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 Eur 128.5m, 34% higher than in the previous year (H1/2016: Eur 95.5m). Sequentially, order intake improved by 8% to Eur 66.6m Q1/2017: Eur 61.9m).
This development was mainly driven by improved demand for Metal Organic Chemical Vapor Deposition (MOCVD) systems for VCSEL (Vertical-Cavity Surface-Emitting Laser), Red-Orange-Yellow (ROY) und specialty LEDs as well as power electronics and Chemical Vapor Deposition (CVD) systems for the production of flash memory applications.
As of June 30, 2017, equipment order backlog totalled Eur 93.4m, a 7% increase on the figure of Eur 87.6m as of March 31, 2017 (June 30, 2016: Eur 86.2m). The majority of the backlog is due for shipment in 2017.
Total revenues for H1/2017 increased to Eur 114.1m (H1/2016: Eur 55.5m) year-on-year while also improving sequentially in a quarterly comparison (Q2/2017: Eur 60.6m; Q1/2017: Eur 53.6m).
Free cash flow of Eur 40.3m in H1/2017 was up Eur 81.3m on the previous year (H1/2016: Eur -41.0m). It also includes positive figures in two consecutive quarters (Q2/2017: Eur 7.0m; Q1/2017: Eur 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 Eur 197.1m as of June 30, 2017, as against Eur 193.6m as of March 31, 2017.
Key Financials
| Aixtron reports financial results for Q2 | 2017 FY |
2016 FY |
+/- | 2017 Q2 |
2017 Q1 |
+/- |
|---|---|---|---|---|---|---|
| Revenue | 114.1 | 55.5 | 34% | 60.6 | 53.6 | 13% |
| Gross Margin | 28.3 | 10.0 | - | 14.7 | 13.6 | 9% |
| Operating result (EBIT) | (21.4) | (26.7) | 20% | 7.9 | (3.4) | n/a |
| Net result | (24.9) | (26.6) | - | (11.4) | (13.5) | n/a |
| Net result per share - basic(€) | (0.22) | (0.26) | 15% | 0.05 | (0.04) | n/a |
Business Development
As explained, revenues and orders received in H1/2017 were driven up by the improved demand for MOCVD systems to produce VCSEL, ROY and speciality LEDs as well as power electronics and CVD systems for the production of flash memory applications.
Following the freezing of product development activities for III-V materials for next-generation logic chips (TFOS) in Q1/2017 which resulted in a one-time write down of Eur 6.6m, EBIT in Q2/2017 was influenced by write downs of Eur 6.4m on the freeze of thin-film encapsulation (TFE) activities.
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 U.S.-based ALD/CVD production line to Eugene Technologies, Inc. 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% subsidiary of Aixtron SE, was founded.
Cost of sales for H1/2017 increased to Eur 85.8m year-on-year, equivalent to 75% of revenues (H1/2016: Eur 45.5m, or 82% of revenues). This was a reflection of the corresponding revenue levels in the first half 2017 as well as a write down of Eur 1.3m related to the TFE activities in Q2/2017 and a write down of Eur 1.0m related to the TFOS activities during Q1/2017.
Adjusted by restructuring costs of Eur 2.3m, gross profit and gross margin in H1/2017 improved to Eur 30.6m and 27% respectively against the previous year (H1/2016: Eur 10.0m; 18% gross margin) while the adjusted gross profit also improved on a quarterly comparison (Q2/2017: EUR 16.0m, 26% gross margin; Q1/2017: Eur 14.7m, 27% gross margin) mainly due to above mentioned reasons.
Operating expenses in H1/2017 were Eur 40.2m (H1/2016: Eur 35.9m) excluding restructuring costs including write downs of Eur 10.7m related to Aixtrons TFOS and TFE activities, amounted to Eur 12.2m. Sequentially, operating expenses adjusted by restructuring costs fell slightly to Eur 19.6m in Q2/2017 (Q1/2017: Eur 20.6m).
The aforementioned reasons led to an adjusted EBITDA of Eur -4.0m in H1/2017, an improvement by 80% year-on-year (H1/2016: Eur ‑20.0m). On a quarterly comparison the adjusted EBITDA was Eur -1.3m in Q2/2017 (Q1/2017: Eur -2.7m).
The H1/2017 EBIT adjusted by restructuring costs of Eur 14.5m was Eur ‑9.6m. Compared to the previous year, EBIT was better by 63% mainly due to the above mentioned effects (H1/2016: Eur -25.9m). In Q2/2017, EBIT adjusted by restructuring costs of Eur 7.7m in total improved to Eur -3.6m (Q1/2017: Eur -5.9m, adjusted by Eur 6.8m).
Excluding restructuring costs, the net result improved year-on-year from Eur -26.6m in H1/2016 to Eur -10.4m in H1/2017.
Management Review
- 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% 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.
Kim Schindelhauer, CEO of Aixtron SE
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 Eur 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 materialize.
- Management expects to achieve a positive free cash flow in 2017 and a positive EBIT for 2018.
Kim Schindelhauer, CEO of Aixtron SE