Leases

6 Months Ended

Jun. 30, 2025

Leases

Leases

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:

		June 30,		December 31,
Leases	Classification	2025		2024
Assets		(in thousands)
Operating leases	Operating lease assets	$	28,561	$	29,621
Finance lease	Finance lease assets*		14,704		15,346
Total leased assets		$	43,265	$	44,967
Liabilities
Current
Operating	Other current liabilities	$	4,574	$	4,470
Finance	Current portion of finance lease obligation		1,437		1,345
Non-current
Operating	Other long-term liabilities		24,363		25,321
Finance	Finance lease obligation		41,567		42,329
Total lease liabilities		$	71,941	$	73,465
*Finance lease assets are recorded net of accumulated depreciation of $47.9 million and include $0.5 million of prepaid financing costs as of June 30, 2025. Finance lease assets are recorded net of accumulated depreciation of $47.4 million and include $0.5 million of prepaid financing costs as of December 31, 2024.

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 six months ended June 30, 2025 and 2024 as follows:

		Three months ended				Six months ended
		June 30,				June 30,
Lease cost	Classification	2025		2024		2025		2024
Operating lease cost		(in thousands)
Product / services*	Cost of revenue	$	1,606	$	1,694	$	3,280	$	3,522
Research and development	Operating expenses		149		203		368		326
Sales and marketing*	Operating expenses		450		451		894		902
General and administrative*	Operating expenses		212		337		538		532
Total operating lease cost		$	2,417	$	2,685	$	5,080	$	5,282
Finance lease cost
Depreciation of leased assets	Cost of revenue, Research and development, Sales and marketing and General and administrative	$	321	$	321	$	643	$	643
Interest on lease liabilities	Interest expense		1,148		1,187		2,304		2,384
Total finance lease cost		$	1,469	$	1,508	$	2,947	$	3,027
Total lease cost		$	3,886	$	4,193	$	8,027	$	8,309
* Product / services, sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $0.4 million and $1.0 million for the three and six months ended June 30, 2025, respectively, and includes short-term lease and variable lease costs of approximately $0.7 million and $1.3 million for the three and six months ended June 30, 2024, 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 June 30, 2025:

	Finance		Operating		Total
Maturity of Lease Liabilities	Leases		Leases		Leases
	(in thousands)
2025	$	2,950	$	3,243	$	6,193
2026		6,008		5,405		11,413
2027		6,128		3,597		9,725
2028		6,251		2,478		8,729
2029		6,376		2,278		8,654
Thereafter		48,960		22,384		71,344
Total lease payments	$	76,673	$	39,385	$	116,058
Less interest portion*		(33,669)		(10,448)		(44,117)
Finance lease and operating lease obligations	$	43,004	$	28,937	$	71,941
* 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.

	June 30,
Lease term and discount rate	2025
Weighted-average remaining lease term (years):
Operating leases		10.8
Finance leases		11.6
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 six months ended June 30, 2025 and 2024, respectively:

	Six months ended June 30,
Cash paid for amounts included in the measurement of lease liabilities	2025		2024
	(in thousands)
Operating cash outflows from operating leases	$	5,080	$	5,282
Operating cash outflows from finance leases		2,304		2,384
Financing cash outflows from finance leases		676		736
Operating lease assets obtained in exchange for operating lease liabilities		1,411		825
Finance lease assets obtained in exchange for new finance lease liabilities		—		—