NASDAQ:ASYS Amtech Systems Q3 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 -$0.07Beat/MissBeat by +$0.11One Year Ago EPS$0.01Amtech Systems Revenue ResultsActual Revenue$26.75 millionExpected Revenue$24.00 millionBeat/MissBeat by +$2.75 millionYoY Revenue GrowthN/AAmtech Systems Announcement DetailsQuarterQ3 2024Date8/7/2024TimeN/AConference Call DateWednesday, August 7, 2024Conference Call Time5:00PM 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 Q3 2024 Earnings Call TranscriptProvided by QuartrAugust 7, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good day, and welcome to the Amtech Systems Fiscal Third Quarter 2024 Earnings Conference Call. Please note that this call is being recorded and simultaneously webcast. I would now like to turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead. Speaker 100:00:17Good afternoon, and thank you for joining us for Amtech Systems' fiscal Q3 2024 conference call. With me on the call today are Bob Daigle, Chairman and Chief Executive Officer Lisa Gibbs, Chief Financial Officer and Wade Janke, Incoming Chief Financial Officer. After close of market today, Amtech released its financial results for the fiscal Q3 2024. The earnings release is posted on the company's website at www.amtechsystems.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 100:01:00Some of the comments to be made on today's call will contain forward looking statements and assumptions that are subject to 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 guarantee of future performance, and actual results could differ materially from current expectations. Among the important factors, which could cause 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 and capital allocation plans. Speaker 100:02:08Other risk factors are detailed in our SEC filings, including our Form 10 ks and Forms 10 Q. Additionally, in today's conference call, we will be referring to non GAAP financial measures as we discuss the Q3 financial results. You'll find a reconciliation of these non GAAP measures to our actual GAAP results included in the press release issued today. Now, I would like to turn the call over to Amtech's Chief Executive Officer, Bob Daigle. Speaker 200:02:39Good afternoon, everyone. Thank you for joining Amtech's quarterly conference call. In the Q3, we continued to optimize our cost structure to match the current demand environment and lay the foundation for meaningful operating leverage as the markets we serve recover. Revenue of $26,700,000 exceeded the high end of our guidance range and our adjusted EBITDA was $2,300,000 I'm pleased that we're beginning to see the financial benefits of the actions we've taken over the past few quarters. The macroeconomic landscape for our end markets remains somewhat mixed. Speaker 200:03:19Within the semiconductor industry, we have begun to see incremental improvement in demand for advanced packaging applications. While we have not seen a sharp recovery, we are seeing a gradual increase in demand from the cyclical lows of the past few quarters. Based on quoting activity and discussions with our customers, we expect to see continued improvement. Offsetting this incremental tailwind, we have experienced a softening of demand for our horizontal diffusion furnaces since these tools are primarily targeted for power electronics semiconductor applications in automotive and industrial markets. While this impacts both our backlog and the future revenue in the near term, our overall profit levels remain materials and substrates end markets, we are seeing a stabilization in overall demand. Speaker 200:04:22Although demand for consumables used for semiconductor fabrication remains somewhat lumpy, the demand for replacement parts continues to improve. Taken together, we believe we've passed the trough in demand for this segment, although we do not expect a sharp recovery in the near term. While we await the rebound in demand across broader markets, we are continuing to focus on optimizing our operations. In the Q3, we completed the relocation of our U. S. Speaker 200:04:52BTU facility to a smaller, more cost effective facility in Massachusetts and expanded our partnership with contract manufacturers to improve operational efficiency and manufacturing flexibility. The smaller facility reduces our fixed costs by about $1,000,000 a year without impacting the production capacity. In addition, we are beginning to see the benefits of pricing actions we've taken over the last several quarters. That said, it will still be a few quarters before we see the full impact due to existing backlog in parts of our business. Overall, we believe the measures we've implemented over the past few quarters have better aligned our organization to support current market demand, while delivering positive near term adjusted EBITDA profitability. Speaker 200:05:49The success of our initiatives has resulted in approximately $7,000,000 in annualized cost savings and allowed us to deliver our 3rd consecutive quarter of positive adjusted EBITDA and operating cash flow despite the ongoing softness in the markets we serve. Looking ahead, we believe Amtech is well positioned to capitalize on several secular trends that will drive demand for our products. Within the automotive market, we expect continued growth of power electronic applications in hybrid and full electric vehicles that will generate strong demand for our consumables and equipment. Within the broader semiconductor market, our tools play a critical role in the advanced processors used in high performance computing. As OSAT and OEM utilization rates increase, we expect to see a stronger rebound in demand for our reflow equipment. Speaker 200:06:47In addition, we expect to benefit from the near shoring investments being made by government and industry players to build more resilient and secure semiconductor and electronic assembly supply chains. In summary, we remain confident that the strategic initiatives we are implementing to enhance operational efficiency and reducing working capital will generate significant shareholder value as our target markets regain momentum. With that, I'll turn it over to Lisa for further details on the Q3. Speaker 300:07:22Thank you, Bob. Net revenues increased 5% sequentially and decreased 13% from the Q3 of fiscal 2023. The sequential increase is primarily due to increased sales of our reflow and wafer cleaning equipment and higher parts and services revenue. The decrease from prior year is primarily attributable to lower sales across most of our product portfolio due to a slowdown in the broader semiconductor market. In the Q3 of fiscal 2024, GAAP gross margin increased sequentially compared to the same prior year period. Speaker 300:07:58On a sequential basis, GAAP gross margin in our semiconductor segment was positively affected by product mix, contributed to increased revenues for Refill Equipment Parts and Services. GAAP gross margin in our Materials and Substrate segment decreased on a sequential basis due primarily to a less favorable product mix of consumables and equipment. Compared to the same prior year period, GAAP gross margin was relatively consistent between periods. Selling, general and administrative expenses decreased approximately $40,000 on a sequential basis and decreased $2,100,000 compared to the same prior year period. The sequential decrease is due primarily to reductions in labor related expenses, partially offset by increased commissions and shipping expenses on higher sales. Speaker 300:08:47Compared to the same prior year period, the decrease is due primarily to lower labor and labor related expenses as a result of our cost reduction initiatives, as well as lower shipping expenses on lower revenue. Research development and engineering expenses decreased $200,000 sequentially and decreased $1,100,000 compared to the same prior year period, with the sequential decrease due primarily to the timing of purchases related to specific projects in both segments and the decrease from prior year attributable to development efforts in our Material and Substrate segment that did not recur. GAAP operating income was $800,000 compared to GAAP operating income of $1,400,000 in the Q2 of fiscal 2024 and GAAP operating loss of 1,100,000 dollars compared to non GAAP operating income of $200,000 in the Q2 of fiscal 2024 and non GAAP operating income of $400,000 in the same prior year period. GAAP net income for the Q3 of fiscal 2024 was $400,000 or 0 point 0 $3 per share. This compares to GAAP net income of $1,000,000 or $0.07 per share for the preceding quarter and GAAP net loss of $1,000,000 or $0.07 per share for the Q3 of fiscal 2023. Speaker 300:10:16Non GAAP net income for the Q3 of fiscal 2024 was $1,100,000 or $0.08 per share. This compares to non GAAP net loss of $200,000 or 0 point $300,000 or $0.02 per share for the Q3 of fiscal 2023. Unrestricted cash and cash equivalents at June 30, 2024 were $13,200,000 compared to $13,100,000 at September 30, 2023. Debt payments during the 3 months ended June 30, 2024 were $300,000 Net cash as of June 30, 2024 was $8,900,000 compared to $2,400,000 as of September 30, 2023. As Bob touched on, we are seeing differences in the order values and margins for new orders booked compared to some of the products shipping from older backlog. Speaker 300:11:13Our shipments for the Q3, 3rd fiscal quarter of 2024, including mix of larger furnaces whose profit levels are below our current expectations and corporate average. New orders are trending towards lower order values, but higher margin products. And as the semi market recovers, we will have higher volumes of these types of bookings. As we continue to work down this backlog, we expect our book to bill, especially in the semi segment to stay below 1. But over time, our book to bill should be closer or exceed 1 to 1 as a higher portion of our business trends towards book and ship orders. Speaker 300:11:51As we've discussed previously, we expect the gross margin of our backlog and our future gross margins to improve, but it will take another 2 to 3 quarters for this to work its way through. Now turning to our outlook. For the 4th fiscal quarter ending September 30, 2024, we expect revenues in the range of $22,000,000 to $25,000,000 with adjusted EBITDA nominally positive. 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 1st and second quarters of fiscal 2024, which will reduce Amtech's structural cost by approximately $7,000,000 annually and better align product pricing with value. Speaker 300:12:42These steps should significantly improve results and enhance profitability through market cycles. Operating results can be significantly impacted positively or negatively by the timing of orders, system shipments, logistical 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. Speaker 300:13:18The outlook provided is based on an assumed exchange rate between the United States dollar and the RMB. Changes in the value of the RMB in relation to the United States dollar could cause actual results to differ from expectations. As I sign off, I would like to welcome Wade to Amtech and thank the Amtech team for all of their hard work and dedication. I would also like to thank Bob and the Board for their support. I am excited for the road ahead for Amtech and its strong leadership and strategy. Speaker 300:13:49Bob, I will turn the call back over to you. Speaker 200:13:55Thank you, Lisa. I would like to take a moment to recognize and thank Lisa for her contributions to Amtech over the past 8 years. Lisa's commitment to the company and her professional excellence has been invaluable and I wish her great success with her new role. I'm pleased to welcome Wade Jenke, Amtech's new CFO. Wade has over 15 years of financial and operational experience with global companies. Speaker 200:14:23Most recently he served as the CFO of the EMS Group at SA Abloy, a $30,000,000,000 publicly traded company headquartered in Sweden. Prior to that, he served in a number of senior financial roles within NASA ABLOY and BAE Systems, spanning SEC reporting, FP and A, cost accounting and manufacturing accounting. He has also led back in acquisition integrations and ERP implementations. I'm excited to welcome Wade to our team. His experience in both financial and operational functions will greatly contribute to our efforts to fully optimize our operations and create greater shareholder value in the quarters and years ahead. Speaker 200:15:07Welcome aboard, Wade. Thank you, Bob, and hello to everyone on the call today. I'm excited to join Bob and the talented team at Amtech. I firmly believe that Amtech has the potential for significant growth in revenue, profit and cash flow given the company's leadership position in the markets that it serves. I look forward to the exciting journey ahead and getting to know many of you personally soon. Speaker 200:15:38I will now turn the call over to the Operator00:16:12Your first question comes from Mark Miller with Benchmark. Please go ahead. Speaker 400:16:22Lisa, I'd like to wish you best in your new endeavor. And Wayne, welcome to the Amtech conference calls. Speaker 300:16:31Thank you, Mark. Speaker 500:16:33You're welcome. You Speaker 400:16:35talked about some pricing actions. What areas were these pricing actions taken? Speaker 200:16:42Yes, Mark, as we commented earlier, a lot of it has been let me start by saying, it is broad. So we most of the parts of our business we felt we needed to take some actions to deal with the inflationary pressures over the past 18 months, 24 months. So to answer your question more directly, it has been brought across our portfolio. But I would say, disproportionate has really been more on some of the equipment that we're manufacturing where I think the inflationary pressures in the parts and different components in our systems have been particularly significant and we needed to deal with. Speaker 400:17:33General Motors and Ford both recently reported strong results for their EV sales. And you've seen any impact from that or any in terms of quoting activity, any thoughts that's positive for your future outlook? Speaker 200:17:48Yes. I think I do continue to view EV as having some pretty nice tailwinds. I think some of the however, the improved results we've seen out of the more traditional automakers has been somewhat offset by the weakness in the from the market leader in terms of overall demand in the power electronics area. One of the things that I also think is encouraging, Mark, for us is the again, they've tempered expectations in terms of full electric vehicle growth rates, but they're still fairly substantial. So I think that's a secular tailwind. Speaker 200:18:31But I also believe that what we're beginning to hear more about is the probably a stronger push to hybridize, replace traditional ICE vehicles with more of the hybrid vehicles given strong consumer acceptance for those vehicles in order to meet the fuel efficiency requirements. So I and again, that's helpful to us because we do play broadly in the power electronics, equipment and consumables area. So I do think that when we look at the puts and takes of kind of a more tempered full EV outlook with an increasing projections for the hybrid electric vehicle side of things, we actually see that net net as somewhat favorable to us. Speaker 400:19:28You mentioned the reflow business was one of the drivers for the upside sales. Are you seeing increased quoting activity? What's does it look like this will continue? Speaker 200:19:41Yes. Yes, yes, Mark. Both shipments have been up. Quoting activity is up. And more importantly, I would say the mix is we're seeing improved mix there. Speaker 200:19:54And what had really softened tremendously was the packaging side of the business because we manufacture reflow equipment that's used for packaging, advanced packaging, as well as traditional surface mount assembly. And what we're seeing is, we've seen several quarters where we have sequentially increased demand for the packaging side of the business. And that comes in at a higher margin for us in a higher ASP than the surface mount equipment. Speaker 400:20:32I just have a couple of housekeeping issues. I'll jump back in the queue. Cash from operations and CapEx, what were they for the quarter? Speaker 300:20:42I've got the year to date numbers in front of me here, Mark. We had cash provided by operations of $9,000,000 which is great year to date and CapEx a little bit over $5,000,000 We finished the build out of that building in Massachusetts, which was a significant part of our CapEx. And I would say in the nearer term, I would expect that to be more just maintenance type of CapEx. Speaker 400:21:11Okay. So these were year to date over the last three quarters? Speaker 500:21:15Yes. Speaker 400:21:15Okay. Thank you. Operator00:21:19Thank you. Your next question comes from Kevin Gerrigan with Westpark Capital. Please go ahead. Speaker 500:21:40Yes. Hey, guys. Thanks for letting me ask a few questions. Bob, I think I may have asked you this last time, but has anything gotten better or worse versus 3 months ago in the market to kind of give you hope that things may be turning around or getting better for your businesses? Speaker 200:21:57Yes. I'd say generally more positive. I think the areas that have clearly seen some rebound, I would say, are parts side of the business, as we mentioned earlier and because again some of the that had a lot of the parts business and service side of things had kind of dried up to a great degree about 6 months ago or so. And we've seen incremental improvement in people maintaining equipment and parts replacements. And then of course, I think what's very significant here is the fact that we're nowhere near peak demand for the reflow equipment, but sequentially we're seeing improvements in demand and in particular chip packaging. Speaker 200:22:51I really I would say in the consumables area, as I mentioned, that's lumpy. I would still characterize it as stable. It's not always consistent, but we're not seeing either a significant headwind or tailwind in that area. And in general, I wouldn't say that it seemed I mean, my sense is that we saw the bottom in the industry a couple of quarters ago and that although we had all hoped for this V shaped recovery, the sharp recovery in the markets we serve, we're not seeing that, but at least we're seeing some incremental improvements. Speaker 500:23:43Okay. Got it. Got it. Yes, I've heard similar that we're kind of just bouncing along the bottom at this point. Everyone's kind of still waiting. Speaker 200:23:54Yes. And I would just That's fine. If I can just add something. To that. And that's kind of again, our strategy or approach has really been to we can't deal with the market demand conditions, but we can deal with our cost structure and operating performance. Speaker 200:24:13And that's really while we wait for something more substantial, as you point out, maybe things are bouncing a lot at the bottom is make sure as things are bouncing along the bottom, we're financially in good shape and doing the best we can to drive EBITDA. Speaker 500:24:32Yes, absolutely. That makes a ton of sense. Okay, perfect. And then just as a follow-up, Lisa, congrats on the new role and best of luck going forward. Thank you. Speaker 200:24:44Can you Speaker 500:24:44just give us the focus for Amtech in terms of capital allocation for the rest of 2024? And is M and A kind of a bit of a focus for you guys? Speaker 300:24:54I would say that with the continued focus on positive EBITDA generation, even as we kind of bounce along here at the bottom as we were saying, we finished that build out of the building in Massachusetts. And here in the near term, I think we kind of returned to a maintenance CapEx. We're going into our annual budgeting cycle here in the next month or 2. So I would expect potentially a little bit more CapEx next year as Bob and Wade look at areas to invest in the business. On the M and A front, I will turn that back to Bob since he's the more forward looking person at this table right now. Speaker 200:25:36Yes, I would say in the current environment, not in the short term, but I do think it's definitely something that we're starting to dig into more in the medium to longer term in terms of how to deploy capital to enhance growth. Speaker 500:25:59Okay, perfect. I appreciate the color. Thank you. Operator00:26:04Thank you. There are no further questions at this time. I will now turn the call back over to CEO, Bob Daigle for closing remarks. Speaker 200:26:27Well, thank you again for joining our conference call and I look forward to updating you on the progress we're making in the coming months. Have a good afternoon, evening everyone. Operator00:26:39Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAmtech Systems Q3 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.comNow I look stupid. Real stupid... I thought what happened 25 years ago was a once- in-a-lifetime event… but how wrong I was. Because here we are, a quarter of a century later, almost to the exact day, and it’s happening again. 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 Third Quarter 2024 Earnings Conference Call. Please note that this call is being recorded and simultaneously webcast. I would now like to turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead. Speaker 100:00:17Good afternoon, and thank you for joining us for Amtech Systems' fiscal Q3 2024 conference call. With me on the call today are Bob Daigle, Chairman and Chief Executive Officer Lisa Gibbs, Chief Financial Officer and Wade Janke, Incoming Chief Financial Officer. After close of market today, Amtech released its financial results for the fiscal Q3 2024. The earnings release is posted on the company's website at www.amtechsystems.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 100:01:00Some of the comments to be made on today's call will contain forward looking statements and assumptions that are subject to 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 guarantee of future performance, and actual results could differ materially from current expectations. Among the important factors, which could cause 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 and capital allocation plans. Speaker 100:02:08Other risk factors are detailed in our SEC filings, including our Form 10 ks and Forms 10 Q. Additionally, in today's conference call, we will be referring to non GAAP financial measures as we discuss the Q3 financial results. You'll find a reconciliation of these non GAAP measures to our actual GAAP results included in the press release issued today. Now, I would like to turn the call over to Amtech's Chief Executive Officer, Bob Daigle. Speaker 200:02:39Good afternoon, everyone. Thank you for joining Amtech's quarterly conference call. In the Q3, we continued to optimize our cost structure to match the current demand environment and lay the foundation for meaningful operating leverage as the markets we serve recover. Revenue of $26,700,000 exceeded the high end of our guidance range and our adjusted EBITDA was $2,300,000 I'm pleased that we're beginning to see the financial benefits of the actions we've taken over the past few quarters. The macroeconomic landscape for our end markets remains somewhat mixed. Speaker 200:03:19Within the semiconductor industry, we have begun to see incremental improvement in demand for advanced packaging applications. While we have not seen a sharp recovery, we are seeing a gradual increase in demand from the cyclical lows of the past few quarters. Based on quoting activity and discussions with our customers, we expect to see continued improvement. Offsetting this incremental tailwind, we have experienced a softening of demand for our horizontal diffusion furnaces since these tools are primarily targeted for power electronics semiconductor applications in automotive and industrial markets. While this impacts both our backlog and the future revenue in the near term, our overall profit levels remain materials and substrates end markets, we are seeing a stabilization in overall demand. Speaker 200:04:22Although demand for consumables used for semiconductor fabrication remains somewhat lumpy, the demand for replacement parts continues to improve. Taken together, we believe we've passed the trough in demand for this segment, although we do not expect a sharp recovery in the near term. While we await the rebound in demand across broader markets, we are continuing to focus on optimizing our operations. In the Q3, we completed the relocation of our U. S. Speaker 200:04:52BTU facility to a smaller, more cost effective facility in Massachusetts and expanded our partnership with contract manufacturers to improve operational efficiency and manufacturing flexibility. The smaller facility reduces our fixed costs by about $1,000,000 a year without impacting the production capacity. In addition, we are beginning to see the benefits of pricing actions we've taken over the last several quarters. That said, it will still be a few quarters before we see the full impact due to existing backlog in parts of our business. Overall, we believe the measures we've implemented over the past few quarters have better aligned our organization to support current market demand, while delivering positive near term adjusted EBITDA profitability. Speaker 200:05:49The success of our initiatives has resulted in approximately $7,000,000 in annualized cost savings and allowed us to deliver our 3rd consecutive quarter of positive adjusted EBITDA and operating cash flow despite the ongoing softness in the markets we serve. Looking ahead, we believe Amtech is well positioned to capitalize on several secular trends that will drive demand for our products. Within the automotive market, we expect continued growth of power electronic applications in hybrid and full electric vehicles that will generate strong demand for our consumables and equipment. Within the broader semiconductor market, our tools play a critical role in the advanced processors used in high performance computing. As OSAT and OEM utilization rates increase, we expect to see a stronger rebound in demand for our reflow equipment. Speaker 200:06:47In addition, we expect to benefit from the near shoring investments being made by government and industry players to build more resilient and secure semiconductor and electronic assembly supply chains. In summary, we remain confident that the strategic initiatives we are implementing to enhance operational efficiency and reducing working capital will generate significant shareholder value as our target markets regain momentum. With that, I'll turn it over to Lisa for further details on the Q3. Speaker 300:07:22Thank you, Bob. Net revenues increased 5% sequentially and decreased 13% from the Q3 of fiscal 2023. The sequential increase is primarily due to increased sales of our reflow and wafer cleaning equipment and higher parts and services revenue. The decrease from prior year is primarily attributable to lower sales across most of our product portfolio due to a slowdown in the broader semiconductor market. In the Q3 of fiscal 2024, GAAP gross margin increased sequentially compared to the same prior year period. Speaker 300:07:58On a sequential basis, GAAP gross margin in our semiconductor segment was positively affected by product mix, contributed to increased revenues for Refill Equipment Parts and Services. GAAP gross margin in our Materials and Substrate segment decreased on a sequential basis due primarily to a less favorable product mix of consumables and equipment. Compared to the same prior year period, GAAP gross margin was relatively consistent between periods. Selling, general and administrative expenses decreased approximately $40,000 on a sequential basis and decreased $2,100,000 compared to the same prior year period. The sequential decrease is due primarily to reductions in labor related expenses, partially offset by increased commissions and shipping expenses on higher sales. Speaker 300:08:47Compared to the same prior year period, the decrease is due primarily to lower labor and labor related expenses as a result of our cost reduction initiatives, as well as lower shipping expenses on lower revenue. Research development and engineering expenses decreased $200,000 sequentially and decreased $1,100,000 compared to the same prior year period, with the sequential decrease due primarily to the timing of purchases related to specific projects in both segments and the decrease from prior year attributable to development efforts in our Material and Substrate segment that did not recur. GAAP operating income was $800,000 compared to GAAP operating income of $1,400,000 in the Q2 of fiscal 2024 and GAAP operating loss of 1,100,000 dollars compared to non GAAP operating income of $200,000 in the Q2 of fiscal 2024 and non GAAP operating income of $400,000 in the same prior year period. GAAP net income for the Q3 of fiscal 2024 was $400,000 or 0 point 0 $3 per share. This compares to GAAP net income of $1,000,000 or $0.07 per share for the preceding quarter and GAAP net loss of $1,000,000 or $0.07 per share for the Q3 of fiscal 2023. Speaker 300:10:16Non GAAP net income for the Q3 of fiscal 2024 was $1,100,000 or $0.08 per share. This compares to non GAAP net loss of $200,000 or 0 point $300,000 or $0.02 per share for the Q3 of fiscal 2023. Unrestricted cash and cash equivalents at June 30, 2024 were $13,200,000 compared to $13,100,000 at September 30, 2023. Debt payments during the 3 months ended June 30, 2024 were $300,000 Net cash as of June 30, 2024 was $8,900,000 compared to $2,400,000 as of September 30, 2023. As Bob touched on, we are seeing differences in the order values and margins for new orders booked compared to some of the products shipping from older backlog. Speaker 300:11:13Our shipments for the Q3, 3rd fiscal quarter of 2024, including mix of larger furnaces whose profit levels are below our current expectations and corporate average. New orders are trending towards lower order values, but higher margin products. And as the semi market recovers, we will have higher volumes of these types of bookings. As we continue to work down this backlog, we expect our book to bill, especially in the semi segment to stay below 1. But over time, our book to bill should be closer or exceed 1 to 1 as a higher portion of our business trends towards book and ship orders. Speaker 300:11:51As we've discussed previously, we expect the gross margin of our backlog and our future gross margins to improve, but it will take another 2 to 3 quarters for this to work its way through. Now turning to our outlook. For the 4th fiscal quarter ending September 30, 2024, we expect revenues in the range of $22,000,000 to $25,000,000 with adjusted EBITDA nominally positive. 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 1st and second quarters of fiscal 2024, which will reduce Amtech's structural cost by approximately $7,000,000 annually and better align product pricing with value. Speaker 300:12:42These steps should significantly improve results and enhance profitability through market cycles. Operating results can be significantly impacted positively or negatively by the timing of orders, system shipments, logistical 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. Speaker 300:13:18The outlook provided is based on an assumed exchange rate between the United States dollar and the RMB. Changes in the value of the RMB in relation to the United States dollar could cause actual results to differ from expectations. As I sign off, I would like to welcome Wade to Amtech and thank the Amtech team for all of their hard work and dedication. I would also like to thank Bob and the Board for their support. I am excited for the road ahead for Amtech and its strong leadership and strategy. Speaker 300:13:49Bob, I will turn the call back over to you. Speaker 200:13:55Thank you, Lisa. I would like to take a moment to recognize and thank Lisa for her contributions to Amtech over the past 8 years. Lisa's commitment to the company and her professional excellence has been invaluable and I wish her great success with her new role. I'm pleased to welcome Wade Jenke, Amtech's new CFO. Wade has over 15 years of financial and operational experience with global companies. Speaker 200:14:23Most recently he served as the CFO of the EMS Group at SA Abloy, a $30,000,000,000 publicly traded company headquartered in Sweden. Prior to that, he served in a number of senior financial roles within NASA ABLOY and BAE Systems, spanning SEC reporting, FP and A, cost accounting and manufacturing accounting. He has also led back in acquisition integrations and ERP implementations. I'm excited to welcome Wade to our team. His experience in both financial and operational functions will greatly contribute to our efforts to fully optimize our operations and create greater shareholder value in the quarters and years ahead. Speaker 200:15:07Welcome aboard, Wade. Thank you, Bob, and hello to everyone on the call today. I'm excited to join Bob and the talented team at Amtech. I firmly believe that Amtech has the potential for significant growth in revenue, profit and cash flow given the company's leadership position in the markets that it serves. I look forward to the exciting journey ahead and getting to know many of you personally soon. Speaker 200:15:38I will now turn the call over to the Operator00:16:12Your first question comes from Mark Miller with Benchmark. Please go ahead. Speaker 400:16:22Lisa, I'd like to wish you best in your new endeavor. And Wayne, welcome to the Amtech conference calls. Speaker 300:16:31Thank you, Mark. Speaker 500:16:33You're welcome. You Speaker 400:16:35talked about some pricing actions. What areas were these pricing actions taken? Speaker 200:16:42Yes, Mark, as we commented earlier, a lot of it has been let me start by saying, it is broad. So we most of the parts of our business we felt we needed to take some actions to deal with the inflationary pressures over the past 18 months, 24 months. So to answer your question more directly, it has been brought across our portfolio. But I would say, disproportionate has really been more on some of the equipment that we're manufacturing where I think the inflationary pressures in the parts and different components in our systems have been particularly significant and we needed to deal with. Speaker 400:17:33General Motors and Ford both recently reported strong results for their EV sales. And you've seen any impact from that or any in terms of quoting activity, any thoughts that's positive for your future outlook? Speaker 200:17:48Yes. I think I do continue to view EV as having some pretty nice tailwinds. I think some of the however, the improved results we've seen out of the more traditional automakers has been somewhat offset by the weakness in the from the market leader in terms of overall demand in the power electronics area. One of the things that I also think is encouraging, Mark, for us is the again, they've tempered expectations in terms of full electric vehicle growth rates, but they're still fairly substantial. So I think that's a secular tailwind. Speaker 200:18:31But I also believe that what we're beginning to hear more about is the probably a stronger push to hybridize, replace traditional ICE vehicles with more of the hybrid vehicles given strong consumer acceptance for those vehicles in order to meet the fuel efficiency requirements. So I and again, that's helpful to us because we do play broadly in the power electronics, equipment and consumables area. So I do think that when we look at the puts and takes of kind of a more tempered full EV outlook with an increasing projections for the hybrid electric vehicle side of things, we actually see that net net as somewhat favorable to us. Speaker 400:19:28You mentioned the reflow business was one of the drivers for the upside sales. Are you seeing increased quoting activity? What's does it look like this will continue? Speaker 200:19:41Yes. Yes, yes, Mark. Both shipments have been up. Quoting activity is up. And more importantly, I would say the mix is we're seeing improved mix there. Speaker 200:19:54And what had really softened tremendously was the packaging side of the business because we manufacture reflow equipment that's used for packaging, advanced packaging, as well as traditional surface mount assembly. And what we're seeing is, we've seen several quarters where we have sequentially increased demand for the packaging side of the business. And that comes in at a higher margin for us in a higher ASP than the surface mount equipment. Speaker 400:20:32I just have a couple of housekeeping issues. I'll jump back in the queue. Cash from operations and CapEx, what were they for the quarter? Speaker 300:20:42I've got the year to date numbers in front of me here, Mark. We had cash provided by operations of $9,000,000 which is great year to date and CapEx a little bit over $5,000,000 We finished the build out of that building in Massachusetts, which was a significant part of our CapEx. And I would say in the nearer term, I would expect that to be more just maintenance type of CapEx. Speaker 400:21:11Okay. So these were year to date over the last three quarters? Speaker 500:21:15Yes. Speaker 400:21:15Okay. Thank you. Operator00:21:19Thank you. Your next question comes from Kevin Gerrigan with Westpark Capital. Please go ahead. Speaker 500:21:40Yes. Hey, guys. Thanks for letting me ask a few questions. Bob, I think I may have asked you this last time, but has anything gotten better or worse versus 3 months ago in the market to kind of give you hope that things may be turning around or getting better for your businesses? Speaker 200:21:57Yes. I'd say generally more positive. I think the areas that have clearly seen some rebound, I would say, are parts side of the business, as we mentioned earlier and because again some of the that had a lot of the parts business and service side of things had kind of dried up to a great degree about 6 months ago or so. And we've seen incremental improvement in people maintaining equipment and parts replacements. And then of course, I think what's very significant here is the fact that we're nowhere near peak demand for the reflow equipment, but sequentially we're seeing improvements in demand and in particular chip packaging. Speaker 200:22:51I really I would say in the consumables area, as I mentioned, that's lumpy. I would still characterize it as stable. It's not always consistent, but we're not seeing either a significant headwind or tailwind in that area. And in general, I wouldn't say that it seemed I mean, my sense is that we saw the bottom in the industry a couple of quarters ago and that although we had all hoped for this V shaped recovery, the sharp recovery in the markets we serve, we're not seeing that, but at least we're seeing some incremental improvements. Speaker 500:23:43Okay. Got it. Got it. Yes, I've heard similar that we're kind of just bouncing along the bottom at this point. Everyone's kind of still waiting. Speaker 200:23:54Yes. And I would just That's fine. If I can just add something. To that. And that's kind of again, our strategy or approach has really been to we can't deal with the market demand conditions, but we can deal with our cost structure and operating performance. Speaker 200:24:13And that's really while we wait for something more substantial, as you point out, maybe things are bouncing a lot at the bottom is make sure as things are bouncing along the bottom, we're financially in good shape and doing the best we can to drive EBITDA. Speaker 500:24:32Yes, absolutely. That makes a ton of sense. Okay, perfect. And then just as a follow-up, Lisa, congrats on the new role and best of luck going forward. Thank you. Speaker 200:24:44Can you Speaker 500:24:44just give us the focus for Amtech in terms of capital allocation for the rest of 2024? And is M and A kind of a bit of a focus for you guys? Speaker 300:24:54I would say that with the continued focus on positive EBITDA generation, even as we kind of bounce along here at the bottom as we were saying, we finished that build out of the building in Massachusetts. And here in the near term, I think we kind of returned to a maintenance CapEx. We're going into our annual budgeting cycle here in the next month or 2. So I would expect potentially a little bit more CapEx next year as Bob and Wade look at areas to invest in the business. On the M and A front, I will turn that back to Bob since he's the more forward looking person at this table right now. Speaker 200:25:36Yes, I would say in the current environment, not in the short term, but I do think it's definitely something that we're starting to dig into more in the medium to longer term in terms of how to deploy capital to enhance growth. Speaker 500:25:59Okay, perfect. I appreciate the color. Thank you. Operator00:26:04Thank you. There are no further questions at this time. I will now turn the call back over to CEO, Bob Daigle for closing remarks. Speaker 200:26:27Well, thank you again for joining our conference call and I look forward to updating you on the progress we're making in the coming months. Have a good afternoon, evening everyone. Operator00:26:39Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by