.3%.
Operating Margin Projections: Non-GAAP operating margin for Q4 2025 is expected to be between 5% and 5.2%.
Earnings Per Share (EPS): Non-GAAP diluted EPS for Q4 2025 is expected to be in the range of $0.62 to $0.68.
Tax Rate: The effective tax rate for Q4 2025 is expected to be between 24% and 25%.
Sector-Specific Outlook: - AC&C: Improved visibility into growth due to AI wins starting to ramp in Q4 2025 and into 2026, along with HPC builds.
Capital Expenditures: Investments in capabilities and infrastructure at Americas and Asia facilities to support long-term growth and operational efficiency.
Long-Term Growth Catalysts: - AI-related demand and increased silicon content in products.
Cash Dividends: Distributed $6 million in cash dividends during the quarter.
Share Repurchase: Repurchased $10 million in stock during the quarter.
Remaining Authorization: Approximately $124 million remaining in the existing share repurchase authorization.
The earnings call shows strong financial results with revenue and EPS at the high end of guidance, positive free cash flow, and significant shareholder returns through dividends and share repurchases. The Q&A section highlights optimism in sectors like AI and A&D, despite some uncertainties in semi-cap. The company's positive outlook for 2026, coupled with strategic investments, suggests a positive market reaction. Given the small-cap nature, the stock is likely to see a positive movement of 2% to 8% over the next two weeks.
The earnings call reveals mixed signals: positive growth in medical and AI sectors, strategic cash management, and shareholder returns. However, concerns arise from cash outflow, AC&C sector challenges, and semi-cap market uncertainties due to China restrictions. The Q&A highlights optimism in future growth but lacks detailed guidance. Given the market cap of $1.4 billion, these mixed factors suggest a neutral stock price movement within the -2% to 2% range over the next two weeks.
The earnings call presents a mixed picture: while revenue declined YoY and recession risks loom, the company maintained EPS guidance, improved cash flow, and executed share repurchases. The Q&A highlights balanced customer sentiment and potential growth in medical and automation sectors. Despite headwinds from tariffs and a customs audit, the company shows resilience. The stock market cap suggests moderate sensitivity. Overall, the sentiment is neutral, with no strong catalysts for a significant stock price change in the next two weeks.
The earnings call presents a mixed picture: a decline in revenue and liquidity challenges are offset by strong EPS, cash flow, and share repurchases. Q&A insights reveal cautious optimism with growth expected in the second half, particularly in medical and compute sectors. However, concerns about customer hesitancy and China-related order softening persist. Given these factors and the company's small-cap status, the stock price is likely to remain stable, leading to a neutral prediction.
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