ASML

ASML Holding N.V. (ASML)

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ASML Holding N.V. (ASML)

Q3 2012 Earnings Call

October 17, 2012 3:00 pm ET

Executives

Eric Meurice – President and Chief Executive Officer

Peter Wennink – Executive Vice President and Chief Financial Officer

Craig DeYoung – Vice President, Investor Relations

Analysts

Didier Scemama – Merrill Lynch

Amit Harchandani – Citigroup

Gareth Jenkins – UBS

Mahesh Sanganeria – RBC Capital Markets

Sandeep Deshpande – JPMorgan

Sachin Shah – Tullett Prebon

Andrew Gardiner – Barclays Capital

Janardan Menon – Liberum Capital

Stephane Houri – Natixis Securities

Mehdi Hosseini – Susquehanna Financial Group

Simon Schäfer – Goldman Sachs

Presentation

Operator

Ladies and gentlemen thank you for standing by, and welcome to the ASML 2012 Third Quarter Results Conference Call on October 17, 2012. For our today’s introduction, all participants will be in a listen-only mode. After ASML’s introduction, there will be an opportunity to ask questions. (Operator Instructions)

I would now like to turn the conference over to Mr. Craig DeYoung. Go ahead please, sir.

Craig DeYoung

Thank you, operator, and good afternoon and good morning ladies and gentlemen. This is Craig DeYoung, Vice President of Investor Relations here at ASML. And I would like to welcome to our investor call and webcast. Joining me today from our headquarters here in Veldhoven, in the Netherlands is Eric Meurice, ASML’s CEO, and Peter Wennink, ASML’s CFO.

As the operator mentioned, today’s call subject is ASML’s third quarter 2012 results. However, as you now know, we’ve also announced our intent to acquire Cymer today and therefore, we’d be happy to answer any questions you might have on either subject as we proceed with the call.

At this time, I would like to draw your attention to the Safe Harbor statement contained in today’s press release and in our third quarter results presentation both of which you can find on our website at asml.com. This Safe Harbor statement will apply to this call and all associated presentation materials. Let me remind you that the length of today’s call is 60 minutes.

And now I would like to turn the call over to Eric Meurice for a brief introduction.

Eric Meurice

Yeah, thank you, Craig. Good afternoon. Good morning. Thank you for attending our third quarter results conference call. Before we begin as usual the Q&A session, Peter and I would like to provide an overview and some commentary on our third quarter results and our view going forward, as well as providing some commentary on the Cymer acquisition proposal.

As usual Peter will start with a review of Q3, I will comment on the short-term outlook, brief outlook on the overview of the Cymer deal. I will complete the introduction with some further comments and update on EUV program and more details on the intent of the Cymer deal. So peter please?

Peter Wennink

Thank you, Eric, and welcome to everyone. As mentioned by Eric, I will focus on the review of our third quarter results, which are very much in line with expectations and we’ll close off with a brief overview of the all the announcements we’ve made judging today with Cymer.

A quick look at our third quarter, sales results show us coming in at about €1.23 billion, just above our guided level. This is very much in line with the previous quarter. This quarter sales remained largely skewed towards the foundry IDM sectors, which accounted for about 70%, including non-critical KrF systems, which supported the capacity additions.

Memory combined represented about 30%. This percentage seems high when looking at the state of the memory market, but we recognized a few leading-edge evaluation systems as sales in the third quarter that were shift in prior quarters. This issue also affected the memory bookings in the quarter last as these are recognized as turns business.

In addition, there is increasing uncertainty in the last few quarters as to the application for which these systems are used, which lead us to combined memory sales and bookings data DRAM and NAND in our presentation materials this quarter. The ASP of all system recognized in Q3 was €35 million, which is an increase of about 10% from the previous quarter. Service and field option sales remained at healthy level of around €230 million.

Q3 net bookings came in at €830 million for 33 systems, excluding EUV. We have booked average selling prices at around €25 million versus €22 million in the second quarter. The quarter’s bookings profile was skewed by the turns business of evaluation systems as mentioned previously. Our order backlog at end of Q3 was €1.34 billion, excluding EUV totaling 48 systems. The backlog profile at quarter’s end remained very similar to that at the of the prior quarter.

Regarding our share buyback program, as of July 9, ASML had to suspend the current program for regulatory reasons in connection with the Customer Co-Investment Program. And in Q4, we planned to reinitiate and complete the previously announced buyback program of €1.13 billion.

As to the outlook, we anticipate fourth quarter sales coming in at about €1 billion putting 2012 annual revenues at about €4.7 billion. A gross margin of about 41% is expected from Q4 sales. R&D and SG&A expenses will be about around €55 million for R&D and €64 million for SG&A. The increase in R&D as a result of the initial rent of the 450 millimeter program, for which the Co-Investment Program has been initiated, customer funding of this program will start by the way in 2013. The increase in SG&A is due to one-time Dutch austerity taxation for the 2012, on high income individuals, which taxation is fully payable by the company. But this charge will be booked fully in the fourth quarter.

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