acls_Current_Folio_10Q

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31,  2020

 

Or

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from               to               

 

Commission file number 000-30941

 

AXCELIS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

 

34-1818596

(State or other jurisdiction of
incorporation or organization)

 

(IRS Employer
Identification No.)

 

108 Cherry Hill Drive

Beverly, Massachusetts 01915

(Address of principal executive offices, including zip code)

 

(978) 787-4000

(Registrant’s telephone number, including area code)

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $.001 par value

ACLS

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐.

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

Large accelerated filer ☐

 

Accelerated filer ☒

Non-accelerated filer ☐

 

Smaller reporting company ☐

 

 

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

 

 

As of May 4,  2020 there were 32,875,141 shares of the registrant’s common stock outstanding.

 

 

Table of Contents

Table of Contents

 

 

 

 

PART I - FINANCIAL INFORMATION 

 

Item 1. 

Financial Statements (Unaudited)

 

 

Consolidated Statements of Operations for the three months ended March 31,  2020 and 2019

3

 

Consolidated Statements of Comprehensive Income for the three months ended March 31,  2020 and 2019

4

 

Consolidated Balance Sheets as of March 31,  2020 and December 31, 2019

5

 

Consolidated Statements of Stockholders’ Equity for the three months ended March 31,  2020 and 2019

6

 

Consolidated Statements of Cash Flows for the three months ended March 31,  2020 and 2019

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

19

 

Results of Operations

20

 

Liquidity and Capital Resources

25

Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4. 

Controls and Procedures

27

PART II - OTHER INFORMATION 

28

Item 1. 

Legal Proceedings

28

Item 1A. 

Risk Factors

28

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 3. 

Defaults Upon Senior Securities

28

Item 4. 

Mine Safety Disclosures

28

Item 5. 

Other Information

28

Item 6. 

Exhibits

29

 

 

2

Table of Contents

 

   PART 1—FINANCIAL INFORMATION

 

Item 1.    Financial Statements.

 

Axcelis Technologies, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

Revenue:

 

 

 

 

 

 

 

Product

 

$

112,133

 

$

84,197

 

Services

 

 

6,858

 

 

7,280

 

Total revenue

 

 

118,991

 

 

91,477

 

Cost of revenue:

 

 

 

 

 

 

 

Product

 

 

67,172

 

 

47,338

 

Services

 

 

6,270

 

 

6,633

 

Total cost of revenue

 

 

73,442

 

 

53,971

 

Gross profit

 

 

45,549

 

 

37,506

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

 

14,606

 

 

13,685

 

Sales and marketing

 

 

8,204

 

 

8,918

 

General and administrative

 

 

9,036

 

 

7,807

 

Total operating expenses

 

 

31,846

 

 

30,410

 

Income from operations

 

 

13,703

 

 

7,096

 

Other (expense) income:

 

 

 

 

 

 

 

Interest income

 

 

482

 

 

841

 

Interest expense

 

 

(1,303)

 

 

(1,230)

 

Other, net

 

 

(620)

 

 

(173)

 

Total other expense

 

 

(1,441)

 

 

(562)

 

Income before income taxes

 

 

12,262

 

 

6,534

 

Income tax provision

 

 

1,041

 

 

472

 

Net income

 

$

11,221

 

$

6,062

 

Net income per share:

 

 

 

 

 

 

 

Basic

 

$

0.34

 

$

0.19

 

Diluted

 

$

0.33

 

$

0.18

 

Shares used in computing net income per share:

 

 

 

 

 

 

 

Basic weighted average common shares

 

 

32,872

 

 

32,683

 

Diluted weighted average common shares

 

 

34,057

 

 

34,224

 

 

See accompanying Notes to these Consolidated Financial Statements

 

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Axcelis Technologies, Inc.

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

Net income

 

$

11,221

 

$

6,062

 

Other comprehensive loss:

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(1,112)

 

 

(495)

 

Amortization of actuarial loss and other adjustments from pension plan

 

 

57

 

 

30

 

Total other comprehensive loss

 

 

(1,055)

 

 

(465)

 

Comprehensive income

 

$

10,166

 

$

5,597

 

 

See accompanying Notes to these Consolidated Financial Statements

 

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Axcelis Technologies, Inc.

Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

    

March 31,

    

December 31,

 

 

 

2020

 

2019

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

174,745

 

$

139,881

 

Accounts receivable, net

 

 

64,238

 

 

83,753

 

Inventories, net

 

 

136,068

 

 

140,364

 

Prepaid expenses and other current assets

 

 

16,621

 

 

11,681

 

Total current assets

 

 

391,672

 

 

375,679

 

Property, plant and equipment, net

 

 

26,363

 

 

25,328

 

Operating lease assets

 

 

5,583

 

 

5,849

 

Finance lease assets, net

 

 

21,528

 

 

21,880

 

Long-term restricted cash

 

 

6,671

 

 

6,653

 

Deferred income taxes

 

 

66,607

 

 

68,060

 

Other assets

 

 

44,149

 

 

44,645

 

Total assets

 

$

562,573

 

$

548,094

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

26,089

 

$

25,341

 

Accrued compensation

 

 

9,237

 

 

7,631

 

Warranty

 

 

3,431

 

 

2,759

 

Income taxes

 

 

344

 

 

294

 

Deferred revenue

 

 

28,892

 

 

24,601

 

Current portion of finance lease obligation

 

 

573

 

 

399

 

Other current liabilities

 

 

6,807

 

 

7,639

 

Total current liabilities

 

 

75,373

 

 

68,664

 

Long-term finance lease obligation

 

 

47,976

 

 

48,149

 

Long-term deferred revenue

 

 

5,214

 

 

4,650

 

Other long-term liabilities

 

 

6,838

 

 

7,204

 

Total liabilities

 

 

135,401

 

 

128,667

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock, $0.001 par value, 75,000 shares authorized; 32,837 shares issued and outstanding at March 31, 2020; 32,585 shares issued and outstanding at December 31, 2019

 

 

33

 

 

33

 

Additional paid-in capital

 

 

559,182

 

 

559,878

 

Accumulated deficit

 

 

(130,730)

 

 

(140,226)

 

Accumulated other comprehensive loss

 

 

(1,313)

 

 

(258)

 

Total stockholders’ equity

 

 

427,172

 

 

419,427

 

Total liabilities and stockholders’ equity

 

$

562,573

 

$

548,094

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to these Consolidated Financial Statements

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Axcelis Technologies, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

Total

 

 

 

 

Common Stock

 

Paid-in

 

Accumulated

 

Comprehensive

 

Stockholders’

 

 

    

 

Shares

    

Amount

    

Capital

    

Deficit

    

Income (Loss)

    

Equity

 

Balance at December 31, 2018

 

 

32,558

 

$

33

 

$

565,116

 

$

(157,260)

 

$

448

 

$

408,337

 

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

6,062

 

 

 —

 

 

6,062

 

Foreign currency translation adjustments

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(495)

 

 

(495)

 

Change in pension obligation

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

30

 

 

30

 

Exercise of stock options

 

 

288

 

 

 —

 

 

1,828

 

 

 —

 

 

 —

 

 

1,828

 

Issuance of restricted common shares

 

 

35

 

 

 —

 

 

(281)

 

 

 —

 

 

 —

 

 

(281)

 

Stock-based compensation expense

 

 

 —

 

 

 —

 

 

1,672

 

 

 —

 

 

 —

 

 

1,672

 

Balance at March 31, 2019

 

 

32,881

 

$

33

 

$

568,335

 

$

(151,198)

 

$

(17)

 

$

417,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

Total

 

 

 

Common Stock

 

Paid-in

 

Accumulated

 

Comprehensive

 

Stockholders’

 

    

 

Shares

    

Amount

    

Capital

    

Deficit

    

Income (Loss)

    

Equity

Balance at December 31, 2019

 

 

32,585

 

$

33

 

$

559,878

 

$

(140,226)

 

$

(258)

 

$

419,427

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

11,221

 

 

 —

 

 

11,221

Foreign currency translation adjustments

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,112)

 

 

(1,112)

Change in pension obligation

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

57

 

 

57

Exercise of stock options

 

 

540

 

 

 1

 

 

4,498

 

 

 —

 

 

 

 

 

4,499

Issuance of shares under Employee Stock Purchase Plan

 

 

 1

 

 

 —

 

 

19

 

 

 —

 

 

 —

 

 

19

Issuance of restricted common shares

 

 

69

 

 

 —

 

 

(1,162)

 

 

 —

 

 

 —

 

 

(1,162)

Stock-based compensation expense

 

 

 —

 

 

 —

 

 

1,724

 

 

 —

 

 

 —

 

 

1,724

Repurchase of common stock

 

 

(358)

 

 

(1)

 

 

(5,775)

 

 

(1,725)

 

 

 —

 

 

(7,501)

Balance at March 31, 2020

 

 

32,837

 

$

33

 

$

559,182

 

$

(130,730)

 

$

(1,313)

 

$

427,172

 

See accompanying Notes to these Consolidated Financial Statements

 

 

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Axcelis Technologies, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

 

$

11,221

 

$

6,062

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,363

 

 

1,615

 

Deferred income taxes

 

 

899

 

 

582

 

Stock-based compensation expense

 

 

1,724

 

 

1,672

 

Provision for excess and obsolete inventory

 

 

802

 

 

607

 

Changes in operating assets & liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

19,223

 

 

7,642

 

Inventories

 

 

1,924

 

 

(6,171)

 

Prepaid expenses and other current assets

 

 

(4,435)

 

 

(1,174)

 

Accounts payable and other current liabilities

 

 

1,689

 

 

(16,911)

 

Deferred revenue

 

 

4,859

 

 

(2,098)

 

Income taxes

 

 

53

 

 

32

 

Other assets and liabilities

 

 

(645)

 

 

(4,207)

 

Net cash provided by (used in) operating activities

 

 

39,677

 

 

(12,349)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Expenditures for property, plant and equipment and capitalized software

 

 

(1,290)

 

 

(4,255)

 

Net cash used in investing activities

 

 

(1,290)

 

 

(4,255)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Net settlement on restricted stock grants

 

 

(1,162)

 

 

(281)

 

Repurchase of common stock

 

 

(7,501)

 

 

 —

 

Proceeds from Employee Stock Purchase Plan

 

 

19

 

 

 —

 

Proceeds from exercise of stock options

 

 

4,499

 

 

1,828

 

Net cash (used in) provided by financing activities

 

 

(4,145)

 

 

1,547

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

640

 

 

123

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

34,882

 

 

(14,934)

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

146,534

 

 

184,902

 

Cash, cash equivalents and restricted cash at end of period

 

$

181,416

 

$

169,968

 

 

 

 

 

 

 

 

 

See accompanying Notes to these Consolidated Financial Statements

 

 

 

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Axcelis Technologies, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

Note 1.  Nature of Business

 

Axcelis Technologies, Inc. (“Axcelis” or the “Company”) was incorporated in Delaware in 1995, and is a producer of ion implantation equipment used in the fabrication of semiconductor chips in the United States, Europe and Asia. In addition, we provide extensive worldwide aftermarket service and support, including spare parts, equipment upgrades, used equipment and maintenance services to the semiconductor industry. 

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments which are of a normal recurring nature and considered necessary for a fair presentation of these financial statements have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for other interim periods or for the year as a whole.

 

The balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in Axcelis Technologies, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

 

Note 2.  Stock-Based Compensation

 

We maintain the Axcelis Technologies, Inc. 2012 Equity Incentive Plan (the “2012 Equity Plan”), which became effective on May 2, 2012, and permits the issuance of options, restricted stock, restricted stock units (“RSUs”) and performance awards to selected employees, directors and consultants of the Company. Our 2000 Stock Plan (the “2000 Stock Plan”) expired on May 1, 2012 and no new grants may be made under that plan after that date.  However, unexpired awards granted under the 2000 Stock Plan remain outstanding and subject to the terms of the 2000 Stock Plan. We also maintain the Axcelis Technologies, Inc. Employee Stock Purchase Plan (the “ESPP”), an Internal Revenue Code Section 423 plan.

 

The 2012 Equity Plan and the ESPP are more fully described in Note 13 to the consolidated financial statements in our 2019 Annual Report on Form 10-K.

 

We recognized stock-based compensation expense of $1.7 million for the three month periods ended March 31,  2020 and 2019, respectively. These amounts include compensation expense related to RSUs, non-qualified stock options and stock to be issued to participants under the ESPP.

 

In the three month periods ended March 31,  2020 and 2019,  we issued 0.6 million and 0.3 million shares of common stock, respectively, upon stock option exercises, purchases under the ESPP and vesting of RSUs. In the three month periods ended March 31,  2020 and 2019,  we received proceeds of $4.5 million and $1.8 million, respectively, in connection with the exercise of stock options.

 

Note 3.  Leases

 

We have operating leases for office space, warehouse space, computer and office equipment and vehicles used in our business operations. We have a finance lease in relation to the 2015 sale-leaseback of our corporate headquarters in Beverly, Massachusetts. We review all agreements to determine if they contain a lease component. An agreement contains a lease component if it provides the use of a specific physical space or a specific physical item. We recognize the lease obligation on a discounted basis using the explicit or implicit discount rate stated within the agreement. We recognize a corresponding right-of-use asset, which is initially determined based upon the net present value of the associated liability and is adjusted for deferred costs and possible impairment, if any. For those lease agreements that do not indicate the applicable discount rate, we use our incremental borrowing rate. We have made the following policy elections: (i) operating

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leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet; (ii) we recognize lease expense for operating leases on a straight-line basis over the lease term; and (iii) we account for lease components and non-lease components that are fixed payments as one component. Some of our operating leases include one or more options to renew, with renewal terms that can extend the respective lease term 1 to 3 years. The exercise of lease renewal options are at our sole discretion. For lease extensions that are reasonably certain to occur, we have included these renewal periods in our calculation of the net present value of the lease obligation and related right-of-use asset. Certain leases also include options to purchase the leased property. The depreciable life of certain assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The amounts of operating and finance lease right-of-use assets and related lease obligations recorded within our consolidated balance sheet are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

Leases

Classification

 

2020

    

2019

    

Assets

 

 

(in thousands)

 

Operating lease

Operating lease assets

 

$

5,583

 

$

5,849

 

Finance lease

Finance lease assets *

 

 

21,528

 

 

21,880

 

Total leased assets

 

 

$

27,111

 

$

27,729

 

Liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Operating

Other current liabilities

 

$

3,233

 

$

3,144

 

Finance

Current portion of finance lease obligation

 

 

573

 

 

399

 

Noncurrent

 

 

 

 

 

 

 

 

Operating

Other long-term liabilities

 

 

2,326

 

 

2,553

 

Finance

Finance lease obligation

 

 

47,976

 

 

48,149

 

Total lease liabilities

 

 

$

54,108

 

$

54,245

 

 

 

 

 

 

 

 

 

 

* Finance lease assets are recorded net of accumulated depreciation of $47.6 million and include $0.7 million of prepaid financing costs as of March 31, 2020. Finance lease assets are recorded net of accumulated depreciation of $47.4 million and include $0.7 million of prepaid financing costs as of December 31, 2019.

 

 

 

 

 

 

 

 

 

 

All of our office locations support selling and servicing functions. Lease expense, depreciation expense relating to finance leased assets and interest expense relating to our finance lease obligation recognized within our consolidated statement of operations for the three months ended March 31,  2020 are as follows:

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Three months ended

 

 

 

March 31,

 

Lease cost

Classification

 

2020

    

2019

    

Operating lease cost

 

 

(in thousands)

 

Service

Cost of revenue

 

$

550

 

$

597

 

Research and development

Operating expenses

 

 

81

 

 

66

 

Sales and marketing*

Operating expenses

 

 

332

 

 

355

 

General and administrative*

Operating expenses

 

 

215

 

 

208

 

Total operating lease cost

 

 

$

1,178

 

$

1,226

 

Finance lease cost

 

 

 

 

 

 

 

 

Depreciation of leased assets

Cost of revenue, R&D, Sales and marketing and G&A

 

$

353

 

$

333

 

Interest on lease liabilities

Interest expense

 

 

1,303

 

 

1,230

 

Total finance lease cost

 

 

$

1,656

 

$

1,563

 

 

 

 

 

 

 

 

 

 

Total lease cost

 

 

$

2,834

 

$

2,789

 

 

 

 

 

 

 

 

 

 

* Sales and marketing, general and administrative expense includes short-term lease and variable lease costs of approximately $0.2 million for the three months ended March 31, 2020 and 2019, respectively.

 

   

Our corporate headquarters, shown below under finance leases, has an original lease term of 22 years. All other locations are treated as operating leases, with lease terms ranging from 1 to 10 years. The tables below reflect the minimum cash outflow regarding our current lease obligations as well as the weighted-average remaining lease term and weighted-average discount rates used on our calculation of our lease obligations and right-of-use assets as of March 31, 2020:  

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance

 

Operating

    

Total

Maturity of Lease Liabilities

 

Leases

 

Leases

 

Leases

 

 

(in thousands)

2020

 

$

4,298

 

$

2,728

 

$

7,026

2021

 

 

5,848

 

 

2,094

 

 

7,942

2022

 

 

5,980

 

 

838

 

 

6,818

2023

 

 

6,114

 

 

168

 

 

6,282

2024

 

 

6,252

 

 

70

 

 

6,322

Thereafter

 

 

79,653

 

 

203

 

 

79,856

Total lease payments

 

$

108,145

 

$

6,101

 

$

114,246

Less interest portion*

 

 

(59,596)

 

 

(542)

 

 

(60,138)

Finance lease and operating lease obligations

 

$

48,549

 

$

5,559

 

$

54,108

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

March 31,

Lease term and discount rate

    

2020

Weighted-average remaining lease term (years):

 

 

 

Operating leases

 

 

1.8

Finance leases

 

 

16.8

Weighted-average discount rate:

 

 

 

Operating leases

 

 

4.5%

Finance leases

 

 

10.5%

 

 

 

 

 

Our cash outflows from our operating leases include rent expense and other charges associated with these leases. These cash flows are included within the operating section of our statement of cash flows. Our cash flows from our finance lease currently include an interest only component and starting in April 2020, both an interest and payment of principal component. The table below shows our cash outflows, by lease type and related section of our statement of cash flows as well as the non-cash amount capitalized on our balance sheet in relation to our operating lease right-of-use assets:

 

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Three months ended

 

 

 

March 31,

 

Cash paid for amounts included in the measurement of lease liabilities

    

2020

 

2019

 

 

 

(in thousands)

 

Operating cash outflows from operating leases

 

$

1,178

 

$

1,226

 

Operating cash outflows from finance leases

 

 

1,422

 

 

1,391

 

Financing cash outflows from finance leases

 

 

 —

 

 

 —

 

Operating lease assets obtained in exchange for operating lease liabilities

 

 

765

 

 

7,453

 

Finance lease assets obtained in exchange for new finance lease liabilities

 

$

 —

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

Note 4.  Revenue

 

 To reflect the organization of our business operations, we divide revenue into two categories: revenue from sales of new systems and revenue arising from the sale of used systems, parts and labor to customers who own systems, which we refer to as “Aftermarket.”

 

Revenue by categories used by management are as follows:

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

 

 

2020

 

2019

 

 

(in thousands)

Systems

 

$

82,338

 

$

57,092

Aftermarket

 

 

36,653

 

 

34,385

 

 

$

118,991

 

$

91,477

 

We also consider revenue by geography. Revenue is allocated to geographic markets based upon the location to which our products are shipped and in which our services are performed. Revenue in our principal geographic markets is as follows:

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

 

 

2020

 

2019

 

 

(in thousands)

North America

 

$

10,661

 

$

11,607

Asia Pacific

 

 

96,828

 

 

62,927

Europe

 

 

11,502

 

 

16,943

 

 

$

118,991

 

$

91,477

 

Our system sales revenue transactions give rise to contract liabilities  (in the case of pre-payments and the fair value of goods and services to be delivered after the system delivery, such as installation and certain warranty obligations).

 

Contract liabilities are as follows:

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2020

 

2019

 

 

(in thousands)

Contract liabilities

 

$

34,106

 

$

29,251

 

 

 

 

 

 

 

 

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Contract liabilities are reflected as deferred revenue on the consolidated balance sheet and relate to payments invoiced or received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the fulfillment of performance obligations.

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

 

 

2020

 

2019

 

 

(in thousands)

Balance, beginning of the period

 

$

29,251

 

$

22,584

   Deferral of revenue

 

 

9,799

 

 

4,078

   Recognition of deferred revenue

 

 

(4,944)

 

 

(6,181)

Balance, ending of the period

 

$

34,106

 

$

20,481

 

The majority of our system transactions have payment terms of 90% due upon shipment of the tool and 10% due upon acceptance. Aftermarket transaction payment terms usually provide that payment is due either within 30 or 60 days after the service is provided or parts delivered.

 

Note 5. Receivables and Allowances for Credit Losses

 

All trade receivables are reported on the Condensed Consolidated Balance Sheets at their amortized cost adjusted for any write-offs and net of allowances for credit losses.

 

Axcelis maintains an allowance for credit losses, which represent an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The estimate is a result of the Company’s ongoing assessments and evaluations of collectability, historical loss experience, and future expectations in estimating credit losses in its receivable portfolio. Axcelis uses historical loss experience rates and applies them to a related aging analysis while also considering customer and/or economic risk where appropriate. Determination of the proper amount of allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provision for credit losses and, as a result, net earnings. The allowance takes into consideration numerous quantitative and qualitative factors that include receivable type, historical loss experience, loss migration, delinquency trends, collection experience, current economic conditions, estimates for supportable forecasts, when appropriate, and credit risk characteristics.

 

Axcelis evaluates the credit risk of the customer when extending credit based on a combination of various financial and qualitative factors that may affect its customers’ ability to pay. These factors may include the customer’s financial condition, past payment experience, and credit bureau, as well as the value of the underlying collateral.

 

Management performs detailed reviews of its receivables on quarterly basis to assess the adequacy of the allowances and to determine if any impairment has occurred. Amounts determined to be uncollectable are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. Changes to the allowances for credit losses are maintained through adjustments to the provision for credit losses, which are charged to current period earnings.

 

The following table shows changes of the allowances for credit losses related to trade receivables for the three months ended March 31, 2020:

 

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Three months ended

 

 

 

March 31,

 

 

 

2020

 

 

 

(in thousands)

 

Balance at January 1 (beginning of year)

 

$

818

 

   Provision for credit losses

 

 

 —

 

   Charge-offs

 

 

(818)

 

   Recoveries

 

 

 —

 

Balance at March 31  (end of period)

 

$

 —

 

 

 

 

Note 6.  Computation of Net Earnings per Share

 

Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted‑average number of common shares outstanding (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased by the number of additional common shares that would have been outstanding if the potentially dilutive common shares issuable on exercise of stock options and vesting of RSUs had been issued, calculated using the treasury stock method.  

 

The components of net earnings per share are as follows:

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

 

    

2020

    

2019

    

 

 

(in thousands, except per share amounts)

 

Net income available to common stockholders

 

$

11,221

 

$

6,062

 

Weighted average common shares outstanding used in computing basic income per share

 

 

32,872

 

 

32,683

 

Incremental options and RSUs

 

 

1,185

 

 

1,541

 

Weighted average common shares used in computing diluted net income per share

 

 

34,057

 

 

34,224

 

Net income per share

 

 

 

 

 

 

 

Basic

 

$

0.34

 

$

0.19

 

Diluted

 

$

0.33

 

$

0.18

 

 

 

Diluted weighted average common shares outstanding does not include options and RSUs outstanding to purchase 1,675 and 9,213 common equivalent shares for the three month periods ended March 31,  2020 and 2019, respectively, as their effect would have been anti-dilutive.

 

 

Note 7.  Accumulated Other Comprehensive Loss

 

The following table presents the changes in accumulated other comprehensive loss, net of tax, by component, for the three months ended March 31,  2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Foreign

    

Defined benefit

    

 

 

 

 

 

currency

 

pension plan

 

Total

 

 

 

(in thousands)

 

Balance at December 31, 2019

 

$

518

 

$

(776)

 

$

(258)

 

Other comprehensive loss and pension reclassification

 

 

(1,112)

 

 

57

 

 

(1,055)

 

Balance at March 31, 2020

 

$

(594)

 

$

(719)

 

$

(1,313)

 

 

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Note 8. Cash, cash equivalents and restricted cash

 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheet to the total of the amounts shown in the statement of cash flows:

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2020

 

 

2019

 

 

(in thousands)

 

Cash and cash equivalents

$

174,745

 

$

139,881

 

Long-term restricted cash

 

6,671

 

 

6,653

 

Total cash, cash equivalents and restricted cash

$

181,416

 

$

146,534

 

 

As of March 31,  2020, we had $6.7 million in restricted cash representing the total of (i) a $5.9 million letter of credit serving as security for the lease of our corporate headquarters in Beverly, Massachusetts, (ii) a  $0.7 million letter of credit relating to workers’ compensation insurance and (iii) a  $0.1 million deposit relating to customs activity.    

 

Note 9.  Inventories, net

 

The components of inventories are as follows:

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

    

2020

    

2019

    

 

 

(in thousands)

 

Raw materials

 

$

87,772

 

$

95,867

 

Work in process

 

 

37,978

 

 

32,131

 

Finished goods (completed systems)

 

 

10,318

 

 

12,366

 

     Inventories, net

 

$

136,068

 

$

140,364

 

 

When recorded, inventory reserves reduce the carrying value of inventories to their net realizable value. We establish inventory reserves when conditions exist that indicate inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for the Company’s products or market conditions. We regularly evaluate the ability to realize the value of inventories based on a combination of factors including the following: forecasted sales or usage, estimated product end of life dates, estimated current and future market value and new product introductions. Purchasing and usage alternatives are also explored to mitigate inventory exposure.

 

Note 10.  Product Warranty

 

We generally offer a one year warranty for all of our systems, the terms and conditions of which vary depending upon the product sold. For all systems sold, we accrue a liability for the estimated cost of standard warranty at the time of system shipment and defer the portion of systems revenue attributable to the fair value of non-standard warranty. Costs for non-standard warranty are expensed as incurred. Factors that affect our warranty liability include the number of installed units, historical and anticipated product failure rates, material usage and service labor costs. We periodically assess the adequacy of our recorded liability and adjust the amount as necessary.

 

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The changes in our standard product warranty liability are as follows:

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

 

    

2020

    

2019

    

 

 

(in thousands)

 

Balance at January 1 (beginning of year)

 

$

3,244

 

$

5,091

 

Warranties issued during the period

 

 

1,385

 

 

954

 

Settlements made during the period

 

 

(950)

 

 

(1,475)

 

Changes in estimate of liability for pre-existing warranties during the period

 

 

126

 

 

89

 

Balance at March 31  (end of period)

 

$

3,805

 

$

4,659

 

 

 

 

 

 

 

 

 

Amount classified as current

 

$

3,431

 

$

4,319

 

Amount classified as long-term

 

 

374

 

 

340

 

Total warranty liability

 

$

3,805

 

$

4,659

 

 

 

Note 11.  Fair Value Measurements

 

Certain assets on our balance sheets are reported at their fair value. Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

 

(a)  Fair Value Hierarchy

 

The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

 

Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

(b)  Fair Value Measurements

 

Our money market funds and short-term investments are included in cash and cash equivalents in the consolidated balance sheets.

 

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The following table sets forth our assets by level within the fair value hierarchy:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2020

 

 

 

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

 

$

148,566

 

$

 —

 

$

 —

 

$

148,566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

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

 

$

92,872

 

$

24,000

 

$

 —

 

$

116,872

 

 

(c)  Other Financial Instruments

 

The carrying amounts reflected in the consolidated balance sheets for accounts receivable, prepaid expenses and other current assets and non-current assets, restricted cash, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

 

Note 12.  Financing Arrangements

 

On January 30, 2015, we sold our corporate headquarters facility in Beverly Massachusetts for $48.9 million. As part of the sale, we also entered into a 22-year lease agreement of our headquarters facility. This sale-leaseback is accounted for as a financing lease under generally accepted accounting principles and, as such, we have recorded a financing obligation of $48.5 million as of March 31,  2020.  Our current lease payments are interest only payments. Commencing in April 2020, the associated lease payments will include both an interest component and payment of principal, with the remaining liability being extinguished at the end of the original lease term. We posted a security deposit of $5.9 million in the form of an irrevocable letter of credit at the time of the closing. This letter of credit is cash collateralized and the associated cash is included in long-term restricted cash.

 

Note 13.  Income Taxes

 

Income tax expense was $1.0 million for the three months ended March 31, 2020, compared to $0.5 million the three months ended March 31, 2019. The $0.5 million increase was primarily due to a $5.7 million increase in pretax income, which was slightly offset by excess tax benefits associated with stock option exercises for the three months ended March 31, 2020, compared to the three months ended March 31, 2019. 

 

We had $66.6 million and $68.1 million of net deferred tax assets worldwide relating to net operating loss carryforwards, tax credit carryforwards and other temporary differences, as of March 31, 2020 and December 31, 2019, respectively. These deferred tax assets are available to reduce income taxes in future years. We have a $9.1 million valuation allowance in the U.S. against certain tax credits and state net operating losses due to the uncertainty of their realization based on long-term Company forecasts and the expiration dates on these tax assets. If future operating results of the U.S. or these foreign jurisdictions are significantly less than our expectations, it is reasonably possible that we would be required to record an additional valuation allowance on our deferred tax assets in the future. 

 

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Note 14.  Concentration of Risk

 

For the three months ended March 31,  2020,  four customers accounted for 20.9%, 16.9%, 14.6% and 10.7% of total revenue, respectively. For the three months ended March 31,  2019,  three customers accounted for 16.4%,  13.4% and 10.2% of total revenue, respectively.  

 

At March 31,  2020,  two customers accounted for 21.2% and 18.3% of accounts receivable, respectively. At December 31, 2019,  three customers accounted for 24.9%,  15.3% and 11.1% of accounts receivable, respectively.

 

Note 15. Share Repurchase

 

The Board has approved stock repurchases of up to $50 million of our common stock through the end of 2020. During the three months ended March 31, 2020, we purchased approximately 0.4 million shares at an average cost of $20.92 per share but have suspended the repurchase program while we continue to invest in the business during these difficult times in the midst of COVID-19. The timing and actual number of shares repurchased in 2020 will depend on various factors, including the price of our common stock, general business and market conditions, and alternative investment opportunities or other uses of cash.  

 

Shares repurchased are accounted for when the transaction is settled. There were no unsettled share repurchases at March 31,  2020.  

 

Note 16.  Contingencies

 

(a)  Litigation

 

We are from time to time a party to litigation that arises in the normal course of our business operations. We are not presently a party to any litigation that we believe might have a material adverse effect on our business operations.

 

(b)  Indemnifications

 

Our system sales agreements typically include provisions under which we agree to take certain actions, provide certain remedies and defend our customers against third-party claims of intellectual property infringement under specified conditions and indemnify customers against any damage and costs awarded in connection with such claims. We have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

 

Note 17.  Recent Accounting Guidance

 

We adopted Financial Accounting Standards Board ASU No. 2019-04 “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” as of January 1, 2020, using the modified-retrospective approach resulting in no cumulative adjustment to retained earnings. The amendments in this Update clarify the guidance within Topic 326 relating to credit losses. Topic 326 replaces the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. Due to the requirements of Topic 326, management reviews the average annual write-off rate along with an assessment of current micro and macro-economic factors to determine any expected losses. The adoption of this Update did not have any material impact on our results of operations or cash flows. See Note 5 above for further discussion.

 

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Certain statements within "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements that involve risks and uncertainties. Words such as may, will, should, would, anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions identify such forward-looking statements. The forward-looking statements contained herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Factors that might cause such a difference include, among other things, those set forth under "Liquidity and Capital Resources" below and under “Risk Factors” in Part I, Item 1A to our annual report on Form 10-K for the year ended December 31, 2019 and in Part II, Item 1A to this report on Form 10-Q, which discussion is incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

 

Overview

 

We are primarily a producer of ion implantation equipment used in the fabrication of semiconductor chips in the United States, Europe and Asia. In addition, we provide extensive worldwide aftermarket service and support, including spare parts, equipment upgrades and maintenance services to the semiconductor industry. Our product development and manufacturing activities occur primarily in the United States. Our equipment and service products are highly technical and are sold through a direct sales force in the United States, Europe and Asia. Consolidation and partnering within the semiconductor manufacturing industry has resulted in a small number of customers representing a substantial portion of our business. Our ten largest customers accounted for 85.9% of total revenue for the three months ended March 31,  2020.

 

In the first three months of 2020,  we delivered strong financial performance driven by demand for our Purion systems. The semiconductor supply chain was identified as a critical infrastructure sector in the Advisory Memorandum issued by the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (“CISA”) on March 19, 2020 and updated on March 28, 2020.  CISA’s list has been incorporated in orders by the Governor of Massachusetts and other states, which urge critical infrastructure sector businesses to continue to operate during the COVID-19 pandemic.  Axcelis has continued to operate during this time, with a combination of work from home and the implementation of protocols for social distancing and other practices in our facilities, as recommended by the U.S. Centers for Disease Control and Prevention. Business travel has been substantially curtailed. Operations outside of the U.S. have also been conducted in accordance with applicable local governmental laws and public health recommendations. We are closely monitoring the impact of the pandemic on our business and will adjust operations as needed.

 

The ultimate consequence of the pandemic on the semiconductor industry will be the aggregation of both positive and negative forces on various customer market segments.  For example, the pandemic may drive enhanced investment in PCs, video streaming and communications technologies.  On the other hand, it is dampening the demand for semiconductors for automotive and aviation applications.  Our customers will be adapting to the changes in the volumes of different types of semiconductors demanded by the market.  These adaptations could cause delay and uncertainty that could impact Axcelis.  However, we are working closely with our customers across market segments, even during this difficult time, to provide them with the best ion implant solutions for their specific manufacturing challenges.

 

The currently implemented, and potential additional, disruptions and restrictions on our operations and ability to travel, and similar disruptions and restrictions impacting our suppliers or customers, could adversely affect our sales and operating results.  Axcelis’ products rely on an extensive global supply chain, and shortages of certain parts could impact our ability to meet customer’s shipment expectations, negatively affecting our revenues.  The COVID-19 pandemic may drive changes in the demand for certain of our customers’ products, resulting in their delay or cancelation of purchases from us. The extent to which the COVID-19 coronavirus may impact our results will depend on future developments, which are highly uncertain and cannot be predicted, including the severity of the coronavirus and the duration of the current pandemic.

 

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Critical Accounting Estimates

 

Management’s discussion and analysis of our financial condition and results of operations included herein and in our Annual Report on Form 10-K for the year ended December 31, 2019 are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions. Management’s estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

Management has not identified any need to make any material change in, and has not changed, any of our critical accounting estimates and judgments as described in Management’s Discussion and Analysis of Financial Conditions and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2019.

 

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Results of Operations

 

The following table sets forth our results of operations as a percentage of total revenue:

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

March 31,

 

 

 

    

2020

    

2019

    

    

Revenue:

 

 

 

 

 

 

Product

 

94.2

%

92.0

%

 

Services

 

5.8

 

8.0

 

 

Total revenue

 

100.0

 

100.0

 

 

Cost of revenue:

 

 

 

 

 

 

Product

 

56.5

 

51.7

 

 

Services

 

5.3

 

7.3

 

 

Total cost of revenue

 

61.8

 

59.0

 

 

Gross profit

 

38.2

 

41.0

 

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

12.3

 

15.0

 

 

Sales and marketing

 

6.9

 

9.7

 

 

General and administrative

 

7.6

 

8.5

 

 

Total operating expenses

 

26.8

 

33.2

 

 

Income from operations

 

11.4

 

7.8

 

 

Other (expense) income:

 

 

 

 

 

 

Interest income

 

0.4

 

0.9

 

 

Interest expense

 

(1.1)

 

(1.3)

 

 

Other, net

 

(0.5)

 

(0.2)

 

 

Total other expense

 

(1.2)

 

(0.6)

 

 

Income before income taxes

 

10.2

 

7.2

 

 

Income tax provision

 

0.9

 

0.5

 

 

     Net income

 

9.3

%

6.7

%

 

 

Revenue

 

The following table sets forth our product and services revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Period-to-Period

 

 

 

 

March 31,

 

Change

 

 

 

 

2020

 

2019

 

$

 

%  

 

 

 

 

(dollars in thousands)

 

Revenue:

    

 

    

    

 

    

    

 

    

 

    

 

    

Product

 

$

112,133

 

$

84,197

 

$

27,936

 

33.2

%

 

Percentage of revenue

 

 

94.2

%  

 

92.0

%  

 

 

 

 

 

 

Services

 

 

6,858

 

 

7,280

 

 

(422)

 

(5.8)

%

 

Percentage of revenue

 

 

5.8

%  

 

8.0

%  

 

 

 

 

 

 

Total revenue

 

$

118,991

 

$

91,477

 

$

27,514

 

30.1

%

 

 

Three months ended March 31,  2020 Compared with Three months ended March 31,  2019

 

Product

 

Product revenue, which includes systems sales, sales of spare parts, product upgrades and used systems was $112.1 million, or 94.2% of revenue during the three months ended March 31,  2020, compared with $84.2 million, or 92.0% of revenue for the three months ended March 31,  2019. The $27.9 million increase in product revenue for the three

20

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month period ending March 31,  2020, in comparison to the same period in 2019, was primarily driven by an increase in the number of systems sold.

 

A portion of our revenue from systems sales is deferred until installation and other services related to future performance obligations are performed. The total amount of deferred revenue at March 31,  2020 and December 31, 2019 was $34.1 million and $29.3 million, respectively. The net increase in deferred revenue was primarily due to collection of advance payments on systems.  

 

Services

 

Services revenue, which includes the labor component of maintenance and service contracts and fees for service hours provided by on-site service personnel, was $6.9 million, or 5.8% of revenue for the three months ended March 31,  2020, compared with $7.3 million, or 8.0% of revenue for the three months ended March 31,  2019. Although services revenue typically increases with the expansion of the installed base of systems, it can fluctuate from period to period based on capacity utilization at customers’ manufacturing facilities, which affects the need for equipment service.

 

Revenue Categories used by Management

 

In addition to the line item revenue categories discussed above, management also regularly disaggregates revenue in the following categories, which it finds relevant and useful:

 

·

Ion implant revenue separate from revenue from legacy non-implant product lines, given that ion implantation systems are the primary driver of our growth and strategic objectives;

·

Systems and Aftermarket revenues, in which “Aftermarket” is

A.

the portion of Product revenue relating to spare parts, product upgrades and used systems combined with

B.

Services revenue, which is the labor component of Aftermarket revenues;

 

Aftermarket purchases reflect current fab utilization as opposed to Systems purchases which reflect capital investment decisions by our customers, which have differing economic drivers;

 

·

Revenue by geographic regions, since economic factors impacting customer purchasing decisions may vary by geographic region; and

·

Revenue by our customer market segments, since they can be subject to different economic drivers at different periods of time, impacting a customer’s likelihood of purchasing capital equipment during any particular period. Currently, management references three customer market segments:  memory, mature technology processes and leading edge foundry and logic. 

 

The ion implant and Aftermarket revenue categories for recent periods are discussed below.

 

Three months ended March 31,  2020 Compared with Three months ended March 31,  2019

 

Ion Implant

 

Included in total revenue of $119.0 million during the three months ended March 31,  2020 is revenue from sales of ion implant products and services of $115.0 million, or 96.7% of total revenue, compared with $87.0 million, or 95.1%, of total revenue for the three months ended March 31,  2019.  The remaining $4.0 million of revenue for the three months ended March 31,  2020 was non-ion implant parts and services.

 

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Aftermarket

 

Included in total revenue of $119.0 million during the three months ended March 31,  2020 is revenue from our Aftermarket business of $36.7 million, compared to $34.4 million for the three months ended March 31,  2019.  The remaining $82.3 million of revenue for the three months ended March 31,  2020 was from system sales. Aftermarket revenue fluctuates from period to period based on capacity utilization at customers’ manufacturing facilities, which affects the sale of spare parts and demand for equipment service. Aftermarket revenue can also fluctuate from period to period based on the demand for system upgrades or used tools.

 

Gross Profit / Gross Margin

 

The following table sets forth our gross profit / gross margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Period-to-Period

 

 

 

 

March 31,

 

Change

 

 

 

    

 

2020

    

 

2019

    

$

 

%  

 

    

 

 

(dollars in thousands)

 

Gross Profit:

    

 

    

    

 

    

    

 

    

 

    

 

    

Product

 

$

44,961

 

$

36,859

 

$

8,102

 

22.0

%

 

Product gross margin

 

 

40.1

 

 

43.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services

 

 

588

 

 

647

 

 

(59)

 

(9.1)

%

 

Services gross margin

 

 

8.6

 

 

8.9

 

 

 

 

 

 

 

Total gross profit

 

$

45,549

 

$

37,506

 

$

8,043

 

21.4

%

 

Gross margin

 

 

38.2

 

 

41.0

 

 

 

 

 

 

 

 

Three months ended March 31,  2020 Compared with Three months ended March 31,  2019

 

Product

 

Gross margin from product revenue was 40.1% for the three months ended March 31,  2020, compared to 43.8% for the three months ended March 31,  2019.  The decrease in gross margin resulted from the successful conversion of three evaluation systems into sales during the quarter.

 

Services

 

Gross margin from services revenue was 8.6% for the three months ended March 31,  2020, compared to 8.9% for the three months ended March 31,  2019.  The decrease in gross margin is attributable to changes in the mix of service contracts.

 

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Operating Expenses

 

The following table sets forth our operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Period-to-Period

 

 

 

 

March 31,

 

Change

 

 

 

 

2020

 

2019

 

$

 

%  

 

 

 

 

(dollars in thousands)

 

Research and development

    

$

14,606

    

$

13,685

    

$

921

    

6.7

%

    

Percentage of revenue

 

 

12.3

%

 

15.0

%

 

 

 

 

 

 

Sales and marketing

 

 

8,204

 

 

8,918

 

 

(714)

 

(8.0)

%

 

Percentage of revenue

 

 

6.9

%

 

9.7

%

 

 

 

 

 

 

General and administrative

 

 

9,036

 

 

7,807

 

 

1,229

 

15.7

%

 

Percentage of revenue

 

 

7.6

%

 

8.5

%

 

 

 

 

 

 

Total operating expenses

 

$

31,846

 

$

30,410

 

$

1,436

 

4.7

%

 

Percentage of revenue

 

 

26.8

%

 

33.2

%

 

 

 

 

 

 

 

Our operating expenses consist primarily of personnel costs, including salaries, commissions, expected incentive plan payouts, stock-based compensation and related benefits and taxes; project material costs related to the design and development of new products and enhancement of existing products; and professional fees, travel and depreciation expenses.

 

Personnel costs are our largest expense, representing $19.9 million or 62.6% of our total operating expenses for the three month period ended March 31,  2020, compared to $17.8 million or 58.4% of our total operating expenses for the three month period ended March 31,  2019.  The higher personnel costs for the three month periods ended March 31,  2020 is primarily due to higher incentive based pay expense.

 

Research and Development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

Period-to-Period

 

 

 

 

March 31,

 

 

 

Change

 

 

 

 

2020

 

2019

 

 

 

$

 

%  

 

 

 

 

(dollars in thousands)

 

Research and development

 

$

14,606

    

$

13,685

    

 

$

921

    

6.7

%

    

Percentage of revenue

 

 

12.3

%

 

15.0

%

 

 

 

 

 

 

 

 

Our ability to remain competitive depends largely on continuously developing innovative technology, with new and enhanced features and systems and introducing them at competitive prices on a timely basis. Accordingly, based on our strategic plan, we establish annual R&D budgets to fund programs that we expect will solve customers’ high value, high impact, ion implantation challenges.

 

Three months ended March 31,  2020 Compared with Three months ended March 31,  2019

 

Research and development expense was $14.6 million during the three months ended March 31,  2020, an increase of $0.9 million, or 6.7%, compared with $13.7 million during the three months ended March 31, 2019. The increase is primarily due to higher incentive based pay expense and increased depreciation associated with capital additions.  

 

Sales and Marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Period-to-Period

 

 

 

 

March 31,

 

Change

 

 

 

 

2020

 

2019

 

$

 

%  

 

 

 

 

(dollars in thousands)

 

Sales and marketing

    

$

8,204

    

$

8,918

    

 $

(714)

    

(8.0)

%

    

Percentage of revenue

 

 

6.9

%

 

9.7

%

 

 

 

 

 

 

 

Our sales and marketing expenses result primarily from the sale of our equipment and services through our direct sales force.

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Table of Contents

 

Three months ended March 31,  2020 Compared with Three months ended March 31,  2019

 

Sales and marketing expense was $8.2 million during the three months ended March 31,  2020, a  decrease of $0.7 million, or 8.0%, compared with $8.9 million during the three months ended March 31,  2019. The decrease is primarily due to reduced tariffs. 

 

General and Administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Period-to-Period

 

 

 

 

March 31,

 

Change

 

 

 

 

2020

 

2019

 

$

 

%  

 

 

 

 

(dollars in thousands)

 

General and administrative

    

$

9,036

    

$

7,807

    

$

1,229

    

15.7

%

    

Percentage of revenue

 

 

7.6

%

 

8.5

%

 

 

 

 

 

 

 

Our general and administrative expenses result primarily from the costs associated with our executive, finance, information technology, legal and human resource functions.

 

Three months ended March 31,  2020 Compared with Three months ended March 31,  2019

 

General and administrative expense was $9.0 million during the three months ended March 31,  2020, an increase of $1.2 million, or 15.7%,  compared with $7.8 million during the three months ended March 31,  2019.  The increase is primarily due to an increase in incentive based pay expense.

 

Other (Expense) Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Period-to-period

 

 

 

 

March 31,

 

change

 

 

 

 

2020

 

2019

 

$

 

%

 

 

 

 

(dollars in thousands)

 

Other expense

 

$

(1,441)

 

$

(562)

 

$

(879)

 

(156.4)

%

 

Percentage of revenue

 

 

(1.2)

%

 

(0.6)

%

 

 

 

 

 

 

 

 

Other (expense) income consists primarily of interest expense relating to the finance lease obligation we incurred in connection with the 2015 sale of our headquarters facility and other financing obligations, foreign exchange gains and losses attributable to fluctuations of the US dollar against local currencies of certain of the countries in which we operate as well as interest earned on our invested cash balances.

 

Other expense was $1.4 million for the three months ended March 31,  2020, compared with $0.6 million for the three months ended March 31,  2019. The increase in other expense of $0.9 million for the three month period ended March 31,  2020 compared to the three month period ended March 31,  2019, was primarily due to higher foreign currency exchange losses in the current year period compared to the prior year. 

 

During the three month periods ended March 31,  2020 and 2019, we had no significant off-balance-sheet risk such as exchange contracts, option contracts or other hedging arrangements. 

 

Income Tax Provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Period-to-period

 

 

 

 

March 31,

 

change

 

 

 

 

2020

 

2019

 

$

 

%

 

 

 

 

(dollars in thousands)

 

Income tax provision

 

$

1,041

 

 

$

472

 

$

569

 

120.6

%

 

Percentage of revenue

 

 

0.9

%

 

 

0.5

%

 

 

 

 

 

 

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Table of Contents

 

Income tax expense was $1.0 million for the three months ended March 31, 2020, compared to $0.5 million the three months ended March 31, 2019. The $0.5 million increase was primarily due to a $5.7 million increase in pretax income, which was slightly offset by excess tax benefits associated with stock option exercises for the three months ended March 31, 2020, compared to the three months ended March 31, 2019. 

 

We had $66.6 million and $68.1 million of net deferred tax assets worldwide relating to net operating loss carryforwards, tax credit carryforwards and other temporary differences, as of March 31, 2020 and December 31, 2019, respectively. These deferred tax assets are available to reduce income taxes in future years. We have a $9.1 million valuation allowance in the U.S. against certain tax credits and state net operating losses due to the uncertainty of their realization based on long-term Company forecasts and the expiration dates on these tax assets. If future operating results of the U.S. or these foreign jurisdictions are significantly less than our expectations, it is reasonably possible that we would be required to record an additional valuation allowance on our deferred tax assets in the future. 

 

Liquidity and Capital Resources

 

We had $174.7 million in unrestricted cash and cash equivalents at March 31,  2020, in addition to $6.7 million in restricted cash, primarily comprised of the $5.9 million security for the lease of our corporate headquarters. Management believes that maintaining a strong cash balance is necessary to provide funding for potential ramps in our business which can require significant cash investment to meet sudden demand. Additionally, we are considering both organic and inorganic opportunities to drive future growth, for which cash resources will be necessary.

 

Our liquidity is affected by many factors. Some of these relate specifically to the operations of our business, for example, the rate of sale of our products, and others relate to the uncertainties of global economic conditions, including the availability of credit and the condition of the overall semiconductor equipment industry. Our established cost structure, other than cost of goods sold, does not vary significantly with changes in volume. We experience fluctuations in operating results and cash flows depending on these factors. We may also engage in stock repurchases, as discussed below.

 

During the three months ended March 31,  2020,  we generated $39.7 million of cash related to operating activities. In comparison, during the three months ended March 31,  2019,  we used  $12.3 million of cash from operations.  

 

Investing activities for the three months ended March 31,  2020 and 2019 resulted in cash outflows of $1.3 million and $4.3 million, respectively, used for capital expenditures.

 

Financing activities for the three months ended March 31, 2020 resulted in a net cash usage of $4.1 million. During the quarter, $7.5 million in cash was used to repurchase common stock and $1.2 million was used for payments to government tax authorities for income tax withholding on RSU vesting, where shares are withheld by the Company. These amounts were partially offset by $4.5 million of proceeds from the exercise of stock options and purchases under the ESPP. Financing activities for the three months ended March 31, 2019 generated net cash of $1.5 million, of which $1.8 million related to the exercise of stock options, partially offset by $0.3 million related to payments made to government tax authorities for income tax withholding on RSU vesting. 

 

We believe that based on our current market, revenue, expense and cash flow forecasts, our existing cash, cash equivalents and borrowing capacity will be sufficient to satisfy our anticipated cash requirements for the short and long-term. We currently have no credit facility but management believes we would be able to borrow if needed.

 

In December 2019, our Board of Directors authorized an increase and extension of the share repurchase program, of up to $50 million of the Company's common stock through 2020. These shares could be purchased in the open market or through privately negotiated transactions. As of March 31, 2020, we had approximately $24.8 million remaining under the share repurchase program but have suspended the repurchase program while we continue to invest in the business during these difficult times. See Part II, Item 2 of this report for purchases under this program. The timing and actual number of shares repurchased in 2020 will depend on various factors,  including the price of our common stock, general business and market conditions, and alternative investment opportunities. Consideration of each of these factors will include an evaluation of the known and anticipated effects of the COVID-19 pandemic on our business and industry. See Note 15 to the financial statements above.

 

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Table of Contents

Commitments and Contingencies

 

Significant commitments and contingencies at March 31,  2020 are consistent with those discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 16 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Table of Contents

 

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

 

As of March 31,  2020, there have been no material changes to the quantitative information about market risk disclosed in Item 7A to our annual report on Form 10-K for the year ended December 31, 2019.

 

Item 4.  Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, these disclosure controls and procedures are effective.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during the three months ended March 31,  2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

27

Table of Contents

PART II—OTHER INFORMATION

 

Item 1.  Legal Proceedings.

 

We are, from time to time, a party to litigation that arises in the normal course of our business operations. We are not presently a party to any litigation that we believe might have a material adverse effect on our business operations.

 

Item 1A.  Risk Factors.

 

As of March 31,  2020, there have been no material changes to the risk factors described in Item 1A to our annual report on Form 10-K for the year ended December 31, 2019, other than the addition of the risk factor set forth below.

 

Our financial condition and results of operations could be adversely affected by the recent coronavirus outbreak.  The novel strain of coronavirus which causes the illness referred to as COVID-19, as with other contagious diseases or other adverse public health developments, may have a material and adverse effect on our business operations. In the case of COVID-19, governmental orders and employee health and safety concerns have caused Axcelis to continue its operations using a combination of work from home and social distancing protocols in our facilities. Business travel has also been substantially curtailed.  These and potential other disruptions or restrictions on our operations and ability to travel, and similar disruptions and restrictions impacting our suppliers or customers could adversely affect our sales and operating results.  Axcelis’ products rely on an extensive global supply chain, and shortages of certain parts could impact our ability to meet customer’s shipment expectations, negatively affecting our revenues.  The COVID-19 pandemic may drive changes in the demand for certain of our customers’ products, resulting in their delay or cancelation of purchases from us. The extent to which the COVID-19 coronavirus may impact our results will depend on future developments, which are highly uncertain and cannot be predicted, including the severity of the coronavirus and the duration of the current pandemic.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

 

In December 2019, our Board of Directors authorized an increase and extension of the share repurchase program, of up to $50 million of the Company's common stock.  The timing and actual number of shares repurchased in 2020 will depend on various factors, including the price of our common stock, general business and market conditions, and alternative investment opportunities or other uses of cash.  

The following table summarizes the stock repurchase activity for the three months ended March 31,  2020 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

March 1, 2020 through March 31, 2020

 

358

 

$20.92

 

358

 

$

24,756

 

 

 

 

Item 3.  Defaults Upon Senior Securities.

 

None.

 

Item 4.  Mine Safety Disclosures.

 

Not Applicable.

 

Item 5.  Other Information.

 

None.

28

Table of Contents

 

Item 6.  Exhibits.

 

The following exhibits are filed herewith:

 

 

 

 

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 13, 2014. Incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K filed with the Commission on May 19, 2014.

 

 

 

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 May 6,  2020. 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 May 6,  2020. 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 May 6,  2020. 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 May 6,  2020. Filed herewith.

 

 

 

101

 

The following materials from the Company’s Form 10-Q for the quarter ended March 31,  2020, formatted in eXtensible Business Reporting Language (XBRL): (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.

 

 

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Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

 

AXCELIS TECHNOLOGIES, INC.

DATED: May 6,  2020

By:

/s/ KEVIN J. BREWER

 

 

 

 

 

Kevin J. Brewer

 

 

Executive Vice President and Chief Financial Officer

 

 

Duly Authorized Officer and Principal Financial Officer

 

30

acls_Ex31_1

Exhibit 31.1

 

CERTIFICATION

of the Principal Executive Officer

Pursuant to Rule 13a-14(a)/15d-14(a) (implementing Section 302 of the Sarbanes-Oxley Act)

 

I, Mary G. Puma, certify that:

 

1.        I have reviewed this quarterly report on Form 10-Q of Axcelis Technologies, Inc.;

 

2.        Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.        Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.        The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.        The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)       Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

Date: May 6, 2020

/s/ MARY G. PUMA

 

 

 

Mary G. Puma,

 

President and Chief Executive Officer

 

acls_Ex31_2

Exhibit 31.2

 

CERTIFICATION

of the Principal Financial Officer

Pursuant to Rule 13a-14(a)/15d-14(a) (implementing Section 302 of the Sarbanes-Oxley Act)

 

I, Kevin J. Brewer, certify that:

 

1.        I have reviewed this quarterly report on Form 10-Q of Axcelis Technologies, Inc.;

 

2.        Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.        Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.        The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.        The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)       Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

Date: May 6, 2020

/s/ KEVIN J. BREWER

 

 

 

Kevin J. Brewer,

 

Executive Vice President and Chief Financial Officer

 

acls_Ex32_1

EXHIBIT 32.1

 

AXCELIS TECHNOLOGIES, INC.

Certification of the Principal Executive Officer

Pursuant to Section 1350 of Chapter 63 of title 18 of the United States Code

 

The undersigned Chief Executive Officer of Axcelis Technologies, Inc., a Delaware corporation, hereby certifies, for the purposes of Section 1350 of Chapter 63 of title 18 of the United States Code (as implemented by Section 906 of the Sarbanes-Oxley Act of 2002) as follows:

 

This Form 10-Q quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and the information contained herein fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

IN WITNESS WHEREOF, the undersigned has executed this Certification as of May 6, 2020.

 

 

 

 

/s/ MARY G. PUMA

 

 

 

Mary G. Puma

 

President and Chief Executive Officer of Axcelis Technologies, Inc.

 

acls_Ex32_2

EXHIBIT 32.2

 

AXCELIS TECHNOLOGIES, INC.

Certification of the Principal Financial Officer

Pursuant to Section 1350 of Chapter 63 of title 18 of the United States Code

 

The undersigned Chief Financial Officer of Axcelis Technologies, Inc., a Delaware corporation, hereby certifies, for the purposes of Section 1350 of Chapter 63 of title 18 of the United States Code (as implemented by Section 906 of the Sarbanes-Oxley Act of 2002) as follows:

 

This Form 10-Q quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and the information contained herein fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

IN WITNESS WHEREOF, the undersigned has executed this Certification as of May 6, 2020.

 

 

/s/ KEVIN J. BREWER

 

 

 

Kevin J. Brewer

 

Executive Vice President and Chief Financial Officer of Axcelis Technologies, Inc.