Axcelis Technologies Inc (ACLS) 2009 Q2 法說會逐字稿

Good day everyone and welcome to the Axcelis second-quarter of 2009 earnings release conference call. As a reminder, today's call is being recorded. Mary Puma, CEO and Chairman, will now read from a prepared script. Q&A will be addressed on an individual basis after the call by contacting Axcelis directly.

Good morning. This is Mary Puma, Chairman and CEO of Axcelis Technologies. Welcome to our call (technical difficulty) the second quarter of 2009. If you have not seen a copy of our press release issued earlier today, it is available on our website. Playback service will also be available on our website as described in our press release.

Please note that comments made today about our expectations for future revenues, profits and other results are forward-looking statements under the SEC Safe Harbor provision. These forward-looking statements (technical difficulty) current expectations and are subject to risks inherent in our business. These risks are described in detail in our Form 10-K annual report and other SEC filings, which we urge you to review.

Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements.

I will start by discussing current market conditions (technical difficulty) activities. I will close with commentary on our financial situation, including cost containment and cash. Industrywide market weakness has continued to negatively impact our business. Discussions with customers and peers at SEMICON West confirm the conditions in the semiconductor market remain challenging. Although several customers are moving ahead with systems purchases associated with improving fab utilization, many others continue to delay capital spending.

We are starting to see some signs of recovery in our aftermarket business, and expect this positive trend to continue as the global economy improves. However, the exact timing of a recovery remains unclear due to poor visibility throughout the supply chain.

Despite the market slowdown, Axcelis has continued to work on programs that will enhance our product portfolio and service offerings, grow our revenues and reduce our costs and cash burn. I will touch on the most important activities, starting with a brief update on our existing products.

We continue to make steady progress with the Optima HD. With memory customers we have been able to demonstrate the Optima HD's ability to deliver superior productivity versus competitive products. In the logic and foundry markets the Optima HD is also gaining acceptance as demonstrated by the recently announced tool of record status achieved at SMIC. The tool's superior productivity and beam quality performance position it well to compete for business across all market segments at current as well as emerging technology nodes.

As a result of ongoing product development activity, we expect the Optima HD's level of competitiveness to continue to improve as we introduce additional productivity and performance gains.

We are having success penetrating with our new single wafer high energy offering, the Optima XE. The Optima XE is the only single wafer high energy tool incorporating proven LINAC technology, as well as innovative Photoresist [out gap] and management technology.

The Optima XE's unique system design enables high productivity over the full range of energy levels, including those associated with NAND and NOR Flash memory, as well as embedded memory and image sensor devices. During the quarter we shipped an Optima XE to an industry-leading memory device manufacturer in Asia for production on a process that has been historically run on a competitor's tool.

We also recently received a purchase order from a second large memory maker after the successful completion of an on-site evaluation. This customer is using the Optima XE to deliver next-generation chips, allowing us to work closely with them as this new process is fanned out to future fabs.

In addition, we continued to run multiple demos for both existing and new high energy customers. Customer feedback on the Optima XE leads us to believe that it provides an extendable platform that will allow Axcelis to continue its leadership position in the high energy application space.

To strengthen our position in the medium current implant market segment we are driving improvements to our Optima MD in targeted performance areas. The fundamental Optima MD architecture has always offered advantages that includes superior low energy beam current and angle control. We expect that product development currently in the works will further enhance the Optima MD's overall competitiveness, particularly at emerging technology nodes.

We have made headway with our Integra RS Dry Strip System. The Integra RS combines proven superior process performance with productivity advantages that result from having the fastest wafer handling available. The Integra RS' process chambers match our existing RapidStrip system, of which we have over 200 chambers installed in the field today. The two Integra RS systems installed in the field are running well, and we expect to announce some positive developments regarding the Integra in the near future.

Now I would like to share additional information on some exciting new relationships that Axcelis has entered into. During the quarter we announced a strategic partnership with Applied Materials to provide service and support to our growing customer base in Japan. Axcelis believes that Japan provides a great opportunity for growth in implant, dry strip and the aftermarket. Our agreement with Applied facilitates this growth by allowing Axcelis customers to utilize Applied's extensive support infrastructure in Japan to optimize the performance and productivity of Axcelis equipment, and provide the highest level of customer service.

Japanese customers believe that our partnership with Applied demonstrates Axcelis' commitment to win in the Japanese market, and that it provides instant credibility for Axcelis in terms of equipment support.

Most importantly, customers have indicated that this partnership will have a positive impact on their tool selection in the future. Last month we announced that Axcelis entered into a joint development program with Kingstone Semiconductor, an independent developer of semiconductor equipment based in Shanghai, China.

We believe this is a very positive development for Axcelis and our customers for a couple of reasons. First, through this collaboration we plan to explore innovative approaches to challenges for next-generation device manufacturing, with the goal of delivering enabling implant solutions for our customers that will provide a competitive advantage.

Kingstone's expertise in ion implant technology and deep understanding of customer and market requirements will be a strong complement to Axcelis' existing capabilities.

Second, the Kingstone relationship expands Axcelis' presence in China and the Asia Pacific region by enhancing Axcelis' customer relationships and extending our operational footprint in areas like global sourcing.

We have developed a strong relationship with the Kingstone team and are looking forward to making future announcements on new technology developments.

Earlier this week we announced another strategic business partnership with Ion Beam Services, or IBS, to provide sales and support for their PULSION plasma immersion ion implanter. This partnership expands Axcelis' and IBS' reach into the ultra high dose implant segment by leveraging Axcelis' global infrastructure and implant expertise and IBS' innovative plasma immersion implanter. PULSION's unique design offers memory and logic chipmakers compelling cost and performance advantages over competitors' tools.

Through this agreement, Axcelis is able to broaden the solutions it can present to customers, and provide IBS the scale it requires to gain global reach. Axcelis and IBS believe that our cooperation will provide an exciting technical and commercial alternative to what is available today.

Axcelis is also in the process of working on other partnerships that span a number of different products and industries, and leverage Axcelis' technology and core competencies. We believe that over time these new business opportunities will diversify our business model and strengthen our overall financial performance.

Turning to our financial situation, the net loss we reported for the second quarter of $0.22 per share, of which $0.04 was attributable to restructuring charges, was in line with our expectations and reflects continuing weak market conditions.

As I mentioned earlier, while new systems business remains sluggish, we did realize an upturn in our aftermarket business in the second quarter. Aftermarket revenues increased $5.5 million or 30% over the first quarter. We continue to see an increase in the order flow for spare parts and systems upgrades, and expect this trend to continue through 2009 as fab utilization improves.

With the many cost savings actions we have taken over the past several months, we have reduced our quarterly OpEx run rate between $22 million and $23 million, down from over $40 million a year ago. Our ongoing focus is on cost containment and working capital management, particularly inventory, to maximize cash flow. We will continue to evaluate and implement additional cost out actions to further improve our P&L and balance sheet.

We ended the quarter with $56.7 million of cash, of which approximately $50 million is unrestricted. During the quarter $7.1 million of cash was used to pay advisor fees associated with the repayment of our debt. $3.8 million was associated with the restructuring, and the remainder supported operations. Although at low revenue levels Axcelis will continue to burn some cash, we expect that our cash usage will slow through the remainder of this year.

Furthermore, based on a conservative revenue forecast and projected expenses associated with actions already taken, we believe that our existing cash balances are sufficient to support operations through the end of the current downturn and for the foreseeable future. We believe all of our products are competitive, and when the market does turn up, we will be positioned to take advantage of opportunities that a recovery presents.

In summary, we continue to make progress across our service business and our implant and cleaning product portfolios. We have entered into and are continuing to explore new business partnerships that will expand our product reach, leverage our core competencies and provide growth.

Although, of course, we all hope that the semiconductor equipment business will improve in the near term, our financial plan has been developed based on the assumption that our markets will remain soft. We will continue to carefully manage it and monitor our financial situation and make prudent decisions about cash.

Thank you very much for your time. If you have any questions, please feel free to directly contact me or Steve Bassett, Axcelis' EVP and CFO.

Ladies and gentlemen, thank you all for your participation in today's conference call.