Aehr Test Systems Reports Record Financial Results & Forecasts More Growth

AEHR Stock’s Guidance Juiced by Demand for EVs

It’s tough to find a great technology stock that hasn’t seen its share price take a beating in 2022. Rising interest rates have hobbled many tech stocks, especially those of companies that have been losing money. Now that the cost of borrowing has gone up and will continue to do so, all eyes will be on tech companies that are profitable and have strong outlooks.

Few tech companies are as compelling right now as Aehr Test Systems (NASDAQ:AEHR).

Aehr Test Systems stock is a fabulous, under-the-radar tech stock I’ve been following for a while—for good reason. The company continues to report excellent financial results, including record results for fiscal 2022. Moreover, management raised their guidance for fiscal 2023.

The optimism is partly fueled by Aehr Test Systems’ high bookings and revenue, which are driven by high demand for the company’s technology that’s used by the electric vehicle (EV) industry.

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The demand for silicon carbide in relation to the EV sector and its supporting infrastructure has been growing at a rapid rate.

In July, Aehr Test Systems announced that it had received a $12.8-million follow-on order from its lead silicon carbide test and burn-in customer. (Source: “Aehr Receives $12.8 Million in Follow-on Orders for Multiple FOX-XP Systems and WaferPak Contactors,” Aehr Test Systems, July 19, 2022.)

The customer is a leading Fortune 500 supplier of semiconductor devices with a significant client base in the automotive sector.

Record financial results, new orders, and strong guidance have been helping juice the price of AEHR stock. As of this writing, Aehr Test Systems stock is:

  • Up by 107% over the last month
  • Up by 72% over the last three months
  • Up by 22% over the last six months
  • Down by 40% year-to-date
  • Up by 153% year-over-year

For technical traders, AEHR stock’s moving average is:

  • Up by 33% from its 20-day exponential moving average
  • Up by 61% from its 50-day simple moving average
  • Up by 10% from its 200-day simple moving average

Chart courtesy of StockCharts.com

Aehr Test Systems Stock Overview

Aehr Test Systems has been a leader in the burn-in test solutions sector for more than 40 years.

The company designs, engineers, and manufacturers test and burn-in equipment used in the semiconductor industry and serving the automotive, mobile, silicon photonics, memory and logic, and silicon carbide markets. (Source: “Investor Presentation” Aehr Test Systems, December 8, 2021.)

The company develops, manufactures, and sells test systems for burning-in and testing logic, optical devices, and memory integrated circuits (ICs). These systems can be used to simultaneously perform testing and burn-in of packaged ICs, ICs still in wafer form, or singulated die.

Aehr Test Systems has installed more than 2,500 systems worldwide.

The company’s worldwide customer base includes Lumentum Holdings Inc (NASDAQ:LITE), Seagate Technology Holdings PLC (NASDAQ:STX), Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), Texas Instruments Incorporated (NYSE:TXN), and the U.S. Department of Defense.

The company has been approached by several silicon carbide suppliers to meet their demand for EVs and other applications, including electric commuter train engine controllers and photovoltaic power conversion.

Long-term market drivers for the $9.0-billion semiconductor test industry include the electrification of vehicles; silicon photonics in fiber optic transceivers and processors; smartphones; and tablets.

Fiscal 2022 Results & Fiscal 2023 Guidance

For the fourth quarter of fiscal 2022 (ended May 31, 2022), Aehr Test Systems announced that its revenue jumped by 166% year-over-year to $7.6 million. (Source: “Aehr Reports Record Revenue for Fiscal 2022 Fourth Quarter and Full Year,” Aehr Test Systems, July 19, 2022.)

Its net income in the fourth quarter was $5.8 million, or $0.20 per share, up significantly from $567,000, or $0.02 per share, in the same prior-year period. The company’s adjusted net income in the fourth quarter of fiscal 2022 was $6.5 million, or $0.23 per share, compared to $930,000, or $0.04 per share, in the fourth quarter of fiscal 2021.

Aehr Test Systems ended the fourth quarter with a backlog of $11.1 million. The company’s effective backlog, which includes all orders since the end of the fourth quarter, is over $25.5 million.

The company’s total cash and cash equivalents at the end of fiscal 2022 were $31.5 million, up from $4.6 million at the end of fiscal 2021.

In fiscal 2022, Aehr Test Systems’ total revenue went up by 206% to $50.8 million. The company swung to full-year profitability of $9.5 million, or $0.34 per share, versus a fiscal 2021 net loss of $2.0 million, or $0.09 per share. Its adjusted net income in fiscal 2022 was $11.7 million, or $0.42 per share, compared to an adjusted 2021 net loss of $3.2 million, or $0.13 per share.

Gayn Erickson, Aehr Test Systems’ president and CEO, noted, “We are pleased to report very strong growth for fiscal 2022, with a record annual revenue of $50.8 million, and record bookings of $60.2 million. Importantly, we are seeing the significant leverage in our operating model to our bottom line, as evidenced by the strong profit for the fiscal year.” (Source: Ibid.)

For fiscal 2023 (ending May 31, 2023), Aehr Test Systems expects to report total revenues in the range of $60.0 to $70.0 million, with a high profit margin similar to that of fiscal 2022.

Management expects the company’s bookings to grow faster than its revenues in fiscal 2023 as the demand for silicon carbide for EVs increases exponentially throughout the decade.

Analyst Take

Aehr Test Systems is pretty much doing everything it can to get Wall Street excited. Unfortunately, rising interest rates, inflation, and fears of a recession are undermining investor optimism. This is actually good for those who are interested in AEHR stock at its current affordable share price, since none of these headwinds have been affecting Aehr Test Systems’ business.

As explained earlier, the company reported record fiscal 2022 results and has provided strong guidance for fiscal 2023 due to the increasing demand for its test systems.