ASML Holding NV (NASDAQ:ASML) Q1 2019 Earnings Conference Call - Final Transcript

Apr 17, 2019 • 09:00 am ET

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ASML Holding NV (NASDAQ:ASML) Q1 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Roger Dassen

quarter was 41.6%, which is slightly higher than the 40% guidance due to a favorable Deep UV mix more than compensating for the gross margin impact of one additional EUV system. Overall R&D and SG&A expenses came in a little lower than guidance with R&D expenses at EUR473 million and SG&A expenses at EUR121 million.

Turning to the balance sheet, EUR55 million worth of shares were repurchased in Q1. We ended last quarter with cash, cash equivalents and short-term investments at a level of EUR3.28 billion.

Moving to the order book, Q1 system bookings came in at EUR1.40 billion, Logic order intake was 75% of total value with the remaining 25% from memory, again reflecting the strong logic demand expected this year. We took three new EUV orders in the quarter. Net income in Q1 was EUR355 million, representing 15.9% of net sales and an EPS of EUR0.84. This was favorably impacted by one-off tax benefit.

With that, I would like to turn to our expectations for the second quarter of 2019. We expect Q2 total net sales between EUR2.5 billion and EUR2.6 billion. Our total net sales forecast for Q2 includes around EUR600 million of EUV system revenue on six expected shipments in Q2. We expect our Q2 installed base management revenue to be around EUR700 million. Gross margin for Q2 is expected to be between 41% and 42%. The lower margin EUV revenue will be compensated by higher margin, non-EUV business.

We continue to expect further improvements in gross margin in the second half, driven by higher system sales, increased field upgrades, shipment of higher margin NXE:3400C systems, as well as contribution of EUV service revenue. This will provide a significant step towards our 2020 target of over 50%. Expected R&D expenses for Q2 are around EUR485 million and SG&A is expected to come in at around EUR125 million. Our estimated 2019 annualized effective tax rate is around 11% because of a one-off tax benefit in 2019. We still expect our long-term effective tax rate to be 14%.

As we remain confident in our long-term growth, we will propose a 50% increase versus last year and our dividend to EUR2.10 per share at our Annual Shareholder Meeting which takes place on April 24th in Veldhoven. The dividend payment is valued at around EUR0.9 billion. We still expect to execute the remaining EUR1.3 billion of the 2018-2019 share buyback program this year with a weighting towards the back of the year.

With that I'd like to turn the call back over to Peter.

Executive
Peter Wennink

Thank you, Roger. As Roger highlighted, although it was a modest quarter the results came in above our guidance and we expect further strengthening in the coming quarters. There continues to be volatility in the markets due to the macroeconomic environment and some uncertainty remains in the semiconductor industry. Our memory customers are going through a period of rebalancing supply and demand with an expected improvement in their business conditions over the course of the year.