GlobalFoundries (GFS) Q4 Earnings & Revenues Beat, Dip Y/Y
GlobalFoundries GFS 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-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, Badger Meter BMI and AMETEK AME. 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%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Badger Meter, Inc. (BMI) : Free Stock Analysis Report
AMETEK, Inc. (AME) : Free Stock Analysis Report
CrowdStrike (CRWD) : Free Stock Analysis Report
GlobalFoundries Inc. (GFS) : Free Stock Analysis Report