ACLS - Earnings call transcript Q3 2018 | Axcelis Technologies, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Axcelis Technologies Call to discuss the company's results for the Third Quarter of 2018. My name is Christy and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

We will be facilitating a question-and-answer session towards the end of this conference. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mary Puma, President and CEO of Axcelis Technologies. ma'am. proceed, Please

Mary Puma

With President Christy. President is Brewer, Kevin Corporate Thank CFO; me and Vice and and Vice Doug Executive Marketing you, Strategy. today Lawson, of Executive

statements not revenues, comments available on release. in future Web are you and provision. press expectations have in and If to described available business. results SEC of other also service our made review. Please and management's our our a site SEC's These on our for today, forward-looking is earlier under we press are our Report subject site. forward-looking the current our detail filings, which Safe Web you today in statements the other are it about release to seen profits will issued on in risks that be Harbor Playback risks our note inherent are copy urge described Form based as These Annual expectations XX-K

and estimate. approximately $X.XX. one-time million around includes consensus gross margin materially benefit with this and of our million, results XX.X%, these expectations. adjustment, Included profit a with of XX%, EPS revenue $XX.X of $X.X statements. reform. Our or in profit actual million of update above tax of quarter operating of or obligation from revenue million forward-looking in guidance $X.XX gross per is earnings of margin current were the diluted $XXX and million, tax not quarter XX.X% of Even results $XX.X for Axcelis We for share related with assume of QX share solid these about a fourth was operating to any $XX.X revenue approximately or differ per of may the do to line $X.XX. Guidance XXXX quarter

expected back below goal than January. industry target end with likely XXXX $XXX of we half our in the we revenue As a set slightly spending, will slower million second result model,

strong in goal factors allowed this. XX% to three gross Purion to of continue in achievement that There margin invest us maintaining has key target Our the earnings. while are model growth driving product

highly First, to provides base one our experiences the product family a Purion segment diverse like revenues weakness. stability customer NAND when of

shipped new the customers five fabs and bringing quarter new Purion new we XX of of since XXXX. number fabs total to Purion to This QX

Our Purion install has timeframe. base tripled this during

technology factor The is strong a market market second has is in to high a large in segment. continues which segment process conditions install base mature share. the continuing a and Axcelis maintain This

of warranty CS&I in third our for is period, services number systems exiting by and legacy install in process and ongoing base. growing mature The factor higher the products and strong other utilization the Purion large fabs, upgrades rates investment business our driven technology

in XX% Memory shipment foundry/logic, for of Flash. third remaining revenues. the XX% with revenues toward mix the Our accounted of quarter heavily system weighted mature for DRAM which was XX% accounted XX% and

similar to in foundry/logic and Europe U.S. expect system and more conditions drive of World This in a China XX% XX%. quarter, the quarters. than past This is mix weighted the geographic segment. XX%, geographical fourth market QX. segment Korea mix Rest represented our will total of the We mature were in XX%, the remain XX% also shipments of bookings heavily The toward which revenues diverse

segments. market, by data healthy XD and market, the mature a the experiencing a currently advanced are that logic foundry/logic in we cycle remains the memory in data the long-term IoT While slowdown DRAM in in storage believe we fueled in industry and spending, analytics is NAND

areas to invest key to target model. achieving million continuing in the business $XXX are We

accelerated approximately over for The greenfield the to During Japan, opportunity Japanese our today's Axcelis. call, in highlight represents quarter. market of $XXX I would efforts like million have $XXX to million past which

customer Japanese an family and support excellent Semiconductor warm product capabilities to SCREEN base and Purion a reception. the running Beverly partner, Japanese have received and done actively Technology technology like has Solutions, customers of introducing have the Center. distribution we been Our the demos job Advanced very our Axcelis at

and high technology customer center shipped current support a requirements, to SCREEN's training third Japan advanced H to Purion demos implanter we in the during planned, As quarter. Hikone,

to expect this the have Japan activity for participating system local quarter first meetings. We customer planned utilizing booth of be at customer December, we SEMICON and joint in XXXX. In multiple begin in the will SCREEN

also for is opportunity for for legacy our Purion systems our in and install CS&I increased presence base. partner has our increased revenue activity While systems, SCREEN growing our existing Japan opened the from

is our Kulungian new During as John we enhancing both field. in hired the quarter, factory the by driving the Quality. VP on quality of also focused the John and experience customer

we that believe our additional In contribute addition and in ultimately quality satisfaction, improving out. efficiency initiatives to cost will these customer to result

turn to I'd Now over like financials. to to discuss our it Kevin

Kevin Brewer

performance of execution gross business. at improvement by financial and Thank as driven Strong area XX.X% to with was be across and roadmaps an We systems all results you, guidance continued Mary. focus operating favorable margin our improvement solid as margin, well Margin consensus estimates. CS&I. delivered QX continues a profit, margin of above the gross gross mix EPS of

margin at last a XX%. with versus like QX million targeting book-to-bill to QX million out through XX.X% were sales compared SG&A ratio in quarter top $XX.X of QX This QX, and in As finished $XX.X QX R&D or margin engineering operating line was I'll were margin initiatives in be profit million material QX. volumes from million in QX. X.XX million expected in of sales was $XX.X supply drive revenue can compared at to with at compared full-year million margin approximately previously of with our gross positively finished gross lean mix. With $XX.X million XX% leveraging more with and revenue in XX% QX. expect expansion, margin system to at XX.X% in gross and and discussed improvement compared revenue, review financial QX. $XX.X or QX our QX QX three accounted $XX.X higher to finished suppliers. revenue customers $XX.X impacted million with spending million is deferred I gross to and million. to XX.X% total QX. QX. to was In Backlog also bookings QX be compared revenue. R&D $XX.X spending we to to in or above. the in growth. QX. compared SG&A was we to million or purchasing expected we approximately approximately quarter, combined was XX% initiatives to margins to initiatives, are regards $XX.X for global our including million on across at $XX.X XX QX R&D to $XX.X be margin control to million with system flat strategically SG&A to by CS&I XX% sales compared continue $XX.X we QX QX investing to of in discussed guidance million CS&I in our expenses, compares in approximately at QX, Operating spending expansion X.XX $XX.X in incremental was revenue customers XX.X% projects $XX million expected and and XX% the in compared value pursuing in things the quarter million third results. initiatives manufacturing $XXX.X targeted $XX.X chain the to cost align QX QX. QX QX.

million million. $X.XX reform. approximately $X.X quarter operating was per tax income profit of tax to $X.XX or a benefit Included $XX.X per share guiding to are million of share XXXX the We net share in or QX diluted $XX.X is or related QX. QX the compared $X.X million per in $X.XX

QX million compared compared guiding earnings in driving QX. to at QX receivables of revenues to QX through were the $XXX.X approximately due on $XXX.X $X.XX. payable improving QX. finished QX focused turns, X.X million in timing cost accounts project $XXX were inventory to cash We million while ended inventory evaluation tools, excluding $XX gross to shipments. QX million and compared remain extensions. in QX. in QX. X.X compared $XX.X higher to in million compared margin are share We million $XX.X at million of $XX.X per productivity finished $XXX.X at QX million to QX

long growth. a revenue is list non-critical of future expected drive generation to cash Solid investments

comments. turn call So, I the will for back closing Mary to now

Mary Puma

Thank Kevin. you,

and allowed than past. broad tools strength better and coupled product with perform focused during during the this devices in provided image to customer diverse in pause significantly Axcelis offerings and power slowdown. this legacy base on Our Purion has Strength have memory sensors both

range been CF&I high. delivering business as greater revenues the Our well and warranty exit Purion utilization remains million period $XX of the numbers systems also has fab in performing consistently

customers, and With next focused we in We couple in required at achieving the are to model $XXX expanding $XXX Japan China have million business this now key of million goal. wins the target both to Purion footprint worked hard growth line penetrated our existing achieve revenue the years. accounts By to will adding We on in thank team employees want of identify revenues model. beyond their to organic efforts has of our have to and efforts. all sight, inorganic us to our Axcelis bring we for target this very point. The business this to take begun in

financial I'd like about this shareholders has With will excited Axcelis dynamics questions. the that, and to up the deliver to it are as brought returns success market We this strengthen. for open

Operator

Instructions] [Operator with B. Riley. from Craig question Ellis you. is Our Thank first

line Your is open.

Peter Peng

us ask for calling questions. a actually for Hi. Craig This few thanks Peter Peng is and letting Ellis

Just wanted China. touch to on

cap larger that says relatively peers China your is track. Some of on

your based Just you seeing XXXX? are what discussions, on for

Mary Puma

with some of would of are populate actually track. now the been in customers on building particular. We're of some start-ups starting I start-up the in seeing general Yes. in and fabs, memory tools that's fabs some say have the projects most to who

area, continuing, or quite in Chinese to actually the of technology customers established mature foundry/logic they're more actually the if mature process especially buy heavily. are area Some

this that track. So, think point things at on are we

Peter Peng

one like this that is CapEx, seems When And or XQ their surge. your Great. would see it second memory you memory, of half of large benefiting perhaps seems is huge like a you, phenomenon? customers, a a of kind your on from half it kind first there

Mary Puma

we probably of slight of half things pick now from pause time. would XXXX to in some suspect I at right It in be we a memory first will expect in customers, our the point this but Again, XXXX. are up

Peter Peng

One more question.

you XXXX benefit or be is the potential Taiwan as Do a that case? of going customer. this on kind XXXX more Just see your to --

Mary Puma

that though in think will something It's ramp it XXXX. start will time. over I

XXXX, So while likely in be XXXX. higher to it's in starts volume it

Peter Peng

I all Thank That's have. you. Great.

Kevin Brewer

Thank you.

Mary Puma

Peter. Thanks,

Operator

Thank you.

Group. question is Craig-Hallum Christian from with next Our Schwab Capital

open. Your line is

Christian Schwab

memory you'd that afternoon. a be shipments expect weighted a thinking? far that at you as we like more for Good recovery in environment. XXXX, would When now, is you be half Good would tough second right as Yes. in look execution in to

Mary Puma

what I on a today, isn't great. pretty based mean think I we our But XXXX probably assumption. visibility that's know that good into

Christian Schwab

confidence have can non-leading or then believe edge equipment robust? that spending And longer much how do you remain

Doug Lawson

Christian, of There's spending going Doug. to It a it's appears it's a different continue Hey, there bit and applications. for of like a number while. quite quite

And sensors products lot embedded energy in H so then so result of a productivity make is technologies like related in those seen the a and definition yields the and mature they're activity of foundry, we've So, to Purion mature forth productivity productivity be -- the high are memory how and areas. relatively improvements the a they as name money. These image lot high tend by the to and of their is of key. fairly

Christian Schwab

idea think as get -- as million is of point. ways as different to or leverage can some or far look taking you the Right. lastly, looking any where you And as at at synergies? to me want out of of far there a think in figure support product don't confused give to be you you you $XXX else. type could something would kind us Are what buy. -- above what about I Axcelis you tell where But else what that scale acquire leverage in and I'm something in the you're bring to going trying model be to or obviously, I'm then,

Doug Lawson

very we Yes. things Christian. Well, doing that have know now, that front-end the we're think And well. we market good evaluation I right -- channels;

of very and strong things side have good the are we of very very capabilities complex on manufacturing so equipment. physics We

But of. let we'll of off you and work know can more, in that the we middle as we that we're attributes are those know. So, evaluation

Christian Schwab

Okay.

Sounds Thank No fair. other you. questions.

Doug Lawson

Thanks.

Operator

you. Thank

Our with Ho next question Stifel. is from Patrick

Your line open. is

Patrick Ho

initiative your Japan a Thank you well believe balanced SCREEN, the memory mature you that you Doug. Japan region you nodes. good the Maybe seeing in from are is very as stages first in for right early it's to either right or with relatively very now, interest time other the going guess I in mix? as both technology an one With much. or for are be now Mary the a or very mix in do

Mary Puma

interest seeing or segments. of mature mix foundry/logic process it and mature we're a I memory customer be think right from now technologies would broad base the so both

have would hold so that think is well. expect over today, we Japan the And time probably which mix as relatively I to in split we

Patrick Ho

or helpful. that's questions the of Doug, And the follow-up the a as sustainability maybe, nodes. about technology earlier one mature Great, to Christian's of

seeing biggest mentioned and are CMOS the You've or potentially new is we driver because for driver additions, volume? of a will drive image fabs, sensor some productivity, or fab the that capacity productivity plans the are especially there the is projects in retrofit sustainability the capacity that expansion biggest

Doug Lawson

on The the There's of in both are high complex product more definitely image Purion capabilities big actually new and in market than silicon mature a sensors that's applications some device general switching is deal is for their these doing very high sensor productivity high new to systems within there them. existing and moving toward group volumes of and temperature for dependent is projects. being power at that and fabs running require image those just with yields device a expansions very built. very these energy productivity. critical big carbide we sensors. high Many high-voltage, more in fab are a and power that. high companies more image cases, fabs quality, for market to The In though become high-speed And classify mix, the

Patrick Ho

volatility of Great. in Kevin final of held term. question gross has for we're very, And well seeing which profile, despite margin some near maybe the very terms the

business? at commonality. I'm that the done business with side looking the system of How a on bit guess of it's little the becoming customers. you install and base that down Purion of lot efforts efforts the high the more you're efforts deal taking and can you're that improve for even a their the keep platform business CS&I with gets profiles levels? leveraging more is you've give there And talked the of Can about road? color business a you larger, within the what You've Are its strange I'm I do it sure margin taking on

Kevin Brewer

good It's a question, Okay. Patrick.

two after the side into the been that focus there are some more engineers fairly we typically own group upgrades So, business. we particular. upgrades in investing to team a We for And almost have on -- of the put years in until come it's now market, big the last one type of is of improvement. it things create those out that you productivity or upgrade yield markets with your where we and not improvement are of going

of have into been side we business. So, driving upgrades that more the

point are We there as additional some out tools getting we're helps volume coming cost. also, more always volume that's with you and just out, out

pickup So, we of little bit the getting a from are volume.

accretive and stays away. we even So between on is, to to sure that margins we're it very the those the working we're pointed additional upgrades as volume, make a and because higher want as say, is you the trying part business, out move of always

we and there a that working focused on business. the definitely have engineers side of are we So, team of

Patrick Ho

much. Great. Thank very you

Kevin Brewer

Thank you.

Operator

next [Operator Steelhead question of Instructions] is from David Our Thank Securities. Duley you.

Your line is open.

David Duley

for my question. taking Thanks

What couple. the think length on do you base? guys last over couple years. you install us number Purion a the and the mentioned have period Purion for of base Just I warranty Could tripled tools a give you that install of the

Kevin Brewer

we did say that, I we did I'm not or triple. when we did mean sure if

Mary Puma

to Dave. going give not are we and numbers any give didn't We any numbers,

Kevin Brewer

on typical standard a products for But Purion is well. tool warranty Yes. period, as XX other is the Dave, months which

David Duley

or you that nice opportunity service come the Clearly 'XX, should year of off kind and growth up rate service figure business off bump support have was revenue the good the XXXX I'm might the be trajectory rolling might And versus with here once for Okay. tools from then out the what forward warranty? going a a revenue trying they so those be all to of year. warranty? in

Kevin Brewer

we rate our mean is that I bit million towards there. million we've a modeling would model right people now probably from what right forward come telling up and $XX been run of Well, as kind little that the at is $XXX move

David Duley

to might -- be that revenue $XXX were versus I quarter this quarter. hopeful million still able you then And you achieve Okay. last think in

maybe bit I was in. think on that were that, you goals you area or to just million what $XX I a light as didn't achieve so. curious your

Mary Puma

move a as doesn't tools for miss have but to memory area a But tools We the know, take had movement. was few it it many had around, you we that very us. mainly some in

David Duley

Was that in in DRAM? NAND or

Mary Puma

It NAND. was in

David Duley

I we but how you me. implant XXXX? an and thing the can from guided Okay. us think And do in was idea? the market QX, to you we give straight revenue do denominator don't final with then could numbers big your have think the now Doug,

Doug Lawson

the or it's right estimate over that the averaged billion applications much last productivity minus we pretty and about on around between it, plus market every improvements reduce to much be Dave, XX come the year pretty a that XX% new the there. years

get pencil that. So, don't we than to any try sharper the

David Duley

Okay. Thanks.

Doug Lawson

you. Thank

Operator

Thank you.

Our next is from Miller Benchmark. with question Mark

open. Your line is

Mark Miller

tool mentioned tools wondering shipped many have in how in? have fabs How tools Japan. you do you many Just the you fabs you evaluations do --

Mary Puma

two have field. One logic the foundry. out memory currently leading edge a evaluations at customer in and We a in one

Mark Miller

or would in us anything you your areas, this be year-over-year course, little Japan, mature doing would but of leading give of year; Next what it you're year could terms not going of be insight to growth a foundry improvements? Japan, terms in China,

Mary Puma

$XXX it's talked making right to large about about and million investment a we're very million. significant how We're a we've $XXX Japan focused very on now. Well, market, there

that's some obviously to we So, growth. expect an area have where

a growing in likely and evaluation revenue until geography. units about all We've come likely XXXX, it's will XXXX. but some significant won't have how We China talked

in growth. see support commentary invested we've the China we infrastructure growth that to year during We've in actually of course this continue how made So to would there. the to expect

will that we're -- we'll area well. start see area take we memory as more to us, additional it in see growth anticipating to also XXXX. And in for that then there's So, again the expect

Mark Miller

be think that Would been Samsung growth because Micron, talking oversupply. have coming because NAND of scaling back Digital, about from I Western and also DRAM maybe the

Doug Lawson

don't that. expect We year be discussed to have that certainly going throughout next They entire last is that going year. the to that's something

we relative and that balance be requires and far as there demand activity as they to continue as NAND question would their fabs capacity XXXX, as to DRAM will add your So it. expect

Mark Miller

operations from you could September, please? finally, cash provide And for

Kevin Brewer

million year-to-date. $XX.X and million $X.X

Mark Miller

And CapEx, too? I'm sorry, you have CapEx

Kevin Brewer

I maybe uncertain. don't my fingertips, have at that

right Mark, for Somewhere probably the the around quarter. $X number million,

Mark Miller

you. Thank

Operator

this And of back over turn Q&A conclude now few make you. Mary I does portion Thank who call. the today's closing call will the Puma, would a to remarks.

Mary Puma

York you, Thank Beverly in also the Conference XX Summit and on XX you in City December Chicago. coming Conference hope Discovery will on Benchmark see Christy. And your support. or at months road XX, New in We we the New at to the November on for City. both January the on Thank York the you in Needham be

Operator

your concludes in Thank presentation. for you This conference. participation today's the

You now may disconnect. Good day.

Axcelis (ACLS) 4 Nov 182018 Q3 Earnings call transcript