ACLS - Earnings call transcript Q2 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 Second Quarter of 2019. My name is Jimmy and I'll 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]

to call presentation CEO Mary Technologies. like host to of now today's for Puma, would turn over the your Axcelis I President and proceed, Please ma'am.

Mary Puma

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

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

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

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

the actions controls. in XX.X% to operating our million of guidance was share per than of second tight continued profitability. cost was our $XX.X of with higher Earnings guidance. from reduction resulting due $X.XX to revised expenses expected Gross in lower contributed margins and spending line quarter above Revenue also

of earnings During trough Axcelis. third cycle this and the our call forming for last we talked second about quarters the

this memory So, as downturn. of expected, we driven bottom bounce continue the to along

also image mature weighted quarter, believe heavily majority the those mature foundry/logic our particularly second sensors. the for foundry/logic XX% to of and mix toward segment. year the systems that power During accounted going with We devices will full manufacturing just XX% be our of memory shipments shipments customers,

includes The mature systems of shipments which and was the This U.S. is XX%; mix. Geographic Europe XX%; Korea more also balanced foundry/logic mix regional a quarter and breakout, XX%; strong than Korea, XX%. reflective usual. China Taiwan of second our in

between revenues million we of the gross are margins XX%. For $XX forecasting approximately and $XX million quarter, third and

of the million in $X.X operating or expect loss $X a between the to a minus breakeven $X.XX. EPS million We range of plus profit profit of to range and

During significant upgrades. in increase both segment a mature systems and activity for the the CS&I foundry/logic we second in for quarter, saw quote

this positive business we XXXX. fourth memory do impact Although, a of have in half recovery should the our anticipate the beginning on not first quarter until a

increase fourth we XXXX the be could result, compared down a XX% As to revenues an between now in in quarter. estimate to XXXX, XX% revenue implying

preparing can upturn. market we continue profitability maintaining influence and the can't control, what we conditions for will next we While focus to on

has development Our this our goal downturn managing throughout extended investment in been our aggressively while costs. product to continue efforts, new

are to we closely develop with segment-focused products. result, working a new our As customers

on are silicon device the as Purion as Our in focused silicon. and advanced well sensor market product image products power on extensions development efforts for carbide

will H customers. we process in the of specifically Purion and logic needs be leading-edge Additionally, advanced the mature product technology requirements investing of extension technology productivity targeting the market

evaluation differentiation plant to we systems the growth systems In field to technology the recovers. that additional sustainable customers' new four steps. Purion needs the seeds second continue to of ship will to and for competitive support implant in a eval our products, create when designed year, fuel manufacturing during half expected With critical our the and market

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

Kevin Brewer

up this we to gross of from guidance this expect quarter all Mary. margin fueling point, Purion prior with mix to profitability I'm and downturn. initiatives and pleased product At our extensions, you, margin be Thank solid extended performance. year average XX% now margin XX%. margin XX% during full performance very continued gross are gross improvement to our second XX.X%,

expenses spending. continuing controlled operating our and to tightly regards With to

and compensation the further cuts, to additional actions include and which implemented reductions lower voluntary pay costs, variable executive board across have continued in tightening. our We headcount

reduced remain downturn. long-term to this achieve to critical we for also and model. shipments resuming expenditures, we profitability, growth fund exit extended of continuing focused strong expected business delayed this our the future see recovery we While as efforts to initiatives, cycle the growth. managing at not We're our Currently, sacrificing required downturn development we've QX product on QX. the gross for key our margin while through QX in beginning bottom in improvement We

Our $XX the $XX We $XX million to program. be under stock with authorized during opportunistic repurchase quarter, program. of repurchased million is we our as part strong. plan continue million still repurchases. balance spending And to of sheet the have share share We of

million the to revenue approximately compared $XX.X $XX.X were results. to quarter our million sales with line turning system Now and QX at QX. revised finished million, financial million QX compared million QX. $XX compared in QX in $XX.X million, $XX.X QX. second in of finished in $XX.X CS&I to at million $XX.X revenue guidance to

in QX. CS&I expect to recover to We revenues our begin

of our $XX.X a million, X.X for in or three in finished X.XX of QX. total $XX $XX.X deferred QX. $XX.X sales, to versus book-to-bill XX% million to to with QX XX% million to sales were in compared at Backlog including QX in at revenue QX QX. in XX bookings our system QX, with in customers million customers compared QX ratio accounted compared four top approximately QX XX% customers above compared to

should we've QX. $XX.X revenue was seen of activity quoting QX. $XX.X to or million mentioned, SG&A XX.X% in lead million R&D a starting combined significant QX As which spending to compared increase XX% rebound in a and or previously in Mary

incremental million expense total operating reductions. headcount lower expenses than QX $X.X $X.X including million finished of guidance our of an

in In for R&D at QX at stay and be to million. and QX, million spending SG&A the $XX.X that R&D flat SG&A $XX expect the of level with with year. quarter we remainder the was

driven nearly mix. cost-out XX% points introduction X,XXX was margin as extensions by margin standard gross well in on gross the was product a QX. average. the Purion QX Purion four-quarter XX.X% we've product line, improved basis margin system and full compared as Since to of QX rolling

a margin evaluation gross margin includes of which recognition We're XX% lower two of guiding tools. approximately QX

For year gross to margin to the approximately XXXX, XX.X%. XX% now full we expect be

million to QX. above per income $X.XX to revised loss at $X.X in share expected Operating compared $X.XX $X.X million QX. $X.X profit our and net in an or in QX share or million guidance million per of finished compared QX $X was

earnings by QX of at QX. compared per or eval X.X inventory. turns QX guiding breakeven $XXX.X plus tools inventory $XXX.X We're to evaluation increase share QX at in to finished minus X.X excluding in driven $X.XX. tool in compared million QX, ended inventory million an

million compared million in $XX.X in at million payable million to QX. accounts were to QX $XX.X compared were QX. compared to $XXX in million $XX.X cash QX finished $XXX.X receivables $XX.X QX. million QX

invested additional In support we evaluation capital to inventory Purion demos in for customer the equipment Purion quarter, and products. tool procure new

our under also program. $XX share We repurchase million purchased of stock

As are tight A which $XXX control, of investor can million margin this greater company XX% gross be than cash found our model. XX% in maintaining model initiatives website. industry continues we investment to critical XX%, cost business free of million XX% flow operating and while the reflects achieving XX%, profit to presentation $XXX downturn our to on

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

Mary Puma

our into deep investment to record maintained industry. profitability product has This you, Kevin. To and a sacrificing development Thank long QX. extend date, without critical track has downturn the goal Axcelis for our been is

implantation. process result by, I diverse currently are our being of tool Our success that share base. at, of our our and the to focus the leadership achieve continued am of customer evaluated to needs a ion with on is needs development support record Axcelis strength will in the Purion technology market continue customer those dedication and large and employees, the of or products either confident that grow

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

Operator

first with [Operator comes Craig-Hallum. Our Instructions] Christian from question Schwab

Your line open. is now

Christian Schwab

question. guys. for Hey, Thanks taking my

And first XXXX. a I you recovery at that Would On expected that? XXXX or that's your driven of thoughts to gradual recovery NAND, half by the of spending to a half the be or memory some both? step point would you on What current or first be that the increased in on during expect DRAM ladder is expect recovery -- year? mean,

Mary Puma

you recovery it be we it recover a in us us DRAM of I in it's trajectory time of what know, exactly before NAND to first do the the expect recoveries most But not -- the expect So by that And of half will be. in we're sort realize clear mean, we will how we does. year. will as recovery. the the upon

Christian Schwab

us Okay, get we levels, current mind to great. the you healthy either you happen, what And capital time combination well in to XXXX walk of then, in a gains the just million? or walk guys $XXX saw of through through of spending type some from to can Japan? intensity us you spending Can recovery type in in and is memory to the it for assumption $XXX that for have back to steady need million, your over potential as in would or that have path foundry/logic that as -- get we memory does

Mary Puma

Sure.

about our model two out really So still the been of timing that expect we expectations perhaps a has now, assumptions pushed little downturn. achieve over million the can changed $XXX despite bit the the to and We fact $XXX haven't because the million that three next years.

out. the And you that it's the on second based really laid scenario latter,

share remain expect to strong. memory. we that The contribute relatively to share get process and technology we get healthy stable our our spending would will that fair memory mature would in We --

where gaining and on market made right working foundry/logic several Japan. share And now the third make new we're point the which is in then, in some you I penetrations also of advanced think, of areas area the in right the to is

next those So, $XXX will again, the the years, in of yes, all of years. million several contribute to things model, couple

Christian Schwab

No you. Great. other Thank questions.

Kevin Brewer

Thanks, Christian.

Operator

question with our Ellis next from And Riley you. Thank FBR. comes Craig B.

is line open. Your now

Peter Peng

for is thanks calling our in question. And taking This Peter actually guys. Ellis. Peng Hey, for Craig

about million. down. Just step like It the a seems outlook, the QX it's on X.X $XX

Just wondering, this is mature directionally, or coming from more foundry? memory is this

Mary Puma

quarter for second talked And particularly I bookings, can a process of I the also about bookings to we our end our foundry/logic and of over under that, XX% for how talked that XX% at mature producing you in memory. only were XX% about were the large quarter mature uptick And the tell you mean, in I obviously tell and technology the pretty quarter. we memory. to shipments XX% can

is talked that at So carry a we foundry/logic this fact us. about the it is time the continuing how have diverse mature large We've in base. really point to customer that

say to memory where year. the us again sometime that half of we're the will we which So that's really leads happen recovery that first in the believe until don't improvement next seeing

Peter Peng

implicit wondering levels. calendar base around how there big just foundry logic that's diverse on this Great. the then XQ. on if And number the a pretty It based doubling implicit from XQ like somewhere that potentially customer mostly And I'm ramp? that seems XXXX it's and is million. view on is then $XXX

Mary Puma

and quarter we mature Well, it's about pretty for as the actually year. we through about diverse. remainder on how average I out mean, more that talked continue talked this would that the how likely a we waiting way of and had foundry/logic of the year balance

would Again that mature the I process type take versus our look say of bookings at are already split similar mentioned if a of bookings, the a I pretty on I split and technology memory. reflective geography our

delays of that are see seeing. So that activity as we see have and it's I funding also that and construction pretty picking part getting is strongly quoting world. that projects in point say quite some this time of would continue But up the in been China pretty to around increased activity a at in their general. rated Well function we've coming at delays on We them well that China strong. some

Kevin Brewer

And the we point top participating. this coming at Peter XX one look that I'd you of on more the out from quarter suggest number customers have people revenue percent our would if

the that all we out more or footprint the spreading that had out to so, it's even X it's XX% So X, increased is little top customers -- bit. a it XX. again, spreading also within beyond all from demonstrates And

Peter Peng

may. I if question more one And

to the Just that more upside? Is basis on from? gross margin color just it from upside or prior just things, XX I like one guess or get improvement about coming it on and just on talk gross the gross to seems margin. margin, is where Great you the wanted points I on view. Can two job some provide

Kevin Brewer

Yes.

products, product the margin out to energy mean high are extensions have I some the we the silicon carbide So tools improvement. And those adding there. and are of other

cost well We to do have value with environment in engineering. through continued low-volume of very an out even

engineering chain getting we're continuing because supply to the although, necessarily So are into value a the of that lot of down, point tools. cost of improvements volumes out we're putting extra we're at this through make not

And component then the the third is mix.

roadmap say product of the which Purion continues is up. XX% going the within to I that, mix from look levels our forward to XX%. going a As move of CS&I always little play the part But of is what a systems out versus also here more cost always margin be those can revenues a to bit the And mix the products systems of increase. when and improvement as volume we of out

Peter Peng

Okay. maybe follow-up. then And a

in more Just in or a improvement? I of conservative XX% just to light base your be case of this $XXX guess more million XX% more even could the a now, -- model the given more

Kevin Brewer

big we're potentially in year we a would model the XX% more mean could of next impact not mix based to down. revised for model I where going XXX Again I'm on this you it them of expect to we're that it. certainly that ahead can revision I right on change depending, that Purion's piece going is when Well, XX% saying things little change. thought bit because the be we're update to of such tell that a don't now guidance. which But the we the now selling

risk So could maybe more find do to until the if a XX% little anything a you growth. XX% find bit there. on for to Peter going we we're stand now But

Peter Peng

guys. you, Thank Okay.

Operator

our next question Duley David with Steelhead. Thank you. from And comes

line open. is Your now

David Duley

technology I in the in. implanters? question. markets for capacity, or demand expansion the seeing curve depending down up market, NAND think In not we're which changes layer you're or DRAM for going my memory in curve counts upon, impact layer marching those although DRAM did shrink Thanks the both and taking the How in process they're in in of

Doug Lawson

This Doug. Okay, is Dave.

NAND on add additional layers, they we necessarily don't implants. see when So

some new in more So that's bit lot board. current addition do little implant opportunity. technologies But on they wafer high creates -- of is new tend DRAM when they do family NAND count, start adding especially the new a finest as recipes come to memory we're wafer time manufacturers a with implants, based. to shrinks, the and the with H the they spending which Purion

based or count we are layer to move expecting just -- the with additional next gain recipes. on over next unassociated So share some the technology shrink, this to

David Duley

And Okay. the update progress might us about we're foundry/logic or could have just you business? high-end at that your made where give an with you

Mary Puma

Yeah.

going demonstrated the we exceeded we competitor throughout evaluation advantages completed So then significant evaluation. and successfully performance evaluation throughput these actually over the levels into and the our

implant So steps at as advanced a for result qualified several we heated were nodes.

down customer a tools reduced number quite and significantly small required of number. provided we improvements productivity the Unfortunately the new that the was it to

tools. I think was two it

that supplier decided trade-offs given the only point. stay at a needed the very a So change of this risk making the small associated of number customer given in tools, to they with current with benefit some the supplier near-term

volume PTOR it are seeing point those this not we nodes. time But in for So any from at we're

David Duley

XX% just quarter. implies year guess Okay. pop or what down projecting, what mentioned And then us or certainly down do to or it could do? as the give roughly the be us final what you your down less views question overall your the for expect? I revenue be that be and XX% will on implant that think a is nice will you or fourth market give more in you you the Could Would you're

Kevin Brewer

as sort you of normalize years plus implant XX% looking Dave, over $X we the the minus market Well, at so. billion last overall or or XX know,

given goes expectations side and this particular the the be of to on our it forth exactly reuse It's lower so size will that. pretty market. on so the this year difficult of it And part of is, that amount in

say, the side our on estimate. of So, we'll we would lower normalized be

David Duley

Thanks. me. That’s it for

Operator

Ho next question comes Stifel. with Our Patrick Instructions] [Operator from

open. Your now line is

Patrick Ho

more work this Are current give color market you technologies given DRAM point obviously Andy, bit the actually type much. you next-generation in could buying makers a increase are Mary, activity but Typically particularly very valuation do current on churn. capacity that versus Thank -- should moves lot there been the of of little memory conditions? seeing in the NAND? and you where it's both a to if

Mary Puma

three those Kevin announcements the the memory-related in that that to us about and event. the is into product coming we're some of in moving that new for to in in a of to into think this evals And inventory. moving we're some making to process So what going We and I is that make is XXXX. we think have actually half the And I'm play forward, to think field going second will Day hear currently assume new have, to related are at going significant activity out come even evaluation XXXX number four and one Investor And technology. more investment mature September and you're answer new a of of you'll evaluations, I the large yes. evaluations fact I referenced our of

Kevin Brewer

Pat, uptick are in of just process. the had we've piece, add-on, in tools but also significant eval are in field terms in tools of a just the that not that inventory inventory currently

So in in there both what's is now right quite a anticipated tools going bit of out additional terms activity of field

Patrick Ho

That's maybe question. my follow-up helpful. as And Great. really Kevin

terms the from a you're up incremental In that increase there variables your will going-forward to gross XX% that XX% XX% other that on or to upside increase bump cost-out making. from that XX%. that to the basis to incremental margins XX% of XX% primarily to or programs, it coming previous Is are

Kevin Brewer

Yes.

should mentioned well the are, extensions question a as out. product too. asked when as have The piece obviously, Peter the So of I cost it

on So improvement XX% margin get to is the our initiatives. incremental XX% continued to to improvement the

to our be product having have We're detail been journey as for well to Day not and is good at product extensions obviously, higher in so but level. will far. there the how stop margins then we'll XX%. move road more pretty our making we're in get much progress in talking cost-out goal to a gross with we're shooting we've maps at about next the as Analyst as sharing it's extensions We detailed that And, place. And September our XX%

Patrick Ho

very Great. much. Thank you

Kevin Brewer

Okay. Thanks, Patrick.

Operator

you. with Gus And question Thank Northland. from our comes next Richard

now line Your open. is

Gus Richard

questions. which for bit. talk part of your quote activity you a taking you on stepped up also the has color little mentioned memory? give or just my Thanks Can a Can that it mature quite Yes. -- you market, is more

Mary Puma

Yes.

towards So weighted major is the is that the to activity points which where China technology, China, significantly also I've clarify probably process Obviously, on And on in given the this is just weighted prior process mature two and China heavily it's lot heavily it's explained surprising technology, before. again are there. we I mentioned that I the towards cycle not which there's mature it going and that. a quote think to

Kevin Brewer

Gus sensors. And image there's power within continued that and lot market of devices a on on activity activity

So really strength continued two provide those us. the segments to for

Gus Richard

helpful. to going of first the was it Okay. are get into got memory that to so Thanks. them is that to has that long recover. I so What as the be That's going seeing or expect is been occur, you first said Okay. to you And Steve evidence And half just then think recovery you just downturn NAND better? it looking start to the one.

Mary Puma

will that around mean, half based points we're best out at at on pretty there, that triangulating customers. discussions lot is can't No. obviously, XXXX. it time are take I this close also to in data clarity I point. And point them first but with the our a more Again, sometime we're on of that put this be staying our

Gus Richard

rough of just memory as unlikely is conversations it market go at as point But Okay. lower. in pretty customers this it's and been the certainly for combination to the well

Mary Puma

Yes.

Gus Richard

Okay. much. All right. Thanks so

Kevin Brewer

Thanks, Gus.

Mary Puma

Thanks.

Operator

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

Mary Puma

Jimmy. you, Thank

we on we Purion attending be you Annual York September be of you to XXth in New Xth York see City. Conference introducing XX on will wave at your hope Day for Fast the Thank Connections And also the D.A. New will in support. where Investor September our We also Davidson Tech products. City next

Operator

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

day. now Good may disconnect. You

Axcelis (ACLS) 7 Aug 192019 Q2 Earnings call transcript