Order intake and backlog remain high for Aixtron

Aixtron, a provider of deposition equipment, has announced its financial results for the first half and the second quarter 2018.

Order intake including spare parts and service improved in H1/2018 to €154.3m, an increase of 20 percent compared to the previous year. This positive development is driven primarily by continued demand for MOCVD systems for the production of red, orange and yellow (ROY) LEDs and especially for MOCVD systems for laser applications such as VCSEL or edge emitting lasers (EEL) for applications in 3D sensor technology or optical data transmission.

Equipment order backlog increased to €138.3m as of June 30, 2018, an increase of 48 percent year-on-year and 20 percent compared to March 31, 2018.

Revenues rose by 3 percent year-on-year to €117.6m in H1/2018. Sequentially, they fell to €55.2m in Q2/2018 due to the scheduled shipments agreed with customers.

Gross profit and gross margin in H1/2018 improved to €50.6m and 43 percent respectively compared to the previous year. Compared to the previous quarter, gross profit decreased to €23.8m in Q2/2018 which is in line with revenue development, while the gross margin remained stable at 43 percent. This was mainly due to a favorable product and regional mix with a benefit from a positive USD/€exchange rate in the second quarter.

Operating result (EBIT) in H1/2018 improved to €12.0m year-on-year. Compared to the previous quarter, EBIT in Q2/2018 fell to €4.1m.

Net profit in H1/2018 rose to €16.0m compared to the previous year and was positively influenced by the capitalisation of deferred taxes in the amount of €5m in the first quarter of 2018, resulting from the transition from losses in the past to expected profits in 2018.

Cash flow from operating activities amounted to €-8.5m in the first half of 2018. The operating cash flow of €12.5m in Q2/2018 could not yet fully offset the negative figure from Q1/2018, which resulted primarily from planned payments in connection with the sale of the ALD/CVD product line in Q4/2017.

Cash and cash equivalents increased to €234.7m as of June 30, 2018, compared to €223.2m as of March 31, 2018. The difference reflects the operating performance including orders received in Q2/2018.

Business Development

Revenues and order intake in the first half of 2018 were driven by continued demand for MOCVD systems for the production of ROY LEDs for e.g. displays as well as lasers such VCSEL for applications in 3D sensing and optical data transmission.

Cost of sales in H1/2018 decreased year over year to €66.9m (57 percent of revenues) compared to €85.8m (75 percent of revenues) in H1/2017. The previous year's figure included a total of €2.3m in write-downs for frozen product lines. The improvement in cost of sales as a percentage of sales essentially reflects the improved product and regional mix. The reduction of cost of sales in Q2/2018 to €31.3m or 57 percent of revenues compared to the previous quarter was in line with the development of revenues.

At €38.7m, operating expenses in H1/2018 were 26 percent lower than in the previous year (H1/2017: €52.4m; included restructuring expenses in connection with depreciation of frozen product lines in the amount of €12.1m). Compared to the previous quarter, operating expenses in Q2/2018 were slightly up to €19.7m due to some $/€translational effects.

Management Review

Bernd Schulte, executive board member of Aixtron SE, comments: "The positive development in order intake continued in the second quarter of this year, so we have decided to raise our order intake guidance for fiscal year 2018. The slightly lower revenues in Q2/2018 are solely attributable to the scheduled shipments agreed with customers. Revenues in the second half of the year will be correspondingly higher than in the first half, so that we will achieve our revenue guidance as planned".

"We continue to benefit from the stable global demand for MOCVD systems for laser applications such as VCSEL or EEL, which are particularly in demand in the field of 3D sensors or optical data transmission. Our MOCVD systems for the production of red, orange and yellow (ROY) LEDs are also in high demand, as they are indispensable for the market penetration of display technologies based on fine pitch, mini and in the future also micro LEDs," adds Felix Grawert, executive board member of Aixtron.

Guidance

Based on the results for the first six months of the fiscal year 2018 and the internal assessment of the development of demand, Aixtron Management updates its 2018 full year guidance given in February 2018.

Accordingly, Aixtron Management now expects to book total orders between €260 and 290 million (up from €230 to 260 million previously) during 2018. Revenues are expected to be around €260 million (Previous range: €230 to 260 million). Gross margin is expected to be around 40 percent of revenues (previous range: 35 percent to 40 percent) and EBIT margin to be around 10 percent of revenues (previous range: 5 percent to 10 percent). The operating cash flow for the year is expected to be positive