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GlobalFoundries (GFS) Q4 Earnings & Revenues Beat, Dip Y/Y

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GlobalFoundries (GFS - Free Report) has delivered adjusted earnings of 64 cents per share in fourth-quarter 2023, beating the Zacks Consensus Estimate by 8.5%. However, the bottom line declined 56% on a year-over-year basis.

Revenues of $1.85 million topped the Zacks Consensus Estimate by 0.2%. However, the top line dipped 12% year over year.

Weakness across the smart mobile devices, communications infrastructure and datacenter, home and industrial IoT, and personal computing end-markets was a major concern.

Wafer shipments decreased 5% year over year to $552 million in the reported quarter.

Nevertheless, strong momentum in the automotive end market was a positive.

GlobalFoundries Inc. Price, Consensus and EPS Surprise

 

GlobalFoundries Inc. Price, Consensus and EPS Surprise

GlobalFoundries Inc. price-consensus-eps-surprise-chart | GlobalFoundries Inc. Quote

End-Market Details

Smart Mobile Devices: Revenues generated from the market fell 7% year over year to $765 million (41% of the total revenues).

Communications Infrastructure & Datacenter: Revenues from the market decreased 63% year over year to $144 million (8% of the total revenues) in the reported quarter.

Home and Industrial IoT: Revenues from the market were $322 million (17% of the total revenues), down 23% from the year-ago quarter.

Automotive: Revenues from the market were $318 million (17% of the total revenues), up 177% from the year-ago quarter.

Personal Computing: Revenues from the market were $84 million (5% of the total revenues), down 27% from the year-ago quarter.

Non-Wafer and Corporate Other Revenue: Revenues from this category were $221 million (12% of the total revenues), down 10% from the year-ago quarter.

Operating Results

In the fourth quarter, the gross margin was 28.3%, which expanded 130 basis points (bps) year over year.

Operating expenses were $221 million, down 33.5% year over year. As a percentage of revenues, the figure contracted 400 bps year over year.

Selling, general and administrative (SG&A) expenses were $87 million, down 33.1% year over year. Research and development (R&D) expenses were $105 million, down 4.5% year over year.

Adjusted SG&A and R&D expenses were $57 million and $97 million, down 45.7% and 5.8% year over year, respectively.

The adjusted operating margin was 20.7%, expanding 50 bps from the prior-year quarter.

Balance Sheet & Cash Flows

As of Dec 31, 2023, cash and cash equivalents were $2.4 billion, up from $1.9 billion as of Sep 30, 2023.

Long-term debt was $1.8 billion at the end of the fourth quarter, down from $2.2 billion at the third-quarter end.

In the fourth quarter, the company generated $684 million of cash from operations, up from $416 million in the prior quarter.

The free cash flow was $456 million in the reported quarter.

Guidance

For first-quarter 2024, GlobalFoundries expects revenues between $1.50 billion and $1.54 million. The Zacks Consensus Estimate for the same is pegged at $1.75 billion.

Gross profit is expected to be $329-371 million, with a gross margin of 23% at the mid-point.

Adjusted operating profit is anticipated between $120 million and $180 million, with an operating margin of 9.9% at the mid-point.

The company anticipates adjusted earnings per share between 18 cents and 28 cents. The Zacks Consensus Estimate for the same is pegged at 45 cents.

Zacks Rank & Stocks to Consider

Currently, GlobalFoundries has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector are CrowdStrike (CRWD - Free Report) , Badger Meter (BMI - Free Report) and AMETEK (AME - Free Report) . CrowdStrike currently sports a Zacks Rank #1 (Strong Buy), and Badger Meter and AMETEK carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CrowdStrike shares have gained 26.3% in the year-to-date period. The long-term earnings growth rate for CRWD is projected at 36.07%

Badger Meter shares have gained 15.7% in the year-to-date period. The long-term earnings growth rate for BMI is projected at 12.27%.

AMETEK shares have gained 13.5% in the year-to-date period. The long-term earnings growth rate for AME is projected at 9.19%.


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