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Axcelis Technologies Inc. Reports Operating Results (10-Q)

August 06, 2010 | About:
10qk

10qk

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Axcelis Technologies Inc. (ACLS) filed Quarterly Report for the period ended 2010-06-30.

Axcelis Technologies Inc. has a market cap of $181.3 million; its shares were traded at around $1.74 with and P/S ratio of 1.4. ACLS is in the portfolios of Arnold Schneider of Schneider Capital Management, George Soros of Soros Fund Management LLC, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Product revenue, which includes systems sales, sales of spare parts and product upgrades, was $50.7 million, or 87.1% of revenue, for the three months ended June 30, 2010, compared with $25.8 million, or 76.8% of revenue for the three months ended June 30, 2009. Product revenue was $91.0 million, or 85.3% of revenue for the six months ended June 30, 2010, compared with $43.5 million, or 73.4% of revenue for the six months ended June 30, 2009. System sales were $22.1 million, or 38.0% of revenue, for the three months ended June 30, 2010, compared with $9.5 million, or 28.3% of revenue for the three months ended June 30, 2009. System sales were $38.2 million, or 35.8% of revenue, for the six months ended June 30, 2010, compared with $16.6 million, or 28.0% of revenue, for the six months ended June 30, 2009. The increase in product revenue in the three and six month period ended June 30, 2010 is attributable to the strengthening of the semiconductor market and a related increase in capital spending by semiconductor manufacturers. In addition, we also believe we are gaining market share with our single wafer ion implant systems for high current and high energy applications (the Optima HDx and Optima XEx), as customers are showing a higher acceptance for our technology.

Included in total revenue of $58.2 million for the three month period ended June 30, 2010 is revenue from sales of ion implantation products and service of $47.7 million, or 82.0% of total revenue, compared with $27.3 million, or 81.4% of total revenue, for the three months ended June 30, 2009. Revenue from sales of ion implantation products and service accounted for $89.0 million, or 83.4% of revenue, for the six months ended June 30, 2010, compared to $49.5 million, or 83.5% of revenue, in the six months ended June 30, 2009. The dollar increase was due to the factors discussed above for product revenue.

The Companys product revenue includes sales of spare parts and product upgrades as well as complete systems. We refer to the business of selling spare parts and product upgrades, combined with the sale of maintenance labor and service contracts and service hours, as the aftermarket business. Included in total revenue of $58.2 million is revenue from our aftermarket business of $36.1 million for the three months ended June 30, 2010, compared to $23.9 million for the three months ended June 30, 2009. The revenue from our aftermarket business was $68.5 million for the six months ended June 30, 2010, compared to $42.3 million for the six months ended June 30, 2009. Aftermarket revenue generally increases with expansion of the installed base of systems but can fluctuate period to period based on capacity utilization at customers manufacturing facilities which affects the sale of spare parts and

Research and development expense was $9.5 million in the three months ended June 30, 2010, an increase of $1.7 million, or 21.8%, compared with $7.8 million in the three months ended June 30, 2009. The increase was due to increased payroll costs ($0.6 million), increased consulting costs ($0.5 million) and increased project material costs ($0.6 million). Research and development expense was $18.6 million for the six months ended June 30, 2010, an increase of $1.3 million or 7.5%, compared with $17.3 million for the six months ended June 30, 2009. The increase relates principally to the acceleration of certain research and development projects to enable us to take advantage of opportunities where we believe we have a technology edge. Many of the projects have been accelerated at the request of our customers. The increase was comprised of increased payroll costs ($0.1 million), increased consulting costs ($0.5 million), increased project material costs ($0.6 million), and increased development asset amortization and depreciation costs ($0.1 million). Research and development expense was attributable to the following activities for the six months ended June 30, 2010: 53% for new product development, 31% for improvement of existing products, and 16% for product testing.

Sales and marketing expense was $6.6 million in the three months ended June 30, 2010, an increase of $0.3 million, or 4.8%, compared with $6.3 million for the three months ended June 30, 2009. The increase was primarily due to increased travel costs of ($0.3 million) due to the increased sales volume experienced by the Company during the quarter. Sales and marketing expense was $13.2 million for the six months ended June 30, 2010, equal to the spending for the six months ended June 30, 2009.

General and administrative expense was $7.5 million for the three months ended June 30, 2010, a decrease of $1.0 million or 11.8%, compared with $8.5 million in the three months ended June 30, 2009. The decrease was due to decreased professional fee expenses ($1.6 million), decreased other miscellaneous expenses ($0.1 million) and increased payroll expense ($0.7 million). General and administrative expense was $15.2 million for the six months ended June 30, 2010, a decrease of $4.0 million, or 20.8%, compared with $19.2 million in the six months ended June 30, 2009. The decrease was primarily due to decreased professional fee expenses ($4.8 million) offset by increased payroll expense ($0.9 million).

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