Ams Ag ((CH:AMS)) has held its Q1 earnings call. Read on for the main highlights of the call.
In the latest earnings call, Ams Ag presented a mixed sentiment with some promising developments alongside persistent challenges. The company reported improved profitability metrics and positive order intake trends, yet faced issues such as declining cash flow, ongoing net losses, and significant debt obligations. While strategic initiatives and successful product launches offer a hopeful outlook, uncertainties related to tariffs and market conditions continue to pose risks.
Above Guidance Revenue
Despite facing seasonality and cyclical weaknesses, Ams Ag reported revenues of €820 million, surpassing the midpoint of their guidance. This represents only a 3% year-over-year decline, showcasing the company’s resilience in maintaining revenue levels amidst challenging conditions.
Improved Profitability
The company achieved an adjusted EBITDA margin improvement of nearly 2 percentage points year-over-year, reaching 16.4%. This was accompanied by a 9% increase in adjusted EBITDA, which rose by €11 million to €135 million, despite lower overall revenues.
Book-to-Bill Ratio Improvement
Ams Ag saw a positive trend in order intake, with the book-to-bill ratio improving to above 1 across all business segments during the quarter. This indicates a healthy demand for the company’s products and services.
Re-establish the Base Program
The company realized run-rate savings of €135 million by the end of the first quarter, significantly ahead of their plan. This contributed to a structural improvement in profitability, highlighting the effectiveness of their strategic initiatives.
Successful New Product Launches
Ams Ag continued to innovate with the launch of further car models featuring the EVIYOS headlamp product. The company also achieved significant design wins in the automotive, industrial, and consumer segments, reinforcing their position in these markets.
Operating Cash Flow Decline
Operating cash flow declined to €10 million in the first quarter from €79 million in the previous quarter. This was due to several negative effects, including increased inventories and decreased accounts payable, which impacted the company’s liquidity.
Net Earnings and Earnings Per Share
The adjusted net result remained negative at €23 million, with adjusted earnings per share turning negative from €0.03 in Q4 to minus €0.23 in Q1. This highlights ongoing profitability challenges for the company.
Debt and Liquidity Challenges
Ams Ag’s net debt position slightly increased to €1.9 billion, with cash on hand reduced to €573 million by the end of March. This was due to planned paybacks and FX effects, underscoring the company’s need to manage its debt and liquidity carefully.
Tariff and Marketplace Uncertainties
The company faces uncertainties regarding global car production and smartphone sales, driven by potential impacts from tariff wars. These factors could affect future performance and market conditions.
Forward-Looking Guidance
Looking ahead, Ams Ag is strategically focusing on profitability and cash flow improvement. The company aims for run-rate savings of €225 million by the end of 2026, with €135 million already realized. For fiscal year 2025, they expect free cash flow to exceed €100 million, supported by savings and government subsidies. Additionally, they plan to keep CapEx below 8% of sales and consider strategic asset sales to generate cash well above €500 million, aiding in debt reduction.
In summary, Ams Ag’s earnings call reflected a cautiously optimistic outlook, with notable improvements in profitability and order intake. However, challenges such as declining cash flow, net losses, and debt obligations persist. The company’s strategic initiatives and successful product launches provide a positive trajectory, though uncertainties in the market remain a concern.