Good day, ladies and gentlemen, welcome to the Axcelis Technologies call to discuss the company's results for the second quarter 2021. My name is Mary, I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of this conference. If at any time during the call you require assistance, please press star followed by zero, a coordinator will be happy to assist you. As a reminder, I would now like to turn the presentation over to your host for today's call, Mary Puma, President and CEO of Axcelis Technologies. Please proceed, ma'am. Thank you, Mary. With me today is Kevin Brewer, Executive Vice President and CFO, and Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. We are all participating in this call remotely, so I would like to apologize in advance for any technical difficulties. If you have not seen a copy of our press release issued last night, it is available on our website. Playback service will also be available on our website as described in our press release. Please note that comments made today about our expectations for future revenues, profits, and other results are forward-looking statements under the SEC's safe harbor provisions. These forward-looking statements are based on management's current expectations and are subject to the risks inherent in our business. These risks are described in detail in our Form 10-K annual report and other SEC filings, which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements. Good morning and thank you for joining us. Axcelis posted another strong quarter. This resulted from overall strength in the semiconductor industry, as well as growing momentum in the Purion product line, notably from the Purion Power Series. Revenue for the second quarter was $147.3 million with earnings per share of $0.55, driven by strong gross margins of 43.5%. Quarterly system sales surpassed $100 million for the first time since 2004. CS&I, our aftermarket business, continued to provide a significant contribution to our top line and gross margin with Q2 revenue of $47.1 million. In the second quarter, 70% of shipments went to mature foundry logic customers and 30% to memory customers, with an even split between DRAM and NAND. We believe the mature process technology segment will account for greater than 70% of system revenue for the full year 2021. The geographic mix of our systems shipments in the second quarter was China 58%, Korea 18%, Europe 12%, Taiwan 3%, and the rest of the world 9%. Turning to third quarter guidance, we expect revenue of approximately $170 million, gross margins of approximately 42.5%, operating profit of approximately $32 million, and earnings per share of approximately $0.70. We now expect Q4 revenue to be above Q3 guidance, allowing us to exceed $625 million in revenue for the full year 2021. This is driven by the rapid growth of the mature process technology segment and the early stages of a memory capacity build. We expect both markets to remain strong well into 2022, and we are currently booking systems into Q2 of next year. Overall demand for capital equipment in the semiconductor industry is being driven by several factors, including supply chain shortages, high fab utilization across all segments causing significant new fab investment, government incentive programs creating geographical expansion opportunities for our customers, and the fundamental underlying drivers that started this growth cycle of 5G data analytics and AI. As a result, we believe that the ion implant TAM has increased significantly. In addition, the rapid acceleration of the electrification of the automotive industry is driving substantial demand for power devices and image sensors. This is not related to the shortage of general-purpose mature devices like MPUs for automotive. It is driven by the 10-15 year strategic roadmaps of all automotive manufacturers and their suppliers. These markets are generating sustainable growth with Purion product extensions in high current, medium current, and high energy designed to serve the power device and image sensor markets. We have invested significantly in both of these markets over the last several years. As a result, we expect power to make up approximately 30% of our systems revenue in 2021, with continued growth driven by the Purion product extension specifically developed for this market. Our growth in this area is clear and sustainable, and most importantly, it is tied to a long-term trend beyond any increases driven by supply chain shortages. Looking at the memory market, we maintain a strong and growing position. We expect 2022 to be a good year for capacity additions in this segment and are already seeing bookings for shipments later this year and into next year. We continue to see a high degree of activity in both advanced logic, where we have a Purion H evaluation underway, and in the Japanese market, especially related to power device manufacturing. The market in China continues to be one of our strongest. This market includes a large number of both domestic and international customers in both the mature and memory markets. We currently have licenses for all planned SMIC shipments in Q3 and continue to receive licenses for future shipments. Evaluations are key to developing new customers, increasing footprint at existing customers, and penetrating new segments. We currently have six Purion evaluation tools in the field focused on supporting future growth. These include a Purion Dragon, a Purion H200, two Purion Hs, and two Purion XE maxes, which are positioned across key target segments, including advanced logic, NAND, DRAM, image sensor, and power devices. We expect four of these systems to close this year. We are also planning to ship one to two additional evaluations in 2021. Given that our current guidance is at the quarterly run rate for the $650 million revenue model much sooner than previously anticipated, we are developing an implant-driven revenue model beyond $650 million that we will publish by the end of this year. As we mentioned last quarter, we are also putting in place offshore manufacturing capacity to support this growth. Kevin will provide additional details on this project as part of his financial review of the quarter. Kevin? Thank you, Mary, and good morning. Axcelis delivered solid Q2 financial results driven by strong gross margin performance and continued revenue growth. Based on our third quarter guidance and current view of the fourth quarter, we now expect to exceed $625 million in revenue for 2021. At the current run rates, we are seeing significant leverage in our business model and expect full-year operating expenses to be around 24% of revenue, with gross margin expected to finish slightly above 42%. Ongoing gross margin improvement will continue to be driven by the timing of cost-out initiatives and mix assumptions that include a higher number of Purion product line extensions. Full-year gross margin assumptions include higher pandemic and supply chain-related costs and the impact of our investment in additional manufacturing capacity. Based on the strength of the market and demand for our Purion products, we're developing new financial models that we plan to share later in the year that should take us well beyond our current $650 million model. On our last call, I mentioned plans to add manufacturing capability closer to customers with a goal of increasing customer satisfaction and capacity. We are well underway with those plans and expect to have a new Axcelis manufacturing facility in South Korea by the end of this year. We currently have sufficient capacity in place to support our near-term demands and expect the Korea factory to play an important role in supporting future manufacturing requirements. Now turning to our second quarter financial results. Q2 revenue finished at $147.3 million, compared to $132.8 million in Q1. Q2 system sales were $100.1 million, compared to $81 million in Q1. This is the first time since 2004 that we exceeded $100 million in quarterly system sales. Q2 CS&I revenue finished at $47.1 million, compared to $51.8 million in Q1. CS&I revenue remains strong, driven by high fab utilization, the growing Purion installed base, system upgrades, and customers purchasing safety stock. We expect Q3 CS&I revenue of approximately $47 million. Q2 sales to our top 10 customers accounted for 75.1% of our total sales, compared to 79.8% in Q1. Two customers were at or above 10% in Q2, compared to one in Q1. Q2 system bookings were $172.1 million, compared to $148.4 million in Q1, with a Q2 book-to-bill ratio of 1.71 versus 1.92 in Q1. We are currently booking into the second quarter of next year. Backlog in Q2, including deferred revenue, finished at $271.2 million, a new record for Axcelis, compared to our prior record of $186.5 million in Q1. Q2 combined SG&A and R&D spending was $40 million, or 27.2% of revenue, compared to $36.1 million, or 27.2%, in Q1. SG&A in the quarter was $23.4 million, with R&D at $16.6 million. We expect Q3 combined SG&A and R&D spending to be approximately $40 million, or 23% of revenue, highlighting the significant leverage in our business model. Q2 gross margin was 43.5% and well above guidance, driven by strength in CS&I, increased Purion Power Series shipments, and continued cost-out activity. We are guiding Q3 gross margin to be approximately 42.5%, driven by product mix and the expected closure of one evaluation system. We expect full-year gross margin will be slightly above 42%, including the closure of four additional evaluation tools. Operating profit in Q2 finished at $24 million, compared to $20.3 million in Q1. We are guiding Q3 operating profit of approximately $32 million. Q2 net income was $18.9 million, or $0.55 per share, compared to $16.5 million or $0.48 per share in Q1. We are guiding Q3 earnings per share of approximately $0.70. Q2 cash finished at $220.5 million, compared to $207.5 million in Q1. In the quarter, we generated $30.8 million in cash from operations and settled share repurchases of $13.4 million. Q2 receivables were $79.5 million, compared to $75.9 million in Q1. Q2 inventory ended at $192.3 million, compared to $174.4 million in Q1. Q2 inventory turns, excluding shipped evaluation tools, finished at 2.0, the same as in Q1. Q2 accounts payable were $40.7 million, compared to $40.5 million in Q1. I would like to thank all of our employees and suppliers for their continuing efforts and outstanding execution, supporting our steep business ramp during the ongoing pandemic. It is an exciting time for Axcelis, with unprecedented growth in the industry and solid customer demand for our products. Our balance sheet is strong, and we have the financial strength to invest in products, infrastructure, and our employees. We've also returned over $50 million of capital to shareholders since the start of our share repurchase programs and had $75 million of remaining authorization under the current program at the end of Q2. Thank you. I now turn the call back to Mary for her closing comments. Thank you, Kevin. Axcelis is currently positioned for strong, sustainable growth. The strength of the industry is a positive for all semiconductor capital equipment suppliers, but Axcelis is uniquely positioned to benefit significantly from the long-term electrification of the automotive market through the strength and established base of our Purion products, in particular, the Purion Power Series implanter family and high-energy products for image sensors, like the Purion VXE and Purion XEmax. These implanters provide significant value and enabling capability to our customers and result in better margin profiles for Axcelis. We will continue to partner closely with our customers across all geographies in this growth segment. Axcelis has the financial means to invest in R&D, global support infrastructure, and capacity to capitalize on all of the opportunities discussed in today's call. We are in the middle of one of the most exciting times in the history of the industry and are confident that we have in place the ingredients to maintain our leadership position in ion implantation. With that, I'd like to open it up for questions. Your first question comes from the line of Patrick Ho from Stifel. Your line is open. Thank you very much, and congrats on a really nice quarter and outlook. Maybe first off, Kevin, in terms of the supply chain and how you're managing through it, given your results and the strong outlook, it obviously looks like you've managed it very well. It looks like it's not having an impact on you guys. Can you just discuss qualitatively what steps you've taken? I do see that inventory's been built up, but that's also just due to the demand that's coming over the next few quarters. What are some of the steps you've taken to kind of mitigate the situation, given that the entire ecosystem is facing challenges today? Yeah. Thank you, Patrick. It's a good question because certainly, there is a lot of pressure out there, and we're seeing it certainly in a lot of the peer earnings. We've been dealing with supply chain disruption really since the start of the pandemic. What was pandemic-related moved more to just a steep ramp. Many of those problems are still out there, and we're seeing it as well as others. I think probably what has helped us, certainly early on, we tried to stay ahead of it. We took a hard look at our supply chain. We started moving some of the commodity-level things, so we put additional material at some new suppliers. We really went into MRP aggressively and opened up the lead time offsets to drive more material ahead of schedule. The other area that we focused on with engineering was making sure we kept ahead of any potential obsolescence that may be coming and took a look at long lead items. I'm not going to tell you it's easy, but we've been managing it. We took people out of manufacturing from the manufacturing engineering ranks and put them out looking at suppliers and working with suppliers. It's a continuing challenge. Logistics, freight, all this stuff is adding cost, but our gross margins, we're still on track to our margin improvement plans that we have, and we're capturing some of that through the volume. I think that, Patrick, it's probably what we do with the MRP and moving some of that material early on that's helped us. So far, we've been able to keep ahead of it with meeting demand. Great. That's helpful. Maybe as my follow-up question, but also for you, Kevin, just in terms of the gross margin, you've done a really good job there. It always has a lot of moving pieces. As some of these evaluation units get closed, typically they tend to have lower margins, but you're still on target for your long-term gross margin models of over 42% and even towards the 43% as you get to $650 million in annual revenue. What are some of the steps there to mitigate the evaluation units and keep your gross margins within that long-term target model range? Yeah. Well, the obvious one is always we're continuing to focus on cost out activity. We've got numerous value engineering programs ongoing. The other thing, Patrick, that's going to help too, a lot of these evals replacing around our product extensions. Those are higher gross margin tools. As we flip some of these evaluation tools and start getting into some follow-on business, that'll also help. It's really going to be continuing to hammer away at cost out and get these product extensions into the field. Those are the things we're focused on. We're obviously taking advantage of the volume right now. As I mentioned, there's some other things pressuring as well. The net of it all is we're still continuing in a positive direction. We're just going to keep focusing on those things that I mentioned. Great. Thank you very much, and with that, I'm done. Thank you. Your next question comes from the line of Craig Ellis from B. Riley Securities. Your line is open. Yeah. Thanks for taking the question, and I'll echo the congratulations on the very robust execution, especially on the fulfillment side in the current environment. Mary, I wanted to go back and follow up on the comment that you made about booking business into the second quarter of 2022, and to see if you could help us with some color on what you're seeing as things book out that far relative to maybe the mix of business, mature foundry versus memory. Does it look similar to where we are now, or is it tilting one way or the other? Maybe secondly, just in the composition of what you're seeing, what are you seeing with respect to uptake on some of the new products and the product line extensions that have had very good momentum over the last 18 months? Okay. Craig, right now, the demand is really strong across really all markets and geographies. In terms of the segments, the mature process technology markets remain robust, and this is really driven by high fab utilization. If you go one level down, image sensors, general mature foundry business, and the power devices are also strong. In particular, we're seeing a lot of growth in the power device area, driven by a recovery in automotive. When you combine what I mentioned before about the long-term commitment to electrification of the automotive market, and you combine that with the success that we're seeing from the Axcelis Purion Power Series in this market, this is really one of the things that created a sustainable growth opportunity for Axcelis. Again, this is not just 2021, but this is moving into 2022 and beyond. In terms of the split, we said this, I think, on the last call, we expect the mature process technology segments going to account for over 70% of our systems revenue in 2021, just because of the strength that we're seeing there. Let's turn to memory. We've been talking about how memory is recovering, and we expect steady business in 2021. We are seeing initial capacity buys coming into our slot plan at the end of this year and early next year. We are seeing a pickup in memory, and we've always said that our memory business is additive to the strong mature process technology business, and that's really what's driving us to say that we are going to exceed $625 million in revenues this year. The customer interest remains strong. We've got a lot of demo activity. We've got six evaluation units out in the field. We believe we have the right products, the right market positioning, and as we've talked about, our execution at this point in time is really quite good. This is really what's going to lead to future growth, even beyond our $650 million business model. I'll turn it over to Doug in a second, but as I said, your second part of the question was the product line extensions and how are the products doing. Well, the products are doing extremely well, and I did mention that we have six evaluation units in the field right now. We've got two in memory, three in mature process technology, and one in advanced logic. We're looking to all of those evaluations to drive future growth. Four of them are in high current, which is the largest segment out of the ion implant product types. That's a place where we're really focused in terms of driving additional growth, and two of them are in high energy. Our high energy business remains very strong, and we have a leadership position there, and we're putting these product line extensions out into the field. For example, out of those six evaluation units, two are Purion XEmaxes at leading image sensor manufacturers. One of them is a Purion H200 that's at a leading power device manufacturer. The other that I'll mention is the Purion H at an advanced logic customer. We truly believe that this is the opportunity that we've been looking for to penetrate this segment and really get a foothold and some growth in this very important market. Doug, I don't know if you want to add anything to that in terms of some of the details on the products themselves. I think you covered most of it. I think, Craig, the silicon carbide tools, both Purion M, Purion H200, and the Purion XE in that market are doing very well. The Purion H200 especially appears to be a very popular option for customers in the power market. We're looking forward to good growth in that product line. That's really helpful, Mary and Doug. The follow-up question relates to the remarks around the point on moving capacity closer to customers and with the facility getting ready to ramp up in South Korea. The question is this. When that facility is opened and operational, what's the revenue capacity of the firm in the near term, next one to two years? As we look at some of the longer-term trends, which Mary, you identified the multi-decade dynamics in auto-related EV and ADAS, and the very robust position that Axcelis has there, will existing capacity plus South Korea give you the three to five-year headroom that you need, or will there be other capacity that you'll need to bring online as we look at getting from here to at least kind of the first step forward with some of the secular auto dynamics by 2025, 2026? Yeah. Craig, it's Kevin. Let me grab the first part of that. From a capacity point of view, what I'll tell you is that the models we're looking at beyond 650 right now that we're going to publish at the end of the year, we'll have plenty of capacity between our Beverly site and the new facility in South Korea to cover those models. Longer term, if we need to do additional expansion, we can take a look at what we're doing in South Korea and add capacity there. I think we did a lot of work over the last couple of years with our existing infrastructure through kaizen events. We invested in capital equipment, we freed up space. I think between all the things we've done in South Korea, there won't be capacity issues from a pure build point of view moving forward. Can I just add one thing to that? Craig, you didn't specifically ask this, but I did want to just add that we have spoken. You know we have a very strong position with customers in Korea, and I've been in personal contact. In fact, I had the pleasure of telling one of our largest customers in person about the fact that we're adding this capacity into South Korea, and they're all extremely pleased. The good news is we'll have the capability to basically meet those needs. Again, I think it's a plus, not only in terms of the capacity, but I think it's a plus in terms of our positioning in South Korea as well as in the Asian market. Yeah. That's good. Go ahead. Just one other quick follow-up. I should have mentioned too, Craig, the plan for South Korea is that we'll be able to ship to any of our customers from that facility as well. It's not going to be set up just for one or two particular customers. The plan is that whatever we're building there has the capability to ship to any of our customers. Okay, you could meet some of that very strong China market demand from South Korea after it opens. Yes. Yeah. Yeah. Okay. Very helpful, color team. I'll hop back in the queue. Thank you. Thank you. Again to ask a question, please press star one. Your next question comes from Tom Diffely from D.A. Davidson. Your line is open. Yes, good morning, and thanks for the question. Mary, I was hoping I could hear a little bit more about the emerging memory recovery and how you think it rolls out over the next year or two in terms of both NAND, DRAM, and maybe the timing. Okay. Well, I think as we said, or as I just said, we're starting to see this pickup now come at the end of the year. We expect it to build into 2022. Our business right now, as I just mentioned, for example, in Q2, was evenly split between NAND and DRAM. Honestly, we've said this a number of times, in terms of our preference, it doesn't really matter what specific type of device capacity the memory customers weigh in, because there's a little bit more high energy in the NAND, there's a little bit more high current in the DRAM, and we have exposure in our process tool of record to both of those types of devices. We're just waiting to see really how it lays out. Again, Doug, I don't know if you have any additional color you want to add on with your thoughts. Yeah. Tom, for implants, we're very much capacity-dependent in terms of growth. As they add wafer starts, they need to add implant. As you could see from the various memory company earnings calls this quarter, demand continues to be very strong and supply is tightening. The last year, they did a lot of technology increases to increase their bit output, either additional layers or shrinks in terms of DRAM. Now they're at a point where they're beginning to fill the shelves that they've put in place. We expect that as we go into the end of this year and throughout next year, it to be a pretty good cycle in terms of memory capacity, wafer start adds. All right. Thanks, Douglas. That's quite helpful. You talked about your business, your systems business, being 70% mature this year. What is your long-term view of the mix between mature and memory? It seems like it's been skewing more towards mature over the last year or two, but has your long-term view changed? I don't think our long-term view has changed. I mean, Go ahead, Doug, did you want to say something? No, I was going to say the same thing. That back the days when it was 50/50, or even, 70/30 in favor of memory are probably behind us, given the strength in sort of the diverse and large customer base that we've developed. As the power market continues to grow and the image sensor market, as we establish a foothold in Japan and in advanced logic, then memory will continue to be strong, as it cycles in terms of capacity adds. I think we would expect to continue to see a stronger mix from the other technologies over time. All right, great. When you look at the eval tools and four of them potentially closing up later this year, I was going to ask you about the hit rate of follow-on orders, but it sounded like Mary mentioned it earlier, that they expect business from all four. I'm just curious at this point, what is the typical timing of a closing of a eval tool to maybe some volume production tools? Well, it can vary. We've talked about how evals typically run one year. Some run a little bit longer, some run a little bit shorter. In general, it's about one year where we become process tool of record and then get repeat orders. There are systems where we are able to get repeat orders even prior to closing evaluation. What's happened is we've worked very closely with the customer. The results have been very good, and the customer has requirements to add capacity. We have gotten repeat orders again in less than 12 months. It really varies by customer, but I think in general, 12 months is a good benchmark. Okay, great. Thank you for your time today. Thank you. Thank you. Again to ask a question, please press star one. Your next question comes from the line of Quinn Bolton from Needham & Company. Your line is open. Hi. Let me offer my congratulations on the night's results and outlook. Wanted to start just with the eval tools to make sure I've got the numbers right. Mary, I think you said you will complete four evals or expect to close four evals before the end of the year with one in the third quarter or so, likely three then in the fourth quarter. Is that correct? No. Quinn, it's Kevin. We have one in the third quarter that's in our guidance, and then we expect to see four additional tools before the end of the year. That's in addition to the one in the third quarter. It's four then in Q4. Yeah. Got it. Okay. Then, Kevin, the guidance for the full year on gross margin of just over 42% sort of implies a step down in margin in the December quarter. I assume a lot of that reflects those four eval tools you recognized. I'm wondering whether the South Korea facility carries any startup costs or absorption issues, as it begins to ramp capacity in late this year. Initially, there is some drag from that, Quinn, for those exact reasons you brought up, the absorption issue. We're hiring people right now. We're training people, and the expectation is that once we're fully operational, sometime into next year, that this becomes a margin-accretive type of a thing versus a slight drag this year. There is a little bit of margin pressure coming from that. As you mentioned, the additional eval is closing out as well. I think the key point on the margins are, we've had roadmaps in place. We're following those roadmaps. Some of them are timing-based. We're way ahead of our models right now in terms of where we thought we would be on revenue. The gross margin is coming along, and it should continue to move up as we execute on these cost out initiatives we have, get the factory fully operational over there, flip some of these evaluation tools, which are product extensions and high margin, into follow-on orders that Mary was just talking about. I think those are really the levers that are going to continue to give us margin growth. The timing is, again, will be based on the quickness that we can get some of this work done. Kevin, I wanted to ask a longer-term question. Mary, you'd mentioned that you think the ion implant TAM now is much larger than perhaps it had been. I think for a fairly long time you've described a TAM of ion implant at about $1 billion. Wondering if you have an updated TAM you might give us, and I know you're going to give us new long-term models, but I think your 550 and 650 models sort of assumed up to 45% share of the old TAM. Wondering if you might update your sort of market share thoughts, given that the TAM's now much larger. Well, I have a graph. Doug, unless you want to, why don't you take it? Yeah. I'll start with the first question on the TAM. As we've said numerous times, it's difficult to actually quantify that, because there's not a lot of actual reporting. We had been, for the last several years, been saying that the TAM had been about $1 billion, and was growing at 10%-15%. At this point, if you look at some of the more recent industry analyst numbers, it's now looking like it's probably up in the $1.5 billion range. We're right now trying to quantify that and get our estimate. In terms of share, again, it becomes a very difficult thing for us to exactly calculate, given that the denominator is kind of a moving target. What we do know is we have very high share, and technology leadership, mind share leadership, and market leadership, especially in the targeted segments like the power device and image sensor markets. We continue to do extremely well with the focused products that we've developed for the Purion extensions. We'll update the model, and at that point, make some decisions on how much additional color we do around any TAM calculation or share. Great. Last question, just on the China business. I know you received licenses to ship to one of the Chinese foundries. Wondering if you could comment, was the China revenue concentrated this quarter as a result of receiving those licenses, or was it a fairly diversified revenue stream? It was a mix. There was a concentration to one particular customer, just based on the timing of some of the export licenses that we received. China is made up of a large and diverse group of both the domestic and multinational customers, and the particular customer that you're referring to, and that I mentioned, is only one of many customers that we have in China. There was a little bit of that, but I would say in general, it was much more of a mix across a broad number of, or a large number of customers. Great. Thank you for the additional color. Hey, Quinn, it's Kevin again. I want to go back to the evals. It's one in Q3. It's a total of four more for the remainder of the year. It's one in Q3, three in Q4, which I think is what Mary had said earlier. I apologize for that. I think I confused the issue. There's four more we expect, one in Q3, and three remaining ones in Q4 for closing out. Yeah. Thank you. Yep. This concludes the Q&A portion of the call. I will now turn the call back over to Mary Puma, who will make a few closing remarks. Thank you, Mary. I'd like to thank everyone for joining us today, and we hope to talk with you virtually and see you in person at upcoming investor events. In August, we will be participating in the Needham Second Annual Virtual Semicap and EDA Conference, and also the Jefferies 2021 Semiconductor, IT Hardware & Communications Infrastructure Summit. We thank you for your continued support. This concludes the presentation. Thank you for your participation in today's conference. You may now disconnect. Goodbye.