Chips, Champagne, & Charts: Q4 Earnings Roundup
ASML, LVMH, and MSCI demonstrate resilience and growth in the face of economic uncertainty.
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ASML
ASML wrapped up 2024 with a bang, posting a record-breaking €9.3 billion in Q4 net sales and a fat 51.7% gross margin! That translates to a cool €2.7 billion in net income for the quarter – not too shabby! For the whole year, they raked in €28.3 billion in sales and a still-impressive 51.3% gross margin, netting a hefty €7.6 billion.
Now, while their Q4 bookings were strong at €7.1 billion (with a juicy €3 billion coming from those high-demand EUV systems), the yearly figure did dip to €18.9 billion from €20 billion in 2023. Looks like the chip party slowed down a bit, but hey, who can keep up that pace forever?
ASML is still printing money! EPS hit €6.85 in Q4 and €19.25 for the year – not too far off from 2023's numbers. And shareholders can rejoice with a 4.9% dividend bump to €6.40 per share. Cha-ching!
That was expected since 2023, they told everyone that 2024 will be a flat year, so no surprise here, the best is yet to come but those booking numbers still bothers me they’re not especially bad, but they’re not excellent either. but they still had an order backlog of approximately 36 billion euros at the end of 2024, CFO Roger Dassen said
On Free cash flow side, it bumped from 3 to 9 billion, yes you read that right, but don’t start throwing fireworks, they are just coming back to 2021 levels. 2023 was a rough year.
Looking ahead, ASML is forecasting a solid Q1 2025 with net sales between €7.5 billion and €8.0 billion and a gross margin between 52% and 53%. For the full year, they're aiming for €30 billion to €35 billion in sales, keeping that margin nice and healthy.
And what about that buzz around cheaper AI models like Deepseek? CEO Christophe Fouquet isn't sweating it. He told CNBC that lower AI costs mean more people will use it, and that means more demand for chips – music to ASML's ears!
So, while the chip market might have taken a little breather, ASML is still in the driver's seat, fueled by the AI boom and their own technological prowess. Buckle up, because this ride is far from over.
We expected those results, there is no reason to ditch the stock,we keep our position here and will look forward to the coming years!
LVMH
LVMH, the luxury powerhouse, just proved that even in a turbulent economy, people still crave a little sparkle in their lives! Despite the challenges, they managed to rake in a whopping €84.7 billion in revenue for 2024. Okay, so organic growth was a modest 1%, but let's be real, they were up against some tough comparisons after those post-Covid spending sprees. 🍾
But here's the kicker: LVMH isn't just about the bling, they're about solid financial performance too. Their profit from recurring operations reached a cool €19.6 billion, with an operating margin of 23.1%. That's not just good, it's significantly above pre-Covid levels!
Now, those pesky exchange rates did take a bite out of their bottom line, particularly for their Fashion & Leather Goods and Wines & Spirits divisions. But even with that headwind, they delivered a net income of €12.6 billion. Not too shabby for a year that had everyone worried about a recession!
And what about those dividends? Well, LVMH is keeping its shareholders happy with a stable dividend of €13 per share. While it's not an increase, it's still a generous payout in a year where many companies are tightening their belts.
So, what's the takeaway? LVMH is a luxury juggernaut that knows how to navigate choppy waters. They've got a winning formula: iconic brands, desirable products, and a knack for staying ahead of the curve. With a strong financial foundation and their eyes firmly set on the future, LVMH is poised to continue its reign as the king of luxury. One thing to keep in mind is that China is still heavy on their results, so it needs to be followed.
Our take, this stock is way too expensive for us. Paying 37 times the free cash flow for a company that is growing in the high single digits is way way way too much.
MSCI
MSCI, the financial data and analytics giant, just flexed its muscles with a strong 2024 performance! They raked in $743.5 million in operating revenues for Q4, a solid 7.7% jump compared to the same period last year. For the full year, they brought in a cool $2.86 billion, a 12.9% increase – not too shabby!
And it's not just about top-line growth; MSCI boasts some impressive margins too. Their operating margin for Q4 clocked in at a healthy 54.5%, while the adjusted EBITDA margin hit a whopping 60.8%. Talk about efficiency!
Now, while diluted EPS was down 23.1% to $3.90 for the quarter, don't hit the panic button just yet. Adjusted EPS actually climbed 13.6% to $4.18, showing that the underlying business is strong.
And speaking of strong, check out that recurring subscription revenue, up 7.5% for the quarter! That's the kind of predictable income that makes investors sleep well at night. Plus, their asset-based fees surged a whopping 20.8%, proving that their clients are putting their money where their mouth is.
But that's not all! MSCI also saw a 21.5% surge in operating cash flow, showing their ability to turn profits into cold, hard cash. And speaking of cash, their free cash flow for 2024 reached $1.3 billion, a healthy jump from $1.14 billion in 2023 – that's a growth rate of about 13.6%! Not bad at all.
MSCI is also sharing the love with shareholders. They've been busy buying back shares – $865.5 million worth in 2024 and through January 28th, 2025! And they just announced a juicy 12.5% dividend hike to $1.80 per share for Q1 2025. Cha-ching!
But wait, there's more! MSCI is also guiding for a free cash flow of $1.4 billion to $1.46 billion in 2025. That's a lot of cash to reinvest in the business, pay down debt, or, you know, buy back even more shares!
So, what's the secret to MSCI's success? Well, according to their Chairman and CEO, Henry Fernandez, it's all about their "attractive business model" and their investments in data, models, and technology. They're basically the brains behind the financial brawn, and they're not slowing down anytime soon.
With a strong track record, a growing customer base, and a commitment to innovation, MSCI is well-positioned to continue its growth trajectory. Looks like they've got the recipe for success!
What’s our take here? Well you already know our view on MSCI, it’s an incredible company, we would love to own it but it’s too damn expensive for us. These are the kind of company that will give you 1 chance to buy it at a good price once every 2 or 3 years. We had it last year at around 420 but we didn’t pull the trigger due to not a lot of cash available.
We look to buy them around 450-500, not more.
But earning season is not over yet for us, next portfolio companies are expected to publish the second week of February so stay tuned.
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