AXCELIS TECHNOLOGIES INC Q4 FY2024 earnings call

• Russell Low noted the fourth quarter ended strong with revenue better than expected, driven by CS&I sales. Backlog declined but remained healthy, and bookings stabilized. • Discussed segments: Silicon Carbide business resilient with long-term drivers intact despite Q1 2025 sequential decline; General Mature expected to decline in Q1 2025 but benefit long-term; Image Sensors revenue moderated; Advanced Logic shipped to a new customer; Memory saw sequential improvement. • 2024 execution highlighted team's work amidst dynamic demand, with gross margins up despite revenue decline. • 2025 outlook: Overall revenue expected to decline YOY, memory expected to grow in DRAM, NAND muted, modest Advanced Logic revenue; focus on secular growth areas like Silicon Carbide, market recovery in Memory and General Mature, share gain in Advanced Logic, and Japan expansion. • Recognized 22 customer awards in 2024, reflecting customer-first culture.

In the fourth quarter, revenue was $252 million, with systems revenue at $187.4 million and CS&I at $65 million. For the full year, revenue totaled $1.02 billion, consisting of $783 million in systems revenue and $235 million in CS&I revenue. In mature nodes, power market revenues were 51% of the mix in Q4 2024, with Silicon Carbide system sales growing ~6% year-over-year in 2024. General Mature revenue increased sequentially in Q4 but is expected to decline in Q1 2025. Image Sensors revenue moderated in Q4. Advanced Logic shipped a system to a new customer in Q4. Memory saw sequential improvement in Q4, with DRAM expected to be consistent in Q1 2025 and NAND muted.

• Anticipate overall revenue decline in 2025. • Memory expected to grow in 2025, specifically in DRAM, with NAND muted. • Modest revenue expected from Advanced Logic initiatives. • First quarter 2025 revenue expected at ~$185 million, gross margins ~40%, OPEX ~$63 million. • Full year 2025 operating expenses expected relatively flat YOY. • Export control impact on China revenue expected closer to the low end of previously guided range.

• Export controls could impact China sales, with the full year impact closer to the low end of the previously guided range. • Digestion of capacity in Power and General Mature markets, particularly in China. • Softness in the Silicon IGBT market expected to continue in 2025.

Q: Charles Shi asked about the assessment of a slightly better second half in 2025 and factors behind it.

A: Russell Low said it's based on backlog, customer conversations, and internal work; bookings stabilized and customers formalized plans. James Coogan added backlog and customer conversations support the view of a better second half.

Q: Charles Shi inquired about memory, specifically NAND spending.

A: Russell Low stated NAND expected to be muted in 2025 as node changes don't directly increase wafer count, and until new factories are filled, NAND won't see benefits.

Q: Charles Shi asked about export control impact on China.

A: James Coogan said the initial 8K estimate was a preliminary one, and since then, more info provides confidence to be closer to the low end of the range, which is baked into guidance.

Q: Craig Ellis asked about first quarter being a bottom and digestion in Power and General Mature.

A: Russell Low said first half expected lower than second half, digestion in China's Mature Technologies not just over supply but technology ramping; outside China, business resilient. James Coogan added customers in different investment cycles.

Q: Craig Ellis followed up on gross margin and OPEX in 2025.

A: James Coogan said gross margins expected at low in Q1 due to cost absorption, mix, and lower CS&I; OPEX to be slightly higher with focus on organic growth and investments.

Q: Jed Dorsheimer asked about Silicon Carbide exposure and backlog deposits.

A: James Coogan said majority of backlog to new entrants and geographies have customer deposits; Russell Low discussed differentiation in medium and high current products for Advanced Logic and memory.

Q: Jack Egan asked about Silicon Carbide weakness impact on guidance.

A: James Coogan said expectations based on customer conversations, bookings, and diverse customer engagement in Silicon Carbide.

Q: David Duley asked about Silicon Carbide revenue and second half.

A: James Coogan said not providing granularity on second half improvement but broadly expecting some strength despite first half digestion.

Q: Tom Diffely asked about Japan expansion.

A: Russell Low said Japan is a $450M market with sub-5% Axcelis share; making beachhead in Power and Advanced Logic, expecting modest revenue growth in Japan.

Q: Mark Miller asked about OPEX breakdown in first quarter.

A: James Coogan said first quarter OPEX slightly up due to seasonal factors, with focus on investing in RD&E for long-term growth.

Q: Christian Schwab asked about end market exposure and automotive.

A: Russell Low and James Coogan said they don't track end market exposure discretely; automotive Silicon Carbide devices largely from North Americans, Europeans, and Japanese.