Aehr test systems (AEHR 23.94%) The stock soared 23.9% on Friday, following the supplier of semiconductor test and reliability qualification equipment the previous afternoon issuing a strong report for its first quarter. of fiscal year 2023, which ended August 31, 2022.
The market’s joy can be attributed to the quarter’s earnings easily beating Wall Street expectations and earnings crushing analysts’ consensus estimate. Investors were also pleased that management reiterated its guidance for the full year and had positive things to say about the company’s long-term outlook.
Aehr’s robust growth is primarily driven by increased demand for silicon carbide semiconductors for electric vehicles (EVs), although the company is also seeing increased demand for its supply chain equipment data communications.
Aehr Test Systems key figures
|Metric||T1 tax 2023||T1 fiscal 2022||To change|
|Revenue||$10.7 million||$5.6 million||89%|
|GAAP net income||$589,000||$696,000||(15%)|
|Adjusted net income||$1.3 million||($414,000)||Reversed from positive to negative|
|Earnings per share (EPS) GAAP||$0.02||$0.03||(33%)|
|Adjusted EPS||$0.05||($0.02)||Reversed from positive to negative|
Investors should focus on adjusted numbers, which exclude one-time items.
Wall Street was looking for adjusted EPS of $0.01 on revenue of $8.5 million. So Aehr accelerated both expectations.
The company’s billings were $19.1 million for the quarter. It ended the period with an order book of $19.5 million.
Aehr ended the quarter with cash and cash equivalents of $36.1 million, compared to $6.5 million at the end of the prior year period. Its indebtedness is relatively light.
What the CEO had to say
CEO Gayn Erickson’s statement in the earnings release was very lengthy. Here’s part of his statement that should give investors an idea of how the company’s products fit into the electric vehicle supply chain.
“We are currently engaged or in discussion with nearly all existing and future silicon carbide suppliers regarding our unique, low-cost, multi-wafer level test and burn-in solution. … [It] allows our customers to break in every device more cost effectively than they could in any other form. … The major silicon carbide companies expect most EV traction inverters to move to multi-chip modules, and they told us they need to move to stress and break-in at the wafer level to eliminate inherent failures before putting devices into multi-chip modules to achieve their cost, performance and reliability goals for those modules. »
Annual orientations reiterated
For fiscal year 2023 (ending May 31), management reiterated its previously provided guidance for total revenue of $60-70 million, which would represent annual growth of 18%-38%. Management also said it expects a strong profit margin similar to last year. In the last fiscal year, the company’s adjusted profit margin (adjusted net income divided by sales) was 23%.
Additionally, the company continues to expect bookings to grow faster than revenue in fiscal 2023 “as surging demand for silicon carbide [semiconductors] in electric vehicles is growing exponentially throughout the decade,” according to the press release.
Worth at least watching
Aehr Test Systems stock deserves a spot on growth investor watch lists. Unlike many companies involved in the electric vehicle supply chain, Aehr is profitable.
It’s a small-cap stock ($471 million market cap) and it still flies under the radar of many investors. But the company is increasingly getting discovered, thanks to its recent strong trading performance and stock price performance since mid-2021.
Beth McKenna has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.