Axcelis Technologies, Inc.

Good day, ladies and gentlemen, and welcome to the Excellus Technologies call to discuss the company's results for the second quarter. My name is Shannon McLeod, and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of this conference. If at any time during the call you require assistance, please press star followed by zero, and a coordinator will be happy to assist you. I would now like to turn the presentation over to your host for today's call, Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. Please proceed.

Thank you, Operator. This is Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. And with me today is Russell Lowe, President and CEO, and Kevin Brewer, Executive Vice President and CFO. If you have not seen a copy of our press release issued yesterday, 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 are based on management's current expectations and are subject to the 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. Now I'll turn the call over to President and CEO, Russell Lowe.

Good morning, and thank you for joining us for our second quarter 2023 earnings call. Demand for the Purian product family continues to be extremely strong, especially in the high-growth silicon carbide power segment. Revenue for the second quarter was $274 million, with earnings per share of $1.86. Backlog remained high at $1.2 billion, with quarterly systems bookings of $193 million, also driven by Purian demand and strength in the power market. For the third quarter of 2023, we expect revenue of approximately $280 million, gross margin of roughly 44%, operating profit of around $64 million, and earnings per share of approximately $1.72. We are raising our forecasted 2023 revenue by $70 million to greater than $1.1 billion. This represents year-over-year revenue growth of approximately 20%, and a year in which overall WFE is expected to do decrease by 20 to 30%. We also believe it's possible to achieve $1.3 billion in revenue in the next one or two years, depending on market conditions. The mature process technology market continues to be an area of strength for Excellus, with 93% of second quarter system shipments going to mature Foundry Logic customers, and 7% to memory customers composed entirely of DRAM. The geographic mix of our system shipments in the second quarter was China, 56%, the US, 13%, Korea, 10%, Europe, 9%, Taiwan, 2%, Japan, 2%, and the rest of the world, 8%. As has been the case since the beginning of this downturn, the power device segment, and in particular silicon carbide, continues to drive our growth. We are actively engaged with all our customers in this high growth market segment, winning business from new customers and expanding our footprint and existing customers. We now expect approximately 60% of our ship system revenue in 2023 to come from this segment with around 35% of total ship system revenue coming from silicon carbide applications. We're seeing increased adoption of pure H200 silicon carbide and Purin XC silicon carbide systems and now have three Purin H200 silicon carbide evaluations underway with customers in multiple geographies. Two of these systems are 150 millimeter and one is a 200 millimeter system. These evaluation units give our customers a head start qualifying productivity limiting recipes as they ramp to high volumes. It also enables the customer to conduct optimization work on their devices utilizing the higher energy and dose capabilities of Purin H200 silicon carbide. In 2023, we expect revenue from silicon carbide customers to be spread relatively evenly across the Purin Power series product family. Xilis is the only ion implantation company that can deliver complete recipe coverage for all power device applications. We are considered to be the technology leader and the supplier of choice, providing the best product family and manufacturing capabilities. This means that using Excellus tools provides the lowest risk path to high volume manufacturing required to support aggressive fab ramp plans. Excellus places significant value on enabling our customers to succeed in this exciting market by providing differentiated product performance and a high level of customer satisfaction. As the industry downturn continues, we now estimate that memory will account for less than 10% of our ship systems revenue and weighted towards DRAM. We expect the PC market will lead the industry out of this downturn beginning the second half of 2024 with 2025 returning to a healthy level of growth in consumer electronics, advanced logic and memory. While our memory and advanced logic customers are experiencing this downturn, Xcelis remains close to them, supporting their installed base and working with them on their future technology and manufacturing needs. It is during downturns that there is an increased ability to collaborate with our customers to expand opportunities for Xcelis during the next upturn. We have multiple evaluation systems in these markets and many customer engagements designed to increase our footprint in these segments. As the industry exits this downturn, Excelis will return to healthy growth in these markets. This combined with continued strength in the power segment will drive Excelis to a $1.3 billion model and beyond. Now I'd like to turn it over to Kevin.