- Earnings call transcript Q3 2022

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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 2022. My name is Ali Blotter, and I will be your coordinator for today. [Operator Instructions] I would like to turn the presentation over to your host for today's call, Mary Puma, President and CEO of Axcelis Technologies. Please proceed, ma'am.

Mary Puma

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

I in all like difficulties. are participating this remotely, We in to for advance so apologize any technical call would

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

results morning, Our quarter Good do to statements. forward-looking may expectations. call. for third us update earnings these for any We our not joining our assume current thank obligation actual you and materially from differ

X% demand was strong Purion XX% third with team, cash shipments equivalents quarter continues technology process for to business, investments million and per earnings logic XX%; aftermarket with X% shipments to for our contributed of family and Taiwan performance of $XX.X product an the our third was short-term share of customers XX.X%. XX%; continued financial China $X.XX to and mature foundry million quarter the and high world Cash, going margin system DRAM. the memory quarter mature customers $XXX.X As and result $XXX.X of are pleased third strength NAND a from of XX%; U.S. Revenue comprised guidance. execution of was the gross million. and be mix and were of geographic CS&I Europe in our for robust X%. Korea The Revenue margin. XX% X% Axcelis area system the The the significantly our to by the XX%; of we that market gross was quarter rest Axcelis above our

the expect of million, gross of million of For $XX to to operating $XXX $XX fourth to $X.XX. we per $X million profit earnings quarter, revenue XX%, and $XXX million margin XX% to of share

the to XX%. of For gross XXXX, million margin exceed than full-year with expected greater are Axcelis a revenues $XXX

economic Our guidance reflects global issues. the and impact geopolitical of three

affecting chain gross supply negatively that continued costs margins. our are First,

not restrictions by in slowing financials. decline of the consumer our to is expected deteriorating recently spending, the the TAM, in primarily doubled third, dollar. implantation U.S. to customers industry minimal rates Second, reduction in certain resulting implant effect have The and which imposed has growth last believe And XXXX, on which ion market. a newly economic $X.XX government to fab wafer significantly total expects assessment China, equipment strong of consequences is our in foreign The exchange adverse on of we from this a the result certain U.S. customers will a device approximately imposed decline, memory on conditions over same in years intensive restrictions few China. suffer power electronics driven billion demand,

in of achieve result, XXXX. growth into a products to $X of system a revenue bookings, and billion market book-to-bill record support this backlog quarter in consecutive of continue third these As healthy X.XX expects Purion of projected Axcelis over sales a strong Strong year experience growth. the to a fourth and segments

and an Kevin? provide over Now discuss I'd to like update. to turn Kevin to financials it operational our

Kevin Brewer

positive demand delivered Axcelis results. for across execution guidance financial the drove board, meeting consensus estimates and Mary, good third continuing solid these results and quarter morning. you, and Thank strong our company products

XXXX continuing we now $XXX forecasting strong XXXX backlog. in growth in be we our fact, to in demand current and are are on In revenue. additional strength And than guiding million based expect greater customer QX in

ahead strategic growth industry. entire Supply manage the QX. engineering in through suppliers are quarter, to issues. to us, to implement these measures we of continued in addition closely headwinds tactical provide to impact opportunities on continuing In our work Throughout address sourcing chain focusing to challenges the the disruption with teams significant and both and

level. challenges manufacturing performed material by a very created address team and Our at availability high

service customers fab and as rates. sales part with our and a teams utilization While closely high ramped wins worked

remain but in As noted on resulting by impacting others costs, costs. reducing satisfaction. chain We focused are disruptions customer higher also the in these supply industry, these

XXXX. As should we I more the see chain to improvements have mentioned supply in beginning calls, begin on sustainable in past

to our posted very Moving the financial $XXX.X QX. above $XX.X to at QX. and revenue QX. $XXX.X million, strong $XXX.X our QX million to and was $XX.X compared QX million quarter compared CS&I guidance, million in revenue finished finished revenue mix to million, at due CS&I to in margins million quarter, cost. lower third $XXX.X in results, in compared QX systems

XX.X% million. of bookings $XXX.X compared million, revenue CS&I to for in QX. QX. XX.X% billion, to a QX. in ten total around customers our customer QX One including margin in SG&A and our with favorable of compared QX, bookings XX.X% million. year. beyond Strong were in in $XXX.X very fabs quarter X.XX X.XX we or to versus expect impact new two customers SG&A revenue, spending top of accretive QX. by more cost the and guidance. book-to-bill margin QX QX foreign compared exchange activities. R&D gross margins, million $XX a out spending expansions to and was Backlog QX. million XX% to approximately at or We ratio the above CS&I QX one at and in gross Multiple In which compared XXXX, was in $XX.X million accounted sales, million R&D the $XX performance QX be SG&A was customers be or R&D of expect well above systems, and QX are and was continuing in With QX, mix revenue revenue sales to at driven $XXX.X planning driving system record combined compared $XX.X finished XXXX XX% XX.X% of deferred for our in revenue. out QX quarter of million XX.X% QX. was of a $X.X $XX.X is in

quarters the to are chain unfavorable the less XX%, prior million at we of resulting in is XX.X%, expected, a our costs. the of of from very systems margin first As XX%, strong to supply Full-year Operating profit finished timing to now lower gross guiding gross mix of million, year. compared XX% QX. in QX up three margin is favorable and to from exceed gross $XX.X of QX guidance performance which through margin due expected $XX.X

share, operating million QX $XX income per or million $X.XX million. million net per profit to to QX or to $XX was Regarding $XX QX. $X.XX share $XX.X of $XX.X -- million $XX compared million in

equivalents repurchases per at $XXX.X in and compared million, in million In of settled to timing the from compared short-term receivables of rates. were at compared are shipments. million. $XX share were million impact inventory QX $XXX.X to QX foreign our million of ended of million, million QX. X.X, million to $XXX.X we the chain to million, accounts to $X million, exchange We X.X driven reflects QX the compared in QX. payable $XXX.X QX, to in of quarter, QX. and cash, cash new impact certain costs, investments QX supply by QX finished earnings $XXX.X QX tools evaluation $XX.X cash inventory guidance guiding China current compared $XX.X finished QX. higher $X.XX. restrictions turns of share in of $XXX.X $XX customers at QX and on generated operations excluding assessment the

team challenging returned I cash stock million to entire thank environment. at her Axcelis call high since beginning level, to for very want closing $XXX and continues work, have for chain despite hard outstanding also to and the performance. over of their And our once now continuing their again, We Axcelis the turn supply shareholders, Thank a repurchase back thank customers. to I want comments. program. execute supporting partners our you our Mary a for to our I

Mary Puma

XXX to our long-term business. Two Axcelis anticipated Thank you, slowdown. Kevin. the during is continue drive grow to well trends positioned industry

series gain Axcelis technology Power market. of by the a automotive and driven continue Purion maintains industry. electrification strength, in this First, products share to advantage leading

the comes leadership maintain and the from and implant of system not for segment, questions. the to we to XX% market With growth and second, devices. slowdown in are expect focused challenges open the technology position other our are a planning many devices is this than this for And IoT revenue do continued up power of mature which image and facing sensors mature for we At the believe I'd and that, Axcelis, We well segment, process greater it XXXX. extremely slowing. are intensive see positioned benefits on Everyone in growth like includes industry mature future.

Operator

[Operator first Ellis B. from comes Instructions] Our at question Riley. Craig

now Your line open. is

Craig Ellis

I I'll ahead. Hi. up. just of Ellis, plow if that sure operator It's to kind broke Craig was the me wasn't

BIS and -- times So, identified: the it's your strong been you allowances shipment China remarks, X two, the which team start? congratulations mentioned points quantify I see the the in color to points? on quarter to the I quarter. Kevin hoping costs three then you. gross was the in past chain and impacting to basis had are And margins, supply Mary, in could items the you just issue follow-up very think the the prepared you what execution on in One quantitatively that XXX any degree outlook. one, Thank if or can on the quantify around

Kevin Brewer

Yes, grab the Craig, first let me two.

been suppliers the logistics. is what about from of we've XXX from year there's headwinds headwinds supply both points from basis on our this chain So that and saying

So us about basis if points. to XXX you it combine

the back would is in with we're we the that yes, things mentioned that's half of a have least engineering seeing. pricing that impact there's that material, still. better XXXX And -- about I at lot doing value things could get one that’s So through on of still I we're of expect

improvement freight, a starting see to are some spot. We that is in so bright

basis that and it's starting back half next in total of points again, So anticipating about year. in about XXX

then So $X.XX couple the had puts question, I either the did quarter, and things because you the takes the the about things. points look earnings. side three FX all were was across I that's final mention the I the other piece And think I or on or up, We at if you there's a but that, impacting times. missed breaking make, negative breaking correct? of of up four EPS P&L, of of FX In you

Mary Puma

BIS. was It

Craig Ellis

Yes, Kevin. one was final the BIS the impact,

Kevin Brewer

tell QX, to so think impact you Yes, us. there we wasn't I can in minimal there's right Okay. and any impact now

believe we diligence, to be our our new and looking at looking through -- due this gone are the restrictions, who customers we've point, impact. we minimal So at at

Craig Ellis

the play then the for and And you get to stellar before Great. guidance I helpful, in of outperformance industry could. specific any at company queue. the by on juncture, is, color of not any the particular be in Mary, the way ‘XX being the early helpful that a the of on calendar year very broader get can wouldn't provide be back this growth for on out, follow-up question appropriate how color question would The linearity indications that. but if No, on year the you looking any arc might things quarter.

Mary Puma

achieving model. really time. put saying out out. on point one we that any a I there of this is in I don't will that very years billion guess now, details thing our we're are couple that's have right we at focused And on the $X Yes, Craig,

more again, there hanging get point, this will we into really it that's XXXX. as isn't market anything. function be So And But conditions. something We'll there. of you out give at that's a

Craig Ellis

on Got your queue. it. within seems the of well ’XX Kevin. Then for way. with those I'll items, back calendar you're Thanks in help that, two on it hop XX.X% being like the

Kevin Brewer

Yes. Craig. Thank you,

Mary Puma

Thank you.

Operator

one moment next the for while you, Thank question.

question Christian Schwab next from Our Craig-Hallum. comes at

open. Your line is now

Christian Schwab

a remind to customers? customers year questions. shipping or of Hey, potential now a what thanks taking number production? two, at like for many look as as that you're silicon my far that in may you how as or look us in And Can carbide, you guys

Kevin Brewer

product terms and full medium Purion implant, and haven't silicon carbide terms It customers. in continues given we is get But in of Christian, into the of Axcelis the definitely to specifics grow the number as carbide. silicon companies leader high by driven ability family. of have of current the primarily the the advantages current, silicon carbide technical to of high line families frying energy more

And on so ago us over with having this a good combined given six has years that started advantage. us work

from And as into So then there. we'll it. it we grow of customers continue get see expect where the to goes to through number XXXX folks

Christian Schwab

any growth I more than them or it have you that? a know doubling out now? Doug Do and every few -- confidence be be greater And, in even some confidence start think rate increase guys you years. of laid wafer could I confidence, even that Or faster expectations

Douglas Lawson

Well, the insight XXXX beginning when that put we for going that in confidence We're of we at year. see we additional in going see up strategic insight but as carbide, we'll We're silicon probably terms through now our provide plan more a we right looking to have what growth give XXXX there. like carbide. some for year do silicon of and the

generally by point this at as accepted is industry think the I As well.

Christian Schwab

through who there's of not have Can people sometimes us just fabs exposure? additional know by, then some selling other and color I you're the on nationalistic you who in given give walk Chinese exactly have can you just exposure that equipment confusion buying a lot your there's know, on And who that, Chinese restrictions to If you China, too? investor about people licenses.

Mary Puma

So -- about a we've but (ph), talked -- of selling point, do are and continue at to SMIC get I names, can't this appropriate this where [Christian] to of obviously those. export we I'm we lot can't give for are you we sorry, but names, a licenses lot give you I

next In least on who that everybody the think from so put to have ship government. the customers the the that over U.S. They I can terms were customers, the at them have other year. list, multinational knows are four suppliers now recently actually equipment added approval of that

a systems, it did shipments provide in and we we just some China, in leaves at seeing Kevin we But those as impact customers you to nanometer and that this domestic for be if action the minimal for of this customers, said, that point are technical than that. are customers. both support, service focused XX at mix have time, out advanced for parameters mainly were look our the the working domestic power on who logic, at again where technology parts, have tended there immediate we focused many are more are take to point. the customers general of had really customers impacted we domestic customers and or many, process process would there been And less that to many customers. the that and area and with of mature stop So mature then have some DRAM And focus NAND on those are and really technology put

impact we do, out And you done at by if so China, what's what our going we not those customers Xth. any in on and have why of not that or about issues. very We've fact the were October that's impacted a look future don't the ruling take needed mix see that minimal. came we've in now customers but this good at right the feel to was point on And

Christian Schwab

clarity. that for Thanks other Great. you. Thank No question.

Kevin Brewer

Thank you.

Operator

One moment please.

D.A. Our at next Hans Chung comes from question Davidson.

open. now line is Your

Linda Bolton Weiser

behalf on us for questions. letting ask the Hans Linda Chung. This is you. of you Thank Thank

of your image in mature with general order what book, much is sensor segment? power guess How I mature? was my versus first the in breakdown So question, specifically

Mary Puma

into in technology right Linda, that and out out time it around we X% in when any We to information. technology we'll for split we point So we we're not NAND, finer. the that. get our and end It's the of the don't February, X% this did we technology are break But in segment to and process more only out now, providing the terms mature and get of that but color memory the out year put mature for mature splitting at process possible call quarter, XX% really process memory shipments XX% was segment. the memory. And only DRAM

Douglas Lawson

Yes, Linda, this is Doug.

a we do reasons fine, down moves the that customer basis of it bit quarterly when One on don’t quite so based and it projects a is forth. on too break you around

tend breakdown So that we based a year to full-year. the provide on once

Linda Bolton Weiser

another power, with helpful? in be the what And that that mature, is helpful. Okay. color seeing Any sensor? growth expectation and that of the image in different you're applications Thank would you. in ’XX, here trends That's is memory,

Mary Puma

Okay.

now, as what memory we shipment. of you slowdown XX% systems for accounts currently XX% terms mature we're seeing in is see do a but of the to about know, in only seeing the markets, But strong in demand So right we're our memory.

So business. technology more for a to slowdown impact system this of our we our on The as having measurable process on is XX% not remain than process technology mature robust. markets, adjust mature And other the said, hand, in XXXX. Linda, shipments account the we

electrification remains image business is growing in parts you is for within the we some market there of initial If break with Power this the there market. strong related go into this segments ordering some And and projects of as although But demand the know, and for and due foundry and customers Kevin us, devices, down XXXX. and of market. On for the mature sensor take top actually extremely is the sustainable consumer to markets, automotive empowered to in commitment created story strong, that, our look Axcelis. general growth long-term theories the these now as you opportunities mentioned, slowing a XXXX to real really that's Purion have tools are leadership

these then growth same going we're It's our build to expectation and revenue what's So that a XXXX, are the we're into as that. really going seeing upon terms that in see really all what in of driving of use XXXX. just we've to factors more been foundation

Linda Bolton Weiser

you. Thank Great.

Operator

One moment.

Duley comes question David Securities. from at Steelhead Our next

open. is line Your

David Duley

ton typically why nice my was? but revenue. there's out results in receivables a in flow deferred increase you generate curiosity, inventories, just cash, talk for this and Kevin, of I strong a a And quarter, cash the that increases noticed on Congratulations of huge about question. obviously I Could have that was you when noticed just don't you thanks and nice taking number outlook. very

Kevin Brewer

Yes.

of So the things had pretty prepayments we mentioned prepayments the a quarters David, this prepayments for over quarter, that's I And from centered we really in we've in of we're quarter, one various increase that this had think have receiving around big number certain the customers. is tools.

that's basically revenue. So undeferred it. driving pointed what's offset the you out, And as is

is the beyond it. except rest that, much of really for not So more

As what's a net terms good had pretty of you we income, cash. know, quarter relevant the for in as

David Duley

what's cash big, net basically to offset and income increase the revenue? up deferred and equaled Yes, though inventories in so even receivables went

Kevin Brewer

Yes, on quarter. go did our you AR point [Technical up out, this Difficulty] as

going be like about we down, talking up, said, is AR So, normally, pretty our a to goes prepays. increase cash had you're but I of significant

David Duley

And payment? as prepayments you the is as deposit? put a they could of -- the full terms Maybe about a some prepayments? Is -- far down just talk go, there the this of do it

Kevin Brewer

little it's enough that some a costs. cover case, in typically, more, In cover a we're mean, But it more cases, bit be our costs material little in these other I Yes. bit a material less. of our little on to looking general, or may payment prepays.

-- to if on want these exposed sure We way sure going we've into any XXXX. of going some that orders that talked orders we there's we're to for as to not that make feel out we're about, got As we we've material. make want risk,

David Duley

Okay.

gross now? what essentially of over Could think I and guiding QX the this just listed been the realize have you're magnitude margins quarters you you where are You just gross down like between QX margin. of of could in we sequentially. I that another margins last and a gross currency the like I talk kind there question and follow-up, remarkably XX flat big things have look product as consistent chunk between about been the XX% And back on margins, magnitude might three your expect then know, gross almost and or XX% currencies a like QX? if the When or are two

Kevin Brewer

Yes.

to it’s good expected, a expected full-year calls I'd our mean, I wondering, got the to fourth we of as that a go on down we've when in last So front be guiding of call people XX.X% below that think and as last I in say and than there number because margins the probably a was are are going don't my say to think I see point. question, four QX I XX% I given bit couple quarter in full-year, we ask well, any are the it. said answer expect employees for less quite I and and why

and is knew it we mix. really So coming this was

high we've and products the that little current know shows a energy our lower and much a lower in high and the bit even no standard you current. medium As presentation, got mix there's the or mystery investor in margis that chart than is of surprise

work have I here. don't So mix to

shift to high big a current quarter. was fourth have coming. in knew We We the it

was piece supply little other a basically bit of which The back. way we have anomaly, the our costs was of coming it, chain

little This a quarter than was bit heavier quarters. prior

so today to beginning also of expected that we than repeat, to going the coming putting we're think and news again, full-year be expect in positive it to back And it us. said was a don't it's then the additional the is think than not we I that's But XX.X% I So greater that's ratcheted out to knew saying I surprise, pressure. XX% we be I XX%. greater of and up year, David,

It's things be more, take despite of we to this on got keeping it's other a increases on, costs in back where expect up. early hard least costs and that to are I'm suppliers of So higher out rid I of new a [Techncial to stuff And year Difficulty] propped of chain But next at supply year. there to full-year take going some improve really get the of are hopeful of, going to everybody's because now that's labor there, lot a some headwinds, are on good going pressuring. supply that we're get still because with because the cases, basis, get we these to stuff continue costs. going it job lots this to and disruption. think the on margins we're going that's doing to all half chain

would We're cost all and we're at doing and engineering. rinse margins getting there at extensions product to So doing looking what boost what year. honestly I and QX going of We're expect the I looks what year answer of -- additional don't talk I time. whether don't year. about want I looking this sourcing because next into better And is is, the honest be be like. to low out to exactly this to we're do QX, just than kind we value know repeat next

And when so do call kind February, of think our the a in more talk next stage I year, about can little we bit we we for set at that point.

David Duley

Okay. appreciate actually color. really Thanks. was That good I it.

revenue Just in to in have if going revenue than one an to that. business? because of realize logic, is I greater look you And I'll us total just math the final including more of I size CS&I now, on essentially apply and I and pass the revenue exact few and you’re me one else. that's edge into and like you $XXX at the non-leading the non-leading last would two But foundry than you've percentages double a we're somebody idea in million the do, And total and it's big been last years I from XXXX. I giving number foundry ask years. if TAM that the that's is, guess, not XX% the and edge over your -- of reason logic Do for what the it

you if XX%, So put shot wondering above your share of is? but it's appears I you what probably the It at think obviously could of us I'm a in and give just market don't is mouth? your words the what to want kind size TAM

Kevin Brewer

David. Hey,

mature don't $X.XX the in the down. terms so accounts than over implant TAM, XX% of share, billion. break And of greater So of market market it's that we for XX% it

our take What have probably much that markets You get share than an at market. higher in idea a average and is systems and average. revenue in as say relative and we the look power especially mature that will the can billion $X.XX I

the And growth Axcelis share. leading overall, to so total has And grow in we share. the continue high areas

David Duley

do of XX% you would share that have imply this than probably market? greater power guess I

Kevin Brewer

given haven't I'll you conclusion number, we so I’ll Yes, a specific let draw that. know. on your

David Duley

Thank out. much. find I’ll you very

Operator

And our Instructions] comes B.Riley. from Ellis Craig [Operator at you. question Thank next

line Your now is open.

Craig Ellis

again. levels. quarter. The Craig in operator on cash that had was in strategic know that me in an really with area significant Ellis. The Thank M&A company past broke hoping update to on don't develop such if I'm Congratulations I up, going in jump some to redeploy and steps Hi, get areas looking it interest, capability? that to ready internally any robust you're interest geographic has The that I can of on being you taken capital get the execution. at how if of provide at now to directed or was And a cash technology either and increase talked to it's ahead, the you was the question one. you. color question diligence area? of about I as but potentially

Mary Puma

Craig. Yes,

year, new growth Board a fact, earlier on his some next He and in as focus extensive doing week. VP of we'll you beyond our analysis we Corporate grow in the this is of findings thoughts process initial and strategy his potential hired M&A research now right our and implant. Development to mission opportunities. of with be know, on And and is So sharing to

this, what would is, still this to I nothing in point but that. stages call is there do as where certainly really at So the will very the we're but And to forward. early get we point of moving share, there's it we

Craig Ellis

for Got it. for Thanks color, that [indiscernible]. follow-up the Mary,

Operator

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

Mary Puma

Thank you, Ali.

the thank Growth we invest December to road in at and thank So January to Summit will on for in New for both on for I York. multiple going are and one want these be also be participating meetings everybody November Conference support. joining on of York to City and We're us the today. XXth we events see We Needham you XXth continued in you your the hope XXth, New

Operator

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

now may day. Good disconnect. You

Axcelis (ACLS) 3 Nov 222022 Q3 Earnings call transcript