Axcelis Technologies Inc 10-Q for FY2022 Q2

Axcelis Technologies Inc (ACLS)

10-Q 2022-08-04 For: 2022-06-30

Added on April 08, 2026

About this 10-Q

Axcelis Technologies Inc filed this 10-Q on August 4, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $221.18M; up 50.2% from $147.27M a year earlier
Diluted EPS: $1.32; up 140.0% from $0.55 a year earlier

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Delaware		34-1818596
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	ACLS	Nasdaq Global Select Market



Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐


PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021	3
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021	4
	Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	5
	Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Overview	18
	Critical Accounting Estimates	18
	Results of Operations	19
	Liquidity and Capital Resources	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II - OTHER INFORMATION		27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28


	Three months ended				Six months ended
		June 30,			June 30,
	2022		2021		2022		2021
Revenue:
Product	$	213,926	$	140,156	$	410,458	$	266,765
Services		7,251		7,118		14,314		13,285
Total revenue		221,177		147,274		424,772		280,050
Cost of revenue:
Product		115,754		76,688		223,395		147,022
Services		6,242		6,572		12,429		12,579
Total cost of revenue		121,996		83,260		235,824		159,601
Gross profit		99,181		64,014		188,948		120,449
Operating expenses:
Research and development		18,731		16,623		35,704		32,308
Sales and marketing		12,703		12,177		23,994		22,564
General and administrative		13,602		11,217		26,180		21,230
Total operating expenses		45,036		40,017		85,878		76,102
Income from operations		54,145		23,997		103,070		44,347
Other (expense) income:
Interest income		352		40		447		73
Interest expense		(1,250)		(1,274)		(2,768)		(2,303)
Other, net		(5,051)		(15)		(6,669)		(1,168)
Total other expense		(5,949)		(1,249)		(8,990)		(3,398)
Income before income taxes		48,196		22,748		94,080		40,949
Income tax provision		4,007		3,842		8,276		5,563
Net income	$	44,189	$	18,906	$	85,804	$	35,386
Net income per share:
Basic	$	1.34	$	0.56	$	2.59	$	1.05
Diluted	$	1.32	$	0.55	$	2.54	$	1.03
Shares used in computing net income per share:
Basic weighted average common shares		33,096		33,677		33,170		33,696
Diluted weighted average common shares		33,562		34,311		33,770		34,473


	June 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	287,167	$	294,923
Accounts receivable, net		146,120		104,410
Inventories, net		213,063		194,984
Prepaid expenses and other current assets		33,378		24,929
Total current assets		679,728		619,246
Property, plant and equipment, net		35,572		34,972
Operating lease assets		10,879		9,242
Finance lease assets, net		18,590		19,238
Long-term restricted cash		753		757
Deferred income taxes		33,715		35,454
Other assets		32,499		34,331
Total assets	$	811,736	$	753,240
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	49,410	$	38,025
Accrued compensation		17,150		30,732
Warranty		8,348		6,424
Income taxes		321		887
Deferred revenue		62,685		60,454
Current portion of finance lease obligation		1,101		979
Other current liabilities		13,955		12,639
Total current liabilities		152,970		150,140
Long-term finance lease obligation		45,822		46,415
Long-term deferred revenue		8,864		7,982
Other long-term liabilities		17,153		9,744
Total liabilities		224,809		214,281
Commitments and contingencies (Note 16)
Stockholders’ equity:
Common stock, $0.001 par value, 75,000 shares authorized; 33,094 shares issued and outstanding at June 30, 2022; 33,240 shares issued and outstanding at December 31, 2021		33		33
Additional paid-in capital		549,401		559,883
Retained earnings (accumulated deficit)		39,582		(22,722)
Accumulated other comprehensive (loss) income		(2,089)		1,765
Total stockholders’ equity		586,927		538,959
Total liabilities and stockholders’ equity	$	811,736	$	753,240


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Income (Loss)		Equity
Balance at December 31, 2020	33,633	$	34	$	570,102	$	(91,969)	$	3,435	$	481,602
Net income	—		—		—		16,480		—		16,480
Foreign currency translation adjustments	—		—		—		—		(1,372)		(1,372)
Change in pension obligation	—		—		—		—		20		20
Exercise of stock options	268		—		2,512		—		—		2,512
Issuance of common shares on restricted stock units, net of shares withheld	81		—		(2,354)		—		—		(2,354)
Stock-based compensation expense	—		—		2,407		—		—		2,407
Repurchase of common stock	(303)		—		(5,468)		(6,167)		—		(11,635)
Balance at March 31, 2021	33,679	$	34	$	567,199	$	(81,656)	$	2,083	$	487,660
Net income	—		—		—		18,906		—		18,906
Foreign currency translation adjustments	—		—		—		—		552		552
Change in pension obligation	—		—		—		—		34		34
Exercise of stock options	72		—		563		—		—		563
Issuance of shares under Employee Stock Purchase Plan	15		—		509		—		—		509
Issuance of common shares on restricted stock units, net of shares withheld	214		—		(4,141)		—		—		(4,141)
Stock-based compensation expense	—		—		3,377		—		—		3,377
Repurchase of common stock	(323)		—		(5,827)		(7,531)		—		(13,358)
Balance at June 30, 2021	33,657	$	34	$	561,680	$	(70,281)	$	2,669	$	494,102


						(Accumulated		Accumulated
				Additional		Deficit)		Other		Total
	Common Stock			Paid-in		Retained		Comprehensive		Stockholders’
	Shares	Amount		Capital		Earnings		Income (Loss)		Equity
Balance at December 31, 2021	33,240	$	33	$	559,883	$	(22,722)	$	1,765	$	538,959
Net income	—		—		—		41,614		—		41,614
Foreign currency translation adjustments	—		—		—		—		(1,186)		(1,186)
Change in pension obligation	—		—		—		—		9		9
Exercise of stock options	41		—		491		—				491
Issuance of common shares on restricted stock units, net of shares withheld	67		—		(3,315)		—		—		(3,315)
Stock-based compensation expense	—		—		2,701		—		—		2,701
Repurchase of common stock	(284)		—		(5,127)		(14,873)		—		(20,000)
Balance at March 31, 2022	33,064	$	33	$	554,633	$	4,019	$	588	$	559,273
Net income	—		—		—		44,189		—		44,189
Foreign currency translation adjustments	—		—		—		—		(2,685)		(2,685)
Change in pension obligation	—		—		—		—		8		8
Exercise of stock options	25		—		298		—		—		298
Issuance of shares under Employee Stock Purchase Plan	15		—		711		—		—		711
Issuance of common shares on restricted stock units, net of shares withheld	205		—		(5,896)		—		—		(5,896)
Stock-based compensation expense	—		—		3,527				—		3,527
Repurchase of common stock	(215)		—		(3,872)		(8,626)		—		(12,498)
Balance at June 30, 2022	33,094	$	33	$	549,401	$	39,582	$	(2,089)	$	586,927


		June 30,		December 31,
Leases	Classification	2022		2021

Assets		(in thousands)
Operating leases	Operating lease assets	$	10,879	$	9,242
Finance lease	Finance lease assets *		18,590		19,238
Total leased assets		$	29,469	$	28,480
Liabilities
Current
Operating	Other current liabilities	$	4,983	$	4,716
Finance	Current portion of finance lease obligation		1,101		979
Noncurrent
Operating	Other long-term liabilities		5,800		4,357
Finance	Finance lease obligation		45,822		46,415
Total lease liabilities		$	57,706	$	56,467

*Finance lease assets are recorded net of accumulated depreciation of $49.2 million and includes $0.6 million of prepaid financing costs as of June 30, 2022. Finance lease assets are recorded net of accumulated depreciation of $48.6 million and includes $0.7 million of prepaid financing costs as of December 31, 2021.


	Finance		Operating		Total
Maturity of Lease Liabilities	Leases		Leases		Leases

	(in thousands)
2022	$	2,995	$	2,793	$	5,788
2023		6,114		3,837		9,951
2024		6,252		1,709		7,961
2025		5,930		1,398		7,328
2026		6,008		1,147		7,155
Thereafter		67,715		487		68,202
Total lease payments	$	95,014	$	11,371	$	106,385
Less interest portion*		(48,091)		(588)		(48,679)
Finance lease and operating lease obligations	$	46,923	$	10,783	$	57,706

* Finance lease interest calculated using the implied interest rate; operating lease interest calculated using estimated corporate borrowing rate.


	June 30,
Lease term and discount rate	2022
Weighted-average remaining lease term (years):
Operating leases		3.1
Finance leases		14.6
Weighted-average discount rate:
Operating leases		4.5%
Finance leases		10.5%



	Six months ended June 30,
Cash paid for amounts included in the measurement of lease liabilities	2022		2021

	(in thousands)
Operating cash outflows from operating leases	$	3,955	$	2,751
Operating cash outflows from finance leases		2,509		2,556
Financing cash outflows from finance leases		475		362
Operating lease assets obtained in exchange for operating lease liabilities		4,714		4,192
Finance lease assets obtained in exchange for new finance lease liabilities		—		—


	Foreign		Defined benefit
	currency		pension plan		Total

	(in thousands)
Balance at December 31, 2021	$	2,064	$	(299)	$	1,765
Other comprehensive loss and pension reclassification		(3,871)		17		(3,854)
Balance at June 30, 2022	$	(1,807)	$	(282)	$	(2,089)


	June 30, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total

	(in thousands)
Assets
Cash equivalents:
Money market funds, U.S. Government Securities and Agency Investments	$	255,222	$	—	$	—	$	255,222


	December 31, 2021
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total

	(in thousands)
Assets
Cash equivalents:
Money market funds, U.S. Government Securities and Agency Investments	$	261,090	$	—	$	—	$	261,090


	June 30,		December 31,
	2022		2021

	(in thousands)
Raw materials	$	149,985	$	133,784
Work in process		44,895		43,164
Finished goods (completed systems)		18,183		18,036
Inventories, net	$	213,063	$	194,984


	Six months ended
	June 30,
	2022		2021

	(in thousands)
Balance at January 1 (beginning of year)	$	6,924	$	4,612
Warranties issued during the period		4,902		3,013
Settlements made during the period		(2,819)		(1,991)
Changes in estimate of liability for pre-existing warranties during the period		12		(372)
Balance at June 30 (end of period)	$	9,019	$	5,262

Amount classified as current	$	8,348	$	4,690
Amount classified as long-term		671		572
Total warranty liability	$	9,019	$	5,262


	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenue:
Product	96.7	%	95.2	%	96.6	%	95.3	%
Services	3.3		4.8		3.4		4.7
Total revenue	100.0		100.0		100.0		100.0
Cost of revenue:
Product	52.4		52.1		52.6		52.5
Services	2.8		4.5		2.9		4.5
Total cost of revenue	55.2		56.6		55.5		57.0
Gross profit	44.8		43.4		44.5		43.0
Operating expenses:
Research and development	8.5		11.3		8.4		11.5
Sales and marketing	5.7		8.3		5.6		8.1
General and administrative	6.1		7.6		6.2		7.6
Total operating expenses	20.3		27.2		20.2		27.2
Income from operations	24.5		16.2		24.3		15.8
Other (expense) income:
Interest income	0.2		—		0.1		—
Interest expense	(0.6)		(0.9)		(0.7)		(0.8)
Other, net	(2.3)		—		(1.6)		(0.4)
Total other expense	(2.7)		(0.9)		(2.2)		(1.2)
Income before income taxes	21.8		15.3		22.1		14.6
Income tax provision	1.8		2.6		1.9		2.0
Net income	20.0	%	12.7	%	20.2	%	12.6	%


	Three months ended						Period-to-Period				Six months ended						Period-to-Period
	June 30,						Change				June 30,						Change
	2022			2021			$		%			2022			2021		$		%

	(dollars in thousands)
Gross Profit:
Product	$	98,172		$	63,468		$	34,704	54.7	%	$	187,063		$	119,743		$	67,320	56.2	%
Product gross margin		45.9	%		45.3	%						45.6	%		44.9	%

Services		1,009			546			463	84.8	%		1,885			706			1,179	167.0	%
Services gross margin		13.9	%		7.7	%						13.2	%		5.3	%
Total gross profit	$	99,181		$	64,014		$	35,167	54.9	%	$	188,948		$	120,449		$	68,499	56.9	%
Gross margin		44.8	%		43.4	%						44.5	%		43.0	%


	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program

	(in thousands except per share amounts)
April 1, 2022 through April 30, 2022	45	$60.36	45	$	77,284
May 1, 2022 through May 31, 2022	60	$56.44	60		73,885
June 1, 2022 through June 30, 2022	110	$58.30	110	$	67,502
Total	215		215


Exhibit No		Description

3.1		Restated Certificate of Incorporation of the Company filed November 2, 2017. Incorporated by reference to Exhibit 3.1 of the Company’s Form 10-Q filed with the Commission on November 3, 2017.

3.2		Bylaws of the Company, as amended as of May 11, 2022. Incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K filed with the Commission on May 11, 2022.

10.1		2022 Amended and Restated Employment Agreement between the Company and Mary G. Puma dated May 24, 2022. Filed herewith.

31.1		Certification of the Principal Executive Officer under Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act), dated August 4, 2022. Filed herewith.

31.2		Certification of the Principal Financial Officer under Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act), dated August 4, 2022. Filed herewith.

32.1		Certification of the Principal Executive Officer pursuant to Section 1350 of Chapter 63 of title 18 of the United States Code (Section 906 of the Sarbanes-Oxley Act), dated August 4, 2022. Filed herewith.

32.2		Certification of the Principal Financial Officer pursuant to Section 1350 of Chapter 63 of title 18 of the United States Code (Section 906 of the Sarbanes-Oxley Act), dated August 4, 2022. Filed herewith.

101		The following materials from the Company’s Form 10-Q for the quarter ended June 30, 2022, formatted in inline eXtensible Business Reporting Language (iXBRL): (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements (Unaudited). Filed herewith.

104		Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).


	AXCELIS TECHNOLOGIES, INC.
DATED: August 4, 2022	By:	/s/ KEVIN J. BREWER

		Kevin J. Brewer
		Executive Vice President and Chief Financial Officer
		Duly Authorized Officer and Principal Financial Officer


Date: August 4, 2022	/s/ MARY G. PUMA

	Mary G. Puma,
	President and Chief Executive Officer


Date: August 4, 2022	/s/ KEVIN J. BREWER

	Kevin J. Brewer,
	Executive Vice President and Chief Financial Officer


	/s/ MARY G. PUMA

	Mary G. Puma
	President and Chief Executive Officer of Axcelis Technologies, Inc.