ASML Q309 sales and orders rise as chip industry executes technology investment strategy

VELDHOVEN, THE NETHERLANDS: ASML Holding NV announced its 2009 third quarter results according to US GAAP as follows:

* Q3 2009 net sales of EUR 555 million versus Q2 2009 net sales of EUR 277 million (Q3 2008 net sales of EUR 696 million).
* Q3 2009 operating income of EUR 39 million, or 6.9 percent of net sales, versus a Q2 2009 operating loss of EUR 124 million or 45.0 percent of net sales (Q3 2008 operating income of EUR 83 million or 12.0 percent of net sales).
* Q3 2009 net income of EUR 20 million, or 3.6 percent of net sales, versus a Q2 2009 net loss of EUR 104 million or 37.6 percent of net sales (Q3 2008 net income of EUR 73 million or 10.5 percent of net sales).
* Q3 2009 net bookings valued at EUR 777 million with 35 systems including 27 new and 8 used systems, leading to an order backlog valued at EUR 1,353 million as of September 27, 2009.

“ASML’s third quarter sales doubled from the second quarter, stemming from technology transition demand for our state-of-the-art immersion lithography systems as new DRAM devices are introduced and as Foundry customers are ramping 40 nanometer (nm) products,” said Eric Meurice, president and Chief Executive Officer of ASML.

“We shipped our first NXT:1950i system, offering best-in-class overlay of less than three nanometers and improved imaging, enabling the next generation of semiconductors with patterning below 30 nm. We kept a close rein on costs and retained a healthy cash position above EUR 1 billion even as we invest in working capital to prepare for sales growth,” Meurice added.

Operations update
In Q3 2009, ASML’s net sales of EUR 555 million included 17 new and seven used systems, resulting in net system sales of EUR 459 million, and net service and field options sales of EUR 96 million. Net system sales for Q2 2009 included the shipment of four new and six used machines, totaling EUR 183 million, and net service and field options sales of EUR 94 million.

The Q3 2009 average selling price for a new system was EUR 23.4 million, compared with the Q2 2009 average selling price for a new system of EUR 31.1 million as a result of a blend of immersion and non-immersion systems. The Q3 2009 average selling price for all ASML systems sold was EUR 19.1 million, compared with the Q2 2009 average selling price for all systems sold of EUR 18.3 million.

Q3 2009 net bookings totaled 35 systems valued at EUR 777 million, including 18 immersion systems.

ASML’s order backlog as of September 27, 2009 was EUR 1,353 million, totaling 54 systems with an average selling price of EUR 25.1 million. ASML’s backlog as of June 28, 2009 was valued at EUR 1,064 million, totaling 43 systems with an average selling price of EUR 24.7 million.

In Q3 2009, ASML generated net income of EUR 20 million, or EUR 0.05 per ordinary share as compared with a net loss in Q2 2009 of EUR 104 million or EUR 0.24 per ordinary share.

The company’s Q3 2009 gross margin was 34.4 percent, compared with the Q2 2009 gross margin of 12.5 percent, reflecting the better coverage of fixed production costs as a result of increased sales.

Q3 2009 R&D costs were EUR 115 million net of credits, versus EUR 118 million in Q2 2009.

Selling, general and administrative (SG&A) costs were EUR 38 million in Q3 2009, compared with EUR 41 million SG&A costs in Q2 2009.

Net cash used in operations was EUR 65 million in Q3 2009 as increasing sales result in higher accounts receivable. ASML ended Q3 2009 with EUR 1,018 million in cash and cash equivalents, compared with EUR 1,093 million at the end of Q2 2009.

Outlook
“We booked 35 systems worth EUR 777 million in the third quarter, nearly twice the level booked in the second quarter; this level reflects accelerated technology investments in the DRAM memory and Foundry segments after a nine month period of very low capital spending,” Meurice said.

“This recovery mainly supports new Integrated Circuits product introductions, not so much an overall significant wafer capacity increase. ASML’s Q3 order intake, and that of Q4 which we expect to be at least of similar value, is for deliveries in the first half of 2010 and will translate into significant sales growth versus Q3 levels. This substantial order increase does not factor in a full worldwide economic recovery, which, if it materializes, could sustain the first half sales level into the second half of 2010,” Meurice added.

ASML expects Q4 2009 net sales of around EUR 550 million and gross margin in Q4 2009 of about 37 percent. R&D expenditures are expected to be at EUR 115 million net of credits and SG&A costs are expected at EUR 37 million. We expect our cash balance in Q4 2009 to be at a similar level as per end-Q3, even as we prepare to ramp NXT shipments in the first half of 2010 and to build EUV systems planned for delivery in the second half of 2010.