Semiconductor service companies will be critical to the artificial intelligence boom, but they don't attract as much attention from investors as chipmakers like Nvidia.Artificial intelligence (AI) is primarily deployed using centralized data centers, but it's slowly migrating to computers and smartphones, which could drive a productivity boom across the economy. None of that would be possible without the advanced semiconductors supplied by companies like Nvidia, Advanced Micro Devices, and Micron Technology ...

BEVERLY, Mass., Sept. 4, 2024 /PRNewswire/ -- Axcelis Technologies, Inc. (NASDAQ: ACLS), a leading supplier of enabling ion implantation solutions for the semiconductor industry, will be a top-level Platinum Sponsor at the International Conference on Ion Implantation Technology 2024 (IIT 2024) taking place September 23-26 at the Toyama International Conference Center in Japan. IIT 2024 is the 24th Conference in the biennial series focused on the major challenges in current and emerging technologies related ...

Axcelis Technologies, Inc. (ACLS) has plunged 15.6% year to date compared with the sub-industry’s decline of 4.3%, reflecting underlying challenges for the company. Axcelis is a leading producer of ion implantation equipment used in the fabrication of semiconductors.Weakness in consumer electronics and EVs vertical has impeded the company’s sales growth momentum. In the first and second quarters, sales declined 0.7% and 6.4%, respectively. ACLS stock is also trading below its 100-day and 200-day moving aver ...

Core Insights - Axcelis Technologies, Inc. will showcase its Purion and GSD Ovation Series of ion implanters at SEMICON India 2024, highlighting significant technology and manufacturing advantages for the semiconductor industry [1][2] - The Indian semiconductor market is projected to exceed $55 billion by 2026, driven by sectors such as smartphones, automotive components, and computing [2] Product Offerings - Purion Power Series: Innovative solutions for thin silicon, TAIKO, and silicon carbide wafer processing across power device applications [1] - Purion H Series: Includes Purion H5 and Purion Dragon, designed for high current implants [1] - Purion H200: A state-of-the-art single wafer high current medium energy implanter for IoT and power applications [1] - Purion XE Series: Features Purion XEmax, a high energy implant platform for advanced image sensor applications up to 15MeV [1] - Purion M Series: Offers a broad spectrum of mid-current doses for evolving implant requirements [1] - GSD Ovation: Cost-effective solution for high current and high energy batch platform capabilities, supporting emerging power market applications [1] Company Background - Axcelis has over 45 years of experience in providing high-productivity solutions for the semiconductor industry, focusing on ion implantation systems [3] - The company is dedicated to developing enabling process applications through design, manufacture, and life cycle support of ion implantation systems [3]

Here are three stocks added to the Zacks Rank #5 (Strong Sell) List today:Bloomin' Brands (BLMN) is a casual dining restaurant company with a portfolio of differentiated restaurant concepts. The Zacks Consensus Estimate for its current year earnings has been revised 14.8% downward over the last 60 days.Axcelis Technologies (ACLS) is a leading producer of ion implantation equipment used in the fabrication of semiconductors. The Zacks Consensus Estimate for its current year earnings has been revised almost 7. ...

These silicon carbide and power chip stocks are down with the EV market, but AI data centers may need their solutions soon.The electric vehicle market encountered a big slowdown last year, and with it, the chipmakers who specialize in the power semiconductors crucial for EVs.But some interesting commentary from two key EV chipmakers this earnings season offer hope not just for an EV recovery, but also that new power-efficient chip technologies may be adopted more and more in power-hungry AI data centers.Wit ...

In today’s unpredictable stock market, investors must discern which stocks to sell to protect their portfolios. The focus here is on three companies facing significant challenges that suggest they may be candidates for the stocks to sell list. Each company experiences fundamental weaknesses that could impact its future performance.For instance, a player in the semiconductor equipment industry relies heavily on a single market, which exposes one company to market volatility and restricts growth opportunities ...

Here are three stocks added to the Zacks Rank #5 (Strong Sell) List today:Archer-Daniels-Midland Company (ADM) is an agricultural commodities and ingredients company. The Zacks Consensus Estimate for its current year earnings has been 1.6% downward over the last 60 days.Axcelis Technologies, Inc. (ACLS) is an equipment supplier to the semiconductor industry. The Zacks Consensus Estimate for its current year earnings has been revised 7.1% downward over the last 60 days.CVS Health Corporation (CVS) is a provi ...

Axcelis Technologies (ACLS) reported second-quarter 2024 non-GAAP earnings per share (EPS) of $1.55, which surpassed the Zacks Consensus Estimate by 11.5%. However, the bottom line decreased 16.7% year over year. The quarter's revenues totaled $256.5 million, beating the Zacks Consensus Estimate by 1.6%. Strong conversion of valuation units and solid demand for ion implantation systems, especially in the silicon carbide space, fueled by the expansion of electric and hybrid vehicles, aided the top line. Addi ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Axcelis Technologies' unaudited consolidated financial statements, including operations, comprehensive income, balance sheets, equity, and cash flows, with detailed notes [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Total revenue decreased by 6.4% and net income by 17.4% for the three months ended June 30, 2024, with similar declines for the six-month period | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenue | $256,512 | $273,970 | $508,883 | $527,990 | | Gross Profit | $112,409 | $119,703 | $228,460 | $223,722 | | Income from Operations| $52,810 | $63,708 | $109,349 | $115,065 | | Net Income | $50,866 | $61,579 | $102,460 | $109,276 | | Basic EPS | $1.56 | $1.88 | $3.14 | $3.34 | | Diluted EPS | $1.55 | $1.86 | $3.12 | $3.29 | - Total revenue decreased by **6.4%** for the three months ended June 30, 2024, and by **3.6%** for the six months ended June 30, 2024, compared to the respective prior year periods[5](index=5&type=chunk) - Net income decreased by **17.4%** for the three months ended June 30, 2024, and by **6.2%** for the six months ended June 30, 2024, compared to the respective prior year periods[5](index=5&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the three months ended June 30, 2024, was **$49.96 million**, a decrease from **$60.57 million** in the prior year, primarily due to lower net income and foreign currency translation adjustments | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $50,866 | $61,579 | $102,460 | $109,276 | | Foreign Currency Translation Adjustments | $(913) | $(1,011) | $(2,644) | $(961) | | Amortization of actuarial net gain and other adjustments from pension plan, net of tax | $5 | — | $10 | — | | Total Other Comprehensive Loss | $(908) | $(1,011) | $(2,634) | $(961) | | Comprehensive Income | $49,958 | $60,568 | $99,826 | $108,315 | - Comprehensive income decreased by **17.5%** for the three months ended June 30, 2024, and by **7.8%** for the six months ended June 30, 2024, compared to the respective prior year periods[7](index=7&type=chunk) [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets increased slightly to **$1.288 billion**, while total liabilities decreased by **15.2%** to **$353.46 million**, and total stockholders' equity increased by **8.1%** to **$934.95 million** | Metric (in thousands) | June 30, 2024 | December 31, 2023 | | :-------------------- | :------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $145,166 | $167,297 | | Short-term investments | $403,143 | $338,851 | | Accounts receivable, net | $188,080 | $217,964 | | Inventories, net | $283,090 | $306,482 | | Total current assets | $1,078,327 | $1,079,991 | | Total assets | $1,288,405 | $1,281,967 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $244,179 | $285,129 | | Total liabilities | $353,457 | $417,085 | | Total stockholders' equity | $934,948 | $864,882 | - Total liabilities decreased by **$63.6 million (15.2%)** from December 31, 2023, to June 30, 2024[10](index=10&type=chunk) - Total stockholders' equity increased by **$70.07 million (8.1%)** from December 31, 2023, to June 30, 2024[10](index=10&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased from **$864.88 million** at December 31, 2023, to **$934.95 million** at June 30, 2024, driven by net income and stock-based compensation, partially offset by share repurchases | Metric (in thousands) | December 31, 2023 | June 30, 2024 | | :-------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $864,882 | $934,948 | | Net Income | N/A | $102,460 | | Stock-based compensation expense | N/A | $10,159 | | Repurchase of common stock | N/A | $(29,995) | | Foreign currency translation adjustments | N/A | $(2,644) | - Net income contributed **$102.46 million** to retained earnings for the six months ended June 30, 2024[11](index=11&type=chunk) - The company repurchased common stock totaling **$29.995 million** during the six months ended June 30, 2024[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2024, net cash provided by operating activities increased to **$82.29 million**, while net cash used in investing activities decreased to **$61.29 million**, and financing activities remained stable at **$40.66 million** | Metric (in thousands) | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $82,290 | $67,274 | | Net cash used in investing activities | $(61,294) | $(73,238) | | Net cash used in financing activities | $(40,656) | $(40,080) | | Net decrease in cash, cash equivalents and restricted cash | $(22,134) | $(47,191) | | Cash, cash equivalents and restricted cash at end of period | $151,817 | $139,156 | - Operating cash flow increased by **$15.02 million (22.3%)** year-over-year for the six months ended June 30, 2024[12](index=12&type=chunk) - Share repurchases accounted for **$29.995 million** of cash used in financing activities during the first six months of 2024[117](index=117&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes provide detailed disclosures on the company's business, accounting policies, stock-based compensation, leases, revenue, and other financial details [Note 1. Nature of Business](index=10&type=section&id=Note%201.%20Nature%20of%20Business) Axcelis Technologies, Inc. produces ion implantation equipment for semiconductor chip fabrication and provides extensive worldwide aftermarket service and support - Axcelis Technologies, Inc. produces ion implantation equipment for semiconductor chip fabrication and provides aftermarket service and support globally[15](index=15&type=chunk) [Note 2. Significant Accounting Policies](index=10&type=section&id=Note%202.%20Significant%20Accounting%20Policies) The company adopted a new accounting policy for derivative financial instruments in 2024 to mitigate foreign currency exchange rate risks, with **$111 million** in open forward exchange contracts - The company adopted a new accounting policy for derivative financial instruments in 2024 to mitigate foreign currency exchange rate risks[17](index=17&type=chunk)[18](index=18&type=chunk) - As of June 30, 2024, Axcelis had open forward exchange contracts with a notional value of **$111 million**, resulting in an unrealized loss of approximately **$323 thousand**[18](index=18&type=chunk) - Gains of **$2.3 million** and **$3.8 million** from forward currency exchange contracts were recorded for the three and six months ended June 30, 2024, respectively[18](index=18&type=chunk) [Note 3. Stock-Based Compensation](index=10&type=section&id=Note%203.%20Stock-Based%20Compensation) Stock-based compensation expense increased to **$5.5 million** for the three months and **$10.2 million** for the six months ended June 30, 2024, compared to the prior year periods | Metric (in millions) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock-based compensation expense | $5.5 | $4.7 | $10.2 | $7.9 | - The company issued **0.2 million** shares of common stock upon vesting of RSUs and purchases under the 2020 ESPP for both the three and six months ended June 30, 2024[22](index=22&type=chunk)[23](index=23&type=chunk) [Note 4. Leases](index=12&type=section&id=Note%204.%20Leases) The company holds operating leases for various facilities and a finance lease for its corporate headquarters, with total leased assets of **$44.91 million** and total lease liabilities of **$73.42 million** as of June 30, 2024 | Metric (in thousands) | June 30, 2024 | December 31, 2023 | | :-------------------- | :------------ | :---------------- | | Operating lease assets | $28,918 | $30,716 | | Finance lease assets | $15,989 | $16,632 | | Total leased assets | $44,907 | $47,348 | | Total lease liabilities | $73,422 | $75,887 | | Lease Cost (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total operating lease cost | $2,685 | $2,614 | $5,282 | $4,858 | | Total finance lease cost | $1,508 | $1,541 | $3,027 | $3,091 | | Total lease cost | $4,193 | $4,155 | $8,309 | $7,949 | - The weighted-average remaining lease term for operating leases is **11.5 years** with a discount rate of **5.5%**, and for finance leases is **12.6 years** with a discount rate of **10.5%** as of June 30, 2024[33](index=33&type=chunk) [Note 5. Revenue](index=15&type=section&id=Note%205.%20Revenue) Total revenue for the three months ended June 30, 2024, was **$256.51 million**, with Systems revenue at **$198.65 million** and Aftermarket revenue at **$57.87 million**, with Asia Pacific remaining the largest geographic market | Revenue Category (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Systems | $198,645 | $215,174 | $394,076 | $410,372 | | Aftermarket | $57,867 | $58,796 | $114,807 | $117,618 | | Total Revenue | $256,512 | $273,970 | $508,883 | $527,990 | | Geographic Market (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $34,373 | $37,918 | $79,876 | $83,084 | | Asia Pacific | $196,159 | $205,941 | $384,376 | $397,044 | | Europe | $25,980 | $30,111 | $44,631 | $47,862 | | Total Revenue | $256,512 | $273,970 | $508,883 | $527,990 | | Contract Liabilities (in thousands) | June 30, 2024 | December 31, 2023 | | :---------------------------------- | :------------ | :---------------- | | Contract liabilities | $174,011 | $210,885 | [Note 6. Receivables and Allowances for Credit Losses](index=16&type=section&id=Note%206.%20Receivables%20and%20Allowances%20for%20Credit%20Losses) Trade receivables are reported net of allowances for credit losses, with **$0.5 million** in recovery of bad debt expense recorded for the six months ended June 30, 2024 - The company recorded **$0.5 million** in recovery of bad debt expense for the six-month period ended June 30, 2024[47](index=47&type=chunk) - No credit losses or recoveries were incurred for the three-month period ended June 30, 2024, or for the six-month period ended June 30, 2023[47](index=47&type=chunk) [Note 7. Computation of Net Earnings per Share](index=18&type=section&id=Note%207.%20Computation%20of%20Net%20Earnings%20per%20Share) Basic EPS for the three months ended June 30, 2024, was **$1.56**, and diluted EPS was **$1.55**, with similar figures for the six-month period | Metric | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $1.56 | $1.88 | $3.14 | $3.34 | | Diluted EPS | $1.55 | $1.86 | $3.12 | $3.29 | | Basic weighted average shares | 32,598 | 32,775 | 32,618 | 32,759 | | Diluted weighted average shares | 32,771 | 33,189 | 32,848 | 33,237 | - Diluted weighted average shares of common stock outstanding for the three and six months ended June 30, 2024, did not include **22,983** and **20,639** common equivalent shares, respectively, as their effect would have been anti-dilutive[49](index=49&type=chunk) [Note 8. Accumulated Other Comprehensive Loss](index=19&type=section&id=Note%208.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss increased to **$(4.48) million** as of June 30, 2024, from **$(1.85) million** at December 31, 2023, primarily due to foreign currency translation adjustments | Component (in thousands) | December 31, 2023 | June 30, 2024 | | :----------------------- | :---------------- | :------------ | | Foreign currency | $(1,956) | $(4,600) | | Defined benefit pension plan | $110 | $120 | | Total | $(1,846) | $(4,480) | - The increase in accumulated other comprehensive loss was mainly driven by foreign currency translation adjustments, which moved from **$(1,956) thousand** to **$(4,600) thousand**[50](index=50&type=chunk) [Note 9. Cash, cash equivalents and restricted cash](index=19&type=section&id=Note%209.%20Cash,%20cash%20equivalents%20and%20restricted%20cash) As of June 30, 2024, total cash, cash equivalents, and restricted cash amounted to **$151.82 million**, with **$6.65 million** in restricted cash for various collateral purposes | Metric (in thousands) | June 30, 2024 | December 31, 2023 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $145,166 | $167,297 | | Long-term restricted cash | $6,651 | $6,654 | | Total cash, cash equivalents and restricted cash | $151,817 | $173,951 | - Restricted cash of **$6.7 million** as of June 30, 2024, includes **$5.9 million** for the headquarters lease, **$0.7 million** for workers' compensation insurance, and **$0.1 million** for customs activity[52](index=52&type=chunk) [Note 10. Inventories, net](index=19&type=section&id=Note%2010.%20Inventories,%20net) Net inventories decreased to **$283.09 million** as of June 30, 2024, from **$306.48 million** at December 31, 2023, primarily due to reductions in raw materials and finished goods | Component (in thousands) | June 30, 2024 | December 31, 2023 | | :----------------------- | :------------ | :---------------- | | Raw materials | $220,910 | $231,200 | | Work in process | $40,481 | $45,373 | | Finished goods (completed systems) | $21,699 | $29,909 | | Inventories, net | $283,090 | $306,482 | - Inventory reserves are established based on forecasted sales, product end-of-life dates, market value, and new product introductions to reduce inventory carrying value to net realizable value[53](index=53&type=chunk) [Note 11. Product Warranty](index=19&type=section&id=Note%2011.%20Product%20Warranty) The standard product warranty liability increased to **$16.42 million** as of June 30, 2024, from **$10.49 million** at January 1, 2023, reflecting new warranties and changes in estimates | Metric (in thousands) | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :-------------------- | :----------------------------- | :----------------------------- | | Balance at January 1 | $16,757 | $10,487 | | Warranties issued during the period | $5,755 | $5,616 | | Settlements made during the period | $(5,653) | $(4,834) | | Changes in estimate of liability for pre-existing warranties during the period | $(444) | $1,552 | | Balance at June 30 | $16,415 | $12,821 | - The company generally offers a one-year warranty for all systems, accruing estimated costs at shipment[54](index=54&type=chunk) [Note 12. Fair Value Measurements](index=21&type=section&id=Note%2012.%20Fair%20Value%20Measurements) As of June 30, 2024, cash equivalents and short-term investments, primarily U.S. Government Securities, totaled **$507.78 million** (Level 1), while forward currency exchange contracts (Level 2) had an unrealized loss of **$323 thousand** | Asset (in thousands) | Level 1 (June 30, 2024) | Level 2 (June 30, 2024) | Total (June 30, 2024) | | :------------------- | :---------------------- | :---------------------- | :-------------------- | | Cash equivalents | $104,958 | — | $104,958 | | Short-term investments | $402,820 | — | $402,820 | | Mark-to-market adjustment on forward exchange contracts | — | $(323) | $(323) | | Total | $507,778 | $(323) | $507,455 | - Forward currency exchange contracts, initiated in February 2024 to mitigate foreign currency fluctuations, are measured at fair value using observable market inputs and classified within Level 2 of the valuation hierarchy[63](index=63&type=chunk) [Note 13. Financing Arrangements](index=22&type=section&id=Note%2013.%20Financing%20Arrangements) The company has a financing lease obligation of **$44.5 million** as of June 30, 2024, related to the 2015 sale-leaseback of its corporate headquarters, secured by a **$5.9 million** cash collateralized letter of credit - As of June 30, 2024, Axcelis had a financing obligation of **$44.5 million** from the sale-leaseback of its corporate headquarters[64](index=64&type=chunk) - A **$5.9 million** cash collateralized letter of credit is held as a security deposit for the headquarters lease, classified as long-term restricted cash[66](index=66&type=chunk) [Note 14. Income Taxes](index=24&type=section&id=Note%2014.%20Income%20Taxes) Income tax expense increased to **$6.4 million** for the three months and **$13.8 million** for the six months ended June 30, 2024, primarily due to a decrease in stock compensation deduction | Metric (in millions) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense | $6.4 | $3.0 | $13.8 | $8.2 | - The increase in income tax expense was primarily due to a decrease in stock compensation deduction[67](index=67&type=chunk) - The effective tax rate was less than the U.S. statutory rate of **21%** due to a forecasted Foreign Derived Intangible Income deduction, Federal R&D tax credits, and a favorable discrete item related to equity compensation[67](index=67&type=chunk) [Note 15. Concentration of Risk](index=24&type=section&id=Note%2015.%20Concentration%20of%20Risk) For the three months ended June 30, 2024, one customer accounted for **11.5%** of total revenue, and one customer represented **11.3%** of accounts receivable at period-end - One customer accounted for **11.5%** of total revenue for the three months ended June 30, 2024[68](index=68&type=chunk) - No individual customer accounted for greater than **ten percent** of total revenue for the six months ended June 30, 2024[68](index=68&type=chunk) - One customer accounted for **11.3%** of accounts receivable at June 30, 2024[68](index=68&type=chunk) [Note 16. Share Repurchase](index=24&type=section&id=Note%2016.%20Share%20Repurchase) During the six months ended June 30, 2024, the company repurchased **0.3 million** shares at an average cost of **$114.07** per share under its **$200 million** stock repurchase program - The Board of Directors approved an additional **$200 million** for the stock repurchase program in August 2023[69](index=69&type=chunk) - During the six months ended June 30, 2024, **0.3 million** shares were repurchased at an average cost of **$114.07** per share[69](index=69&type=chunk) [Note 17. Contingencies](index=24&type=section&id=Note%2017.%20Contingencies) The company is not currently involved in any litigation expected to have a material adverse effect on its business, and no material costs have been incurred for intellectual property indemnification provisions - The company is not currently involved in any litigation that is expected to have a material adverse effect on its business operations[70](index=70&type=chunk)[125](index=125&type=chunk) - System sales agreements include intellectual property indemnification provisions, but no material costs have been incurred or accrued[72](index=72&type=chunk) [Note 18. Recent Accounting Guidance](index=26&type=section&id=Note%2018.%20Recent%20Accounting%20Guidance) The company is evaluating the impact of recently issued FASB Accounting Standards Updates: ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), effective for fiscal years beginning after December 15, 2023, and December 15, 2024, respectively - ASU 2023-07 (Segment Reporting) is effective for fiscal years beginning after December 15, 2023, and aims to enhance disclosures for significant segment expenses[73](index=73&type=chunk) - ASU 2023-09 (Income Taxes) is effective for annual periods beginning after December 15, 2024, and seeks to improve income tax disclosures, particularly for rate reconciliation and taxes paid[74](index=74&type=chunk) - The company is currently evaluating the impact of both ASUs on its future consolidated financial statements and related disclosures[73](index=73&type=chunk)[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, highlighting revenue trends, gross profit, operating expenses, and liquidity, noting strong demand in the mature process segment [Overview](index=27&type=section&id=Overview) Axcelis Technologies, a leading producer of ion implantation equipment, saw strong demand in the first half of 2024, with **98%** of shipped systems revenue from the mature process segment, primarily power devices - Axcelis is a primary producer of ion implantation equipment for semiconductor chips and provides extensive worldwide aftermarket service and support[77](index=77&type=chunk) - The first six months of 2024 exhibited continued strong demand for capital equipment, with the mature process segment representing **98%** of shipped systems revenue[78](index=78&type=chunk) - Power device shipments comprised **59%** of total systems revenue, general mature **36%**, and image sensors **4%**[78](index=78&type=chunk) - Demand from silicon carbide customers within the power segment is expected to remain healthy in the second half of 2024, with DRAM and NAND spending projected to pick up in 2025[78](index=78&type=chunk) [Critical Accounting Estimates](index=27&type=section&id=Critical%20Accounting%20Estimates) Management's financial reporting relies on continuous evaluation of estimates and judgments, with no material changes identified since the 2023 Form 10-K - The preparation of financial statements requires management to make estimates and judgments that affect reported amounts[79](index=79&type=chunk) - No material changes have been made to critical accounting estimates and judgments as described in the 2023 Form 10-K[80](index=80&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section details the company's financial performance, including revenue breakdown by product and service, gross profit margins, and operating expenses, highlighting a decrease in product revenue but an increase in service revenue [Revenue](index=29&type=section&id=Revenue) Total revenue decreased by **6.4%** to **$256.51 million** for the three months and by **3.6%** to **$508.88 million** for the six months ended June 30, 2024, primarily due to a decrease in system sales, while services revenue increased significantly | Revenue Category (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Period-to-Period Change ($) | Period-to-Period Change (%) | | :------------------------------ | :------------------------------- | :------------------------------- | :-------------------------- | :-------------------------- | | Product | $245,380 | $265,673 | $(20,293) | (7.6)% | | Services | $11,132 | $8,297 | $2,835 | 34.2% | | Total revenue | $256,512 | $273,970 | $(17,458) | (6.4)% | | Revenue Category (in thousands) | Six months ended June 30, 2024 | Six months ended June 30, 2023 | Period-to-Period Change ($) | Period-to-Period Change (%) | | :------------------------------ | :----------------------------- | :----------------------------- | :-------------------------- | :-------------------------- | | Product | $488,798 | $511,680 | $(22,882) | (4.5)% | | Services | $20,085 | $16,310 | $3,775 | 23.1% | | Total revenue | $508,883 | $527,990 | $(19,107) | (3.6)% | - The decrease in product revenue for both periods was primarily driven by a decrease in system sales[84](index=84&type=chunk)[87](index=87&type=chunk) [Aftermarket and Systems Revenue](index=33&type=section&id=Aftermarket%20and%20Systems%20Revenue) For the three months ended June 30, 2024, Aftermarket revenue was **$57.9 million**, a slight decrease from **$58.8 million** in the prior year, while Systems revenue decreased to **$198.6 million** from **$215.2 million** - Aftermarket revenue for the three months ended June 30, 2024, was **$57.9 million**, compared to **$58.8 million** in the prior year[90](index=90&type=chunk) - Systems revenue for the three months ended June 30, 2024, was **$198.6 million**, down from **$215.2 million** in the prior year[90](index=90&type=chunk) - Aftermarket revenue for the six months ended June 30, 2024, was **$114.8 million**, compared to **$117.6 million** in the prior year[91](index=91&type=chunk) - Systems revenue for the six months ended June 30, 2024, was **$394.1 million**, compared to **$410.4 million** in the prior year[91](index=91&type=chunk) [Gross Profit / Gross Margin](index=33&type=section&id=Gross%20Profit%20%2F%20Gross%20Margin) Total gross profit decreased by **6.1%** to **$112.41 million** for the three months but increased by **2.1%** to **$228.46 million** for the six months, with improved product and services gross margins due to favorable mix changes | Metric | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product Gross Profit (in thousands) | $110,621 | $118,932 | $226,128 | $222,168 | | Product Gross Margin (%) | 45.1% | 44.8% | 46.3% | 43.4% | | Services Gross Profit (in thousands) | $1,788 | $771 | $2,332 | $1,554 | | Services Gross Margin (%) | 16.1% | 9.3% | 11.6% | 9.5% | | Total Gross Profit (in thousands) | $112,409 | $119,703 | $228,460 | $223,722 | | Total Gross Margin (%) | 43.9% | 43.7% | 44.9% | 42.4% | - The increase in product gross margin was primarily due to a favorable mix of system revenue[93](index=93&type=chunk)[96](index=96&type=chunk) - The increase in services gross margin was attributable to changes in the mix of service contracts[94](index=94&type=chunk)[96](index=96&type=chunk) [Operating Expenses](index=35&type=section&id=Operating%20Expenses) Total operating expenses increased by **6.4%** to **$59.6 million** for the three months and by **9.6%** to **$119.11 million** for the six months ended June 30, 2024, primarily due to higher personnel costs | Operating Expense (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $25,786 | $24,130 | $51,448 | $47,903 | | Sales and marketing | $17,230 | $15,537 | $34,675 | $29,681 | | General and administrative | $16,583 | $16,328 | $32,988 | $31,073 | | Total operating expenses | $59,599 | $55,995 | $119,111 | $108,657 | - Personnel costs, the largest expense, increased due to higher wages and headcount, partially offset by a decrease in bonus expense[98](index=98&type=chunk) [Research and Development](index=35&type=section&id=Research%20and%20Development) Research and development expense increased by **6.9%** to **$25.8 million** for the three months and by **7.4%** to **$51.4 million** for the six months ended June 30, 2024, primarily due to higher personnel expenses | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $25,786 | $24,130 | $51,448 | $47,903 | - The increase in R&D expense is primarily due to higher personnel expenses associated with increases in wages and headcount[101](index=101&type=chunk) [Sales and Marketing](index=37&type=section&id=Sales%20and%20Marketing) Sales and marketing expense increased by **10.9%** to **$17.2 million** for the three months and by **16.8%** to **$34.7 million** for the six months ended June 30, 2024, mainly due to higher personnel expenses | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales and marketing | $17,230 | $15,537 | $34,675 | $29,681 | - The increase in sales and marketing expense is primarily due to higher personnel expenses associated with increases in wages and headcount[103](index=103&type=chunk) [General and Administrative](index=37&type=section&id=General%20and%20Administrative) General and administrative expense increased by **1.6%** to **$16.6 million** for the three months and by **6.2%** to **$33.0 million** for the six months ended June 30, 2024, driven by higher personnel expenses | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative | $16,583 | $16,328 | $32,988 | $31,073 | - The increase in G&A expense is primarily due to higher personnel expenses associated with an increase in headcount, offset by a decrease in bonus expense for the three-month period[105](index=105&type=chunk)[107](index=107&type=chunk) [Other Income (Expense)](index=39&type=section&id=Other%20Income%20(Expense)) Total other income significantly increased to **$4.5 million** for the three months and **$6.9 million** for the six months ended June 30, 2024, primarily due to higher interest income and foreign exchange gains | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total other income | $4,455 | $908 | $6,914 | $2,453 | - The **$3.5 million** increase in other income for the three months was primarily due to a **$1.7 million** increase in interest income and **$2.3 million** in foreign exchange gains from forward currency exchange contracts, partially offset by **$2.5 million** in foreign exchange losses[109](index=109&type=chunk) - The **$4.5 million** increase in other income for the six months was primarily due to a **$3.3 million** increase in interest income and **$3.8 million** in foreign exchange gains from forward currency exchange contracts, partially offset by **$5.9 million** in foreign exchange losses[109](index=109&type=chunk) [Income Tax Provision](index=39&type=section&id=Income%20Tax%20Provision) Income tax expense increased to **$6.4 million** for the three months and **$13.8 million** for the six months ended June 30, 2024, primarily due to a decrease in stock compensation deduction, with the effective tax rate remaining below the U.S. statutory rate of **21%** | Metric (in thousands) | Three months ended June 30, 2024 | Three months ended June 30, 2023 | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax provision | $6,399 | $3,037 | $13,803 | $8,242 | - The increase in income tax expense was primarily due to a decrease in stock compensation deduction[110](index=110&type=chunk) - The effective tax rate was less than the U.S. statutory rate of **21%** due to a forecasted Foreign Derived Intangible Income deduction, Federal R&D tax credits, and a favorable discrete item related to equity compensation[111](index=111&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2024, Axcelis maintained strong liquidity with **$145.2 million** in unrestricted cash and cash equivalents and **$403.1 million** in short-term investments, with operating activities generating **$82.3 million** in cash - As of June 30, 2024, the company had **$145.2 million** in unrestricted cash and cash equivalents and **$403.1 million** in short-term investments[114](index=114&type=chunk) - Net cash provided by operating activities was **$82.3 million** for the six months ended June 30, 2024, an increase from **$67.3 million** in the prior year[115](index=115&type=chunk) - Investing activities resulted in **$61.3 million** in cash outflows, including **$3.6 million** for capital expenditures and **$249.0 million** for short-term investments, partially offset by **$191.3 million** from maturities of short-term investments[116](index=116&type=chunk) - Financing activities used **$40.7 million**, primarily for common stock repurchases (**$30.0 million**) and tax withholdings on restricted stock grants (**$11.2 million**)[117](index=117&type=chunk) - Management believes current cash and cash equivalents are sufficient to meet anticipated short- and long-term cash requirements[118](index=118&type=chunk) [Commitments and Contingencies](index=41&type=section&id=Commitments%20and%20Contingencies) Significant commitments and contingencies as of June 30, 2024, remain consistent with those disclosed in the 2023 Form 10-K - Significant commitments and contingencies at June 30, 2024, are consistent with those discussed in the 2023 Form 10-K[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of June 30, 2024, there have been no material changes to the quantitative and qualitative disclosures about market risk previously reported in the 2023 Form 10-K - No material changes to market risk disclosures have occurred as of June 30, 2024, compared to the 2023 Form 10-K[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control over financial reporting identified during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2024[122](index=122&type=chunk) - No material changes in internal control over financial reporting were identified during the three months ended June 30, 2024[123](index=123&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any litigation that is expected to have a material adverse effect on its business operations - The company is not presently a party to any litigation that is believed to have a material adverse effect on its business operations[125](index=125&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) As of June 30, 2024, there have been no material changes to the risk factors described in the company's 2023 Form 10-K - No material changes to the risk factors described in Item 1A of the 2023 Form 10-K have occurred as of June 30, 2024[126](index=126&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Board of Directors approved a **$200 million** additional funding for its stock repurchase program in August 2023, with **141 thousand** shares repurchased during the three months ended June 30, 2024 - The Board of Directors approved an additional **$200 million** for the stock repurchase program in August 2023, with no expiration date[126](index=126&type=chunk) | Period (three months ended June 30, 2024) | Total Number of Shares Purchased (in thousands) | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands) | | :---------------------------------------- | :---------------------------------------------- | :--------------------------- | :------------------------------------------------------------------------------------------ | | April 1 through April 30 | 78 | $103.33 | $166,999 | | May 1 through May 31 | 63 | $110.03 | $160,011 | | June 1 through June 30 | — | — | $160,011 | | Total | 141 | N/A | N/A | [Item 3. Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - No defaults upon senior securities occurred[129](index=129&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[129](index=129&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) During the quarter ended June 30, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements - No director or officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2024[130](index=130&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, certifications from executive officers, and iXBRL formatted financial statements - Exhibits include Restated Certificate of Incorporation, Certificate of Amendment, Bylaws, and certifications from Principal Executive Officer and Principal Financial Officer under Exchange Act Rule 13a-14(a)/15d-14(a) and Section 1350 of Chapter 63 of title 18 of the United States Code[132](index=132&type=chunk) - The financial statements (Consolidated Statements of Operations, Comprehensive Income, Balance Sheets, Cash Flows, and Notes) are filed in inline eXtensible Business Reporting Language (iXBRL) format[132](index=132&type=chunk) SIGNATURES