Axcelis(US:ACLS)2024-05-02 16:21Financial Data and Key Metrics Changes - Revenue for Q1 2024 was $252.4 million, exceeding forecasts, with earnings per diluted share at $1.57, a 10% increase from $1.43 in the same period last year [6][18] - Gross margin improved by over 500 basis points, primarily due to product mix, despite higher selling costs, R&D, and taxes [6][19] - Systems bookings totaled $107 million, with a systems backlog of $1.1 billion at the end of the quarter [18] Business Line Data and Key Metrics Changes - Systems revenue was $195.4 million, while CS&I revenue was $56.9 million, reflecting flat system volume and a modest decline in CS&I compared to the prior year [18] - Mature nodes accounted for 99% of shipped systems revenue, with power devices leading at 55% of total systems revenue [9][10] - In the power segment, silicon carbide and silicon IGBTs represented 76% and 24% of the revenue recognized, respectively [10] Market Data and Key Metrics Changes - Geographically, China represented 59% of sales, followed by the U.S. at 17%, Japan at 7%, Europe at 4%, Korea at 4%, and the rest of the world at 9% [9] - The company expects China to represent 40% to 60% of quarterly systems revenue moving forward [11] Company Strategy and Development Direction - The company aims to extend its lead in the power market and establish a position in advanced logic through focused R&D and marketing efforts [7][14] - Investments are being made in joint development engagements and evaluation systems to grow market share [7][21] - The company is focused on improving operational efficiency and gross margins, with a retirement incentive program expected to yield cost savings in the second half of the year [20] Management's Comments on Operating Environment and Future Outlook - Management anticipates a stronger second half of 2024, driven by recovery in mature markets and continued strength in the power segment [17][68] - The timing of the recovery in memory markets is expected to be later than previously anticipated, with NAND recovery not expected until 2025 [11][68] - Management remains optimistic about long-term growth driven by trends in electric vehicles, AI, and IoT [14][16] Other Important Information - The company ended Q1 with $530.2 million in available cash and generated $42.2 million from operations [23] - A share repurchase program has returned over $200 million to shareholders since 2019 [23] Q&A Session Summary Question: Insights on near-term order dynamics and second half sales potential - Management noted a $1 billion run rate in the first half and expects a stronger second half, supported by a $1.1 billion backlog and improved quoting activity [28][29] Question: Impact of gross margin optimization initiatives - The early retirement incentive program is expected to cost approximately $1.5 million, with benefits accruing in the second half of 2024 [31] Question: DRAM recovery timeline and market drivers - Management acknowledged a slower DRAM recovery but noted strong demand for high-bandwidth memory and plans for future capacity expansions [36][39] Question: Trends in silicon carbide and other markets - Management confirmed continued strength in silicon carbide, with expectations for a recovery in general mature markets driven by consumer spending [47][52] Question: Long-term growth drivers and market conditions - Management highlighted the importance of power devices and the expected recovery in memory markets as key drivers for achieving long-term growth targets [72][74]