Good day, ladies and gentlemen, and welcome to the Axcelis Technologies call to discuss the company's results for the first quarter of 2022. My name is Sylvana, I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. I would now like to turn the presentation over to your host for today's call, Mary Puma, President and CEO of Axcelis Technologies. Please proceed, ma'am.

Thank you, Sylvia. With me today is Kevin Brewer, Executive Vice President and CFO, and Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. We are all participating in this call remotely, so I would like to apologize in advance for any technical difficulties. If you've 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. Good morning, and thank you for joining us for our first-quarter earnings call. 2022 has begun exactly as 2021 ended for both Axcelis and the industry, with significant demand for chips in the capital equipment required to produce them. Turning to Axcelis specifically, the adoption of the full Purion product family has been strong and continues to gain momentum across the large and growing customer base. Customer satisfaction remains our top priority. Today, despite the challenging supply chain and logistics environment, solid execution by the full Axcelis team has allowed us to keep up with this high level of customer demand, meet shipments, and maintain high levels of customer satisfaction. I would like to thank our dedicated employees once again for delivering these results under these challenging conditions. As a result of this demand and our strong execution, our first-quarter financial performance was well above our guidance. Revenue for the first quarter was $203.6 million with earnings per share of $1.22, gross margin of 44.1%, and the quarter-end cash balance of $297.9 million. Our aftermarket business, or what we refer to as CS&I, continued to contribute significantly to our revenue and gross margin. CS&I revenue in Q1 was $51.8 million. The growing mature process technology market continues to be an area of strength for Axcelis, with 81% of first-quarter shipments going to mature foundry logic customers and 19% to memory customers, with NAND accounting for 9% and DRAM 10%. Our geographic mix was spread more evenly around the world due to significant global investment in the mature process technology market. The resulting mix of our system shipments in the first quarter was China 32%, Korea 18%, Europe 13%, Taiwan 11%, the U.S. 10%, Japan 6%, and the rest of the world, 10%. Visibility for 2022 continues to be good from a demand perspective, with significant orders for 2023 already booked. As a result, Axcelis now expects to achieve revenue of greater than $850 million in 2022. For the second quarter, we expect revenue of $205 million to $215 million, gross margin of approximately 41%, operating profit of approximately $41 million, and earnings per share of approximately $1. Our guidance reflects increases in supply chain and logistics costs that are impacting our gross margin and operating expenses. In a few minutes, Kevin will provide more color on the actions we're taking to mitigate these challenges. The industry is in the strongest cycle ever seen and continues to be driven by the same factors we've discussed last quarter. In addition to a strong market, the implant TAM has increased significantly to approximately $2 billion and investment in the power market, both silicon and silicon carbide, continues to grow rapidly. Power devices are more implant-intensive and require our more advanced Purion product extensions. We expect the power segment to account for between 30% and 40% of our system shipments in 2022. This growth is a long-term trend driven by the transition to electric vehicles and should benefit Axcelis for many years to come. Overall, we expect that the mature markets will account for approximately 80% of our total system shipments in 2022. We expect memory in 2022 will approach revenue levels seen at the last peak. In 2021, memory accounted for 17% of systems revenue, and we expect it to be approximately 20% in 2022. We maintain a strong and growing position in memory. In April, we shipped a Purion H high current evaluation to a new memory customer for a DRAM application. Also, in April, we shipped the Purion H evaluation system to a new fab at an existing mature process technology customer. These two Purion H evaluation shipments will position Axcelis for further growth in the high current market, the largest implant products segment. Now I'd like to turn it over to Kevin to discuss our financials and provide an operational update.

Thank you, Mary, and good morning. Axcelis delivered exceptional first-quarter financial results, beating company guidance and consensus estimates across the board. Favorable mix, higher tool sales, and strong execution drove solid top and bottom-line results in Q1. Throughout the quarter, our purchasing and engineering teams worked closely with suppliers to mitigate supply chain disruption while our manufacturing team filled the gap and performed at a very high level. Pandemic-related shutdowns, ongoing chip shortages, and logistics issues are continuing, and we're working hard strategically and tactically to tackle these issues. As Mary mentioned, 2022 is on track to be another great year for Axcelis, and we now expect full-year revenue to be greater than $850 million. End markets are strong, and visibility remains good. Like others in the industry, we are dealing with similar supply chain disruption and higher costs, and I've included these anticipated challenges into our Q2 guidance and full-year forecast, but the situation is changing almost daily. As noted in our last call, we began production at the new Axcelis Asia operations center in South Korea, and we have now shipped multiple systems from the AOC as we continue to ramp production levels. This factory gives us flexibility and manufacturing capacity to support our $1 billion revenue model. Moving now to our first-quarter financial results. Q1 revenue finished at $203.6 million, well above our guidance compared to $205.7 million in Q4. Q1 system sales were $151.8 million compared to $147.3 million in Q4. Q1 CS&I revenue finished at $51.8 million, compared to $58.4 million in Q4. We expect Q2 CS&I revenue to be around $51 million and recommend modeling the remainder of 2022 at $55 million per quarter. Q1 sales chart, top 10 customers accounted for 69.8% of our total sales, compared to 71.9% in Q4. Two customers were 10% or above in Q1 compared to three in Q4. Q1 system bookings were $315.5 million, compared to $193.9 million in Q4 with a Q1 book-to-bill ratio of 2.0 versus 1.29 in Q4. Backlog in Q1, including deferred revenue, finished at $625 million, a new record compared to $461 million in Q4. Multiple customers are planning new fabs and expansions for 2023, which is driving bookings out beyond one year. Q1 combined SG&A and R&D spending was $40.8 million or 20.1% of revenue compared to $42.9 million or 20.9% in Q4. SG&A in the quarter was $23.9 million with R&D of $17 million. In Q2 we expect SG&A and R&D spending to be approximately 22% of revenue. For the full year, I recommend modeling SG&A and R&D spending at approximately 21% of revenue. Q1 gross margin was 44.1% and well above our guidance. Gross margin in the quarter was higher than guidance due to a more favorable mix of systems and upgrades. We are guiding Q2 gross margin of approximately 41% driven by the expected shipment of a less favorable mix compared to Q1. Full-year gross margin is expected to be approximately 42% due to significantly higher supply chain costs. We are continuously evaluating ways to offset increased costs, but customer satisfaction remains our top priority. Outside of the higher costs mentioned, we continue to make solid progress on core gross margin improvement initiatives that are fueled by growth in our CS&I business, Purion product extensions, and across-the-board cost-out. Our $1 billion model reflects continued gross margin expansion driven by higher revenue from CS&I and Purion product extensions, incremental supply chain volume and value engineering, planned labor and quality improvements, and a return to a more typical supply chain and logistics environment. Operating profit in Q1 finished at $48.9 million compared to $46.6 million in Q4. We're guiding Q2 operating profit of approximately $41 million. Q1 net income was $41.6 million or $1.22 per share compared to $35.7 million or $1.5 per share in Q4. Q1 includes a favorable tax benefit resulting from a foreign derived intangible income tax deduction known as FDII. We are forecasting a 15% effective tax rate for future quarters based on the FDII reduction, regarding Q2 earnings per share of approximately $1. As noted earlier, our Q2 guidance reflects the anticipated impacts on our business from supply chain and pandemic-related issues, which remains an evolving situation. Q1 receivables were $119 million compared to $104.4 million in Q4. Q1 inventory ended at $203.8 million compared to $195 million in Q4. Q1 inventory turns excluding evaluation tools, finished at 2.5 compared to 2.7 in Q4. Q1 accounts payable were $50.8 million compared to $38 million in Q4. Q1 cash finished at $298 million, slightly higher than Q4, which was $296 million. In the quarter, we generated $25.8 million of cash from operations and executed share repurchases of $20 million. Through Q1, we have returned over $95 million of cash to our shareholders through stock repurchases. It's an exciting time for Axcelis with significant growth in the industry and solid customer demand for our products. We have executed at a very high level throughout the pandemic, and once again, I want to thank the entire team for continuing to perform exceptionally well in a very difficult environment. I also want to thank our supply chain partners that are working very hard to support us and our customers for their strong support during these unusual times. We're working hard to minimize disruption to our customers who count on us to execute on our commitments, and we remain laser-focused on customer satisfaction. Thank you. And I'll now turn the call back to Mary for closing comments.

Thank you, Kevin. We are pleased with our first-quarter results and excited about the opportunity to achieve revenues greater than $850 million in 2022, a year earlier than previously expected. Axcelis has a competitive Purion product line, a broad and diverse customer base, a strong balance sheet, and a dedicated team of employees. We are well-positioned for significant sustainable growth. The implant market is increasing thanks to strength in the overall semiconductor industry, but also due to a rapidly expanding mature process technology segment. The capabilities of Purion product extensions, like the Purion Power Series, combined with the implant-intensive nature of the image sensor and power device segments, uniquely position Axcelis to benefit from the electrification of the automotive industry. We are experiencing what are the most exciting times in the history of the semiconductor industry. And we are confident that we are making all the right investments to achieve leadership in ion implantation. Axcelis is working through current supply chain and logistics-related headwinds, and we are committed to maintaining high customer satisfaction levels during these challenging times. With that, I'd like to open it up for questions. Sylvia.

The first question comes from Patrick Ho from Stifel.

Can you hear me?

We can hear you now, please go ahead.

Yes, we can.

Great. Congrats again and thanks for taking my question. Maybe first off for you, Kevin, in terms of the supply chain issues, the lockdowns, this is something that's obviously affecting everyone. As we look at the June quarter, can you qualify what the biggest issues are? Is it parts procurement? Is it labor availability? Is it the COVID lockdowns? Maybe from a gross margin perspective, how much of that is impacting at least the June quarter in terms of these called supply chain issues?

Yes. In terms of the lockdowns in China right now, the biggest impact to us is probably on the CS&I side of the business, getting materials in and distributed throughout China. There have been shortages coming out as well. There are some particular suppliers we have, Patrick, that have been down waiting for commodity-level things out of China. So there is an impact on the supply chain side for sure. I think one of the things that has probably hit us the hardest since this pandemic has started, in this quarter was suppliers having shortages with chips. We've been working through this issue for several quarters. In many cases, proprietary designs we were able to work around them with our engineering teams and find alternatives, but this quarter seemed to be more difficult in terms of some of our suppliers getting hit hard. So that's something that's been out there for a while and it's something that was probably part of this quarter. So the supply chain is difficult across the board, with everything from chip shortages and commodity shortages to logistics issues that have been out there for quite a while Now just getting material moved in and out. We're continuing to work with those. We're very focused with our engineering team helping out. The supply chain people are working hard to mitigate that, and again, we're moving on. In terms of the margin impact this quarter in Q2, to be honest with you, a lot of it is a big shift in mix from where we were in Q1. As the year runs on, these higher supply chain costs are starting to catch up with us. I think as you know, we've had some pretty good margin improvement throughout the pandemic last year, we hit quite a few points to our bottom-line margin, even in a difficult environment. But it's catching up, or some of the things we're working on aren't quite keeping up as fast. I see those issues continuing to plague us really into the second half, which is why I thought it was important to put a full-year gross margin target out there of 42%, so people can kind of model and see where we're going. But beyond that, there's still a lot of good things going on with our margin improvement initiatives. So we're continuing in our value engineering projects. We're still working on growing the CS&I business. We've got evaluations out there, and there are additional product extensions that will convert over, and those are high-margin. So we're pedaling the bike fast, trying to keep ahead of these higher costs, which at some point are going to let up. If you asked me to quantify on a full-year basis what the impact of the supply chain is, I would say conservatively, it's negative 150 basis points; it could be as high as 200 negative basis points. So there's quite a bit of pressure on the supply chain rate side right now with costs, which is why I feel comfortable as we move out of this year and move towards our billion-dollar model, which has seen its farther down the road. We get some of these near-term headwinds behind us; we continue with our cost-out roadmaps and we feel very comfortable with our billion-dollar model. We've put an update in our presentation factor for this year where we think we will be at greater than $850 million.

Great. That's really helpful, Kevin. As my follow-up question, and I'll throw it out to all of you. CS&I business continues to deliver for you guys, it's very accretive to margins, and you're projecting some growth in the second half of the year. What's the biggest driver given that I guess utilization rates are high right now for chip makers? The supply chain is an issue for all parties involved. Is it upgrades, is it spare parts, is that the biggest driver or is it a mix of different products?

Yes, it's a combination of factors. As we keep delivering more Purion products, there's a certain level of entitlement that comes with it, including spare parts. After the warranty period, there's also the service related to repairs. Spare parts and increased tools are significant aspects, but upgrades are another area where we've consistently focused and seen positive results. Typically, upgrades come with high margins. If we can develop the upgrades, we can likely sell them since there's limited third-party competition in this area. Our engineering teams are continuously working on upgrades that enhance yields or throughput, which customers appreciate. This focus on upgrades and spare parts is driving our growth, particularly since sourcing used tools is extremely difficult right now. Therefore, the growth is primarily coming from these two areas, which are beneficial for our margins.

Great, thanks again, and congrats.

Yes. Thank you.

We have no questions at this time. And our next question comes from Mark Miller, the Benchmark Company.

Congrats again on another great quarter. Just trying to think here, the tax rate went down last quarter. What are you projecting for taxes for the rest of this year?

Yeah. Mark, I would model it as 15% for the rest of the year. Yes, 15%. I think we've always kind of told you to model it in the 20%, 21% range. But with this new deduction for foreign shipments that we're getting, and that's really because we've exhausted NOLs now, so we can take advantage of this new deduction. That's going to keep our tax rate down, so I've modeled it at 15%.

SG&A has increased somewhat in the June quarter and is expected to continue rising for the rest of the year. Is this increase primarily due to R&D, or is CapEx increasing more than it did in the March quarter? Is this being driven by R&D or SG&A?

Yes. It's a little bit of both, but I really full-year we’re projecting to be 21%, so it's going to come back down. Even though it's up a little bit in Q2, full-year should be at 21%. And if you look at where our models had us mark on the $850 million model that we put out last December, it was 21% to 22%, so we're going to hang on to the lower end of that and pick up some savings on the OpEx. So we're right on our models we're executing low on our models, so it's full-year 21%.

Great. Thank you.

Our next question comes from Hans Chung from D.A. Davidson.

Hi, thank you for taking my question. I just wanted to follow up on the gross margin. You mentioned that there's a big shift in the mix. Can you elaborate more on all the dynamics here, like what kind of shift, and how should we think about just going forward, maybe the second half? I know you put out the full-year guidance, but just any color will be helpful.

Yes. So on the mix side of things, each of the product lines carries different margin levels. We actually have a chart in our investor presentation that shows how the contribution level is the standard margin level on high energy, high current, medium current. And you can see that on the bar chart there’s a noticeable difference between each of those product lines. This quarter, the short answer is, is less high-energy weighted. The other thing that can impact this quarter-to-quarter is the mix of CS&I in terms of how much revenue comes from CS&I. We don't provide gross margin at CS&I, but it's accretive to the overall bottom-line margins. There's a little more growth on the system side this quarter versus CS&I because it's flat with last quarter, and our revenues are coming up, so that puts a little bit of drag. But as I mentioned and as you pointed out, full-year will be 42%. As I mentioned with Patrick, there's quite a bit of drag right now coming out of the supply chain, anywhere from 150 basis points conservatively to probably as high as 200 basis points. So that's really the bigger gross margin start. We always have had fluctuation quarter-to-quarter and it will continue that way based on mix and stuff, which is why we always try to just focus on the full year because it tends to average out from quarter-to-quarter.

Got it. Thank you. That's what I had. Thank you.

This concludes the Q&A portion of the call. I will now turn the call back over to Mary Puma, who will make a few closing comments.

Thank you, Sylvia. Thank you all for joining us today. We hope to see you at our very active upcoming investor event schedule. We will be participating in the 22nd Annual B. Riley Institutional Investor Conference in Los Angeles in May and we are participating in three conferences all in June. The 19th Annual Craig-Hallum Institutional Investor Virtual Conference, the 50th Annual Collin Technology, Media and Telecom Conference in New York City, and the Stifel 2022 Cross-sector Insight Conference in Boston. During Semicon West in July, we will also be participating at the CEO Summit, as well as hosting our own Axcelis Investor Breakfast Seminar. And we will be attending the DA Davidson Big Sky Technology Summit in Montana in August. We thank you for your continued support, and please stay healthy.

This concludes the presentation. Thank you for your participation in today's conference. You may now disconnect. Good day.