Yahoo Finance Axcelis Technologies Inc (ACLS) Q1 2024 Earnings Call Transcript Highlights: Strong Performance ...
Q1 Revenue: $252.4 million
Earnings Per Diluted Share (EPS): $1.57, up 10% from $1.43 year ago
Gross Margin: Improved by over 500 basis points due to product mix
System Revenue Breakdown: China 59%, U.S. 17%, Japan 7%, Europe 4%, Korea 4%, Rest of World 9%
Market Segment Revenue: Mature nodes 99%, DRAM 1%
Power Devices Revenue: 55% of total systems revenue, with silicon carbide 76% and silicon IGBTs 24%
Q2 Revenue Guidance: Approximately $245 million
Q2 Gross Margin Guidance: Around 43.5%
Q2 Operating Income Guidance: Approximately $47 million
Q2 EPS Guidance: $1.30
Q1 Systems Bookings: $107 million
Q1 Systems Backlog: $1.1 billion
Q1 CS&I Revenue: $56.9 million
Q1 Gross Margin: 46%
Q1 Operating Expenses: 23.6% of sales
Q1 Cash from Operations: $42.2 million
Available Cash End of Q1: $530.2 million
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Revenue for Q1 2024 exceeded forecasts at $252.4 million, with earnings per diluted share increasing by 10% year-over-year to $1.57.
Gross margin improved by over 500 basis points due to favorable product mix, despite higher selling costs and taxes.
Strong performance in the silicon carbide power devices segment and robust shipments to China contributed significantly to the quarter's results.
Axcelis has a solid backlog of $1.1 billion, providing a strong foundation for future revenue.
The company is actively engaged in expanding its market share through strategic R&D and marketing initiatives, including the evaluation of advanced tools like the Purion Dragon with leading logic customers.
Negative Points
The recovery in memory and other general mature process technologies markets remains uncertain, with expected recoveries now pushed to later in the year or 2025.
Q1 bookings at $107 million were lower compared to system revenue, indicating potential volatility in future revenue streams.
The company anticipates a moderation in gross margins in Q2 due to product mix and costs associated with closing several evaluation systems.
CS&I revenue for the year has been revised down to approximately $250 million due to lower tool utilization.
While there is strong demand in the power segment, the general mature market and memory segments are still showing signs of softness, which could impact overall performance.
Q & A Highlights
Q: Can you provide insight into the near-term dynamics you're seeing in order activity and the potential for a rise in second half sales? A: (Russell Low, President and CEO) We are currently running at a $1 billion run rate in the first half and expect a stronger second half. The timing and magnitude of the upturn depend on market conditions. We've seen an increase in Q1 quoting activity over Q4, a slowing of customer push outs, and a small uptick in pull-ins. We have a $1.1 billion backlog, which supports our expectations for a stronger second half.
Q: Could you discuss the gross margin optimization initiatives and their impact? A: (James Coogan, CFO) The retirement incentive we've offered will be a second quarter event, costing approximately $1.5 million. The benefits will accrue over the back half of 2024, primarily in our operations team, affecting our cost of sales line items and improving gross margins.
Q: What are the implications of the delayed DRAM recovery, and how does it affect your projections? A: (Russell Low, President and CEO) The demand for high-bandwidth memory is strong, but it doesn't change the number of steps to process this memory. We expect an improvement in memory fab utilization, leading to an uptick in demand. We are prepared for a quick market turn and are making incremental investments in inventory to meet potential recovery and growth in 2025.
Q: How do you see the mature foundry logic market evolving through the rest of the year? A: (Russell Low, President and CEO) The mature markets are beginning to recover, driven by consumer spending and memory market improvements. We expect these markets to account for over 90% of our total systems revenue for the year, with trends likely increasing into the recovery.
Q: Can you elaborate on the impact of electric vehicles (EVs) and hybrid vehicles on your business, particularly regarding implant intensity? A: (Russell Low, President and CEO) Hybrid vehicles use a significant amount of power chips and inverters. As costs come down and performance requirements increase, we might see more use of silicon carbide in hybrids. Both markets (silicon IGBT and silicon carbide) are highly implant intensive and represent strong opportunities for Axcelis.
Q: What are your expectations for the AI servers market and its impact on the implant market? A: (Russell Low, President and CEO) The growth in AI servers is exciting, particularly in terms of power usage for generation, storage, and distribution. Silicon carbide's efficiency and heat tolerance present significant opportunities within data centers. This market's expansion will likely drive demand for power devices and implants.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
