The following is a summary of the Tokyo Electron Limited (TOELY) Q4 2024 Earnings Call Transcript:

Financial Performance:

• Tokyo Electron reported net sales of JPY1,830.5 billion, down by 17.1% year-over-year due to the slowdown of customers' capital investment.

• Gross profit margin marked a record high, leading to an operating income of JPY456.2 billion and a net income of JPY363.9 billion.

• Record-high R&D investment of JPY202.8 billion was made.

• ROE declined to 21.8% on a year-on-year basis.

• Liabilities increased by JPY56.4 billion to JPY696.2 billion, partly due to income tax payable.

• Net assets increased by JPY182.5 billion to JPY1,760.1 billion, due to rising stock prices and the recording of a net income of JPY124.9 billion.

• Equity ratio was 71.1%, and free cash flow was JPY118.7 billion.

Business Progress:

• Tokyo Electron saw good progress in winning product-oriented-revenue (PORs) with high-value-added strategy products for mass production as well as for development.

• The company is aiming to expand its market share in high-value-added areas like logic, DRAM, and NAND by actively investing in R&D.

• Tokyo Electron has a hiring plan to recruit 2,000 people annually to hire 10,000 people in total over the next five years.

• It plans to invest JPY250 billion in R&D, and expects CapEx of JPY170 billion and depreciation of JPY63 billion.

• The company's board decided to implement a share repurchase of up to JPY80 billion based on fiscal 2025 financial estimates and a payout ratio of 50%.

• The company's new products are growing steadily and are expected to improve productivity and reliability.

• An increase in sales to NAND customers is also anticipated in the second half of this fiscal year.

• Tokyo Electron anticipates hybrid bonding for NAND area to start up in two to three years and expects the market for backside power delivery network (PDN) to pick up in about three to four years.

• The company is focusing its R&D on cryogenic etching, conductor etching, advanced lithography surface preparation technology, advanced packaging areas such as wafer to wafer and die-to-wafer bonding, and ultra-flat wafer treatment for EUV lithography among other areas.

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