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Investing.com -- Disco (OTC:DSCSY) reported first-quarter sales of ¥89.9 billion, up 8.6% year-over-year, and operating profit of ¥34.4 billion, a 3.3% increase, according to results released after the company revised its guidance on July 9.
The operating profit exceeded expectations by approximately ¥10 billion excluding foreign exchange effects, with an additional ¥4 billion boost from a weaker yen. Gross profit margin was 68.1%, down 1.7 percentage points quarter-over-quarter, while SG&A expenses decreased by ¥5.7 billion to ¥26.8 billion.
Shipments, which indicate the real earnings trend, totaled ¥111.1 billion, rising 9.8% year-over-year and 20% quarter-over-quarter, surpassing the company’s guidance of ¥102 billion. Equipment shipments increased 28% compared to the fourth quarter, with dicers up 29% and grinders up 31%. The growth was driven by Generative AI demand, particularly in the memory segment, while OSAT shipments also increased.
The quarterly performance benefited from some fourth-quarter orders being pushed to the first quarter, as well as the acceleration of some second-quarter shipments. Consumables shipments rose 5%, in line with guidance, while "other" shipments increased 8%, exceeding the company’s conservative projection of a 15% decline.
For the second quarter, Disco forecasts sales of ¥91.2 billion, down 5% year-over-year but up 1% quarter-over-quarter, with operating profit expected to reach ¥33.2 billion, a 22% decrease. These projections assume exchange rates of ¥135/$ and ¥160/€, with stable rates potentially adding approximately ¥4 billion to operating profit.
The company expects second-quarter gross profit margin to decline by about 2 percentage points, primarily due to anticipated yen appreciation. SG&A expenses are projected to increase slightly to around ¥27 billion.
Disco anticipates second-quarter shipments of ¥83.6 billion, representing a 25% decrease from the first quarter, with equipment shipments projected to fall 35%. The company attributes this decline partly to the acceleration of some shipments to the first quarter, though Generative AI-related shipments are expected to remain strong. Consumables shipments are forecast to grow 5% quarter-over-quarter, while "other" shipments are expected to decrease by 15%.
The company expects shipments to rise in the third quarter compared to the second quarter. Management noted that while logic shows underlying strength compared to memory, second-quarter logic shipments are expected to decline slightly. The company also indicated limited visibility on Generative AI-related shipments beyond fiscal year 2027.
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