NASDAQ:ASYS Amtech Systems Q1 2024 Earnings Report $3.55 +0.03 (+0.85%) As of 04/24/2025 04:00 PM Eastern Earnings History Amtech Systems EPS ResultsActual EPS-$0.04Consensus EPS -$0.12Beat/MissBeat by +$0.08One Year Ago EPSN/AAmtech Systems Revenue ResultsActual Revenue$24.92 millionExpected Revenue$22.00 millionBeat/MissBeat by +$2.92 millionYoY Revenue GrowthN/AAmtech Systems Announcement DetailsQuarterQ1 2024Date2/9/2024TimeN/AConference Call DateMonday, February 12, 2024Conference Call Time8:00AM ETUpcoming EarningsAmtech Systems' Q2 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled on Wednesday, May 7, 2025 at 5:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Amtech Systems Q1 2024 Earnings Call TranscriptProvided by QuartrFebruary 12, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good day, and welcome to the Amtech Systems Fiscal First Quarter 20 24 Earnings Conference Call. Please note that this call is being recorded. I would now like to turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead. Speaker 100:00:16Good morning, and thank you for joining us for Amtech Systems' Fiscal First Quarter 2024 Conference Call. With me on the call today are Bob Daigle, Chairman and Chief Officer Lisa Gibbs, Chief Financial Officer and Paul Lancaster, Vice President of Sales and Customer Service. After close of market Friday, Amtech released its financial results for the Q1 of 2024. The earnings release is posted on the company's website atwww.amteksystems.com in the Investors section. Before we begin, I'd like to remind everyone that the Safe Harbor disclaimer in our public filings covers this call and our webcast. Speaker 100:00:56Some of the comments to be made during today's call will contain forward looking statements and assumptions that are subject risks and uncertainties, including, but not limited to, those contained in our SEC filings, all of which are posted within the Investors section of our corporate website. The company assumes no obligation to update any such forward looking statements. You are cautioned not to place undue reliance on forward looking statements, which speak only as of today. These statements are not a Actual results to differ materially from those in the forward looking statements are changes in the technologies used by customers and competitors, change in volatility and the demand for products the effect of changing worldwide political and economic conditions, including trade sanctions The effect of overall market conditions, including the equity and credit markets and market acceptance risks, ongoing logistics, supply chain and labor challenges, capital allocation plans and the COVID-nineteen pandemic. Other risk factors are detailed in our SEC filings, including our Form 10 ks and Forms 10 Q. Speaker 100:02:13Additionally, in today's conference call, we will be referring to non GAAP financial measures as we discuss the Q1 financial results. You'll find a reconciliation of these non GAAP measures to our actual GAAP results included in the press release issued on Friday. I will now turn the call over to Amtech's Chief Executive Officer, Bob Daigle. Speaker 200:02:37Good morning, everyone. Thank you for joining Amtech's quarterly conference call. I'm pleased with the progress we're making to improve our cost structure and position the company for strong operating results as markets recover. We remain focused on operational optimization having achieved over $6,000,000 in annualized cost savings through actions implemented over the past 4 months. Revenue of $24,900,000 exceeded the high end of our guidance range and more importantly, adjusted EBITDA of $200,000 surpassed our expectations, marking a significant improvement from the $2,400,000 adjusted EBITDA loss in the prior quarter. Speaker 200:03:21The macroeconomic landscape for our target end markets remains somewhat mixed, especially within the semiconductor market. In this broad sector, we continue to experience softness in near term demand for equipment used for most wafer fabrication and back end packaging applications as the industry digests existing capacity and evaluates expansion plans for the upcoming quarters. However, amidst this backdrop, we are seeing pockets of resilience, particularly in submarkets related to hybrid and electric vehicles. Demand has been improving for consumables used for silicon carbide semiconductor production and we continue to experience strong demand for high end belt furnaces used to produce power semiconductor packaging materials and diffusion furnaces used for silicon and silicon carbide wafer production. While we await for the rebound in demand in the broader markets, Our organization is dedicated to optimizing every aspect of our operations to drive improved financial performance. Speaker 200:04:30In the Q1, we continued our efforts to enhance our cost structure and streamline operations. Building on the $4,000,000 in annualized cost savings discussed on our last call, we identified an additional $2,000,000 in opportunities, which we implemented in the Q1. The combination of these actions is expected to generate over $6,000,000 in annualized savings starting in Q2 of 2024 when compared to the same period last year. Our primary objective continues to be aligning the organization size with current market conditions to achieve near term EBITDA profitability, while simultaneously positioning ourselves for significant operating leverage as market demand rebounds. Beyond these completed We are actively exploring opportunities to optimize our manufacturing operations through strategic contract manufacturing partnerships. Speaker 200:05:32Our overarching goal is to focus our highly skilled workforce on production of large complex systems, while streamlining manufacturing of simpler components and assemblies through outsourcing. We believe this approach will enhance our overall flexibility and while optimizing our fixed cost structure. For example, building on the positive results from the initial outsourcing initiatives, We plan to expand these efforts in the Q3 by relocating 1 of our manufacturing facilities in the U. S. To a smaller more cost effective facility. Speaker 200:06:07This strategic move is anticipated to reduce fixed expenses while preserving and in some instances enhancing our production capabilities. In addition to our restructuring activities, during the Q1, we took additional actions to refine our pricing strategy. Despite the inflationary conditions affecting input pricing over the last couple of years, we have not been as diligent in passing increases on to our customers. With new objectives in place, we are seeing promising progress in quoting for new tools to ensure that pricing aligns more closely with current input costs. We do anticipate a lag before the full impact of these adjustments flow through as we work through the existing backlog. Speaker 200:06:58Shifting to the balance sheet. Are pleased to report a notable increase of $4,000,000 in cash during the quarter. This increase primarily comes from our focused approach to managing working capital, particularly in optimizing the timing of receivables and upfront payments. Looking ahead, we are committed to identifying additional opportunities including inventory reduction to further enhance the strength of our balance sheet. In closing, while Amtech stands out as a unique company with differentiated exposure to several rapidly growing markets, our current focus is on optimizing operations to increase profitability. Speaker 200:07:43Our performance in the Q1 highlights the increase the initial success of these efforts with positive EBITDA and operating cash flow despite challenging market conditions. Looking ahead, we are confident that the major investments in an AI related infrastructure and the investments that will be made to diversify global supply chains will result in strong demand for our back end equipment. We also believe our consumables business and semiconductor manufacturing equipment will greatly benefit from strong growth in silicon carbide wafer production. As our markets recover, I'm confident that the strategic actions we're taking today to improve operational efficiency and reduce working capital will generate meaningful shareholder value. With that, I'll turn it over to Lisa for further details on the Q1. Speaker 200:08:39Thank you, Bob. Speaker 300:08:41Net revenues decreased 10% sequentially and increased 16% from the Q1 of fiscal 2023. The sequential decrease is primarily due to a decrease in equipment across our business segments. As Bob mentioned, we are experiencing lower bookings in multiple areas of our business due to the softness in the semiconductor market. The increase from prior year is primarily attributable to increases in our belt furnace shipments the addition of Intrepix, partially offset by lower shipments of our reflow equipment. GAAP gross margin increased sequentially due primarily to the intangible asset impairment charge of $4,600,000 that was recorded in fiscal Q4 2023. Speaker 300:09:26Compared to the prior year period, GAAP gross margin decreased primarily due to a less favorable product and an intangible asset impairment charge of $800,000 recorded in Q1 2024. Non GAAP gross margin increased sequentially due primarily to lower overhead expenses and a more favorable product mix. Non GAAP gross margin in fiscal Q1 twenty twenty four was slightly lower compared to the prior year period due primarily to a less favorable product mix. Accounting guidance requires us to assess factors that could be considered a triggering event for impairment and the immaterial decline in our stock price below book value as of December 31, 2023 required us to perform this impairment assessment. Accordingly, we recorded a non cash impairment charge totaling the remainder is recorded within operating expenses. Speaker 300:10:29Selling, general and administrative expenses or SG and A decreased $2,500,000 on a sequential basis and decreased $600,000 compared to the same prior year period. That the sequential decrease is due to a number of expenses that were lower in Q1 twenty twenty four including intangible amortization, equity compensation, labor, consulting and audit fees. Compared to the prior year, the decrease is due primarily to $1,400,000 of lower acquisition expenses as well as lower consulting fees, partially offset by added SG and A from the addition of Intrepix. Research, development and engineering expenses decreased $1,000,000 sequentially and increased $200,000 compared to the same prior year The sequential decrease is associated with the reduction of investment in next generation polishing tools at PR Hoffman that we referenced last quarter. GAAP operating loss was $8,900,000 compared to GAAP operating loss of $11,700,000 the Q4 of fiscal 2023 and GAAP operating loss of $2,700,000 in the same prior year period. Speaker 300:11:44Non GAAP operating loss was $200,000 compared to non GAAP operating loss of $3,000,000 in the Q4 of fiscal 2023 and non GAAP operating loss of $2,700,000 in the same prior year period. GAAP net loss for the Q1 of fiscal 2024 was $9,400,000 or $0.66 per share. This compares to GAAP net loss of $12,000,000 or $0.85 per share for the preceding quarter and GAAP net loss of $2,700,000 or $0.20 per share for the Q1 of fiscal 2023. Non GAAP net loss for the Q1 of fiscal 2024 was $600,000 or $0.04 per share. This compares to non GAAP net loss of $2,500,000 or $0.18 per share for the preceding quarter and non GAAP net loss of $0.7000000 or 0 point cash and cash equivalents at December 31, 2023 were $17,000,000 compared to $13,100,000 at September 30, 2023. Speaker 300:12:54Approximately 80% of our cash balance as of December 31, 2023 is held in the United States. As Bob mentioned, we continue to focus on managing our working capital and we had a very strong collections during this December quarter. In terms of our debt, as a reminder, we changed the structure of our debt in December and a portion of our term loan was moved over to our revolver and our maximum borrowing capacity on the revolver was raised to $14,000,000 The amount that was transferred from our term loan to the revolver was $5,600,000 leaving a term loan balance of $4,400,000 In January, we paid $2,000,000 towards the revolver, leaving us with an approximate balance of $3,600,000 To date, other than the balance transfer, we have not borrowed against the revolver. We continue to closely monitor our working capital and liquidity and we'll evaluate the balance on our revolver and our cash needs in an effort to minimize interest expense. Our working capital needs may vary as we execute on backlog of $50,000,000 and with BTUs moved to their smaller facility this summer, we will have capital expenditures in the coming months. Speaker 300:14:09Now turning to our outlook. For the 2nd fiscal quarter ending March 31, 2024, we expect revenues in the range of $22,000,000 to $25,000,000 with EBITDA nominally negative to neutral. Although the near term outlook for revenue and earnings remains challenging, We remain confident that the future prospects are strong for both our consumables and equipment serving advanced mobility and advanced packaging applications. We took actions during the Q1 of fiscal 2024, which will reduce Amtech's structural costs by approximately $6,000,000 annually and better align product pricing with value. These steps should significantly improve results and enhance profitability through market cycles. Speaker 300:14:55Operating results can be significantly impacted positively or negatively by the timing of orders, system challenges and the financial results of semiconductor manufacturers. Additionally, the semiconductor equipment industries can be cyclical and inherently impacted by changes in market demand. Actual results may differ materially in the weeks months ahead. A portion of Amtech's results is denominated in RMBs, a Chinese currency. The outlook provided is based on an assumed change rate between the United States dollar and the RMB. Speaker 300:15:30Changes in the value of the RMB in relation to the United States dollar could cause actual results to differ from Operator00:15:48Thank you. At this time, we'll be conducting a question and answer session. Our first question comes from the line of Craig Irwin with Roth MKM. Please proceed with your question. Speaker 400:16:17Hi, good morning and thanks for taking my questions. First, I'd like to say congratulations on the positive execution in a difficult environment. I know that really takes a lot from not only just leadership, but the rest of the employees. Speaker 100:16:30Thank you, Craig. Speaker 400:16:32My question is this, right? Your backlog is very strong if we look at the long term history for Emtek Systems, right? It's a healthy book of business with a number of substantial customers. It's diversified markets that are driving things and product lines that you offer. Can you maybe highlight for us Not the backlog, but the pipeline, right? Speaker 400:17:01As you look out there, I can see several Silicon Carbide fabs that are on the drawing boards right now. There are also many other power semiconductor fabs out there and things in the more sort of typical mainline semis industry that are slated for construction probably over the next many years. But How would you characterize the broader book of potential business over the next number of years versus where you've sat at different points in the cycle over the last few years? Speaker 200:17:36Yes. Craig, let me Talk through the different parts of the business because I absolutely agree with you that there's some very strong tailwinds, especially in regards to, I'd say the broader power electronics business and even with All the news these days about a little bit of a slowdown backing off a little bit on the EV market, it's there's still very strong growth projections and there's still an awful lot of investment going into the silicon carbide area. But more broadly than that, the shift More recently from, I think a lot more emphasis on hybrid electric vehicles is also a very secular tailwind for power electronics business. And a lot of our backlog is really in relation to that. If you look at current backlog, a lot of it is really in the power semiconductor packaging area. Speaker 200:18:37And in some cases, the actual wafer production for both IGBTs and silicon carbide. What I would expect to happen and as I mentioned during in our comments, we're starting to see I think there was some digestion of some inventory even in the power electronics area. We're starting to see some rebounds in the consumables market area. I would expect that to continue. And I would expect that some of the I would more activity in regards to silicon carbide manufacturing capital equipment in the coming as we look out in the next year or 2 as these fabs continue to expand. Speaker 200:19:26And at some point, we'll see a recovery in the back end. That's probably been the I mean, that's been the softest part of our business has really slowed significantly, but we would expect that to rebound nicely as the industry digests the existing capacity. So again, over the next it's easy to point to some very strong tailwinds in the next year or 2 for the business, it's hard to predict exactly, which quarter when do we start to see that heavy on a quarterly basis. Speaker 400:20:15Okay, understood. So the $6,000,000 in savings that you achieved This past few months, can you maybe help us understand how that materializes on the P and L ratably over time, right? Will that all be achieved by the end of this quarter? Or does it potentially lag into the next quarter, given the way the changes were made? And If you were to see a positive uptick in demand from what you're anticipating now, Does this, crimp in any way your ability to serve that demand? Speaker 400:20:52Or does your restructuring, just make you, more profitable and better position to serve your markets? Speaker 300:21:00Sure, Craig. I'll take that first part. I would say the $4,000,000 annualized We should see in the full quarter here, the additional 2 has a bit of a lag, but not a lot. But definitely by the fiscal Q2, we should see the full impact of that savings. I'll let Bob answer the other part of that. Speaker 200:21:23Yes. And to your question, Craig about have we done anything that would create issues as the market rebounds. Now we've that's an area. We've been very careful about that and making sure that we maintain capability to scale. And part of that is really more of a strategic move To get some strategic partners in place for some of the contract manufacturing, by reducing some of the fixed costs, we really haven't jeopardize growth because we've aligned with partners, which will help us scale and scale in a more cost effective way than we have in the past. Speaker 200:22:05So again, I think we're ready for the rebound whenever it comes and I don't think Any of the actions we've taken really jeopardize any of that. Speaker 400:22:15Excellent. Last question, if I may. Congrats on the positive cash movement in the quarter, right. I know that also takes some significant discipline. Do you see potential for further gains over the next number of months? Speaker 400:22:32Is there a potential need for working capital cash? And is there any other adjustments to balance sheet? I mean, you did your debt, right? Your debt is now in a much more secure position. But is there any other adjustment to the balance sheet that you would maybe want to highlight? Speaker 300:22:52It was the team worked really hard this quarter on collections and managing working capital. And I think it will continue to kind of fluctuate. We've got this backlog to work down, as well as we're moving BTU into a in Massachusetts into a smaller building over the summer. So there will be some CapEx expenditures over the next couple of quarters. So I think it will fluctuate, But we'll continue a very strong focus on working capital. Speaker 300:23:20Bob mentioned, our partners will be working with them to see where we can leverage their buying power and let them consume some working capital instead of our balance sheet. So it will fluctuate a little bit, but we'll continue to have a very strong focus on it going forward. Speaker 400:23:42Thank you so much. Hey, thanks for taking my questions and good luck. Speaker 100:23:46Thank you, Craig. Operator00:23:49Thank you. Our next comes from the line of Mark Miller with The Benchmark Company. Please proceed with your question. Speaker 500:24:03Thank you for the question and congratulations on the progress on reducing cost. I was just wondering where are you at right now with relation to some of your financial covenants with your lender? So, Speaker 300:24:19we revised those covenants with our lender. It's a quarterly EBITDA covenant And we were in compliance with that, well in excess of compliance with that covenant this quarter. Speaker 500:24:30Okay. You mentioned you were implementing a pricing strategy and trying to pass along some increases you've seen. How is that could you give a little more color on that? Speaker 200:24:41Yes. I'll talk a little bit more about that, Mark. Yes. And as I mentioned in the commentary, I think part of what was happening is we were seeing a little bit of margin pressure because input costs were rising and we really weren't adjusting pricing accordingly. We've changed that and we've updated our pricing, our models and how we approach the market. Speaker 200:25:06And frankly, That's been received okay. I mean customers are never happy about price increases. But in this case, I think it was expected and We just lagged a little bit I think behind where we might have otherwise been. But it's we've done pretty well with those And again, we've got we have some backlog, which we'll be working through. So it's not all immediate. Speaker 200:25:34But as we build out our backlog and replace backlog, it's going to come in at a better margin. Speaker 500:25:42Okay. Thank you. Operator00:25:47Thank you. Ladies and gentlemen, I see no other questions at this time. I'll turn the floor back to Mr. Daigle for any final comments. Speaker 200:25:54All right. Thank you. Thank you. Thank you again for joining our conference call and I look forward to updating you on our progress in the months to come. Have a good day everyone. Operator00:26:05Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAmtech Systems Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Amtech Systems Earnings HeadlinesAmtech Systems (NASDAQ:ASYS) investors are sitting on a loss of 62% if they invested three years agoApril 20, 2025 | finance.yahoo.comAmtech Stock Plummets 31% YTD: Should Investors Hold or Fold?April 14, 2025 | msn.comTrump’s betrayal exposed Trump’s Final Reset Inside the shocking plot to re-engineer America’s financial system…and why you need to move your money now.April 25, 2025 | Porter & Company (Ad)Amtech cuts Q2 revenue view to $15M-$16M from $21M-$23MApril 10, 2025 | markets.businessinsider.comAmtech Systems Shares Drop 13% After 2Q Outlook CutApril 9, 2025 | marketwatch.comAmtech Provides Second Quarter Fiscal 2025 Financial Guidance UpdateApril 9, 2025 | businesswire.comSee More Amtech Systems Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Amtech Systems? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Amtech Systems and other key companies, straight to your email. Email Address About Amtech SystemsAmtech Systems (NASDAQ:ASYS) manufactures and sells capital equipment and related consumables for use in fabricating silicon carbide (SiC), silicon power devices, analog and discrete devices, electronic assemblies, and light-emitting diodes (LEDs) worldwide. The company operates through Semiconductor and Material and Substrate segments. The Semiconductor segment designs, manufactures, sells, and services thermal processing equipment, including solder reflow ovens, horizontal diffusion furnaces, and custom high-temp belt furnaces for use by semiconductor, electronics, and electro/mechanical assembly manufacturers; and diffusion and reflow thermal systems, as well as wafer cleaning equipment and related services. The Material and Substrate segment manufactures and sells consumables and machinery for lapping and polishing of materials, such as silicon wafers for semiconductor products; sapphire substrates for LED lighting and mobile devices; silicon carbide wafers for LED and power device applications; various glass and silica components for 3D image transmission; quartz and ceramic components for telecommunications devices; and medical device components, and optical and photonics applications. It also offers substrate products comprising of double-sided wafer cleaning system, entegrity head tester, substrate carrier, substrate polishing templates, double-sided lapping and polishing machines, single-sided polisher, and substrate process chemicals. The company sells its products through sales personnel, as well as a network of independent sales representatives and distributors. Amtech Systems, Inc. was incorporated in 1981 and is headquartered in Tempe, Arizona.View Amtech Systems ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step InWhy It May Be Time to Buy CrowdStrike Stock Heading Into EarningsCan IBM’s Q1 Earnings Spark a Breakout for the Stock? 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There are 6 speakers on the call. Operator00:00:00Good day, and welcome to the Amtech Systems Fiscal First Quarter 20 24 Earnings Conference Call. Please note that this call is being recorded. I would now like to turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead. Speaker 100:00:16Good morning, and thank you for joining us for Amtech Systems' Fiscal First Quarter 2024 Conference Call. With me on the call today are Bob Daigle, Chairman and Chief Officer Lisa Gibbs, Chief Financial Officer and Paul Lancaster, Vice President of Sales and Customer Service. After close of market Friday, Amtech released its financial results for the Q1 of 2024. The earnings release is posted on the company's website atwww.amteksystems.com in the Investors section. Before we begin, I'd like to remind everyone that the Safe Harbor disclaimer in our public filings covers this call and our webcast. Speaker 100:00:56Some of the comments to be made during today's call will contain forward looking statements and assumptions that are subject risks and uncertainties, including, but not limited to, those contained in our SEC filings, all of which are posted within the Investors section of our corporate website. The company assumes no obligation to update any such forward looking statements. You are cautioned not to place undue reliance on forward looking statements, which speak only as of today. These statements are not a Actual results to differ materially from those in the forward looking statements are changes in the technologies used by customers and competitors, change in volatility and the demand for products the effect of changing worldwide political and economic conditions, including trade sanctions The effect of overall market conditions, including the equity and credit markets and market acceptance risks, ongoing logistics, supply chain and labor challenges, capital allocation plans and the COVID-nineteen pandemic. Other risk factors are detailed in our SEC filings, including our Form 10 ks and Forms 10 Q. Speaker 100:02:13Additionally, in today's conference call, we will be referring to non GAAP financial measures as we discuss the Q1 financial results. You'll find a reconciliation of these non GAAP measures to our actual GAAP results included in the press release issued on Friday. I will now turn the call over to Amtech's Chief Executive Officer, Bob Daigle. Speaker 200:02:37Good morning, everyone. Thank you for joining Amtech's quarterly conference call. I'm pleased with the progress we're making to improve our cost structure and position the company for strong operating results as markets recover. We remain focused on operational optimization having achieved over $6,000,000 in annualized cost savings through actions implemented over the past 4 months. Revenue of $24,900,000 exceeded the high end of our guidance range and more importantly, adjusted EBITDA of $200,000 surpassed our expectations, marking a significant improvement from the $2,400,000 adjusted EBITDA loss in the prior quarter. Speaker 200:03:21The macroeconomic landscape for our target end markets remains somewhat mixed, especially within the semiconductor market. In this broad sector, we continue to experience softness in near term demand for equipment used for most wafer fabrication and back end packaging applications as the industry digests existing capacity and evaluates expansion plans for the upcoming quarters. However, amidst this backdrop, we are seeing pockets of resilience, particularly in submarkets related to hybrid and electric vehicles. Demand has been improving for consumables used for silicon carbide semiconductor production and we continue to experience strong demand for high end belt furnaces used to produce power semiconductor packaging materials and diffusion furnaces used for silicon and silicon carbide wafer production. While we await for the rebound in demand in the broader markets, Our organization is dedicated to optimizing every aspect of our operations to drive improved financial performance. Speaker 200:04:30In the Q1, we continued our efforts to enhance our cost structure and streamline operations. Building on the $4,000,000 in annualized cost savings discussed on our last call, we identified an additional $2,000,000 in opportunities, which we implemented in the Q1. The combination of these actions is expected to generate over $6,000,000 in annualized savings starting in Q2 of 2024 when compared to the same period last year. Our primary objective continues to be aligning the organization size with current market conditions to achieve near term EBITDA profitability, while simultaneously positioning ourselves for significant operating leverage as market demand rebounds. Beyond these completed We are actively exploring opportunities to optimize our manufacturing operations through strategic contract manufacturing partnerships. Speaker 200:05:32Our overarching goal is to focus our highly skilled workforce on production of large complex systems, while streamlining manufacturing of simpler components and assemblies through outsourcing. We believe this approach will enhance our overall flexibility and while optimizing our fixed cost structure. For example, building on the positive results from the initial outsourcing initiatives, We plan to expand these efforts in the Q3 by relocating 1 of our manufacturing facilities in the U. S. To a smaller more cost effective facility. Speaker 200:06:07This strategic move is anticipated to reduce fixed expenses while preserving and in some instances enhancing our production capabilities. In addition to our restructuring activities, during the Q1, we took additional actions to refine our pricing strategy. Despite the inflationary conditions affecting input pricing over the last couple of years, we have not been as diligent in passing increases on to our customers. With new objectives in place, we are seeing promising progress in quoting for new tools to ensure that pricing aligns more closely with current input costs. We do anticipate a lag before the full impact of these adjustments flow through as we work through the existing backlog. Speaker 200:06:58Shifting to the balance sheet. Are pleased to report a notable increase of $4,000,000 in cash during the quarter. This increase primarily comes from our focused approach to managing working capital, particularly in optimizing the timing of receivables and upfront payments. Looking ahead, we are committed to identifying additional opportunities including inventory reduction to further enhance the strength of our balance sheet. In closing, while Amtech stands out as a unique company with differentiated exposure to several rapidly growing markets, our current focus is on optimizing operations to increase profitability. Speaker 200:07:43Our performance in the Q1 highlights the increase the initial success of these efforts with positive EBITDA and operating cash flow despite challenging market conditions. Looking ahead, we are confident that the major investments in an AI related infrastructure and the investments that will be made to diversify global supply chains will result in strong demand for our back end equipment. We also believe our consumables business and semiconductor manufacturing equipment will greatly benefit from strong growth in silicon carbide wafer production. As our markets recover, I'm confident that the strategic actions we're taking today to improve operational efficiency and reduce working capital will generate meaningful shareholder value. With that, I'll turn it over to Lisa for further details on the Q1. Speaker 200:08:39Thank you, Bob. Speaker 300:08:41Net revenues decreased 10% sequentially and increased 16% from the Q1 of fiscal 2023. The sequential decrease is primarily due to a decrease in equipment across our business segments. As Bob mentioned, we are experiencing lower bookings in multiple areas of our business due to the softness in the semiconductor market. The increase from prior year is primarily attributable to increases in our belt furnace shipments the addition of Intrepix, partially offset by lower shipments of our reflow equipment. GAAP gross margin increased sequentially due primarily to the intangible asset impairment charge of $4,600,000 that was recorded in fiscal Q4 2023. Speaker 300:09:26Compared to the prior year period, GAAP gross margin decreased primarily due to a less favorable product and an intangible asset impairment charge of $800,000 recorded in Q1 2024. Non GAAP gross margin increased sequentially due primarily to lower overhead expenses and a more favorable product mix. Non GAAP gross margin in fiscal Q1 twenty twenty four was slightly lower compared to the prior year period due primarily to a less favorable product mix. Accounting guidance requires us to assess factors that could be considered a triggering event for impairment and the immaterial decline in our stock price below book value as of December 31, 2023 required us to perform this impairment assessment. Accordingly, we recorded a non cash impairment charge totaling the remainder is recorded within operating expenses. Speaker 300:10:29Selling, general and administrative expenses or SG and A decreased $2,500,000 on a sequential basis and decreased $600,000 compared to the same prior year period. That the sequential decrease is due to a number of expenses that were lower in Q1 twenty twenty four including intangible amortization, equity compensation, labor, consulting and audit fees. Compared to the prior year, the decrease is due primarily to $1,400,000 of lower acquisition expenses as well as lower consulting fees, partially offset by added SG and A from the addition of Intrepix. Research, development and engineering expenses decreased $1,000,000 sequentially and increased $200,000 compared to the same prior year The sequential decrease is associated with the reduction of investment in next generation polishing tools at PR Hoffman that we referenced last quarter. GAAP operating loss was $8,900,000 compared to GAAP operating loss of $11,700,000 the Q4 of fiscal 2023 and GAAP operating loss of $2,700,000 in the same prior year period. Speaker 300:11:44Non GAAP operating loss was $200,000 compared to non GAAP operating loss of $3,000,000 in the Q4 of fiscal 2023 and non GAAP operating loss of $2,700,000 in the same prior year period. GAAP net loss for the Q1 of fiscal 2024 was $9,400,000 or $0.66 per share. This compares to GAAP net loss of $12,000,000 or $0.85 per share for the preceding quarter and GAAP net loss of $2,700,000 or $0.20 per share for the Q1 of fiscal 2023. Non GAAP net loss for the Q1 of fiscal 2024 was $600,000 or $0.04 per share. This compares to non GAAP net loss of $2,500,000 or $0.18 per share for the preceding quarter and non GAAP net loss of $0.7000000 or 0 point cash and cash equivalents at December 31, 2023 were $17,000,000 compared to $13,100,000 at September 30, 2023. Speaker 300:12:54Approximately 80% of our cash balance as of December 31, 2023 is held in the United States. As Bob mentioned, we continue to focus on managing our working capital and we had a very strong collections during this December quarter. In terms of our debt, as a reminder, we changed the structure of our debt in December and a portion of our term loan was moved over to our revolver and our maximum borrowing capacity on the revolver was raised to $14,000,000 The amount that was transferred from our term loan to the revolver was $5,600,000 leaving a term loan balance of $4,400,000 In January, we paid $2,000,000 towards the revolver, leaving us with an approximate balance of $3,600,000 To date, other than the balance transfer, we have not borrowed against the revolver. We continue to closely monitor our working capital and liquidity and we'll evaluate the balance on our revolver and our cash needs in an effort to minimize interest expense. Our working capital needs may vary as we execute on backlog of $50,000,000 and with BTUs moved to their smaller facility this summer, we will have capital expenditures in the coming months. Speaker 300:14:09Now turning to our outlook. For the 2nd fiscal quarter ending March 31, 2024, we expect revenues in the range of $22,000,000 to $25,000,000 with EBITDA nominally negative to neutral. Although the near term outlook for revenue and earnings remains challenging, We remain confident that the future prospects are strong for both our consumables and equipment serving advanced mobility and advanced packaging applications. We took actions during the Q1 of fiscal 2024, which will reduce Amtech's structural costs by approximately $6,000,000 annually and better align product pricing with value. These steps should significantly improve results and enhance profitability through market cycles. Speaker 300:14:55Operating results can be significantly impacted positively or negatively by the timing of orders, system challenges and the financial results of semiconductor manufacturers. Additionally, the semiconductor equipment industries can be cyclical and inherently impacted by changes in market demand. Actual results may differ materially in the weeks months ahead. A portion of Amtech's results is denominated in RMBs, a Chinese currency. The outlook provided is based on an assumed change rate between the United States dollar and the RMB. Speaker 300:15:30Changes in the value of the RMB in relation to the United States dollar could cause actual results to differ from Operator00:15:48Thank you. At this time, we'll be conducting a question and answer session. Our first question comes from the line of Craig Irwin with Roth MKM. Please proceed with your question. Speaker 400:16:17Hi, good morning and thanks for taking my questions. First, I'd like to say congratulations on the positive execution in a difficult environment. I know that really takes a lot from not only just leadership, but the rest of the employees. Speaker 100:16:30Thank you, Craig. Speaker 400:16:32My question is this, right? Your backlog is very strong if we look at the long term history for Emtek Systems, right? It's a healthy book of business with a number of substantial customers. It's diversified markets that are driving things and product lines that you offer. Can you maybe highlight for us Not the backlog, but the pipeline, right? Speaker 400:17:01As you look out there, I can see several Silicon Carbide fabs that are on the drawing boards right now. There are also many other power semiconductor fabs out there and things in the more sort of typical mainline semis industry that are slated for construction probably over the next many years. But How would you characterize the broader book of potential business over the next number of years versus where you've sat at different points in the cycle over the last few years? Speaker 200:17:36Yes. Craig, let me Talk through the different parts of the business because I absolutely agree with you that there's some very strong tailwinds, especially in regards to, I'd say the broader power electronics business and even with All the news these days about a little bit of a slowdown backing off a little bit on the EV market, it's there's still very strong growth projections and there's still an awful lot of investment going into the silicon carbide area. But more broadly than that, the shift More recently from, I think a lot more emphasis on hybrid electric vehicles is also a very secular tailwind for power electronics business. And a lot of our backlog is really in relation to that. If you look at current backlog, a lot of it is really in the power semiconductor packaging area. Speaker 200:18:37And in some cases, the actual wafer production for both IGBTs and silicon carbide. What I would expect to happen and as I mentioned during in our comments, we're starting to see I think there was some digestion of some inventory even in the power electronics area. We're starting to see some rebounds in the consumables market area. I would expect that to continue. And I would expect that some of the I would more activity in regards to silicon carbide manufacturing capital equipment in the coming as we look out in the next year or 2 as these fabs continue to expand. Speaker 200:19:26And at some point, we'll see a recovery in the back end. That's probably been the I mean, that's been the softest part of our business has really slowed significantly, but we would expect that to rebound nicely as the industry digests the existing capacity. So again, over the next it's easy to point to some very strong tailwinds in the next year or 2 for the business, it's hard to predict exactly, which quarter when do we start to see that heavy on a quarterly basis. Speaker 400:20:15Okay, understood. So the $6,000,000 in savings that you achieved This past few months, can you maybe help us understand how that materializes on the P and L ratably over time, right? Will that all be achieved by the end of this quarter? Or does it potentially lag into the next quarter, given the way the changes were made? And If you were to see a positive uptick in demand from what you're anticipating now, Does this, crimp in any way your ability to serve that demand? Speaker 400:20:52Or does your restructuring, just make you, more profitable and better position to serve your markets? Speaker 300:21:00Sure, Craig. I'll take that first part. I would say the $4,000,000 annualized We should see in the full quarter here, the additional 2 has a bit of a lag, but not a lot. But definitely by the fiscal Q2, we should see the full impact of that savings. I'll let Bob answer the other part of that. Speaker 200:21:23Yes. And to your question, Craig about have we done anything that would create issues as the market rebounds. Now we've that's an area. We've been very careful about that and making sure that we maintain capability to scale. And part of that is really more of a strategic move To get some strategic partners in place for some of the contract manufacturing, by reducing some of the fixed costs, we really haven't jeopardize growth because we've aligned with partners, which will help us scale and scale in a more cost effective way than we have in the past. Speaker 200:22:05So again, I think we're ready for the rebound whenever it comes and I don't think Any of the actions we've taken really jeopardize any of that. Speaker 400:22:15Excellent. Last question, if I may. Congrats on the positive cash movement in the quarter, right. I know that also takes some significant discipline. Do you see potential for further gains over the next number of months? Speaker 400:22:32Is there a potential need for working capital cash? And is there any other adjustments to balance sheet? I mean, you did your debt, right? Your debt is now in a much more secure position. But is there any other adjustment to the balance sheet that you would maybe want to highlight? Speaker 300:22:52It was the team worked really hard this quarter on collections and managing working capital. And I think it will continue to kind of fluctuate. We've got this backlog to work down, as well as we're moving BTU into a in Massachusetts into a smaller building over the summer. So there will be some CapEx expenditures over the next couple of quarters. So I think it will fluctuate, But we'll continue a very strong focus on working capital. Speaker 300:23:20Bob mentioned, our partners will be working with them to see where we can leverage their buying power and let them consume some working capital instead of our balance sheet. So it will fluctuate a little bit, but we'll continue to have a very strong focus on it going forward. Speaker 400:23:42Thank you so much. Hey, thanks for taking my questions and good luck. Speaker 100:23:46Thank you, Craig. Operator00:23:49Thank you. Our next comes from the line of Mark Miller with The Benchmark Company. Please proceed with your question. Speaker 500:24:03Thank you for the question and congratulations on the progress on reducing cost. I was just wondering where are you at right now with relation to some of your financial covenants with your lender? So, Speaker 300:24:19we revised those covenants with our lender. It's a quarterly EBITDA covenant And we were in compliance with that, well in excess of compliance with that covenant this quarter. Speaker 500:24:30Okay. You mentioned you were implementing a pricing strategy and trying to pass along some increases you've seen. How is that could you give a little more color on that? Speaker 200:24:41Yes. I'll talk a little bit more about that, Mark. Yes. And as I mentioned in the commentary, I think part of what was happening is we were seeing a little bit of margin pressure because input costs were rising and we really weren't adjusting pricing accordingly. We've changed that and we've updated our pricing, our models and how we approach the market. Speaker 200:25:06And frankly, That's been received okay. I mean customers are never happy about price increases. But in this case, I think it was expected and We just lagged a little bit I think behind where we might have otherwise been. But it's we've done pretty well with those And again, we've got we have some backlog, which we'll be working through. So it's not all immediate. Speaker 200:25:34But as we build out our backlog and replace backlog, it's going to come in at a better margin. Speaker 500:25:42Okay. Thank you. Operator00:25:47Thank you. Ladies and gentlemen, I see no other questions at this time. I'll turn the floor back to Mr. Daigle for any final comments. Speaker 200:25:54All right. Thank you. Thank you. Thank you again for joining our conference call and I look forward to updating you on our progress in the months to come. Have a good day everyone. Operator00:26:05Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by