ASE Technology Holding Co., Ltd. (NYSE:ASX) Q4 2023 Earnings Call Transcript
ASE Technology Holding Co., Ltd. (NYSE:ASX) Q4 2023 Earnings Call Transcript February 1, 2024
ASE Technology Holding Co., Ltd. beats earnings expectations. Reported EPS is $0.13, expectations were $0.12. ASE Technology Holding Co., Ltd. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Ken Hsiang: Hello. I am Ken Hsiang, the Head of Investor Relations for ASE Technology Holdings. Welcome to our Fourth Quarter and Full Year 2023 Earnings Release. Thank you for attending today. Please refer to our Safe Harbor notice on Page [Technical Difficulty] to having their voices and questions broadcast via participation in this event. If participants do not consent, please disconnect at this time. I would like to remind everyone that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to a high degree of risk and our actual results may differ materially. For the purposes of this presentation, dollar figures are generally stated in New Taiwan Dollars, unless otherwise indicated.
As a Taiwan-based company, our financial information is presented in accordance with Taiwan IFRS. Results presented using Taiwan IFRS may differ materially from results using other accounting standards, including those presented by our subsidiary using Chinese GAAP. I am joined today by Joseph Tung, our CFO; and Dr. Tien Wu, our COO. For today's presentation, I will first be going over the financial results. Dr. Wu will then give a market update and the 2024 key points. Joseph will then give the official company guidance. Both Joseph and Tien will then be available to take your questions during the Q&A session that follows. During the Q&A session, each caller will be limited to 2 questions at a time, but may return to the queue for further questions.
As per our expectations, the overall demand environment for our services remained sluggish during the fourth quarter. However, there were pockets of stronger performers within the devices we serve. But by and large, our customers remain conservative in their ordering patterns. In general, higher-end leading-edge services seem to be faring better than legacy services, but stronger wide breadth volumes remained elusive. For our ATM business, revenues were on the higher end of our expectations. During the quarter, key equipment utilization rates were still relatively low, averaging out between the low- and mid-60s. For our EMS business, in the fourth quarter, revenues increased sequentially, in line with our expectations. This was driven by customers' new devices and growth in Computing and Automotive segments.
For the year as a whole, the seasonal peak was a bit later in the year. With that, please turn to Page 3, where you will find our fourth quarter consolidated results. For the fourth quarter, we recorded fully diluted EPS of NTD 2.13 and basic EPS of NTD 2.18. Consolidated net revenues increased 4% sequentially and declined 10% year-over-year. We had a gross profit of NTD 25.8 billion with a gross margin of 16%. Our gross margin declined by 0.2 percentage points sequentially and declined by 3.2 percentage points year-over-year. The sequential decline in margin is principally due to higher EMS business mix and slightly lower ATM business loading during the quarter. The annual decline in gross margin is principally the result of lower loading during the current downturn.
Our operating expenses increased by NTD 0.4 billion sequentially and declined by NTD 0.4 billion annually. The sequential increase in operating expenses are primarily due to higher compensation expenses, specifically higher bonuses due to stronger goal achievement and ESOP expenses. The year-over-year decline was primarily attributable to lower bonus and profit-sharing expenses across the company. Our operating expense percentage declined 0.1 percentage points sequentially and increased 0.6 percentage points year-over-year to 8.7%. The operating expense percentage changes were primarily related to lower operating leverage in a downturn environment. Operating profit was NTD 11.8 billion, up NTD 0.4 billion sequentially and down NTD 8 billion year-over-year.
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