OSRAM Licht AG

Q3 revenue was EUR 853 million, above the midpoint of guidance, and reported sales were down 3% year over year because of FX; management said the weaker U.S. dollar reduced top line by about EUR 35 million year over year and EUR 20 million sequentially. Adjusted EBITDA margin was 19.5%, up almost 1 percentage point quarter over quarter and year over year, with adjusted EBITDA improving by EUR 21 million. Adjusted net result was EUR 27 million, while IFRS net result was minus EUR 28 million and IFRS EPS was negative EUR 0.28. Operating cash flow was EUR 88 million, capex was EUR 48 million, and free cash flow was EUR 43 million; year-to-date free cash flow was breakeven. For Q4, management guided revenue to EUR 790 million to EUR 890 million at an exchange rate of 1.16, adjusted EBITDA margin to 17.5% plus or minus 1.5 percentage points, and free cash flow of more than EUR 100 million. They said the weaker U.S. dollar will cost a middle double-digit million figure in top line versus the start of the year.

Aldo Kamper described the quarter as a good one and said the strategic focus is paying off through stronger cash flow, growth in the core portfolio, and better profitability. He highlighted 9% year-over-year growth in the core semiconductor business on a comparable basis, 800 design-win projects in the quarter, and EUR 4 billion of design wins in the first nine months, saying this supports the midterm growth model. He also said the company sees solid underlying demand in auto, despite short-term hiccups, and is thinking about extending the cost-saving program beyond the current phase.

Rainer Irle emphasized balance sheet and liquidity progress, saying cash on hand was EUR 979 million at the end of September and above EUR 1 billion by the end of October after a EUR 500 million private placement. Net debt was about EUR 2 billion, while available liquidity rose to approximately EUR 1.6 billion. He said operating cash flow was EUR 88 million in Q3, capex was EUR 48 million, free cash flow was EUR 43 million, and full-year capex should be 6% to 7% of revenue, below the long-term 8% average. He also quantified the one-off EBITDA benefit from Singapore asset sales at a bit more than EUR 10 million, and said adjusted EBITDA had been supported by that gain.

Analysts asked about auto demand, the impact of Nexperia-related supply-chain turbulence, and whether the company would accelerate cost cuts beyond the current plan. Management said automotive inventory levels are okay, but short-term ordering is elevated and could affect this quarter and next, while global vehicle builds are still holding up and China is a relative strength. On cost savings, Aldo said the EUR 225 million goal should be reached significantly ahead of plan and that management is considering how to extend the program after that. In response to consumer business questions, management said socket wins are progressing well across Android and non-Android customers, and on asset disposals it reiterated that proceeds will be significantly above EUR 500 million.