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Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

​

FORM 10-Q

​

(Mark One)

​

| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

​

For the quarterly period ended September 30, 2024

​

or

​

| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

​

For the transition period from to

​

Commission file number 000-30941

​

AXCELIS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

​

| ​ |
Delaware | ​ | 34-1818596
(State or other jurisdiction of incorporation or organization) | ​ | (IRS Employer Identification No.)

​

108 Cherry Hill Drive

Beverly, Massachusetts 01915

(Address of principal executive offices, including zip code)

​

(978) 787-4000

(Registrant’s telephone number, including area code)

​

Securities registered pursuant to Section 12(b) of the Act:

​

​ | ​ | ​
Title of each class | Trading symbol | Name of each exchange on which registered
Common Stock, $0.001 par value | ACLS | Nasdaq Global Select Market

​

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

​

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

​

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

​

| ​ |
| ​ |
Large accelerated filer ☒ | ​ | Accelerated filer ☐
Non-accelerated filer ☐ | ​ | Smaller reporting company ☐
​ | ​ | Emerging growth company ☐

​

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

​

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

​

As of November 4, 2024, there were 32,506,111 shares of the registrant’s common stock outstanding.

​

​

Table of Contents

Table of Contents

​

|  | ​
PART I - FINANCIAL INFORMATION | ​
Item 1. | Financial Statements (Unaudited) | ​
​ | Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 | 3
​ | Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2024 and 2023 | 4
​ | Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 | 5
​ | Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023 | 6
​ | Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 | 8
​ | Notes to Consolidated Financial Statements (Unaudited) | 9
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21
​ | Overview | 21
​ | Critical Accounting Estimates | 21
​ | Results of Operations | 22
​ | Liquidity and Capital Resources | 28
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 29
Item 4. | Controls and Procedures | 29
PART II - OTHER INFORMATION | 30
Item 1. | Legal Proceedings | 30
Item 1A. | Risk Factors | 30
Item 2. | Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities | 30
Item 3. | Defaults Upon Senior Securities | 30
Item 4. | Mine Safety Disclosures | 30
Item 5. | Other Information | 30
Item 6. | Exhibits | 31

​

​

​

2

Table of Contents

​

PART 1—FINANCIAL INFORMATION

​

Item 1. Financial Statements.

​

Axcelis Technologies, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Nine months ended | ​
​ | ​ | ​ | September 30, | ​ | September 30, | ​
​ |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Revenue: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Product | ​ | $ | 246,826 | ​ | $ | 283,367 | ​ | $ | 735,626 | ​ | $ | 795,047 | ​
Services | ​ |  | 9,738 | ​ |  | 8,959 | ​ |  | 29,822 | ​ |  | 25,269 | ​
Total revenue | ​ |  | 256,564 | ​ |  | 292,326 | ​ |  | 765,448 | ​ |  | 820,316 | ​
Cost of revenue: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Product | ​ |  | 136,379 | ​ |  | 154,798 | ​ |  | 399,049 | ​ |  | 444,311 | ​
Services | ​ |  | 10,215 | ​ |  | 7,844 | ​ |  | 27,968 | ​ |  | 22,600 | ​
Total cost of revenue | ​ |  | 146,594 | ​ |  | 162,642 | ​ |  | 427,017 | ​ |  | 466,911 | ​
Gross profit | ​ |  | 109,970 | ​ |  | 129,684 | ​ |  | 338,431 | ​ |  | 353,405 | ​
Operating expenses: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Research and development | ​ |  | 26,395 | ​ |  | 24,093 | ​ |  | 77,843 | ​ |  | 71,996 | ​
Sales and marketing | ​ |  | 16,808 | ​ |  | 16,465 | ​ |  | 51,483 | ​ |  | 46,146 | ​
General and administrative | ​ |  | 19,854 | ​ |  | 17,446 | ​ |  | 52,842 | ​ |  | 48,519 | ​
Total operating expenses | ​ |  | 63,057 | ​ |  | 58,004 | ​ |  | 182,168 | ​ |  | 166,661 | ​
Income from operations | ​ |  | 46,913 | ​ |  | 71,680 | ​ |  | 156,263 | ​ |  | 186,744 | ​
Other income (expense): | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest income | ​ |  | 6,560 | ​ |  | 4,580 | ​ |  | 18,126 | ​ |  | 12,824 | ​
Interest expense | ​ |  | (1,333) | ​ |  | (1,325) | ​ |  | (4,017) | ​ |  | (4,027) | ​
Other, net | ​ |  | 3,225 | ​ |  | (1,260) | ​ |  | 1,257 | ​ |  | (4,348) | ​
Total other income | ​ |  | 8,452 | ​ |  | 1,995 | ​ |  | 15,366 | ​ |  | 4,449 | ​
Income before income taxes | ​ |  | 55,365 | ​ |  | 73,675 | ​ |  | 171,629 | ​ |  | 191,193 | ​
Income tax provision | ​ |  | 6,789 | ​ |  | 7,744 | ​ |  | 20,593 | ​ |  | 15,986 | ​
Net income | ​ | $ | 48,576 | ​ | $ | 65,931 | ​ | $ | 151,036 | ​ | $ | 175,207 | ​
Net income per share: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Basic | ​ | $ | 1.49 | ​ | $ | 2.01 | ​ | $ | 4.63 | ​ | $ | 5.35 | ​
Diluted | ​ | $ | 1.49 | ​ | $ | 1.99 | ​ | $ | 4.61 | ​ | $ | 5.28 | ​
Shares used in computing net income per share: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Basic weighted average shares of common stock | ​ |  | 32,550 | ​ |  | 32,807 | ​ |  | 32,595 | ​ |  | 32,775 | ​
Diluted weighted average shares of common stock | ​ |  | 32,675 | ​ |  | 33,159 | ​ |  | 32,780 | ​ |  | 33,208 | ​

​

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

​

​

3

Table of Contents

​

Axcelis Technologies, Inc.

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Nine months ended | ​
​ | ​ | September 30, | ​ | September 30, | ​
​ |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
Net income | ​ | $ | 48,576 | ​ | $ | 65,931 | ​ | $ | 151,036 | ​ | $ | 175,207 | ​
Other comprehensive income (loss): | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Foreign currency translation adjustments | ​ |  | 2,257 | ​ |  | (1,231) | ​ |  | (387) | ​ |  | (2,192) | ​
Amortization of actuarial net gain and other adjustments from pension plan, net of tax | ​ |  | 5 | ​ |  | — | ​ |  | 15 | ​ |  | — | ​
Total other comprehensive income (loss) | ​ | ​ | 2,262 | ​ | ​ | (1,231) | ​ | ​ | (372) | ​ | ​ | (2,192) | ​
Comprehensive income | ​ | $ | 50,838 | ​ | $ | 64,700 | ​ | $ | 150,664 | ​ | $ | 173,015 | ​

​

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

​

​

4

Table of Contents

​

Axcelis Technologies, Inc.

Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, |  | December 31, |
​ | ​ | 2024 | ​ | 2023 |
ASSETS | ​
Current assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash and cash equivalents | ​ | $ | 120,066 | ​ | $ | 167,297 | ​
Short-term investments | ​ |  | 459,341 | ​ |  | 338,851 | ​
Accounts receivable, net | ​ |  | 183,543 | ​ |  | 217,964 | ​
Inventories, net | ​ |  | 290,954 | ​ |  | 306,482 | ​
Prepaid income taxes | ​ | ​ | 10,748 | ​ | ​ | — | ​
Prepaid expenses and other current assets | ​ |  | 57,441 | ​ |  | 49,397 | ​
Total current assets | ​ |  | 1,122,093 | ​ |  | 1,079,991 | ​
Property, plant and equipment, net | ​ |  | 54,454 | ​ |  | 53,971 | ​
Operating lease assets | ​ | ​ | 30,391 | ​ | ​ | 30,716 | ​
Finance lease assets, net | ​ | ​ | 15,668 | ​ | ​ | 16,632 | ​
Long-term restricted cash | ​ |  | 6,653 | ​ |  | 6,654 | ​
Deferred income taxes | ​ | ​ | 58,938 | ​ | ​ | 53,428 | ​
Other assets | ​ |  | 49,928 | ​ |  | 40,575 | ​
Total assets | ​ | $ | 1,338,125 | ​ | $ | 1,281,967 | ​
LIABILITIES AND STOCKHOLDERS’ EQUITY | ​
Current liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Accounts payable | ​ | $ | 54,047 | ​ | $ | 54,400 | ​
Accrued compensation | ​ |  | 23,070 | ​ |  | 31,445 | ​
Warranty | ​ |  | 14,547 | ​ |  | 14,098 | ​
Income taxes | ​ |  | — | ​ |  | 6,164 | ​
Deferred revenue | ​ |  | 138,682 | ​ |  | 164,677 | ​
Current portion of finance lease obligation | ​ |  | 1,399 | ​ |  | 1,511 | ​
Other current liabilities | ​ |  | 20,519 | ​ |  | 12,834 | ​
Total current liabilities | ​ |  | 252,264 | ​ |  | 285,129 | ​
Long-term finance lease obligation | ​ |  | 42,671 | ​ |  | 43,674 | ​
Long-term deferred revenue | ​ |  | 25,344 | ​ |  | 46,208 | ​
Other long-term liabilities | ​ |  | 42,252 | ​ |  | 42,074 | ​
Total liabilities | ​ |  | 362,531 | ​ |  | 417,085 | ​
Commitments and contingencies (Note 17) | ​ | ​ | ​ | ​ | ​ | ​ | ​
Stockholders’ equity: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Common stock, $0.001 par value, 75,000 shares authorized; 32,504 shares issued and outstanding at September 30, 2024; 32,685 shares issued and outstanding at December 31, 2023 | ​ |  | 33 | ​ |  | 33 | ​
Additional paid-in capital | ​ |  | 545,350 | ​ |  | 547,189 | ​
Retained earnings | ​ |  | 432,429 | ​ |  | 319,506 | ​
Accumulated other comprehensive loss | ​ |  | (2,218) | ​ |  | (1,846) | ​
Total stockholders’ equity | ​ |  | 975,594 | ​ |  | 864,882 | ​
Total liabilities and stockholders’ equity | ​ | $ | 1,338,125 | ​ | $ | 1,281,967 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​

​

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

​

5

Table of Contents

Axcelis Technologies, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Accumulated | ​ | ​ | ​ |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Additional | ​ | ​ | ​ | Other | ​ | Total |
​ | ​ | ​ | Common Stock | ​ | Paid-in | ​ | Retained | ​ | Comprehensive | ​ | Stockholders’ |
​ |  | ​ | Shares |  | Amount |  | Capital |  | Earnings |  | (Loss) |  | Equity |
Balance at December 31, 2022 | ​ | ​ | 32,775 | ​ | $ | 33 | ​ | $ | 550,299 | ​ | $ | 118,892 | ​ | $ | (1,968) | ​ | $ | 667,256 | ​
Net income |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | 47,697 | ​ |  | — | ​ |  | 47,697 | ​
Foreign currency translation adjustments |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | 50 | ​ |  | 50 | ​
Exercise of stock options |  | ​ | 2 | ​ |  | — | ​ |  | 25 | ​ |  | — | ​ |  | — | ​ |  | 25 | ​
Issuance of common stock on restricted stock units, net of shares withheld |  | ​ | 56 | ​ |  | — | ​ |  | (3,907) | ​ |  | — | ​ |  | — | ​ |  | (3,907) | ​
Stock-based compensation expense | ​ | ​ | — | ​ |  | — | ​ |  | 3,199 | ​ |  | — | ​ |  | — | ​ |  | 3,199 | ​
Repurchase of common stock |  | ​ | (107) | ​ |  | — | ​ |  | (1,924) | ​ |  | (10,575) | ​ |  | — | ​ |  | (12,499) | ​
Balance at March 31, 2023 |  | ​ | 32,726 | ​ | $ | 33 | ​ | $ | 547,692 | ​ | $ | 156,014 | ​ | $ | (1,918) | ​ | $ | 701,821 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | 61,579 | ​ |  | — | ​ |  | 61,579 | ​
Foreign currency translation adjustments |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | (1,011) | ​ |  | (1,011) | ​
Issuance of stock under Employee Stock Purchase Plan |  | ​ | 6 | ​ |  | — | ​ |  | 957 | ​ |  | — | ​ |  | — | ​ |  | 957 | ​
Issuance of common stock on restricted stock units, net of shares withheld |  | ​ | 199 | ​ |  | — | ​ |  | (11,558) | ​ |  | — | ​ |  | — | ​ |  | (11,558) | ​
Stock-based compensation expense | ​ | ​ | — | ​ |  | — | ​ |  | 4,749 | ​ |  | ​ | ​ |  | — | ​ |  | 4,749 | ​
Repurchase of common stock | ​ | ​ | (95) | ​ | ​ | — | ​ | ​ | (1,720) | ​ | ​ | (10,780) | ​ | ​ | — | ​ | ​ | (12,500) | ​
Balance at June 30, 2023 |  | ​ | 32,836 | ​ | $ | 33 | ​ | $ | 540,120 | ​ | $ | 206,813 | ​ | $ | (2,929) | ​ | $ | 744,037 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | 65,931 | ​ |  | — | ​ |  | 65,931 | ​
Foreign currency translation adjustments |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | (1,231) | ​ |  | (1,231) | ​
Issuance of common stock on restricted stock units, net of shares withheld |  | ​ | 7 | ​ |  | — | ​ |  | (349) | ​ |  | — | ​ |  | — | ​ |  | (349) | ​
Stock-based compensation expense | ​ | ​ | — | ​ |  | — | ​ |  | 5,082 | ​ |  | — | ​ |  | — | ​ |  | 5,082 | ​
Repurchase of common stock |  | ​ | (71) | ​ |  | — | ​ |  | (1,276) | ​ |  | (11,223) | ​ |  | — | ​ |  | (12,499) | ​
Balance at September 30, 2023 |  | ​ | 32,772 | ​ | $ | 33 | ​ | $ | 543,577 | ​ | $ | 261,521 | ​ | $ | (4,160) | ​ | $ | 800,971 | ​

​

​

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

​

6

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Axcelis Technologies, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

​

​

​

​

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Accumulated | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Additional | ​ | ​ | ​ | Other | ​ | Total
​ | ​ | ​ | Common Stock | ​ | Paid-in | ​ | Retained | ​ | Comprehensive | ​ | Stockholders’
​ |  | ​ | Shares |  | Amount |  | Capital |  | Earnings |  | (Loss) |  | Equity
Balance at December 31, 2023 | ​ | ​ | 32,685 | ​ | $ | 33 | ​ | $ | 547,189 | ​ | $ | 319,506 | ​ | $ | (1,846) | ​ | $ | 864,882
Net income |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | 51,595 | ​ |  | — | ​ |  | 51,595
Foreign currency translation adjustments |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | (1,731) | ​ |  | (1,731)
Change in pension obligation |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | 5 | ​ |  | 5
Issuance of common stock on restricted stock units, net of shares withheld |  | ​ | 42 | ​ |  | — | ​ |  | (2,699) | ​ |  | — | ​ |  | — | ​ |  | (2,699)
Stock-based compensation expense | ​ | ​ | — | ​ |  | — | ​ |  | 4,690 | ​ |  | — | ​ |  | — | ​ |  | 4,690
Repurchase of common stock |  | ​ | (122) | ​ |  | — | ​ |  | (2,201) | ​ |  | (12,798) | ​ |  | — | ​ |  | (14,999)
Balance at March 31, 2024 |  | ​ | 32,605 | ​ | $ | 33 | ​ | $ | 546,979 | ​ | $ | 358,303 | ​ | $ | (3,572) | ​ | $ | 901,743
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | 50,866 | ​ |  | — | ​ |  | 50,866
Foreign currency translation adjustments |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | (913) | ​ |  | (913)
Change in pension obligation |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | 5 | ​ |  | 5
Issuance of stock under Employee Stock Purchase Plan |  | ​ | 10 | ​ |  | — | ​ |  | 1,242 | ​ |  | — | ​ |  | — | ​ |  | 1,242
Issuance of common stock on restricted stock units, net of shares withheld |  | ​ | 143 | ​ |  | — | ​ |  | (8,468) | ​ |  | — | ​ |  | — | ​ |  | (8,468)
Stock-based compensation expense |  | ​ | — | ​ |  | — | ​ |  | 5,469 | ​ |  | ​ | ​ |  | — | ​ |  | 5,469
Repurchase of common stock | ​ | ​ | (141) | ​ | ​ | — | ​ | ​ | (2,545) | ​ | ​ | (12,451) | ​ | ​ | — | ​ | ​ | (14,996)
Balance at June 30, 2024 |  | ​ | 32,617 | ​ | $ | 33 | ​ | $ | 542,677 | ​ | $ | 396,718 | ​ | $ | (4,480) | ​ | $ | 934,948
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | 48,576 | ​ |  | — | ​ |  | 48,576
Foreign currency translation adjustments |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | 2,257 | ​ |  | 2,257
Change in pension obligation |  | ​ | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | 5 | ​ |  | 5
Issuance of common stock on restricted stock units, net of shares withheld |  | ​ | 5 | ​ |  | — | ​ |  | (241) | ​ |  | — | ​ |  | — | ​ |  | (241)
Stock-based compensation expense | ​ | ​ | — | ​ |  | — | ​ |  | 5,412 | ​ |  | — | ​ |  | — | ​ |  | 5,412
Repurchase of common stock |  | ​ | (118) | ​ |  | — | ​ |  | (2,498) | ​ |  | (12,865) | ​ |  | — | ​ |  | (15,363)
Balance at September 30, 2024 |  | ​ | 32,504 | ​ | $ | 33 | ​ | $ | 545,350 | ​ | $ | 432,429 | ​ | $ | (2,218) | ​ | $ | 975,594

​

​

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

7

Table of Contents

Axcelis Technologies, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine months ended | ​
​ | ​ | September 30, | ​
​ |  | 2024 |  | 2023 |
Cash flows from operating activities | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income | ​ | $ | 151,036 | ​ | $ | 175,207 | ​
Adjustments to reconcile net income to net cash provided by operating activities: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Depreciation and amortization | ​ |  | 11,542 | ​ |  | 9,488 | ​
Deferred income taxes | ​ |  | (5,510) | ​ |  | (12,623) | ​
Stock-based compensation expense | ​ |  | 15,571 | ​ |  | 13,030 | ​
Provision for doubtful accounts | ​ | ​ | 2,984 | ​ | ​ | 749 | ​
Provision for excess and obsolete inventory | ​ |  | 4,120 | ​ |  | 3,912 | ​
Accretion of discounts and premiums on marketable securities | ​ | ​ | (10,167) | ​ | ​ | (8,463) | ​
Unrealized currency (gain) loss on foreign denominated transactions | ​ | ​ | (3,100) | ​ | ​ | 7,487 | ​
Mark-to-market adjustment on forward exchange contracts | ​ | ​ | 583 | ​ | ​ | — | ​
Changes in operating assets and liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Accounts receivable | ​ |  | 28,774 | ​ |  | (26,674) | ​
Inventories | ​ |  | 11,299 | ​ |  | (79,494) | ​
Prepaid expenses and other current assets | ​ |  | (8,110) | ​ |  | (16,493) | ​
Accounts payable and other current liabilities | ​ |  | (2,738) | ​ |  | (8,916) | ​
Deferred revenue | ​ |  | (46,700) | ​ |  | 47,704 | ​
Income taxes | ​ |  | (14,132) | ​ |  | (3,672) | ​
Other assets and liabilities | ​ |  | (7,414) | ​ |  | (9,948) | ​
Net cash provided by operating activities | ​ |  | 128,038 | ​ |  | 91,294 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash flows from investing activities | ​ | ​ | ​ | ​ | ​ | ​ | ​
Expenditures for property, plant and equipment and capitalized software | ​ |  | (7,523) | ​ |  | (10,503) | ​
Purchase of short-term investments | ​ |  | (433,894) | ​ |  | (271,583) | ​
Maturities of short-term investments | ​ |  | 323,570 | ​ |  | 207,907 | ​
Net cash used in investing activities | ​ |  | (117,847) | ​ |  | (74,179) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash flows from financing activities | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net settlement on restricted stock grants | ​ |  | (11,408) | ​ |  | (15,814) | ​
Repurchase of common stock | ​ |  | (45,358) | ​ |  | (37,498) | ​
Proceeds from Employee Stock Purchase Plan purchases | ​ |  | 1,242 | ​ |  | 957 | ​
Principal payments on finance lease obligation | ​ | ​ | (1,125) | ​ | ​ | (915) | ​
Proceeds from exercise of stock options | ​ | ​ | — | ​ | ​ | 25 | ​
Net cash used in financing activities | ​ |  | (56,649) | ​ |  | (53,245) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Effect of exchange rate changes on cash and cash equivalents | ​ |  | (774) | ​ |  | (1,267) | ​
Net decrease in cash, cash equivalents and restricted cash | ​ |  | (47,232) | ​ |  | (37,397) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash, cash equivalents and restricted cash at beginning of period | ​ |  | 173,951 | ​ |  | 186,347 | ​
Cash, cash equivalents and restricted cash at end of period | ​ | $ | 126,719 | ​ | $ | 148,950 | ​

​

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

​

8

Table of Contents

Axcelis Technologies, Inc.

Notes to Consolidated Financial Statements (Unaudited)

​

Note 1. Nature of Business

​

Axcelis Technologies, Inc. (“Axcelis” or the “Company”) was incorporated in Delaware in 1995 and is a producer of ion implantation equipment used in the fabrication of semiconductor chips in the United States, Europe and Asia. In addition, we provide extensive worldwide aftermarket service and support, including spare parts, equipment upgrades, used equipment, and maintenance services to the semiconductor industry.

​

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments which are of a normal recurring nature and considered necessary for a fair presentation of these financial statements have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for other interim periods or for the year as a whole.

​

The balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. As of September 30, 2024, there have been no material changes in the Company’s significant accounting policies, other than with respect to the Company’s accounting policy for derivative financial instruments, which it had not held in prior periods, as described in Note 2 below. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2024, as amended by Amendment No. 1 thereto, filed with the SEC on February 28, 2024 (as so amended, the “2023 Form 10-K”).

​

​

Note 2. Significant Accounting Policies

​

Derivative instruments

​

We are exposed to certain risks relating to our ongoing business operations, including market risks relating to fluctuations in foreign currency exchange rates. We have entered into forward exchange contracts in order to mitigate risks associated with fluctuations in exchange rates on forecasted transactions denominated in foreign currencies and to minimize the impact of foreign currency fluctuations on our earnings and cash flows. These contracts have month-to-month settlement dates. As of September 30, 2024, we had open contracts with a notional value of $104 million. We measure these instruments at fair value and recognize assets or liabilities associated with the intrinsic value on these open contracts on the Consolidated Balance Sheets at the end of each reporting period. At September 30, 2024, the recognized unrealized loss on these forward exchange contracts was approximately $0.6 million. Unrealized gains and losses are shown in our cash flows from operating activities within our Consolidated Statement of Cash Flows. We have not designated these forward exchange contracts as hedging instruments and we record changes in the fair values at each measurement date in Other, net on the Consolidated Statements of Operations. For the three and nine months ended September 30, 2024, we recorded $3.3 million of loss and $0.5 million of gain on forward currency exchange contracts, respectively.

​

We do not offset fair value amounts of derivative instruments. We do not use derivative instruments for speculative purposes.

​

Note 3. Stock-Based Compensation

​

We maintain the Axcelis Technologies, Inc. 2012 Equity Incentive Plan, as amended (the “2012 Equity Plan”), which became effective on May 2, 2012, and permits the issuance of options, restricted stock, restricted stock units (“RSUs”) and performance awards to selected employees, directors, and consultants of the Company.

​

The 2012 Equity Plan is more fully described in Note 13 to the consolidated financial statements in our 2023 Form 10-K.

​

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Table of Contents

We recognized stock-based compensation expense of $5.4 million and $5.1 million for the three-month periods ended September 30, 2024 and 2023, respectively. We recognized stock-based compensation expense of $15.6 million and $13.0 million for the nine-month periods ended September 30, 2024 and 2023, respectively. These amounts include compensation expense related to RSUs and stock issued to participants under the 2020 Employee Stock Purchase Plan (the “2020 ESPP”).

​

In the three-month periods ended September 30, 2024 and 2023, we issued 5,023 and 7,320 shares of common stock, respectively, upon vesting of RSUs granted under the 2012 Equity Plan and purchases under the 2020 ESPP. In the three-month periods ended September 30, 2024 and 2023, we received no proceeds from purchases under the 2020 ESPP.

​

In the nine-month periods ended September 30, 2024 and 2023, we issued 0.2 million and 0.3 million shares of common stock, respectively, upon vesting of RSUs granted under the 2012 Equity Plan and purchases under the 2020 ESPP. In the nine-month periods ended September 30, 2024 and 2023, we received proceeds of $1.2 million and $1.0 million, respectively, in connection with purchases under the 2020 ESPP.

​

Note 4. Leases

​

We have operating leases for manufacturing, office space, warehouse space, computer and office equipment and vehicles used in our business operations. We have a finance lease in relation to the 2015 sale-leaseback of our corporate headquarters in Beverly, Massachusetts. We review all agreements to determine if the agreement contains a lease component. An agreement contains a lease component if it provides for the use of a specific physical space or a specific physical item.

​

We recognize operating lease obligations under Accounting Standards Codification Topic 842, Leases (“Topic 842”). The guidance in Topic 842 requires recognition of lease assets and related liabilities on a discounted basis using the explicit or implicit discount rate stated within the agreement. We recognize a corresponding right-of-use asset, which is initially determined based upon the net present value of the associated liability and is adjusted for deferred costs and possible impairment, if any. For those lease agreements that do not indicate the applicable discount rate, we use our incremental borrowing rate. We have made the following policy elections: (i) operating leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets; (ii) we recognize lease expense for operating leases on a straight-line basis over the lease term; and (iii) we account for lease components and non-lease components that are fixed payments as one component. Some of our operating leases include one or more options to renew, with renewal terms that can extend the respective lease term by one to three years. The exercise of lease renewal options is at our sole discretion. For lease extensions that are reasonably certain to occur, we have included the renewal periods in our calculation of the net present value of the lease obligation and related right-of-use asset. Certain leases also include options to purchase the leased property. The depreciable life of certain assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The amounts of operating and finance lease right-of-use assets and related lease obligations recorded within our consolidated balance sheets are as follows:

​

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Table of Contents

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | September 30, | ​ | December 31, | ​ | ​ | ​
Leases | Classification | ​ | 2024 |  | 2023 |  |  | ​
Assets | ​ | ​ | (in thousands) | ​ |  | ​
Operating leases | Operating lease assets | ​ | $ | 30,391 | ​ | $ | 30,716 | ​ | ​ | ​
Finance lease | Finance lease assets* | ​ |  | 15,668 | ​ |  | 16,632 | ​ | ​ | ​
Total leased assets | ​ | ​ | $ | 46,059 | ​ | $ | 47,348 | ​ | ​ | ​
Liabilities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating | Other current liabilities | ​ | $ | 5,217 | ​ | $ | 4,978 | ​ | ​ | ​
Finance | Current portion of finance lease obligation | ​ | ​ | 1,399 | ​ | ​ | 1,511 | ​ | ​ | ​
Non-current | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating | Other long-term liabilities | ​ | ​ | 25,290 | ​ | ​ | 25,724 | ​ | ​ | ​
Finance | Finance lease obligation | ​ |  | 42,671 | ​ |  | 43,674 | ​ | ​ | ​
Total lease liabilities | ​ | ​ | $ | 74,577 | ​ | $ | 75,887 | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
*Finance lease assets are recorded net of accumulated depreciation of $47.2 million and include $0.5 million of prepaid financing costs as of September 30, 2024. Finance lease assets are recorded net of accumulated depreciation of $46.4 million and include $0.6 million of prepaid financing costs as of December 31, 2023. | ​ | ​ | ​

​

11

Table of Contents

Our operating lease office locations support local selling and servicing functions. Our Axcelis Asia Operations Center facility in South Korea is used to manufacture our products for Asia-based customers. We lease a logistics and flex manufacturing center in Beverly, Massachusetts to support our principal product manufacturing operations at our corporate headquarters. Operating lease expense and depreciation and interest expense relating to our finance lease obligation are recognized within our Consolidated Statement of Operations for the three and nine months ended September 30, 2024 and 2023 as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | Three months ended | ​ | Nine months ended |  | ​
​ | ​ | ​ | September 30, | ​ | September 30, | ​ | ​
Lease cost | Classification | ​ | 2024 |  | 2023 |  | 2024 |  | 2023 |  | ​
Operating lease cost | ​ | ​ | (in thousands) |  | ​
Product / services* | Cost of revenue | ​ | $ | 1,664 | ​ | $ | 2,041 | ​ | $ | 5,186 | ​ | $ | 5,328 | ​ | ​
Research and development | Operating expenses | ​ |  | 127 | ​ |  | 183 | ​ |  | 453 | ​ |  | 426 | ​ | ​
Sales and marketing* | Operating expenses | ​ |  | 463 | ​ |  | 419 | ​ |  | 1,365 | ​ |  | 1,231 | ​ | ​
General and administrative* | Operating expenses | ​ |  | 232 | ​ |  | 298 | ​ |  | 763 | ​ |  | 813 | ​ | ​
Total operating lease cost | ​ | ​ | $ | 2,486 | ​ | $ | 2,941 | ​ | $ | 7,767 | ​ | $ | 7,798 | ​ | ​
Finance lease cost | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Depreciation of leased assets | Cost of revenue, Research and development, Sales and marketing and General and administrative | ​ | $ | 321 | ​ | $ | 324 | ​ | $ | 964 | ​ | $ | 961 | ​ | ​
Interest on lease liabilities | Interest expense | ​ |  | 1,177 | ​ |  | 1,214 | ​ |  | 3,561 | ​ |  | 3,668 | ​ | ​
Total finance lease cost | ​ | ​ | $ | 1,498 | ​ | $ | 1,538 | ​ | $ | 4,525 | ​ | $ | 4,629 | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total lease cost | ​ | ​ | $ | 3,984 | ​ | $ | 4,479 | ​ | $ | 12,292 | ​ | $ | 12,427 | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
* Product / services, sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $0.3 million and $1.6 million for the three and nine months ended September 30, 2024, respectively, and includes short-term lease and variable lease costs of approximately $0.6 million and $1.6 million for the three and nine months ended September 30, 2023, respectively. | ​ | ​

​

​

The lease of our corporate headquarters, shown below under finance leases, had an original lease term of 22 years, beginning in January 2015 and expiring in January 2037, with renewal options. All other locations are treated as operating leases, with lease terms ranging from one to 16 years. The tables below reflect the minimum cash outflow regarding our current lease obligations as well as the weighted-average remaining lease term and weighted-average discount rates used in our calculation of our lease obligations and right-of-use assets as of September 30, 2024:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Finance | ​ | Operating |  | Total |
Maturity of Lease Liabilities | ​ | Leases | ​ | Leases | ​ | Leases | ​
​ | ​ | (in thousands) | ​
2024 | ​ | $ | 1,566 | ​ | $ | 1,937 | ​ | $ | 3,503 | ​
2025 | ​ |  | 5,930 | ​ |  | 6,671 | ​ |  | 12,601 | ​
2026 | ​ |  | 6,008 | ​ |  | 5,106 | ​ |  | 11,114 | ​
2027 | ​ |  | 6,128 | ​ |  | 3,300 | ​ |  | 9,428 | ​
2028 | ​ | ​ | 6,251 | ​ | ​ | 2,013 | ​ | ​ | 8,264 | ​
Thereafter | ​ | ​ | 55,336 | ​ | ​ | 23,220 | ​ | ​ | 78,556 | ​
Total lease payments | ​ | $ | 81,219 | ​ | $ | 42,247 | ​ | $ | 123,466 | ​
Less interest portion* | ​ | ​ | (37,149) | ​ | ​ | (11,740) | ​ | ​ | (48,889) | ​
Finance lease and operating lease obligations | ​ | $ | 44,070 | ​ | $ | 30,507 | ​ | $ | 74,577 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
* Finance lease interest calculated using the implied interest rate; operating lease interest calculated using estimated corporate borrowing rate. | ​

​

The table above does not include options to renew lease terms that are not reasonably certain of being exercised.

​

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​

​ | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​
Lease term and discount rate |  | 2024 | ​
Weighted-average remaining lease term (years): | ​ | ​ | ​ | ​
Operating leases | ​ | ​ | 10.8 | ​
Finance leases | ​ |  | 12.3 | ​
Weighted-average discount rate: | ​ | ​ | ​ | ​
Operating leases | ​ |  | 5.5% | ​
Finance leases | ​ |  | 10.5% | ​
​ | ​ | ​ | ​ | ​

​

Our cash outflows from our operating leases include rent expense and other charges associated with these leases. These cash flows are included within the operating activities section of our statement of cash flows. Our cash flows from our finance lease include both an interest component and a principal component. The table below shows our cash outflows by lease type and related section of our statement of cash flows, as well as the non-cash amount capitalized on our balance sheet in relation to our operating lease right-of-use assets for the nine months ended September 30, 2024 and 2023, respectively:

​

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine months ended September 30,
Cash paid for amounts included in the measurement of lease liabilities |  | 2024 |  | 2023
​ | ​ | (in thousands)
Operating cash outflows from operating leases | ​ | $ | 7,767 | ​ | $ | 7,798
Operating cash outflows from finance leases | ​ |  | 3,561 | ​ |  | 3,668
Financing cash outflows from finance leases | ​ |  | 1,125 | ​ |  | 915
Operating lease assets obtained in exchange for operating lease liabilities | ​ |  | 4,063 | ​ |  | 25,697
Finance lease assets obtained in exchange for new finance lease liabilities | ​ |  | — | ​ |  | —
​ | ​ | ​ | ​ | ​ | ​ | ​

​

​

Note 5. Revenue

​

To reflect the organization of our business operations, we divide revenue into two categories: revenue from sales of new systems and revenue arising from the sale of used systems, parts, and labor to customers who own systems, which we refer to as “Aftermarket.”

​

Revenue by categories used by management are as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Nine months ended
​ | ​ | September 30, | ​ | September 30,
​ | ​ | 2024 | ​ | 2023 | ​ | 2024 | ​ | 2023
​ | ​ | (in thousands)
Systems | ​ | $ | 201,037 | ​ | $ | 231,454 | ​ | $ | 595,114 | ​ | $ | 641,825
Aftermarket | ​ | ​ | 55,527 | ​ | ​ | 60,872 | ​ | ​ | 170,334 | ​ | ​ | 178,491
Total Revenue | ​ | $ | 256,564 | ​ | $ | 292,326 | ​ | $ | 765,448 | ​ | $ | 820,316

​

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We also consider revenue by geography. Revenue is allocated to geographic markets based upon the location to which our products are shipped and in which our services are performed. Revenue in our principal geographic markets is as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Nine months ended
​ | ​ | September 30, | ​ | September 30,
​ | ​ | 2024 | ​ | 2023 | ​ | 2024 | ​ | 2023
​ | ​ | (in thousands)
North America | ​ | $ | 32,950 | ​ | $ | 51,563 | ​ | $ | 112,826 | ​ | $ | 134,647
Asia Pacific | ​ | ​ | 202,377 | ​ | ​ | 185,194 | ​ | ​ | 586,754 | ​ | ​ | 582,238
Europe | ​ | ​ | 21,237 | ​ | ​ | 55,569 | ​ | ​ | 65,868 | ​ | ​ | 103,431
Total Revenue | ​ | $ | 256,564 | ​ | $ | 292,326 | ​ | $ | 765,448 | ​ | $ | 820,316

​

Our system sales revenue transactions give rise to contract liabilities (in the case of pre-payments and the fair value of goods and services to be delivered after the system delivery, such as installation and certain warranty obligations).

​

Contract liabilities are as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​ | December 31,
​ | ​ | 2024 | ​ | 2023
​ | ​ | (in thousands)
Contract liabilities | ​ | $ | 164,026 | ​ | $ | 210,885
​ | ​ | ​ | ​ | ​ | ​ | ​

Contract liabilities are reflected as deferred revenue on the consolidated balance sheets and include payments received in advance of system sales as well as deferral of revenue from systems sales for installation and other future performance obligations. Contract liabilities are recognized as revenue upon the fulfillment of performance obligations.

​

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Nine months ended
​ | ​ | September 30, |  | September 30,
​ | ​ | 2024 | ​ | 2023 | ​ | 2024 | ​ | 2023
​ | ​ | (in thousands)
Balance, beginning of the period | ​ | $ | 174,011 | ​ | $ | 182,540 | ​ | $ | 210,885 | ​ | $ | 154,777
Deferral of revenue* | ​ | ​ | 31,544 | ​ | ​ | 62,787 | ​ | ​ | 65,222 | ​ | ​ | 154,216
Recognition of deferred revenue | ​ | ​ | (41,529) | ​ | ​ | (43,298) | ​ | ​ | (112,081) | ​ | ​ | (106,964)
Balance, end of the period | ​ | $ | 164,026 | ​ | $ | 202,029 | ​ | $ | 164,026 | ​ | $ | 202,029

​

* Amount is net of a reclassification of $4.7 million from deferred revenue to refund liability for the nine months ended September 30, 2024.

​

The majority of our system transactions have either (1) payment terms of 90% due upon shipment of the system and 10% due upon acceptance or (2) a pre-shipment deposit ranging from 20% to 60%, with the remainder due upon shipment, less 10% due at acceptance. Aftermarket transaction payment terms typically provide that payment is due either within 30 or 60 days after the service is provided or parts delivered.

​

Note 6. Receivables and Allowances for Credit Losses

​

All trade receivables are reported on the consolidated balance sheets at their amortized cost adjusted for any write-offs and net of allowances for credit losses.

​

We maintain an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life of our receivables, considering current market conditions and estimates for supportable forecasts when appropriate. The estimate is a result of our ongoing assessments and evaluations of collectability, historical loss experience, and future expectations in estimating credit losses in our receivable portfolio. We use historical loss experience rates and apply them to a related aging analysis while also considering customer and/or economic risk where appropriate. Determination of the proper amount of allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provision for credit losses and, as a result, net earnings. The

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allowance takes into consideration numerous quantitative and qualitative factors that include receivable type, historical loss experience, loss migration, delinquency trends, collection experience, current economic conditions, trade restrictions, estimates for supportable forecasts, when appropriate, and credit risk characteristics.

​

We evaluate the credit risk of the customer when extending credit based on a combination of financial and qualitative factors that may affect our customers’ ability to pay. These factors may include the customer’s financial condition, past payment experience, and credit bureau report, as well as the value of the underlying collateral.

​

Management performs detailed reviews of our receivables on a quarterly basis to assess the adequacy of the allowances and to determine if any impairment has occurred. Amounts determined to be uncollectable are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. Changes to the allowances for credit losses are maintained through adjustments to the provision for credit losses, which are charged to current period earnings. We recorded $3.4 million of bad debt expense for the three month period ended September 30, 2024 associated with a European customer that filed for bankruptcy. We recorded $0.5 million of recovery of bad debt expense and $3.4 million of bad debt expense for the nine-month period ended September 30, 2024. We recorded $0.7 million of bad debt expense for the three and nine-month periods ended September 30, 2023. As of both September 30, 2024 and September 30, 2023, we had no provision for credit losses.

​

​

Note 7. Computation of Net Earnings per Share

​

Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of shares of common stock outstanding (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased by the number of additional shares of common stock that would have been outstanding if the potentially dilutive shares of common stock issuable on exercise of stock options and vesting of RSUs had been issued, calculated using the treasury stock method.

​

The components of net earnings per share are as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Nine months ended | ​
​ | ​ | September 30, | ​ | September 30, | ​
​ |  | 2024 |  | 2023 |  | 2024 |  | 2023 |
​ | ​ | (in thousands, except per share amounts) | ​
Net income available to common stockholders | ​ | $ | 48,576 | ​ | $ | 65,931 | ​ | $ | 151,036 | ​ | $ | 175,207 | ​
Weighted average shares of common stock outstanding used in computing basic income per share | ​ |  | 32,550 | ​ |  | 32,807 | ​ |  | 32,595 | ​ |  | 32,775 | ​
Incremental options and RSUs | ​ |  | 125 | ​ |  | 352 | ​ |  | 185 | ​ |  | 433 | ​
Weighted average shares of common stock used in computing diluted net income per share | ​ |  | 32,675 | ​ |  | 33,159 | ​ |  | 32,780 | ​ |  | 33,208 | ​
Net income per share | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Basic | ​ | $ | 1.49 | ​ | $ | 2.01 | ​ | $ | 4.63 | ​ | $ | 5.35 | ​
Diluted | ​ | $ | 1.49 | ​ | $ | 1.99 | ​ | $ | 4.61 | ​ | $ | 5.28 | ​

​

​

Diluted weighted average shares of common stock outstanding does not include 109,266 and 734 common equivalent shares issuable with respect to outstanding equity awards for the three-month periods ended September 30, 2024 and 2023, respectively, or 21,477 and 2,598 common equivalent shares issuable with respect to outstanding equity awards for the nine-month periods ended September 30, 2024 and 2023, respectively, as their effect would have been anti-dilutive.

​

​

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Note 8. Accumulated Other Comprehensive Loss

​

The following table presents the changes in accumulated other comprehensive loss, net of tax, by component, for the nine months ended September 30, 2024:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Foreign |  | Defined benefit |  | ​ | ​ |
​ | ​ | currency | ​ | pension plan | ​ | Total |
​ | ​ | (in thousands) |
Balance at December 31, 2023 | ​ | $ | (1,956) | ​ | $ | 110 | ​ | $ | (1,846) | ​
Other comprehensive loss and pension reclassification | ​ |  | (387) | ​ |  | 15 | ​ |  | (372) | ​
Balance at September 30, 2024 | ​ | $ | (2,343) | ​ | $ | 125 | ​ | $ | (2,218) | ​

​

​

​

Note 9. Cash, cash equivalents and restricted cash

​

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the amounts shown in the statement of cash flows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | September 30, | ​ | December 31, | ​
​ | 2024 | ​ | ​ | 2023 | ​
​ | (in thousands) | ​
Cash and cash equivalents | $ | 120,066 | ​ | $ | 167,297 | ​
Long-term restricted cash | ​ | 6,653 | ​ | ​ | 6,654 | ​
Total cash, cash equivalents and restricted cash | $ | 126,719 | ​ | $ | 173,951 | ​

​

As of September 30, 2024, we had $6.7 million in restricted cash representing the total of (i) a $5.9 million cash collateralized letter of credit serving as a security deposit for our headquarters lease in Beverly, Massachusetts, (ii) a $0.7 million cash collateralized letter of credit relating to workers’ compensation insurance and (iii) a $0.1 million deposit relating to customs activity. See Note 13 for further discussion on the $5.9 million cash collateralized letter of credit.

​

Note 10. Inventories, net

​

The components of inventories are as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​ | December 31, | ​
​ |  | 2024 |  | 2023 |
​ | ​ | (in thousands) | ​
Raw materials | ​ | $ | 231,547 | ​ | $ | 231,200 | ​
Work in process | ​ |  | 42,931 | ​ |  | 45,373 | ​
Finished goods (completed systems) | ​ |  | 16,476 | ​ |  | 29,909 | ​
Inventories, net | ​ | $ | 290,954 | ​ | $ | 306,482 | ​

​

When recorded, inventory reserves reduce the carrying value of inventories to their net realizable value. We establish inventory reserves when conditions exist that indicate inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for our products or market conditions. We regularly evaluate the ability to realize the value of inventories based on a combination of factors including the following: forecasted sales or usage, estimated product end of life dates, estimated current and future market value and new product introductions. Purchasing and usage alternatives are also explored to mitigate inventory exposure.

​

Note 11. Product Warranty

​

We generally offer a one-year warranty for all of our systems, the terms and conditions of which vary depending upon the product sold. For all systems sold, we accrue a liability for the estimated cost of standard warranty at the time of system shipment and, if applicable, defer the portion of systems revenue attributable to non-standard warranty. Costs for non-standard warranty are expensed as incurred. Factors that affect our warranty liability include the number of installed units, historical and anticipated product failure rates, material usage and service labor costs. We periodically assess the adequacy of our recorded liability and adjust the amount as necessary.

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​

The changes in our standard product warranty liability are as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine months ended | ​
​ | ​ | September 30, | ​
​ |  | 2024 |  | 2023 |
​ | ​ | (in thousands) | ​
Balance at January 1 (beginning of year) | ​ | $ | 16,757 | ​ | $ | 10,487 | ​
Warranties issued during the period | ​ |  | 9,004 | ​ |  | 9,072 | ​
Settlements made during the period | ​ |  | (9,313) | ​ |  | (7,746) | ​
Changes in estimate of liability for pre-existing warranties during the period | ​ |  | (48) | ​ |  | 2,043 | ​
Balance at September 30 (end of period) | ​ | $ | 16,400 | ​ | $ | 13,856 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amount classified as current | ​ | $ | 14,547 | ​ | $ | 11,464 | ​
Amount classified as long-term (within other long-term liabilities) | ​ |  | 1,853 | ​ |  | 2,392 | ​
Total warranty liability | ​ | $ | 16,400 | ​ | $ | 13,856 | ​

​

​

Note 12. Fair Value Measurements

​

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

​

(a) Fair Value Hierarchy

​

The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

​

Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

​

Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

​

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

​

(b) Fair Value Measurements

​

Our money market funds and short-term investments with initial maturities of three months or less are included in cash and cash equivalents in the consolidated balance sheets. Other investments that have a maturity of greater than three months but less than one year are included within short-term investments in the consolidated balance sheets.

​

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The following table sets forth our assets by level within the fair value hierarchy:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2024 |
​ | ​ | Fair Value Measurements |
​ |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |
​ | ​ | (in thousands) |
Assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash equivalents and other short-term investments: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash equivalents (money market funds, U.S. Government Securities and Agency Investments) | ​ | $ | 81,623 | ​ | $ | — | ​ | $ | — | ​ | $ | 81,623 | ​
Short-term investments (U.S. Government Securities and Agency Investments) | ​ | ​ | 460,473 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 460,473 | ​
Mark-to-market adjustment on forward exchange contracts | ​ | ​ | — | ​ | ​ | (583) | ​ | ​ | — | ​ | ​ | (583) | ​
Total | ​ | $ | 542,096 | ​ | $ | (583) | ​ | $ | — | ​ | $ | 541,513 | ​

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2023 |
​ | ​ | Fair Value Measurements |
​ |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |
​ | ​ | (in thousands) |
Assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash equivalents and other short-term investments: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash equivalents (money market funds, U.S. Government Securities and Agency Investments) | ​ | $ | 118,278 | ​ | $ | — | ​ | $ | — | ​ | $ | 118,278 | ​
Short-term investments (U.S. Government Securities and Agency Investments) | ​ | ​ | 339,240 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 339,240 | ​
Total | ​ | $ | 457,518 | ​ | $ | — | ​ | $ | — | ​ | $ | 457,518 | ​

​

(c) Other Financial Instruments

​

The carrying amounts reflected in the consolidated balance sheets for accounts receivable, prepaid expenses, forward currency exchange contracts and other current assets and non-current assets, restricted cash, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

​

(d) Forward Currency Exchange Contracts

​

Beginning in February 2024, we entered into forward currency exchange contracts to minimize the impact of foreign currency fluctuations on our earnings and cash flows. These contracts have month-to-month settlement dates. Any gains or losses on these contracts are reported within Other, net in our Consolidated Statement of Operations. Any open contracts at period end that have settlement dates within one month after the reported period end and any mark-to-market valuation adjustments related to these open contracts are recorded in the current asset or current liability account and any unrealized gain or loss recognized is recorded within Other, net in our Consolidated Statement of Operations. These contracts are measured at fair value using observable market inputs such as forward currency exchange rates and our counterparties’ credit risks. Based on these inputs, the derivative instruments are classified within Level 2 of the valuation hierarchy. At September 30, 2024, the recognized unrealized loss on these forward exchange contracts was approximately $0.6 million. Based on our continued ability to trade and enter into forward contracts, we consider the markets for our fair value instruments to be active. We evaluated the credit risk associated with the counterparties to these derivative instruments and determined that as of September 30, 2024, such credit risks have not had an adverse impact on the fair value of these instruments.

​

Note 13. Financing Arrangements

​

On January 30, 2015, we sold our corporate headquarters facility in Beverly, Massachusetts for $48.9 million. As part of the sale, we also entered into a 22-year lease agreement of our headquarters facility. This sale-leaseback is accounted for as a financing lease under generally accepted accounting principles and, as such, we have recorded a financing obligation of $44.1 million as of September 30, 2024. The associated lease payments include both an interest component and payment of principal, with the remaining liability being extinguished at the end of the original lease term.

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As of September 30, 2024, we had a security deposit of $5.9 million related to this lease in the form of a cash collateralized letter of credit issued with UBS Bank USA, which is classified as long-term restricted cash on our balance sheet at September 30, 2024.

​

Note 14. Income Taxes

​

Income tax expense was $6.8 million for the three months ended September 30, 2024, compared to $7.7 million for the three months ended September 30, 2023. The $0.9 million decrease was primarily due to a decrease in pre-tax income. Income tax expense was $20.6 million for the nine months ended September 30, 2024, compared to $16.0 million for the nine months ended September 30, 2023. The increase was primarily due to a decrease in in the benefit received from share-based compensation.

​

The effective tax rate for the three and nine months ended September 30, 2024 was less than the U.S. statutory rate of 21% primarily attributable to the Foreign Derived Intangible Income deduction, Federal research and development tax credits and excess tax benefits from share-based compensation.

​

The deferred income taxes of $58.9 million and $53.4 million as of September 30, 2024 and December 31, 2023, respectively, reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. As of September 30, 2024, we have recorded a $12.1 million valuation allowance in the U.S. against certain tax credits due to the uncertainty of their realization. Realization of our net deferred tax assets is dependent on future taxable income. We believe it is more likely than not that such assets will be realized; however, ultimate realization could be impacted by market conditions and other variables not known or anticipated at this time.

​

Note 15. Concentration of Risk

​

For the three months ended September 30, 2024, one customer accounted for 11.9% of total revenue. For the three months ended September 30, 2023, no individual customer accounted for greater than ten percent of total revenue.

​

For the nine months ended September 30, 2024, no individual customer accounted for greater than ten percent of total revenue. For the nine months ended September 30, 2023, one customer accounted for 10.7% of total revenue.

​

​

At September 30, 2024, one customer accounted for 11.7% of accounts receivable. At December 31, 2023, one customer accounted for 12.2% of accounts receivable.

​

Note 16. Share Repurchase

​

In February 2022, our Board of Directors approved stock repurchases of up to $100 million of our common stock. In August 2023, our Board of Directors approved additional funding of $200 million for our stock repurchase program, to be available on full utilization of the $100 million repurchase funding approved in February 2022. During the nine months ended September 30, 2024, we repurchased 0.4 million shares at an average cost of $118.02 per share. The timing and actual number of any additional shares to be repurchased under this program will depend on various factors including price, corporate and regulatory requirements, alternative investment opportunities and other market conditions.

​

Repurchased shares are accounted for when the transaction is settled and returned to the status of authorized but unissued shares. Accordingly, on our balance sheet, the repurchase price is deducted from common stock par value and from additional paid-in capital for the excess over par value. If additional paid-in capital has been exhausted, the excess over par value is deducted from retained earnings. Direct costs incurred to acquire the shares are included in the total cost of the shares.

​

Note 17. Contingencies

​

(a) Litigation

​

We are from time to time a party to litigation that arises in the normal course of our business operations. We are not presently a party to any litigation that we believe might have a material adverse effect on our business operations.

​

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(b) Indemnifications

​

Our system sales agreements typically include provisions under which we agree to take certain actions, provide certain remedies and defend our customers against third-party claims of intellectual property infringement under specified conditions and indemnify customers against any damage and costs awarded in connection with such claims. We have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

​

Note 18. Recent Accounting Guidance

​

In November 2023 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 is intended to enhance disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC Topic 280, Segment Reporting (“ASC 280”). ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its chief operating decision maker (“CODM”) uses to assess segment performance and to make decisions about resource allocations. ASU 2023-07 is intended to improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more useful financial analyses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply ASU 2023-07 retrospectively to all prior periods presented in the consolidated financial statements. We are currently evaluating the impact of ASU 2023-07 on our future consolidated financial statements and related disclosures.

​

In December 2023 the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 addresses investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. We are currently evaluating the impact of ASU 2023-09 on our future consolidated financial statements and related disclosures.

​

​

​

​

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

​

Certain statements within "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements that involve risks and uncertainties. Words such as may, will, should, would, anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions identify such forward-looking statements. The forward-looking statements contained herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Factors that might cause such a difference include, among other things, those set forth under "Liquidity and Capital Resources" below and under “Risk Factors” in Part I, Item 1A to our 2023 Form 10-K, which discussion is incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

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Overview

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We are primarily a producer of ion implantation equipment used in the fabrication of semiconductor chips in the United States, Europe, and Asia. In addition, we provide extensive worldwide aftermarket service and support, including spare parts, equipment upgrades and maintenance services to the semiconductor industry. Our product development and manufacturing activities currently occur primarily in the United States and South Korea. Our equipment and service products are highly technical and are sold through a direct sales force in the United States, Europe, and Asia. Consolidation and partnering within the semiconductor manufacturing industry has resulted in a small number of customers representing a substantial portion of our business. Our ten largest customers accounted for 48.2% of total revenue for the nine months ended September 30, 2024.

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Demand for our capital equipment in the first nine months of 2024 has been relatively flat. The overall mature process segment represented 98% of our shipped systems revenue, with 1% of shipments to advanced logic and 1% of shipments to dynamic random-access memory (“DRAM”). Power device shipments comprised 58% of total systems revenue with the general mature segment representing 32%, and image sensors at 9%.

Critical Accounting Estimates

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Management’s discussion and analysis of our financial condition and results of operations included herein and in our 2023 Form 10-K are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions. Management’s estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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Management has not identified any need to make any material change in, and has not changed, any of our critical accounting estimates and judgments as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K.

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Results of Operations

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The following table sets forth our results of operations as a percentage of total revenue:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | ​ | Nine months ended | ​ | ​
​ | ​ | September 30, | ​ | ​ | September 30, | ​ | ​
​ |  | 2024 |  | 2023 |  |  | 2024 |  | 2023 |  |
Revenue: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Product | ​ | 96.2 | % | 96.9 | % | ​ | 96.1 | % | 96.9 | % | ​
Services |  | 3.8 |  | 3.1 |  |  | 3.9 |  | 3.1 |  |
Total revenue |  | 100.0 |  | 100.0 |  |  | 100.0 |  | 100.0 |  |
Cost of revenue: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Product |  | 53.2 |  | 53.0 |  |  | 52.1 |  | 54.2 |  |
Services |  | 4.0 |  | 2.7 |  |  | 3.7 |  | 2.8 |  |
Total cost of revenue |  | 57.2 |  | 55.7 |  |  | 55.8 |  | 57.0 |  |
Gross profit |  | 42.8 |  | 44.3 |  |  | 44.2 |  | 43.0 |  |
Operating expenses: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Research and development |  | 10.3 |  | 8.2 |  |  | 10.2 |  | 8.8 |  |
Sales and marketing |  | 6.6 |  | 5.6 |  |  | 6.7 |  | 5.6 |  |
General and administrative |  | 7.7 |  | 6.0 |  |  | 6.9 |  | 5.9 |  |
Total operating expenses |  | 24.6 |  | 19.8 |  |  | 23.8 |  | 20.3 |  |
Income from operations |  | 18.2 |  | 24.5 |  |  | 20.4 |  | 22.7 |  |
Other income (expense): | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest income |  | 2.6 |  | 1.6 |  |  | 2.4 |  | 1.6 |  |
Interest expense |  | (0.5) |  | (0.5) |  |  | (0.5) |  | (0.5) |  |
Other, net |  | 1.3 |  | (0.4) |  |  | 0.2 |  | (0.5) |  |
Total other income |  | 3.4 |  | 0.7 |  |  | 2.1 |  | 0.6 |  |
Income before income taxes |  | 21.6 |  | 25.2 |  |  | 22.5 |  | 23.3 |  |
Income tax provision |  | 2.6 |  | 2.6 |  |  | 2.7 |  | 1.9 |  |
Net income | ​ | 19.0 | % | 22.6 | % | ​ | 19.8 | % | 21.4 | % | ​

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Revenue

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The following table sets forth our product and services revenue:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Period-to-Period | ​ | Nine months ended | ​ | Period-to-Period |  | ​
​ | ​ | September 30, | ​ | Change | ​ | September 30, | ​ | Change |  | ​
​ | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % |  | ​
​ | ​ | (dollars in thousands) | ​
Revenue: |  | ​ |  |  | ​ |  |  | ​ |  |  |  |  | ​ |  |  | ​ |  |  | ​ |  | ​ |  | ​ |
Product | ​ | $ | 246,826 | ​ | $ | 283,367 | ​ | $ | (36,541) | ​ | (12.9) | % | $ | 735,626 | ​ | $ | 795,047 | ​ | $ | (59,421) | ​ | (7.5) | % | ​
Percentage of revenue | ​ | ​ | 96.2 | % | ​ | 96.9 | % | ​ | ​ | ​ | ​ | ​ | ​ | 96.1 | % | ​ | 96.9 | % | ​ | ​ | ​ | ​ | ​ | ​
Services | ​ |  | 9,738 | ​ |  | 8,959 | ​ | ​ | 779 | ​ | 8.7 | % |  | 29,822 | ​ |  | 25,269 | ​ | ​ | 4,553 | ​ | 18.0 | % | ​
Percentage of revenue | ​ | ​ | 3.8 | % | ​ | 3.1 | % | ​ | ​ | ​ | ​ | ​ | ​ | 3.9 | % | ​ | 3.1 | % | ​ | ​ | ​ | ​ | ​ | ​
Total revenue | ​ | $ | 256,564 | ​ | $ | 292,326 | ​ | $ | (35,762) | ​ | (12.2) | % | $ | 765,448 | ​ | $ | 820,316 | ​ | $ | (54,868) | ​ | (6.7) | % | ​

​

Three months ended September 30, 2024 Compared with Three months ended September 30, 2023

​

Product

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Product revenue, which includes systems sales, sales of spare parts, product upgrades and used systems, was $246.8 million, or 96.2% of revenue, during the three months ended September 30, 2024, compared with $283.4 million, or 96.9% of revenue, for the three months ended September 30, 2023. The $36.5 million decrease in product revenue for the

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three-month period ended September 30, 2024, in comparison to the same period in 2023, was primarily driven by a decrease in system sales.

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Deferred revenue includes payments received in advance of system sales as well as deferral of revenue from systems sales for installation and other future performance obligations. The total amount of deferred revenue at September 30, 2024 and December 31, 2023 was $164.0 million and $210.9 million, respectively.

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Services

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Services revenue, which includes the labor component of maintenance and service contracts and fees for service hours provided by on-site service personnel, was $9.7 million, or 3.8% of revenue, for the three months ended September 30, 2024, compared with $9.0 million, or 3.1% of revenue, for the three months ended September 30, 2023. Although services revenue typically increases with the expansion of the installed base of systems, it can fluctuate from period to period based on capacity utilization at customers’ manufacturing facilities, which affects the need for equipment service.

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Nine months ended September 30, 2024 Compared with Nine months ended September 30, 2023

​

Product

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Product revenue was $735.6 million, or 96.1% of revenue, during the nine months ended September 30, 2024, compared with $795.0 million, or 96.9% of revenue, for the nine months ended September 30, 2023. The $59.4 million decrease in product revenue for the nine-month period ended September 30, 2024, in comparison to the same period in 2023, was primarily driven by a decrease in system sales.

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Services

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Services revenue was $29.8 million, or 3.9% of revenue, for the nine months ended September 30, 2024, compared with $25.3 million, or 3.1% of revenue, for the nine months ended September 30, 2023.

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Revenue Categories used by Management

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In addition to the line item revenue categories discussed above, management also regularly disaggregates revenue in the following categories, which it finds relevant and useful:

​

| ● | Systems and Aftermarket revenues, in which “Aftermarket” is:

| A. | The portion of Product revenue relating to spare parts, product upgrades and used equipment, combined with

| B. | Services revenue, which is the labor component of Aftermarket revenues;

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(Aftermarket purchases reflect current fab utilization as opposed to Systems purchases which reflect capital investment decisions by our customers, which have differing economic drivers);

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| ● | Revenue by geographic regions, since economic factors impacting customer purchasing decisions may vary by geographic region; and ​

| ● | Revenue by our customer market segments, since they can be subject to different economic drivers at different periods of time, impacting a customer’s likelihood of purchasing capital equipment during any particular period. Currently, management references three customer market segments: memory, mature process technology and leading edge foundry and logic.

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Aftermarket and Systems Revenue

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Three months ended September 30, 2024 Compared with Three months ended September 30, 2023

​

Included in total revenue of $256.6 million during the three months ended September 30, 2024 is revenue from our Aftermarket business of $55.5 million, compared with $60.9 million of Aftermarket revenue for the three months ended September 30, 2023. Aftermarket revenue fluctuates from period to period based on capacity utilization at customers’ manufacturing facilities, which affects the sale of spare parts and demand for equipment service. Aftermarket revenue can also fluctuate from period to period based on the demand for system upgrades or used equipment. The remaining $201.1 million of revenue for the three months ended September 30, 2024 was systems revenue, compared with $231.4 million of systems revenue for the three months ended September 30, 2023. Systems revenue fluctuates from period to period based on our customers’ capital spending.

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Nine months ended September 30, 2024 Compared with Nine months ended September 30, 2023

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Included in total revenue of $765.4 million during the nine months ended September 30, 2024 is revenue from our Aftermarket business of $170.3 million, compared with $178.5 million of Aftermarket revenue for the nine months ended September 30, 2023. The remaining $595.1 million of revenue for the nine months ended September 30, 2024 was systems revenue, compared with $641.8 million of systems revenue for the nine months ended September 30, 2023.

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Gross Profit / Gross Margin

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The following table sets forth our gross profit / gross margin:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Period-to-Period | ​ | Nine months ended | ​ | Period-to-Period |  | ​
​ | ​ | September 30, | ​ | Change | ​ | September 30, | ​ | Change |  | ​
​ |  | 2024 |  | 2023 |  | $ | ​ | % |  | ​ | 2024 |  | ​ | 2023 |  | $ | ​ | % |  |
​ | ​ | (dollars in thousands) | ​
Gross Profit: |  | ​ |  |  | ​ |  |  | ​ |  |  |  |  | ​ |  |  | ​ |  |  | ​ |  | ​ |  | ​ |
Product | ​ | $ | 110,447 | ​ | $ | 128,569 | ​ | $ | (18,122) | ​ | (14.1) | % | $ | 336,577 | ​ | $ | 350,736 | ​ | $ | (14,159) | ​ | (4.0) | % | ​
Product gross margin | ​ | ​ | 44.7 | % | ​ | 45.4 | % | ​ | ​ | ​ | ​ | ​ | ​ | 45.8 | % | ​ | 44.1 | % | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Services | ​ |  | (477) | ​ |  | 1,115 | ​ | ​ | (1,592) | ​ | (142.8) | % |  | 1,854 | ​ | ​ | 2,669 | ​ | ​ | (815) | ​ | (30.5) | % | ​
Services gross margin | ​ | ​ | (4.9) | % | ​ | 12.4 | % | ​ | ​ | ​ | ​ | ​ | ​ | 6.2 | % | ​ | 10.6 | % | ​ | ​ | ​ | ​ | ​ | ​
Total gross profit | ​ | $ | 109,970 | ​ | $ | 129,684 | ​ | $ | (19,714) | ​ | (15.2) | % | $ | 338,431 | ​ | $ | 353,405 | ​ | $ | (14,974) | ​ | (4.2) | % | ​
Gross margin | ​ | ​ | 42.8 | % | ​ | 44.3 | % | ​ | ​ | ​ | ​ | ​ | ​ | 44.2 | % | ​ | 43.0 | % | ​ | ​ | ​ | ​ | ​ | ​

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Three months ended September 30, 2024 Compared with Three months ended September 30, 2023

​

Product

​

Gross margin from product revenue was 44.7% for the three months ended September 30, 2024, compared to 45.4% for the three months ended September 30, 2023. The decrease in gross margin primarily resulted from an unfavorable mix of system revenue.

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Services

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Gross margin from services revenue was (4.9)% for the three months ended September 30, 2024, compared to 12.4% for the three months ended September 30, 2023. The decrease in gross margin is attributable to changes in the mix of service contracts.

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Nine months ended September 30, 2024 Compared with Nine months ended September 30, 2023

​

Product

​

Gross margin from product revenue was 45.8% for the nine months ended September 30, 2024, compared to 44.1% for the nine months ended September 30, 2023. The increase in gross margin primarily resulted from a favorable mix of system revenue.

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Services

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Gross margin from services revenue was 6.2% for the nine months ended September 30, 2024, compared to 10.6% for the nine months ended September 30, 2023. The decrease in gross margin is attributable to changes in the mix of service contracts.

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Operating Expenses

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The following table sets forth our operating expenses:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Period-to-Period | ​ | Nine months ended | ​ | Period-to-Period |  | ​
​ | ​ | September 30, | ​ | Change | ​ | September 30, | ​ | Change |  | ​
​ | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % |  | ​
​ | ​ | (dollars in thousands) | ​
Research and development |  | $ | 26,395 |  | $ | 24,093 |  | $ | 2,302 |  | 9.6 | % | $ | 77,843 |  | $ | 71,996 |  | $ | 5,847 |  | 8.1 | % |
Percentage of revenue | ​ | ​ | 10.3 | % | ​ | 8.2 | % | ​ | ​ | ​ | ​ | ​ | ​ | 10.2 | % | ​ | 8.8 | % | ​ | ​ | ​ | ​ | ​ | ​
Sales and marketing | ​ |  | 16,808 | ​ |  | 16,465 | ​ | ​ | 343 | ​ | 2.1 | % |  | 51,483 | ​ |  | 46,146 | ​ | ​ | 5,337 | ​ | 11.6 | % | ​
Percentage of revenue | ​ | ​ | 6.6 | % | ​ | 5.6 | % | ​ | ​ | ​ | ​ | ​ | ​ | 6.7 | % | ​ | 5.6 | % | ​ | ​ | ​ | ​ | ​ | ​
General and administrative | ​ |  | 19,854 | ​ |  | 17,446 | ​ | ​ | 2,408 | ​ | 13.8 | % |  | 52,842 | ​ |  | 48,519 | ​ | ​ | 4,323 | ​ | 8.9 | % | ​
Percentage of revenue | ​ | ​ | 7.7 | % | ​ | 6.0 | % | ​ | ​ | ​ | ​ | ​ | ​ | 6.9 | % | ​ | 5.9 | % | ​ | ​ | ​ | ​ | ​ | ​
Total operating expenses | ​ | $ | 63,057 | ​ | $ | 58,004 | ​ | $ | 5,053 | ​ | 8.7 | % | $ | 182,168 | ​ | $ | 166,661 | ​ | $ | 15,507 | ​ | 9.3 | % | ​
Percentage of revenue | ​ | ​ | 24.6 | % | ​ | 19.8 | % | ​ | ​ | ​ | ​ | ​ | ​ | 23.8 | % | ​ | 20.3 | % | ​ | ​ | ​ | ​ | ​ | ​

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Our operating expenses consist primarily of personnel costs, including wages, commissions, incentive-based compensation, stock-based compensation and related benefits and taxes; project material costs related to the design and development of new products and enhancement of existing products; and professional fees, travel and depreciation expenses.

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Personnel costs are our largest expense, representing $35.5 million, or 56.3%, of our total operating expenses for the three months ended September 30, 2024, compared to $34.8 million, or 60.0%, of our total operating expenses for the three months ended September 30, 2023. Personnel costs were $107.2 million, or 58.9%, of our total operating expenses for the nine months ended September 30, 2024, compared to $99.3 million, or 59.6%, of our total operating expenses for the nine months ended September 30, 2023. The higher personnel costs for the three and nine months ended September 30, 2024 are primarily due to increases in wages and headcount as well as stock compensation expense, partially offset by a decrease in variable compensation expense.

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Research and Development

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | Period-to-Period | ​ | ​ | Nine months ended | ​ | ​ | ​ | Period-to-Period |  | ​
​ | ​ | September 30, | ​ | Change | ​ | ​ | September 30, | ​ | ​ | ​ | Change |  | ​
​ | ​ | 2024 | ​ | 2023 | ​ | ​ | $ | ​ | % | ​ | ​ | 2024 | ​ | 2023 | ​ | ​ | ​ | $ | ​ | % |  | ​
​ | ​ | (dollars in thousands) | ​
Research and development |  | $ | 26,395 |  | $ | 24,093 |  | $ | 2,302 | ​ | 9.6 | % | ​ | $ | 77,843 |  | $ | 71,996 |  | ​ | $ | 5,847 |  | 8.1 | % |
Percentage of revenue | ​ | ​ | 10.3 | % | ​ | 8.2 | % | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 10.2 | % | ​ | 8.8 | % | ​ | ​ | ​ | ​ | ​ | ​ | ​

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Our ability to remain competitive depends largely on continuously developing innovative technology, with new and enhanced features and systems and introducing them at competitive prices on a timely basis. Accordingly, based on our

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strategic plan, we establish annual research and development budgets to fund programs that we expect will solve customers’ high value, high impact, ion implantation challenges.

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Three months ended September 30, 2024 Compared with Three months ended September 30, 2023

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Research and development expense was $26.4 million during the three months ended September 30, 2024, an increase of $2.3 million, or 9.6%, compared with $24.1 million during the three months ended September 30, 2023. The increase is primarily due to higher project and consulting expenses and higher personnel expenses associated with increases in wages partially offset by a decrease in variable compensation expense.

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Nine months ended September 30, 2024 Compared with Nine months ended September 30, 2023

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Research and development expense was $77.8 million during the nine months ended September 30, 2024, an increase of $5.8 million, or 8.1%, compared with $72.0 million during the nine months ended September 30, 2023. The increase is primarily due to higher project and consulting expenses and higher personnel expenses associated with increases in wages partially offset by a decrease in variable compensation expense and temporary employees.

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Sales and Marketing

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Period-to-Period | ​ | Nine months ended | ​ | Period-to-Period |  | ​
​ | ​ | September 30, | ​ | Change | ​ | September 30, | ​ | Change |  | ​
​ | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % |  | ​
​ | ​ | (dollars in thousands) | ​
Sales and marketing |  | $ | 16,808 |  | $ | 16,465 |  | $ | 343 | ​ | 2.1 | % | $ | 51,483 |  | $ | 46,146 |  | $ | 5,337 |  | 11.6 | % |
Percentage of revenue | ​ | ​ | 6.6 | % | ​ | 5.6 | % | ​ | ​ | ​ | ​ | ​ | ​ | 6.7 | % | ​ | 5.6 | % | ​ | ​ | ​ | ​ | ​ | ​

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Our sales and marketing expenses result primarily from the sale of our equipment and services through our direct sales force.

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Three months ended September 30, 2024 Compared with Three months ended September 30, 2023

​

Sales and marketing expense was $16.8 million during the three months ended September 30, 2024, an increase of $0.3 million, or 2.1%, compared with $16.5 million during the three months ended September 30, 2023. The increase is primarily due to higher personnel expenses associated with increases in wages and stock compensation expense partially offset by a decrease in variable compensation expense.

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Nine months ended September 30, 2024 Compared with Nine months ended September 30, 2023

​

Sales and marketing expense was $51.5 million during the nine months ended September 30, 2024, an increase of $5.3 million, or 11.6%, compared with $46.1 million during the nine months ended September 30, 2023. The increase is primarily due to higher personnel expenses associated with increases in wages and stock compensation expense partially offset by a decrease in variable compensation expense.

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General and Administrative

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Period-to-Period | ​ | Nine months ended | ​ | Period-to-Period |  | ​
​ | ​ | September 30, | ​ | Change | ​ | September 30, | ​ | Change |  | ​
​ | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % |  | ​
​ | ​ | (dollars in thousands) | ​
General and administrative |  | $ | 19,854 |  | $ | 17,446 |  | $ | 2,408 |  | 13.8 | % | $ | 52,842 |  | $ | 48,519 |  | $ | 4,323 |  | 8.9 | % |
Percentage of revenue | ​ | ​ | 7.7 | % | ​ | 6.0 | % | ​ | ​ | ​ | ​ | ​ | ​ | 6.9 | % | ​ | 5.9 | % | ​ | ​ | ​ | ​ | ​ | ​

​

Our general and administrative expenses result primarily from the costs associated with our executive, finance, information technology, legal and human resource functions.

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​

Three months ended September 30, 2024 Compared with Three months ended September 30, 2023

​

General and administrative expense was $19.9 million during the three months ended September 30, 2024, an increase of $2.4 million, or 13.8%, compared with $17.4 million during the three months ended September 30, 2023. The increase is primarily due to an increase in bad debt expense of $2.8 million partially offset by lower personnel expenses associated with a decrease in variable compensation expense.

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Nine months ended September 30, 2024 Compared with Nine months ended September 30, 2023

​

General and administrative expense was $52.8 million during the nine months ended September 30, 2024, an increase of $4.3 million, or 8.9%, compared with $48.5 million during the nine months ended September 30, 2023. The increase is primarily due to higher bad debt expense and higher personnel expenses associated with an increase in wages and stock compensation partially offset by a decrease in variable compensation expense.

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Other Income (Expense)

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Period-to-period |  | ​ | Nine months ended | ​ | Period-to-period |  | ​
​ | ​ | September 30, | ​ | change |  | ​ | September 30, | ​ | change |  | ​
​ | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % |  | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % |  | ​
​ | ​ | (dollars in thousands) | ​
Other income (expense): |  | $ | 8,452 |  | $ | 1,995 |  | $ | 6,457 |  | 323.7 | % |  | $ | 15,366 |  | $ | 4,449 |  | $ | 10,917 |  | 245.4 | % | ​
Percentage of revenue | ​ |  | 3.4 | % |  | 0.7 | % | ​ | ​ | ​ | ​ | ​ | ​ |  | 2.1 | % |  | 0.6 | % | ​ | ​ | ​ | ​ | ​ | ​

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Other income (expense) consists of interest earned and accretion on our invested cash balances, interest expense relating to the finance lease obligation we incurred in connection with the 2015 sale of our headquarters facility and other financing obligations as well as foreign exchange gains and losses attributable to both fluctuations of the U.S. dollar against local currencies of the countries in which we operate and forward currency exchange contracts.

​

Other income was $8.5 million for the three months ended September 30, 2024, compared with other income of $2.0 million for the three months ended September 30, 2023. The $6.5 million increase in other income (expense) compared to the same prior year period was primarily due to an increase in interest income of $2.0 million and an increase in foreign exchange gains of $7.7 million, partially offset by foreign exchange losses of $3.2 million from forward currency exchange contracts. Other income was $15.4 million for the nine months ended September 30, 2024, compared with other income of $4.4 million for the nine months ended September 30, 2023. The $10.9 million increase in other income (expense) compared to the same prior year period was primarily due to an increase in interest income of $5.3 million, an increase in foreign exchange gains of $5.1 million and foreign exchange gains of $0.5 million from forward currency exchange contracts.

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Income Tax Provision

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended | ​ | Period-to-period |  | ​ | Nine months ended | ​ | Period-to-period |  | ​
​ | ​ | September 30, | ​ | change |  | ​ | September 30, | ​ | change |  | ​
​ | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % |  | ​ | 2024 | ​ | 2023 | ​ | $ | ​ | % |  | ​
​ | ​ | (dollars in thousands) | ​
Income tax provision |  | $ | 6,789 | ​ |  | $ | 7,744 |  | $ | (955) |  | (12.3) | % |  | $ | 20,593 | ​ |  | $ | 15,986 |  | $ | 4,607 |  | 28.8 | % | ​
Percentage of revenue | ​ |  | 2.6 | % | ​ |  | 2.6 | % | ​ | ​ | ​ | ​ | ​ | ​ |  | 2.7 | % | ​ |  | 1.9 | % | ​ | ​ | ​ | ​ | ​ | ​

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Income tax expense was $6.8 million for the three months ended September 30, 2024, compared to $7.7 million for the three months ended September 30, 2023. The $0.9 million decrease was primarily due to a decrease in pre-tax income. Income tax expense was $20.6 million for the nine months ended September 30, 2024, compared to $16.0 million for the nine months ended September 30, 2023. The increase was primarily due to a decrease in the benefit received from share-based compensation.

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The effective tax rate for the three and nine months ended September 30, 2024 was less than the U.S. statutory rate of 21% primarily attributable to the Foreign Derived Intangible Income deduction, Federal research and development tax credits and excess tax benefits from share-based compensation.

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The deferred income taxes of $58.9 million and $53.4 million as of September 30, 2024 and December 31, 2023, respectively, reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. As of September 30, 2024, we have recorded a $12.1 million valuation allowance in the U.S. against certain tax credits due to the uncertainty of their realization. Realization of our net deferred tax assets is dependent on future taxable income. We believe it is more likely than not that such assets will be realized; however, ultimate realization could be impacted by market conditions and other variables not known or anticipated at this time.

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Liquidity and Capital Resources

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At September 30, 2024, we had $120.1 million in unrestricted cash and cash equivalents and $459.3 million in short-term investments, in addition to $6.7 million in restricted cash. Management believes that maintaining a strong cash balance is necessary to fund a continuing ramp in our business which can require significant cash investment to meet sudden demand. Additionally, we are using cash to repurchase shares as part of our stock repurchase program and are considering both organic and inorganic opportunities to drive future growth, for which cash resources will be necessary.

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Our liquidity is affected by many factors. Some of these relate specifically to the operations of our business, for example, the rate of sales of our products, and others relate to the uncertainties of global economic conditions, including the availability of credit and the condition of the overall semiconductor equipment industry. Our industry requires ongoing investments in operations and research and development that are not easily adjusted to reflect changes in revenue. As a result, profitability and cash flows can fluctuate more widely than revenue. Stock repurchases, as discussed below, also reduce our cash balances.

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During the nine months ended September 30, 2024 and 2023, we generated $128.0 million and $91.3 million, respectively, of cash related to operating activities.

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Investing activities for the nine months ended September 30, 2024 resulted in cash outflows of $117.8 million, $7.5 million of which was used for capital expenditures and $433.9 million of which was used to purchase short-term investments, offset by $323.6 million related to maturities of short-term investments. Investing activities for the nine months ended September 30, 2023 resulted in cash outflows of $74.2 million, $10.5 million of which was used for capital expenditures and $271.6 million of which was used to purchase short-term investments, offset by $207.9 million related to maturities of short-term investments.

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Financing activities for the nine months ended September 30, 2024 resulted in a cash usage of $56.6 million. During the first nine months of 2024, (i) $45.4 million in cash was used to repurchase our common stock, (ii) $11.4 million was used for payments to government tax authorities for income tax withholding on employee compensation arising from the vesting of RSUs, where units are withheld by us to cover taxes, and (iii) $1.1 million was used to reduce the liability under the finance lease of our corporate headquarters. These amounts were partially offset by $1.2 million of proceeds related to the purchase of shares under our 2020 ESPP during the first nine months of 2024. In comparison, financing activities for the nine months ended September 30, 2023 resulted in cash usage of $53.2 million, of which (i) $37.5 million related to the repurchase of our common stock (ii) $15.8 million related to payments made to government tax authorities for income tax withholding on employee compensation arising from the vesting of RSUs, and (iii) $0.9 million relating to the reduction of our financing lease liability. These amounts were partially offset by $1.0 million of proceeds related to the purchase of shares under our 2020 ESPP and exercise of stock options during the first nine months of 2023.

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As of September 30, 2024, we had a security deposit of $5.9 million related to the lease of our corporate headquarters in the form of a cash collateralized letter of credit issued with UBS Bank USA, which is classified as long-term restricted cash on our balance sheet.

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We believe that based on our current market, revenue, expense and cash flow forecasts, our existing cash and cash equivalents will be sufficient to satisfy our anticipated cash requirements for the short- and long-term.

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Commitments and Contingencies

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Significant commitments and contingencies at September 30, 2024 are consistent with those discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 16 to the consolidated financial statements included in our 2023 Form 10-K.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

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As of September 30, 2024, there have been no material changes to the quantitative information about market risk disclosed in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” included in our 2023 Form 10-K.

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Item 4. Controls and Procedures.

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Evaluation of Disclosure Controls and Procedures

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Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, these disclosure controls and procedures are effective.

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Changes in Internal Control over Financial Reporting

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There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during the three months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

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Item 1. Legal Proceedings.

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We are, from time to time, a party to litigation that arises in the normal course of our business operations. We are not presently a party to any litigation that we believe might have a material adverse effect on our business operations.

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Item 1A. Risk Factors.

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As of September 30, 2024, there have been no material changes to the risk factors described in Item 1A, “Risk Factors” included in our 2023 Form 10-K.

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Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

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In February 2022, our Board of Directors authorized a share repurchase program for up to $100 million of the Company’s common stock. This program was announced on March 1, 2022. In August 2023, our Board of Directors approved additional funding of $200 million for our stock repurchase program, to be available upon the full utilization of the $100 million repurchase funding approved in February 2022. This additional funding was announced on September 12, 2023. The Company’s share repurchase program does not have an expiration date.

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The following table summarizes the stock repurchase activity, based upon settlement date, for the three months ended September 30, 2024 as well as the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Total Number of Shares Purchased |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Program |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program | ​
​ | ​ | (in thousands except per share amounts) | ​
July 1 through July 31 | ​ | 70 | ​ | $137.48 | ​ | 70 | ​ | ​ | 150,387 | ​
August 1 through August 31 | ​ | 48 | ​ | $111.33 | ​ | 48 | ​ | ​ | 145,011 | ​
September 1 through September 30 | ​ | — | ​ | $0.00 | ​ | — | ​ | ​ | 145,011 | ​
Total | ​ | 118 | ​ | ​ | ​ | 118 | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​

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Item 3. Defaults Upon Senior Securities.

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None.

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Item 4. Mine Safety Disclosures.

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Not Applicable.

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Item 5. Other Information.

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Lynnette C. Fallon, Executive Vice President, HR/Legal, General Counsel, and Secretary has announced her plan to retire in early 2025, at which time she will resign as an executive officer. The Company is engaged in a search for her successor. Following her retirement, Ms. Fallon will continue to serve as a senior advisor to the Company.

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During the quarter ended September 30, 2024, no director or officer adopted or terminated any contract, instrument or written plan for the purchase or sale of Axcelis securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any non-Rule 10b5-1 trading arrangement as defined in Item 408(c) of Regulation S-K.

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Item 6. Exhibits.

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The following exhibits are filed herewith:

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Exhibit No |  | Description
​ | ​ | ​
3.1 | ​ | Restated Certificate of Incorporation of the Company filed November 2, 2017. Incorporated by reference to Exhibit 3.1 of the Company’s Form 10-Q filed with the Commission on November 3, 2017.
​ | ​ | ​
3.2 | ​ | Certificate of Amendment to the Restated Certificate of Incorporation of the Company filed May 9, 2024. Incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed with the Commission on May 9, 2024.
​ | ​ | ​
3.3 | ​ | Bylaws of the Company, as amended as of May 11, 2022. Incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K filed with the SEC on May 11, 2022.
​ | ​ | ​
31.1* | ​ | Certification of the Principal Executive Officer under Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act), dated November 7, 2024.
​ | ​ | ​
31.2* | ​ | Certification of the Principal Financial Officer under Exchange Act Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act), dated November 7, 2024.
​ | ​ | ​
32.1** | ​ | Certification of the Principal Executive Officer pursuant to Section 1350 of Chapter 63 of title 18 of the United States Code (Section 906 of the Sarbanes-Oxley Act), dated November 7, 2024.
​ | ​ | ​
32.2** | ​ | Certification of the Principal Financial Officer pursuant to Section 1350 of Chapter 63 of title 18 of the United States Code (Section 906 of the Sarbanes-Oxley Act), dated November 7, 2024.
​ | ​ | ​
101* | ​ | The following materials from the Company’s Form 10-Q for the quarter ended September 30, 2024, formatted in inline eXtensible Business Reporting Language (iXBRL): (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements (Unaudited). Filed herewith.
​ | ​ | ​
104* | ​ | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).
​ | ​ | ​
* Filed herewith
** This exhibit is being furnished rather than filed, and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

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SIGNATURES

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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​ | AXCELIS TECHNOLOGIES, INC.
DATED: November 7, 2024 | By: | /s/ JAMES G. COOGAN
​ | ​ | ​
​ | ​ | James G. Coogan
​ | ​ | Executive Vice President and Chief Financial Officer
​ | ​ | Duly Authorized Officer and Principal Financial Officer

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