News: Suppliers
30 July 2024
Aixtron’s revenue rebounds in Q2, boosted by LED segment
For second-quarter 2024, deposition equipment maker Aixtron SE of Herzogenrath, near Aachen, Germany has reported revenue of €131.8m, down 24% on €173.5m a year ago but up on last quarter’s €118.3m, and in the upper half of the €120-140m guidance range.
First-half 2024 revenue of €250.1m hence almost matched first-half 2023’s €250.7m, performing strongly against the weaker overall market dynamics.
Of total first-half revenue, 79% came from equipment sales (down from 82% a year ago), while 21% came from after-sales service & consumables and spare parts (up from 18% a year ago).
Metal-organic chemical vapor deposition (MOCVD)/chemical vapor deposition (CVD) equipment for making gallium nitride (GaN)- and silicon carbide (SiC)-based power electronics devices comprised 52% of equipment revenue (34% SiC and 18% GaN), falling back from 83% last quarter. This is because MOCVD equipment for making LEDs has rebounded from just 5% of equipment revenue a year ago to 43%, driven by micro-LED developments. MOCVD equipment for making optoelectronics devices (telecoms/datacoms and 3D sensing lasers for consumer electronics, solar, and wireless/RF communications) has fallen further, from 12% of equipment revenue last quarter to just 9%.
On a regional basis for first-half 2024 revenue, 65% came from Asia (up from 50% in first-half 2023), 27% from Europe (down from 29%) and just 8% from the Americas (up from 21%).
The G10 product family, comprising the G10-SiC, G10-GaN and G10-AsP systems, was the main driver. “The strong demand for our technology continues across all addressed end-markets, particularly in the SiC segment,” says CEO & president Dr Felix Grawert.
Quarterly gross margin was 37% in Q2/2024, down from 42% a year ago but level with last quarter, leading to first-half gross margin of 37% in 2024 being down from 42% in 2023. This was due mainly to a shift in the product mix, which included a high proportion of lower-margin LED systems.
Investments in R&D remain high
Quarterly operating expenses have risen further, from €28.9m a year ago and €33.8m last quarter to €36.3m, due mainly to R&D expenses increasing from €19.8m then €22.9m to €24.6m. First-half operating expenses have hence risen from €56.5m in 2023 to €70.1m in 2024, with R&D spending (on existing systems plus the development of new system generations) increasing from €39m to €47.5m. Accordingly, full-time equivalent staffing of 1132 is up by 12% from 1014 a year ago.
The operating profit (earnings before interest and taxes, EBIT) has more than halved from €48.1m (19% EBIT margin) in 2023 to €22.8m (9% EBIT margin) in first-half 2024. However, despite being down on €44.6m (26% margin) a year ago, quarterly operating result (EBIT) has rebounded from €9.9m (EBIT margin of 8%) last quarter to €12.9m (EBIT margin of 10%) in Q2/2024.
First-half net profit has halved from €43.9m (€0.39 per share) in 2023 to €22m (€0.20 per share) in 2024. However, despite being down on €40.4m (€0.36 per share) a year ago, quarterly net profit has rebounded slightly from €10.8m (€0.10 per share) in Q2/2023 to €11.2m (€0.10 per share) in Q2/2024.
Operating cash flow continues recovery
Quarterly operating cash flow of €20.2m in Q2/2024 was a big improvement on €7.4m last quarter and –€76.3m a year ago. First-half operating cash flow has hence improved from –€70.5m in 2023 to €12.8m in 2024.
However, despite improving from –€82m in Q2/2023 and –€33.1m, quarterly free cash flow in Q2/2024 was still negative at –€23.4m, with first-half free cash flow going from –€80.1m in 2023 to –€56.5m in 2024. This is because quarterly capital expenditure (CapEx) has risen from just €5.7m a year ago then €25.7m last quarter to €43.5m, taking first half CapEx from just €9.6m in 2023 to €69.2m in 2024, due mainly to investments in Aixtron’s new Innovation Center and the expansion of production capacities in Italy.
Also, in preparation for the high expected business volume in the upcoming quarters, inventory has been built up further, from €394.5m a year ago and €436.4m last quarter to €447.9m.
New production site in Italy
In June, Aixtron announced the purchase of a new site near Turin, Italy. With an investment in the low double-digit million euro range in an existing building, the firm is creating the opportunity to quickly expand its production capacities – and potentially double its volume in the future after additional investment in the facility’s infrastructure. Aixtron is thus addressing the expected increase in demand from major customers and will be able to cover future order peaks at all times.
First systems to be installed in new Innovation Center in second-half 2024
Aixtron is investing about €100m in constructing its Innovation Center in Herzogenrath site, where it will work with customers on the development and testing of the next generation of systems for the future. After breaking ground in Q4/2023, the first systems are scheduled to be installed in the new 1000m² cleanroom complex during second-half 2024.
Cash reserves
After paying a dividend of €45m, cash and cash equivalents (including other current financial assets) fell during Q2/2024 from €148.5m to €79.4m (down from €181.7m at the end of 2023 and €210.4m a year ago). However, underlining the firm’s continuing financial strength, the equity ratio was 75% at end-June 2024.
High order intake and backlog
First-half order intake was down from €317.7m in 2023 to €296m in 2024. However, second-quarter 2024 order intake was €175.7m, almost matching the record €177.8m a year ago and up on €120.3m last quarter, due particularly to the high demand from the power electronics sector.
Of total equipment order intake, 57% was for silicon carbide (SiC) applications and 29% for gallium nitride (GaN) power electronics. A large proportion of the equipment orders booked in Q2/2024 will be delivered next year.
While important new SiC customers drove business in Q1 – including one of the top-five suppliers of SiC components and customers from China and Japan – Aixtron also secured major follow-up orders from existing SiC customers, among others.
“We have not only succeeded in acquiring new customers, including one of the top-five suppliers of SiC components, we were also able to secure major follow-up orders from important existing customers,” says Grawert. “Nexperia is a good example in the field of power electronics, where we were able to impress with both our SiC and GaN systems. This momentum is reflected in our Q2 order intake,” he adds.
The system order backlog has risen significantly from €355m at end-March to €400.6m at end-June, although this is down on €412.5m a year ago.
Full year revenue and EBIT margin guidance lowered
Reflect the current business environment in power electronics and development of the order intake (with a significant proportion of Q2/2024 system order intake not due to be delivered until next year), on 4 July Aixtron lowered its guidance for full-year 2024 revenue from €630–720m to €620–660m. This includes expected third-quarter 2024 revenue of €150–180m.
Aixtron still expects gross margin of 43–45%, but EBIT margin guidance has been reduced from 24–26% to 22–25%.
“The additional site in Italy serves to strategically secure our growth plans. And our new innovation center will further strengthen our research and development activities,” says chief financial officer Dr Christian Danninger. “This will enable us to offer technologies that not only meet the current high demands of the semiconductor industry but also anticipate and serve future trends.”
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