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Wolfspeed (WOLF) Reports Loss in Q2 Earnings, Revenues Up Y/Y
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Wolfspeed (WOLF - Free Report) reported a second-quarter fiscal 2024 non-GAAP loss of 55 cents per share, narrower than the Zacks Consensus Estimate of a loss of 63 cents per share but broader than the year-ago quarter’s loss of 11 cents per share.
Revenues of $208.4 million increased 20% year over year and beat the consensus mark by 1.19%. Mohawk Valley Fab contributed $12 million in revenues in the reported quarter.
Power Products accounted for 51.7%, while Materials Products contributed 48.3%. Power Products revenues increased 12.2% year over year to $107.7 million. Materials Products revenues increased 29.4% year over year to $100.7 million.
Power device design-ins were $2.1 billion in the reported quarter. Quarterly design wins were $2.9 billion, with more than 75% related to automotive applications.
In the fiscal second quarter, Wolfspeed reported a non-GAAP gross margin of 16.4%, down from 35.8% reported in the year-ago quarter.
In the reported quarter, sales, general and administrative expenses were $64.9 million (31.1% of total revenues), up 28.8% year over year.
Research & development expenses (21.7% of total revenues) increased 15% year over year to $45.3 million.
Wolfspeed incurred $10.5 million of factory start-up costs and $35.6 million of underutilization costs in the second quarter of fiscal 2024.
Wolfspeed incurred a non-GAAP operating loss of $70.8 million, wider than the operating loss of $35.9 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2023, WOLF had cash, cash equivalents and short-term investments of $2.64 billion compared with $3.35 billion as of Sep 24, 2023.
Free cash outflow was $755 million, comprising $183 million of operating cash outflow and $572 million of capital expenditures.
Guidance
For third-quarter fiscal 2024, Wolfspeed expects revenues in the range of $185-$215 million. Non-GAAP loss is expected to be 57-69 cents per share.
Revenues from materials are expected between $90 million and $95 million.
The company expects Mohawk Valley fab to contribute nearly $20-$30 million in revenues in the third quarter of fiscal 2024.
It expects non-GAAP gross margin in the range of 13-20%, with the midpoint of 16.5%. At the midpoint, this includes approximately $36 million of underutilization costs. Non-GAAP operating expenses of approximately $109 million are expected for the fiscal third quarter, including $13 million of start-up costs, primarily related to the JP materials facility in Siler City, NC.
Zacks Rank & Stocks to Consider
Currently, Wolfspeed carries a Zacks Rank #4 (Sell).
WOLF shares have declined 46.3% against the Zacks Computer and Technology sector’s rise of 12.4% in the past six-month period.
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Wolfspeed (WOLF) Reports Loss in Q2 Earnings, Revenues Up Y/Y
Wolfspeed (WOLF - Free Report) reported a second-quarter fiscal 2024 non-GAAP loss of 55 cents per share, narrower than the Zacks Consensus Estimate of a loss of 63 cents per share but broader than the year-ago quarter’s loss of 11 cents per share.
Revenues of $208.4 million increased 20% year over year and beat the consensus mark by 1.19%. Mohawk Valley Fab contributed $12 million in revenues in the reported quarter.
Power Products accounted for 51.7%, while Materials Products contributed 48.3%. Power Products revenues increased 12.2% year over year to $107.7 million. Materials Products revenues increased 29.4% year over year to $100.7 million.
Power device design-ins were $2.1 billion in the reported quarter. Quarterly design wins were $2.9 billion, with more than 75% related to automotive applications.
Wolfspeed Price, Consensus and EPS Surprise
Wolfspeed price-consensus-eps-surprise-chart | Wolfspeed Quote
Operating Details
In the fiscal second quarter, Wolfspeed reported a non-GAAP gross margin of 16.4%, down from 35.8% reported in the year-ago quarter.
In the reported quarter, sales, general and administrative expenses were $64.9 million (31.1% of total revenues), up 28.8% year over year.
Research & development expenses (21.7% of total revenues) increased 15% year over year to $45.3 million.
Wolfspeed incurred $10.5 million of factory start-up costs and $35.6 million of underutilization costs in the second quarter of fiscal 2024.
Wolfspeed incurred a non-GAAP operating loss of $70.8 million, wider than the operating loss of $35.9 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2023, WOLF had cash, cash equivalents and short-term investments of $2.64 billion compared with $3.35 billion as of Sep 24, 2023.
Free cash outflow was $755 million, comprising $183 million of operating cash outflow and $572 million of capital expenditures.
Guidance
For third-quarter fiscal 2024, Wolfspeed expects revenues in the range of $185-$215 million. Non-GAAP loss is expected to be 57-69 cents per share.
Revenues from materials are expected between $90 million and $95 million.
The company expects Mohawk Valley fab to contribute nearly $20-$30 million in revenues in the third quarter of fiscal 2024.
It expects non-GAAP gross margin in the range of 13-20%, with the midpoint of 16.5%. At the midpoint, this includes approximately $36 million of underutilization costs. Non-GAAP operating expenses of approximately $109 million are expected for the fiscal third quarter, including $13 million of start-up costs, primarily related to the JP materials facility in Siler City, NC.
Zacks Rank & Stocks to Consider
Currently, Wolfspeed carries a Zacks Rank #4 (Sell).
WOLF shares have declined 46.3% against the Zacks Computer and Technology sector’s rise of 12.4% in the past six-month period.
Shopify (SHOP - Free Report) , Pinterest (PINS - Free Report) and AvidXchange (AVDX - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify shares have gained 28.3% in the past six-month period. SHOP is set to report its fourth-quarter 2023 results on Feb 13.
Pinterest shares have gained 34.5% in the past six-month period. PINS is set to report its fourth-quarter 2023 results on Feb 8.
AvidXchange shares have declined 1.3% in the past six-month period. AVDX is set to report its fourth-quarter 2023 results on Feb 28.