Wolfspeed Inc (WOLF) Q1 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...

GuruFocus News
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In This Article:

  • Revenue: $195 million for the quarter, down 3% sequentially.

  • Power Revenue: $97 million, decreased quarter-over-quarter.

  • Materials Revenue: $98 million, slightly up from the prior quarter.

  • Non-GAAP Gross Margin: 3.4%, down quarter-over-quarter.

  • Operating Expenses: $120 million, down $10 million quarter-over-quarter.

  • Adjusted EPS: Ahead of the midpoint of the August guidance.

  • Cash and Cash Equivalents: Approximately $1.7 billion at the end of the quarter.

  • Free Cash Flow: Negative $528 million, including negative $132 million of operating cash flow and $396 million of capital expenditures.

  • Q2 2025 Revenue Guidance: Between $160 million to $200 million.

  • Q2 2025 Non-GAAP Gross Margin Guidance: Between -6% to 6%.

  • Q2 2025 Non-GAAP Operating Expenses Guidance: $110 million.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Wolfspeed Inc (NYSE:WOLF) secured $2.5 billion in incremental funding through the CHIPS & Science Act and additional debt financing, strengthening its capital structure.

  • The company is transitioning its entire device business to a 200-millimeter silicon carbide platform, which is expected to improve yields and reduce costs.

  • Wolfspeed Inc (NYSE:WOLF) recorded $1.3 billion in design wins in fiscal Q1, with significant growth in EV revenue, indicating strong market demand.

  • The company is implementing restructuring initiatives expected to generate annual cash savings of approximately $200 million.

  • Wolfspeed Inc (NYSE:WOLF) is well-positioned to capitalize on the growing demand for silicon carbide in the EV and industrial markets, with a robust backlog of $11 billion in design wins.

Negative Points

  • The company is experiencing slower-than-expected growth in EV adoption and continued weakness in industrial and energy sectors, impacting revenue.

  • Wolfspeed Inc (NYSE:WOLF) is closing its 150-millimeter device fab in Durham and its epitaxy facility in Texas, which will affect approximately 20% of its workforce.

  • The company reported a non-GAAP gross margin of 3.4% for the first quarter, down quarter-over-quarter, with significant underutilization costs.

  • Wolfspeed Inc (NYSE:WOLF) is facing challenges in transitioning customer demand from its Durham fab to the Mohawk Valley fab, which may impact revenue continuity.

  • The company needs to raise up to $300 million in additional capital and refinance its 2026 convertible notes to meet CHIPS grant disbursement conditions.

Q & A Highlights

Q: Can you discuss the impact of the recent election results on the CHIPS Act and Wolfspeed's status with the PMT? A: Gregg Lowe, CEO, explained that the CHIPS Act has strong bipartisan support as it addresses national and economic security issues by reducing reliance on foreign semiconductor supply. The election results do not change this bipartisan priority, and the CHIPS grants are seen as an investment in maintaining U.S. leadership in silicon carbide technology.

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