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AEM books 'best quarter on record' as earnings surge 449% to $43.8 mil

Uma Devi
Uma Devi • 3 min read
AEM books 'best quarter on record' as earnings surge 449% to $43.8 mil
This came on the back of a 179% increase in revenue to $146.8 million from $52.7 million in 1QFY2019, due to increased orders from its main customer of 18 years, Intel.
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SINGAPORE (Apr 28): AEM Holdings, the provider of equipment systems solutions and manufacturing services, reported its ‘best quarter on record’ with earnings of $43.8 million for 1QFY2020 ended March, some 449% higher than a year ago.

This came on the back of a 179% increase in revenue to $146.8 million from $52.7 million in 1QFY2019, due to increased orders from its main customer, Intel. This beat the group's forecast range of $135 million to $145 million that was announced on Mar 19.

The American multinational corporation, which has been AEM’s main customer for about 18 years, had contributed to increases in the group’s orders for the tools, consumables, and services segments.

Segmentally, AEM’s equipment systems solutions (ESS) and test and measurement solutions (TMS) segments booked increases, while the system level test and inspection (SLT-i) and micro-electro-mechanical systems (MEMS) segments recorded marginal decreases in revenue contributions.

While AEM says it is maintaining its revenue guidance for FY2020 to be between $360 million and $380 million, it is expecting some revenue in 2QFY2020 to be pushed back to 3QFY2020 amid reduced workforce counts at its facilities.

Material costs for the quarter more than doubled to $86.5 million from $32.6 million a year ago, while staff costs increased 68% to $13.9 million from $8.3 million last year due to higher bonus provision and headcount primarily for business development and engineering and for the increase in sales.

See also: Cordlife posts net loss of $11.57 mil for 1QFY2024 due to refund fulfilment

Correspondingly, net profit for the quarter surged 448% to $36.1 million from $6.6 million last year. Net profit margin, too, increased to 24.6% from 12.5% in 1QFY2019.

As at end-March, cash and cash equivalents stood at $100.2 million.

Earnings per share on a diluted basis more than quadrupled to 13.27 cents from 2.43 cents in 1QFY2019.

See also: Changi Airport Group reports FY2024 earnings of $431 mil, 13.1 times higher y-o-y

In its outlook statement, AEM noted that most of its operations are taking place with a leaner force on sites, and are supported by employees working from home. In addition, disruptions to supply chain and leaner workforce restrictions have resulted in the fulfilment of some orders being pushed back to other quarters.

However, AEM notes that the shift to telecommuting, as well as work-from-home and virtual learning arrangements have created an increase in demand for semiconductor chips for servers, PCs and notebooks.

“As the industry becomes increasingly aware of the significance and benefits of system-level testing to test more advanced chips, AEM has gained recognition within semiconductor customers,” says AEM.

“Our advanced semiconductor testing solutions have placed AEM in an advantageous position to tap on the growth of system-level testing in Cloud, 5G, EV, IoT and AI, especially in these critical times,” adds the group.

Shares in AEM closed two cents higher, or 0.93% up, at $2.18 on Tuesday prior to the results announcement.

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