Market Overview - Some investors express concerns about an expensive market near all-time highs, but not all stocks are expensive or near their highs [1] - The high-growth technology sector, particularly companies focused on the auto and industrial markets, is experiencing a downturn due to rising interest rates leading to decreased demand [1] Axcelis Technologies - Axcelis Technologies is a leader in ion implantation equipment for semiconductor manufacturing, with a significant portion of its sales tied to silicon carbide (SiC) production [3][4] - Despite a downturn, 41% of Axcelis' 2024 sales are from SiC, and 97% are from trailing-edge chips used in various applications [4] - Earnings per share (EPS) peaked at $7.43 in 2023 but fell to $6.15 in 2024, with a projected 27% sequential revenue decline in Q1 2025 and EPS expected to drop to $0.38 [5] - The stock has decreased 66% from its 2023 high of $201 to $59, but the company has $571.3 million in cash and no debt, equating to $17.48 per share, which is nearly 30% of its market cap [6] - Long-term investors may find value at current prices, as the company is generating cash during the downturn [7] IPG Photonics - IPG Photonics produces high-end lasers for industrial and medical applications and has faced significant challenges, including a downturn exacerbated by the Russia-Ukraine conflict [8][9] - The stock has fallen 74% from a high of $264 in 2021 to around $64 today, but the company holds $930.1 million in cash with no debt, representing $21.86 per share, or about one-third of its market cap [10] - The company’s peak earnings were $5.16 per share in 2021, and current trading reflects a P/E ratio of 12, which drops to 8.1 when excluding cash [10] - The new CEO plans to invest in differentiating technologies while being less aggressive with share repurchases, which may lead to short-term losses [11][12] - If there is a recovery in the industrial or auto sectors, IPG could see significant stock price appreciation, supported by its cash reserves [12]

Core Viewpoint - Axcelis Technologies reported strong fourth-quarter results but issued disappointing forward guidance, leading to a significant drop in stock price [1][2][3]. Financial Performance - The company reported earnings per share (EPS) of $1.54 on revenue of $252.42 million for the fourth quarter, surpassing analyst estimates of $1.25 EPS and $244.95 million in revenue [2]. - Year-over-year sales declined approximately 19%, but the results still exceeded Wall Street targets [2]. - Diluted EPS fell roughly 28% compared to the prior year, yet remained better than average analyst expectations [3]. Forward Guidance - For the first quarter, management anticipates revenue of approximately $185 million, significantly lower than the $221.6 million expected by analysts and down from $252.4 million in the same quarter last year [4]. - Projected earnings per diluted share are expected to be $0.38, a substantial decrease from $1.57 a year ago [4]. Market Outlook - Despite expectations for growth in the silicon carbide market, Axcelis anticipates weaker demand as customers deplete existing supplies [5]. - Overall revenue is expected to decline this year due to this trend and softer demand in the Chinese market [5]. - Management does foresee moderate sales improvement in the second half of the year, with strong long-term results expected from product categories like silicon carbide and memory recovery [6].

Financial Data and Key Metrics Changes - The company reported fourth quarter revenues of $252 million, with earnings per diluted share of $1.54, exceeding expectations due to strong demand in CS&I sales [7][30] - Gross margins for the fourth quarter were 46%, surpassing the outlook of 42.5%, driven by better-than-expected CS&I revenue [33] - For the full year 2024, total revenue was $1.02 billion, with gross margins of 44.7%, a 120 basis point increase year-over-year despite lower revenue volume [36] Business Line Data and Key Metrics Changes - System sales saw a sequential decline in Power and Image Sensors, but improvements were noted in General Mature and Memory sales [8][9] - CS&I revenue for the fourth quarter was $65 million, with stronger upgrade activity contributing to a 17% sequential growth [30][31] - Silicon Carbide system sales grew approximately 6% year-over-year, with expectations of a slight decline in 2025 due to customer digestion periods [10][12] Market Data and Key Metrics Changes - China accounted for 49% of total shipped system sales, with a sequential decline primarily due to a drop in Image Sensor sales [31] - System sales to Korea improved to 11% in the fourth quarter, up from 1% in the third quarter, mainly due to improved memory shipments [31] - The company anticipates a muted NAND market in 2025, while expecting growth in DRAM driven by AI and increased memory content in devices [20][22] Company Strategy and Development Direction - The company aims to capture growth opportunities in Silicon Carbide and Advanced Logic markets, focusing on technology engagement with customers [26][50] - A strategic goal is to expand within the Advanced Logic market, which is seen as a multi-year initiative [18] - The company plans to continue investing in product innovation and customer technology roadmaps despite near-term market digestion [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a stronger second half of 2025 based on backlog and customer conversations, despite a muted near-term demand backdrop [55][57] - The company expects overall revenue in 2025 to decline year-over-year, with a focus on DRAM investments while NAND remains muted [24][25] - Management highlighted the importance of maintaining strong margins and cost control amidst a dynamic demand environment [23][39] Other Important Information - The company exited 2024 with a strong balance sheet, consisting of $571 million in cash and no debt, allowing for continued investment and share repurchase programs [38][40] - New reporting changes will include non-GAAP measures and the inclusion of Image Sensor revenue in the General Mature category starting in Q1 2025 [41][42] Q&A Session Summary Question: Factors for a stronger second half in 2025 - Management indicated that backlog and customer conversations suggest a stronger second half, with bookings stabilizing and projects formalizing [55][56] Question: Memory revenue expectations - Management expects the majority of memory revenue in 2025 to come from DRAM, with NAND remaining muted due to capacity issues [59][60] Question: Impact of export controls on revenue - Management clarified that recent information provided confidence in system shipments, adjusting the estimated impact of export controls to the low end of the previously guided range [63][65] Question: Dynamics of digestion in the first quarter - Management noted that digestion in the Power and General Mature markets is primarily in China, with resilience observed in other geographies [72][75] Question: Silicon Carbide revenue exposure - Management confirmed that while China is a significant market for Silicon Carbide, the business remains robust globally, with diverse customer engagement [88][90] Question: Increase in CS&I revenue - Management attributed the 17% sequential growth in CS&I to stronger upgrade activity and execution on service contracts across multiple regions [107][108]

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $252 million, with earnings per diluted share of $1.54, slightly better than expectations due to strong demand in aftermarket CS and I sales [5][19] - Full year 2024 revenue totaled $1.02 billion, consisting of $783 million in systems revenue and $235 million in CS and I revenue [19] - Gross margins for Q4 were 46%, exceeding the outlook of 42.5%, driven by stronger CS and I revenue [21] - Full year gross margins were 44.7%, a 120 basis point increase year over year despite lower revenue volume [23] Business Line Data and Key Metrics Changes - Mature node applications accounted for the majority of sales, particularly in power and general mature segments [6] - Revenue from the power market was 51% of the mix, down from 57% in Q3 2024, while silicon carbide system sales grew approximately 6% year over year [6][7] - Image sensor revenue moderated in Q4 following a large customer order in Q3, with expectations for flattish revenue in Q1 2025 [11] - Memory sales improved sequentially in Q4, particularly in DRAM, with expectations for consistent sales in Q1 2025 [12] Market Data and Key Metrics Changes - China remained the strongest region, accounting for 49% of total shipped system sales, although there was a sequential decline due to lower image sensor sales [20] - System sales to Korea improved to 11% in Q4 from 1% in Q3, mainly due to improved shipments in memory [20] - The company anticipates a decline in revenue from silicon carbide in Q1 2025 as customers undergo a digestion period, but long-term drivers remain intact [8][30] Company Strategy and Development Direction - The company is focused on capturing growth opportunities through product innovation, cost management, and customer engagement on technology roadmaps [31] - Long-term growth drivers include the increasing demand for silicon carbide in power applications and market recovery in memory and general mature segments [17][18] - The company plans to continue organic investments, execute share buybacks, and evaluate inorganic growth opportunities [25] Management's Comments on Operating Environment and Future Outlook - Management expects overall revenue in 2025 to decline year over year, with a slight uptick anticipated in the second half of the year based on backlog and customer discussions [28][36] - The company is monitoring the impact of new U.S. government restrictions on revenue from China, estimating a potential impact of $20 million to $50 million in 2025 [30] - Management remains optimistic about the long-term growth potential in silicon carbide and memory markets despite short-term challenges [17][18] Other Important Information - The company received 22 customer awards in 2024, reflecting a significant increase compared to 2023, highlighting its commitment to customer satisfaction [18] - The company will begin including image sensor revenue as part of its general mature category starting in Q1 2025 to simplify disclosures [27] Q&A Session Summary Question: Factors for a stronger second half in 2025 - Management believes the second half will be stronger based on backlog, customer conversations, and stabilized bookings [34][36] Question: Memory revenue expectations for 2025 - Management expects the majority of memory revenue in 2025 to come from DRAM, with NAND remaining muted due to capacity issues [39][41] Question: Impact of export control on revenue from China - Management revised the estimated impact of export controls to the low end of the previously guided range, based on new information received [44][45] Question: Near-term dynamics and digestion in China - Management noted that digestion in China is not solely due to oversupply but also involves technology ramping and yield optimization [50][52] Question: Silicon carbide revenue and geographic exposure - Management indicated that while silicon carbide revenue is expected to be down in 2025, it remains a robust business with diverse customer engagement [66][68]

Q4 2024 EARNINGS PRESENTATION FEBRUARY 11, 2025 Strong demand for aftermarket CS&I sales Sequential decline in Power and Image Sensor, offset by an improvement in General Mature and Memory CS&I sales the primary driver behind better-than-expected margins and EPS Bookings stabilized, and flat on a sequential basis 3 SHIPPED SYSTEMS REVENUE BY SEGMENT: Q4 & FULL YEAR 2024 p o w e r m a t u r e n o d e s p o w e r m a t u r e n o d e s Q4'24 SEGMENT 2024* 36% SILICON CARBIDE (SiC) 41% 14% SILICON IGBT 15% 34% ...

Core Insights - Axcelis Technologies (ACLS) reported quarterly earnings of $1.54 per share, exceeding the Zacks Consensus Estimate of $1.25 per share, but down from $2.15 per share a year ago, indicating an earnings surprise of 23.20% [1] - The company achieved revenues of $252.42 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.07%, but down from $310.29 million year-over-year [2] - Axcelis has consistently surpassed consensus EPS estimates over the last four quarters [2] Earnings Outlook - The immediate price movement of Axcelis shares will depend on management's commentary during the earnings call and future earnings expectations [3][4] - Current consensus EPS estimate for the upcoming quarter is $1.03 on revenues of $225.7 million, and for the current fiscal year, it is $5 on revenues of $974.65 million [7] Industry Context - The Electronics - Manufacturing Machinery industry, to which Axcelis belongs, is currently ranked in the bottom 10% of over 250 Zacks industries, which may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [5]

Financial Performance - For the full year 2024, Axcelis reported revenue of $1.02 billion, a decrease of 9.7% compared to $1.13 billion in 2023[2] - Fourth quarter revenue was $252.4 million, down from $256.6 million in the third quarter of 2024, with a gross margin of 46.0%[3] - Operating profit for the full year 2024 was $210.8 million, compared to $265.8 million in 2023, reflecting a decline of 20.7%[2] - Net income for 2024 was $201 million, with diluted earnings per share of $6.15, down from $246.3 million and $7.43 per share in 2023[2] - Net income for Q4 2024 was $49,956 million, a decrease of 29.5% compared to $71,056 million in Q4 2023[16] Future Outlook - Axcelis expects first quarter 2025 revenues of approximately $185 million and earnings per diluted share of approximately $0.38[6] - The company plans to focus on product innovation and cost management to capture long-term growth opportunities[4] Cash and Assets - Cash and cash equivalents decreased to $123.5 million as of December 31, 2024, from $167.3 million a year earlier[14] - Total assets increased to $1.35 billion as of December 31, 2024, compared to $1.28 billion in 2023[14] - Cash, cash equivalents, and restricted cash at the end of the period stood at $131,064 million, unchanged from the previous year[16] Cash Flow and Financing - Net cash provided by operating activities for the twelve months ended December 31, 2024, was $140,818 million, down from $156,869 million in the previous year, reflecting a decrease of 10.2%[16] - Cash flows from investing activities showed a net cash used of $108,726 million for the twelve months ended December 31, 2024, compared to $100,858 million in 2023, indicating an increase in cash outflow of 7.4%[16] - The net cash used in financing activities for the twelve months ended December 31, 2024, was $71,192 million, compared to $68,268 million in 2023, indicating an increase of 2.7%[16] Shareholder Returns - The company returned capital to shareholders through buybacks, exiting the year with a stronger balance sheet[4] - The company repurchased $60,489 million of common stock in the twelve months ended December 31, 2024, compared to $52,499 million in 2023, representing an increase of 15.2%[16] Expenses - Depreciation and amortization expenses for Q4 2024 were $4,267 million, up from $3,581 million in Q4 2023, reflecting an increase of 19.2%[16] - Stock-based compensation expense for the twelve months ended December 31, 2024, was $20,951 million, an increase of 14.8% from $18,269 million in 2023[16] Operational Changes - The company experienced a significant change in operating assets and liabilities, with a net decrease of $46,381 million in Q4 2024 compared to a slight increase of $264 million in Q4 2023[16] - The effect of exchange rate changes on cash and cash equivalents resulted in a decrease of $3,013 million in Q4 2024, contrasting with an increase of $1,128 million in Q4 2023[16]

Financial Performance - For the full year 2024, the company reported revenue of $1.02 billion, a decrease from $1.13 billion in 2023. Systems revenue was $782.6 million, down from $883.6 million in 2023. Operating profit was $210.8 million compared to $265.8 million in 2023. Net income for the year was $201 million with diluted earnings per share of $6.15, down from net income of $246.3 million and diluted earnings per share of $7.43 in 2023. Gross margin improved to 44.7% from 43.5% in 2023 [2][4]. - In Q4 2024, the company reported revenue of $252.4 million, slightly down from $256.6 million in Q3 2024. Gross margin for the quarter was 46.0%, an increase from 42.9% in Q3. Operating profit for the quarter was $54.5 million, up from $46.9 million in Q3. Net income for the quarter was $50 million, or $1.54 per diluted share, compared to $48.6 million, or $1.49 per diluted share in Q3 [3][8]. Management Commentary - The President and CEO highlighted that the company exited the year strongly, with Q4 revenue and profitability exceeding expectations. Looking ahead to 2025, the company anticipates a cyclical digestion period as customers adjust to previous investments, particularly in China. The focus will be on long-term growth opportunities through product innovation, cost management, and collaboration with customers on technology roadmaps [4]. - The Executive Vice President and CFO expressed satisfaction with the financial execution in 2024, noting the ability to deliver higher gross margins and solid free cash flow despite a revenue decline. The company returned capital to shareholders via buybacks and ended the year with a stronger balance sheet, positioning itself to invest during the cyclical digestion period [4]. Business Outlook - For Q1 2025, the company expects revenues of approximately $185 million and earnings per diluted share of approximately $0.38 [5].

Core Insights - Axcelis Technologies, Inc. will showcase its Purion™ platform of ion implanters at SEMICON Korea 2025, highlighting trends such as AI, advanced packaging, and sustainable semiconductor manufacturing technologies [1][2] Company Overview - Axcelis has over 45 years of experience providing innovative, high-productivity solutions for the semiconductor industry, focusing on ion implantation systems [3] Event Participation - The company will be located at Booth D622 during SEMICON Korea, emphasizing its commitment to the Korean market and the expansion of its operations with a new Asia HUB Warehouse [2] Product Offerings - The Purion™ platform is the flagship implant platform, addressing various implant requirements for existing and emerging applications [5] - The Purion Power Series™ is designed for power devices, accommodating multiple wafer sizes (150mm, 200mm, and 300mm) and various substrate types [5] - New upgrade offerings include enhancements for performance and efficiency, featuring innovative source technology and productivity packages [5]

Company Performance - Axcelis Technologies (ACLS) ended the latest trading session at $66.15, reflecting a +0.68% adjustment from the previous close, while the S&P 500 gained 0.72% [1] - The stock has experienced an 11.75% decline over the past month, underperforming the Computer and Technology sector's loss of 1.35% and the S&P 500's gain of 1.02% [1] Upcoming Earnings Report - Axcelis Technologies is set to release its earnings report on February 10, 2025, with projected earnings per share (EPS) of $1.25, indicating a 41.86% decrease from the same quarter last year [2] - Revenue is expected to be $244.9 million, reflecting a 21.07% drop compared to the year-ago quarter [2] Analyst Forecasts - Investors should monitor recent revisions to analyst forecasts for Axcelis Technologies, as these revisions often indicate short-term business trends [3] - Positive estimate revisions are viewed as a sign of optimism regarding the company's business outlook [3] Valuation Metrics - Axcelis Technologies has a Forward P/E ratio of 13.13, which is a discount compared to the industry average Forward P/E of 24.09 [6] - The company's PEG ratio stands at 2.4, while the Electronics - Manufacturing Machinery industry has an average PEG ratio of 0.95 [6] Industry Context - The Electronics - Manufacturing Machinery industry is part of the Computer and Technology sector and currently holds a Zacks Industry Rank of 206, placing it in the bottom 18% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]