Q2 2025 Axcelis Technologies Inc Earnings Call

Good day, ladies and gentlemen, and welcome to the Axcelis Technologies call to discuss the company's results for the second quarter of 2025. My name is Sean Omar and I will be your coordinator for today. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *1, 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *1, 1 again. Please be advised that today's conference is being recorded.

Recorded.

I would now like to turn the presentation over to your host. For today's call, David Grigg, Senior Vice President of Investor Relations and Corporate Strategy.

Please proceed.

Thank you, operator. This is David rizik. Senior vice president of investor relations and corporate strategy. And with me today is Russell low, president and CEO and Jamie Coogan Executive, Vice President and CFO.

If you have not seen a copy of our press release issued earlier today, is it is available on our website. In addition we have prepared, slides, accompanying today's call and you can find those on our website as well.

Playback service will also be available on our website as described in our press release.

Please note that comments made today about our expectations for future revenues profits and other results are forward-looking statements under the sec's Safe Harbor. Provision

These risks are described in detail in our form, 10 annual report, and other SEC filings, which we urge you to review.

Our actual results May differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements,

During this call, we will be discussing various non-gaap Financial measures. Please refer to our press release and accompanying materials for information regarding our non-gaap financial results and Reconciliation to our gaap measures. Now, I'll turn the call over to president and CEO Russell low.

Good morning and thank you for joining us for our second quarter 2025 earnings call.

Beginning on 54, we deliver solid results in the second quarter with revenue of 195 million and non-gaap earnings per diluted. Share of 1.13 cents. Both exceeding, our Outlook

We generated slightly better than expected systems and cs9, revenue delivered, strong gross margins while maintaining discipline cost control.

Bookings in the second quarter were 96 million, down slightly on a sequential basis and reflecting a book-to-bill of 0.8 times. While customers continue to digest capacity, we're encouraged that first half bookings reflect a slight improvement compared to the second half of 2024.

Consistent with our prior commentary. Bookings, can fluctuate from quarter to quarter.

With that let me add some additional color on the trends. We are seeing by market category, turn to slide 5 in the quarter sales to mourn node. Applications comprised almost the entirety of our system shipments in particular power and general mature.

Now on slide 6, let me review our Trends by End Market within our power business. Shipment of silicon carbide, applications where relatively flat on a quarter over quarter basis

While the overall silicon carbide industry continue to digest the capacity as been put in place over the past 2 years. We see pockets of investment across a number of different customers

As well as other applications.

Outside of China customers are using this slow period to increase R&D engagement and invest in technology, transitions. In the quarter, we shipped a pure and XC Hindi tool to a customer that is investing in 200. Mm, Super Junction technology and we continue to be inactive discussions and engagements with other customers on their trench and super Junction technology roadmaps.

As we noted in the past Excel is the market and Technology leader in high energy and implantation which is required for deeper and more precise implants and a critical enabling technology for customers transitioning into these next generation architectures.

In addition to the need for high energy implants, we're excited about the long-term demand driver for silicon carbide, which is underpinned by declining device prices. Along with a World's need for greater Energy Efficiency, this creates the following Tailwind for silicon carbide, demand,

First, in the EV industry, we anticipate the penetration rate into EVS that continue to grow. And this includes not just batteries, and electric vehicles, but hybrid vehicles, as well, where we are already seeing signs of adoption.

Second, we anticipate that silicon carbide content per vehicle to grow as well.

Third. We see growing requirements for higher voltage, silicon carbide, applications such as faster, charge times, driving investment and development of trench, and super Junction designs. And as I noted, we are a technology enabler with our Market leading high energy portfolio. 4 while overall demand for EVS in the US is decelerated on a global basis. EV sales continued to grow at a robust Pace with iea forecasting, 25% year-over-year growth in 2025,

As a result of the penetration rate of EVS, the percentage of overall Auto Sales, continue to grow the combination of all these factors to create a multiplier effect on silicon carbide, demand. And that's just within the EV industry.

Finally, with device prices declining. We also expect growing adoption outside of the Auto industry including renewable energy industrial motor drives Railway applications data uh Center power supplies and and many others. In fact, what important proof point of this is the recent public announcements from leading power device makers over the past several months, which signals increased attention and collaboration on delivering higher voltage Power Solutions for Next Generation. AI data centers, We Believe silicon carbide will play a key role here.

We also believe the combination of these volume content and Technology drivers translates into attractive long-term Market opportunity for excellus.

from a near-term perspective as we think about this business over the next few quarters, we see continued pockets of demand

And we expect a modest Improvement in Revenue in the second half of 2025.

Starting on the second quarter results will now refer to the remainder of the power market segments as other power compared to previously referring to it. This is silicon igbt, while igbts have made up the line. Share of this category, We Believe other power is more reflective of other potential power applications such as silicon bcds, silicon power, mosfets and Gan power devices.

So if the results of the second quarter ship system revenue from our other power applications group sequentially, primarily due to growth in China across multiple customers.

In our general mature segment Revenue, declines slightly on a sequential basis as customers continue to manage their capacity Investments, given the current demand environment in Auto industrial and consumer electronics. We continue to see pockets of improved tool utilization, which is an encouraging sign. However, we would need to see this continued coupled with improved and demand in all of this to translate into resumption of capacity Investments.

Market dynamics aside we are working closely with customers on their capacity and Technology. Roadmaps case in point we secured a meaningful order for high energy and high current tools from a customer in China. That is investing in 28, nanometer applications. This is a nice reference win for us and can open up additional opportunities down the road.

Turn to slide 7 in advanced logic. We continue to engage closer with customers on their evaluation units. And we are pleased to say that in the second quarter. We we received a follow-on order from 1 of these customers. This is consistent with our strategy of penetrating. This opportunity by working collaboratively with customers through their evaluation units during their R&D process.

Maintains an underpenetrated market for excellus. When we are actively targeting Next. Generation implant applications at the M. Plus 1 M plus 2 and N plus 3 nodes this includes important applications for Implant such as the backside. Power distribution Network integration where we believe we have potential Solutions based on improved device performance and yield and the ability for customers to control the energy period of implanted ions.

Move into memory ship system Revenue. Declines on a sequential basis consistent with commentary on our prior call that memory spending would remain muted for the balance of the year.

Compared to 2024, which saw a sharp reduction in volume we continue to expect more its growth in this end Market on a year-over-year basis.

Despite the pause on implant Investments, across dram and nand. We're executing on our strategy of penetrating new and existing opportunities with customers on their next Generation, road maps, and Fab plans. To that end. We secured an order for a high current system for a DM application, with a potential for additional follow-on orders, based on this customer's investment plans,

In and customers remain focused on scaling to higher layer counts, which requires deposition and Edge chamber based upgrades and not incremental ion implantation capacity. As a result we expect demand for nand applications to remain muted over the balance of the year.

On slide, 8, let me wrap up my thoughts prior to hanging the call over to Jamie.

Despite the macroeconomic uncertainty and widely known cyclical. Digestion, we are seeing in 2025. We are executing very well with what we can control this. Includes the following

First a Relentless focus on Innovation and deep engagement with current and new customers across their technology road maps. In fact, during these quieter times, customers increase their focus on R&D to drive better cost, performance in yield and simply put we see ourselves as an extension of the R&D teams.

Second, our engagement with customers does not end at the system level but also Cs and I our customer Solutions and Innovations business is foundational to the customer experience.

This includes spares and consumables service upgrades and use tools through the first half of 2025, at CSI, Revenue, made up approximately 30% of total revenue and is up slightly on a year-over-year basis despite lower systems volumes during this period. And this is a reflection of the strength of our install base, which provides a resilient Revenue stream through the cycles.

Moreover, given that a cs9 gross margins are maturely higher than the corporate average. This business makes up a meaningful percentage of our profitability. And I'm pleased with our execution in driving more service contracts and high value upgrades for customers that are seeking our latest generation technology within their existing footprint.

And third, we are prudently managing our cost structure while ensuring we have the resources necessary to invest in growth. This is a flex in our first half, 2025 adjusted, even a margin of approximately 20%

Taken together. These actions are allowing us to deliver strong profitability, despite a sickly soft demand environment. While positioning us to catch the long-term growth opportunities that we believe lie ahead.

With that, let me turn the call over to Jamie for a closer. Look at our results and Outlook Jamie

Thank you, Russell and good morning, everyone.

I'll start with some additional details on our second quarter, before returning to our outlook for Q3.

Starting on slide 9. Second quarter Revenue was 195 million with system Revenue at 134 million and see us. And I Revenue at 61 million. Both slightly above our expectations for the quarter.

From a geographic perspective consistent with our commentary on our prior earnings. Call China increased sequentially to 65% of total shipped system sales up from 37% in the prior quarter.

We continue to anticipate our customers in China to digest, the robust Investments they've made into mature node capacity over the past few years. As a result, we anticipate second app Revenue in China to be relatively similar to the first half.

turning to other regions, we saw shipped system sales to the US at 19%, while Korea declined to 8% consistently with our expectation of muted demand from memory for the balance of the Year, following the first quarter,

In addition, we've added the geographic split on total revenue reflecting both systems and csni using this measure.

Korea was 13%.

Starting in the third quarter, we will transition to reporting Geographic, split of total revenue. Only which is consistent with our peers and a better reflection of the overall company exposure. We have

Please see the appendix of our earnings slide presentation for a quarterly breakdown of geographic Revenue. Mix starting in the first quarter of 2024.

As Russell mentioned bookings declined slightly on a sequential basis to 96 million and we exited the second quarter with backlog of 582 million.

Turning to slide 10. Now, let me share some additional details on our gaap and non-gaap results.

We delivered, strong Gap, growth margins of 44.9% in the quarter exceeding. Our Outlook of 41.7%, our non-gaap gross. Margins were 45.2% compared to our Outlook of 42%. Our better than expected margins were primarily due to higher csni Revenue, another quarter of better than expected warranty and installation costs, and favorable systems mix

In addition, our gross margins are benefiting from the cost savings and efficiencies actions, we've taken over the past years and we will continue to explore ways to optimize our cost structure.

Gaap operating expenses total of 58.4 million and on a non-gaap basis. Operating expenses were 53.6 million relatively in line with our Outlook of 54 million

As a result, gaap operating profit was 29 million reflecting a 14.9% operating margin.

Our non-gaap operating margin was 17.7%. Leading to an adjusted ibida. In the second quarter of 38.9 million reflecting a 20% margin.

We generated approximately 6 million dollars in other income with the sequential increase primarily due to foreign currency gains.

Our tax rate was approximately 10% in the second quarter on a gap basis and approximately 11% on a non-gaap basis. The lower than expected tax rate was primarily attributable to our foreign derived intangible income deduction and federal research and development credits.

for the balance of the year, we estimate, our non-gaap tax rate to be approximately, 15%,

Our weighted average diluted share count in the quarter was 31.9 Million shares and this all translates into Gap, diluted earnings per share of 98 cents which exceeded our Outlook of 57 cents.

Non-gaap diluted earnings per share was a13 exceeding. Our Outlook of 73 cents the higher than expected EPS, was primarily due to the better than expected Revenue, gross margin.

And in addition our non-gaap EPS benefited by about 5 cents due to a better than expected tax rate.

Moving to our cash flow and balance sheet data shown on slide 11, we generated 38 million of free cash flow in the second quarter as a result of better than expected profitability as well as improved days sales outstanding.

Turning to share repurchases in the second quarter, we repurchased approximately 45 million in shares and at the end of the second quarter, we had 168 million remaining in. Share repurchase authorization.

We exited the quarter with a strong balance sheet, consisting of 581 million of cash, cash equivalents and marketable, securities on hand, which includes 31 million of long-term, Securities that we've added in the second quarter.

Before I turn to our outlook for the third quarter, I'll share some of our current thoughts on tariffs.

We continue to monitor the fluid tariff environment, and we believe we are well, positioned to respond to any changes through through risk, mitigation strategies. And by leveraging our Global supply chain and Manufacturing Footprints. The Outlook, I will provide today includes a modest estimated impact from terrorists.

With that, let me discuss our third quarter outlook on, slide 12, all measures will be non-gaap with the exception of Revenue.

We expect Revenue in the third quarter of approximately $200 million. Additionally, our initial view of fourth quarter points to relatively similar levels, compared to the third quarter.

We expect non-gaap growth margins of approximately 43%. The sequential decline is primarily due to our mix of systems revenue for the period, as well as a slightly higher volume of systems, Revenue relative to Cs. And I our current view of the fourth quarter gross margins. Also points to similar levels with the third quarter,

We expect non-gaap operating expenses of approximately 53 million in the third quarter and expect this to increase slightly on a sequential basis in the fourth quarter.

Per share in the third quarter of approximately $1.

In summary and to Echo Russell's earlier commentary, despite the cyclical softness. In our markets, we are pleased with our ability to generate robust profitability, return Capital to shareholders and maintain a strong balance sheet, which positions us to deliver, long-term value creation for our shareholders with that. Let me hand the call back to Russell for closing remarks Russell.

Thank you Jamie. We believe we are well positioned to navigate the current cyclical downturn. At this been focused on cost controls for delivering tangible benefits even at a lower volume environment. At the same time, our strong balance sheet has enabled us to opportunistically repurchase shares and return cash to our shareholders.

As we look ahead, we are confident. We will emerge from this period even stronger, supported by our clear technology roadmap and differentiated market position.

I want to thank our customers employees shareholders and partners for their continued support and Trust in excellus.

With that operator, we're ready to take your questions.

Thank you. At this time. We will

Conduct the question and answer session.

As a reminder to ask a question, you'll need to press *1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please, press *1, 1 again.

Please limit yourself to 1 question and 1 follow-up.

Please stand by as we compile the Q&A roster.

In our first question comes from Chris Christian, Schwab with Craig Helm Capital. Your line is now open.

Uh, thanks for taking my question, congrats on the the great quarter of the great results. Um,

Every Market in, in, in 2026. Do you have any initial indications of of wafer start growth there yet?

Hey, Christian, it's Russell. Um, so if we kind of really, we're not forecasting 2026 yet, but I think what we've said is that, you know, it let's just take DM initially. So obviously H hbm has been quite hot, uh, that's been eating away at DM capacity and a lot of the suppliers have been kind of 4-wheel constrained. So, you know, as as as you know, uh, node over node, the implant intensity, doesn't change much. So we would need wafer starts to increase in order to start shipping more implants. And, uh, I think, you know what, while it may take a couple of years for new capacity to come on, I think in the end of 25 early 26, you're going to start to

See some of these some of this new capacity come online. So obviously, you know, we're not going to be making any predictions yet, but uh, we're excited by that.

Great. And then and then my second question has to do with the uh, General mature, uh Marketplace, you know, kind of uh, you know information uh by the chip manufacturers is kind of scattered as far as Outlook and optimism and Ottawa, and Industrial, but from from your perspective, um, you know, when do you do you see that market? Um, improving in the second half of 25 or do you think that's really, uh, a calendar of 2026 event?

Yeah, so I I, I, I, I think so, we're kind of saying that we, we believe that our revenue for the second half of 25, I think slightly up on that revenue for the first half of 25, but it, it won't be due to General mature. Um, I think we kind of, we've said that, you know, we, we actually seeing slight uptick and it's because of power. Uh, Jen gender mature is, I think it's in a digestion period at this stage.

Great. Uh, no other questions and congrats on the great results. Thank you. Thanks.

And our next question comes from Craig Ellis with B Riley securities.

Yeah, thanks for taking the question and guys. Congratulations on. Very strong execution, through the income statement, and the Strong Guide. I wanted to follow up to start Russell with, um,

Is, is that the right interpretation and implication from what you were saying there?

Hey Craig. Uh, so so actually, so just to kind of like, you know recap we're seeing we we think the Silicon Compass can be slightly stronger in the second half of 25 in the first half. What we begin to see is a bit more of a bifurcation within China. Uh, obviously, they're looking to get the processes laid down, get the yield up, get the cost down and they're focusing a lot on, you know, 6 inch planer, some are looking at 200. Mm, planer outside of China, you're seeing customers drive very quickly to 200 and particularly to Advanced devices as well. So they're looking to go from planer to trench and then we've also got customers working on Super Junction as well. So you've seen this bifurcation in technology and those guys have been specifically you know, focused on these new technologies. So as as we've mentioned before to make uh Trends and super Junction devices, you need high energy implants and as the the market leader for high energy this is playing beautifully.

To our sweet spot. And, you know, we're working very close to our customers to develop their processes utilizing these. These these tools

Great really helpful. And then Jamie a follow-up on your comments around, gross margin and drivers to uh to robust levels in the quarter. So I think you mentioned Cs and I mix warranty performance, uh, mix and and trailing multi-year cost reduction. The question is this can you talk a little bit more about where you see structural gains in some of those cogs drivers, whether it's warranty or just the ability to perpetuate ongoing cost gains because as as uh systems eventually comes back uh will will lose at least 1 of the favorable drivers and I want to better understand how some of the others could help perform help help perpetuate the strong performance, thank you.

Yeah. Thanks Craig good, good question on the margins. Uh yeah. So mixes as you noted systems mixed. So mixed within our systems and then mix between systems and Cs and I will continue to be the primary driver of gross margin. Um, you know, uh for us over the reporting period over the sort of performance period. Um, the the structural changes that we're making are in sort of what call like these. We call them below below standard cost type items that's in their warranty installation and sort of other expenses related to that as well as you know, to some extent. Uh, the maximization of our Global operations footprint which we talked about, which will provide some incremental benefit,

Benefits over time. Um you know when we talk about our long-term margin trajectory and projections, you know, uh the the the cost we're going to continue to drive cost out, uh, to the best of our ability. Um, you know, that is a multi-year path for us to see that sort of change in a much more meaningful and structural way, but what we've done here in the in 2024 and now you're seeing to some extent through 20125 is that on the lower volumes, we have been able to drive, you know, sort of, you know, higher margins here. Um you know, uh in in in a pretty pretty nice and meaningful way. Um, you know looking to the back half of the year, we do see margins come down slightly relative to the expectations and that really is driven by mix. So we still have those favorable benefits. Um you know that we're seeing below the line but the mix is really going to put a little bit of pressure on margins here in in the back half of 25.

Really helpful. Jamie. Uh, thanks guys.

yep, thanks for

And our next question comes from Jed Dorsheimer with William Blair.

Hi, thanks for taking my question. And, uh, I'll echo the sentiments, um, Russell. I'm just, uh, I was wondering if I could go back to a previous question and just get a little bit more detail. Um,

You know, I think it's helpful to understand, sort of the uh, Western shift to uh, more advanced uh, structures such as trench where the capital intensity for high energy is greater. I just the, the question is, as you, um, discussed the the difference between China and rest of the world. Um, are you implying that? Uh, because Trent um, high energy is used in planer and trench is the mix that you're selling into China. Actually High current and medium current um, skewed or is it high energy? But just for, um, planer versus high energy for the uh, more Capital intensive, trench, and rest of the world. Um, and then I have a follow-up.

Do standard planer, you don't actually need high energy so that would be the high current and the medium current and those will be the the tool sets you'd need. As you start to go into higher energy, you're going to need, you know I'm saying like when you go into like trench and um, super Junctions, that's when you need to start using high energy and uh the intensity of high energy goes up, obviously because you know, you can't defuse. These implant profiles in the Silicon carbides, you have to Overlay them with Channel, sorry with um with um chaining and also, we're seeing the energies going higher and higher as well, so it's utilizing more and more of our energy capability. So, you know, if you're going to do trench and and, uh, super Junction, you're going to be using, you know, medium current and high energy and probably a little smattering of high cut of, of of sorry, Pi, current medium, current and high energy. But if you're doing planer, you you don't need the uh, the high energy.

I appreciate you. Uh, um, yeah, that helps a lot um, as my follow-up uh and maybe somewhat related. Uh, clearly your position in high energy with the linear particle. Accelerator is a clear differentiation, uh, versus your competitor. Um, I'm curious if on the R&D front uh away from uh just uh traditional power and silicon carbide, are you seeing any applications um that are demanding you know, high energy in a similar.

Way that silicon carbide uh has I'm just curious as you look out on the horizon uh in terms of uh markets, um what uh what what you uh what you're seeing thanks.

So, so high energy is used in pretty much every application, right? Other than Advanced logic. So in n and D Ram, particularly in image senses, they they are particularly deep devices because of the iqe. Uh, so you have lots of implants into to those. We're also seeing some kind of more advanced, uh, kind of avalanche devices being, uh, utilizing really high energy. But I I'd say that silicon carbide is definitely a, a driver at the moment, but, but high energy and I want to say hi energy. We got, we got various flavors of high energy all the way up to like 15 M Mega electron volts. Uh, so we, we, we, we certainly cover the entire gamut. Um, but yeah, hot. But the density of high energy implants, in silicon carbide is certainly a driver.

Great. Thank you. I'll jump back in queue.

Great, thanks. Cheers.

Our next question comes from Jack Egan with Charter equity research.

Great, thanks for taking the questions. Uh, so I was curious if, uh, tariff Poland's or anything of the like might be contributing to some of the positive momentum in the US. And I because um, last quarter, you mentioned that, uh, spare parts saw some upside and, you know, logically depending on the sector or the the End Market. I guess if, if these customers had underutilized capacity, then I would imagine to get ahead of tariffs. They might purchase some spares rather than new systems. So, um, I guess maybe just more broadly. What were some of the drivers behind the, uh, the strong performance in CSI?

Yeah, no, it's it's a good question, Jack. And you know, obviously Q2 coming into the Q2 is a wild time, right? With the the announcement of the tariffs, the regimes and all the sort of uncertainty that created, you know. I would say nothing material driven by what we saw from a poll in perspective. Um, really the driver for us in the second quarter for our um, Cs and I had to do with upgrades uh, and upgrade related activity. Um, you know, we've talked about this on our roadmap to sort of, you know, new new capacity additions is, you know, you're going to see increase utilization, you're going to see our customers finding ways to, you know, squeak out incremental efficiencies out of their current tool sets, right? That leads to higher upgrade activity, higher spays, and soils and others and then you know, they'll go through and make those capacity additions over time. So you know, the the the trend is following sort of the Playbook that we've seen in in the past. Um, you know, but as Russell noted in the commentary, you know, we have not seen the inflection.

Great. Okay. Um, that's helpful. Um and then I guess it was uh good to see, you know, the elevated repurchases in the quarter. Um, should we expect kind of a higher Baseline, going forward? Or was this more just excellus being a bit more opportunistic?

Yeah, we we certainly talked about our sort of cap allocation strategy, right? Being sort of organic growth base, right. Our entire R&D, Investments and others, you know, and then sort of pivoting over to the the return side, as well as, you know, looking at inorganic. So you know, again during the second quarter we were opportunistic here um, allocating. You know the the the 45 million plus to, you know, share repurchases in the period. Um, you know, as we go forward, you know, our our comment at the time we we announced um,

Our our our incremental authorization um, in the second quarter was around um having buying at a higher rate than we had historically. And so you may recall if you go back into some of our filings, you'll see we typically bought bought around 15 million or so a quarter. Uh so we do anticipate buying at an elevated rate relative to that 15 million uh but you know, I'm not going to forecast exactly how much we'll we'll put towards Sherry purchases, uh, for the third quarter just yet.

Got it. Okay, thanks, that's helpful.

Check.

Our next question comes from Tom.

Da Davidson company.

Yes, good morning, thank you for the questions. Um Russell first I was hoping to get an update on just the state of the competition in China and maybe both on a systems and the spares business point of view.

Hey Tom. Yeah, sure. So obviously, we, we monitor our competition incredibly carefully. Um, you know, particularly a lot, the new companies that are starting up in China as I as I mentioned, there's there's been uh competition in China for many years, it's like 2 competitors out there been there for about 20 years. Uh and what what I'd like to say is,

That they are. We we we don't see them outside of China. We don't see them in accounts that are, you know, available to to, to, to us manufacturers. If you like, uh, I think they're, they're getting their foothold in these accounts that are are essentially off limits to, to, to us manufacturers. Uh, the feedback we get is that they're still very immature. I mean, remember these things. These these tools have really big simultaneous compliance uh, you know, uh requirements. So you know, you need really high throughput.

You need really good beam. Uniformity beam angles, beam Purity, low particles, it really.

Does take a huge amount of knowledge experience and work in order to come down, you know, that, that that, you know, that get that maturity curve where you need it to be. So, we're certainly watching them very carefully. Uh, I would say they're still very early on in in, in their road map.

Okay. No, it's very helpful. Um, and maybe as a follow-up Jimmy um maybe talk a little bit about the backlog. Uh and at this point is it just systems or is it include systems plus Cs and I and and what do you think? The projected shipment or timing is of that backlog?

Yeah, no. So I that's a great question, Tom. Yeah, our backlog numbers we've, uh, report are just systems, uh, related orders. So it does not include any of our, our csni, um, you know, Revenue expectations in there. So it's just systems purchase orders, uh, that that we've, uh, brought in into the business, um, you know, as it relates to the timing, you know, they're, you know, that backlog carries into 2026, uh, for sure. Um, you know, and as we think about it gives us a nice Runway, right? As we go into 2026, um, you know, but we are looking to see that inflection point where we get increased bookings. Um, you know, I think of note, um, it's important for us to remember that, you know, we are at, you know, despite the booking is not necessarily maybe being where we want them to be. They are at a substantially higher level.

Than they were in the back half of 2024. Um, and so, you know, we are starting to see some movement there. Um, and, and ultimately, we just want to make sure that we position the business, uh, to be able to execute very well on the upturn, right? So investing in the R&D, you know, maintaining slightly higher inventory levels to the opportunistic. Um, you know, with, uh, you know, when that swing occurs, that we've got the inventory related to our high turn systems available for our customers. Um, and so, you know, again, we we're proud of the execution so far through the first, uh, 6 months here of 2025, and we look to finish the year, uh, out good.

Great and I appreciate the color for both you. Thanks.

Thanks. Thanks. Tom.

Our next question comes from Mark Miller with the Benchmark company.

Uh good morning and thank you for the question. I'm just trying to reconcile a couple of things here that uh Johnny V sales. As you noted there, they've been strong year-over-year yet you're projecting flat China sails in the second half. Similarly dram sales have also been strong but your memory sales were just 3% of total shipments and we're sequentially down. I'm just trying to reconcile both of these things. With what you're you're you're seeing

Yeah, so I think on the China side, what you're seeing is um you know again they built out significant capacity over 20 you know through 24 and it's coming into the year. We knew that they would use 25 in order to increase the productivity and efficiency of their tools and systems while continuing to add capacity, but at a, at a slightly lower rate. So although we see, you know, power continue to be strong, we see China, you know, continuing to, you know, perform for us, our customers are absolutely trying to find ways to increase the penetration of silicon carbide into the EVS. The penetration rate of silicon carbide into Eevee and China is still relatively low. Um, you know, given the volume of of automobiles that are selling in addition to that Mark, we're seeing, you know, some Chinese, uh, auto manufacturers push silicon carbide into hybrid vehicles as well. So I would say the the

The market for silicon carbide in the electric vehicle and hybrid vehicle segments is increasing. As a result, our customers are trying to find ways to ensure that their devices are qualified to support that in the future. So, I think that's a dynamic we're seeing there.

On the memory side, you know, we knew memory was coming into the year. We we, we, uh, had the deliveries there in the first quarter which was a nice uptick we still expect memory to be muted, uh, through 2025, um, you know, as as our customers are digesting the capacity as Russell's noted, a couple times here, you know, they're finding opportunities with the growth of HPM to sort of repurpose other parts of the Fab to to, to squeak Tools in here or there to eek out, incremental capacity. But they haven't necessarily pulled the trigger on significant capacity additions just yet. And so what we're really seeing is opportunistic buys by our customers to get that, you know, just a you know, 1 or 2 3, more implants in there. Um and and memory will EB and flow over the course of this year. Um, it should be higher than what we saw in 2024, but it's still going to be at muted levels, relative to our uh, historical experience.

Thank you.

And this concludes the question and answer session, I would now like to turn it back to David richet for closing remarks.

Thank you. Operator. I want to thank everyone for joining the call and your interest in excellus, operator. You can close the call.

This concludes the presentation. Thank you for your participation. In today's conference, you may now disconnect good day.