ACLS - Earnings call transcript Q1 2019 | 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 First Quarter of 2019. My name is Joelle, 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. now for turn President today's of Technologies. would to presentation and I Axcelis host your call, Instructions] like the to over CEO [Operator Mary Puma, Please ma'am. proceed,

Mary Puma

With Lawson, Executive President Executive Joelle. 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 and risks profits service for

XX% XX%, better shipments, systems of of only share, mature spending. our Revenue despite was than do quarter, gross in the difficult may a per Our accounted We to current solid expectations. QX to forecasted assume for bulk strong Memory shipments forward-looking any from earnings $XX.X driven obligation quarter million, foundrylogic Axcelis our margins with results differ update conditions. for was by quarter of materially $X.XX controlled and market tightly going these with actual for not customers. the the statements. continued

the and mix the their broad for customers China, and in memory China. likely XX%; as Taiwan, quarter We highlighting expense in delayed the memory conditions in the our system well slowdown outlook imbalance fab for was Korea, segment our weakness in as of and with to the U.S. the as conservative activity combined softness reduce geographies. world, Lower which, year full of We continuing as first expect across the from resulting anticipate well. and investment utilization similar a XX%; XX%; after-market manage rest shipments in in remainder some mix. technologies segment's geographic market inventories, the mature our Europe, XX%; XX%; financial The impacting of could will our are expected, QX make XXXX These revenue. throughout XXXX market control, challenging more process is industry reflect

revenues of EPS gross market We For conditions. the of XX%, operating by to revenues $X.XX second be range million down we are influence can't of $X million, believe XX% $X.XX. compared in margins forecasting the If to and could XXXX. XXXX of quarter, approximately $XX we continue, current profit approximately market approximately conditions

we focus will can on control. So what we

next Our for profitability objectives prepare and maintain the upturn. are to

to costs our and products through control extensions new market the will aggressively will growth on differentiation continuing silicon. well while We in advanced image carbide the as the focus to These market as competitive customers' create Purion development our products, will efforts device R&D for silicon the image segment-focused on sensor and and sensor downturn, for in manufacturing invest for technology powered market product new recovers. needs fuel supports manage These products. that as

our in fundamentals requirements into will The business the technology few market, world changed. come not connected customers. and proliferation across years foundry/logic this product Additionally, and in be the another needs by all market back of IoT The In extensions storage we near process the and next data profitability the customers we of DRAM logic supply H logic continues of to XG investing mature the will be future patient and leading-edge datacenter and over and advanced XD the cycle inventories mature market, the for demand targeting productivity segments. down and boost Purion and memory in term, specifically alignment. analytics data the growth, create while AI work technology driven manage our will in the segments. to NAND cycle advanced be have

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

Kevin Brewer

Thank you, pleased through for on margin the We're with company's share per anticipate Mary. gross sacrificing profitability I'm QX our extended at of the revenues beginning performance could recovery conditions. to XXX% given XX% be the focused downturn XXXX. Currently, costs our managing and assuming be growth. bottom the and in QX QX. without very I'm managing earnings future cycle, market down below QX in this we

million we expenses push-out projects. XXXX have a variable headcount, in result, cut through operating compensation planned of infrastructure-related $XX As reductions some by approximately and

revenue expected our business on we model. strong gross product QX. in margin compared financial delayed this long-term at reduced million system improvement a to critical as development not revenue QX. in finished to work we were million million also efforts QX to to we CS&I turn key exit to quarter required While $XX.X compared $XX.X We're expenditures, trajectory QX QX growth million finished first have continuing $XXX.X downturn. $XX.X to $XX.X targets at QX. in the million a I'll compared sales achieve in results. resuming margin $XX.X to million initiatives

and pressure in or to approximately quarterly system three flat bookings XX to million top finished customers at deferred QX million sales, this million XX% a QX. for revenue spare combined operating million $X.X $XX.X a with SG&A cost was mentioned. of slight $XX.X of with by stay $XX.X expect control in parts above. or lower a regarding revenue, CS&I with compared QX. to upgrades, QX the QX ratio on X.XX QX. $XX.X million In tool QX initiatives QX, sales result as in which actions or XXXX $XX XX% compared quarter our was XX% We for XXXX. expenses. compared $XX.X Backlog than including million in we guidance be be modeling flat customers to of a planned compared R&D progress QX of to gross QX, were at finished $XX.X margin million XX.X% book-to-bill of approximately in QX the approximately improvement the consumables. million. at margin expect the tool less continued margin of with $XX.X QX was mix SG&A versus I QX, customers total favorable continue an in X.XX expenses our QX with year. QX. and in to and accounted reduction of revenue million, containment tightly to $XX couple point, spending in a end in of next QX at as SG&A R&D sales towards quarters, shipments. CS&I includes XX%, that million recognition remainder recommend was of and for previously spending likely mix, result level driven of This XX.X% in our recovery XX.X% at and revenues margin and gross a will QX the to more total under of R&D evaluation to At

$X.XX. income million $XX compared QX to of at to to evaluation in in inventory were back we in operating range. This of QX. regarding excluding to For million in million any the X.X million previously repurchase XXXX, margins of accrued to per payment to Did or share, at X.X compared cash in finished of million full in not million receivables eval profit compared XX% profit $XX quarter $X.XX share tools $X.XX still Operating was compared turns number reflects expect a compared to be QX inventory XX% QX in higher driven share in shares have $X.X $XXX.X per QX to $XXX.X accounts were at expenses. $X.X $XX.X payable QX million million million QX, net share QX. QX tools. finished QX million. range in QX. $XXX to plan million by to QX buy the or $XX $XX.X compared in QX, in place. in million a the approximately QX. QX, and million $X QX $X.X $XX million ended per year was earnings $XXX $X.XX still gross regarding compared

while million downturn achieving As to is growth that in critical products our our this tight we maintain in industry $XXX Investment achieving we cost objectives. control model. invest to are continues, business key our initiatives will

reflects flow greater Our cash gross and to XX% turn be than which the Mary margin of operating long-term model, to on XX% free XX% XX%, the call to can for found I'll profit comments. XX% now of closing back website. company

Mary Puma

of with confident large this the our up of you, nature of Axcelis diverse allowed that achieve questions. customer sacrificing leadership will and profitable implantation. to Kevin.The I'd I our our employees, customer through to Thank the future to base, With critical our development on support growth. projects to remain development downturn focus and have products, ion without Purion am needs, for grow with continued along market needs dedication those to technology like continue the share open it in that, and Axcelis success

Operator

first [Operator question with Our Steelhead. comes David from Instructions] Duley,

David Duley

be think I second you or you for half. I half mentioned, would do year? the XX% the implications year. was what revenue first wondering talk could the the for you I the down about second highlight you down us the will if of half could revenue be versus think, know Could just that for

Mary Puma

this then, along the that an we and And probably that in think bumping QX. Well, expect we QX said improvement we are at QX bottom point.

David Duley

would think better get you in do QX? what And

Mary Puma

pick utilization, what from is early year. this or some think get along our That we're towards has we in right into late should is think would we we the the improvement now also provide start of with that, end year up pushed segment. will to fab So the the that improved recovery looking expect mature revenues. technology What aftermarket the at year late likely process CS&I in actually memory XXXX. which And better

David Duley

where you geographic that? about seeing then, you you talk And are weakness. some mentioned Could

Mary Puma

been technology the obviously, certainly seen mature the tied side Yes. that's market memory slowdown something China, we're call technology and where as actually, of area And I'll process fact right based lot weakness. construction this I we've of customers. the some mean, in the to But on issues both segment. what with it that China, is that a What have is and mainly in we're on some fab there some now projects there also the new the well is conditions. in seeing some mature in seeing delays is overlap process global

David Duley

from Could you question of and space calendar high-end this what about, the have foundry/logic Japan? you for me. year, sort expectations Final talk

Mary Puma

proceeding are Well, in that both we we the with segments. have those plans of

continues We provide had We Semiconductor. evaluation we're their some have and of terms in getting we there's additional on segment making of in there, that customer And a activities in with here progress team And accounts' as that center management the in revenue and in SCREEN that's advanced an Japan, demo a been plans the future. foundry/logic in well expect rolling progress the could Hikone. continued training weeks as with couple of over ago. the lot and made place

So some it could from again, of both are as But that's those as about, places proceeding revenue talked that where see time that, we've segments, we've any fact, segments. in talked meaningful planned. about, those take to two additional

Operator

Ho, Stifel. comes next Our from with question Patrick

Patrick Ho

node, at the Mary, process smartphone you the I is customers? applications are the what mature specific guess, as in to spending follow-up are maybe guess, I'm in seeing driving, that slowdown that specific -- a those getting automotive, segment? you by driving slowdown seeing your applications on the like comments are I

Mary Puma

that. is Doug to Yes, respond to going

Doug Lawson

geography-based, kind it's the led many driving of in of of said, segment. will That's be high the lot as general this that in appears of to of a economy. spread. China Chinese it. Mary inventories It's sort by customers And bunch It with a

in some allows fab them down that ramp of capacities little to So a general bit. their

utilizations back bleeds sales. and inventory that As system these our expect we will service then to would leading off, helping up, additional then business go

specific segment. So one I don't think it's

Patrick Ho

impact, you guess, the Kevin, as well cost are XXXX, they still the gross especially a through initiatives having hanging past levels? follow-up in into quarter. seeing, XX% a maybe decline we bigger year And margins despite in about talked out -- the allowing revenues the margin I projected lower and effect? revenue gross become at really an you this these June to keep Great. for progress as in you Are at and above,

Kevin Brewer

out, teed areas also, up pricing. well are And number of too, cost projects improvement multiyear that deliver margin The a mean, had is making business the We've the engineering as roadmaps Yes. as There place. improvement through cost on where I to been extensions, product those. are able these on well continued we executing these are gross chain. in still we've progress Patrick. to supply better are

the working very still product the margins. are So extensions also helping margins But move we're hard. the

drive in growth margin of on improvement, things the pulled to we've spending future that we're As in some call, critical operating the still back But those improvement. said expenses. I or areas

Doug Lawson

one Mary new in products. thing Patrick, commented investing And the and other just to Both Kevin add. on

of are being very mind. All in with those products designed margins gross new much improved

Patrick Ho

I guess, the guess, customer across appropriately, do just from but question looking at are guess, to, on opportunities. obviously productivity do you also That's a me, or, new final platform; the -- get extensions the that requirements what for because right the And board to base how the I How you product providing balance, something? I'm your customers improvements existing one, great trying front. and Axcelis keep the and potentially invest I on customer present way extensions? requests not a

Doug Lawson

market's we spends then versus individual customers. the so balance of the time make customer on our in needs. time a actually the going to an customers, based we of needs overall our a foundries, will decisions what the spend can So that we be, market lot And where We and lot versus that that. what marketing that request, a of group our really understand case have with strong with,

Operator

you. Thank

Our comes B. Craig with Ellis, Riley. from next question

Your line is now open.

Peter Peng

XX% DRAM Peter Peng, a is This our and question. shipment, On actually memory Ellis. Hi. thanks -- NAND And taking rough Craig the in filling between your radar provide you mix? can for for

Mary Puma

The DRAM was the XX% about remaining was and XX%, of the XX%. Yes. Flash

Peter Peng

be if improvement XX, last talk margin, per the the your improvement on looked like to drivers a quarters. two there? seems Slide there It visible quarter. about just then, at And a point look Can gross the you underlying I

Kevin Brewer

Yes.

so ongoing, repeat the again, company pricing drive mature, come engineering, supply chain, we continuing include has to in with So warrantee in costs the it's it's then, the margins. costs become to tools and from come install see value discussing. fabs; improvement that's extensions those product the these we just go the down. as margin that initiatives that were And and extensions, orders which better get We helping improvements

the come As you margins. platform. the And of really on side of accretive. business last is progress across the you We can of always presentation, say Purion in that know, improvement years service we've our made in lot really systems the that see over the in margins the focusing a CS&I investor very standard

improve out And number ideas is more. a good initiatives we're of working we the So news haven't of through run to still. on how things

XX% So keeping model point what's to to these gross really that's year propping up XX% margins XX% at full the the where our longer-term we to comfortable the at and XX%. feel

Peter Peng

then, activating share one the what program? you talk are for me. triggers about your more And buyback for Can

Kevin Brewer

and is can discussed Mary opportunistic. tell period to points trigger to time as be We're only I The well. you the And [indiscernible] some from a now, that will right we've to we're and that blackout in something review I it's board time. going

Operator

Northland. from comes Richard, question with next Our Gus

Gus Richard

mature and products, Would power you've on CMOS be in of of good [indiscernible] it emerging then in semi that weakness? strong, semiconductor guys the some that sensors follow companies the is assume weakness Just remains sort up explanation China? to got reasonable to a

Doug Lawson

Yes, devices be I Gus, certainly continued sensors think, [indiscernible] and strong. the to power

fabless customers. in As devices; the segment base in it's mature very up a of customer you terms but big number know, fabs, very also of makes of and terms products large a

that's when to electronic rest ours cut you it's not on also customers non-Chinese so China. well. of of market, But some Chinese And products of the impacted. that ours. impacted some impacts look economy's spending that's more China And doing those that the some ship back the are of it on the the of as And customers at

it's sensor more the non-CMOS So impact or device the of power semi on market. probably

Gus Richard

annual for And guidance roughly then, your down is XX%.

state that the which probably You also QX QX expect QX. to September to be imply bottom, and are below going would

doing A, And do excess you you in right? what math, quarters XX% the gives And up in fourth the with math confidence come two am growth you again, of If I kind out? of quarter. sequential the B, the

Kevin Brewer

the mean, I math Yes, is right.

number. the QX, flat the We've bottom. basically QX, have kind of We QX said

in the of sitting delta So is the QX. remainder

Mary Puma

that business, quarter in that, that potentially will I And along Right. process segment and, the begin QX or mature the our as to believe we improve with earlier mentioned to up CS&I utilization as fab pick expect technology aftermarket we in well.

it at right looking way. you're the So

Doug Lawson

lot I from Gus, customers' even a think over of their that to about inventory plans bring and look especially down. customers there's And earnings of and if their at quarters have this confidence discussed season, a endpoint, been you what next couple our the customers during discussion

business the a drive will in standpoint. mature terms from of improvement that so fab And the

Gus Richard

for one last sorry just on And math didn't I then, this. the me. And Okay. do I'm

cash quarter. the of in me Could think you uses the declined through about $XX I the walk million just cash?

Kevin Brewer

a that at was last as year. Well, were some capital there And accrued spending there expenses was level, high in it well.

Gus Richard

That makes sense. you. Okay, got it. All Thank right.

Kevin Brewer

Gus. you, Thank

Operator

you. Thank

question Company. Our with next The from comes Mark Benchmark Miller,

Your is now line open.

Mark Miller

You the And domestic founders back. spending? the companies they back? Chinese are scaling back they large wondering I producers to was still? mature other about scaling their weak -- throttling Or they weakening. in are NAND But know or just trying were China indicated capital are are ramp I

Doug Lawson

this low as meaningful probably overall on having They're level not They're market impact some a wafer planning on will to ramp a impact meaningful plan and start through to into this you to so and could really to ramp. in terms point. at still XXXX. still continue starts, But NAND very go of market year they the at the have

Mark Miller

Europe? Are or over going remain you Or expecting down the quarters? to couple next flat that's any in improvements

Kevin Brewer

Yes.

think process category us, of, the falls into for mature Europe technologies. I largely

ramp that the that later the bit analysis that a we kind of little would as expect part we it's into grouped year. would with So up get of that

Mark Miller

Excuse me.

Mary Puma

in for that there's now right planning going a new say, XXXX. of on in to going coming online some Mark, lot Europe be will was I projects

Mark Miller

When or of do year, in showing year you XG terms a up That's positive being rollout? as next think XG later start will this impact?

Kevin Brewer

Yes.

So the XG not XG will affect the It's just entire devices. market.

So you so much of tend to that to from involved. another as XG to increase all are and ability increases one in ramps, communication get devices the to analytical data means point it faster, addition forth, which and storage the capability

So, over actually. few gradual a years, ramp it's I the next think

provides another we out. So come cycle as even it through probably this kicker

Operator

[Operator with Instructions] Our from Craig-Hallum question comes Schwab, Christian next Capital.

Christian Schwab

Mary, happened previous But of versus XXXX, can year, there's little what improving you of expect push-outs, times a now delayed near the base? the you're what customer on that expectations if weakness jumped from late. you the into the memory about talk quarter regarding and I potentially any during specifics hearing end or

Mary Puma

are the will there that start XXXX. early projects And customers what and that fourth continuing our potentially discussions in we the start hearing those a is from mean, there number not, until now to pulse taking in equipment I Well, out projects with equipment originally anticipated of had could we're to take quarter. market, fact,

So essentially on changed that's part what planning of really our the is customers. just

Christian Schwab

both is and any DRAM NAND you further add other on or And could specifics there? that

Mary Puma

across know all now versus DRAM to Flash mean, at proceed this early again, be that large memory that some and the we year next customers late But there a are point. certain projects the year. basically. number of it's both Yes, I board, have timing in who will appears

Operator

make This few Mary Puma, concludes closing call now call. to will portion over the of the remarks. a I Q&A turn who back the will

Mary Puma

to you a of conferences. one see busy have we we and at conference schedule these QX, investor hope So in

May on also Cross-Sector Craig-Hallum will you Investor Boston. XXth Thank be Conference XXth at XXnd on in Annual Conference Conference your June on B. support. XXth, Riley Minneapolis, in on Conference We Investor the for LA, XXth Stifel and the in XXth & Insights the Boston the Institutional in Annual June Company Ideas May

Operator

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

You may now Good day. disconnect.

Axcelis (ACLS) 8 May 192019 Q1 Earnings call transcript