Aixtron in year-end push
"Not only should our revenues continue to grow dynamically in the final quarter, but also our profits accordingly" - Bernd Schulte, president of Aixtron
Aixtron SE reports a successful started to the second half of 2020. In particular, high demand from the application markets for GaN power electronics and laser technology for optical data transmission and 3D sensor systems has enabled strong business development in the third quarter.
Aixtron has received orders of €209.3 million from January 1 to September 30. This represents a substantial 39 percent increase over the same period in the previous year. With new orders totaling €70.8 million in the third quarter, Aixtron even slightly (2 percent) exceeded the strong previous quarter (€69.6 million).
Strong increase in customer orders
The order backlog at the end of the first nine months (September 30) was €164.1 million, up by 51 percent on the corresponding figure for the previous year. In the third quarter, the order backlog grew by 5 percent compared to the previous quarter.
In the first three quarters of 2020, Aixtron generated total revenues (including service and spare parts) of €161.1 million, down 13 percent year on year. In the third quarter, revenues increased again in a quarterly comparison and grew by 14 percent to €64.1 million.
The spread of the COVID-19 pandemic had only a limited impact on business development in the first nine months of the current fiscal year. Aixtron took early preventive measures against the Corona Pandemic and strengthened these measures in the third quarter. Aixtron's operations continue to be not significantly affected by the course of the pandemic.
In the nine month period, the equipment manufacturer for the semiconductor industry generated a gross profit of €63.3 million (previous year €74.7 million), corresponding to a gross margin of 39 percent (previous year 40 percent); in the third quarter, gross profit was €25.8 million and the gross margin reached 40 percent again.
Strong R&D focus on MOCVD technology
Operating expenses increased by 5 percent year over year in the period January to September 2020. In the past nine months, Aixtron has invested in the development of next-generation MOCVD tools for various applications. In addition, the Company continues to advance the qualification of OLED technology. In total, Aixtron's research and development (R&D) expenses for the first nine months of 2020 amounted to €41.2 million, up from €40.0 million year-on-year.
Due to a further quarter-on-quarter increase in revenues and somewhat lower operating costs, Aixtron more than doubled its operating result (EBIT, earnings before interest and taxes) to €8.2 million in the third quarter of 2020 (up 148 percent). Despite the improvement in the third quarter, the nine-month operating result of €10.3 million was still 58 percent lower than in the corresponding prior-year period.
The significant improvement in EBIT in the third quarter was also reflected positively in the development of the EBIT margin. The special equipment manufacturer more than doubled its EBIT margin in the third quarter from 6 percent to 13 percent. In a nine-month comparison, at 6 percent the EBIT margin is lower than in the same period of the previous year (13 percent).
Accordingly, net income of €7.1 million for the third quarter more than doubled compared to the previous quarter (previous quarter: €3.3 million). For the first nine months, net income of €9.6 million is below the prior year's level (€20.2 million).
Solid financial foundation
Aixtron's continued balance sheet strength is demonstrated by the high equity ratio of 82 percent (September 30, 2020) compared to 84 percent at the same date in the previous year. Free cash flow in the first nine months of 2020 was €-3.3 million, compared to €-2.4 million in the corresponding prior-year period, mainly due to planned higher inventory levels in preparation for deliveries in the fourth quarter.
On the basis of the business development in the first nine months of the 2020 fiscal year and the internal assessment of the development of demand, the Management Board confirms and narrows the existing annual guidance. This takes into account, among other things, the expected impact of the COVID 19 pandemic, which is still considered to be insignificant for the Aixtron Group's business.
Aixtron confirms guidance 2020
The management board expects incoming orders to be between €270 million and €300 million. Revenues should reach around €260 million to €280 million by the end of 2020. The gross margin is forecast to remain unchanged at around 40 percent and the EBIT margin at 10 percent to 15 percent.
The Executive Board is constantly monitoring the impact of the COVID 19 pandemic and ongoing trade disputes on the global economy and the movement of goods, in order to be able to assess any potential effects on Aixtron's own supply chain and production as well as on customer demand and thus on the business development of Aixtron at any time and - if necessary - to initiate corrective actions.
"We're in our year-end push. Aixtron's business development in the third quarter has shown that the demand for our innovative deposition systems remains at a high level. Not only should our revenues continue to grow dynamically in the final quarter, but also our profits accordingly," commented Dr. Bernd Schulte, President of Aixtron SE.
"Aixtron's strength is also reflected in our continued high level of investment in the further development of our leading-edge technology. This allows us to make progress in continuing to align our product portfolio with the growing demands of our customers' future markets such as 5G mobile network expansion and e-mobility," adds Felix Grawert, president of Aixtron.