• Revenue: $256.6 million for Q3 2024.
• Earnings Per Diluted Share: $1.49.
• Gross Margin: 42.9%.
• Operating Expenses: $63.1 million or 24.6% of revenue.
• Operating Profit: $46.9 million with an 18.3% operating margin.
• Bookings: $84 million for the quarter.
• Backlog: $758 million at the end of Q3 2024.
• Free Cash Flow: $42 million generated in the quarter.
• Cash and Short-term Investments: $579 million at the end of Q3 2024.
• Geographic Revenue: China accounted for 71% of total ship system sales.

• Warning! GuruFocus has detected 7 Warning Signs with LGND.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Axcelis Technologies Inc (NASDAQ:ACLS) delivered a strong third quarter with revenue of $257 million and earnings per diluted share of $1.49, largely in line with expectations.
• The company is well-positioned as a market leader in silicon carbide implantation, a critical manufacturing step for silicon carbide devices, which is expected to grow significantly.
• Axcelis Technologies Inc (NASDAQ:ACLS) is seeing interest in its solutions for transitioning to trench MOSFETs, which require deeper implants and align with their high-energy tools.
• The company is actively engaging with customers in the advanced logic market, exploring new applications for ion implantation.
• Axcelis Technologies Inc (NASDAQ:ACLS) has a strong balance sheet with $579 million in cash, cash equivalents, and short-term investments, enabling continued investment in product roadmaps and customer engagement.

Negative Points

• Bookings in the third quarter were softer than expected, with a notable decline in the power and general mature markets.
• The company anticipates lower revenue in the first half of 2025 compared to the second half of 2024 due to capacity digestion in key markets.
• Gross margin for the third quarter was slightly below target at 42.9%, impacted by systems mix and lower CS&I revenue.
• A bad debt expense related to a European customer bankruptcy negatively impacted operating expenses and earnings per share.
• The company corrected an error in historical backlog calculations, reducing the previously reported backlog for the second quarter of 2024 from $994 million to $879 million.

Q & A Highlights

Q: Can you provide more context around order activity, particularly in terms of end use and geographic basis? A: James Coogan, CFO, explained that the softness in the general mature and power space, especially in China, is driving lower order activity. Although there are ongoing discussions, the placement of purchase orders continues to be delayed, impacting expectations for the first half of 2025.

Q: What are the positives and headwinds for the first half of 2025 compared to the second half of 2024? A: Russell Low, CEO, noted that while there is a digestion period for general mature and power markets, particularly in China, memory shows promise. They expect more activity in memory in Q4 and into the first half of 2025. However, without a meaningful recovery, 2025 could be a down year compared to 2024.

Q: Have you taken any actions to eliminate the use of Chinese components in your supply chain? A: James Coogan, CFO, stated that while not specifically eliminating Chinese components, Axcelis actively manages its supply chain to improve localization and reduce cross-border shipping costs. They have a strong supply base in the U.S. and other regions outside China.

Q: How is the transition from 150mm to 200mm silicon carbide wafers affecting your business? A: Russell Low, CEO, mentioned that the transition is picking up speed, with many customers already taking delivery of 200mm capabilities. Most customers will bring up 200mm capacity on new machines rather than transferring from 150mm, presenting opportunities for new tool sales and aftermarket upgrades.

Q: Can you provide insights into the utilization rates of your equipment, particularly in silicon carbide? A: James Coogan, CFO, indicated that utilization rates are generally down, as reflected in lower CS&I numbers. The softness in general mature and power markets, along with memory, affects utilization, but specific customer or regional details were not disclosed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.