Axcelis Technologies Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Craig Ellis - B. Riley Securities - Analyst : Yeah, thanks for taking the question team. I wanted to start with inquiry on order activity and hoping you could put more context around some of the slides in the deck. So the question is, can you just frame up what you've seen with orders on an end use basis and maybe a geographic basis starting with the momentum that exists in the big business exiting 2Q, how things played out in 3Q and what you've seen fourth quarter to date?

Question: Craig Ellis - B. Riley Securities - Analyst : Got it. And then just following up on the point, you made Jamie about the first half of '25. Can you talk about within the view the company now has, what are some of the positives half on half and one half, '25 what are some of the headwinds? And how does that stack up both on a geographic basis and on an end use basis?

Question: Craig Ellis - B. Riley Securities - Analyst : Got it guys. I'll hop back in the queue. Thanks for the help.

Question: Jack Egan - Charter Equity Research, Inc. - Analyst : Hey guys, thanks for taking the questions. So a few days ago, there was a report that some other capital equipment companies are directing their suppliers to kind of eliminate the use of Chinese components. I'm not really sure to what degree Axcelis uses Chinese suppliers for your components. But have you taken any similar actions or do you plan on taking any similar actions?

Question: Jack Egan - Charter Equity Research, Inc. - Analyst : Got it. Okay. And then I guess this was kind of more last quarter, but you mentioned that the rebound in general mature kind of needed to see a better consumer spending to return to strength. And I wasn't sure if there's really a way to quantify this but to what degree is general mature leverage to the three end markets you mentioned, so automotive, industrial and consumer, I mean, is consumer always the biggest driver of that segment or is just kind of particularly important right now because of some of the weakness in those other end markets. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:30PM, ACLS.OQ - Q3 2024 Axcelis Technologies Inc Earnings Call

Question: Jack Egan - Charter Equity Research, Inc. - Analyst : Got it. Okay. Thank you.

Question: Ross Cole - Needham & Company, Inc. - Analyst : Hi, and thank you for taking my question. I wanted to dive a little bit deeper into your [GAN] opportunity. Given that you mentioned the European customer had a little bit of a negative outcome there and led to the increased OpEx. How do you see this changing going forward? Thank you.

Question: Ross Cole - Needham & Company, Inc. - Analyst : Great. Thank you. That was really helpful color. Appreciate it. Thanks a lot.

Question: Tom Diffely - DA Davidson - Analyst : Yeah, good morning. I appreciate the chance to ask a question here. Just wanted to focus on the transition of silicon carbide from 150 to 200 for some of your customers and curious, what is the opportunity for you for a fab that's transitioning versus a new Greenfield fab?

Question: Tom Diffely - DA Davidson - Analyst : Just to -- yeah, just to clarify though, your tools are 150, 200 capable with a bit of a kit. Is that right?

Question: Tom Diffely - DA Davidson - Analyst : Okay, great. I hope now, that helps clarify. And then just a follow up question on the margin side, when you look at the margins down about 150basis points a year-over-year, is that simply overhead absorption? Is its product mix? Could you provide a little more color there.

Question: Tom Diffely - DA Davidson - Analyst : But this hasn't been any kind of unusual pricing pressure.

Question: Tom Diffely - DA Davidson - Analyst : Great. Thank you very much.

Question: Christian Schwab - Craig-Hallum Capital Group LLC - Analyst : Great. Thanks for taking my question. I guess as far as memory is concerned, you guys seem to have increased enthusiasm about the recovery of the DRAM spending. Well, other memory guys have been more excited about an increase in NAND spending on the movement to the 300 layer this year. So I'm just wondering if you can give us further clarity on your enthusiasm for DRAM.

Question: Christian Schwab - Craig-Hallum Capital Group LLC - Analyst : Either, that does. So when would you, you're building capacity, so would we assume that increase DDR5 wafer starts, in essence for DRAM. I think that's what you're talking about. You would anticipate that maybe in, the summer going into hopefully a better smartphone and PC sales cycle in the second half of '25 is putting the pieces of the puzzle together correctly there.

Question: Christian Schwab - Craig-Hallum Capital Group LLC - Analyst : Great. No other questions. Thank you.

Question: Mark Shooter - William Blair & Company - Analyst : Thank you guys. You have a Mark Shooter here on for Jed this morning. Just touching on the wafer market you're seeing in power in China. There are -- they seem to be like the last bastion of EV growth. So could you provide some color on the capacity and the digestion in that region that you're seeing and what needs to occur?

Question: Mark Shooter - William Blair & Company - Analyst : Great. That makes sense. I appreciate the call, Russell. Thank you. Can you touch on as a follow up, how much of your backlog is China sick? And have you seen any changes to the patterns and pushouts or cancellations there due to the things that you're talking about?

Question: Mark Shooter - William Blair & Company - Analyst : Got it. Thank you, Jamie.

Question: Dave Duley - Steelhead Securities - Analyst : Thank you. Good morning. I was wondering I think -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:30PM, ACLS.OQ - Q3 2024 Axcelis Technologies Inc Earnings Call

Question: Dave Duley - Steelhead Securities - Analyst : Hi. I saw that the China revenue, I think was 71% of revenue in the third quarter. Could you give us an idea of what you think the percentage will be in Q4 and in the first half of next year. I'm assuming that the Chinese revenue is what is going to be down in the first half of next year, but maybe I'm wrong.

Question: Dave Duley - Steelhead Securities - Analyst : Okay. And then far as silicon carbide in China in the first half of next year, would you expect that to be down versus the second half of 2024 or is silicon carbide still strong in China in the first half of next year?

Question: Dave Duley - Steelhead Securities - Analyst : Okay. Couple follow-ons just maybe you could help us with the utilization rates of your equipment. You can hear on the US and European SIC conference calls of your customers, that business is not really growing at this point or they're in digestion mode or trying to figure out lowering their CapEx and whatnot. So I'm just kind of curious what the utilization rates are in US and Europe and then, are they much different in China than they are in those geographic regions?

Question: Dave Duley - Steelhead Securities - Analyst : Just in general the utilization rates of your tools in the marketplace if you'd like to say. I'm more interested in silicon carbide than anything else. But however, you'd like to answer the question would be great.

Question: Dave Duley - Steelhead Securities - Analyst : Okay. Thank you.