The following is a summary of the Ams-OSRAM AG (AMSSY) Q1 2024 Earnings Call Transcript:

Financial Performance:

• Ams-OSRAM reported Q1 group revenues of €847 million, a decrease from Q4 2023 due to seasonality in the automotive aftermarket business and inventory corrections in industrial and medical markets.

• There was a significant increase in R&D expenses to €140 million, in part due to the ongoing development of the microLED project.

• The decrease in SG&A expenses to €93 million reflects cost-cutting measures, such as the 'Re-establish-the-Base' program.

• The restructuring costs for the microLED strategy led to a transformation cost of around €700 million in 2024.

• The gross margin underutilization costs recorded are around €300 million per year, which are expected to decrease as part of the company's growth plan.

• The company reported an adjusted gross profit of €241 million, 7% less than the previous quarter.

• Ams-OSRAM anticipates a decline in revenue and adjusted EBIT for Q2 due to seasonality, but expects positive cash flow excluding interest payments for FY'24.

Business Progress:

• The company has redirected its focus from the scaled-down microLED project towards smaller-scale core development activities, securing over €5 billion in design wins.

• The automotive and consumer semiconductor business have shown robust performance, despite the market uncertainty.

• Product development for adaptive beam lighting for cars is progressing well, with good global traction and potential opportunities from a regulatory shift in the U.S.

• The company plans to lease the Kulim 8-inch facility in Malaysia to a new lessee, as part of a cost-saving measure that is expected to improve EBIT and cash flow in 2025.

• A part of their noncore semiconductor portfolio is anticipated to be divested by the end of 2024.

• Their Android sensor production is projected to continue and grow with Korean and Chinese manufacturers.

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