Axcelis (ACLS) 3 Aug 232023 Q2 Earnings call transcript

Good day, ladies and gentlemen and welcome to the Axcelis Technologies call to discuss the company's results for the Second Quarter. My name is Shannon McLead and I will be your coordinator for today. [Operator Instructions]

I would now like to turn the presentation over to your host for today's call, Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. Please proceed.

operator. you, Thank CFO. Lawson, Strategy Doug President President Corporate President of CEO This with Executive me and and Vice Executive and Kevin Low, today Marketing and is Brewer, Vice is and Russell

release If you have be Playback it seen our a available website. on available our will as issued described press our on in copy is service yesterday, of not press also our website release.

and forward-looking and to statements expectations detail business. today about in the the review. which and our for inherent in These other that XX-K results provision. Form in filings, annual note report profits are are our current to subject harbor are comments our made safe Please other described you statements based risks under urge management's future are SEC's expectations SEC forward-looking risk we revenues, These on

differ current any Our from obligation actual update We assume these to materially results forward-looking statements. do not may our expectations.

CEO, the turn call I'll Low. Now, President over and Russell to

you $X.X bookings of by quarter with with second million, high and strength thank strong, especially for the earnings carbide continues billion demand extremely of be market. Purion systems at and call. per our Backlog power the quarterly $XXX $XXX to million, for Purion remained the product driven morning high-growth for share Revenue earnings XXXX was for power in silicon Demand Good quarter $X.XX. family second us segment. joining also the in

$XX roughly of and expect share XXXX, operating quarter earnings third approximately million, around $X.XX. margin we of of million approximately XX%, The $XXX gross profit of revenue of per

revenue year expected to which decrease $X.X greater by revenue XX% overall WFE in our XX% billion. a We $XX in forecasted XXXX approximately are This by year-over-year represents of to than growth XX%. to is million raising

memory second Axcelis, technology quarter in foundry an of X to going for The area of DRAM. process the We mature $X.X strength customers, it's X in and on depending composed conditions. to logic achieve or mature with continues next entirely market to to market years possible customers revenue of system billion XX% shipments X% also believe be

The XX%, of the X%, Korea in shipments world geographic X% rest the X%. quarter the Europe U.S. XX%, Taiwan mix of was X%, and our the China Japan system XX%, second

since As been growth. this in segment of case silicon the to our power the carbide downturn, beginning has and the continues particular, drive device

We are shipped now from this from market around We XX% segment, system segment, our new high-growth footprint in of and our from engaged actively in of XX% expanding with carbide all system winning with come coming approximately to this business customers in our total existing shipped applications. XXXX revenue customers customers. expect silicon revenue

these increased they and of HXXX units qualifying and give seeing our adoption are start of Two carbide have customers as Purion volumes. limiting systems Purion in recipes HXXX XXX-millimeter with a These one XE multiple customers high and productivity carbide geographies. silicon silicon a is carbide We're now underway to evaluations head Purion silicon XXX-millimeter ramp system. X systems evaluation

applications. HXXX Purion higher implantation Purion customer deliver of for to carbide recipe on devices family. Axcelis coverage that from power Series silicon carbide. relatively conduct silicon the dose their the Power work enables product only is also XXXX, the and It across complete revenue utilizing all can to spread the energy expect evenly In iron we optimization be capabilities customers company device

to risk of product provide that provides best to using to and the supplier the family considered This required fab to lowest technology manufacturing the path choice and the support Axcelis plans. means manufacturing capabilities. are aggressive high-volume We tools be leader ramp

level and by providing in succeed customer our product differentiated this significant high a places exciting value on of enabling Axcelis performance customers satisfaction. market to

towards of we downturn As our DRAM. less XX% account will and than that weighted memory continues, for revenue estimate now industry shipped the systems

in will the of of healthy advanced downturn with of the the to expect beginning growth and out PC a electronics, We XXXX level lead returning half market XXXX consumer this second logic industry memory.

our manufacturing to Axcelis their to It close customers for upturn. increased base the memory during with supporting future customers their working them with installed and on experiencing are remains Axcelis expand technology and there an needs. them, While this advanced downturn, downturns is our logic and through is opportunities collaborate next ability to

to systems evaluation engagements multiple our and segments. designed have We markets in increase customer these many these footprint in

growth beyond. [Technical billion these in $X.X downturn, and strength This healthy markets. model the with Power Axcelis Difficulty] return As the segment industry continued have combined in this drive exits to will

over it turn to like to Kevin. I'd Now

morning. Thank and good Russell you,

represents excited are with financial $X.X XXXX is revenue, and XX%. approximately exceed which billion We expected year-over-year second about our growth pleased are quarter results now of full-year to and

our quarter, demand revenue finished at and Looking solid earnings well Purion. strong above share due to continued execution guidance second per for and

significantly system million million million. at of was and QX at with revenue $XXX.X margin QX above revenues, gross to revenue due favorable share guidance was $XXX higher-than-expected $X.XX and earnings per spending. CS&I $XX.X

from benefited this effective by much compensation. associated stock tax quarter, also We driven tax lower with rate deduction

in continued billion at $XXX quoting million XX% $X.X but for expectation Strong in systems will fluctuate our should $XXX shipped revenue this of model. for quarter, XXXX market approximately and which segment approximately activity systems for the be that come will in million bookings revenue quarter-to-quarter, Power CS&I our the revenue XXXX. modeled and from supports

improved XX.X% costs and margin lower at deferrals XXX slightly a gross in basis QX points above guidance, mix. by and finished driven

gross improvement. product gross goods approximately higher approximately QX. allows Purion further functions There laser in We come remain XX% the $X.X lower us of model expect to forecast margin to gross and margin at the drive and underway in revenue billion across initiatives model. are to which of extensions, on the business higher in sales XX% Key margin improvements QX focused of cost margin numerous

Turning to expenses. operating

our ended of XX.X% at The and revenue than second quarter better guidance.

expect approximately XX%. quarter be the in third OpEx We to

solidify our in business technology memory in we always, and markets increase markets. support investing spending, while logic the to continue advantage business advanced growth, As our will the the of footprint specialty areas that control tightly in and

will new in infrastructure will operational fully our just open state-of-the-art to achieve infrastructure One from our Mass walk we center located in be and continue Additionally, employees is models. this month headquarters. facility example to expected to a our QX. during is The investment logistics financial required invest and our short of Beverley,

also in to billion plan comfortable model. further our ramp We are $X.X grow our Korean that and capacity Beverly needs initiatives as support revenue we and have operations that place

short-term revenue. with the QX investments and have support quarter to required cash of million stock returned inventory equivalents of ended generated by Cash impacted shareholders expected the half We share in from the $XXX and since to in million second million over $XX.X operations. In increase we through programs. higher and cash capture million our quarter, $XX.X $XXX.X XXXX repurchased of cash, was repurchase

has Axcelis during in market a profitability execution power strong rare in continued positioning to device downturn. revenue opportunity significant industry is This challenging grow product strong environment. the and a a of and result

their We Axcelis I partners to growth I deliver. and overall to confidence and for also in chain the supply Once our entire want thank hard semiconductor team want our ability in logic recovers. look Axcelis for the to forward our thank continued work for supporting performance. outstanding their again, to advanced customers continuing market also memory and as their

turn Russell back now his the comments. closing to for call will I

achievable the or in Thank and XXXX factors. $X.X to X the you, Axcelis growth to X is This $X.X expects revenue next billion years. due Kevin. achieve greater billion following over than

total more the the segments grow years than annually First, of in and the TAM. XX% greater implant TAM with XX% are market last to XX% doubled than representing has expected and few between mature

intensity Second, peaking Pat [indiscernible] implant and and mature image XX-nanometers. sensors increasing at general the have are highly implant intensive nodes

Third, of markets. recipes power making process the This the these to covering from sensor product high all implant mature will Purion in growth and key extensions only product capable markets. designed to with Axcelis positions in be company high-value line a optimize uniquely technology device Axcelis image benefit manufacturing,

a desire making And your finally, want customers employees, to customer fundamental by and strong Axcelis' investors support. successful. and our win to continued for I suppliers, cultural relationships customer thank our long-term

like With questions. for that, to open I'd up

Ellis Our comes Thank you. Craig [Operator Riley Instructions] from B. first from question Securities.

in calling Ellis. Craig for Ethan is This Widell

in surge a So XX.X% confidence hitting quarter overall was and surprise, XX% your nice impact does by for fourth year? the margin this in the

surprise was bit the costs deferrals. better as nice little as This of some in came and is a of mix from part well and better It it QX Kevin. a

stronger think a in of improvement bit, little approximately to XX%. QX still up that we QX, is I on think the we first half year we're I much on get a last than call, but And to away then target towards the from up that off full QX of becoming further that, see probably QX. second the little talked expect XX%. from strength QX in number half QX, QX about And bit of we're about of took from

So full we're in yeah, for XX% range so we're still anticipating being still -- the that year.

[Technical signs using Micron are with the that memory I've Hynix strength are higher -- that and been Difficulty] then [indiscernible]? Purion demand And Dragon driving SK

this And Doug. is

you but high-bandwidth memory. So think up asking you're about a little the I broke bit,

HBM for the the similar other So it's for implant or implant, whether any content DRAM, types. of is

XXXX. memory next step spending we of cycle. see half said of that the as fabs. create we first sort HBM the towards as start in what to PC up and of in, next a So it kicking the -- refresh to That's ramp starts utilization Then far back will a really and as capacity the good year to getting goodness second see healthy CapEx the CapEx is, utilize memory sometime of year cycle we drive the bring

Jon Blair. comes from question Dorsheimer from next William Our

just of a X specific guide. with China strong in but concern is that what's are And I'm globally, year return would which market, the the on ability target, pull-in guess used if Russell, the wondering, will, first you then pretty how seems now. question, the of just thought take a right specifically, your follow-up. your greatest if kind be monitoring to And see And a respect type terms limit of healthy I up to congratulations so X areas the have your of we in health quarter. process you gate, demand the one to to lean that to causing out I don't around to that channels

Doug. is this Jed,

where So think drivers. or year X the that's now, model seeing X guidance, of for billion our right raising biggest to our years power the billion now. full terms in I strength $X.X market we're The $X.X the from the pulling us, in and optimism is in to

are Ethan see starting of -- activity. strength We their increase the start was in think I as result a guys as on to beginning AI utilization memory to question, the some saying last of the we're to I the

expect and is next whole a a as that. key for to event. And products. watching be in of there, then of cycle that the logic PC electronics driver mature mature consumer going a to we're And big type we're markets are that the terms refresh type so be probably XX monitoring of foundry

power what driven very $X.X So the pull the year, gives model, $X.X But heavily especially silicon this to in. us by the strength being in that's and confidence that billion it's model in carbide. billion

And Kulim and carbide in silicon in publicly just specifically, obviously the noted $X follow-up is I is guess capital for terms by they've of as the you investment intensive XXX-millimeter. trench then Infineon a question more major and billion on announcement my

that that And offerings, XXX different spend. or or of tool the so in changes within my assuming question it tooling a is XXX? a field And none around of we what seen your terms upgradable offer -- Malaysia versus haven't silicon your offering carbide or I'm does

XXX XXX helpful. So, guess I just yes, would versus be

Hi, Jed, it's Russell.

platform we still for so have the versus XXX, Power Purion series. complete XXX So

So the to essentially, and upgradable carbide, it's carbide XXX. and carbide, available a m-silicon that And the between kit XXX XXX. xc-silicon field you all go HXXX XXX allows silicon are the

handling, upgradeable modified be it's the same scanning essentially And larger needs the I -- the the a upgradable substrate. slightly to kit. machine, that's an like field wafer but So say, for obviously,

Our Tom Diffely D.A. from next question comes Davidson. from

silicon a Maybe carbide more the on couple side.

the some any the new end have in ebbs seen years? fab are EV over couple any the recent flows next to you So modifications or construction changes and of that of the expected with markets, plans

continues it carbide still point, supply actually, this constrained. accelerate, at I is mean No, to silicon

growing bit the bit EV rapidly. is, investors a U.S. parochial of note, of a -- talk being of a things is to one quite here, but activity. And when we mean market. not And market view the so Globally, of bit the there's we little of often a EV quite a little there's

and And to so signs that We're investment continue. seeing silicon we carbide think the of expect I driving no that changing. that's

when you're guess, the you companies a does And then product, I matter or also, modules? end creating about to are the the implant? if Is thinking discrete difference it there in

carbide things. wafer in only involved silicon the the fab Well, we're side in of discrete

they then put that, it manufacturing. no would they module after impact in there's in implant So package a module, the

a the the Kevin with little impact up. And Maybe opening both more new then capacity your the on just potentially on of logistics margins time and color for center over center. question a

all call material is Yes, material right and the center incoming now, new about XX so potentially hitting probably kind locations we got and we've of of front. handle different our

So manufacturing, not Also, what's and space We're that's if surrounding of put out manufacturing this the clear required up but between of frees we more X remaining stock going efficiency. room facility to that space happening some could going to to improve Beverly. remove point, all additional overall in try in over us really grabbing material. at some cities that Beverly out as headquarters, the we

need we're we infrastructure pretty to of -- done from a an of with got point do. now mortar view, from what So much view, Brexit we've point

can a have shift. and second on third of add we We a capacity additional lot

that. done, Our very the Kaizen. I'm in process Beverly a capacity and the continues are the improvement with But team $X.X billion kaizen I and center, again, more our new this use we to manufacturing -- to potentially to of hit manufacturing and team, operation, site number the say beyond buildings logistics drive our between Korea there terms when comfortable of

place And we've another case, got put capacity to some too, manufacturing very if good down need option. supply in partners chain contract that's road, the worst we

about So this feel very short at long of we're I and at, it, good point. where

comes from Our from Doyle question Needham. next Nicolas

like a Quinn second the of the X also, or system the slightly bookings bookings How what quarters. extended book-to-bill a out function this Nick Bolton. couple below being for Is in Doyle into seeing on backlog? half? time anomaly looks first the of you far placed? an And for It are then was front on looking are

is This Kevin.

me answer So that. let

see down really to about little this bit start off there's quarter. I bookings million broader-based if prior was book-to-bill I was higher. But a going last by little quarter $XXX from recovery. compared a were million probably a saying, we're to $XXX on back last much And go $XXX I'll which we the think industry million the bit, it quarter, So fluctuate you mean, until down quarter,

the here and down, but very company. thing have is key think up still So very this for of backlog, kind I backlog the we $X.X is billion strong real a a large

that into It I going 'XX, now. terms taking of in orders is and but pretty mean all XXXX. necessarily bookings both, capacity our in And but we're sold we're right out in backlog full, out XXXX doesn't mean we're into --

other the because that of backlog, don't there's I about under -- I this then we ago, CS&I under again So systems book-to-bill think and with up a quite a and popped million that. backlog that and back couple if one quarters you booking I'm revenue such strong top we bit not tool. consider business were sitting $XXX mean worried X I we on of more enough gets have you out down over a road

So a Power is base bit around there segment again, until broader I strong industry think we'll recovery. little still. see is this very it bounce

we think XX% the that of have believe come power. I from bookings now year's

on was last said think I call, have the it might we XX%.

strength additional coming seeing we're through right power So now.

this me Doug, just let just one Nick, let more comment. add -- is me

factories The other is quote side. And indicator guys out the it's in our next couple are exceptionally silicon planning we the remains And very these watch high years. activity quote good of carbide and activity. the over

indicator continued strength. that's -- good of another So it's in terms

of touched you're in And for the for the what seeing thinking these seeing It sounds And in recovery back the memory kind terms -- you're can driven you second is and by the that? points the coming but company's $X.X of touch PCs. expectation PC -- model hit memory in in strength the for a where XXXX? like can the on company what call, half more the you're Maybe billion recovery follow-up my you you on without directly, market?

Hey, Nick, question. for it's Russell. the Thanks

we starts benefit stay of in lot very with so lot We've see market And see memory to strong expecting shoots. looking we're memory, A close to market. for from what our recover, once of the been memory to a we green historically regarding people naturally that. So customers. very the

second think at XXXX moment, a as memory giving customers, 'XX, talking of to the pretty kind That's we're as far our half we're seeing. the in strong I I'm of year thinking goes. what

a $X.X sensors. so billion path obviously that would be regarding question like mature and the This processes to a recovery memory image recovery to billion, the us in previously in think other I to for said we've be $X.X and looking that some of consumer we'd spending order propel

think we are to next in X we see the the say what think $X.X in expected. us beyond a consumer years. in we that power like or our recovery plus I But in X we seeing business billion with strength the power spending, I strength getting

line that to billion Yeah, model. on paths I think it, the is Nick, bottom there's multiple that $X.X

why market So said that's depending the conditions. in call on we

And depends different bunch so on of of combinations. thing a it really lot a

Duley Our Steelhead next David comes question Securities. from from

wondering, in just And have electric was would I carbide market? expect markets of couple, markets vehicle recent which of early you you to be the seen silicon A adopters adoption EV? outside besides other

the customers' about you a talking The the a iron thing quite they especially be so is mean, It's savings to at little comes for volumes to can other and that where But a performance carbide and tremendous cost as their so websites, Doug, opens nice and automotive with forth, our get. silicon as applications, would markets well the to in it and it the a important, industrial of more generation yes, so the It's applications -- the costly. releases thanks energy up heat bit press the as but energy, benefit if markets, heat weight down in that devices. because provide and are performance increase, question. -- the is weight and forth, that I module look it's industrial of the

be piece. we will expect that And another that, so

the presentation, show above growth EVs that's carbide. we area In that with associated a there's silicon good

definitely from So, hearing customers. yes, our we that are

same build don't it's into silicon tools, EV directly industrial it we M our would or application. see or Purion Purion the devices into necessarily energy an going H, carbide us, customers whether Purion For and our an because XE using

taking go, lead to orders is availability? guess, And you then way maybe another much times current is, How understand you lead I XXXX. for as you're you far us have ask where just currently? capacity it for help Or mentioned XXXX? as capacity manufacturing times are do quarterly the could And what

It's a Kevin. center said Yes, now a earlier, to rate bit up comes but additional so little center for logistics the manufacturing going bit the capacity that's of heavy right that this new process, of I normal as also help And It's think mentioned, I shipments that it and logistics I order there's mean, Kaizen we're are seeing getting in I we required. as once more right are online, there's is little with plenty them now right we're material. with that have, part ongoing now. our filled

in the if we cell lead thing always we can process, on the orders need chain. got what XXXX, assuming would the piece other supply we're ship -- of from much but hand, we've In is we that that yes, times, we've the I is have So quarter shorter tools times to. than And that booking the turn material within is our with past, lead said say are that.

I on our update supply improve. has -- mean quick that. chain a give continue I'll to So

we're has I a group about because lot it think ramping peer and think been lot our ramping. our within a you group of hear not peer right now I still don't

us daily more are and things perfect keeping and adding chain, our allowing So we're I'm with ramp say are almost with but to our chain. not capacity with supply are going supply up us suppliers to

times lead now. problem our are customers So with say a not I should right

us. -- was I pretty execute may even orders. probably lead think last from because part, think few the of us pandemic to, it that's the our at coming helping we've is kind getting when for I fully think, preventing be the most time I not been well able frankly, still us for And years,

going We of couple almost utilizes we're of hiring over up now -- come lots Difficulty] last off-shift fully been third down to and have years So over and this shifts, of done second run the first [Technical add capacity capacity. its things we're they're really really additional shift. and that bringing to nowhere people big near,

hiring hire. to facility bit us. Korea -- been for for we process going And while Korea were capacity it's The So has that little really online, hire when certainly, The we actually tougher been probably that it's [indiscernible]. brought okay market we hiring, a in can was able gotten better.

everything I but assuming we lot can at lead it's we our for -- material So think in there, that's get an the now. end a the again, to issue is are something of get a right day, quarter, not times can a

conference they're Final guess, are this And they question spike the back gross think me say, points, guess, on XXX I I would is I margin, for question at the hit the going exiting gross around for XXX to asked to up, right to call down last year, regarding XX%? if QX the drop XX% margins why I or XX%, basis let's year XX%. target

thing at that XX.X%. taken I exit with coming would QX because first XX% part well, of out spike is, we at got say won't Yes,

QX, pretty step-up suggest to may still David, were -- when the in math, to we'll to which we it XX% the second you there bring you're had and close we new stronger have So get XX%. step have absolutely QX talking a a a right, need XX% still QX, math half but in We're and in the going big up.

bring to -- margins years. moves thing over that's that's margin the around margins driving initiatives, big the of these things mix, And in the the a one been of gross as piece we is thing that it. other is, the complete So continue gross

up a of we've around. margins you -- things about for up can the little full our our at to end always know many expecting been you if years this margins talk or we full on notches yes when XX% year based year gross a quarter-to-quarter, basis, XX%, kind we move last where above talking and have it's on progress at So it year that I we're gross full because more notch of But look year, averages. models, over quarters these bit continuing things do

of the So that's that's when you $X.X you look that. billion at a X when greatness, look quarters something year at full not model, X or like

So yes, question. answered hopefully, I your

Kevin, product but let me the just just CS&I to make extends of energy products. big the it's we said move margins billion, jump to in better clear, you second we the mix, high One systems. thing systems is X have with want standard look in or we worry I growth the one about comes at. then there's systems, sure mixes some And the type than of is because piece that versus $X.X a of

little put the roughly of it's but in pressure it's still the the does a percentage that on for margins terms same systems. so And higher because CS&I, the revenue a wise, much gain

if look in remember I to is always that. the I Difficulty]. the what that that CS&I accretive. you rate point. we mean is coming the But probably say should run to increase current from mention at a billion, of $X.X [Technical is majority good Yes, us takes

that on our margins if because going will systems we so making weren't, backwards. progress that And are be suggest we

come So systems putting view mix mix progress making bigger we're a lower and which margins in, that of the still fact CS&I, at of that does much things. impact in we're

be. to So we again, want we're right, where we're

that's part it, a it the mix product energy mentioned within mean, high just segment. of product is current, of a have helped should is, which of high and as versus piece big too, extension quite probably the the as well well. that's too. margins I with bit the mix, not I It's there's piece I other The mean,

but moving we moving road place goal is us maps in keep So to a way initiatives very the to to that we positive in where everything detailed there's of want That's that be. lot a have the direction. with gets pieces, going it and

next with from the Our Miller comes question Benchmark Mark Company.

the slowing China. were wondering seeing? the they seeing the in just business cover One I was of some indicated in EV companies market laser what in I'm you're

seeing Well, standpoint, I any think, -- the device the not Mark, from we're slowing.

So we're actual -- we're from we're away of a steps a couple the -- not couple cars.

is still And the still high so very carbide and silicon constrained. far demand supply

So necessarily that impacted by we're or seeing that. not being

You silicon just of a I'm e-mails that? carbide memory, number underway quantify both if and for wondering you mentioned could

Yes.

all Mark, we in is evalves I Right segments field, and across say the product. Russell. market this So would they're now, X have

So image mature foundry in sensors, evalves memory, we've and got power.

the of think we silicon tools HXXX I the in on power. press made X out So there, a evalves the carbide release this

an for XEmax have We image sensors.

we looking to designed We have R&D start. M, logic also an we're basically from where straight shouldn't have at twin a dragon in advanced center, get a the forget

in So yes, market very work business areas. we grow close and to to we're those looking, customers products continuing obviously, have all our segments all that and to for

was one housekeeping Just question. What CapEx?

I'm sorry, mark I was muted, it was $X million in the quarter.

Doug call. the some closing call make will turn I back Lawson, who This concludes remarks. will to over the Q&A portion of now our

today. Thank you us for joining

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Have your you disconnect. presentation. This the good may Thank participation now day. and concludes in today's conference a you for