Aixtron on Track for Profitability in 2018
Revenues and order intake continued to increase in Q2/2017
German deposition equipment firm Aixtron has announced its financial results for the first half and the second quarter 2017. Total order intake including spares and service in H1/2017 came to €128.5m, 34 percent higher than in the previous year (H1/2016: €95.5m).
Sequentially, order intake improved by 8 percent to €66.6m Q1/2017: €61.9m). This development was mainly driven by improved demand for MOCVD systems for VCSEL, Red-Orange-Yellow (ROY) and specialty LEDs as well as power electronics and CVD systems for the production of flash memory applications.
As of June 30, 2017, equipment order backlog totalled €93.4m, a 7 percent increase on the figure of €87.6m as of March 31, 2017 (June 30, 2016: €86.2m). The majority of the backlog is due for shipment in 2017.
Total revenues for H1/2017 increased to €114.1m (H1/2016: €55.5m) year-on-year while also improving sequentially in a quarterly comparison (Q2/2017: €60.6m; Q1/2017: €53.6m).
Free cash flow of €40.3m in H1/2017 was up €81.3m on the previous year (H1/2016: -€41.0m). It also includes positive figures in two consecutive quarters (Q2/2017: €7.0m; Q1/2017: €33.3m) which was mainly attributable to the collection of receivables as well as advanced payments received from customers.
Cash and cash equivalents (including cash deposits with a maturity of more than 90 days) increased to €197.1m as of June 30, 2017, as against €193.6m as of March 31, 2017.
During H1/2017, Aixtron continued to transform the company to align R&D expenses with revenues in order to return to profitability in 2018. In this context, the sale of the US-based ALD/CVD production line to Eugene Technologies was announced in Q2/2017. Furthermore, the establishment of a Joint Venture for the Aixtron OLED deposition technology is ongoing and progressing. To support this, APEVA SE, a 100 percent subsidiary of Aixtron SE, was founded.
Cost of sales for H1/2017 increased to €85.8m year-on-year, equivalent to 75 percent of revenues (H1/2016: €45.5m, or 82 percent of revenues). This was a reflection of the corresponding revenue levels in the first half 2017 as well as a write down of €1.3m related to the TFE activities in Q2/2017 and a write down of €1.0m related to the TFOS activities during Q1/2017.
Adjusted by restructuring costs of €2.3m, gross profit and gross margin in H1/2017 improved to €30.6m and 27 percent respectively against the previous year (H1/2016: €10.0m; 18 percent gross margin) while the adjusted gross profit also improved on a quarterly comparison (Q2/2017: €16.0m, 26 percent gross margin; Q1/2017: €14.7m, 27 percent gross margin) mainly due to above mentioned reasons.
Operating expenses in H1/2017 were €40.2m (H1/2016: €35.9m) excluding restructuring costs including write downs of €10.7m related to Aixtrons TFOS and TFE activities, amounted to €12.2m. Sequentially, operating expenses adjusted by restructuring costs fell slightly to €19.6m in Q2/2017 (Q1/2017: €20.6m).
The aforementioned reasons led to an adjusted EBITDA of -€4.0m in H1/2017, an improvement by 80 percent year-on-year (H1/2016: €"‘20.0m). On a quarterly comparison the adjusted EBITDA was -€1.3m in Q2/2017 (Q1/2017: -€2.7m).
The H1/2017 EBIT adjusted by restructuring costs of €14.5m was €"‘9.6m. Compared to the previous year, EBIT was better by 63 percent mainly due to the above mentioned effects (H1/2016: -€25.9m). In Q2/2017, EBIT adjusted by restructuring costs of €7.7m in total improved to -€3.6m (Q1/2017: -€5.9m, adjusted by €6.8m).
Excluding restructuring costs, the net result improved year-on-year from -€26.6m in H1/2016 to -€10.4m in H1/2017.
Kim Schindelhauer, CEO of Aixtron SE, comments: "In H1/2017, the positive development in order intake has continued and will result in improved revenues. Therefore, we have decided to raise our 2017 full year guidance for order intake and revenues.
In addition, we have stepped forward in focusing on our core business in the first half of 2017 with the sale of our ALD/CVD business to Eugene Technologies, by freezing our TFOS and TFE activities, by founding our 100 percent subsidiary company APEVA SE in order to spin-off our OLED activities.
We are also pleased that Dr. Felix Grawert will join us as member of the Executive Board by August 14, 2017 which means that we have successfully completed the majority of tasks concerning the realignment of Aixtron in H1/2017. Considering all these facts, Aixtron is on track to return to profitability in 2018."
Guidance
Based on the assessment on Aixtron's order intake, Management now expects for fiscal year 2017 to achieve revenues and an order intake between €210 million and 230 million.
Aixtron continues to transform the Company to align R&D expenses with revenues in order to return to profitability in 2018. As the execution of this strategy might have a substantial influence on profit, Management is not guiding on EBITDA, EBIT and net result for fiscal year 2017. Management will provide an update on the 2017 earnings outlook as the above-mentioned plans and measures materialise. Management expects to achieve a positive free cash flow in 2017 and a positive EBIT for 2018.
