ACLS - Earnings call transcript Q4 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 Fourth Quarter and Full-Year of 2018. My name is Brian, 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] As a reminder, this conference call maybe recorded for replay purposes. to call, presentation Chief Mary of Technologies. like host to Executive now Axcelis today's for Puma, would turn over the your Officer I President and Please ma'am. proceed,

Mary Puma

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

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

of of critical entire result the half the tools the a execution earnings One a a significant despite do work came at may million very second over couple year. a Our slowdown We current successful expectations. this full-year XXXX short, to assume for of spending initiatives. we years forward-looking any from revenue revenues obligation last year objective Axcelis. our of of only memory results differ update year-end was set for million, few materially and hard our XXXX the these actual call, and not we a statements. $XXX.X We successful year-ago of in few $XXX as the close accomplished with

to expanded a we large of group and installed customers. base diverse Purion First, the

in became partners for mature product customers. process devices, with segments segments and we mature Second, area And image as power key foundry/logic. these market Purion extensions the technology specifically and sensors, such on finally, key we focused developed these

result, a when kept memory growing. Axcelis slowed, As

X%, XX%, improved All to $XXX experiencing XX%, gross increased slowdown, of the metrics nearly our over reflected approximately by financial in XX%, by nearly market grew this memory. increased while our mature nearly a in the revenue X%, increased CS&I by to revenue mix margin exceeded with of million. increased systems deep fourth was in cash and foundry/logic revenue by which a XX% market XXXX, XX% memory XX% revenue and is share by segment split All quarter

highlighting tale the For the the XX% halves. was full-year two of foundry/logic the mix memory, XX% and mature

$X.XX. systems share XX%, Japan the Taiwan with XX%, XXXX earnings were of me earnings let summarize share X%. of were mix QX financial for a world Now for and above Korea the fourth consensus Results the fourth quarter XXXX were of and our shipments of XX%, guidance the revenues provide XX%, quarter per guidance. $X.XX. estimates. per rest million U.S. Europe the our were quarter $XXX.X million the $XXX.X with few quarter for geographic The of XX%, results Revenues China and and

quarter, first $XX of we the for are guidance $XX revenues and million to Turning million. forecasting between

approximately of margins $X XX% $X.XX $X.XX. of gross income of expect and million We $X EPS million to to operating

and depend without on what slowdown New our Based know up. enter full-year memory spending providing as Year, XXXX when guidance. will the continuing we memory With back the results on picks we largely today

remains in ion margins to flat Gross implantation but be revenues to could to Highly objective. profitable improve market primary X% share fluctuate quarter-to-quarter. down will leadership XXXX year-over-year, our XX%. will Our continue

new will extensions. be we maintain R&D and will in standing on and Purion downturn. SG&A So levels this R&D through products focused

advanced on market as silicon. our image the continue sensor product In product to market and develop and as we will XXXX, been successful approach focused Purion the carbide for silicon power development very device in to market with products have extensions well We segment image on sales. sensor

product the investing targeting to requirements Purion be development customers. and SG&A on Additionally, be the the of in will market expansion support H advanced of and segment. productivity leading-edge extension, investment market, mature penetration needs we the logic the will technology specifically continued of foundry/logic process of Chinese focused market of technology infrastructure Japanese the advanced

growing upturn. and drive cycle market. markets approximately and XXXX extensions the $XXX The in have continues IoT in the the include; logic advanced AI of growth in three foundry/logic market, within storage by million driven with to data data-centric these Each penetrating XD segment. analytics advanced and mature data of number fundamentals the to the memory, markets billion world new the NAND introducing the Purion, implant next number not be three, objectives our in segment in changed. slowdown [TAM]; growth existing and footprint market specifically Despite product Our current Purion one, ion this and two, DRAM the number Japanese connected our base; customer the represents of $X Purion foundry/logic

we As expect all cycle to this XG proliferates, another across boost segments.

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

Kevin Brewer

hitting meaningful from Thank area highest $XXX.X XXXX was estimates but years. $XX.X the consensus things and XXXX, the at margin finished solid to In improvement year-end in out satisfaction, support to $XX supply authorized investments we and to share Full-year impacting Based program. are business our we beyond. Cash executed across financial initiatives XXXX and we announced in expenses, is growth could to focus million. through targeted this aligning optimization, of on cost guidance you, spending value and Axcelis gross realize incremental generated customer cash initiatives continues business model opportunities we million balance Mary. and and operations with project. growth million as operating Board. one-year strategic in delivered initiatives. XXXX are be levels lean, and revenue that an financial We performance on we Board in also repurchase expect our which the our $XXX to control. cash that size January CS&I product on a expansion, drove strong, With across strong all fourth Company’s expected additional Company improvement Axcelis our believe the quarter solid in drive Margin we engineering chain results strategic regards million margin results and position, XX program which XX had

approximately X% CS&I with gross XXXX in up million deferred Systems revenue, XXXX. to X.XX SG&A R&D revenue in were million in combined year $XXX.X versus was to initiatives XXXX. to each year $XX.X certain and our XX%. $XXX.X in spending and revenue five was margin $XXX.X $XXX.X draw support CS&I $XX QX, QX our at to in to finished compared years. results. Now to XX% at QX. approximately million the million level million up guidance, expenses Full-year to customers top which for $XX.X that finished the QX. QX. XX.X% $XX accounted XX% in in $XXX.X was $XXX.X quarter. to XX.X% SG&A and to million. to improvement X.XX for In in ratio, in revenue be at million expect at Full-year $XX.X QX line occur to $XX.X margins, compared we compared $XXX.X with million QX spending million million quarter up compared $XX.X our at finished approximately turning or X% was $XX.X of were million growth to extensions the QX R&D compared bookings customers XX.X% QX. in QX, SG&A to million and million Backlog to favorably fourth was and our XX.X% approximately in of or total book-to-bill revenue in XXXX, including was XX.X% compared million QX. $XX.X above. QX impact in initiatives, million XXXX. QX million Gross QX. revenue compared five financial gross was compared million margin compared margin compared sales approximately $XX QX XX million $XX.X the in quarter compared product $XX.X revenue million system million $XX.X QX highest system R&D with sales mix first QX, finished XX.X% million in and XX% in at in or QX. to $XX.X QX, sales compared a full-year

margin gross margin full-year be compared XX% the QX profit million $XX.X to approximately QX. XX%, compared to operating profit was up XXXX gross XX% XXXX. Operating range. of in in and $XX.X million to XXXX in million XX% Full-year Regarding in expect was million, $XX.X $XX QX

million of QX $XXX the from we growth million. in critical inventory a evaluation regarding we XXXX CS&I. by model. from to $XXX.X or net $X.XX. Regarding spending performance cost net million to are of sales initiatives compared share compared million in $XX at million million. in income was was and was approximately achieving $X $X XXXX, to We to QX. business million drive $XX.X valuation per income receivables and In Full-year $XX.X million cash or QX million $XXX $X.X initiatives operations. fairly QX. XXXX. $XXX.X compared will $XXX $XX.X tools to was all cash $X.XX to XXXX, was $X.XX up that QX. to driven execute and cash excluding monitor margin at in million plan per compared $XX incremental $XX.X QX. in were QX. X.X million were expansion million business million $XXX in Full-year $XXX.X to million closely turns, financial QX $X.X at million In million that our million Plan earnings payable share end profit XXXX, quarter, QX which income XXXX of realized $XX at system to to invest X.X customer allowance, to in net compared $XXX.X QX of or in compared million growth. QX finished to compared $X.XX QX cash a by satisfaction, to accounts finished impacted QX. generated operating a in of to maintain share operations QX per $XX.X inventory were million million ended strong control reversal compared Year

gross to which to margin to will XX% of be XX% than can and a of Company model, updated turn XX%, XX% cash Mary profit free call closing found the Our now XX% operating comments. back greater for now website. flow reflects I on

Mary Puma

you, Thank Kevin.

achieve They through from Axcelis. Axcelis they choosing and technology for competitive their Axcelis product they customers more market as development needs gain our ion and those support will will Our the I'd employees, In for it and am on innovation the needs, customer tailored that, platform a we to implant performance have show, ion that questions. of extensions company. I form technology Purion Axcelis like financial share market. approved up memory benefit in confident focus solutions of for the than XXXX, to more to are dedication Brian? needs continued choose in number the that a our in with the Purion much are With leadership open grow a to continue choice implantation. the implant and for

Operator

Ellis first you. FBR. Thank Our come Instructions] line question from of [Operator B. Riley the of will Craig

now open. is line Your

Craig Ellis

at taking congratulations that basis X% the for objectives point the just accomplishments on revenues in XXXX into with wanted as in could plays the in you XXXX. with that your to on and with Axcelis from each for to look be Thanks realize maybe and tie start three the potential that follow-up the Yes. XXXXs XX% longer-term down potential Can question I associated Mary, all some way into help we milestones on the a range. revenues to financial the the on just and us of XXXX? a objectives of

Mary Puma

Okay. we Well, We me down that be X% to flat clarify. first XX%. said to could let

call the experiencing, slowdown we're directional impact I'll to revenues this cycle remains memory, our on is where which driven really on mainly are have So will right driving, our cycle. but with And said now it could the the do has potentially is by intact, in what's we information what year. we go, really long-term an where revenues that

the in XD spending year, the maybe to picking peers to NAND. DRAM up the starting expect in and with half likely we then spreading memory sometime of and begin second others back So like industry, our

we the of terms the in that we have. initiatives year, the or have change we on have of right now So really that what's objectives that for milestones doesn't going any the

growing within So base. footprint our we talked talked three our about objectives Purion growth existing our – to we customer within –

new a going timing what's extensions product market doesn't that, our the on then we the on win memory a opportunity to now advanced continue and And just good continue potentially of planned. as and on market really we're developing expand in to penetrating all impact any initiatives going with business. where focus like to some of So to continue Japan going segment We're foundry/logic it's for those specific finally, business have market. right again, issue will feel And there's the customers. the

past, So image again, and and we've CMOS talked about advanced power in logic the memory. sensors devices,

So things other customers memory potentially on those again, of based in an none of than impact some what we're in those doing will timing on, XXXX. have

Douglas Lawson

Craig. is This Hey, Doug.

Let on products. a the me bit add more just color little

the of focusing on for compared advanced markets. we're this in current is Purion product One the H. to high different bringing things year There’s a to very that high really the markets current need market extensions the mature with

especially same so, to for markets, and been with tailor mature, companies which worked power those we device companies we've Purion looking at point doing for high And image we're the And the sensor know, very markets. now as current us. as productivity you with family product strong has looked a closely thing to the at

Craig Ellis

helpful. is and cost very Kevin, been for really question next initiatives gross is that My XX down company that the gross margin. clear outlook, the so the in on margins you've That's there are executing. months strong or quarter

fruits not any in gross the things much you'd how the like other look the near-term, landscape? customization only what of we're initiatives model competitive down versus change of we at seeing is as but margins, increasing, the that product versus with the cost and mix So those benefits be getting target in really

Kevin Brewer

Yes.

we some the put cost to engineering, of well. So projects, along we've product work brings as which optimization, supply The pricing continue extensions as out that lot the you chain premium I that. been highlight, a value the say of in driving

slide suppliers a the as have to point gross to these parts several more depending still margins. Purion as well, we a to last we're more combination extensions if cost drive And product going going target in our mix look now to cost out, into system $XXX on in the thing model this just standard quarter-to-quarter opportunities presentation, the updated the in it's out XX% is over further mentioned the So to continuing that, of our look forward, which margins large up we’ve model, Doug the we've time. of to service We've relative that the talked at products. extensions, number we're cost that had mix XX% mix investing the of been three or XX%. had at the I for last to products. It's about of kind at at we low as is right of we've out XX% matured for shows within of product the at Purion more move Mary did and help million. And think the But years, is a Purion products the of or us that the there at products. able the investor I up and the

to energy all large news the the more still. is us H, good good on that's closely opportunity high is the margins, $XXX aligns get because million we as which see with for that a That's standard You'll model.

accelerating So are the we're growing in and margins that area. that area also

Craig Ellis

That's be started I you size, or us buyback. to on help just that last helpful. the share two, a readable that more do utilizing Company, understand buyback is One, back for material matrix have before approach used framework And help that you something this use. material basis? would earlier for the And queue. basis per you could with Just anything? a in how year, get one me us in announcement can development The

Kevin Brewer

Yes, so program. a not using we're XXbX-X

the both the we're opportunistic to make is purchase that's utilizing when manner shares. a plan we these and investment want in cash Company to I good a be the that sure for company our So shareholders.

Craig Ellis

much. very Thanks

Operator

Thank line you. Ho And our Stifel. Patrick from next with question will come

is line Your now open.

Patrick Ho

quarter. and congratulations Well, first node, and Mary, the strength of thank mature in you very off much the December technology in saw you also. opportunities maybe the terms

in about Where terms remarks – in of saw other any types CMOS power and you that You and straight the whether in talked where mix devices prepared image QX? your of devices there changes sensors semiconductors.

Mary Puma

respond Doug have I'll that to So, Okay,

Douglas Lawson

Hey, Patrick.

product a market really is power we've to carbide. So customers lines side approach customers. those to two silicon device. What the year started we've there lot we activity with of found we of be One segment that on was silicon is done in focus very strong. thing Last the oftentimes and continue very, as their with get this close

that more And and understand that in detail back go so and on create able their focus we're area. roadmaps extensions in to can then

So we're product there. really deal, current bottleneck mature had an done and has are But the typically the evaluation one them. big market that productivity Purion we in a and focus and H logic, now in on, right so very where for see in focused much places of advanced requirements is going a well to we've the there. foundries is, And on mix some that opportunities gotten needs high the we've there. to then closer process that

at for And we're some Purion so notes. tailor of to looking how really advanced even more now those H more

So that's there. the activity

Patrick Ho

these the I helpful. guess I extensions Is to question, you as you seeing variable improvements driving drive sales other – drives on Are that’s are the that only a the factors, guess extinctions? maybe past that described your for create in productivity still about the that these you follow-up in extensions talked and a needs more And the variable of call? Great, extensions. how key

Douglas Lawson

market segment. by varies It

in energy. require and for deep and red higher sensors, a image infrared implants, So contamination they example, metals much

as now we there. silicon. area device affects different thermal effects, power substrates silicon requirements the a our it's market, yield that So move It's that's device, control. – performance. and There's device that's In carbide an a into

device it back much gets very to issues. and yield it's So Oftentimes performance just not productivity.

Patrick Ho

and a still that's From is for recovery industry the are timing me the a a range? in uncertain from you about helping chain of whole. managing that management Obviously, uncertainty to question given swing factor very keep the final optimization to that XX% call. How Kevin. for your the levels in inventory on memory XX% a gross that margins you and I big talked and your Great, as and supply guess

Kevin Brewer

Yes.

do that lead of start very a inventory slowdown time. we to what have when typically short that's So we things lot

longer it's through. lead to inventory the really we manage So have time

got a then right it's of team though going we're on sales when the to lead on But have hearing want have on. can and drive planning the we that that. will our So long don't that a a to to on the to to make be when you second to turn ready now, off. and is the think we'd back pull suppliers need stuff, sure of because hold we we again, easier half easily bill ramp the get lot material where we materials also it what don't from certainly we got continue based we But miss to we've back And close we're a setup drive so that and turn you things eye short up. continue keeping it lead,

So I said, we're, Patrick. like we're closely that monitoring

Patrick Ho

Great. Thank very you much.

Kevin Brewer

Thanks. Okay.

Mary Puma

Thank you, Patrick.

Operator

And Thank question line the you. of from Steelhead David with Securities. come our will next Duley

open. Your line is now

David Duley

jump questions. just the in couple I There had of a Yes. revenue – deferred a quarter. in clarification big was

from think Could was? million what I $XX you to explain $XX million. that

Kevin Brewer

of of A shipments. the timing it's on the lot

Mary Puma

went end that this at in the December, lot a year. right was There Yes. up

Kevin Brewer

Right.

David Duley

earnings when that. then levels are recently for think you then current what just the you for operating had I level. the around And you're I'm wondering $XX income if reported forecasting forecasting higher reasons the key Okay. And million,

it's you're could Maybe that and just I about incremental you the talk making? investment expenses operating think operating an expenses.

Kevin Brewer

going for we and mean in the the talked continue to that is we the about because are cycle, we're all lined expenses things think get to model. I to XXX we're to up, Well, invest this to have extensions yes, those us need going call, we I product it invest operating

to on was jeopardize XXX spending, now pull really we're going So if beyond. model we a and right back

higher of you offset So sure certainly some higher But is model what what brought you're but then, are looking not up, than the margins at, probably have saying. spending I'm been that. probably it's there

David Duley

just comparing was it. I Well,

think lower I income to $XX quarter to you you're a and was XXXX when third and operating now guiding number. of it did $XX.X the million million

Kevin Brewer

see also a in is then I we and in heavier, you And quarters. Yes. there want one-time other get little bit if expenses but QX is we that mean that don't

doesn't that QX numbers. the So help

David Duley

is investment. the want somewhere got Dave really we're to that is make cycle sets. key back This The we've we of sure in this Okay. it as – the and around product going bottom turns to

If heavily the success key you need that updated on by look product up see to introductions. down and There the are cycles in invested driving new the cycle. can we've revenue you pretty to in that's year, chart the

Mary Puma

the just support growth. in not it's infrastructure And R&D the also it's to

with how SCREEN available So demo and we've for about to growth there been our We've coming talking going that's Japan. that's Purion becoming H in our to and relationship be QX. shipped drive going in online, training

expenses because their make right that we're just do. investment like continue going the to to So it's thing to where the

Kevin Brewer

…as evals. well as additional

Mary Puma

Yes.

in China got support to leading the some evals infrastructure edge additional Additionally an and then foundry/logic. we've also

are to for things those right and us all XXX So prepare model the to beyond. do the

David Duley

your the Okay. from understand embedded end two what's foundry/logic year the either Help the expectations or Japan markets, us new for market? high in

Mary Puma

lot. are difficult are very in Those talked this markets a we've point to that this two about time, At penetrate.

an and We have evaluation well we are going advanced a that's an – customer foundry hard well. and working at very to unit

to likely whether we're see segments next outright XXXX. their from to initial of going not But actual or in And to sales that Japan orders continue It's any so that. from And evaluation additional would into I this Again, to takes of just coming those time. hope get start over some year. would that again, time place units, follow-on our year. significant expand will Japan, either we just volume it in

David Duley

expect what during then, the be Kevin tax Okay. you rate XXXX? And to do

Kevin Brewer

I whole better this us XX%. been tax little bit XX%, doing just would but model year always credits the We things, it’ll and a because R&D that fund We've tax Dave. to use obviously and than allow there's

David Duley

me. That’s you. it for Okay. Thank

Douglas Lawson

Thanks Dave.

Mary Puma

you. Thank

Operator

next Hallum question Christian our from of And Group. will with come the you. Capital Schwab line Thank

line now Your open. is

Christian Schwab

in jumped Hey. Good bit but morning, guys. a late. little I apologize I on advance,

X% So on flat to to XXXX, be correct? down XX%, you expect to your revenue year-over-year

Mary Puma

Yes.

Christian Schwab

Fabulous. in – what of were aggregate do to for reasons this teens? being that the dramatic will down one, wafer mid-to-high you equipment gave front-end outperformance Can your three what two you spending year

Mary Puma

think growth going to to you continue do what drive year? this our is you're that What asking? Is

Christian Schwab

Yes. Well, most looking is CapEx you I mid-to-high two spending guess why my general, do in you as the is are be by question teens could why? and as well which expected year-over-year to outperforming down reasons I'm three for flat? or So

Mary Puma

Okay.

it have we've dynamics. talking company. does with how we just been we're about do more And first, So a talked to memory – market about than

strong technology mature a revenue revenues the customer that We've percentage and going penetration. higher good base a have We and much that's – percentage to segment base Purion our represent had a likely in of higher in have area XXXX market much and very process strong. remains also

presence Purion we customer just to about So how to we've focus on increasing we're going our diverse continue And base. footprint. talked on a got

we about applications, new again, some talked devices talked going and and that logic. image we're specialty some There's sensors. and we've So there’s memory after applications about Japan power and advanced

extensions, And market actual be then year. continue about this new is that. a minutes ago, we're invest so CapEx going of this despite to the to share continuing we're product we're talked and all things to the Doug that the the to final fact the And thing, down those in working market, gain spending likely few

some are get to of and out and enhance of start to going that to upgrades ability and at products things to to we the XXXX these those new year. going of those And in expect the end new our come traction applications are start meet to some

in really end again, is downturn. I And year, to this to verses like expect of it's the we our to minus things flat and of the by – earlier, revenues the backup revenues our year XX% driven X% XXXX second potentially memory peers half but in pick where do will the being up that drive sometime So XXXX. this said really

Christian Schwab

Okay.

put not mouth words So restate so went there. let to through in you what me your

remains that say robust versus you in So would spending mature XXXX XXXX. node

gain and it second be If You expect fair? that it versus closer be will to down XXXX comes half share throughout will year in of would it flat. closer back the to continue XXXX, to memory doesn’t, market if XX. to Is the

Mary Puma

up are I timing year giving know. the we of in the saying year. end will memory where terms memory the recovery We're for don't of revenues. is and strength what the and the our – Again, not we'll the of But XXXX exactly recovery for guidance timing impact

Christian Schwab

Okay, great. other Thanks. questions. No

Operator

Thank next Benchmark with from question Miller of will line our Mark the come you. And Company.

now open. Your line is

Mark Miller

question. Thank you for the

of So pursuing that gives recent half with bouncing line that in further be the year? confidence memory expected what down the up this you second year, smartphone production to back be will

Douglas Lawson

isn't just smartphone, driven by the universe. But timing Well, spending so everybody being back I think for debate by the center forth are analytics the very exact of when bounces memory and the drivers. memory Mark, and is data up still big in

and feel then DRAM we will NAND as the wave come sooner XD wave, little at in. In kicked that everyone than supply middle come typical line. the memory back cycle. probably XD fairly kick memory for a which the like feel most and We kick back implant back that least we're demand supply again in line, back or NAND into as in data-centric the a is more in stronger less So and in a and demand of will

it So happen sooner the we're exact. later. prefer guess to than to not would trying timing, certainly We exact

Mark Miller

Okay.

significant terms current be basically in the a for or mature topline. the the for to the of the rebound memory year What's it going be and biggest like going to process, of driver in going looks [indiscernible] your increase the revenues? of guidance your of to revenues. driving be half second more the year the gains? share What's from Delta, quarter Is Just It of very the big? the

Kevin Brewer

as to the look year the be a large we base spread, going So markets driver, there. customer is we mature at diverse the our got continued and

lot extension. a on we our by relative footprint, to increasing product focusing of needs, the which application doing our in So driving that's key are R&D investment, and

when So comes that's, than back, higher. one. comes impact, If of the that's later big before, know as comes probably if market. back we'll than said we’ll we a be a that – it lower. again, that We that's And back piece sooner will number memory you know, be it

Mark Miller

logic one us advanced a where currently? of more the – mentioned are give on I evals. is going update Could evals little believe us the You you

Mary Puma

they In where are? terms of

Mark Miller

Right.

Mary Puma

Okay.

So image we logic, and One in memory is evals sensors. have now. in is three in is advanced one right one

Mark Miller

now press expecting Okay. you And stronger domestic manufacturers, pick that that's right or market? finally, memory overall going to is the similar that's the now, to were from is somewhat Chinese, the than but up market

Mary Puma

Well, market both is on who memory impacting those are you serving multiple China there delays is of XX% China I construction in projects customers of China clearly be based continues have comprised segments and China to look multiple conditions and delays, fab overall, some at on revenues. and types market. to new mean if the obviously also the in But of China, been certainly memory XX% customers slowdown Axcelis’

for that with fab be global our versus the remind that comes domestic Although I Chinese China in the business the significant of semiconductor to constructions customers. customers that companies just tends a and to domestic and want people slowdowns portion from the

Kevin Brewer

me Mark, that. add And let to just

XX%. thing spread, mix the other XX% geographic which the still was China if XX%, around above China, our for had think Japan, to spread XX% accounted particular our U.S. around pretty And look I was is a for XX% – then but and a you we around the that's Korea, first shipments notable interesting. was the for quarter, at this Europe. It for

which grouping diverse a And so market. the is it's Korean strong a towards we when see you see heavier in more much very then would weighting memory typically much

Mark Miller

Thank you.

Mary Puma

Thanks.

Operator

Needham come Thank Our next you. question will & [Operator with Quinn Bolton from Instructions] Company.

now Your open. line is

Quinn Bolton

more Hi, increase mature be kind in business Mary the margin on the the and strong mix actually WFE? to memory, December Kevin, you've a lot want the or you curious, decline about just congratulations it the – overall gross mature XXXX. I'm talked just logic/foundry logic/foundry given year-on-year in for do just to expect shifting in of quarter. to I likely flat, is did

Mary Puma

Doug. Go ahead,

Douglas Lawson

Yes.

weighted say when much more memory heavily of be weighted mature. much interesting this split to back. even over relatively weighted to evenly, year back, market kind is weighted first year, year half last mean much It's so will in depends it split. mature. a fairly on coming next It's this for mix. it's at will comes a pretty the hard the mature? three was Really the the as memory memory it's when is second the year-over-year it's in towards point, years think whereas half, year, towards year the be I XXXX, towards This come more I out close towards

In terms we break revenue specifically. exact don't of out that year-over-year,

the strong We base like sensor, and customer focusing needs, grow us diverse continues have power very many of their a with image there that market. in on to when device

share. So productivity ground think fertile We to needs that's a grow mature foundry.

Quinn Bolton

sound sensor like Okay, weakness image I it business. kind It handset sort it, doesn't down, of great. – premium impact doesn't seen end the that of lot related a the the market. And guess sensor ask of a sound you've smartphone slow but image to in of question. CMOS the I'll like any Obviously could markets

Kevin Brewer

a perspective lot which image the forth. areas implant our the growth an the and is deep infrared on, less from reds, needs phone there of And so thing is interesting mobile and focus sensor strong market. is customers, are of in driven one the Well, by future

higher energies. And require those so

our well high like higher extremely price VXC and done that market much product have the sell than a for tool. in those standard energy extensions So

Quinn Bolton

for in gross would margin I year, said the Kevin, range, And to XX%. XX% to Got lastly, be it. expect but for be then if you the correctly margins QX heard XX%

You've It looks your through cost favor the come years. as programs. you certainly in be the working volume, improvement would about sequentially like a lot talked

to the to offset have to what's trend it of down sort XX.X% margin gross XX% the year say in the first quarter. So for from

Kevin Brewer

Yes.

say So that we're are year basically there. experienced is we point then some the flatness mix in flat right impact year, this will overall A of have headwinds so the to And lot the is now. XX.X% we the this I from – last tariffs year-over-year. we're it

lot to drawback accepted but still but expect a of duty that recover We into have that point program, happen. not that to that expect some a we through program been

margins. have the to that we So number be to of some other is have evals thing the the is drag year in on and going with this recognized we

got the I So is. think fact us of out

Quinn Bolton

Okay. Thank you.

Operator

Richard Thank the you. Northland. of question come line And with from our Gus will next

now is line open. Your

Gus Richard

do into the quarter, Yes. the backlog Thanks going range? for taking coverage much What's question. Typically a have? how you

Kevin Brewer

be backlog Well, point a into as I'll this quarter. is right now

I importantly more think we're I don't number. So over the a last think $XXX backlog year, is but

and shipping. important, we the give depending order customers that many us same a the of sounds and times a in order its Although booked an we'll customers, on within have quarter few – shipped get days some purchase will

have which your number, going on backlog really current going the up to So purchase the out don't not ahead, doing. months customers, is what of it's but several a I order be indicative say backlog? I'm there So you'll not like but yes, healthy whereas the quarter ends in to

Gus Richard

range XXX just XX is the I typically was Is curious to was. it what just Right. it what – ranges? the two-thirds

Kevin Brewer

don't I I it's about mean I don't have to XXX. I that. last really go have back. I've year, you told think

I XXX. year to to that. take you XX So back can last give

Gus Richard

then imaging, lot it? markets, demand? And of power a Is of where excluding it U.S., What's that out the in that’s Europe, China? Is and of that the is foundries. got Okay. you've Geo location mature mature

Kevin Brewer

It's planet wide.

bottlenecks it's there's by that product driven So Asia, big everywhere. current there's mix high the it's – that IBMs IBMs driven Europe large a the steps fabs. are it's become the such driver by a foundries it's for implant, bunch fabs, – is that into in these driven just of in just flowing It's

powered optimized – productivity. their that's, sensor be so of performances. needs and And more that's that then in improve device There's implant one and like specialized yields markets to very can specific terms in And image probably number device. driver the the

Gus Richard

it. mentioned the the vision Got sensors demand? deep-red. that infrared, last that was Okay. you for for Is customers building And my in autonomous me, you. your computer one sensors and that incremental vehicles? are Is Thank then image CMOS and demand more the

Kevin Brewer

selling applications. what us industrial reds but other their too, are tell exactly – specifically they're products don't aerospace, They in and defense general, in automotive, infrared the

a So vision applications. type lot of

– beyond enhancing better up beyond So the mobile it's reds the phone, end the mobile you by with sensors. quality image do although phone, well on

board, So the across I think Gus. it cuts

Gus Richard

Okay.

Kevin Brewer

backlog quarters? Going six back to for your three, think number I sorry.

from So XX. as as XX high it's anywhere

So XX, XX over the six quarters. last

Gus Richard

helpful. very That's you. Thank

Operator

concludes This the now question-and-answer will to will today. remarks. turn call Puma, portion you. back who make Thank over Mary I the a closing few

Mary Puma

Thank you, Brian.

always, City. looking the investor exciting includes see So continued York as March coming forward you support to Technology you several an thank very have one Conference we the year and of months Axcelis you this Eighth in planned. SFG and to much. we Thank in for for your to trips I the on want hope are and And New Annual XX

Operator

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

day. may You now disconnect. Good have

Axcelis (ACLS) 7 Feb 192018 Q4 Earnings call transcript